SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-9186
TOLL BROTHERS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 23-2416878
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3103 Philmont Avenue, Huntingdon Valley, Pennsylvania 19006-4298
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 938-8000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock (par value $.01) New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
As of December 31, 1996, the aggregate market value of the Common Stock held by
non-affiliates of the Registrant was approximately $433,366,000.
As of December 31, 1996, there were 33,950,360 shares of Common Stock
outstanding.
Documents Incorporated by Reference:
Toll Brothers, Inc. Proxy Statement with respect to its 1997 Annual Meeting of
Shareholders, scheduled to be held on March 5, 1997, is incorporated into
Part III hereof.
PART I
ITEM 1. BUSINESS
General
Toll Brothers, Inc. ("Toll Brothers" or the "Company"), a Delaware
corporation formed in May 1986, commenced its business operations, through
predecessor entities, in 1967. Toll Brothers designs, builds, markets and
arranges financing for single family detached and attached homes in middle
and high income residential communities in thirteen states and five regions
around the country. The communities are generally located on land the
Company has developed, although, due to the poor economic conditions
during the early 1990's, the Company was able to acquire a number of fully
approved parcels and several improved subdivisions. Currently, Toll Brothers
operates predominantly in major suburban residential areas in southeastern
Pennsylvania, central New Jersey, the Virginia and Maryland suburbs of
Washington, D.C., the Boston, Massachusetts metropolitan area, southern
Connecticut, Westchester County, New York, Orange County and Los Angeles
County, California, the suburbs of Raleigh and Charlotte,
North Carolina and Scottsdale, Arizona. It is also developing communities in
northern Delaware, Nassau County, New York, McKinney, Texas, a northern
suburb of Dallas, Austin, Texas and Palm Beach County, Florida. The Company
has recently acquired property in the San Francisco Bay area and expects to
begin offering homes for sale there in the second half of fiscal 1997.
The Company markets its homes primarily to middle and upper-income buyers,
emphasizing high quality construction and customer satisfaction. As of
October 31, 1996, the Company was offering homes for sale in 100 communities.
Single family detached homes were being offered at prices, excluding
customized options, generally ranging from $160,000 to $645,000, with an
average base sales price of $368,000. Attached home prices, excluding
customized options, generally range from $100,000 to $477,000, with an
average base sales price of $218,000. In the five years ended October
31, 1996, Toll Brothers delivered 7,860 homes in 177 communities.
In recognition of the Company's achievements, it has received numerous
awards from national, state and local homebuilder publications and
associations. In fiscal 1996, the Company was selected "America's Best
Builder" by the National Association of Home Builders (the "NAHB") and
Builder magazine in recognition of its excellent financial performance,
unique custom-production system for building luxury homes in high
volume and the excellence of its designs. The Company also received the
National Housing Quality Award from the NAHB, which recognizes the Company's
outstanding commitment to total quality management and continuous
improvement. In 1994, the Company received one of the first place awards in
the "Build America Beautiful" Awards Program, sponsored by Better Homes and
Gardens magazine, the NAHB and Keep America Beautiful, Inc., in recognition
of the Company's programs to improve the handling of solid waste
on construction sites. In addition, the Company was named "The Builder of
the Year" in 1988 by Professional Builder magazine.
On October 31, 1996 and 1995, the Company had backlogs of $526,194,000
(1,367 homes) and $400,820,000 (1,078 homes), respectively. Substantially
all homes in backlog at October 31, 1996 are expected to be delivered by
October 31, 1997.
As of October 31, 1996, the Company was offering homes for sale in 100
communities and owned or controlled through options, over 8,800 home sites in
communities under development, as well as land for approximately 8,500 planned
home sites in proposed communities.
<PAGE>
The Company generally attempts to reduce certain risks homebuilders
encounter, by controlling land for future development through options
whenever possible (which allows the Company to obtain the necessary
government approvals before acquiring title to the land), by beginning
construction of homes after an agreement of sale has been executed with a
buyer and by using subcontractors to perform home construction and land
development work on a fixed-price basis. However, in order to obtain better
terms or prices or due to competitive pressures, the Company has purchased
several properties outright, or acquired the underlying mortgage, prior to
obtaining all of the necessary governmental approvals needed to commence
development.
The Communities
Toll Brothers' communities are generally located in suburban areas near
major highways with access to major cities. Through 1981, all communities
were located in southeastern Pennsylvania. The Company began selling homes
in central New Jersey in 1982, in northern Delaware and Massachusetts in
1987, in Maryland in 1988, in Virginia and Connecticut in 1992, in New York
in 1993, in Southern California and North Carolina in 1994, in the suburbs of
Dallas, Texas and Florida in 1995 and Austin, Texas in 1996.
In addition, in August 1995, the Company acquired certain assets, including two
existing communities under development and options on several future
communities, of Geoffrey H. Edmunds & Associates, a privately owned
Scottsdale, Arizona, luxury homebuilder. The Company has also acquired
property in the San Francisco Bay Area and expects to begin offering homes
for sale there in the second half of fiscal 1997.
The Company emphasizes its high-quality, detached single family homes that
are marketed primarily to the "upscale" luxury market, generally those
persons who have previously owned a principal residence - the so-called
"move-up" market. The Company believes its reputation as a developer of
homes for this market enhances its competitive position with respect to the
sale of more moderately priced detached homes, as well as attached homes.
The Company also markets to the 50+ year-old "empty nester" and
believes that this market has strong growth potential. The Company has
developed a number of home designs that it believes will appeal to this
category of home buyer and integrated these designs into its communities
along with its other homes.
Each single family home community offers several home plans, with the
opportunity to select various exterior styles. The communities are designed
to fit existing land characteristics, blending winding streets, cul-de-sacs
and underground utilities to establish a pleasant environment. The Company
strives to create a diversity of architectural styles within an overall
planned community. This diversity arises from variations among the models
offered and in exterior design options of homes of the same
basic floor plan, from the preservation of existing trees and foliage whenever
practicable, and from the curving street layout, which allows relatively few
homes to be seen from any vantage point. Normally, homes of the same type or
color may not be built next to each other. The communities have attractive
entrances with distinctive signage and landscaping. The Company believes
this avoids a "development" appearance and gives the community a diversified
neighborhood look that enhances home value.
Attached home communities are generally one to three stories, provide for
limited exterior options and often contain commonly-owned recreational
acreage with swimming pools and tennis courts. These communities have
associations through which homeowners act jointly for their common interest.
It is the Company's belief that the homes built by Toll Brothers in its
named communities provide homeowners with additional value upon resale.
<PAGE>
The Homes
Most single family detached-home communities offer at least three different
home plans, each with several substantially different architectural styles.
For example, the same basic floor plan may be selected with a Colonial,
Georgian, Federal or Provincial design, and exteriors may be varied further
by the use of stone, stucco, brick or siding. Attached home communities
generally offer two or three different floor plans with two, three or four
bedrooms.
In all of Toll Brothers' communities, certain options are available to the
purchaser for an additional charge. The options typically are more numerous and
significant on the more expensive homes. Major options include additional
garages, additional rooms, finished lofts, and additional fireplaces. As a
result of the additional charges for such options, the average sales price
was approximately 16% higher than the base sales price during fiscal 1996.
The range of base sales prices for the Company's lines of homes as of
October 31, 1996, was as follows:
<TABLE>
Single Family Detached Homes:
<S> <C> <S><C>
Move-up $160,000 - $500,000
Executive 247,000 - 602,000
Estate 335,000 - 645,000
</TABLE>
<TABLE>
Attached Homes:
<S> <C> <S> <C>
Townhomes 100,000 - 219,000
Carriage Homes 234,000 - 477,000
</TABLE>
Contracts for the sale of homes are at fixed prices. The prices at which
homes are offered have generally increased from time to time during the
sellout period for each community; however, there can be no assurance that
sales prices will increase in the future.
The Company uses some of the same basic home designs in similar
communities. However, the Company is continuously developing new designs to
replace or augment existing ones to assure that its homes are responsive to
current consumer preferences. For new designs, the Company has its own
architectural staff and occasionally engages unaffiliated architectural
firms. During the past year, the Company has introduced over 35 new models.
<PAGE>
The following table summarizes certain information with respect to
residential communities of Toll Brothers under development as of
October 31, 1996:
<TABLE>
HOMES UNDER
NUMBER OF HOMES HOMES CONTRACT AND HOME SITES
STATE COMMUNITIES APPROVED CLOSED NOT CLOSED AVAILABLE
<S> <C> <C> <C> <C> <C>
Arizona 12 958 88 117 753
California 7 474 85 35 354
Connecticut 6 218 86 38 94
Delaware 4 416 357 31 28
Florida 2 213 30 34 149
Maryland 4 455 60 38 357
Massachusetts 8 830 608 108 114
New Jersey:
North central 6 694 205 31 458
Central 20 1,291 421 239 631
South central 7 1,087 317 120 650
New York 9 415 151 78 186
North Carolina 5 565 73 57 435
Pennsylvania 34 4,217 2,072 264 1,881
Texas 3 426 16 27 383
Virginia 14 1,512 394 150 968
Total 141(1) 13,771 4,963 1,367 7,441(2)
</TABLE>
(1) Of these 141 communities, 100 had homes being offered for sale, 14 had
not yet opened for sales, and 27 had been sold out but not all
closings had been completed. Of the 100 communities in which homes
were being offered for sale, 92 were single family detached-home
communities containing a total of 92 homes under construction but
not under contract (exclusive of model homes) and 8 were attached
home communities containing a total of 23 homes under construction
but not under contract (exclusive of model homes).
(2) On October 31, 1996, significant site improvements had not commenced
on approximately 3,967 of the 7,441 available home sites.
Of the 7,441 available home sites, 768 were not owned, but were
controlled through options.
Land Policy
Before entering into a contract to acquire land, the Company completes
extensive comparative studies and analyses on detailed Company-designed forms
that assist it in evaluating the acquisition. Toll Brothers generally
attempts to follow a policy of acquiring options to purchase land for future
communities. However, in order to obtain better terms or prices, or due to
competitive pressures, the Company has at times acquired property outright.
In addition, the Company has at times acquired the underlying mortgage on a
property and subsequently obtained title to that property.
The options or purchase agreements are generally on a non-recourse basis,
thereby limiting the Company's financial exposure to the amounts invested in
property and pre-development costs. The use of options or purchase agreements
may somewhat raise the price of land that the Company eventually acquires,
but significantly reduces risk. It also allows the Company to obtain
necessary development approvals before acquisition of the land, which generally
enhances the value of the options and the land eventually acquired. The
Company's purchase agreements are typically subject to numerous conditions
including, but not limited to, the Company's ability to obtain necessary
governmental approvals for the proposed community. Often, the down payment on
the agreement will be returned to the Company if all approvals are not
obtained, although pre-development costs may not be recoverable. The Company
has the ability to extend many of these options for varying periods of time,
in some cases by the payment of an additional deposit and in some cases
without an additional payment. The Company has the right to cancel any of its
land agreements by forfeiture of the Company's down payment on the agreement.
In such instances, the Company generally is not able to recover any
pre-development costs.
During the early 1990's, due to the recession and the difficulties other
builders and land developers had in obtaining financing, the number of
buyers competing for land in the Company's market areas diminished, while
the number of sellers increased, resulting in more advantageous prices for
land acquisitions made by the Company. Further, many of the land parcels
offered for sale were fully approved, and often improved, subdivisions.
Generally, such types of subdivisions previously had not been available for
acquisition in the Company's market area. The Company purchased several such
subdivisions outright and acquired control of several others through option
contracts.
Due to the improvement in the economy and the improved availability of
capital, during the past several years, the Company has seen an increase in
competition for available land in its market areas. The continuation of the
Company's development activities over the long term will be dependent upon
its continued ability to locate, enter into contracts to acquire, obtain
governmental approvals for, consummate the acquisition of, and improve
suitable parcels of land.
In the Company's view, the rolling recession in the United States creates a
bottoming market in some parts of the nation as other markets become strong.
While the Company believes that there is significant diversity in its
Northeast and Mid-Atlantic markets and that this diversity provides
protection from the vagaries of the individual local economies, it believes
that a greater geographic diversification will provide additional protection
and more opportunities for growth. During the past three years, the Company
has expanded into California, North Carolina, Florida, Texas and Arizona.
The Company continues to explore additional geographic areas for expansion.
The following is a summary of the parcels of land that the Company either
owns or controls through options and loan assets at October 31, 1996 for
proposed communities, as distinguished from those currently under development:
<TABLE>
Number of Number of Number of
State Communities Acres Homes Planned
<S> <C> <C> <C>
Arizona 2 170 158
California 5 159 316
Connecticut 2 73 68
Delaware 1 93 151
Florida 1 12 37
Massachusetts 2 302 354
New Jersey: (1)
South central 2 470 750
North central 3 209 199
Central 15 1,885 2,026
New York 5 341 254
North Carolina 1 51 98
Pennsylvania 19 1,349 1,543
Texas 8 288 530
Virginia(2) 6 1,220 2,010
Total 72 6,622 8,494(3)
</TABLE>
(1) New Jersey includes two communities which contain plans for 170 units
which will either be rented or sold at lower than market rentals or
prices.
(2) Virginia includes one community which contains plans for 30 "affordable
dwelling units" which will be sold at lower than market prices.
(3) Of the 8,494 planned home sites, 3,719 lots were controlled through
options and 750 lots were controlled through loan assets secured by liens.
<PAGE>
The aggregate of loan assets, option deposits and related pre-development
costs for proposed communities was approximately $20,349,000 at
October 31, 1996. The aggregate purchase price of land parcels under option
at October 31, 1996 was approximately $193,733,000.
The Company evaluates all of the land under control for proposed
communities on an ongoing basis with respect to economic and market
feasibility. During the year ended October 31, 1996 such feasibility
analyses resulted in approximately $1,001,000 of capitalized costs related to
proposed communities being charged to expense because they were no longer
deemed to be recoverable.
There can be no assurance that the Company will be successful in securing
necessary development approvals for the land currently under its control or
for land which the Company may acquire control of in the future or, that
upon obtaining such development approvals, the Company will elect to
complete its purchases under such options. The Company has generally been
successful in the past in obtaining governmental approvals, has substantial
land currently under its control for which it is seeking such approvals
(as set forth in the table above), and devotes significant resources to
locating suitable additional land for development and to
obtaining the required approvals on land under its control. Failure to locate
sufficient suitable land or to obtain necessary governmental approvals,
however, may impair the ability of the Company over the long term to maintain
current levels of development activities.
The Company generally has not purchased land for speculation or with the
contemplation of selling it for profit.
The Company believes that it has an adequate supply of land in its existing
communities and in land held for future development (assuming that all
properties are developed) to maintain its operations at its current levels for
several years.
Community Development
The Company expends considerable effort in developing a concept for each
community, which includes determination of size, style and price range of the
homes, layout of the streets and individual lots, and overall community
design. After obtaining the necessary governmental subdivision and other
approvals, which can sometimes require several years to obtain, the Company
then improves the land by grading and clearing the site, installing roads,
underground utility lines and pipes, erecting distinctive entrance
structures, and staking out individual home sites.
Each community is managed by a project manager who is located at the site.
Working with construction supervisors, marketing personnel and, when
required, other Company and outside professionals such as engineers,
architects and legal counsel, the project manager is responsible for
supervising and coordinating the various developmental steps from acquisition
through the approval stage, marketing, construction and customer service,
including monitoring the progress of work and controlling expenditures.
Major decisions regarding each community are made by senior members of the
Company's management.
The Company recognizes revenue only upon the closing of a home sale (the
point at which title and possession are transferred to the buyer), which
generally occurs shortly after construction is substantially completed. The
most significant variable affecting the timing of the Company's
revenue stream, other than housing demand, is receipt of final regulatory
approvals, which, in turn, permits the Company to begin the process of
obtaining executed contracts for sales of homes. Receipt of such final
approvals is not seasonal. Although the Company's sales and construction
activities vary somewhat with the seasons, affecting the timing of closings, any
such seasonal effect is relatively insignificant compared to the effect of
receipt of final governmental approvals.
<PAGE>
Subcontractors perform all home construction and land development work,
generally under fixed-price contracts. Toll Brothers acts as a general
contractor and purchases some, but not all, of the building supplies it
requires (see "PROPERTIES - Manufacturing/Distribution Facility").
The Company is not, and does not anticipate, experiencing a shortage of
either subcontractors or supplies of building materials. The Company's
construction superintendents and assistant superintendents coordinate
subcontracting activities and supervise all aspects of construction
work and quality control. One of the ways the Company seeks to achieve home
buyer satisfaction is by providing its construction superintendents with
incentive compensation arrangements based on each home buyer's responses on
pre-closing and post-closing checklists.
The Company maintains insurance to protect against certain risks associated
with its activities. These insurance coverages include, among others,
general liability, "all-risk" property, workers' compensation, automobile,
and employee fidelity. The Company believes the amounts and extent of such
insurance coverages are adequate.
Marketing
The Company believes that its marketing strategy, which emphasizes its more
expensive "Estate" and "Executive" lines of homes, has enhanced the Company's
reputation as a builder-developer of high-quality upscale housing. The
Company believes this reputation results in greater demand for all of the
Company's lines of homes. The Company generally includes attractive decorative
moldings such as chair rails, crown moldings, dentil moldings and other
aesthetic features, even in its less expensive homes, on the basis that this
additional construction expense is important to its marketing effort.
In addition to relying on management's extensive experience, the Company
determines the prices for its homes through a Company-designed value analysis
program that compares a Toll Brothers home with homes offered by other
builders in the relevant marketing area. The Company accomplishes this by
assigning a positive or negative dollar value to differences in product
features, such as amenities, location and marketing.
Toll Brothers expends great effort in creating its model homes, which play
an important role in the Company's marketing. In its models, Toll Brothers
creates an attractive atmosphere, with bread baking in the oven, fires
burning in fireplaces, and background music. Interior decorations vary among
the models and are carefully selected based upon the lifestyles of the
prospective buyers. During the past several years, the Company has received
a number of awards from various homebuilder associations for its interior
merchandising.
The sales office located in each community is generally staffed by Company
sales personnel, who are compensated with salary and commission. In
addition, a significant portion of Toll Brothers' sales is derived from the
introduction of customers to its communities by local cooperating realtors.
The Company advertises extensively in newspapers, other local and regional
publications and on billboards. The Company also uses videotapes and
attractive color brochures to describe each community. The Company has
established a web site on the Internet (http://www.tollbrothers.com)
to provide its customers with additional information on the Company and its
homes.
All Toll Brothers homes are sold under the Company's one-year limited
warranty as to workmanship and two-year limited warranty as to mechanical
equipment. Many of those warranties are supplemented by privately insured
programs, which provides the homebuyer a limited ten-year warranty as to
structural integrity.
<PAGE>
Customer Financing
The Company makes arrangements with a variety of mortgage lenders to
provide home buyers a range of conventional mortgage financing programs.
By making available an array of attractive mortgage programs to qualified
purchasers, the Company is able to better coordinate and expedite
the entire sales transaction by ensuring that mortgage commitments are
received and that closings take place on a timely and efficient basis.
During fiscal 1996, approximately 56% of the Company's closings were
financed through mortgage programs offered by the Company. In addition,
during the same period, the Company's home buyers, on average, financed
approximately 71% of the purchase price of their homes.
The Company secures the availability of a variety of competitive market
rate mortgage products from both national and regional lenders. Such
availability is generally obtained at no cost to the Company and is committed
for varying lengths of time and amounts.
The Company also obtains forward commitments for fixed and variable rate
mortgage financing which contain various rate protection features. Such
commitments have generally cost the Company from zero to one-half of one
percent of the mortgage funds reserved and typically have terms of 9 to 18
months. As of October 31, 1996, there were approximately $106 million of such
commitments available, which expire at various dates through December 1997.
Competition
The homebuilding business is highly competitive and fragmented. The
Company competes with numerous homebuilders of varying size, ranging from
local to national in scope, some of which have greater sales and financial
resources than the Company. Resales of homes also provide competition.
The Company competes primarily on the basis of price, location, design, quality,
service and reputation; however, during the past several years, the Company's
financial stability, relative to others in its industry, has become an
increasingly favorable competitive factor. The Company believes that, due to
the increased availability of capital, competition has increased during the
past several years.
Regulation and Environmental Matters
The Company is subject to various local, state and federal statutes,
ordinances, rules and regulations concerning zoning, building design,
construction and similar matters, including local regulations which impose
restrictive zoning and density requirements in order to limit the number of
homes that can eventually be built within the boundaries of a particular
locality. In addition, the Company is subject to registration and filing
requirements in connection with the construction, advertisement and sale of
homes in its communities in certain states and localities in which it
operates. These laws have not had a material effect on the Company,
except to the extent that application of such laws may have caused the
Company to conclude that development of a proposed community would not be
economically feasible, even if any or all necessary governmental approvals
were obtained (See "Business-Land Policy"). The Company may also be subject
to periodic delays or may be precluded entirely from developing communities due
to building moratoriums in the areas in which it operates. Generally, such
moratoriums relate to insufficient water or sewage facilities or inadequate
road capacity.
In order to secure certain approvals, the Company may have to provide
affordable housing at below market rental or sales prices. The impact on the
Company will depend on how the various state and local governments in which
the Company engages, or intends to engage, in development implement their
programs for affordable housing. To date, these restrictions have not had a
material impact on the Company.
<PAGE>
The Company is also subject to a variety of local, state and federal
statutes, ordinances, rules and regulations concerning protection of health
and the environment ("environmental laws"), as well as the effects of
environmental factors. The particular environmental laws which apply to any
given community vary greatly according to the community site, the site's
environmental conditions and the present and former uses of the site. These
environmental laws may result in delays, may cause the Company to incur
substantial compliance and other costs, and can prohibit or severely restrict
development in certain environmentally sensitive regions or areas.
The Company maintains a policy of engaging, prior to consummating the
purchase of land, independent environmental consultants to assess such land
for the potential of hazardous or toxic materials, wastes or substances.
Because it has generally obtained such assessments for the land it has
purchased, the Company has not been significantly affected to date by the
presence of such materials.
Employees
As of October 31, 1996, the Company employed 1,155 full-time persons; of
these, 43 were in executive positions, 134 were engaged in sales activities,
130 in project management activities, 345 in administrative and clerical
activities, 321 in construction activities, 77 in engineering activities and
105 in the panel plant operations. The Company considers its employee relations
to be good.
ITEM 2. PROPERTIES
Headquarters
Toll Brothers' corporate offices, containing approximately 45,000 square
feet, are located in a modern facility at 3103 Philmont Avenue, Huntingdon
Valley, Montgomery County, Pennsylvania. The facility was purchased by the
Company in September 1988.
Manufacturing/Distribution Facility
Toll Brothers owns a facility of approximately 200,000 square feet in which
it manufactures open wall panels, roof and floor trusses, and certain
interior and exterior millwork to supply a portion of the Company's
construction needs. This operation also permits Toll Brothers to purchase
wholesale lumber, plywood, windows, doors, certain other interior and
exterior millwork and other building materials to supply its communities.
The Company believes that increased efficiency, cost savings and productivity
result from the operation of this plant and from such wholesale purchases of
material. This plant generally does not sell or supply to any purchasers
other than Toll Brothers. The property, which is located in Morrisville,
Pennsylvania, is adjacent to U.S. Route 1, a major thoroughfare, and is
served by rail.
Regional and Other Facilities
The Company leases office and warehouse space in various locations, none of
which is material to the business of the Company.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various claims and litigation arising in the
ordinary course of business. The Company believes that the disposition of
these matters will not have a material adverse effect on the business or the
financial condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended October 31, 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT
The section entitled "Proposal One: Election of Directors" of the
Company's Proxy Statement for the 1997 Annual Meeting of Shareholders is
incorporated herein by reference.
The following table includes information with respect to all executive
officers of the Company as of October 31, 1996. All executive officers serve
at the pleasure of the Board of Directors of the Company.
<TABLE>
Name Age Positions
<S> <C> <C> <S> <C>
Robert I. Toll 55 Chairman of the Board,
Chief Executive Officer and Director
Bruce E. Toll 53 President, Chief Operating Officer,
Secretary and Director
Zvi Barzilay 50 Executive Vice President and Director
Joel H. Rassman 51 Senior Vice President, Treasurer,
Chief Financial Officer and Director
</TABLE>
Robert and Bruce Toll, who are brothers, co-founded the Company's
predecessors' operations in 1967. Their principal occupations since
inception have been related to their various homebuilding and other real
estate related activities.
Zvi Barzilay joined the Company as a project manager in 1980 and has been
an officer since 1983. In 1994, Mr. Barzilay was elected a Director of the
Company.
Joel H. Rassman has been a senior vice president of the Company since
joining the Company in 1984. Mr. Rassman was elected a Director of the
Company by the Board of Directors in 1996.<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is principally traded on the New York Stock
Exchange (Symbol:TOL). It is also listed on the Pacific Stock Exchange.
The following table sets forth the price range of the Company's common
stock on the New York Stock Exchange for each fiscal quarter during the two
years ended October 31, 1996.
Three Months Ended
<TABLE>
1996 October 31 July 31 April 30 January 31
<S> <C> <C> <C> <C>
High $17 7/8 $18 5/8 $20 5/8 $23 1/2
Low $16 $14 5/8 $15 3/8 $16 5/8
</TABLE>
1995 October 31 July 31 April 30 January 31
<TABLE>
<S> <C> <C> <C> <C>
High $19 $17 1/4 $13 3/4 $12 1/4
Low $15 1/2 $11 5/8 $11 1/8 $9 1/8
</TABLE>
The Company has not paid any cash dividends on its common stock to date and
expects that for the foreseeable future it will follow a policy of retaining
earnings in order to finance the continued development of its business.
Payment of dividends is within the discretion of the Company's Board of
Directors and will depend upon the earnings, capital requirements and
operating and financial condition of the Company, among other factors. The
Company's 10 1/2% Senior Subordinated Notes due March 15, 2002 and 9 1/2%
Senior Subordinated Notes due March 15, 2003, contain restrictions on the
amount of dividends the Company may pay on its common stock. In addition,
the Company's Bank Revolving Credit Agreement requires the maintenance of
minimum shareholders' equity which restricts the amount of dividends the
Company may pay. As of October 31, 1996, under the most restrictive of the
agreements, the Company could pay up to approximately $73,678,000 of cash
dividends.
At December 31, 1996, there were approximately 703 record holders of the
Company's common stock.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial and housing
data of the Company as of and for each of the five fiscal years ended
October 31, 1996. It should be read in conjunction with the Consolidated
Financial Statements and Notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Summary Consolidated Income Statement Data (Amounts in thousands, except
per share data)
<TABLE>
Year Ended October 31
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Revenues $760,707 $646,339 $504,064 $395,261 $281,471
======== ======== ======== ======== ========
Income before income taxes,
extraordinary item and
change in accounting $ 85,793 $79,439 $ 56,840 $43,928 $ 28,864
======== ======= ======== ======= ========
Income before extraordinary
item and change in
accounting $ 53,744 $49,932 $ 36,177 $27,419 $ 17,354
Extraordinary loss (668) (816)
Cumulative effect of change
in accounting 1,307
-------- ------- -------- -------- ---------
Net income $ 53,744 $49,932 $ 36,177 $ 28,058 $ 16,538
Earnings per share
Primary
Income before extraordinary
item and change in
accounting $ 1.56 $ 1.47 $ 1.08 $ .82 $ .52
Extraordinary loss (.02) (.02)
Cumulative effect of change
in accounting .04
-------- ------- -------- -------- ---------
Net income $ 1.56 $ 1.47 $ 1.08 $ .84 $ .50
======== ======= ======== ======== =========
Weighted average number of
shares outstanding 34,492 33,909 33,626 33,467 33,234
======== ======= ======== ======== ========
Fully-diluted
Income before extraordinary
item and change in
accounting $ 1.50 $ 1.41 $ 1.05 $ .82 $ .52
Extraordinary loss (.02) (.02)
Cumulative effect of change
in accounting .04
-------- ------- -------- -------- --------
Net income $ 1.50 $ 1.41 $ 1.05 $ .84 $ .50
======== ======= ======== ======== ========
Weighted average number of
shares outstanding 36,891 36,651 35,664 33,583 33,237
======== ======= ======== ======== ========
</TABLE>
<PAGE>
Summary Consolidated Balance Sheet Data (Amounts in thousands)
<TABLE>
October 31
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Inventory $772,471 $623,830 $506,347 $402,515 $287,844
======== ======== ======== ======== ========
Total assets $837,926 $692,457 $586,893 $475,998 $384,836
======== ======== ======== ======== ========
Debt
Loans payable $132,109 $ 59,057 $ 17,506 $ 24,779 $ 25,756
Subordinated debt 208,415 221,226 227,969 174,442 128,854
Collateralized mortgage
obligations payable 2,816 3,912 4,686 10,810 24,403
-------- -------- -------- -------- --------
Total $343,340 $284,195 $250,161 $210,031 $179,013
======== ======== ======== ======== ========
Shareholders' equity $314,677 $256,659 $204,176 $167,006 $136,412
======== ======== ======== ======== ========
</TABLE>
<TABLE>
Housing Data
<S> <C> <C> <C> <C> <C>
Year ended October 31: 1996 1995 1994 1993 1992
Number of homes
closed 2,109 1,825 1,583 1,324 1,019
Sales value of homes
closed
(in thousands) $759,303 $643,017 $501,822 $392,560 $279,841
Number of homes
contracted 2,398 1,846 1,716 1,595 1,202
Sales value of homes
contracted
(in thousands) $884,677 $660,467 $586,941 $490,883 $342,811
As of October 31:
Number of homes
in backlog 1,367 1,078 1,025 892 621
Sales value of homes
in backlog
(in thousands) $526,194 $400,820 $370,560 $285,441 $187,118
<PAGE>
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following table sets forth certain income statement items related to
the Company's operations as percentages of total revenues:
Year Ended October 31: 1996 1995 1994
---- ---- ----
Revenues 100.0% 100.0% 100.0%
------ ------ ------
Costs and expenses:
Land and housing construction 76.4 75.0 75.4
Selling, general and administrative 9.1 9.2 9.7
Interest 3.2 3.4 3.6
--- --- ---
Total costs and expenses 88.7 87.6 88.7
---- ---- ----
Operating income 11.3% 12.4% 11.3%
===== ===== =====
FISCAL 1996 COMPARED TO FISCAL 1995
Revenues for fiscal 1996 of $761 million exceeded those of fiscal 1995 by
$114 million or 18%. This increase in revenues was due to an increase in both
the number of homes and average price per home delivered. The increase in
the number of homes delivered was due to the higher backlog of homes at
October 31, 1995 as compared to October 31, 1994 and to the greater number of
homes sold during fiscal 1996 as compared to fiscal 1995. The increase in
the number of homes sold was the result of the higher number of selling
communities that the Company had in 1996 over 1995 and an increase in the
average number of homes sold per community. The increase in the average
delivered price per home was due principally to a change in product mix to
larger homes, a shift to more expensive locations, an increase in the value
of options that the homebuyers selected and increases in selling prices in a
number of the Company's communities. The increase in the average delivered
price was partially offset by an increase in sales incentives provided to the
homebuyers.
Land and construction costs as a percentage of revenues increased in
fiscal 1996 as compared to fiscal 1995. The increase was due principally to
increased material and overhead costs, increased costs of sales incentives
and the additional start-up costs, generally higher construction costs and
the inefficiencies of production associated with the Company's expansion
into California, Arizona, Texas, North Carolina and Florida. The increased
overhead costs were due principally to the severe winter weather conditions
that the Company encountered in many of its markets in fiscal 1996. The cost
increases were partially offset by the lower amount of inventory writedowns in
1996($4.6 million) as compared to 1995($5.4 million).
Selling, general and administrative expenses amounted to $69.7 million
or 9.1% of revenues in fiscal 1996 as compared to $59.7 million or 9.2% of
revenues in fiscal 1995. The increased spending was attributable to the
greater number of communities that the Company was operating in 1996 as
compared to 1995 as well as the additional costs associated with the
Company's geographic expansion.
Interest expense is determined on a specific lot-by-lot basis and will vary
depending on many factors including the period of time that the land under
the home was owned, the length of time that the house was under construction,
and the interest rates and amount of debt carried by the Company in
proportion to the amount of inventory during those periods.
<PAGE>
FISCAL 1995 COMPARED TO FISCAL 1994
Revenues for fiscal 1995 of $646.3 million exceeded those of 1994 by
$142.2 million or 28%. This increase was primarily the result of the greater
number of homes delivered in 1995 which was principally due to the higher
backlog at the beginning of fiscal 1995 as compared to the backlog at the
beginning of fiscal 1994, the greater number of contracts that were signed in
1995 compared to 1994 and to a greater number of communities delivering homes in
1995 as compared to 1994. In addition, the average price per home increased
due to a change in product mix to larger homes, a shift in location of homes
closed to more expensive locations and increases in selling prices.
As of October 31, 1995, the backlog of homes under contract amounted to
$400.8 million (1,078 homes), an 8% increase over the backlog as of
October 31, 1994. In fiscal 1995, the Company signed new contracts of $660.4
million (1,846 homes), as compared to $586.9 million (1,716 homes) in fiscal
1994. The increase in new contracts in 1995 over 1994 was primarily due to
the increase in the number of communities in which the Company was offering
homes for sale, a shift in location of the communities to more expensive areas,
an increase in the size of the homes that our customers purchased and
increases in selling prices. The increase was partially offset by a decline
in the number of homes sold per community.
Land and housing construction costs amounted to $485.0 million (75.0% of
revenues) in 1995 as compared to $380.2 million (75.4% of revenues)in 1994.
As a percentage of revenues, land and land development costs, job overhead
costs and write-offs of inventory and previously capitalized costs that the
Company no longer considered realizable, were lower in 1995 than in 1994.
The percentage decrease was partially offset by increased material and
subcontractor costs. The Company provided for write-offs of inventory and
previously capitalized costs that it no longer considered realizable of $5.4
million in 1995 and $7.0 million in 1994.
Selling, general and administrative expenses ("SG&A") in 1995 and 1994
amounted to $59.7 million (9.2% of revenues) and $48.8 million (9.7% of
revenues), respectively. The increased spending in 1995 was the result of an
increase in selling expense due to the larger number of communities in which
the Company was offering homes for sale in 1995 as compared to 1994 and an
increase in general and administrative expenses, primarily payroll and
payroll-related costs, due to the overall growth and increased profitability of
the Company. The decline in SG&A, as a percentage of revenues, was due to
revenues increasing at a faster rate than SG&A spending.
Interest expense is determined on a specific lot-by-lot basis and will
vary depending on many factors including the period of time that the land was
owned, the period of time that the house was under construction, and the
interest rates and the amount of debt carried by the Company in proportion to
the amount of its inventory during those periods. As a percentage of
revenues, interest expense was lower in 1995 as compared to 1994. The decline
was principally the result of an 11% increase in the average price of
homes closed in 1995 over 1994 while capitalized interest per home closed
in 1995 only increased 6%.
INCOME TAXES
Income taxes for fiscal 1996, 1995 and 1994 were provided at effective
rates of 37.4%, 37.1% and 36.4%, respectively.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
Funding for the Company's residential development activities is
principally provided by cash flows from operations, public debt and equity
markets, and unsecured bank borrowings.
Cash flow from operations, before inventory additions, improved as
operating results improved and the Company anticipates that the cash flow
from operations will continue to improve as a result of an increase in
revenues from the delivery of homes from the existing backlog as well as
from new sales agreements. The Company has used the cash flow from
operations and borrowings under its revolving credit facility to acquire
additional land for new communities, to fund additional expenditures for land
development and construction costs needed to meet the requirements of the
increased backlog, the continuing expansion of the number of communities in
which the Company is offering homes for sale and to reduce debt. The Company
expects that inventories will continue to increase and is currently negotiating
and searching for additional opportunities to obtain control of land for
future communities.
The Company has a $250 million unsecured revolving credit facility with
fifteen banks which extends through June 2000. The facility reduces by 50%
in June 1999 unless extended as provided for in the agreement. As of
October 31, 1996, the Company had $50 million of loans and approximately
$26.1 million of letters of credit outstanding under the facility. In
addition, the Company has a $50,000,000 loan commitment from two banks under
which the Company will borrow the funds in March 1997 for a period of five
years at a fixed interest rate of 7.82%.
In November 1996, the Company issued $100,000,000 of 8 3/4% Senior
Subordinated Notes to the public. The notes mature in November 2006. The
net proceeds are to be used for general corporate purposes.
The Company believes that it will be able to fund its activities through
a combination of existing cash resources, operating cash flow and existing
sources of credit.
INFLATION
The long-term impact of inflation on the Company is manifested in
increased land, land development, construction and overhead costs, as well
as in increased sales prices. For several years prior to fiscal 1989, the
Company was able to raise sales prices by amounts at least equal to its cost
increases. From fiscal 1989 through February 1, 1991, however, sales
prices either declined slightly or remained steady, and since then have risen
only modestly.
The Company generally contracts for land significantly before
development and sales efforts begin. Accordingly, to the extent land
acquisition costs are fixed, increases or decreases in the sales prices of
homes may affect the Company's profits. Since the sales prices of homes are
fixed at the time of sale and the Company generally sells its homes prior
to commencement of construction, any inflation of costs in excess of those
anticipated may result in lower gross margins. The Company generally
attempts to minimize that effect by entering into fixed-price contracts with
its subcontractors and material suppliers for specified periods of time,
which generally do not exceed one year.
Housing demand, in general, is adversely affected by increases in interest
costs, as well as in housing costs. Interest rates, the length of time that
land remains in inventory and the proportion of inventory that is financed
affect the Company's interest costs. If the Company is unable to raise
sales prices enough to compensate for higher costs, which had generally been
the condition during prior years, or if mortgage interest rates increased
significantly, affecting prospective buyers' ability to adequately finance a
home purchase, the Company's revenues, gross margins and net income would be
adversely affected. Increases in sales prices, whether the result of
inflation or demand, may affect the ability of prospective buyers to afford
a new home.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements as set forth in item 14(a)(1) and (2).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item with respect to executive officers of
the Company is set forth in Part I. The information required by this item
with respect to the Directors of the Company is incorporated by reference to
the Company's Proxy Statement for the 1997 Annual Meeting of Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the
Company's Proxy Statement for the 1997 Annual Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to the
Company's Proxy Statement for the 1997 Annual Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to the
Company's Proxy Statement for the 1997 Annual Meeting of Shareholders.
STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included herein and in other Company statements, reports
and S.E.C. filings is forward-looking within the meaning of the Private
Securities Litigation Reform Act of 1995, including, but not limited to,
statements concerning anticipated operating results, financial resources,
growth and expansion. Such forward-looking information involves
important risks and uncertainties that could significantly affect actual
results and cause them to differ materially from expectations expressed
therein. These risks and uncertainties include local, regional and national
economic conditions, the effects of governmental regulation, the competitive
environment in which the Company operates, fluctuations in interest rates,
changes in home prices, the availability and cost of land for future growth,
the availability of capital, the availability and cost of labor and
materials, and weather conditions.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Financial Statement Schedule
1. Financial Statements
Page
<TABLE>
<S> <C>
Report of Independent Auditors F-1
Consolidated Statements of Income for the
Years Ended October 31, 1996, 1995 and 1994 F-2
Consolidated Balance Sheets as of
October 31, 1996 and 1995 F-3
Consolidated Statement of Shareholder's Equity
for the Years Ended October 31, 1996, 1995 and 1994 F-4
Consolidated Statements of Cash Flows for the
Years Ended October 31, 1996, 1995 and 1994 F-5
Notes to Consolidated Financial Statements F-6 - F-13
Summary Consolidated Quarterly Data F-14
2. Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
for the Years Ended October 31,
1996, 1995 and 1994 F-15
</TABLE>
Schedules not listed above have been omitted because
they are either not applicable or the required information
is included in the financial statements or notes thereto.
3. Exhibits required to be filed by Item 601 of Regulation S-K:
3.1 Certificate of Incorporation, as amended, is hereby
incorporated by reference to Exhibit 3.1 of the
Registrant's Form 10-K for the fiscal year ended
October 31, 1989.
3.2 Amendment to the Certificate of Incorporation dated
March 11, 1993, is hereby incorporated by reference to
Exhibit 3.1 of Registrant's Form 10-Q for the quarter
ended January 31, 1993.
3.3 By-laws, as amended, are hereby incorporated by reference
to Exhibit 3.2 of the Registrant's Form 10-K for the fiscal
year ended October 31, 1989.
4.1 Specimen Stock Certificate is hereby incorporated by
reference to Exhibit 4.1 of the Registrant's Form 10-K for
the fiscal year ended October 31, 1991.
4.2 Indenture dated as of March 15, 1992, between Toll Corp.,
as issuer, the Registrant, as guarantor, NBD Bank, National
Association, as Trustee, including Form of Guarantee, is
hereby incorporated by reference to Exhibit 4 of
Toll Corp.'s Registration Statement on Form S-3 filed with
the Securities and Exchange Commission on March 11, 1992,
File No. 33-45704.
<PAGE>
Exhibit
Number Description
4.3 Indenture dated as of March 15, 1993, among Toll Corp., as
issuer, the Registrant, as guarantor, and NBD Bank, National
Association, as Trustee, including Form of Guarantee, is
hereby incorporated by reference to Exhibit 4.1 of
Toll Corp.'s Registration Statement on Form S-3 filed with
the Securities and Exchange Commission, March 10, 1993,
File No. 33-58350.
4.4 Indenture dated as of January 15, 1994 between Toll Corp.,
as issuer, the Registrant, as guarantor, Security Trust
Company, N.A., as Trustee, including Form of Guarantee, is
incorporated by reference to Exhibit 4.1 of Toll Corp.'s
Registration Statement on Form S-3 filed with the Securities
and Exchange Commission on January 23, 1995, File No. 33-51775.
4.5 Indenture dated as of November 12, 1996 between Toll Corp.,
as issuer, the Registrant, as guarantor, NBD Bank, a
Michigan banking corporation, as Trustee, including form of
guarantee, is hereby incorporated by reference to
Exhibit 4.1 of the Registrant's Form 8-K dated November 6,
1996 filed with the Securities and Exchange Commission.
10.1 Revolving credit agreement, dated as of November 1, 1993 as
amended through May 8, 1996, among First Huntingdon Finance
Corp., the Registrant, PNC Bank, National Association,
CoreStates Bank, N.A., The First National Bank of Chicago,
NationsBank National Association, Bank Hapoalim B.M.,
Kleinwort Benson Limited, Mellon Bank, The Fuji Bank,
Limited, Credit Lyonnais, New York Branch, Banque Paribas,
Krieditbank N.V., Comerica Bank, Bayerische Vereinsbank AG,
New York Branch, The Industrial Bank of Japan Trust Company,
The Sanwa Bank Limited and PNC Bank, National Association,
as Agent.
10.2 Toll Brothers, Inc. Amended and Restated Stock Option Plan
(1986), as amended and restated by the Registrant's Board of
Directors on February 24, 1992 and adopted by its
shareholders on April 6, 1992, is hereby incorporated by
reference to Exhibit 19(a) of the Registrant's Form 10-Q
for the quarterly period ended April 30, 1992.
10.3 Toll Brothers, Inc. Amended and Restated Stock Purchase Plan
is hereby incorporated by reference to Exhibit 4 of the
Registrant's Registration Statement on Form S-8 filed with
the Securities and Exchange Commission on August 4, 1987,
File No. 33-16250.
10.4 Toll Brothers, Inc. Key Executives and Non-Employee
Directors Stock Option Plan (1993) is hereby incorporated by
reference to Exhibit 10.1 of the Registrant's Form 8K filed
with the Securities and Exchange Commission on May 25, 1994.
10.5 Amendment to the Toll Brothers, Inc. Key Executives and
Non-Employee Directors Stock Option Plan (1993) is hereby
incorporated by reference to Exhibit 10.2 of the
Registrant's's Quarterly Report on Form 10-Q for the quarter
ended April 30, 1995.
<PAGE>
Exhibit
Number Description
10.6 Toll Brothers, Inc. Cash Bonus Plan is hereby incorporated by
reference to Exhibit 10.2 of the Registrant's Form 8-K filed
with the Securities and Exchange Commission on May 25, 1994.
10.7 Amendment to the Toll Brothers, Inc. Cash Bonus Plan adopted
by the Board of Directors subject to shareholder approval.
10.8 Toll Brothers, Inc. Stock Option and Incentive Stock Plan
(1995) is hereby incorporated by reference to Exhibit 10.1
to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended April 30, 1995.
10.9 Amendment to the Toll Brothers, Inc. Stock Option and
Incentive Stock Plan (1995) adopted by the Board of Directors
on May 29, 1996 subject to shareholder approval.
10.10 Stock Redemption Agreement between the Registrant and Robert
I. Toll, dated October 28, 1995, is hereby incorporated by
reference to Exhibit 10.7 of the Registrants Form 10-K for
the Fiscal Year ended October 31, 1995.
10.11 Stock Redemption Agreement between the Registrant and Bruce
E. Toll, dated October 28, 1995, is hereby incorporated by
reference to Exhibit 10.8 of the Registrants Form 10-K for
the Fiscal Year ended October 31, 1995.
10.12 Agreement between the Registrant and Joel H. Rassman, dated
June 30, 1988, is hereby incorporated by reference to
Exhibit 10.8 of Toll Corp.'s Registration Statement on Form
S-1 filed with the Securities and Exchange Commission on
September 9, 1988, File No. 33-23162.
10.13 Agreement regarding sharing of office expenses, dated
May 29, 1986, among Robert Toll, Bruce Toll and the
Registrant, is hereby incorporated by reference to
Exhibit 10.8 of the Registrant's Registration Statement on
Form S-1 filed with the Securities and Exchange Commission
on July 8, 1986, File No. 33-6066.
11 Statement regarding computation of Per Share Earnings.
22 Subsidiaries of the Registrant.
24 Consent of Independent Auditors.
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter
of the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
Township of Lower Moreland, Commonwealth of Pennsylvania on
December 12, 1996.
TOLL BROTHERS, INC.
By: /s/ Robert I. Toll
-------------------------
Robert I. Toll
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Robert I. Toll Chairman of the Board December 12, 1996
Robert I. Toll of Directors and Chief
Executive Officer
(Principal Executive Officer)
/s/ Bruce E. Toll President, Chief Operating December 12, 1996
Bruce E. Toll Officer, Secretary
and Director
/s/ Zvi Barzilay Executive Vice President December 12, 1996
Zvi Barzilay and Director
/s/ Joel H. Rassman Senior Vice President, December 12, 1996
Joel H. Rassman Treasurer, Chief
Financial Officer and Director
(Principal Financial Officer)
/s/ Joseph R. Sicree Vice President and December 12, 1996
Joseph R. Sicree Chief Accounting Officer
(Principal Accounting
Officer)
/s/ Robert S. Blank Director December 12, 1996
Robert S. Blank
/s/ Richard J. Braemer Director December 12, 1996
Richard J. Braemer
/s/ Roger S. Hillas Director December 12, 1996
Roger S. Hillas
/s/ Carl B. Marbach Director December 12, 1996
Carl B. Marbach
/s/ Paul E. Shapiro Director December 12, 1996
Paul E. Shapiro
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Toll Brothers, Inc.
We have audited the accompanying consolidated balance sheets of Toll
Brothers, Inc. and subsidiaries at October 31, 1996 and 1995, and the
related consolidated statements of income, shareholders' equity, and cash
flows for each of the three years in the period ended October 31, 1996.
Our audits also included the financial statement schedule listed in the
Index at item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Toll
Brothers, Inc. and subsidiaries at October 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of
the three years in the period ended October 31, 1996, in conformity with
generally accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
December 10, 1996<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
<TABLE>
Year Ended October 31
1996 1995 1994
<S> <C> <C> <C>
Revenues:
Housing sales $759,303 $643,017 $501,822
Interest and other 1,404 3,322 2,242
-------- -------- --------
760,707 646,339 504,064
-------- -------- --------
Costs and expenses:
Land and housing construction 580,990 485,009 380,240
Selling, general and administrative 69,735 59,684 48,789
Interest 24,189 22,207 18,195
-------- -------- --------
674,914 566,900 447,224
-------- -------- --------
Income before incomd taxes 85,793 79,439 56,840
Income taxes 32,049 29,507 20,663
-------- -------- --------
Net income $ 53,744 $ 49,932 $ 36,177
======== ======== ========
Earnings per share
Primary $ 1.56 $ 1.47 $ 1.08
Fully-diluted $ 1.50 $ 1.41 $ 1.05
Weighted average number of shares
Primary 34,492 33,909 33,626
======== ======== ========
Fully-diluted 36,891 36,651 35,664
======== ======== ========
</TABLE>
See accompanying notes.
<PAGE>
CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share amounts)
October 31
1996 1995
<TABLE>
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 22,891 $ 27,772
Inventory 772,471 623,830
Property, construction and office
equipment, net 12,948 11,898
Receivables, prepaid expenses and other
assets 26,783 25,017
Mortgage notes receivable 2,833 3,940
-------- --------
$837,926 $692,457
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Loans payable $132,109 $ 59,057
Subordinated notes 208,415 221,226
Customer deposits on sales contracts 43,387 36,194
Accounts payable 42,423 31,640
Accrued expenses 58,211 46,771
Collateralized mortgage obligations payable 2,816 3,912
Income taxes payable 35,888 36,998
-------- --------
Total liabilities 523,249 435,798
-------- --------
Shareholders' equity
Preferred stock, none issued
Common stock, 33,918,606 and 33,638,026 shares
issued at October 31, 1996 and 1995, respectively 339 336
Additional paid-in capital 43,018 38,747
Retained earnings 271,320 217,576
-------- --------
Total shareholders' equity 314,677 256,659
-------- --------
$837,926 $692,457
======== ========
</TABLE>
See accompanying notes.
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Amounts in thousands)
<TABLE>
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, November 1, 1993 33,319 $333 $35,206 $131,467 $167,006
Net income 36,177 36,177
Exercise of stock options 101 1 954 955
Employee stock plan
purchases 3 38 38
------- ------ ------- -------- --------
Balance, October 31, 1994 33,423 334 36,198 167,644 204,176
Net income 49,932 49,932
Exercise of stock options 213 2 2,525 2,527
Employee stock plan
purchases 2 24 24
------- ------ ------- -------- --------
Balance, October 31, 1995 33,638 336 38,747 217,576 256,659
Net income 53,744 53,744
Exercise of stock options 276 3 4,196 4,199
Employee stock plan
purchases 5 75 75
------- ------ ------- -------- --------
Balance, October 31, 1996 33,919 $ 339 $43,018 $271,320 $314,677
======= ====== ======= ======== ========
</TABLE>
See accompanying notes.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)
Year Ended October 31
1996 1995 1994
<TABLE>
<S> <C> <C> <C>
Cash flows from operating activities:
Net income 53,744 $ 49,932 $ 36,177
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 3,306 2,943 2,687
Loss (gain) from repurchase of subordinated debt 540 (355) (616)
Deferred tax provision (benefit) 877 (476) (361)
Net realizable value provisions 1,000 3,800 4,300
Changes in operating assets and liabilities:
Increase in inventory (138,059)(118,720)(104,482)
Increase in receivables, prepaid
expenses and other assets (2,783) (3,345) (1,481)
Increase in customer deposits on sales contracts 7,193 6,123 7,622
Increase in accounts payable
and accrued expenses 22,223 8,625 22,594
(Decrease) increase in income taxes payable (1,805) 4,957 4,046
-------- ------- --------
Net cash used in operating activities (53,764) (46,516)(29,514)
-------- ------- --------
Cash flows from investing activities:
Sale (purchase) of marketable securities 3,674 (1,691)
Purchase of property and equipment, net (3,596) (2,452) (2,968)
Principal repayments of mortgage
notes receivable 1,107 684 5,308
------- ------- -------
Net cash (used in) provided by investing activities (2,489) 1,906 649
Cash flows from financing activities: ------- ------- -------
Proceeds from loans payable 173,028 160,000 23,493
Principal payments of loans payable (111,738)(121,159)(35,900)
Net proceeds from issuance of subordinated debt 55,541
Repurchase of subordinated debt (13,096) (6,256) (3,290)
Principal payments of collateralized mortgage
obligations payable (1,096) (780) (6,152)
Proceeds from stock options exercised and
employee stock plan purchases 4,274 2,551 870
------- ------- ------
Net cash provided by financing activities 51,372 34,356 34,562
------- ------- ------
Net (decrease) increase in cash and cash equivalents (4,881)(10,254) 5,697
Cash and cash equivalents, beginning of year 27,772 38,026 32,329
------- ------- -------
Cash and cash equivalents, end of year $22,891 $27,772 $38,026
======= ======= =======
Supplemental disclosures of cash flow information
Interest paid, net of amount capitalized $ 8,612 $ 7,587 $ 6,762
======= ======= =======
Income taxes paid $32,116 $24,547 $16,977
======= ======= =======
Supplemental disclosures of noncash activities
Residential inventories acquired through
seller financing $11,582 $ 2,563 $ 5,000
======= ======= =======
Income tax benefit relating to exercise of
employee stock options $ 861 $ 478 $ 124
======= ======= =======
</TABLE>
See accompanying notes.
<PAGE>
Notes to Consolidated Financial Statements
1. Significant accounting policies
Basis of presentation
The accompanying consolidated financial statements include the accounts of Toll
Brothers, Inc. (the "Company"), a Delaware corporation, and its majority-owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Income recognition
The Company is engaged in the development, construction and sale of residential
housing. Revenues and cost of sales are recorded at the time each home sale is
closed and title and possession have been transferred to the buyer. Closing
normally occurs shortly after construction is substantially completed.
Cash and cash equivalents
Liquid investments with original maturities of three months or less are
classified as cash equivalents. The carrying value of these investments
approximates fair market value.
Property, construction and office equipment
Property, construction and office equipment are recorded at cost and are stated
net of accumulated depreciation of $16,159,000 and $14,079,000 at October 31,
1996 and 1995, respectively. Depreciation is recorded by using the straight-
line method over the estimated useful lives of the assets.
Inventories
Inventories are stated at the lower of cost or estimated net realizable value.
In addition to direct land acquisition, land development and housing
construction costs, costs include interest, real estate taxes and direct
overhead costs related to development and construction, which are capitalized
to inventories during the period beginning with the commencement of
development and ending with the completion of construction.
Land, land development and related costs are amortized to cost of homes closed
based upon the total number of homes to be constructed in each community.
Housing construction and related costs are charged to cost of homes closed under
the specific identification method.
The Company capitalizes project marketing costs and charges them against income
as homes are closed.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS 121").
The new rules establish standards for the recognition and measurement of
impairment losses on long-lived assets. The Company will adopt FAS 121 in the
first quarter of fiscal 1997 and does not believe that it will have a
material effect on its financial position or results of operations
Income taxes
Income taxes are provided using the liability method prescribed by Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". This
Statement requires a liability approach for measuring deferred taxes based on
temporary differences between the financial statement and tax bases of assets
and liabilities existing at each balance sheet date using enacted tax rates
for years in which taxes are expected to be paid or recovered.
Earnings per share
The computation of primary and fully-diluted earnings per share is based on the
weighted average number of shares of common stock and common stock equivalents
outstanding. In addition, the computation of fully-diluted earnings per share
assumes the conversion of the Company's 4 3/4% Convertible Senior Subordinated
Notes due 2004 at $21.75 per share for the period that the notes were
outstanding, although the closing price of the Company's common stock on the New
York Stock Exchange on October 31, 1996 was $17.125 per share.
Acquisition
In August 1995, the Company acquired certain assets of Geoffrey H. Edmunds &
Associates, a privately owned luxury homebuilder located in Scottsdale,
Arizona. The Company, through this acquisition, obtained ownership or control
of 773 lots in the Scottsdale area. The acquisition took place in phases
with the merger of the Edmunds organization completed in April 1996. The
acquisition price was not material to the financial position of the Company.
2. Inventory
Inventory consists of the following(amounts in thousands):
<TABLE>
October 31
1996 1995
<S> <C> <C>
Land and land development costs $204,527 $182,790
Construction in progress 491,552 377,456
Sample homes 40,017 32,448
Land deposits and costs of
future development 16,243 13,555
Loan assets acquired for
future development 4,106 5,157
Deferred marketing and
financing costs 16,026 12,424
-------- --------
$772,471 $623,830
======== ========
</TABLE>
Construction in progress includes the cost of homes under
construction, land and land development costs and the carrying costs of lots
that have been substantially improved.
Loan assets acquired for future development represent loans secured by liens on
real property purchased from various banks. If the Company acquires title to
the property, the cost of the loan asset is reclassified to land and land
development costs.
For the years ended October 31, 1996, 1995 and 1994, the Company provided for
inventory writedowns to net realizable value and the expensing of costs which
it believed not to be recoverable of $4,611,000, $5,366,000 and $6,957,000,
respectively.
Interest capitalized in inventories is charged to interest expense when the
related inventories are closed. Interest incurred, capitalized and expensed for
the three years ended October 31, 1996 is as follows(amounts in thousands):
1996 1995 1994
<TABLE>
<S> <C> <C> <C>
Interest capitalized,
beginning of year $43,142 $39,835 $38,270
Interest incurred 27,695 25,780 21,701
Interest expensed (24,189) (22,207) (18,195)
Write-off to cost
and expenses (457) (266) (1,941)
Interest capitalized, ------- ------- -------
end of year $46,191 $43,142 $39,835
======= ======= =======
</TABLE>
3. Loans payable and subordinated notes
Loans payable consists of the following(amounts in thousands):
October 31,
1996 1995
<TABLE>
<S> <C> <C>
Revolving credit facility borrowing $50,000 $52,000
Term loan due July 2001 68,000
Other 14,109 7,057
-------- -------
$132,109 $59,057
======== =======
</TABLE>
The Company has a $250,000,000 unsecured revolving credit facility with fifteen
banks which extends through June 2000. The facility reduces by 50% in June 1999
unless extended as provided for by the agreement. Interest is payable on
short-term borrowing at 1.10% above the Eurodollar rate or at other specified
variable rates as selected by the Company from time to time. The Company
fixed the interest rate on $50,000,000 of borrowing at 7.54% until June 2000.
As of October 31, 1996, letters of credit and obligations under escrow
agreements of $26,127,000, were outstanding. The agreement contains various
covenants, including financial covenants related to consolidated
shareholders' equity, indebtedness and inventory. The agreement requires that
the Company maintain a minimum consolidated shareholders' equity which
restricts the payment of cash dividends and the repurchase of Company stock
to approximately $73,678,000 as of October 31, 1996.
In July 1996, the Company borrowed $68,000,000 from eight banks for a period
of five years at a fixed interest rate of 7.91%. The agreement contains the
same financial covenants as the Company's revolving credit facility.
The carrying value of the loans payable approximates the estimated fair market
value
Subordinated notes consists of the following(amounts in thousands):
<TABLE>
October 31,
1996 1995
<C> > <C> <C>
10 1/2% Senior Subordinated Notes, due March 15,2002 $ 87,800 $ 94,500
9 1/2% Senior Subordinated Notes, due March 15,2003 69,960 73,960
4 3/4% Convertible Senior Subordinated Notes,
due January 15, 2004 50,999 53,199
Bond discount (344) (433)
-------- --------
$208,415 $221,226
======== ========
</TABLE>
The 10 1/2% notes are subordinated to all senior indebtedness of the Company.
These notes are redeemable in whole or in part, at the option of the Company
on or after March 15, 1997 at various prices. The indenture restricts certain
payments by the Company including cash dividends and the repurchase of
Company stock.
The 9 1/2% notes are subordinated to all senior indebtedness of the Company.
The notes are redeemable in whole or in part, at the option of the Company on or
after March 15, 1998 at various prices. The indenture restricts certain
payments by the Company including cash dividends and the repurchase of
Company stock.
The 4 3/4% convertible notes are subordinated to all senior indebtedness of the
Company. The notes are convertible into shares of common stock of the
Company at the option of the noteholders at any time prior to maturity at a
conversion price of $21.75 per share. The notes are redeemable, in whole or
in part, at the option of the Company on or after January 15, 1997 at various
prices.
In November 1996, the Company issued $100,000,000 of 8 3/4% senior
subordinated notes due in 2006. The notes, redeemable in whole or in part,
at the option of the Company on or after November 15, 2001 at various prices,
are subordinated to all senior indebtedness of the Company and have the same
restrictions as to the payment of dividends and the repurchase of Company
stock as the 9 1/2% notes.
During fiscal 1996, 1995 and 1994, the Company repurchased $12,900,000,
$6,801,000 and $4,040,000, respectively, of the various issues of notes in
open market purchases. The gains and losses from the repurchases were
immaterial and included in other income.
As of October 31, 1996, the aggregate fair market value of all the outstanding
subordinated notes, based upon their quoted market prices, was approximately
$214,574,000.
The annual aggregate maturities of the Company's loans and notes during the
next five fiscal years are: 1997 - $8,941,000; 1998 -$ 2,944,000; 1999 -
$353,000; 2000 - $51,871,000 and 2001 - $68,000,000.
4. Shareholders' equity
The Company's authorized capital stock consists of 40,000,000 shares of
Common Stock, $.01 par value per share, and 1,000,000 shares of Preferred
Stock, $.01 par value per share. The Company's Certificate of Incorporation,
as amended, authorizes the Board of Directors to increase the number of
authorized shares of Common Stock to 60,000,000 shares and the number of
shares of authorized Preferred Stock to 15,000,000 shares.
Stock option plans
The Company's three stock option plans for employees, officers and non-employee
directors provide for the granting of incentive stock options and nonstatutory
options with a term of up to ten years at a price not less than the market
price of the stock at the date of grant. The Company's Stock Option and
Incentive Stock Plan (1995) provides for automatic increases each January 1
in the number of shares available for grant by 2% of the number of shares
outstanding (including treasury shares). The 1995 Plan restricts the number
of options that may be granted in a calendar year to the lesser of the number
of shares available for grant or 2,500,000 shares.
The following summarizes stock option activity for the three plans during
the three years ended October 31, 1996:
<TABLE>
Number Option Price
of Shares Per Share
<S> <C> <C>
Outstanding,
November 1, 1993 1,031,750 $ 3.25 - $15.13
Granted 729,200 15.81 - 19.00
Exercised (106,425) 3.25 - 12.75
Cancelled (41,400) 10.75 - 15.88
Outstanding,
October 31, 1994 1,613,125 $ 3.25 - $19.00
Granted 1,022,200 9.94 - 11.00
Exercised (212,775) 3.25 - 15.88
Cancelled (80,350) 9.94 - 15.88
Outstanding,
October 31, 1995 2,342,200 $ 3.25 - $19.00
Granted 843,450 17.31 - 20.25
Exercised (276,000) 3.25 - 15.88
Cancelled (37,825) 9.94 - 20.25
Outstanding
October 31, 1996 2,871,825 $ 3.25 - $20.25
Exercisable,
October 31, 1996 1,751,800 $ 3.25 - $19.00
</TABLE>
Options available for grant at October 31, 1996, 1995 and 1994 under all the
plans were 2,899,000, 3,260,000, and 2,537,000, respectively.
<PAGE>
Bonus Award Shares
Under the terms of the Company's Cash Bonus Plan covering the Chairman of the
Board and Chief Operating Officer (the "Executives"), each Executive is
entitled to receive cash bonus awards based upon the pretax earnings and
shareholders' equity of the Company. In May 1996, the Board of Directors and
the Executives agreed, subject to shareholder approval, that any bonus
payable under the plan for each of the three fiscal years ended
October 31, 1998 shall be made (except for specified conditions) in shares of
the Company's common stock using the value of the stock as of the date
of the agreement ($17.125 per share). On October 31, 1996, the closing
price of the Company's common stock on the New York Stock Exchange was
$17.125. The shares will be allocated from the Company's Stock Option and
Incentive Stock Plan (1995). The Executives will receive 66,975 shares each
for their 1996 bonus award if the shareholders approve the amendments to the
Cash Bonus Plan and the Stock Option and Incentive Stock Plan (1995).
Employee stock purchase plan
The Company's Employee Stock Purchase Plan enables substantially all employees
to purchase the Company's common stock for 95% of the market price of the
stock on specified offering dates. The plan, which terminates in
December 2001, provides that 100,000 shares be reserved for purchase. As of
October 31, 1996, a total of 65,780 shares were available for issuance.
The following summarizes stock purchases under this plan during the three
years ended October 31, 1996:
Number of Price
Shares Range
<TABLE>
<S> <C> <C> <C>
1994 3,124 $10.81 - $17.10
1995 1,942 9.62 - 17.81
1996 4,580 15.68 - 21.73
</TABLE>
Redemption of Common Stock
In order to help provide for an orderly market in the Company's common
stock in the event of the death of either Robert I. Toll or Bruce E. Toll
(the "Tolls"), or both of them, the Company and the Tolls have entered into
agreements in which the Company has agreed to purchase from the estate of
each of the Tolls $10,000,000 of the Company's common stock (or a lesser
amount under certain circumstances) at a price equal to the greater of fair
market value (as defined) or book value (as defined).
Further, the Tolls have agreed to allow the Company to purchase $10,000,000
of life insurance on each of their lives. In addition, the Tolls granted the
Company an option to purchase up to an additional $30,000,000 (or a lesser
amount under certain circumstances) of common stock from each of their
estates. The agreements expire in October 2005.
<PAGE>
5. Income taxes
The provision for income taxes includes federal and state taxes.
Substantially all of the difference between the effective tax rate
(37.4%, 37.1% and 36.4% for 1996, 1995 and 1994, respectively) used in these
provisions and the statutory federal tax rate of 35% was due to state taxes,
net of federal tax benefit, and in 1994, the recalculation of the deferred
tax balances due to an increase in the federal statutory rate, a decrease in
the estimated state tax rate, and the effect of nontaxable income
generated from short-term investments.
The provisions for income taxes for the three years ended October 31, 1996
were as follows (amounts in thousands):
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Federal $29,013 $27,586 $19,020
State 3,036 1,921 1,643
$32,049 $29,507 $20,663
Current $31,172 $29,983 $21,024
Deferred 877 (476) (361)
$32,049 $29,507 $20,663
</TABLE>
The components of income taxes payable as of October 31, 1996 and 1995
were (amounts in thousands):
<TABLE>
1996 1995
<S> <C> <C>
Current $21,999 $23,986
Deferred 13,889 13,012
------- -------
$35,888 $36,998
======= =======
</TABLE>
The components of net deferred taxes payable as of October 31, 1996 and
1995 were (amounts in thousands):
<TABLE>
1996 1995
<S> <C> <C>
Deferred tax liabilities
Capitalized interest $16,203 $16,776
Deferred expenses 4,434 2,955
Other 314 225
------- -------
Total 20,951 19,956
------- -------
Deferred tax assets
Net realizable value
reserves 3,640 3,699
Inventory valuation
differences 1,556 1,780
Accrued expenses
deductible when paid 522 791
Other 1,344 674
------- -------
Total 7,062 6,944
------- -------
Net deferred tax liability $13,889 $13,012
======= =======
6. Employee retirement plan
The Company maintains a salary deferral savings plan covering substantially all
employees. The plan provides for Company contributions totaling 2% of all
eligible compensation, plus 2% of eligible compensation above the social
security wage base, plus matching contributions of up to 2% of eligible
compensation of employees electing to contribute via salary deferrals.
Company contributions with respect to the plan totaled $1,061,000, $851,000
and $770,000, for the years ended October 31, 1996, 1995 and 1994, respectively.
7. Commitments and contingencies
As of October 31, 1996, the Company had agreements to purchase land and
improved home sites for future development with purchase prices aggregating
approximately $193,733,000 of which $9,802,000 had been paid or deposited.
Purchase of the properties is contingent upon satisfaction of certain
requirements by the Company and the sellers.
As of October 31, 1996, the Company had agreements of sale outstanding to
deliver 1,367 homes with an aggregate sales value of approximately
$526,194,000. As of that date, the Company has arranged through a number of
outside mortgage lenders to provide approximately $174,000,000 of mortgages
related to those sales agreements.
In August 1996, the Company entered into an agreement with two banks to borrow
$50,000,000 in March 1997, at a fixed interest rate of 7.82% for a period of
five years. The agreement contains covenants similar to the Company's
revolving credit facility.
The Company is involved in various claims and litigation arising in the ordinary
course of business. The Company believes that the disposition of these
matters will not have a material effect on the business or on the financial
condition of the Company.
<PAGE>
Summary Consolidated Quarterly Financial Data (Unaudited)
(Amounts in thousands, except per share data)
</TABLE>
<TABLE>
Three Months Ended
Oct. 31 July 31 April 30 Jan. 31
FISCAL 1996:
<S> <C> <C> <C> <C>
Revenues $260,351 $212,778 $145,508 $142,070
Income before income taxes $ 35,216 $ 24,609 $ 12,753 $ 13,215
Net income $ 22,085 $ 15,413 $ 7,978 $ 8,268
Earnings per share
Primary $ .64 $ .45 $ .23 $ .24
Fully-diluted $ .61 $ .43 $ .23 $ .23
Weighted average number of
shares outstanding
Primary 34,479 34,435 34,506 34,547
Fully-diluted 36,833 36,780 36,929 37,023
FISCAL 1995:
Revenues $199,606 $186,928 $137,488 $122,317
Income before income taxes $ 27,151 $ 24,360 $ 15,081 $ 12,847
Net income $ 16,986 $ 15,242 $ 9,445 $ 8,259
Earnings per share
Primary $ .49 $ .45 $ .28 $ .25
Fully-diluted $ .47 $ .43 $ .27 $ .24
Weighted average number of
shares outstanding
Primary 34,326 34,074 33,707 33,527
Fully-diluted 36,774 36,605 36,153 36,009
</TABLE>
<PAGE>
TOLL BROTHERS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Amounts in thousands)
<TABLE>
Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Description of Period Expenses Accounts Deductions of Period
(A)
Net realizable value
reserves for inventory
of land and land
development costs:
<S> <C> <C> <C> <C>
Year ended
October 31, 1994:
Delaware $1,000 $1,000
Massachusetts $2,759 300 $1,393 1,666
New Jersey 3,056 3,000 367 5,689
Pennsylvania 1,247 1,247
Total $7,062 $4,300 $3,007 $8,355
Year ended
October 31, 1995:
Delaware $1,000 $ 320 $ 680
Massachusetts 1,666 $1,000 270 2,396
New Jersey 5,689 2,800 1,131 7,358
Total $8,355 $3,800 $1,721 $10,434
Year ended
October 31, 1996:
Delaware $ 680 $ 183 $ 497
Massachusetts 2,396 1,698 698
New Jersey 7,358 $1,000 150 8,208
Total $10,434 $1,000 $2,031 $9,403
</TABLE>
(A) Represents amount of reserves utilized, which is recorded at the time
that affected homes are closed.
EXHIBIT 1
AMENDED AND RESTATED ARTICLES I THROUGH XI
OF THE REVOLVING CREDIT AGREEMENT
(Cover page, table of contents,
first paragraph and recitals
are also attached for convenience)<PAGE>
REVOLVING CREDIT AGREEMENT
by and among
FIRST HUNTINGDON FINANCE CORP.,
TOLL BROTHERS, INC.
and its Subsidiaries
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, as Agent
Dated as of November 1, 1993, as Amended
on May 8, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS 1
1.01 Certain Definitions 1
1.02 Construction 35
1.03 Accounting Principles 35
ARTICLE II CREDIT FACILITIES 36
2.01 Commitments to Make Facility A Loans 36
2.02 Nature of Banks' Obligations with
Respect to Facility A Loans 36
2.03 Facility A Commitment Fee 36
2.04 Extension by Facility A Banks of the
Mandatory Reduction Date
or Expiration Date 37
(a) Mandatory Reduction Date 37
(b) Expiration Date 37
(c) Mandatory Reduction Date or
Expiration Date 38
2.05 Intentionally Omitted. 38
2.06 Facility A Loan Requests 38
2.07 Making Facility A Loans 39
2.08 Facility A Notes 39
2.09 Use of Facility A Proceeds 40
2.10 Letter of Credit Sublimit 40
(a) Letter of Credit Requests 40
(b) Documentation; Notices to Agent 40
(c) Letter of Credit Fees 41
2.11 Escrow Agreement Sublimit 41
(a) Escrow Agreement Requests 41
(b) Documentation; Notices to Agent 42
(c) Escrow Agreement Fees 42
2.12 Reimbursement of Advances on Letters of
Credit or Escrow Agreements 43
2.13 Participations in Letters of Credit and
Escrow Agreements; Responsibility of
Issuing and Escrow Banks 43
2.14 Reduction of Facility A Commitments 45
(a) Pro Rata Reduction 45
(b) Automatic Reduction on Mandatory
Reduction Date 46
2.15 Increase in Facility A Commitments 48
(a) Existing Facility A Banks 48
(b) New Facility A Banks 48
(c) Limitations on Increases 49
2.16 Requests for Facility B Loans 49
(a) Facility B Loan Requests 49
2.17 Offers 50
(a) Facility A Bank Offers 50
(b) Other Bank Offers 51
2.18 Acceptance of Offers 51
2.19 Borrowing 55
(a) Notice of Borrowing 55
(b) Delivery of Facility B Notes 56
2.20 Renewal of Option 56
2.21 Fees 56
2.22 Prepayment Penalty 56
2.23 Interest After Default 56
2.24 Use of Proceeds 57
2.25 Reduction of Commitments 57
(a) Bank Exclusion Event 57
(b) Bank Extension or Mutual Agreement 59
ARTICLE III FACILITY A INTEREST RATES 60
3.01 Interest Rate Options 60
(a) Revolving Credit Interest
Rate Options 60
(b) Facility A Term Loan Interest Rate
Options 62
(c) Rate Quotations 63
3.02 Interest Periods 63
3.03 Interest After Default 64
3.04 CD Rate or Euro-Rate Unascertainable 64
3.05 Selection of Interest Rate Options 65
ARTICLE IV PAYMENTS 65
4.01 Payments 65
4.02 Pro Rata Treatment of Banks 66
4.03 Interest Payment Dates 67
4.04 Voluntary Prepayments 67
4.05 Mandatory Prepayments 69
(a) Facility A Commitments or
Borrowing Base Exceeded 69
(b) Application Among Interest
Rate Options; Indemnity 70
(c) Premiums and Adjustments Upon
Prepayment of Facility A Term Loans 70
4.06 Additional Compensation in Certain
Circumstances 70
(a) Increased Costs or Reduced Return
Resulting From Taxes, Reserves,
Capital Adequacy Requirements,
Expenses, Etc 70
(b) Indemnity 71
(c) Reduction in Indemnity 72
(d) Replacement of a Bank 72
ARTICLE V REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE
COVENANTS 72
5.01 Representations and Warranties 72
(a) Organization and Qualification 73
(b) Capitalization and Ownership 73
(c) Consolidated Subsidiaries 73
(d) Power and Authority 74
(e) Validity and Binding Effect 74
(f) No Conflict 74
(g) Litigation 74
(h) Title to Properties 74
(i) Financial Statements 75
(j) Margin Stock 75
(k) Full Disclosure 75
(l) Taxes; Payment of Liabilities 76
(m) Consents and Approvals 76
(n) No Event of Default; Compliance
with Instruments 76
(o) Patents, Trademarks, Copyrights,
Licenses, Etc 76
(p) Insurance 77
(q) Compliance with Laws 77
(r) Material Contracts 77
(s) Investment Companies 78
(t) Plans and Benefit Arrangements 78
(u) Employment Matters 79
(v) Environmental Matters 79
(w) Senior Debt Status 80
(x) Maintenance of Properties and
Leases 81
(y) Visitation Rights 81
(z) Keeping of Records and Books
of Account 81
(aa) Use of Proceeds 81
(bb) Intercompany Loans, Loans and
Advances to the Borrower 81
(cc) Appraisals 82
(dd) Collateral Documents 83
(ee) Mortgage Subsidiaries 83
(ff) Senior Indebtedness Ratings 83
5.02 Updates to Schedules 84
ARTICLE VI CONDITIONS OF LENDING, ISSUING LETTERS OF CREDIT
OR ENTERING INTO ESCROW AGREEMENTS 85
6.01 Closing Date 85
6.02 Each Additional Loan, Letter of Credit
or Escrow Agreement 87
ARTICLE VII SECURITY 87
7.01 Granting of Security 87
(a) Creation of Liens 87
(b) Delivery and Recordation
of Documents 88
(c) Power of Attorney 88
7.02 Security Events 89
7.03 Release of Liens 89
ARTICLE VIII NEGATIVE COVENANTS 89
8.01 Negative Covenants 89
(a) Indebtedness 90
(b) Affiliate Transactions 91
(c) Guaranties 91
(d) Loans and Investments 91
(e) Loans; Permitted Purchase
Money Loans; Letters of Credit
and Permitted Additional Senior
Indebtedness 92
(f) Liquidations, Mergers,
Consolidations, Acquisitions 93
(g) Dispositions of Assets or
Subsidiaries 94
(h) Subsidiaries, Partnerships and
Joint Ventures 94
(i) Continuation of or Change
in Business 95
(j) Change in Control 95
(k) Changes in Subordinated
Loan Documents 95
(l) Plans and Benefit Arrangements 95
(m) Changes in Organizational Documents 96
(n) Development Limitations 97
(o) Senior Leverage 99
(p) Mortgage Subsidiaries Leverage 99
(q) Senior Leverage Plus Contingent
Liabilities 99
(r) Subordinated Debt to Equity 99
(s) Minimum Adjusted
Shareholders' Equity 99
(t) Incorporation by Reference 99
8.02 Reporting Requirements 99
(a) Financial Statements 100
(b) Compliance Certificate;
Joinders; Updates to Schedules
of the Borrower 101
(c) Project Reports 101
(d) Purchase Money Loan Reports 101
(e) Environmental Certificates 102
(f) Subordinated Indebtedness
Documentation 102
(g) Notice of Default 102
(h) Notice of Litigation 102
(i) Notices Relating to Permitted
Additional Senior Indebtedness 102
(j) Certain Events 103
(k) Other Reports and Information 103
(l) Notices Regarding Plans and Benefit
Arrangements 103
ARTICLE IX DEFAULT 105
9.01 Events of Default 105
9.02 Consequences of Event of Default 108
9.03 Notice of Sale 110
ARTICLE X THE AGENT 110
10.01 Appointment 110
10.02 Delegation of Duties 111
10.03 Nature of Duties; Independent Credit
Investigation 111
10.04 Actions in Discretion of Agent;
Instructions from the Banks 111
10.05 Reimbursement and Indemnification
of Agent by the Borrower 112
10.06 Exculpatory Provisions 112
10.07 Reimbursement and Indemnification of
Agent by Banks 113
10.08 Reliance by Agent 113
10.09 Notice of Default 114
10.10 Notices; Litigation 114
10.11 Banks in Their Individual Capacities 115
10.12 Holders of Notes 115
10.13 Equalization of Banks 115
10.14 Successor Agent 116
10.15 Agent's Fee 116
10.16 Availability of Funds 116
10.17 Calculations 117
10.18 Beneficiaries 117
ARTICLE XI MISCELLANEOUS 117
11.01 Modifications, Amendments or Waivers 117
11.02 No Implied Waivers; Cumulative
Remedies; Writing Required 119
11.03 Reimbursement and Indemnification
of Banks by the Borrower; Taxes 119
11.04 Holidays 120
11.05 Funding by Branch, Subsidiary or
Affiliate 120
(a) Notional Funding 120
(b) Actual Funding 120
11.06 Notices 121
11.07 Severability 121
11.08 Governing Law 121
11.09 Prior Understanding 121
11.10 Duration; Survival 122
11.11 Successors and Assigns; Assignment and
Participations; Additional Banks 122
(a) Successors and Assigns 122
(b) Assignments and Participations 122
(c) Additional Bank 123
11.12 Joinder of Guarantors 125
11.13 Confidentiality 126
11.14 Counterparts 126
11.15 Exceptions 126
11.16 Consent to Forum; Waiver of Jury Trial 126
11.17 Tax Withholding Clause 126
11.18 Existing Agreement 127
11.19 Pari Passu Treatment of Loans 127
<PAGE>
SCHEDULES
SCHEDULE 1.01(C) COMMITMENTS OF BANKS
SCHEDULE 1.01(E EXISTING LETTERS OF CREDIT AND ESCROW
AGREEMENTS
SCHEDULE 1.01(P) PERMITTED LIENS
SCHEDULE 1.01(Q) QUALIFIED RATING AGENCIES; QUALIFIED RATINGS;
COMPANY DEBT RATING
SCHEDULE 5.01(c) SUBSIDIARIES
SCHEDULE 5.01(t) EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 5.01(v) ENVIRONMENTAL DISCLOSURES
SCHEDULE 8.02(a)(ii) PERMITTED OTHER INDEBTEDNESS
SCHEDULE 8.02(a)(iii) PERMITTED SUBORDINATED INDEBTEDNESS
EXHIBITS
EXHIBIT A ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT B ENVIRONMENTAL CERTIFICATE
EXHIBIT C GUARANTY AND SURETYSHIP AGREEMENT
EXHIBIT D INDEMNITY AGREEMENT
EXHIBIT E(1) FACILITY A NOTE
EXHIBIT E(2) FACILITY B NOTE
EXHIBIT F(1) FACILITY A LOAN REQUEST FORM
EXHIBIT F(2) FACILITY B LOAN REQUEST FORM
EXHIBIT G OPINION OF COUNSEL
EXHIBIT H EXAMPLE OF BORROWING BASE COMPUTATION
EXHIBIT I INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT J APPRAISERS
EXHIBIT K GUARANTOR JOINDER
EXHIBIT L COMPLIANCE CERTIFICATE
EXHIBIT M(1) BANK JOINDER
EXHIBIT M(2) NEW BANK INFORMATION PACKAGE
EXHIBIT N CONFIRMATION OF EXPOSURE
EXHIBIT O EXAMPLE OF COMPUTATION OF TERM LOAN
PREPAYMENT PREMIUM
EXHIBIT P COLLATERAL SHARING AGREEMENT
EXHIBIT Q(1) FACILITY A BANK OFFER
EXHIBIT Q(2) FACILITY A BANK ACCEPTANCE
EXHIBIT Q(3) EXAMPLE OF FACILITY B TERM LOAN ACCEPTANCE
PROCEDURES
EXHIBIT Q(4) FACILITY B BORROWING NOTICE
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is dated as of November 1,
1993, and is made by and among FIRST HUNTINGDON FINANCE CORP., a
Delaware corporation (the "Borrower"), TOLL BROTHERS, INC., a
Delaware corporation ("Company") and the other GUARANTORS (as
hereinafter defined), the BANKS (as hereinafter defined), and PNC
BANK, NATIONAL ASSOCIATION, in its capacity as agent for the
Banks under this Agreement (hereinafter referred to in such
capacity as the "Agent").
WITNESSETH:
WHEREAS, the Borrower has requested the Banks to provide
revolving credit and term loan facilities to the Borrower; and
WHEREAS, the credit facilities shall be used to make loans
or advances to the Guarantors or to provide letters of credit or
escrow agreements on behalf of the Guarantors; and
WHEREAS, the Banks are willing to provide such credit upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, in consideration of
their mutual covenants and agreements hereinafter set forth and
intending to be legally bound hereby, covenant and agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. In addition to words and
terms defined elsewhere in this Agreement, the following words
and terms shall have the following meanings, respectively, unless
the context hereof clearly requires otherwise:
Additional Facility A Bank shall have the meaning
given to such term in Section 11.11(c).
Additional Facility A Bank Treasury Rate Ceiling
shall mean the rate computed pursuant to Paragraph (B) of the
definition of Treasury Rate with respect to an Additional
Facility A Bank which elects to make a Facility A Term Loan
pursuant to Section 11.11(c)(D)(1). The interest rate charged by
such Additional Facility A Bank on such Facility A Term Loan may
not exceed the Additional Facility A Bank Treasury Rate Ceiling.
Adjusted Category 2 Borrowing Base Assets shall
mean the Category 2 Borrowing Base Assets reduced (but not below
zero) by the following amount (provided such amount is a positive
number): (A) the sum of Category 2 Borrowing Base Assets and
Category 3 Borrowing Base Assets, minus (B) two thirds (2/3) of
the sum of Category 1 Borrowing Base Assets, Category 2 Borrowing
Base Assets and Category 3 Borrowing Base Assets, and minus
(C) Category 3 Borrowing Base Assets.
Adjusted Category 3 Borrowing Base Assets shall
mean the Category 3 Borrowing Base Assets reduced (but not below
zero) by the difference between the following amounts (provided
such difference is a positive number): (A) the sum of Category 2
Borrowing Base Assets and Category 3 Borrowing Base Assets, minus
(B) two thirds (2/3) of the sum of Category 1 Borrowing Base
Assets, Category 2 Borrowing Base Assets and Category 3 Borrowing
Base Assets.
Adjusted Consolidated Senior Liabilities shall
mean Consolidated Senior Liabilities plus 50% of Consolidated
Contingent Liabilities.
Adjusted Shareholders' Equity shall mean as of any
date of determination Shareholders' Equity less the amount, if
any, by which the Mortgage Subsidiaries' Adjusted Shareholders'
Equity as of such date exceeds $20,000,000.
Adjustment Amount shall have the meaning assigned
to such term in Section 2.18.
Affiliate as to any Person shall mean any other
Person (i) which directly or indirectly controls, is controlled
by, or is under common control with such Person, (ii) which
beneficially owns or holds 20% or more of any class of the voting
stock of such Person, or (iii) 20% or more of the voting stock
(or in the case of a person which is not a corporation, 20% or
more of the equity interest) of which is beneficially owned or
held, directly or indirectly, by such Person. Control, as used
herein, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, including the power to
elect a majority of the directors or trustees of a corporation or
trust, as the case may be.
Agent shall mean PNC Bank, National Association
and its successors.
Agent's Fee shall have the meaning assigned to
that term in Section 10.15 hereof.
Aggregate Facility A Credit Exposure shall mean as
of any date the sum of each of the amounts described in (A)
through (C) below outstanding on such date: (A) the aggregate
outstanding principal balance of the Facility A Loans outstanding
on such date, plus (B) the aggregate undrawn face amount of the
Letters of Credit issued pursuant to Section 2.10, plus (C) the
obligations under the Escrow Agreements entered into pursuant to
Section 2.11. It is acknowledged that clauses (B) and (C)
exclude the undrawn face amount of Letters of Credit and
obligations under Escrow Agreements which Borrower has Cash
Collateralized.
Agreement shall mean this Credit Agreement as the
same may be supplemented or amended from time to time including
all schedules and exhibits hereto.
Agreement of Sale shall mean a written agreement
with a Person, which is not an Affiliate of the Company or any
Consolidated Subsidiary of the Company, for the sale of a unit
fully executed by all parties to such agreement which shall be in
form and substance satisfactory to Agent, which shall include no
contingency for the purchaser selling another residence, which
shall be accompanied by a non-refundable (except on terms set
forth in such agreement or as may be prevented by applicable law)
deposit equal to the lesser of (x) ten percent (10%) of the
purchase price of the unit sold, (y) the difference between the
purchase price set forth in such agreement and the amount of the
mortgage contingency set forth in such agreement (at least one-half of which
deposit shall have been paid in cash), and (z) the
maximum amount of deposit which applicable Law permits the seller
of such unit to retain if the closing for the sale of such unit
does not occur, and which shall provide that the purchase price
shall be paid in cash or by title company check or by certified
or bank check at or before the closing of the sale (such cash or
check may be obtained by the buyer from a loan provided by the
seller or an Affiliate of the seller), the date of which shall be
set forth in such agreement. For the purpose of clause (z)
above, applicable Law shall be deemed to prohibit seller from
retaining a deposit if it creates a presumption that the amount
of such deposit is unreasonable and as such may not be retained
by the seller.
Amount to be Collateralized shall have the meaning
assigned to such term in Section 2.14(b)(iii).
Assessment Rate for any day shall mean the rate
per annum (rounded upward to the nearest 1/100 of 1%) as
determined by the Agent in accordance with its usual procedures
(which determination shall be conclusive absent manifest error)
to be the annual assessment rate in effect on such day which is
payable by a member of the Bank Insurance Fund classified as
well-capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the
meaning of 12 C.F.R. Section 327.3(d) (or any successor provision) to
the Federal Deposit Insurance Corporation (or any successor) for
such Corporation's (or such successor's) insuring time deposits
at offices of such institution in the United States. The CD Rate
shall be adjusted automatically as of the effective date of each
change in the Assessment Rate.
Assignment and Assumption Agreement shall mean an
Assignment and Assumption Agreement by and among a Purchasing
Bank, the Transferor Bank and the Agent, as Agent and on behalf
of the remaining Banks, substantially in the form of Exhibit A
hereto.
Assumed Joint Venture Loans shall mean loan
obligations of a Consolidated Subsidiary other than the Company
in favor of a Person which is not a Loan Party or an Affiliate of
a Loan Party secured by assets of such Consolidated Subsidiary
provided that (i) such Consolidated Subsidiary is not wholly
owned by the other Loan Parties; (ii) at the time the Loan
Parties acquired their interest in such Consolidated Subsidiary
such loans existed and were secured by such assets; and (iii) the
recourse for such loans is limited to such Consolidated
Subsidiary and any refinancing of such loans and any new loans
entered into by such Consolidated Subsidiary provided that with
respect to such loans, refinancings thereof and new loans (A) the
aggregate amount thereof shall not exceed the amount of the loans
which existed at the time the Loan Parties acquired their
interest in such Consolidated Subsidiary, (B) such loans,
refinancings and new loans shall not be secured by any assets of
such Consolidated Subsidiary other than those which secured the
loans which existed at the time the Loan Parties acquired such
interest, and (C) at least 80% of the amount thereof shall be
provided by the same lenders which provided the loans which
existed at the time the Loan Parties acquired such interest.
Assumed Purchase Money Loans shall mean loans
secured by assets purchased by a Consolidated Subsidiary and
assumed or entered into by such Consolidated Subsidiary on the
date of purchase provided that (i) the amount of such loans does
not exceed the purchase price thereof and (ii) recourse for such
loans is limited to the Consolidated Subsidiary; and any
amendment, modification, extension or refinancing of such loans
provided that with respect to the loans, as amended, modified,
extended, or refinanced (A) the aggregate amount thereof shall
not exceed the amount of the loans which existed at the time the
Consolidated Subsidiary purchased such assets, (B) such loans and
refinancings shall not be secured by any assets of such
Consolidated Subsidiary other than those initially purchased by
such Consolidated Subsidiary, and (C) at least 80% of the amount
thereof shall be provided by the same lenders which provided the
loans which existed at the time the Consolidated Subsidiary
purchased such assets.
Authorized Officer shall mean those individuals
designated by written notice to the Agent from the applicable
Loan Party, authorized to execute notices, reports and other
documents required hereunder. The Loan Parties may amend such
list of Persons from time to time by giving written notice of
such amendment to the Agent.
Bank Exclusion Event shall occur with respect to
any Bank if (A) such Bank becomes subject to the control of an
Official Body, or (B) all of the following shall occur (i) such
Bank breaches its obligation to make a Loan, issue or participate
in any Letter of Credit or enter into or participate in any
Escrow Agreement pursuant to Sections 2.10 and 2.11 hereof,
(ii) a Simple Majority of the Banks requests that such Bank be
excluded pursuant to Section 2.25 hereof, and (iii) Borrower
agrees to exclude such Bank and reduce or terminate its
Commitments.
Bank to be Removed shall have the meaning given to
such term in Section 2.25.
Bank to be Terminated shall have the meaning given
to such term in Section 2.25.
Banks shall mean collectively the Facility A Banks
and the Facility B Banks and Bank shall mean any Facility A Bank
or Facility B Bank.
Base Shareholders' Equity shall mean as of any
date of determination the sum of (i) $190,000,000; (ii) 50% of
the Homebuilder Consolidated Net Income for the period between
February 1, 1995 and October 31, 1995 provided that there is net
income (as opposed to a net loss), (iii) 50% of the Homebuilder
Consolidated Net Income for each fiscal year (or completed
portion of the fiscal year if the computation is made during that
fiscal year) in which there is net income (as opposed to net
loss) between November 1, 1995 through the date of determination;
plus (iv) the difference between the following amounts provided
that if such difference is less than zero, the amount of this
clause (iv) shall be zero: (A) 50% of the cash proceeds received
from the sale of additional shares of the Company's common stock
to Persons which are not Loan Parties, Unconsolidated
Subsidiaries or Affiliates (other than Robert I. Toll or Bruce E.
Toll) of the Company between February 1, 1995 through the date of
determination, less (B) 50% of the cash purchase price paid by
the Company to purchase shares of its common stock from Persons
which are not Loan Parties, Unconsolidated Subsidiaries or
Affiliates of the Company between February 1, 1995 through the
date of determination.
Benefit Arrangement shall mean at any time an
"employee benefit plan," within the meaning of Section 3(3) of
ERISA, which is neither a Plan or a Multiemployer Plan and which
is maintained, sponsored or otherwise contributed to, by any
member of the ERISA Group.
Bond Obligations shall have the meaning given to
such term in Section 8.01(a)(vi).
Borrower shall mean First Huntingdon Finance
Corp., a corporation organized and existing under the laws of the
State of Delaware.
Borrowing Base shall have the meaning given to
such term in Section 8.01(e).
Borrowing Base Assets shall mean collectively
Category 1 Borrowing Base Assets, Category 2 Borrowing Base
Assets and Category 3 Borrowing Base Assets.
Borrowing Date shall mean the one Business Day in
each week selected by Borrower for such week as the day on which
Loans are to be made, provided that Borrower may select as
additional Borrowing Dates: (i) the expiration date of any Euro-Rate
Interest Period or CD Rate Interest Period, and (ii) up to
an additional twelve (12) Business Days in any consecutive twelve
(12) month period.
Borrowing Tranche shall mean (i) with respect to
the CD Rate Portion, Facility A Loans to which the CD Rate Option
applies, and which, by reason of the selection of, conversion to
or renewal of such CD Rate Option on the same day, have the same
Interest Period, (ii) with respect to the Euro-Rate Portion,
Facility A Loans to which the Euro-Rate Option applies, and
which, by reason of the selection of, conversion to or renewal of
such Euro-Rate Option on the same day, have the same Interest
Period, (iii) with respect to the Prime Rate Portion of the
Facility A Loans, Facility A Loans to which the Prime Rate Option
applies by reason of the selection of or conversion to such Prime
Rate Option, (iv) with respect to the Federal Funds/Euro-Rate
Portion of the Facility A Loans, Facility A Loans to which the
Federal Funds/Euro-Rate Option applies by reason of the selection
of or conversion to such Federal Funds/Euro-Rate Option, (v) with
respect to the Facility A Term Loans, the portion of such Loans
which have the same Borrowing Date and Facility A Term Loan Due
Date and (vi) with respect to the Facility B Loans, the portion
of such Loans which have the same Borrowing Date and Facility B
Loan Due Date.
Business Day shall mean (i) with respect to
matters relating to the Euro-Rate Option, a day on which banks in
the London interbank market are dealing in U.S. Dollar deposits
and on which commercial banks are open for domestic and
international business in Philadelphia, Pennsylvania, and
(ii) with respect to any other matter, a day on which commercial
banks are open for business in Philadelphia, Pennsylvania.
Cash Collateralize shall mean with respect to any
Escrow Agreement or Letter of Credit, that the Borrower shall
provide cash or other collateral satisfactory to the Escrow Bank
or Issuing Bank, as the case may be, in an amount equal to such
Escrow Bank's or Issuing Bank's contingent liability under such
Escrow Agreement or Letter of Credit, as the case may be, and
enter into such other indemnification agreements as such Escrow
Bank or Issuing Bank may require.
Category 1 Borrowing Base Assets shall mean the
following assets of the Loan Parties: (1) residential units and
buildings under construction; (2) completed residential units and
buildings; and (3) land (and related site improvements and land
development costs) under residential units and buildings under
construction or completed and land (and related site improvements
and land development costs) on which a unit is to be constructed
which is subject to an Agreement of Sale, except that any of the
foregoing assets described in clauses (1) through (3) above shall
be excluded from Category 1 Borrowing Base Assets if they are
Excluded Assets.
Category 2 Borrowing Base Assets shall mean site
improvements on land which is not subject to an Agreement of
Sale, except for site improvements which are Excluded Assets.
Category 3 Borrowing Base Assets shall mean
acquisition and development costs (excluding costs of site
improvements) of land which is not subject to an Agreement of
Sale, except for acquisition and development costs which are
Excluded Assets.
CD Rate shall mean with respect to the Facility A
Loans comprising any Borrowing Tranche to which the CD Rate
Option applies for any Interest Period, the interest rate per
annum determined by the Agent by adding:
(A) the rate per annum obtained by dividing (the
resulting quotient to be rounded upward to the nearest
1/100 of 1%) (i) the rate of interest (which shall be
the same for each day in such CD Rate Interest Period)
which is the arithmetic average computed by the Agent
of the rates determined by the Agent in accordance with
its usual procedures (which determination shall be
conclusive absent manifest error) to be the average of
the secondary market bid rates at or about 11:00
o'clock a.m., Eastern Time, on the first day of such CD
Rate Interest Period by dealers of recognized standing
in negotiable certificates of deposit for the purchase
at face value of negotiable certificates of deposit for
delivery on such day in amounts comparable to such CD
Rate Loan and having maturities comparable to such CD
Rate Interest Period by (ii) a number equal to 1.00
minus the CD Rate Reserve Percentage; and
(B) the Assessment Rate.
The CD Rate may also be expressed by the following
formula:
[average of the secondary market ]
CD Rate = [bid rates determined by the Agent] + Assessment Rate
[1.00 - CD Rate Reserve Percentage]
The CD Rate shall be adjusted with respect to the CD Rate Option
outstanding on the effective date of any change in the CD Rate
Reserve Percentage as of such effective date. The Agent shall
give prompt written notice to the Borrower of the CD Rate as
determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
CD Rate Interest Period shall have the meaning
assigned to that term in Section 3.02 hereof.
CD Rate Option shall mean the rate of interest
determined pursuant to Section 3.01(a)(iv).
CD Rate Portion shall mean the portion of the
Facility A Loans bearing interest at any time under the CD Rate
Option.
CD Rate Reserve Percentage shall mean the
effective percentage (expressed as a decimal, rounded upward to
the nearest 1/100 of 1%), as determined in good faith by the
Agent (which determination shall be conclusive absent manifest
error), which is in effect on such day as prescribed by the Board
of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including without
limitation supplemental, marginal and emergency reserve
requirements) of the Agent in respect of nonpersonal time
deposits in Dollars in the United States. The CD Rate shall be
adjusted automatically as of the effective date of each change in
the CD Rate Reserve Percentage.
CD Rate Spread shall have the meaning given to
such term in Section 3.01(a)(iv).
Change of Control shall mean any transaction or
group of transactions after which another partnership, limited
partnership, syndicate or other group (excluding a mutual fund)
which is deemed a "person" within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934 owns more of Company's
issued and outstanding common stock than is owned in the
aggregate by Robert Toll and Bruce Toll (and the executors,
administrators or heirs of either or both of them in the event of
the death of either or both of them).
Closing Date shall mean the Business Day on which
the first Facility A Loan shall be made, which shall be
November 1, 1993.
Collateral Documents shall have the meaning given
to such term in Section 7.01.
Collateral Sharing Agreement shall have the
meaning assigned to such term in the definition of Permitted
Additional Senior Indebtedness.
Commercial Purchase Money Loans shall mean any of
the following: (i) purchase money loans made by a financial
institution for the primary purpose of acquiring in separate
transactions commercial real estate rental projects which are
completed and substantially leased (meaning for this purpose that
80% or more of the rentable area is subject to existing leases
under which tenants are paying market rent and in respect of
which there is not payment default), (ii) purchase money loans
made by a financial institution for the primary purpose of
acquiring real estate substantially all of which (A) is a
Qualified Golf Course or will be developed by the Loan Parties as
a Qualified Golf Course, or (B) is used by a Loan Party as
offices or as a panel plant, or (iii) other loans which are
secured solely by the assets of a Qualified Golf Course owned by
one or more of the Guarantors and the amount of such loans does
not exceed 90% of the book value of such Qualified Golf Course.
Commitment shall mean either a Facility A
Commitment or Facility B Commitment; Commitments shall mean
collectively the Facility A Commitments and Facility B
Commitments.
Company shall mean Toll Brothers, Inc., a Delaware
corporation.
Company Debt Rating shall mean the lower of the
rating described in clause (1) or that described in clause (2)
below: (1) the second highest Qualified Rating obtained by the
Company, or (2) either (A) or (B) as applicable: (A) the
Qualified Rating obtained by the Company from Standard & Poor's
or from Moody's, as the case may be, if the Company has obtained
a Qualified Rating from only one of these two agencies; or (B)
the higher of the Qualified Rating obtained from Standard &
Poor's and Moody's if the Company has obtained Qualified Ratings
from both of these two agencies. As of the Fourth Amendment
Effective Date, each of the ratings of Moody's listed below is
deemed to be equivalent to the rating of Standard & Poor's listed
next to it:
Equivalent
Rating of
Moody's Standard & Poor's
Baa2 BBB
Baa3 BBB-
Ba1 BB+
Ba2 BB
Schedule 1.01(Q) shall on the Fourth Amendment Effective Date and
at all times thereafter: (1) list with respect to each Qualified
Rating Agency other than Moody's and Standard & Poor's the
ratings of such Agency which are equivalent to the four ratings
of Moody's and the four ratings of Standard & Poor's set forth
above for purposes of computing the Company Debt Rating and
(2) set forth the Company's computation of the Company Debt
Rating. It is acknowledged that the Company Debt Rating on the
Fourth Amendment Effective Date is BB+/Ba1.
Compliance Certificate shall have the meaning
given to such term in Section 8.02(b).
Confirmation of Exposure shall mean a schedule in
the form attached as Exhibit N which the Agent in its discretion
may prepare and distribute to the Facility A Banks showing each
Facility A Bank's Contingent Exposure and Net Exposure in Letters
of Credit and Escrow Agreements on the date thereof.
Consolidated Contingent Liabilities shall mean all
of the Company's and the Company's Homebuilder Consolidated
Subsidiaries' guarantees, endorsements (other than for collection
in the ordinary course of business) and other contingent
obligations in respect of the obligations of other persons or
entities who are not the Company or the Company's Homebuilder
Consolidated Subsidiaries (including contingent reimbursement
obligations in connection with letters of credit, escrow
agreements or Bond Obligations but excluding any of the foregoing
items which are also included in the definition of Consolidated
Senior Liabilities), all determined on a consolidated basis in
accordance with GAAP.
Consolidated Net Income shall mean, for any
period, the aggregate of the Net Income of the Company and its
Consolidated Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP.
Consolidated Senior Liabilities shall mean the
Senior Liabilities of the Company and its Homebuilder
Consolidated Subsidiaries on a consolidated basis plus (except as
provided in the last sentence) the aggregate of the amounts
determined by multiplying the ownership interest of each
Consolidated Homebuilder Subsidiary, expressed as a percentage,
in the shareholders' equity of each Unconsolidated Subsidiary by
the liabilities of such Unconsolidated Subsidiary. For purposes
of the preceding sentence, percentage ownership interest shall be
calculated as the percentage ownership of the Company or such
Consolidated Homebuilder Subsidiary in the total shareholders'
equity of the Unconsolidated Subsidiary (the "Ownership
Percentage"). If the sum of (a) the aggregate of the amounts
determined by multiplying the Ownership Percentage of each
Consolidated Homebuilder Subsidiary in each Unconsolidated
Subsidiary by the shareholders' equity (or comparable measure of
equity) of each such Unconsolidated Subsidiary and (b) the
aggregate of the (i) Guarantees by any Loan Party of Indebtedness
of such Unconsolidated Subsidiary and (ii) loans payable or other
obligations of such Unconsolidated Subsidiary to Borrower or any
of the Loan Parties (excluding receivables secured by first
mortgage liens on real property which receivables do not exceed
the net realizable value of such real property and are not
subordinate to any other obligation of such Unconsolidated
Subsidiary) is less than 20% of Adjusted Shareholders' Equity,
then the amount referred to in the final phrase of the first
sentence need not be included in determining Company's
Consolidated Senior Liabilities.
Consolidated Subsidiaries shall mean the
Subsidiaries of the Company which are consolidated with the
Company for accounting purposes under GAAP.
Consolidated Subsidiary Shares shall mean the
issued and outstanding capital stock, partnership interests,
beneficial ownership interest, or other ownership interests, as
applicable, of each Consolidated Subsidiary of the Company.
Contingent Exposure shall mean at any time for
each Facility A Bank the aggregate of the face amount of
outstanding Letters of Credit which it has issued and the
aggregate amount of its obligations under outstanding Escrow
Agreements to which it is a party.
Development Agreement shall mean agreements
between the Loan Parties and municipalities or other Official
Bodies or utilities (both public or private) relating to the
development of real estate by the Guarantors as permitted under
this Agreement.
Dollar, Dollars, U.S. Dollars and the symbol $
shall mean lawful money of the United States of America.
Environmental Certificate shall have the meaning
given to such term in Section 8.02(e) hereof.
Environmental Complaint shall mean any written
complaint setting forth a cause of action for personal or
property damage or equitable relief, order, notice of violation,
citation, request for information issued pursuant to any
Environmental Laws by an Official Body, subpoena or other written
notice of any type relating to, arising out of, or issued
pursuant to any of the Environmental Laws or any Environmental
Conditions, as the case may be.
Environmental Conditions shall mean any conditions
of the environment, including, without limitation, the work
place, the ocean, natural resources (including flora or fauna),
soil, surface water, ground water, any actual or potential
drinking water supply sources, substrata or the ambient air,
relating to or arising out of, or caused by the use, handling,
storage, treatment, recycling, generation, transportation,
release, spilling, leaking, pumping, emptying, discharging,
injecting, escaping, leaching, disposal, dumping, threatened
release or other management or mismanagement of Regulated
Substances resulting from the use of, or operations on, the
Property.
Environmental Laws shall mean all federal, state,
local and foreign laws and regulations, including permits,
orders, judgments, consent decrees issued, or entered into,
pursuant thereto, relating to pollution or protection of human
health or the environment or employee safety in the work place.
Environmentally Approved Land shall mean land
owned by Borrower or a Guarantor as to which there has been
delivered to Agent an Environmental Certificate which either
(1) contains no exceptions on exhibit A thereto except for
Permitted Environmental Exceptions, or (2) if it contains any
exceptions other than Permitted Environmental Exceptions, such
land shall have either been (x) approved as acceptable by Agent,
which approval has not been reversed by a Simple Majority of
Banks, or (y) approved by a Simple Majority of Banks if Agent
initially does not approve such Environmental Certificate.
ERISA shall mean the Employee Retirement Income
Security Act of 1974, as the same may be amended or supplemented
from time to time, and any successor statute of similar import,
and the rules and regulations thereunder, as from time to time in
effect.
ERISA Group shall mean, at any time, the Borrower
and all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under common
control and all other entities which, together with the Borrower,
are treated as a single employer under Section 414 of the
Internal Revenue Code.
Escrow Agreement shall mean any Existing Escrow
Agreement or New Escrow Agreement. An Escrow Agreement shall
cease to be an "Escrow Agreement" hereunder and governed by the
provisions applicable to Escrow Agreements at such time as the
Borrower shall Cash Collateralize such Escrow Agreement pursuant
to Section 2.11 or 2.14.
Escrow Agreement Issuance Limit shall mean as to
any Facility A Bank at any time the amount set forth opposite its
name on Schedule 1.01(C) hereto in the column labeled "Escrow
Agreement Issuance Limit," as amended from time to time.
Escrow Bank shall have the meaning given to such
term in Section 2.11.
Escrow Fee shall have the meaning given to such
term in Section 2.11(c).
Euro-Rate shall mean with respect to the Facility
A Loans comprising any Borrowing Tranche to which the Revolving
Credit Euro-Rate Option applies for any Interest Period, the
interest rate per annum determined by the Agent by dividing (the
resulting quotient rounded upward to the nearest 1/100 of 1% per
annum) (i) the rate of interest determined by the Agent (which
determination shall be conclusive absent manifest error) to be
the average of the rates of interest per annum for deposits in
U.S. Dollars offered by banks in the London interbank market to
major money center banks at approximately 11:00 A.M. London time
two (2) Business Days prior to the first day of such Interest
Period for delivery on the first day of such Interest Period in
amounts comparable to such Borrowing Tranche and having
maturities comparable to such Interest Period, as such rates
appear on the page of Reuters Monitor Money Rate Service which
displays London interbank offered rates of major banks, by (ii) a
number equal to 1.00 minus the Euro-Rate Reserve Percentage. The
Euro-Rate may also be expressed by the following formula:
[average of rates offered to]
Euro-Rate = [major money center banks]
[in the London interbank market]
[as determined by Agent ]
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate
Option outstanding on the effective date of any change in the
Euro-Rate Reserve Percentage as of such effective date. The
Agent shall give prompt notice to the Borrower of the Euro-Rate
as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
Euro-Rate Interest Period shall mean the Revolving
Credit Euro-Rate Interest Period .
Euro-Rate Option shall mean the Revolving Credit
Euro-Rate Option .
Euro-Rate Portion shall mean the portion of the
Facility A Loans bearing interest at any time under any Euro-Rate
Option.
Euro-Rate Reserve Percentage shall mean the
percentage (expressed as a decimal rounded upward to the nearest
1/100 of 1%) as determined by the Agent (which determination
shall be conclusive absent manifest error) which is in effect
during any relevant period, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, without
limitation, supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities") of the Agent.
Euro-Rate Spread shall have the meaning given to
such term in Section 3.01(a)(ii).
Event of Default shall mean any of the Events of
Default described in Section 9.01 of this Agreement.
Excluded Assets shall mean any of the following
assets: (A) assets subject to any lien securing Indebtedness
referred to and otherwise permitted by Section 8.01(a) hereof
(except for Indebtedness hereunder and Permitted Purchase Money
Loans), (B) land, site improvements, development costs and units
or buildings constructed or under construction on such land if
the applicable Guarantor has not received Preliminary Approval
with respect to such land or if it is not Environmentally
Approved Land; and (C) payments for Options (Borrower may,
however, include the appraised value of Qualified Options when it
computes its Borrowing Base under the circumstances described in
Section 8.01(e)(ii)).
Excluded Mortgage Subsidiary Guaranties shall mean
as of any date of determination the lesser of (i) the aggregate
amount of guaranties of any of the Loan Parties directly or
indirectly of the obligation of any of the Mortgage Subsidiaries,
or (ii) $10,000,000.
Existing Agreement means the Amended and Restated
Revolving Credit Agreement, dated as of July 29, 1992, among
Borrower, the Company, certain Subsidiaries of the Company, Agent
and the Facility A Banks named therein, as amended.
Existing Escrow Agreements shall mean escrow
agreements described on Schedule 1.01(E) entered into by PNC Bank
pursuant to the Existing Agreement and which remain in effect on
the date hereof.
Existing Letters of Credit shall mean letters of
credit described on Schedule 1.01(E) which were issued by some of
the Facility A Banks pursuant to the Existing Agreement and which
remain outstanding on the date hereof.
Expiration Date shall mean June 16, 2000, or any
later date if the expiration date of this Agreement shall be
extended pursuant to the terms hereof.
Expiration Date Facility A Term Loan Option shall
have the meaning given to such term in
Section 3.01(b)(ii).Facility A Bank Acceptance shall have the
meaning assigned to such term in Section 2.18.
Facility A Bank Acceptance Date shall have the
meaning assigned to such term in Section 2.19.
Facility A Bank Offer shall have the meaning
assigned to such term in Section 2.17.
Facility A Bank Portion shall have the meaning
assigned to such term in Section 2.18.
Facility A Banks shall mean the financial
institutions named as "Facility A Banks" on Schedule 1.01(C)
hereto and their respective successors and assigns as permitted
hereunder, each of which is referred to herein as a Facility A
Bank.
Facility A Commitment shall mean as to any
Facility A Bank at any time, the amount set forth opposite its
name on Schedule 1.01(C) hereto in the column labeled "Facility A
Commitment," and thereafter on Schedule I to the most recent
Assignment and Assumption Agreement to which such Facility A Bank
is a party, and Facility A Commitments shall mean the aggregate
Facility A Commitments of all of the Facility A Banks.
Facility A Loan Request shall mean a request for
Facility A Loans made in accordance with Sections 2.06 or
11.11(c) hereof or a request to select, convert to or renew a CD
Rate Option or a Euro-Rate Option in accordance with Section 3.02
hereof.
Facility A Loans shall mean collectively and
Facility A Loan shall mean separately (a) all Facility A Loans or
any Facility A Loan made by the Facility A Banks or one of the
Facility A Banks to the Borrower pursuant to Sections 2.01 or
11.11(c) hereof, and (b) all amounts advanced pursuant to a
Letter of Credit or an Escrow Agreement, as provided in Section
2.12 hereof. Each Facility A Loan shall either be a Facility A
Term Loan or a Revolving Credit Loan.
Facility A Notes shall mean collectively and
Facility A Note shall mean separately all the Facility A Notes of
the Borrower in the form of Exhibit E(1) hereto evidencing the
Facility A Loans together with all amendments, extensions,
renewals, replacements, refinancings or refundings thereof in
whole or in part.
Facility A Ratable Share shall mean the proportion
that a Facility A Bank's Facility A Commitment bears to the
Facility A Commitments of all of the Facility A Banks. If a
Facility A Bank's Facility A Commitment is reduced pursuant to
Section 2.25(a) to equal the amount of its outstanding Facility A
Loans, such Facility A Bank's Commitment shall be treated as
being equal to zero for purposes of computing such Facility A
Bank's Facility A Ratable Share.
Facility A Revolving Credit Commitments shall mean
at any time the difference between the Facility A Commitments and
the amount of Facility A Term Loans then outstanding; Facility A
Revolving Credit Commitment shall mean for each Facility A Bank
at any time the difference between such Facility A Bank's
Facility A Commitment and its Facility A Term Loan (if any) then
outstanding.
Facility A Term Loan shall mean any Facility A
Loan which is subject to the Facility A Term Loan Option
described in Section 3.01(b)(ii).
Facility A Term Loan Banks shall have the meaning
given to such term in Section 4.04(a)(2).
Facility A Term Loan Due Date shall have the
meaning given to such term in Section 3.01(b)(ii).
Facility A Term Loan Election Period shall mean
(A) the period beginning on the Fifth Amendment Effective Date
and ending on the close of business on the 90th day after the
Fifth Amendment Effective Date; and (B) the period beginning on
each anniversary date of the Fifth Amendment Effective Date and
ending on the close of business on the 90th day after such date
provided that both of the following two conditions are met:
(1) the Borrower and the Facility A Banks shall have extended the
Mandatory Reduction Date on each occasion when such parties were
permitted to do so pursuant to Section 2.04 prior to such
anniversary date so that the Mandatory Reduction Date, as
extended, shall be June 16 of the calendar year which is the
third calendar year after the calendar year in which such
anniversary date falls and (2) the Borrower has not elected the
Facility A Term Loan Option prior to such anniversary date.
Facility A Term Loan Option shall mean either the
Expiration Date Facility A Term Loan Option or the Mandatory
Reduction Date Facility A Term Loan Option.
Facility B Bank shall mean at any time any
financial institutions which have any Facility B Loans
outstanding to the Borrower and their respective successors and
assigns as permitted hereunder, each of which is referred to
herein as a Facility B Bank. A Facility A Bank will also be a
Facility B Bank if such Facility A Bank makes a Facility B Loan.
The parties shall amend Schedule 1.01(C) from time to time to
list the Facility B Banks pursuant to Section 2.18 and 11.11.
Facility B Borrowing Notice shall have the meaning
assigned to such term in Section 2.19.
Facility B Closing Fee shall have the meaning
given to such term in Section 2.21.
Facility B Commitment shall mean as to any
Facility B Bank at any time, the amount of its Facility B Loans
then outstanding. The amount of Facility B Loans to be borrowed
from each Facility B Bank on the Borrowing Date for such Facility
B Loans shall be set forth on Schedule 1.01(C) hereto in the
column labeled "Facility B Commitment of Borrowing Date."
Facility B Commitments shall mean the aggregate Facility B
Commitments of all of the Facility B Banks. Nothing herein shall
be construed as obligating any Bank to offer to make a Facility B
Loan hereunder.
Facility B Loan Due Date shall have the meaning
assigned to such term in Section 2.16.
Facility B Loan Election Period shall have the
meaning assigned to such term in Section 2.16.
Facility B Loan Request shall have the meaning
assigned to such term in Section 2.16.
Facility B Loans shall mean collectively and
Facility B Loan shall mean separately all Facility B Loans or any
Facility B Loan made by the Facility B Banks or one of the
Facility B Banks to the Borrower pursuant to Sections 2.16.
Facility B Notes shall mean collectively and
Facility B Note shall mean separately all the Facility B Notes of
the Borrower in the form of Exhibit E(2) described in Section
2.19(b) evidencing the Facility B Loans together with all
amendments, extensions, renewals, replacements, refinancings or
refundings thereof in whole or in part.
Federal Funds Effective Rate for any day shall
mean the rate per annum (based on a year of 360 days and actual
days elapsed and rounded upward to the nearest 1/100 of 1%)
announced by the Federal Reserve Bank of New York (or any
successor) computed by the Agent on such day as being the
weighted average of the rates on overnight Federal funds
transactions arranged by Federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve
Bank (or any successor) in substantially the same manner as such
Federal Reserve Bank computes and announces the weighted average
it refers to as the "Federal Funds Effective Rate" as of the date
of this Agreement; provided, if such Federal Reserve Bank (or its
successor) does not announce such rate on any day, the "Federal
Funds Effective Rate" for such day shall be the Federal Funds
Effective Rate for the last day of which such rate was announced.
Federal Funds/Euro-Rate Option shall mean the rate
of interest determined pursuant to Section 3.01(a)(iii).
Federal Funds/Euro-Rate Portion shall mean portion
of the Facility A Loans bearing interest at any time under the
Federal Funds/Euro-Rate Option.
Fifth Amendment shall mean the Fifth Amendment to
this Agreement dated as of July 25, 1995.
Fifth Amendment Effective Date shall mean the
effective date of the Fifth Amendment.
50% Minimum Requirement shall have the meaning
assigned to such term in Section 2.18.
Financial Letter of Credit shall mean any Letter
of Credit issued on behalf of a Guarantor which is not a
Performance Letter of Credit and which is issued to a third party
to ensure payment by an Affiliate of the Company of a financial
obligation or satisfaction by such Affiliate of any other
obligation of such Affiliate.
First Level Debt Rating shall mean a Company Debt
Rating of (i) BBB or higher if the rating is provided by Standard
& Poor's, (ii) Baa2 or higher if the rating is provided by
Moody's or (iii) equivalent to or higher than a BBB rating by
Standard & Poor's or Baa2 by Moody's if the rating is provided by
a Qualified Rating Agency other than Standard & Poor's or
Moody's.
Fourth Amendment shall mean the Fourth Amendment
to this Agreement, dated June 16, 1995.
Fourth Amendment Effective Date shall mean the
effective date of the Fourth Amendment.
Fourth Level Debt Rating shall mean a Company Debt
Rating of (i) BB or lower if the rating is provided by Standard &
Poor's, (ii) Ba2 or lower if the rating is provided by Moody's,
or (iii) equivalent to or lower than a BB rating by Standard &
Poor's or a Ba2 by Moody's if the rating is provided by a
Qualified Rating Agency other than Standard & Poor's or Moody's.
GAAP shall mean generally accepted accounting
principles as are in effect from time to time and applied on a
consistent basis (except for changes in application in which the
Borrower's independent certified public accountants concur) both
as to classification of items and amounts.
Guarantors shall mean the Company and each of the
other entities listed under the heading "Guarantors" on the
signature pages hereto and any additional persons which may from
time to time join this Agreement as Guarantors hereunder.
Guaranty of any Person shall mean any obligation
of such Person guaranteeing or in effect guaranteeing any
liability or obligation of any other Person in any manner,
whether directly or indirectly, including, without limiting the
generality of the foregoing, any performance bond or other
suretyship arrangement and any other form of assurance against
loss, except endorsement of negotiable or other instruments for
deposit or collection in the ordinary course of business.
Guaranty Agreement shall mean the Guaranty and
Suretyship Agreement in substantially the form attached hereto as
Exhibit C to be executed and delivered by each Guarantor to the
Agent for the benefit of the Banks.
Homebuilder Consolidated Net Income shall mean,
for any period, the aggregate of the Net Income of the Company
and its Homebuilder Consolidated Subsidiaries, excluding
insurance proceeds received in respect of a Senior Officer Life
Policy upon the death of a beneficiary thereunder.
Homebuilder Consolidated Subsidiaries shall mean
the Homebuilder Subsidiaries of the Company which are
consolidated with the Company for accounting purposes under GAAP.
Homebuilder Subsidiaries shall mean each of the
Subsidiaries of the Company except for the Mortgage Subsidiaries.
Indebtedness shall mean as to any Person at any
time and without duplication, any and all indebtedness,
obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or
contingent, or joint or several) of such Person for or in respect
of: (i) borrowed money (excluding any loans to any Loan Party
from an insurance company with respect to which the sole recourse
of such company for repayment is the cash value of life insurance
issued by such company), (ii) amounts raised under or liabilities
in respect of any note purchase or acceptance credit facility,
(iii) reimbursement obligations under any letter of credit,
(iv) currency swap agreement, interest rate swap, cap, collar or
floor agreement or other interest rate management device, except
if such agreement or device (1) is entered into in the ordinary
course of the business of the Loan Parties or (2) is applicable
to other Indebtedness and is not treated as a liability under
GAAP, (v) any other transaction (including without limitation
forward sale or purchase agreements, capitalized leases and
conditional sales agreements) having the commercial effect of a
borrowing of money entered into by such Person to finance its
operations or capital requirements (but not including trade
payables and accrued expenses incurred in the ordinary course of
business which are not represented by a promissory note or other
evidence of indebtedness and which are not more than thirty (30)
days past due), or (vi) any Guaranty of Indebtedness for borrowed
money.
Indemnity shall mean the Amended and Restated
Indemnity Agreement in the form of Exhibit D between the Banks
and the Loan Parties relating to possible environmental
liabilities relating to the real property owned by the Loan
Parties.
Initial Acceptees shall have the meaning assigned
to such term in Section 2.18.
Intercompany Agreement shall have the meaning
given to such term in Section 5.01(bb).
Intercompany Loans means the loans from the
Borrower to the Guarantors using the proceeds of Loans hereunder.
Intercompany Notes shall have the meaning given to
such term in Section 5.01(bb).
Intercompany Subordination Agreement shall have
the meaning given to such term in Section 5.01(bb).
Interest Payment Date shall mean each date
specified for the payment of interest in Section 4.03.
Interest Period shall mean either a CD Rate
Interest Period or any Euro-Rate Interest Period.
Interest Rate Option shall mean the CD Rate
Option, Revolving Credit Euro-Rate Option, the Prime Rate Option,
the Federal Funds/Euro-Rate Option or the Facility A Term Loan
Option.
Internal Revenue Code shall mean the Internal
Revenue Code of 1986, as the same may be amended or supplemented
from time to time, and any successor statute of similar import,
and the rules and regulations thereunder, as from time to time in
effect.
Investments in Mortgage Subsidiaries shall mean
the following: (i) investments or contributions by a Loan Party
directly or indirectly in the capital stock of or other payments
(except in connection with the transactions for fair value in the
ordinary course of business) to any of the Mortgage Subsidiaries,
(ii) loans by a Loan Party directly or indirectly to any of the
Mortgage Subsidiaries, (iii) guaranties by a Loan Party directly
or indirectly of the obligations of any of the Mortgage
Subsidiaries (except for the Excluded Mortgage Subsidiary
Guaranties) or (iv) other obligations, contingent or otherwise of
the Loan Parties to or for the benefit of any of the Mortgage
Subsidiaries.
Issuing Bank shall have the meaning given to such
term in Section 2.10(a).
Labor Contracts shall have the meaning assigned to
that term in Section 5.01(r).
Law shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance,
opinion, release, ruling, order, injunction, writ, decree or
award of any Official Body.
L/C-Escrow Exposure shall mean the sum of the
aggregate undrawn face amount of Letters of Credit issued
pursuant to Section 2.10 plus the obligations under Escrow
Agreements entered into pursuant to Section 2.11.
L/C-Escrow Sublimit shall mean an amount equal to
the product of two-thirds (2/3) times the Facility A Revolving
Credit Commitments with such product rounded to the nearest
number which is an integral multiple of $5,000,000, or in the
event such product is an integral multiple of $2,500,000 but not
of $5,000,000, then rounded upward to the nearest integral
multiple of $5,000,000. The L/C Escrow Sublimit on the Sixth
Amendment Effective Date is $155,000,000 .
Letter of Credit shall mean any Existing Letter of
Credit or New Letter of Credit. A Letter of Credit shall cease
to be a "Letter of Credit" hereunder and governed by the
provisions hereof applicable to Letters of Credit at such time as
the Borrower shall Cash Collateralize such Letter of Credit
pursuant to Section 2.10 or 2.14.
Letter of Credit Fee shall have the meaning
assigned to that term in Section 2.10.
Letter of Credit Issuance Limit shall mean as to
any Facility A Bank at any time, the amount set forth opposite
its name on Schedule 1.01(C) hereto in the column labeled "Letter
of Credit Limit" as amended from time to time.
Lien shall mean any mortgage, deed of trust,
pledge, lien, security interest, charge or other encumbrance or
security arrangement of any nature whatsoever, whether
voluntarily or involuntarily given, including but not limited to
any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having
the effect of, security and any filed financing statement or
other notice of any of the foregoing (whether or not a lien or
other encumbrance is created or exists at the time of the
filing).
Loan Documents shall mean this Agreement, the
Notes, the Guaranty Agreement, the Indemnity, the Collateral
Documents, Intercompany Subordination Agreement, the Agent's
Letter and any other instruments, certificates or documents
delivered or contemplated to be delivered hereunder or thereunder
or in connection herewith or therewith, as the same may be
supplemented or amended from time to time in accordance herewith
or therewith, and Loan Document shall mean any of the Loan
Documents.
Loan Parties shall mean collectively the Borrower
and the Guarantors.
Loans shall mean collectively the Facility A Loans
and the Facility B Loans and Loan shall mean either a Facility A
Loan or a Facility B Loan.
Mandatory Reduction Date shall mean June 16, 1999
or any later date if the Mandatory Reduction Date shall be
extended pursuant to the terms hereof.
Mandatory Reduction Date Facility A Term Loan
Option shall have the meaning given to such term in
Section 3.01(b)(ii).
Material Adverse Change shall mean any set of
circumstances or events which (a) has any material adverse effect
upon the validity or enforceability of this Agreement or any
other Loan Document, or (b) is material and adverse to the
business, properties, assets, financial condition or results of
operations of the Loan Parties taken as a whole.
month, with respect to a Euro-Rate Interest
Period, shall mean the interval between the days in consecutive
calendar months numerically corresponding to the first day of
such Interest Period. The last day of a calendar month shall be
deemed to be such numerically corresponding day for such calendar
month (i) if there is no such numerically corresponding day in
such calendar month, or (ii) if the first day of such Interest
Period is the last Business Day of a calendar month.
Moody's shall mean Moody's Investors Service,
Inc., or any successor.
Mortgage Banking Business shall mean the business
of issuing mortgage loans on residential properties (whether for
purchase of homes or refinancing of existing mortgages),
purchasing and selling mortgage loans, issuing securities backed
by mortgage loans, acting as a broker of mortgage loans, and
other activities customarily associated with mortgage banking and
related businesses.
Mortgage Subsidiaries shall mean any corporations,
limited partnerships or business trusts either organized after
the Closing Date or designated as a Mortgage Subsidiary after the
Closing Date, and in either instance, the capital stock of such
corporations, limited partnerships or business trusts shall be
owned by the Company or one or more of its Consolidated
Subsidiaries and such corporations, limited partnerships or
business trusts shall engage in the Mortgage Banking Business.
Mortgage Subsidiaries' Adjusted Shareholders'
Equity shall mean as of any date of determination stockholders'
equity less goodwill of the Mortgage Subsidiaries as of such date
determined on a consolidated basis in accordance with GAAP plus
any loans made by the Loan Parties to the Mortgage Subsidiaries
(except for intercompany payables to one or more of the Loan
Parties in respect of the Mortgage Subsidiaries' share of accrued
consolidated income tax liabilities which have not yet been paid
by the Loan Parties) or other Investments in Mortgage
Subsidiaries which are not included in the stockholders' equity
of the Mortgage Subsidiaries.
Mortgage Subsidiaries' Liabilities shall mean all
Indebtedness of any of the Mortgage Subsidiaries plus accrued
income taxes payable within one year.
Multiemployer Plan shall mean any employee benefit
plan which is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA and to which the Borrower or any
member of the ERISA Group is then making or accruing an
obligation to make contributions or, within the preceding five
Plan years, has made or had an obligation to make such
contributions.
Multiple Employer Plan shall mean a Plan which has
two or more contributing sponsors (including the Borrower or any
member of the ERISA Group) at least two of whom are not under
common control, as such a plan is described in Sections 4063 and
4064 of ERISA.
Net Exposure shall mean with respect to each
Letter of Credit and Escrow Agreement: (i) in the case of the
Issuing Bank or Escrow Bank, as the case may be, its Contingent
Exposure less the interests purchased therein by other Facility A
Banks; and (ii) in the case of all other Facility A Banks, the
interest therein which they purchase.
Net Income shall mean for any period and for any
Person the net income of such Person, determined in accordance
with GAAP.
Net New Communities shall mean as of the end of
any fiscal quarter the number (which may not be negative) equal
to the excess, if any, of (i) the number of communities which
entered into Agreements of Sale during such fiscal quarter over
(ii) the number of communities which, during the one-year period
ending with the end of such fiscal quarter were for a period of
more than six (6) consecutive months entering into Agreements of
Sale.
New Bank Joinder and Information Package shall
mean with respect to any new bank which hereafter shall join this
Agreement as a Bank hereunder each of the following documents
which shall be delivered to the Agent at least seven (7) days
prior to the effective date of such bank's joinder to this
Agreement:
(i) a duly completed and executed Bank Joinder in the
form of Exhibit M(1) which shall provide that such Bank Joinder
shall become effective on a future date which shall be no sooner
than seven (7) days after the date on which the Borrower delivers
the New Bank Joinder and Information Package to Agent;
(ii) duly executed Notes in the form of Exhibit E(1)
and E(2), as applicable;
(iii) satisfactory evidence that such bank is a
Qualified Bank including current reports evidencing the issuer
rating of such bank as determined by Thompson's BankWatch; and
(iv) each of the documents and other information
attached as Exhibit M(2), duly completed and where applicable
signed and dated.
New Escrow Agreement shall have the meaning given
to such term in Section 2.11(a).
New Letter of Credit shall have the meaning given
to such term in Section 2.10(a).
Non-electing Additional Facility A Bank shall have
the meaning given to such term in Section 4.04(a)(2).
Non-Extending Facility A Bank shall have the
meaning given to such term in Section 2.04(c).
Non-Extending Facility A Bank Removal Effective
Date shall have the meaning given to such term in Section 2.04.
Nonrecourse Indebtedness shall mean indebtedness
or other obligations secured by a lien on property to the extent
that the liability for such indebtedness or other obligations is
limited to the security of the property without liability on the
part of Company or any Consolidated Subsidiary for any
deficiency.
Notes shall mean collectively all of the Facility
A Notes and Facility B Notes and Note shall mean individually
either a Facility A Note or a Facility B Note.
Offer shall have the meaning assigned to such term
in Section 2.17.
Offered Amount shall have the meaning given to
such term in Section 2.15(a).
Official Body shall mean any national, federal,
state, local or other government or political subdivision or any
agency, authority, bureau, central bank, commission, department
or instrumentality of any of the foregoing, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign
or domestic.
Option shall mean an option of one of the Loan
Parties to purchase land for construction of residential real
estate thereon.
Other Bank shall have the meaning assigned to such
term in Section 2.17(b).
Other Bank Offer shall have the meaning assigned
to such term in Section 2.17(b).
Other Bank Portion shall have the meaning assigned
to such term in Section 2.18.
PBGC shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of
ERISA or any successor.
Performance Letter of Credit shall mean any letter
of credit issued on behalf of a Guarantor in favor of a
municipality or any other Official Body, including without
limitation any utility, water or sewer authority, or other
similar entity for the purpose of assuring such municipality,
other Official Body, utility, water or sewer authority or similar
entity that an Affiliate of the Company will properly and timely
complete work it has agreed to perform for the benefit of such
municipality, other Official Body, utility, water or sewer
authority or similar entity.
Permitted Additional Senior Indebtedness shall
mean Indebtedness of the Loan Parties not in excess of
$100,000,000 in the aggregate which meets each of the following
requirements:
(A) such Indebtedness is either unsecured or is
secured and is either pari passu with or subordinate to
the Indebtedness hereunder provided that the following
conditions are met:
(1) such Indebtedness may be secured only by
the Liens which may result under Article VII of
this Agreement, after a security event occurs
under the agreements governing such Indebtedness,
the term "security event" shall be defined
substantially as the term Security Event is
defined under this Agreement;
(2) the Liens in favor of the holders of such
Indebtedness shall be pari passu with or
subordinated to (but not senior to)the Liens in
favor of the Agent for the benefit of the Banks
under this Agreement as provided in the Collateral
Sharing Agreement referred to in clause (3) below
and may not be granted to such holders before
Liens in favor of the Agent hereunder have been
granted,
(3) if the Borrower desires that Liens secure
such Indebtedness and that such Liens be pari
passu with the Liens of the Agent for the benefit
of the Banks, the holders of such Indebtedness
shall enter into a Collateral Sharing Agreement
substantially in the form attached as Exhibit P
(the "Collateral Sharing Agreement") under which
the collateral agent shall be a person or persons
mutually acceptable to Agent and the Required
Majority of the Banks and to the holders of such
Indebtedness; such Collateral Sharing Agreement
shall provide that either such holders or the
Banks may require that the collateral agent or
collateral co-agents foreclose upon, or exercise
any other rights in the collateral upon a default
and acceleration of either the Loans hereunder or
of such Indebtedness; and
(4) If the Borrower desires that Liens secure
such Indebtedness and that such Liens be
subordinated to the Liens of the Agent for the
benefit of the Banks, then holders of such
Indebtedness shall enter into a subordination
agreement with the Agent and the Banks under terms
satisfactory to the Agent and the Required
Majority of Banks subordinating the Liens securing
such Indebtedness to such Liens of the Agent.
(B) Borrower shall deliver to Agent copies of the
agreements evidencing such Indebtedness within two (2)
Business Days after their execution;
(C) any covenants contained in the agreements
evidencing such Indebtedness which are more restrictive
to the Loan Parties than those contained herein
governing the Indebtedness hereunder as determined by
the Agent at any time shall be incorporated by
reference herein; and
(D) no more than $50,000,000 of the principal
amount of such Indebtedness is due before the
Expiration Date; provided that if the Expiration Date
is extended any Indebtedness which was Permitted
Additional Senior Indebtedness prior to such extension
shall not be disqualified as such merely because the
extension caused the principal amount thereof due
before the Expiration Date to exceed $50,000,000, but
following such extension the Loan Parties may not
increase the principal amount of such Indebtedness
which is due before the Expiration Date until the
aggregate thereof has been reduced below $50,000,000.
Permitted Environmental Exception shall mean an
exception set forth on an Environmental Certificate which the
independent environmental engineer certifies can be cured by
remediation which shall cost less than $100,000 to complete. If
the engineer cannot determine and certify as to the cost of such
remediation the exception shall not be a Permitted Exception.
Permitted Exceptions shall mean any nonconsensual
lien, claim, suit, judgment, tax, assessment, charge or levy
(collectively, a "Claim") against a Loan Party, except for the
Borrower or the Company, provided that the Company has
demonstrated to the Agent's satisfaction (i) that the Claim has
arisen from the discontinuation of operations of such Loan Party
and the Company has concluded that the continued operation of
such Loan Party is no longer beneficial to the Company, and
(ii) that the Loan Parties would still be in compliance with the
covenants contained in this Agreement if Company's consolidated
balance sheet as at the end of the immediately preceding fiscal
quarter and consolidated income statement for the three and
twelve months then ended had been adjusted to eliminate the
amount of the book value of all assets of any Loan Parties
against which all such Claims have been imposed which the Company
desires to treat as Permitted Exceptions and otherwise adjusted
in accordance with generally accepted accounting principles to
reflect to the fullest extent appropriate the financial
consequences to the Company on a consolidated basis of such
liens, claims, suits, judgments, taxes, assessments, charges and
levies and the elimination of such property.
Permitted Investment in Mortgage Subsidiaries
shall mean the Excluded Mortgage Subsidiary Guaranties and
Investments in the Mortgage Subsidiaries provided that the
aggregate amount of such Investments in Mortgage Subsidiaries
does not exceed the lesser of the following: (A) the sum of
(i) $20,000,000, plus (ii) 50% of Consolidated Net Income between
May 1, 1993 through the date of determination, or (B) 20% of
Shareholders' Equity as of the date of determination.
Permitted Liens shall mean:
(i) Liens for taxes, assessments, or similar
charges, incurred in the ordinary course of business and which
are not yet due and payable and pledges or deposits made in the
ordinary course of business to secure payment of workmen's
compensation, or to participate in any fund in connection with
workmen's compensation, unemployment insurance, old-age pensions
or other social security programs provided that liens permitted
in this subsection (i) may not in the aggregate exceed ten
percent (10%) of the Company's Adjusted Shareholders' Equity;
(ii) Statutory liens and other liens of mechanics,
workmen and contractors, provided that the liens permitted by
this subsection (ii) are not in excess of $1,000,000 individually
or $2,000,000 in the aggregate and either such liens have not
been filed or, if such liens have been filed, either (i) a stay
of enforcement thereof has been obtained within 60 days, or
(ii) such liens have been satisfied of record within 60 days
after the date of filing thereof;
(iii) Good faith escrows, pledges or deposits
of cash or cash equivalents made (A) by the Loan Parties in the
ordinary course of business to secure performance of bids,
tenders, contracts (other than for the repayment of borrowed
money) or leases, or to secure statutory obligations, or surety,
appeal, indemnity, performance or other similar bonds required in
the ordinary course of business, or (B) by third parties in favor
of the Loan Parties pursuant to Agreements of Sale;
(iv) Encumbrances consisting of zoning
restrictions, easements or other restrictions on the use of real
property, none of which materially impairs the use of such
property or the value thereof, and none of which is violated in
any material respect by existing or proposed structures or land
use;
(v) Liens, security interests and mortgages, if
any, in favor of the Agent for the benefit of the Banks and cash
collateral granted to a Bank (or to a person who had been a Bank
when such collateral was granted but thereafter was removed under
Section 2.14 or otherwise ceased to be a Bank hereunder) as
security for the obligations of the Loan Parties under Letters of
Credit or Escrow Agreements under or as required by this
Agreement;
(vi) Any Lien existing on the date of this
Agreement and described on Schedule 1.01(P) hereto provided that
the principal amount secured thereby is not hereafter increased
and no additional assets become subject to such Lien;
(vii) Liens securing Permitted Purchase Money
Loans and Permitted Non-Recourse Indebtedness described in the
definitions of such terms; and
(viii) The following, (A) if the validity or
amount thereof is being contested in good faith by appropriate
and lawful proceedings diligently conducted so long as levy and
execution thereon have been stayed and continue to be stayed or
(B) if a final judgment is entered and such judgment is
discharged within thirty (30) days of entry:
(1) Claims or Liens for taxes, assessments
or charges due and payable and subject to interest
or penalty, provided that the Loan Parties
maintain such reserves or other appropriate
provisions as shall be required by GAAP and pay
all such taxes, assessments or charges forthwith
upon the commencement of proceedings to foreclose
any such Lien; or
(2) Claims, Liens or encumbrances upon, and
defects of title to, real or personal property,
including any attachment of personal or real
property or other legal process prior to
adjudication of a dispute on the merits;
(ix) Purchase money security interests in
equipment securing Indebtedness permitted under Section
8.01(a)(vii);
(x) Other Liens which are a Permitted Exception,
provided that there do not exist any such Permitted
Exceptions on the date hereof; and
(xi) Liens securing Permitted Additional Senior
Indebtedness, provided that such Liens are pari passu
in accordance with the Collateral Sharing Agreement
with or subordinated to Liens in favor of the Agent for
the benefit of the Banks and that the other conditions
of the definition of Permitted Additional Senior
Indebtedness are met.
Permitted Nonrecourse Indebtedness shall mean
Indebtedness for money borrowed which is incurred by a Loan Party
in transactions for purposes of acquiring improved or unimproved
real estate and which is secured by such real estate and
improvements where (A) the amount of the investment of the Loan
Parties in the assets which are mortgaged, pledged or assigned to
secure such Indebtedness (in excess of the amount of the loan
secured by such mortgage, pledge or assignment) does not exceed
$1,000,000 and (B) either (x) the liability of the Loan Parties
for such Indebtedness is limited solely to the assets of the Loan
Parties which are mortgaged, pledged or assigned to secure such
Indebtedness or (y) only a Loan Party other than Company is
liable for the Indebtedness and the sum of the Shareholders'
Equity (including amounts owed by such Loan Party to Company or
another Loan Party or other Affiliate of the Company which is
either subordinate in right of payment to, or collection of which
is postponed in favor of, such Indebtedness) of, investments in,
and loans to such Loan Party does not exceed $1,000,000.
Permitted Purchase Money Loans shall mean,
collectively, Seller Purchase Money Loans, Commercial Purchase
Money Loans, Assumed Joint Venture Loans and Assumed Purchase
Money Loans.
Person shall mean any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated organization, joint venture, government or
political subdivision or agency thereof, or any other entity.
Plan shall mean at any time an employee pension
benefit plan (including a Multiple Employer Plan but not a
Multiemployer Plan) which is covered by Title IV of ERISA or is
subject to the minimum funding standards under Section 412 of the
Internal Revenue Code and either (i) is maintained by any member
of the ERISA Group for employees of any member of the ERISA Group
or (ii) has at any time within the preceding five years been
maintained by any entity which was at such time a member of the
ERISA Group for employees of any entity which was at such time a
member of the ERISA Group.
PNC Bank shall mean PNC Bank, National
Association.
Potential Default shall mean any event or
condition which with notice, passage of time or a determination
by the Agent or the Required Majority of Banks, or any
combination of the foregoing, would constitute an Event of
Default.
Preliminary Approval shall mean preliminary
approval from required state and local governmental authorities
and agencies of a Guarantor's or Consolidated Subsidiary's
preliminary development plan in accordance with the provisions of
the Pennsylvania Municipalities Planning Code or its equivalent
in any other jurisdiction in which the Company is doing business
such that in each instance there is vested in the Guarantor or
Consolidated Subsidiary the right to develop such real estate for
residential purposes substantially in accordance with the
intentions of such Guarantor or Consolidated Subsidiary subject
only to obtaining such additional approvals which do not impose
any material burdens on the Guarantor or Consolidated Subsidiary
and with respect to which there is no reasonable expectation that
final approval shall not be obtained.
Prime Rate shall mean the interest rate per annum
announced from time to time by the Agent at its Principal Office
as its then prime rate, which rate may not be the lowest rate
then being charged commercial borrowers by the Agent.
Prime Rate Option shall mean the rate of interest
determined pursuant to Section 3.01(a)(i) of the Agreement.
Prime Rate Portion shall mean the portion of the
Facility A Loans bearing interest at any time at the Prime Rate
Option.
Principal Office shall mean the main banking
office of the Agent in Philadelphia, Pennsylvania.
Prohibited Transaction shall mean any prohibited
transaction as defined in Section 4975 of the Internal Revenue
Code or Section 406 of ERISA for which neither an individual nor
a class exemption has been issued by the United States Department
of Labor.
Property shall mean all real property, both owned
and leased, of the Loan Parties.
Purchasing Bank shall mean a Bank which becomes a
party to this Agreement by executing an Assignment and Assumption
Agreement.
Qualified Bank shall mean either (i) a bank with a
minimum issuer credit rating of "C" under Thompson's BankWatch or
an equivalent rating under a bank rating system acceptable to the
Agent and a Simple Majority of the Banks, or (ii) any other bank
approved by all Banks.
Qualified Golf Course shall mean a commercial golf
course and related club facilities which is located adjacent to
or in substantially immediate proximity of a residential
community developed or under development by one or more of the
Guarantors and the acquisition or development of which was
undertaken to facilitate development of such community.
Qualified Option shall mean an Option which, by
its terms and under applicable Law, may be assigned or pledged by
the Loan Party which holds such Option at any time to the Agent
or the Banks without the consent of any Person (other than such
Loan Party) or the fulfillment of any other conditions which have
not already been fulfilled.
Qualified Rating shall mean a public or private
rating of the Senior Indebtedness of the Company and its
Subsidiaries or the Indebtedness under the Agreement or an
implied rating of any Indebtedness of the Company and its
Subsidiaries senior to the Subordinated Indebtedness obtained
from a Qualified Rating Agency. A Qualified Rating must be one
of the following:
1. An actual rating of the Indebtedness
hereunder exclusive of any other Senior
Indebtedness;
2. An actual rating of the Senior Indebtedness;
3. An implied rating of the Indebtedness
hereunder exclusive of any other Senior
Indebtedness.
4. An implied rating of the Senior Indebtedness;
or
5. An implied rating of Indebtedness senior to
current outstanding Subordinated
Indebtedness.
If the Company receives more than one rating from a Qualified
Rating Agency, the rating which falls in the lowest number
category above shall be the Qualified Rating. (For example, if
the Company receives from a Qualified Rating Agency a rating
described in line 2 above and one described in line 4, the rating
described in line 2 shall be the Qualified Rating.) An implied
rating of any Indebtedness shall not be a Qualified Rating if it
assumes that such Indebtedness is secured. If any Qualified
Rating Agency provides more than one rating of the Company's
Senior Indebtedness or the Indebtedness under the Agreement, then
the rating falling in the lowest numbered category above shall be
the "Qualified Rating" hereunder. Schedule 1.01(Q) describes
each of the ratings of the Company's Senior Indebtedness or its
Indebtedness hereunder or the implied ratings which the parties
hereto have agreed shall be the Qualified Ratings as of the
Fourth Amendment Effective Date. Schedule 1.01(Q) shall be
revised at all times to reflect the list of Qualified Ratings
then in existence.
Qualified Rating Agency shall mean Moody's,
Standard & Poor's, the other agencies listed on Schedule 1.01(Q)
or any other nationally recognized rating agency which is
qualified to perform a public rating of the Company's Senior
Indebtedness and which is approved by a Required Majority of
Facility A Banks pursuant to Section 5.01(ff). Schedule 1.01
shall be revised at all times to reflect the list of Qualified
Rating Agencies then in existence.
Ratable Share shall mean the proportion that a
Bank's Commitment bears to the Commitments of all of the Banks.
If a Facility A Bank's Facility A Commitment is reduced pursuant
to Section 2.25(a) to equal the amount of its outstanding
Facility A Loans, such Facility A Bank's Facility A Commitment
shall be treated as being equal to zero for purposes of computing
such Facility A Bank's Ratable Share.
Regular Business Activities shall mean the
activities of the Loan Parties of owning, developing,
constructing, selling, financing, managing and consulting in
respect of real estate, the holding of real estate for
investment, the business of mortgage brokerage and mortgage
banking, the business of real estate brokerage and the title
insurance business.
Regulated Substances shall mean any substance,
including without limitation Solid Waste, the generation,
manufacture, processing, distribution, treatment, storage,
disposal, transport, recycling, reclamation, use, reuse or other
management or mismanagement of which is regulated by the
Environmental Laws.
Regulation U shall mean Regulation U, T, G or X as
promulgated by the Board of Governors of the Federal Reserve
System, as amended from time to time.
Rejected Offeror shall have the meaning assigned
to such term in Section 2.18.
Remaining Facility A Banks shall have the meaning
given to such term in Section 2.25(b).
Remediation Adjustment shall mean with respect to
any Environmentally Approved Land which is subject to a Permitted
Environmental Exception, 150% of the estimated remaining costs to
complete remediation necessary to cure such exception.
Removal Date shall have the meaning given to such
term in Section 2.25(b)(ii).
Reportable Event means a reportable event
described in Section 4043 of ERISA and regulations thereunder
with respect to a Plan or Multiemployer Plan.
Requested Increase shall have the meaning given to
such term in Section 2.15(a).
Request Date shall have the meaning assigned to
such term in Section 2.17.
Required Majority shall mean (i) if there exists
no Event of Default or if an Event of Default exists and is
continuing but there are no Loans, Letters of Credit or Escrow
Agreements outstanding, Banks whose Commitments aggregate at
least 66 2/3% of the Commitments of all of the Banks, or (ii) if
an Event of Default exists and is continuing and there are Loans,
Letters of Credit or Escrow Agreements outstanding, Banks whose
Total Exposure aggregates at least 66 2/3% of the Total Exposure
of all of the Banks. The Commitment and outstanding Loans of a
Bank shall not be included in determining a Required Majority of
Banks if a Bank Exclusion Event shall have occurred and be
continuing with respect to such Bank.
Required Majority of Facility A Banks shall mean
(i) if there exists no Event of Default or if an Event of Default
exists and is continuing but there are no Facility A Loans
outstanding, Facility A Banks whose Facility A Commitments
aggregate at least 66 2/3% of the Facility A Commitments of all
of the Facility A Banks, or (ii) if an Event of Default exists
and is continuing and there are Facility A Loans outstanding,
Facility A Banks whose Facility A Loans outstanding aggregate at
least 66 2/3% of the total principal amount of the Facility A
Loans outstanding hereunder. The Facility A Commitment and
outstanding Facility A Loans of a Facility A Bank shall not be
included in determining a Required Majority of Facility A Banks
if a Bank Exclusion Event shall have occurred and be continuing
with respect to such Facility A Bank.
Required Number of Additional Acceptances shall
have the meaning assigned to such term in Section 2.18.
Required Threshold of Banks shall mean (i) at
least two (2) or more Banks or (ii) Kleinwort Benson Limited and
a majority of banks having a principal place of business and
making loans in England.
Revolving Credit Euro-Rate Interest Period shall
have the meaning given to such term in Section 3.02.
Revolving Credit Euro-Rate Option shall mean the
rate of interest determined pursuant to Section 3.01(a)(ii).
Revolving Credit Loans shall mean Loans subject to
the Prime Rate Option, Federal Funds/Euro-Rate Option, Revolving
Credit Euro-Rate Option or CD Rate Option described in Section
3.01(a).
Revolving Credit Ratable Share shall mean the
proportion that a Facility A Bank's Facility A Revolving Credit
Commitment bears to the Facility A Revolving Credit Commitments
of all of the Facility A Banks. If a Facility A Bank's
Commitment is reduced pursuant to Section 2.25(a) to equal the
amount of its outstanding Facility A Loans, such Facility A
Bank's Facility A Revolving Credit Commitment shall be treated as
being equal to zero for purposes of computing such Facility A
Bank's Revolving Credit Ratable Share.
Second Level Debt Rating shall mean a Company Debt
Rating of (i) BBB- if the rating is provided by Standard &
Poor's, (ii) Baa3 if the rating is provided by Moody's, or
(iii) equivalent to a BBB- rating by Standard & Poor's or a Baa3
rating by Moody's if the rating is provided by a Qualified Rating
Agency other than Standard & Poor's or Moody's.
Security Event shall have the meaning given to
such term in Section 7.02.
Seller Purchase Money Loans shall mean purchase
money loans made by the seller of improved or unimproved real
estate in separate transactions for the exclusive purpose of
acquiring such real estate for development and secured by a
mortgage lien on such real estate.
Senior Executive shall mean the Chairman of the
Board, President, Executive Vice President, Chief Financial
Officer, Chief Accounting Officer or General Counsel of any Loan
Party.
Senior Indebtedness shall mean the Indebtedness
under this Agreement and any Permitted Additional Senior
Indebtedness.
Senior Liabilities shall mean with respect to the
Company and its Homebuilder Consolidated Subsidiaries their
accrued income taxes payable within one year, their liabilities
under the Loans, and any other Indebtedness of them, except for
Subordinated Indebtedness, Performance Letters of Credit and
Escrow Agreements.
Senior Officer Life Policy shall mean a policy of
life insurance owned by the Company and insuring the life of
Bruce E. Toll or Robert I. Toll and naming the Company as the
beneficiary thereunder.
Shareholders' Equity shall mean as of any date of
determination stockholders' equity less goodwill of the Company
and its Consolidated Subsidiaries as of such date determined on a
consolidated basis in accordance with GAAP.
Simple Majority shall mean (i) if there exists no
Event of Default or if an Event of Default exists but there are
no Loans, Letters of Credit or Escrow Agreements outstanding,
Banks whose Commitments aggregate 51% or more of the Commitments
of all of the Banks, or (ii) if an Event of Default exists and is
continuing and there are Loans, Letters of Credit or Escrow
Agreements outstanding, Banks whose Total Exposure aggregates 51%
or more of the Total Exposure of all of the Banks. The
Commitment and outstanding Loans of a Bank shall not be included
in determining a Simple Majority of Banks if a Bank Exclusion
Event shall have occurred and be continuing with respect to such
Bank.
Simple Majority of Facility A Banks shall mean
(i) if there exists no Event of Default or if an Event of Default
exists but there are no Facility A Loans outstanding, Facility A
Banks whose Facility A Commitments aggregate 51% or more of the
Facility A Commitments of all of the Facility A Banks, or (ii) if
an Event of Default exists and is continuing and there are
Facility A Loans outstanding, Facility A Banks whose Facility A
Loans outstanding aggregate 51% or more of the total principal
amount of the Facility A Loans outstanding hereunder. The
Facility A Commitment and outstanding Facility A Loans of a
Facility A Bank shall not be included in determining a Simple
Majority of Banks Facility A Banks if a Bank Exclusion Event
shall have occurred and be continuing with respect to such
Facility A Bank.
Sixth Amendment shall mean the Sixth Amendment to
this Agreement, dated May 8, 1996.
Sixth Amendment Effective Date shall mean the
effective date of the Sixth Amendment.
Solid Waste shall mean any garbage, refuse or
sludge from any waste treatment plant, water supply treatment
plant or air pollution control facility generated by activities
on the Property, and any unpermitted release into the environment
or the work place of any material as a result of activities on
the Property, including without limitation, scrap and used
Regulated Substances.
Spread shall have the meaning assigned to such
term in Section 2.16.
Standard & Poor's shall mean Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc.
Subordinated Indebtedness shall have the meaning
given to such term in Section 8.01(a)(iii).
Subordinated Loan Documents shall mean at any time
the agreements and other documents then governing the
Subordinated Indebtedness.
Subsidiary of any Person at any time shall mean
(i) any corporation, partnership or trust (including a business
trust) in which such Person owns directly or indirectly through
one or more intermediaries any of the issued and outstanding
voting stock, partnership interests or other interests, and
(ii) any corporation, trust (including a business trust),
partnership or other entity which is controlled or capable of
being controlled by such Person or one or more of such Person's
Subsidiaries.
Term Loan Due Date shall mean either the Facility
A Term Loan Due Date or the Facility B Loan Due Date.
Term Loans shall mean collectively the Facility A
Term Loans and the Facility B Loans and Term Loan shall mean
either a Facility A Term Loan or a Facility B Loans.
Third Level Debt Rating shall mean a Company Debt
Rating of (i) BB+ if the rating is provided by Standard & Poor's,
(ii) Ba1 if the rating is provided by Moody's, or
(iii) equivalent to a BB+ rating by Standard & Poor's or a Ba1
rating by Moody's if the rating is provided by a Qualified Rating
Agency other than Standard & Poor's or Moody's.
30% Limit shall have the meaning assigned to such
term in Section 2.18.
Transferor Bank shall mean the selling Bank
pursuant to an Assignment and Assumption Agreement.
Treasury Rate shall mean (A) with respect to Term
Loans , an interest rate per annum to be charged thereon
determined by the Agent two (2) Business Days prior to the
effective date (the "Effective Date") of the making of such Term
Loans (if they are Facility B Loans) or the election to have such
Loans bear interest at a Facility A Term Loan Option (if they are
Facility A Term Loans) as the yield on a United States Treasury
security with a life equal to the time period between the
Effective Date and the Term Loan Due Date; (B) with respect to
any Facility A Term Loan made by an Additional Facility A Bank
pursuant to an election under Section 11.11(c)(D)(1), the maximum
interest rate per annum which may be charged thereon determined
by the Agent two (2) Business Days prior to the date on which
such Facility A Term Loan is made as the yield on a United States
Treasury security with a life equal to the time period between
the date on which such Facility A Term Loan is to be made and the
Facility A Term Loan Due Date; and (C) with respect to any
proposed prepayment of a Term Loan pursuant to Section 4.04 or
4.05, the interest rate per annum to be used in computing the
Term Loan Prepayment Premium determined by the Agent two (2)
Business Days prior to the date of such prepayment if it is
voluntary and on or after such date if it is mandatory as the sum
of the yield on a United States Treasury security with a life
equal to the time period between the date on which such
prepayment is to be made and the Term Loan Due Date. The Agent
shall determine the yield on United States Treasury securities
pursuant to clauses (A), (B) and (C) above based on (i) the
display designated as "Page 501 on the Telerate Service (or such
other display as may replace Page 501 on the Telerate Service)
for actively traded U.S. Treasury securities at 11:00 a.m. on the
date on which such yield is to be determined or (ii) if such
yields shall not be reported as of such time or the yields
reported as of such time shall not be ascertainable, the Treasury
Constant Maturity Series yields reported in the Federal Reserve
Board's Statistical Release H-15 (519) (or its successor
publication) (the "Statistical Release") published most recently
next preceding (by more than one (1) Business Day) the date of
such computation. If Telerate Service or the Statistical Release
as the case may be do not report the yield of a security with a
life equal to the time period specified in clauses (A), (B) or
(C) above, the Agent shall compute the yield on a hypothetical
security with life equal to such time period by interpolating
linearly based on the reported yield of the security with a life
closest to and greater than such time period and the reported
yield of the security with a life closest to and less than such
time period.
Term Loan Prepayment Premium shall mean with
respect to the payment of a Term Loan for any reason (whether
voluntarily, by acceleration or otherwise and whether in whole or
in part) prior to the Term Loan Due Date, a premium to be paid in
connection therewith equal to the present value of the product of
the following: (a) the positive difference (this clause (a) shall
be deemed to equal zero if such difference is less than zero)
between (i) the Treasury Rate applicable to the Term Loan being
prepaid computed pursuant to clause (A) or (B) of the definition
of Treasury Rate and (ii) the Treasury Rate computed pursuant to
clause (C) of the definition of Treasury Rate which would apply
if a new Term Loan were made on the date of the proposed
prepayment with a maturity equal to the remaining maturity of the
Term Loan being prepaid, (b) the amount being prepaid, and (c) a
fraction with a numerator equal to the number of days from the
prepayment date through the Term Loan Due Date and a denominator
of 365 or 366 days as the case may be. The discount rate for the
purpose of computing present value in the preceding sentence
shall be the Treasury Rate which would apply to a hypothetical
new Term Loan if the Banks were to make such a Loan on the
prepayment date with a term that expires on Term Loan Due Date.
An example of the computation of the Term Loan Prepayment Premium
is set forth as Exhibit O hereto. The discount rate shall be
applied to the product of items (a), (b) and (c) above using the
methodology set forth in the fourth step of the example attached
as Exhibit O.
Total Exposure shall mean at any time with respect
to any Bank, the sum of such Bank's Facility A Loans, Facility B
Loans and Net Exposure under Letters of Credit and Escrow
Agreements outstanding at such time.
Unconsolidated Subsidiary shall mean any
Subsidiary of the Company which meets all of the following
requirements: (A) such Subsidiary is not consolidated with the
Company for accounting purposes under GAAP, (B) the Loan Parties
collectively own directly or indirectly through one or more
intermediaries at least 5% of the issued and outstanding voting
stock, partnership interests or other interests in such
Subsidiary, and (C) the aggregate of the Loan Parties'
investments in, contributions or loans to or guarantees or other
obligations for the benefit of such Subsidiary exceed $1,000,000.
1.02 Construction. Unless the context of this
Agreement otherwise clearly requires, references to the plural
include the singular, the singular the plural and the part the
whole, "or" has the inclusive meaning represented by the phrase
"and/or," and "including" has the meaning represented by the
phrase "including without limitation." References in this
Agreement to "determination" of or by the Agent or the Banks
shall be deemed to include good faith estimates by the Agent or
the Banks (in the case of quantitative determinations) and good
faith beliefs by the Agent or the Banks (in the case of
qualitative determinations). Whenever the Agent or the Banks are
granted the right herein to act in its or their sole discretion
or to grant or withhold consent such right shall be exercised in
good faith. The words "hereof," "herein," "hereunder" and
similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. The
section and other headings contained in this Agreement and the
Table of Contents preceding this Agreement are for reference
purposes only and shall not control or affect the construction of
this Agreement or the interpretation thereof in any respect.
Section, subsection, schedule and exhibit references are to this
Agreement unless otherwise specified.
1.03 Accounting Principles. Except as otherwise
provided in this Agreement, all computations and determinations
as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be
made and prepared in accordance with GAAP (including principles
of consolidation where appropriate), and all accounting or
financial terms shall have the meanings ascribed to such terms by
GAAP.
ARTICLE II
CREDIT FACILITIES
A. FACILITY A
2.01 Commitments to Make Facility A Loans. Subject to
the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Facility A
Bank severally agrees to make loans (the "Facility A Loans") to
the Borrower at any time or from time to time on or after the
date hereof to, but not including, the Expiration Date in an
aggregate principal amount not to exceed at any one time such
Facility A Bank's Facility A Revolving Credit Commitment minus
the sum of (i) such Facility A Bank's Net Exposure under
outstanding Letters of Credit issued pursuant to Section 2.10,
and (ii) such Facility A Bank's Net Exposure under Escrow
Agreements entered into pursuant to Section 2.11. Within such
limits of time and amount and subject to the other provisions of
this Agreement, the Borrower may borrow, repay and reborrow
pursuant to this Section 2.01 if Borrower elects one of the
revolving credit Interest Rate Options pursuant to Section
3.01(a).
2.02 Nature of Facility A Banks' Obligations with
Respect to Facility A Loans. Each Facility A Bank shall be
obligated to participate in each request for Facility A Loans
pursuant to Section 2.06 hereof in accordance with its Revolving
Credit Ratable Share. Facility A Term Loans made pursuant to
Section 11.11(c) shall be made exclusively by the Additional
Facility A Bank described in such Section. The aggregate of each
Facility A Bank's Facility A Loans outstanding hereunder to the
Borrower at any time shall never exceed its Facility A Commitment
minus the sum of its Net Exposure under outstanding Letters of
Credit plus its Net Exposure under outstanding Escrow Agreements.
The Borrower shall not request a Facility A Loan pursuant to
Section 2.01, 11.11(c) or otherwise hereunder if such Facility A
Loan would cause the Loan Parties to violate the covenant
contained in Section 8.01(e). The obligations of each Facility A
Bank hereunder are several. The failure of any Facility A Bank
to perform its obligations hereunder shall not affect the
obligations of the Borrower to any other party nor shall any
other party be liable for the failure of such Facility A Bank to
perform its obligations hereunder. The Facility A Banks shall
have no obligation to make Facility A Loans hereunder on or after
the Expiration Date.
2.03 Facility A Commitment Fee. Accruing from the date
hereof until the Expiration Date, the Borrower agrees to pay to
the Agent for the account of each Facility A Bank, as
consideration for such Facility A Bank's Facility A Commitment
hereunder, a commitment fee (the "Facility A Commitment Fee") at
a rate per annum (computed on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed) on which shall
be determined at any time based on the Company Debt Rating at
such time as follows:
Rate of
Facility A Commitment Fee
Company (expressed as a
Debt Rating percentage per annum)
First Level Debt Rating .175%
Second Level Debt Rating .225%
Third Level Debt Rating .325%
or lower rating
The foregoing rate shall change automatically with any change in
the Company Debt Rating. The Facility A Commitment Fee shall be
computed by applying the foregoing rate to the average daily
difference between the amount of such Facility A Bank's Facility
A Commitment as the same may be constituted from time to time
less the sum of its outstanding Facility A Loans and its Net
Exposure in Letters of Credit and Escrow Agreements. All
Facility A Commitment Fees shall be payable in arrears on the
first Business Day of each February, May, August and November
after the date hereof and on the earlier of (x) the Expiration
Date and (y) acceleration of the Facility A Notes. Borrower's
obligation to pay a Facility A Commitment Fee to a Facility A
Bank shall terminate whenever a Facility A Bank Exclusion Event
shall have occurred and be continuing with respect to such
Facility A Bank.
2.04 Extension by Facility A Banks of the Mandatory
Reduction Date or Expiration Date.
(a) Mandatory Reduction Date. Borrower may
request a one-year extension of the Mandatory Reduction Date by
delivering written notice of such request to the Facility A Banks
on or after Borrower delivers the annual financial statements to
the Banks for the fiscal year ending October 31, 1995 or any
subsequent fiscal year pursuant to Section 8.02(a)(ii), but
before April 30 of the following fiscal year. The Mandatory
Reduction Date may not be extended to a date which is on or after
the Expiration Date.
(b) Expiration Date. Borrower may request (1) a
two-year extension of the Expiration Date by delivering written
notice of such request to the Facility A Banks on or after
Borrower delivers the annual financial statements to the Banks
for the fiscal year ending October 31, 1996 pursuant to Section
8.02(a)(ii), but before April 30 of the following fiscal year,
and (2) if the Expiration Date has been extended pursuant to
clause (1) above, Borrower may request a one-year extension of
the Expiration Date by delivering written notice of such request
to the Facility A Banks on or after Borrower delivers the annual
financial statements to the Banks for the fiscal year ending
October 31, 1997 or any subsequent fiscal year pursuant to
Section 8.02(a)(ii), but before April 30 of the following fiscal
year. The Expiration Date shall never be extended to a date
which is more than five (5) years (1826 or 1827 days, as the case
may be) after the effective date of such extension.
(c) Mandatory Reduction Date or Expiration Date.
The Facility A Banks agree to respond to the Borrower's request
for an extension of the Mandatory Reduction Date pursuant to
Section 2.04(a) or the Expiration Date pursuant to Section
2.04(b) within seventy-five (75) days following the Facility A
Banks' receipt of such request; provided, however, that the
Required Majority of Facility A Banks must consent to any
extension of the Mandatory Reduction Date or Expiration Date, as
the case may be, and the failure of any Facility A Bank to
respond within such time period shall constitute a rejection by
such Facility A Bank of Borrower's request for an extension. If
Borrower requests an extension of the Mandatory Reduction Date or
Expiration Date and such Mandatory Reduction Date or Expiration
Date (before its extension) is fewer than 75 days following
Borrower's request for such extension, the Facility A Banks shall
be deemed to reject such request if they do not respond to such
request before such Mandatory Reduction Date or Expiration Date,
as the case may be. A Facility A Bank which fails to respond
within such 75-day time period may within 60 days after the
expiration of such period rescind its rejection and join in the
extension if a Simple Majority of Facility A Banks approved of
the extension on or before the expiration of such 75-day period.
The extension will be approved if Facility A Banks which approved
the request within the 75-day period, together with Facility A
Banks which rescind their rejections pursuant to the preceding
sentence, comprise a Required Majority of Facility A Banks. If
the Required Majority of Facility A Banks agree to extend the
Mandatory Reduction Date or Expiration Date, as the case may be,
but one or more of the Facility A Banks do not agree to such
extension (hereinafter referred to as a "Non-Extending Facility A
Bank"), then the extension shall be effective only if the
Borrower shall have completed all of the steps required to remove
the Non-Extending Facility A Bank pursuant to Section 2.25(b) on
or before the Mandatory Reduction Date or Expiration Date (before
giving effect to the requested extension; hereinafter referred to
as the "Non-Extending Facility A Bank Removal Date"), so that the
Removal Date (as defined in Section 2.25(b)) shall be the Non-Extending
Facility A Bank Removal Date. Notwithstanding the
preceding sentence, the Borrower and the Non-Extending Facility A
Bank may with the consent of a Simple Majority of Facility A
Banks agree to have the removal of the Non-Extending Facility A
Bank pursuant to Section 2.25(b) occur on a mutually acceptable
date prior to the Non-Extending Facility A Bank Removal Date so
that the Removal Date (as defined in Section 2.25(b))) shall be
such agreed upon date.
2.05 Intentionally Omitted.
2.06 Facility A Loan Requests. Except as otherwise
provided herein, the Borrower may from time to time prior to the
Expiration Date request the Facility A Banks to make Facility A
Loans, or renew or convert the Interest Rate Option applicable to
existing Facility A Loans, by the delivery to the Agent, not
later than 10:00 A.M. Philadelphia time (i) three (3) Business
Days prior to the proposed Borrowing Date with respect to the
making of Facility A Loans to which the Revolving Credit Euro-Rate Option or
Facility A Term Loan Option applies or the conversion to or the renewal of
the Revolving Credit Euro-Rate Option for any Facility A Loans; (ii)
one (1) Business Day prior to the proposed Borrowing Date with respect to
the making of a Facility A Loan to which the Federal Funds/Euro-Rate Option
applies or the conversion to or renewal of the Federal
Funds/Euro-Rate Option for any Facility A Loans; (iii) one (1)
Business Day prior to the proposed Borrowing Date with respect to
the making of a Facility A Loan to which either the CD Rate
Option or the Prime Rate Option applies or the conversion to or
renewal of the CD Rate Option for any Facility A Loans; and
(iv) the last day of the preceding Interest Period with respect
to the conversion to the Prime Rate Option for any Facility A
Loan, of a duly completed request therefor substantially in the
form of Exhibit F(1) hereto by telephone and confirmed on the
same day in writing by letter, facsimile or telex in such form
(each, a "Facility A Loan Request"). Each Facility A Loan
Request shall be irrevocable and shall specify (i) the proposed
Borrowing Date; (ii) the aggregate amount of the proposed
Facility A Loans comprising the Borrowing Tranche, which shall be
in integral multiples of $100,000 and not less than $2,000,000
for Facility A Loans to which the CD Rate Option or Revolving
Credit Euro-Rate Option applies, not less than the lesser of
$200,000 or the maximum amount available for Facility A Loans to
which the Prime Rate Option or the Federal Funds/Euro-Rate Option
applies and shall equal or exceed $25,000,000 but not exceed
$50,000,000 for Facility A Loans to which the Expiration Date
Facility A Term Loan Option applies and shall equal or exceed
$25,000,000 but not exceed $75,000,000 for Facility A Loans to
which the Mandatory Reduction Date Facility A Term Loan Option
applies; (iii) whether the CD Rate Option, Revolving Credit Euro-Rate Option,
Prime Rate Option, Federal Funds/Euro-Rate Option or Facility A Term Loan
Option shall apply to the proposed Facility A Loans comprising the Borrowing
Tranche; and (iv) in the case of Facility A Loans to which the CD Rate
Option or any Euro-Rate Option applies, an appropriate CD Rate or Euro-Rate
Interest Period for the proposed Facility A Loans comprising the Borrowing
Tranche.
2.07 Making Facility A Loans. The Agent shall,
promptly after receipt by it of a Facility A Loan Request
pursuant to Section 2.06, notify the Facility A Banks of its
receipt of such Facility A Loan Request specifying: (i) the
proposed Borrowing Date and the time and method of disbursement
of such Facility A Loan; (ii) the amount and type of such
Facility A Loan and the applicable CD Rate Interest Period or
Euro-Rate Interest Period (if any); and (iii) the apportionment
among the Facility A Banks of the Facility A Loans as determined
by the Agent in accordance with their respective Revolving Credit
Ratable Shares. Each Facility A Bank shall remit the principal
amount of each Facility A Loan to the Agent in immediately
available funds at the Principal Office prior to 12:00 Noon
Philadelphia time such that the Agent is able to, and the Agent
shall, to the extent the Facility A Banks have made funds
available to it for such purpose, fund such Facility A Loan to
the Borrower in U.S. Dollars and same day funds at the Principal
Office on the Borrowing Date, provided that if any Facility A
Bank fails to remit such funds to the Agent in a timely manner
the Agent may elect in its sole discretion to fund with its own
funds the Facility A Loan of such Facility A Bank on the
Borrowing Date.
2.08 Facility A Notes. The obligation of the Borrower
to repay the aggregate unpaid principal amount of the Facility A
Loans made to it by each Facility A Bank, together with interest
thereon, shall be evidenced by a promissory note of the Borrower
dated the Closing Date in substantially the form attached hereto
as Exhibit E(1) payable to the order of each Facility A Bank in a
face amount equal to the Facility A Commitment of such Facility A
Bank.
2.09 Use of Facility A Proceeds. The proceeds of the
Facility A Loans shall be used by Borrower solely to make
Intercompany Loans to the Guarantors which shall be used by the
Guarantors as working capital, for other corporate purposes and
to satisfy amounts advanced pursuant to Letters of Credit and
Escrow Agreements.
2.10 Letter of Credit Sublimit.
(a) Letter of Credit Requests. The Borrower may
request that a Facility A Bank (such Bank or any Bank which
issued an Existing Letter of Credit each shall be referred to as
the "Issuing Bank" with respect to its Letter of Credit) issue,
on the terms and conditions hereinafter set forth, letters of
credit on behalf of a Guarantor (each a "New Letter of Credit").
Each Existing Letter of Credit has, and each New Letter of Credit
shall have, a maximum stated maturity date on or before the
earlier of the following two dates: (1) four years from the date
on which such Letter of Credit is issued, or (2) one year after
the Expiration Date. For purposes of this subsection, "stated
maturity" is the expiration date of the Letter of Credit without
giving effect to any future extension thereof under an automatic
renewal provision, provided that such automatic renewal provision
permits the Issuing Bank to elect not to extend by giving written
notice of cancellation to the beneficiary. If the termination
date of the Issuing Bank's obligations under a Letter of Credit
shall extend beyond the Expiration Date, Borrower agrees to Cash
Collateralize such Letter of Credit at least fifteen (15) days
prior to the Expiration Date. Borrower also agrees to Cash
Collateralize Letters of Credit as described in Section 2.25(b)
and as otherwise set forth in this Agreement. In no event shall
(i) the aggregate undrawn face amount of the Letters of Credit
issued pursuant to this Section 2.10 by any Facility A Bank at
any time exceed that Facility A Bank's Letter of Credit Issuance
Limit; (ii) the L/C-Escrow Exposure exceed at any time the L/C-Escrow
Sublimit; (iii) the Aggregate Facility A Credit Exposure
at any time exceed the Facility A Commitments; or (iv) Borrower
request any Letter of Credit if the issuance thereof would cause
the Loan Parties to violate the covenant contained in Section
8.01(e).
(b) Documentation; Notices to Agent. The
Facility A Banks will issue Letters of Credit which are either
Performance Letters of Credit or Financial Letters of Credit.
Borrower shall deliver to the Issuing Bank, with a copy being
delivered simultaneously to Agent, its duly completed application
for issuance on the Issuing Bank's standard form therefor
together with such other related documents as Agent or the
Issuing Bank may reasonably require. Provided the conditions set
forth in this Agreement have been met, such Issuing Bank shall
within five Business Days following receipt of such application
and documents acceptable to Agent and such Issuing Bank issue its
Letter of Credit in a form and containing such terms and
conditions as are acceptable to Agent and such Issuing Bank and
as otherwise directed by Borrower. Each Issuing Bank and
Borrower have advised Agent of the face amount and nature
(Performance or Financial) of, and provided to Agent photocopies
of, all existing Letters of Credit issued by such Issuing Bank,
and will notify the Agent of all future Letters of Credit on the
date the Issuing Bank issues such Letters of Credit and provide
Agent photocopies thereof within five Business Days following the
day thereof and shall notify Agent of any increase or decrease in
the face amount of any Letter of Credit issued by such Issuing
Bank on the date of such increase or decrease. The Borrower and
Guarantors agree to be bound by the terms of the Issuing Bank's
application and/or agreement for Letters of Credit and the
Issuing Bank's written regulations and customary practices
relating to Letters of Credit, though such interpretation may be
different from the Loan Parties' own, and it is understood and
agreed that, except in the case of gross negligence or willful
misconduct, the Issuing Bank shall not be liable for any error,
negligence and/or mistakes, whether of omission or commission, in
following the Borrower's instructions or those contained in the
Letters of Credit or any modifications, amendments or supplements
thereto.
(c) Letter of Credit Fees. The Borrower shall
pay (i) to the Agent for the account of the Facility A Banks a
fee (the "Letter of Credit Fee") equal to three-quarters of one
percent (3/4%) per annum (subject to adjustment below) of the
daily average of the face amount of all Letters of Credit to be
allocated among the Facility A Banks based on their Net Exposures
in outstanding Letters of Credit, and (ii) to the Agent for the
account of each Issuing Bank a fronting fee equal to one-eighth
of one percent (1/8%) per annum (subject to adjustment below) of
the daily average face amount of the Letters of Credit issued by
such Issuing Bank. Letter of Credit Fees and the fronting fees
shall be computed based on a year of 365 or 366 days, as the case
may be. If the face amount of Financial Letters of Credit issued
by the Facility A Banks hereunder shall at any time exceed
$5,000,000, (i) the Letter of Credit Fee in respect of such
excess shall equal a rate per annum equal to the Euro-Rate Spread
then in effect and (ii) the fronting fee in respect of such
excess shall equal one-eighth of one percent (1/8%) per annum.
The Letter of Credit Fee and fronting fee each shall be payable
quarterly in arrears commencing with the first Business Day of
each February, May, August and November following issuance of
each Letter of Credit and on the expiration date of such Letter
of Credit.
2.11 Escrow Agreement Sublimit.
(a) Escrow Agreement Requests. Borrower may
request that any Facility A Bank (such Facility A Bank or any
Facility A Bank which is a party to an Existing Escrow Agreement
each shall be referred to as an "Escrow Bank" with respect to its
Escrow Agreement) on behalf of Guarantor enter into an agreement
or other similar arrangements with a municipality or any other
Official Body, including without limitation any utility, water or
sewer authority, or other similar entity in which a Guarantor or
Affiliate of the Company conducts its business for the purpose of
assuring such municipality or other Official Body that such
Guarantor or Affiliate will properly and timely complete work it
has agreed to perform for the benefit of such municipality or
other Official Body, under the terms of which the New Escrow Bank
will agree to set aside or otherwise make available a specified
amount of funds which will be paid to such municipality or other
Official Body in the event such Guarantor or Affiliate fails to
perform such work (each a "New Escrow Agreement"). Each Existing
Escrow Agreement has, and each New Escrow Agreement shall have, a
maximum stated maturity date on or before the earlier of the
following two dates: (1) four years from the date on which such
Escrow Agreement becomes effective, or (2) one year after the
Expiration Date. For purposes of this subsection, "stated
maturity" is the expiration date of the Escrow Agreement without
giving effect to any future extension thereof under an automatic
renewal provision, provided that such automatic renewal provision
permits the Escrow Bank to elect not to extend by giving written
notice of cancellation to the beneficiary. If the termination
date of the Escrow Bank's obligations under an Escrow Agreement
shall extend beyond the Expiration Date, Borrower agrees to Cash
Collateralize such Escrow Agreement at least fifteen (15) days or
prior to the Expiration Date. Borrower also shall Cash
Collateralize Escrow Agreements as described in Section 2.14(b)
and otherwise in this Agreement. In no event shall (i) the
aggregate obligations under Escrow Agreements entered into
pursuant to this Section 2.11 by any Facility A Bank exceed such
Facility A Bank's Escrow Agreement Issuance Limit; (ii) the L/C-Escrow
Exposure exceed, at any time, the L/C-Escrow Sublimit;
(iii) the Aggregate Facility A Credit Exposure exceed, at any
time, the Facility A Commitments, or (iv) Borrower request that
an Escrow Bank enter into an Escrow Agreement if entering into
such Escrow Agreement would cause the Loan Parties to violate the
covenant contained in Section 8.01(e).
(b) Documentation; Notices to Agent. Borrower
shall deliver to the Escrow Bank, with a copy being delivered
simultaneously to Agent, its request for the Escrow Bank to enter
into an Escrow Agreement, together with such other related
documents as Agent or the Escrow Bank may reasonably require, and
provided the conditions set forth in this Agreement have been
met, the Escrow Bank will enter into an Escrow Agreement in a
form and containing such terms and conditions as are acceptable
to Agent and the Escrow Bank and as otherwise directed by
Borrower. The Escrow Bank and Borrower have advised Agent of the
amount of the Escrow Bank's obligations under all existing Escrow
Agreements to which it is a party, and provided to Agent
photocopies of all such Escrow Agreements, and will notify Agent
of all future Escrow Agreements on the date Escrow Bank enters
into any such future Escrow Agreements and provide the Agent
photocopies thereof within five Business Days following the date
thereof and shall notify Agent of any increase or decrease in the
amount of the outstanding obligation under any Escrow Agreement
to which the Escrow Bank is a party on the effective date of such
increase or decrease. It is understood and agreed that, except
in the case of gross negligence or willful misconduct, the Escrow
Bank shall not be liable for any error, negligence and/or
mistakes, whether of omission or commission, in following the
Borrower's instructions or those contained in the Escrow
Agreements or any modifications, amendments or supplements
thereto.
(c) Escrow Agreement Fees. The Borrower shall
pay (i) to the Agent for the account of the Facility A Banks a
fee (the "Escrow Fee") equal to three quarters of one percent
(3/4%) per annum to be allocated among the Facility A Banks based
on their Net Exposures in outstanding Escrow Agreements, and
(ii) to the Agent for the account of the Escrow Bank a fronting
fee equal to one-eighth of one percent (1/8%) per annum, which
fees shall be computed on the daily average outstanding
obligations of the Escrow Bank under the Escrow Agreements and
shall be payable quarterly in arrears commencing with the first
Business Day of each February, May, August and November following
issuance of each Escrow Agreement and on the expiration date of
such Escrow Agreement. Escrow Fees and the fronting fees shall
be computed based on a year of 365 or 366 days, as the case may
be.
2.12 Reimbursement of Advances on Letters of Credit or
Escrow Agreements. Borrower and each Guarantor on whose behalf
each Letter of Credit and each Escrow Agreement is issued hereby
agree, notwithstanding the terms of any documents executed and
delivered under Sections 2.10(b) and 2.11(b) to the contrary, to
reimburse each Issuing Bank for all amounts advanced pursuant to
each Letter of Credit and to reimburse all Escrow Banks for all
sums advanced pursuant to each Escrow Agreement. If the
foregoing sums are not immediately reimbursed by Borrower or the
Guarantor for whom such Letter of Credit or Escrow Agreement was
issued, the unreimbursed sum shall become, at the time of the
advance a Revolving Credit Loan from the Facility A Banks (unless
an event described in Section 9.01(m) (without giving effect to
the 30-day grace period) or (n) has occurred and is continuing in
which case such sum shall not be a Facility A Loan but shall
remain payable by Borrower and the Guarantors in the same manner
and on the same terms as if it were a Facility A Loan from the
Facility A Banks) and shall thereafter bear interest under the
Prime Rate Option in accordance with the provisions contained in
Section 3.01. Each such Issuing Bank and Escrow Bank shall give
written notice to any Guarantor for whom each Letter of Credit or
Escrow Agreement was issued who failed immediately to reimburse
the sums advanced and also shall notify the Agent of such
unreimbursed draw. Agent shall promptly notify the Facility A
Banks of such draw.
2.13 Participations in Letters of Credit and Escrow
Agreements; Responsibility of Issuing and Escrow Banks.
(i) Each Facility A Bank shall, notwithstanding
the Letter of Credit Issuance Limits and Escrow Agreement
Issuance Limits, purchase from time to time from each other
Facility A Bank an undivided interest in such other Facility A
Bank's Contingent Exposure in Letters of Credit which it has
issued and Escrow Agreements to which it is a party as may be
necessary to result in the Net Exposure of each Facility A Bank
in each Letter of Credit and Escrow Agreement being equal to such
Facility A Bank's Revolving Credit Ratable Share of such
Contingent Exposure. The Facility A Banks shall purchase
interests in the Contingent Exposures of each of the other
Facility A Banks or such interests shall be reduced whenever such
Contingent Exposures are increased or reduced for any reason so
that the Net Exposure of each Facility A Bank shall always equal
its Revolving Credit Ratable Share of the Contingent Exposures of
all of the Facility A Banks except for short-term differences
which arise after an Additional Facility A Bank joins the
Agreement as described in Section 11.11(c). The Agent may in its
sole discretion from time to time prepare and distribute to each
Facility A Bank a Confirmation of Exposure. Each Facility A Bank
shall review such Confirmation of Exposure and notify the Agent
within two Business Days of its receipt thereof if it believes
the Confirmation of Exposure incorrectly lists the amount of its
Contingent Exposure in Letters of Credit or Escrow Agreements or
any other information. Agent may assume that the information
contained in the Confirmation of Exposure is correct if a
Facility A Bank does not notify the Agent of an error therein
within such two-day period, provided that a Facility A Bank may
subsequently correct an error in the Confirmation of Exposure but
shall be responsible for any loss resulting from such delay.
(ii) The purchases by each Facility A Bank of
interests in Letters of Credit and Escrow Agreements pursuant to
Section 2.13(i) shall be absolute, irrevocable and unconditional
and shall be enforceable by every other Facility A Bank both
before and after an Event of Default shall have occurred and be
continuing and both before and after the Expiration Date shall
have passed. In the event any draw under a Letter of Credit
issued by an Issuing Bank or payment under an Escrow Agreement
entered into by an Escrow Bank is for any reason not immediately
reimbursed directly by Borrower or by all Facility A Banks making
Facility A Loans subject to the Prime Rate Option, each Facility
A Bank immediately upon demand by Agent shall severally (and not
jointly) reimburse such Issuing Bank or an Escrow Bank, as the
case may be, in an amount equal to its Revolving Credit Ratable
Share of the amount by which such Issuing Bank or an Escrow Bank
has not been reimbursed in immediately available funds without
any setoff, counterclaim or deduction of any kind, and Borrower
shall remain obligated to repay upon demand such amounts to the
Facility A Banks with interest thereon at the rate which would
otherwise be borne by a Facility A Loan subject to the Prime Rate
Option hereunder.
(iii) Without limiting the generality of any
of the foregoing, each Facility A Bank, the Borrower and the
Guarantor on whose behalf a Letter of Credit is issued or an
Escrow Agreement is entered into shall assume all risks of the
acts, omissions, or misuse of each Letter of Credit and each
Escrow Agreement by any beneficiary thereof; and, each Issuing
Bank and each Escrow Bank (except to the extent of its gross
negligence or willful misconduct) shall not be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any Letter of Credit or Escrow Agreement issued
by it or any document submitted by any party in connection with
the application for and issuance of such Letter of Credit or
Escrow Agreement, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or
forged; (b) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any instrument or document
transferring or assigning or purporting to transfer or assign any
Letter of Credit or Escrow Agreement or the rights or benefits
thereunder or proceeds thereof in whole or in part, which may
prove to be invalid or ineffective for any reason; (c) failure of
the beneficiary under any Letter of Credit or Escrow Agreement to
comply fully with conditions required in order to demand payment
under such Letter of Credit or Escrow Agreement; (d) errors,
omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise; or
(e) any loss or delay in the transmission or otherwise of any
documents, requests, or drafts required in order to make a
disbursement or other payment under any such Letter of Credit or
Escrow Agreement. Any action taken or omitted to be taken by an
Issuing Bank or Escrow Bank (without gross negligence or willful
misconduct on its part) shall be binding upon each Facility A
Bank, and shall not put any such Issuing Bank or Escrow Bank
under any resulting liability to any Facility A Bank, the
Borrower or such Guarantor, and each Facility A Bank (jointly and
severally in proportion to its Revolving Credit Ratable Share),
the Borrower and such Guarantor, jointly and severally, agree to
indemnify and hold each such Issuing Bank and Escrow Bank
harmless from and against any and all losses, liabilities,
claims, obligations, penalties, actions, damages, suits,
judgments, costs, expenses (including reasonable fees of counsel
to such Issuing Bank or Escrow Bank), or disbursements imposed
on, incurred by or asserted against any such Issuing Bank or
Escrow Bank, in any way relating to or arising from it acting or
refraining from acting in its capacity as such, except if the
same results from such Issuing Bank's or Escrow Bank's gross
negligence or willful misconduct.
(iv) On the date on which the Borrower shall Cash
Collateralize a Letter of Credit or an Escrow Agreement pursuant
to Section 2.10, 2.11 or 2.14 (but not pursuant to
Section 9.02(a)), the Letters of Credit or Escrow Agreements so
collateralized shall cease to be Letters of Credit or Escrow
Agreements hereunder, each Facility A Bank other than the Escrow
Bank or Issuing Bank shall be deemed to sell to the Issuing Bank
or Escrow Bank its undivided interest in the Letters of Credit or
Escrow Agreements and in such collateral and indemnification
agreements in exchange for its Net Exposure in such Letters of
Credit or Escrow Agreements (which Net Exposure shall be reduced
to zero).
2.14 Reduction of Facility A Commitments.
(a) Pro Rata Reduction. The Borrower shall have
the right at any time and from time to time upon five (5)
Business Days' prior written notice to the Agent to reduce
permanently, in a minimum amount of $5,000,000 of principal and
whole multiples of $500,000 for any amount over $5,000,000, or
terminate the Facility A Commitments based first on the Revolving
Credit Ratable Shares of the Facility A Banks until such
Revolving Credit Ratable Shares have been reduced to zero and
then based on the Facility A Ratable Shares of the Facility A
Banks without penalty or premium, except as hereinafter set
forth, provided that any such reduction or termination shall be
accompanied by (a) the payment in full of any Facility A
Commitment Fee then accrued on the amount of such reduction or
termination and (b) prepayment first of the Revolving Credit
Loans and then of the Facility A Term Loans, together with the
full amount of interest accrued on the principal sum to be
prepaid (and all amounts referred to in Sections 4.04 and 4.06
hereof), to the extent that the aggregate amount thereof then
outstanding plus the outstanding face amount of Letters of Credit
and obligations under Escrow Agreements exceeds the Facility A
Commitments as so reduced or terminated. From the effective date
of any such reduction or termination the obligations of Borrower
to pay the Facility A Commitment Fee pursuant to Section 2.03
shall correspondingly be reduced or cease.
(b) Automatic Reduction on Mandatory Reduction
Date.
(i) Reduction of Facility A Commitments.
The amount of the Facility A Commitment of each Facility A Bank
shall be reduced automatically and permanently on the Mandatory
Reduction Date by 50% of the amount of such Facility A Commitment
immediately before such date so that (i) each Facility A Bank's
Facility A Commitment on and immediately after the Mandatory
Reduction Date shall equal 50% of the amount of its Facility A
Commitment immediately prior to such date, and (ii) the aggregate
of the Facility A Commitments on and immediately after the
Mandatory Reduction Date shall equal 50% of the amount of the
aggregate of the Facility A Commitments immediately before such
date.
(ii) Reduction of Escrow Agreement and Letter
of Credit Limits and Sublimits. The amount of the Escrow
Agreement Issuance Limit and the Letter of Credit Issuance Limit
of each Facility A Bank and the L/C-Escrow Sublimit each shall be
reduced automatically and permanently on the Mandatory Reduction
Date as follows:
(A) Escrow Agreement Issuance Limit. The amount
of each Facility A Bank's Escrow Agreement Issuance
Limit on and after the Mandatory Reduction Date shall
be equal to the greater of (1) 50% of the amount of
such Escrow Agreement Issuance Limit immediately before
the Mandatory Reduction Date or (2) the amount of such
Facility A Bank's obligations as the Escrow Bank under
Escrow Agreements. If the amount in clause (2) of the
sentence above exceeds the amount in clause (1), then,
so long as such excess continues to exist: (y) such
Facility A Bank's Escrow Agreement Issuance Limit shall
be reduced automatically as the amount in clause (2)
decreases (i.e., due to the termination or expiration
of Escrow Agreements to which it is a party), and
(z) the Borrower may not request from such Facility A
Bank, and such Facility A Bank may not enter into,
additional Escrow Agreements pursuant to this
Agreement.
(B) Letter of Credit Issuance Limit. The amount
of each Facility A Bank's Letter of Credit Issuance
Limit on and after the Mandatory Reduction Date shall
be equal to the greater of (1) 50% of the amount of
such Letter of Credit Issuance Limit immediately before
the Mandatory Reduction Date or (2) the amount of such
Facility A Bank's obligations as the Issuing Bank under
Letters of Credit. If the amount in clause (2) of the
sentence above exceeds the amount in clause (1), then,
so long as such excess continues to exist: (y) such
Facility A Bank's Letter of Credit Issuance Limit shall
be reduced automatically as the amount in clause (2)
decreases (i.e., due to the termination or expiration
of Letters of Credit which it has issued), and (z) the
Borrower may not request from such Facility A Bank, and
such Facility A Bank may not issue, any additional
Letters of Credit pursuant to this Agreement.
(C) L/C-Escrow Sublimit. The amount of the L/C-Escrow
Sublimit shall be equal to the greater of
(1) two-thirds (2/3) of the amount of the Facility A
Commitments (rounded upward to the nearest number which
is an integral multiple of $5,000,000) after reduction
of such Facility A Commitments or (2) the amount the
L/C-Escrow Exposure on the Mandatory Reduction Date.
If the L/C-Escrow Exposure exceeds the L/C-Escrow
Sublimit, then, so long as such excess continues to
exist: (y) the L/C-Escrow Sublimit shall be reduced
automatically as the L/C-Escrow Exposure decreases
(i.e., due to the termination or expiration of Escrow
Agreements or Letters of Credit), and (z) the Borrower
may not request that any Facility A Bank enter into any
Escrow Agreements or issue any Letters of Credit.
(iii) Repayment of Facility A Loans; Cash
Collateralization of Escrow Agreements and Letters of Credit. If
the Aggregate Facility A Credit Exposure exceeds the amount of
the Facility A Commitments on the Mandatory Reduction Date (after
the Facility A Commitments have been reduced on such date),
Borrower shall repay Facility A Loans on the Mandatory Reduction
Date in the amount of the lesser of (A) such excess or (B) the
amount of Facility A Loans outstanding. Borrower shall repay all
Revolving Credit Loans before it repays any Facility A Term Loans
pursuant to the first sentence. Any repayment of a Facility A
Term Loan on the Mandatory Reduction Date pursuant to the first
sentence of this clause (iii) shall be subject to the Term Loan
Prepayment Premium. If the aggregate of the undrawn face amount
of Letters of Credit scheduled to expire after the Mandatory
Reduction Date plus obligations under the Escrow Agreements
scheduled to terminate after the Mandatory Reduction Date exceeds
the amount of Facility A Commitments on such Mandatory Reduction
Date after reduction of such Facility A Commitments (such excess
shall be referred to as the "Amount to be Collateralized"), then
Borrower shall, on or before the date which is fifteen (15) days
before such Mandatory Reduction Date, Cash Collateralize Letters
of Credit and Escrow Agreements in an aggregate amount equal to
or exceeding such Amount to be Collateralized. Borrower shall
select outstanding Escrow Agreements and Letters of Credit for
Cash Collateralization for purposes of the preceding sentence in
the following order of priority: (i) first, Borrower shall
select Escrow Agreements and Letters of Credit in reverse order
of the amount of obligations under or face amount of, as the case
may be, such Escrow Agreements or Letters of Credit (so that, for
example, a Letter of Credit will be Cash Collateralized before an
Escrow Agreement if the face amount of the Letter of Credit will
exceed the obligations under the Escrow Agreement on the
Mandatory Reduction Date); (ii) second, if (A) two or more
Letters of Credit shall have the same face amount, (B) the amount
of the obligations under two or more Escrow Agreements shall be
the same or (C) the face amount of a Letter of Credit shall equal
the amount of the obligations under an Escrow Agreement, then, in
such event, Borrower shall Cash Collateralize such Letters of
Credit and Escrow Agreements (the obligations under or face
amounts of which are the same) in order of the amount of the
Contingent Exposure of the Issuing Banks or Escrow Banks which
issued or entered into such Letters of Credit or Escrow
Agreements (so that, for example, if more than one Facility A
Bank is the Escrow Bank or Issuing Bank under such Escrow
Agreements or Letters of Credit all of such Escrow Agreements and
Letters of Credit issued by the Facility A Bank with the highest
Contingent Exposure would be Cash Collateralized before any of
such Escrow Agreements or Letters of Credit issued by any other
Facility A Bank would be Cash Collateralized).
2.15 Increase in Facility A Commitments.
(a) Existing Facility A Banks.
(i) Procedures. Subject to the limitations
contained in Section 2.15(c), Borrower may from time to time
request an increase in the Facility A Commitments of the Facility
A Banks by sending a notice thereof to all of the Facility A
Banks and the Agent. Such notice shall specify the total amount
of increase requested by the Borrower (the "Requested Increase")
which amount shall not exceed the amount permitted in Section
2.15(c) below. Each Facility A Bank shall respond in writing to
Borrower (with a copy simultaneously sent to the Agent), within
forty-five (45) days after receiving such notice from Borrower,
stating the maximum amount, if any, by which it is willing to
increase its Facility A Commitment (the "Offered Amount"). If
the total of the Offered Amount for all of the Facility A Banks
is less than the Requested Increase, each Facility A Bank's
Facility A Commitment shall increase by its Offered Amount and
the Borrower may offer the difference to a new bank pursuant to
Section 2.15(b) below. If the total of the Offered Amount for
all of the Facility A Banks is greater than the Requested
Increase, the Requested Increase shall be allocated in proportion
to the Offered Amounts.
(ii) Effect on Letter of Credit and Escrow
Limits. Whenever a Facility A Bank increases its Facility A
Commitment hereunder, (1) the L/C-Escrow Sublimit shall increase
by an amount equal to 2/3 of the increased of such Facility A
Bank's Facility A Commitment, and (2) its Letter of Credit
Issuance Limit and its Escrow Agreement Issuance Limit each shall
be increased by multiplying the current limit times a fraction
equal to its new Facility A Commitment after giving effect to the
increase in its Facility A Commitment divided by its Facility A
Commitment before such increase. Following any increase in
Facility A Commitments pursuant to this Section 2.15(a), the
Agent shall send to the Facility A Banks and the Borrower a
revised Schedule 1.01(C) setting forth the new Facility A
Commitments. Such schedule shall replace the existing Schedule
1.01(C) if no Facility A Bank objects thereto within 10 days of
its receipt thereof.
(b) New Facility A Banks. Subject to the
limitations contained in Section 2.15(c), Borrower may from time
to time request that a new bank join this Agreement and provide a
Facility A Commitment hereunder, provided that Borrower shall at
least seven (7) days prior to the date on which such bank joins
this Agreement notify the Agent of the name of such proposed new
bank and the amount of its proposed Facility A Commitment, Letter
of Credit Issuance Limit and Escrow Agreement Issuance Limit and
the amount of Facility A Term Loans it shall make pursuant to
Section 11.11(c) (if any) and deliver a duly completed New Bank
Joinder and Information Package with respect to such bank. Such
bank shall join this Agreement pursuant to the procedures
contained in Section 11.11.
(c) Limitations on Increases.
(i) Borrower may not request an increase in
the Facility A Commitments and the Facility A Commitments shall
not be increased pursuant to Section 2.15(a) and (b) if: (1)
after giving effect to the proposed increase in Facility A
Commitments, the Facility A Commitments shall exceed $240,000,000
if the proposed increase shall occur on or before June 16, 1996,
(2) after giving effect to the proposed increase in Facility A
Commitments, the aggregate of the increases in the Facility A
Commitments pursuant to Sections 2.15(a) and (b) plus the
increase requested by Borrower during the 12-month period
beginning June 16, 1997 or during any 12-month period beginning
on June 16, of any year thereafter shall exceed $40,000,000;
provided that the Facility A Commitments may be increased by more
than the amounts permitted in this clause (2) or clause (1) above
in any year upon the consent of the Simple Majority of Facility
A Banks which shall not be unreasonably withheld; (3) there
exists an Event of Default or Potential Default on the date of
such request or on the effective date of such increase; or
(4) after giving effect to the proposed increase in Facility A
Commitments the Facility A Commitments shall exceed $300,000,000.
(ii) The Facility A Commitment of any
Facility A Bank shall not be increased if its Facility A
Commitment already exceeds, or with any such increase would
exceed, one-third of the total of all Facility A Commitments to
Borrower, and no Facility A Bank shall become a party to this
Agreement with a Facility A Commitment in excess of one-third of
the total of all Facility A Commitments at such time.
B. FACILITY B
2.16 Requests for Facility B Loans.
(a) Facility B Loan Requests. Borrower may request
from the Facility A Banks at any time during the period from the
Sixth Amendment Effective Date through the first anniversary of
such date (the "Facility B Loan Election Period") that such
Facility A Banks offer to make fixed rate term loans to the
Borrower (herein, any such loans from Facility A Banks, together
with any such loans made by any Other Banks described in Sections
2.17 and 2.18 below shall be referred to as "Facility B Loans").
Borrower shall request Facility B Loans by delivering to the
Agent a written request therefor in the form of Exhibit F(2)
hereto (each a "Facility B Loan Request"). Borrower may not
borrow more than two (2) Borrowing Tranches of Facility B Loans
during the Facility B Loan Election Period, provided that
Borrower may borrow up to two (2) Borrowing Tranches of Facility
B Loans in each subsequent Facility B Loan Election Period if the
Banks agree to renew the Facility B Loan Election Period as
described in Section 2.20 below. Each Facility B Loan Request
shall state the following:
(1) the principal amount of such Facility B Loans
which Borrower is requesting provided that (a) the aggregate
principal amount of all Facility B Loans requested by Borrower
plus the amount of Facility B Loans outstanding may not exceed
$100,000,000 and (b) the amount requested by Borrower in each
Facility B Loan Request must be at least $25,000,000 and an
integral multiple of $1,000,000;
(2) whether Borrower is electing the Requested Rate
Option or the Bid Rate Interest Option described in Section
2.16(b) and if Borrower is electing the Requested Rate Option,
the Requested Spread; and
(3) the maturity date of the Facility B Loans which
Borrower is requesting (the "Facility B Loan Due Date") which may
be any date, provided that:
(i) the Facility B Loan Due Date shall not be more
than five (5) years after the Borrowing Date with respect to such
Facility B Loans; and
(ii) all Facility B Loans requested under the same
Facility B Loan Request shall have the same Facility B Loan Due
Date.
(b) Facility B Interest Rate Options. The Facility B
Loans shall bear interest at a fixed percentage which shall be
expressed as a percentage rounded to the nearest one thousandth
of one percent (the "Spread") over the Treasury Rate applicable
to the term of such Facility B Loan in effect two (2) Business
Days prior to the Borrowing Date with respect to such Facility B
Loans. Interest shall be computed on the basis of a year of 365
or 366 days, as the case may be and actual days elapsed. The
amount of the Spread which shall govern each Facility B Loan
shall be determined under either the Requested Rate Option or the
Bid Rate Option, at the option of Borrower as set forth in
clauses (i) and (ii) below.
(i) Requested Rate Option. Borrower shall quote in
its Facility B Loan Request the Spread which shall apply to all
Facility B Loans which Borrower is requesting.
(ii) Bid Rate Option. Borrower shall request that each
Facility A Bank state in its Offer the Spread at which it offers
to make Facility B Loans. If Borrower accepts such Facility B
Bank's Offer, then the Spread quoted by such Bank shall apply to
such Bank's Facility B Loan.
2.17 Offers
(a) Facility A Bank Offers.
Following the date on which Borrower delivers a
Facility B Loan Request (the "Request Date"): (i) the Agent may,
but shall not be required to, offer to make a Facility B Loan in
response to such Facility B Loan Request by delivering written
notice thereof in the form of Exhibit Q(1) to Borrower on or
before the close of business on the third (3rd) Business Day
following the Request Date, and (ii) each of the Facility A Banks
other than the Agent may, but shall not be required to, offer to
make a Facility B Loan by delivering written notice thereof in
the form of Exhibit Q(1) to the Agent on either the fourth (4th)
or on or before 12:00 noon on the fifth (5th) Business Day
following the Request Date (each written offer by Agent or a Bank
shall be referred to as an "Facility A Bank Offer"). The Agent
shall deliver the Facility A Bank Offers to Borrower on or before
the close of business on the sixth (6th) business day following
the Request Date. Each Facility A Bank Offer shall state: (i) the
amount of Facility B Loans which such Facility A Bank offers to
make, which amount shall be an integral multiple of $1,000,000
and may not exceed 30% of the amount requested by Borrower, and
(ii) if Borrower has elected the Bid Rate Option, the Spread
(which shall be expressed as a percentage rounded to the nearest
one thousandths of one percent) which such Facility A Bank
offers. The Agent shall not disclose to any Facility A Bank the
terms of any Facility A Bank Offer made by any other Facility A
Bank prior to delivering all Facility A Bank Offers to Borrower.
Any Facility A Bank Offer shall be rejected if Agent receives
such Facility A Bank Offer after 12:00 noon on the close of
business on the fifth (5th) business day following the Request
Date or if such Facility A Bank Offer does not satisfy the
requirements listed above and conform to Exhibit Q(1).
(b) Other Bank Offers. Borrower may solicit offers
(each an "Other Bank Offer") to make Facility B Loans from other
persons who are Qualified Banks but are not Banks hereunder (each
an "Other Bank") in connection with any Facility B Loan Request
made by Borrower, provided that such Facility B Loans shall have
the same Borrowing Date and Facility B Loan Due Date as the
Borrowing Date and Facility B Loan Due Date applicable to the
Facility B Loans requested from the Facility A Banks and provided
further that the Borrower may not accept any Other Bank Offer
unless Borrower has complied with the requirements in Section
2.18 below (relating to accepting Other Bank Offers) and as
otherwise set forth below. (The term "Offer" used hereafter
shall refer to either a Facility A Bank Offer or an Other Bank
Offer.)
2.18 Acceptance of Offers .
Borrower may, in its sole discretion, accept Facility A
Bank Offers by sending to the Agent a written notice of such
acceptance in the form of Exhibit Q(2) (the "Facility A Bank
Acceptance") provided that the Agent must receive such Facility A
Bank Acceptance before the close of business on the eighth (8th)
Business Day following the Request Date. Agent shall promptly
send a copy of the Facility A Bank Acceptance to each of the
Facility A Banks whose Offers (or portions thereof) are being
accepted. Such Facility A Bank Acceptance shall (i) state the
name of each Facility A Bank whose Offer (or any portion thereof)
Borrower is accepting, (ii) state the portion of each Offer which
Borrower is accepting, (iii) state the total amount of Offers
which Borrower is accepting; (iv) state the Spread which shall
apply to such Facility A Bank's Facility B Loan; which Spread
shall be (a) the Requested Spread if Borrower elected the
Requested Rate Option or (b) the Spread quoted by such Bank in
its Offer if the Borrower elected the Bid Rate Option, (v) if
Borrower is accepting any Offers from any Other Banks, such
Facility A Bank Acceptance shall state the names of such Other
Banks and the amount of Facility B Loans and the Spreads
applicable to such Loans, and (vi) demonstrate that Borrower has
complied with the requirements set forth in numbered Paragraphs
(1) through (6) below (which shall not apply if Borrower elects
not to accept any Offers) in accordance with the procedures
outlined in Steps numbered First through Fifth below. Borrower
may accept from the Facility A Banks an amount of Offers which is
either equal to, less than or greater than the amount it
requested in its Facility B Loan Request. The requirements in
each of Paragraphs (2) through (4) and (6) below shall be applied
to Offers accepted from Facility A Banks and Other Banks in
response to or in connection with Borrower's current Facility B
Loan Request and shall not take into account any Offers accepted
in response to or in connection with any prior Facility B Loan
Request.
(1) The amount of each Offer which Borrower accepts
from any Facility A Bank or Other Bank shall be an integral
multiple of $1,000,000.
(2) The aggregate amount of Facility B Loans which
Borrower accepts from the Facility A Banks and Other Banks must
equal or exceed $25,000,000.
(3) The number of Facility A Banks whose Offers are
accepted must equal or exceed 50% of the total number of Facility
A Banks (the limitation in this clause (3) shall be referred to
as the "50% Minimum Requirement").
(4) Each Facility A Bank Offer and Other Bank Offer
which Borrower accepts may not exceed 30% of the aggregate amount
of Offers which Borrower accepts from all of the Facility A Banks
and Other Banks (the limitation in this clause (4) shall be
referred to as the "30% Limit").
(5) The sum of the Offers which Borrower accepts plus
the principal amount of Facility B Loans outstanding on the date
of such acceptance may not exceed $100,000,000.
(6) Borrower may accept Offers for Facility B Loans
from Other Banks only if each of the following conditions is
satisfied:
(A) Borrower shall have delivered to the Agent a
duly completed and executed New Bank Joinder and Information
Package at least seven (7) days before Borrower accepts the Offer
of such Other Bank; such New Bank Joinder and Information Package
shall, among other things: (i) contain evidence satisfactory to
Agent that such Other Bank is a "Qualified Bank" and (ii) include
a completed and executed Bank Joinder in the form of Exhibit M(2)
which shall provide that (1) such Other Bank shall join this
Agreement effective on the Borrowing Date of the Facility B Loans
which such Other Bank shall make (or before such Borrowing Date
if such Other Bank shall join as a Facility A Bank as well as a
Facility B Bank) and (2) such Bank Joinder shall terminate if
Borrower does not accept the Offer of such Other Bank and
requests Facility B Loan from such Other Bank (unless such bank
is joining as a Facility A Bank in which case such Bank Joinder
shall remain in effect and such banks shall join this Agreement
in such capacity);
(B) The interest rate to be charged by each of
the Other Banks shall be quoted as a fixed Spread over the
Treasury Rate based on a year of 365 or 366 days, as the case may
be and actual days elapsed. The Spread to be charged by each
Other Bank may not exceed (i) the Requested Spread if Borrower
selects the Requested Rate Option or (ii) the highest interest
rate Spread offered by an Initial Acceptee (defined in the Fifth
Step below) if Borrower selects the Bid Rate Option;
(C) Borrower may accept an Offer by an Other Bank
only if Borrower has accepted in full each Offer made by each of
the Facility A Banks at a Spread which equals or is less than the
Spread offered by such Other Bank (Borrower shall be deemed for
purposes of determining Borrower's compliance with this clause
(C): (i) to accept any portion of any Offer from an Initial
Acceptee which Borrower is prohibited from accepting under the
30% Limit in the Third Step below, and (ii) to accept any portion
of any Offer from an Initial Acceptee which Borrower is
prohibited from accepting under the Fifth step below), and ;
(D) the amount of Offers for Facility B Loans
which Borrower accepts from Other Banks may not exceed 66-2/3% of
the amount of Offers for Facility B Loans which Borrower has
accepted from the Facility A Banks; and
(E) the Borrowing Date and Facility B Loan Due
Date of the Facility B Loans provided by Other Banks shall be the
same as the Borrowing Date and Facility B Loan Due Date of the
Facility B Loans provided by the Facility A Banks.
Borrower shall apply the requirements in Paragraphs (1)
through (6) above under the procedures numbered "First" through
"Fifth" below and shall demonstrate in its Facility A Bank
Acceptance that it has complied with such procedures. Borrower
shall not consider any Offer which a Facility A Bank delivers in
applying the First through Fifth steps below if such Offer is
received by the Agent after 12:00 Noon on the fifth Business Day
following the Request Date or if such Offer otherwise does not
meet each of the requirements in Section 2.16. Exhibit Q(3) sets
forth an example of the application of Paragraphs (1) through (6)
above in accordance with the procedures in Steps numbered First
through Fifth below. Each step below is subject to all of the
requirements in Paragraphs (1) through (6) above. If any of the
requirements in Paragraph (1) through (6) are not met or any of
the procedures in the First through Fifth steps are not followed,
then all outstanding Offers for Facility B Loans from the
Facility A Banks and Other Banks shall terminate and Borrower's
Facility B Loan Request shall be canceled.
First, after Borrower has received all of the Facility
A Bank Offers, Borrower shall decide upon the portion of such
Facility A Bank Offers that it is accepting (the "Facility A Bank
Portion") and the aggregate amount of Other Bank Offers that it
is accepting (the "Other Bank Portion"). The Other Bank Portion
shall comply with clauses (A) through (E) of Paragraph 6 above
and the aggregate of the Facility A Bank Portion and Other Bank
Portion must equal or exceed $25,000,000.
Second, Borrower shall accept all Facility A Bank
Offers if the amount thereof equals (but does not exceed) the
Facility A Bank Portion. Borrower shall select Facility A Bank
Offers as follows if the amount thereof exceeds the amount of the
Facility A Bank Portion:
Alternative 1. If Borrower elects the Requested Rate
Option, Borrower shall accept Offers in total amount equal to the
Facility A Bank Portion and shall allocate its acceptance to the
Facility A Banks on a pro-rata basis based on the amount Offered
by each Facility A Bank. Borrower shall round the amounts it
accepts from each Facility A Bank to integral multiples of
$1,000,000.
Alternative 2. If Borrower elects the Bid Rate Option,
Borrower shall accept Facility A Bank Offers in a total amount
equal to the Facility A Bank Portion and shall allocate its
acceptance to the Facility A Banks in order of the Spreads which
they offered (i.e., lowest offered spread first). In the event
that two or more Facility A Banks offered the same Spread and the
amount to be accepted at such Spread is less than the total
amount offered by such Facility A Banks at such spread, Borrower
shall allocate its acceptance on a pro-rata basis based on the
amount offered by each such Facility A Bank. In such event
Borrower shall round the amounts it accepts from such Facility A
Banks to integral multiples of $1,000,000.
Third, Borrower shall determine whether the amount of
the Offer to be accepted from any Facility A Bank under the
Second step above shall exceed the 30% Limit described in
Paragraph (4) above. If the amount of the Offer to be accepted
from any Facility A Bank exceeds the 30% Limit, Borrower shall
reduce the amount of the Offer it shall accept from such Facility
A Bank by the amount of such excess and then re-compute the
amount of the Offer to be accepted from each Facility A Bank
pursuant to the Second step above (treating such Facility A Bank
as having made an Offer equal to its original Offer less the
amount of such excess).
Fourth, Borrower shall determine whether the 50%
Minimum Requirement described in Paragraph (3) above exceeds the
number of Facility A Banks whose Offers are to be accepted in
whole or in part under the Third step above. If the 50% Minimum
Requirement exceeds the number of Facility A Banks whose Offers
are to be accepted in whole or in part (such excess shall be
referred to as the "Required Number of Additional Acceptances"),
Borrower shall accept a portion of the Offers, from those
Facility A Banks who made Offers but whose Offers were not to be
accepted under First, Second and Third Steps above (each a
"Rejected Offeror"), according to the following criteria:
(i) If the Required Number of Additional Acceptances
equals the number of Rejected Offerors, Borrower shall accept a
portion of the Offer from each Rejected Offeror equal to
$1,000,000.
(ii) If the number of Rejected Offerors exceeds the
Required Number of Additional Acceptances, Borrower shall select
a number of Rejected Offerors equal to the Required Number of
Additional Acceptances. Borrower shall choose among Rejected
Offerors in order of the Spreads (i.e. lowest spread first)
offered by each of the Rejected Offerors. If the spreads offered
by two or more Rejected Offerors are equal and Borrower is
required to accept a portion of the Offers from one or more but
not all of such Rejected Offerors, Borrower may choose among such
Rejected Offerors in its sole discretion. Borrower shall accept
from each Rejected Offeror which it has selected under this
clause (ii) a portion of such Rejected Offeror's Offer equal to
$1,000,000.
(iii) If the Required Number of Additional
Acceptances exceeds the number of Rejected Offerors, then all
outstanding Offers for Facility B Loans from the Facility A Banks
and Other Banks shall terminate and Borrower's Facility B Loan
Request shall be canceled.
Fifth, if Borrower has accepted Offers (or portions
thereof) from any Rejected Offerors under clause (i) or (ii) of
the Fourth step above, Borrower shall make the additional
adjustments described in this Fifth Step. For purposes of this
Fifth Step (1) the term "Adjustment Amount" shall mean the
product of the Required Number of Additional Acceptances times
$1,000,000 and (2) the term "Initial Acceptees" shall mean each
Facility A Bank, which has made an Offer and whose Offer has been
accepted under the First through Third Steps above. Borrower
shall reduce the amount of Offers which it shall accept from one
or more of the Initial Acceptees in an aggregate amount equal to
the Adjustment Amount. Borrower shall select Offers for such
reduction in inverse order of the amount of the Spread quoted by
each Initial Acceptee (i.e., highest Spread first) provided that
(i) the amount of Facility B Loans to be provided by any Initial
Acceptee shall not be reduced below $1,000,000 and (ii) if the
Spreads quoted by two or more Initial Acceptees are equal and the
total amount of the Facility B Loans to be made by them exceeds
the reduction amount, the reduction shall be allocated to such
Initial Acceptees on an pro rata basis based on the amounts of
their proposed Facility B Loans (before adjustment in this Fifth
step) and the amount to be allocated to each such Initial Acceptee shall be
rounded to an integral multiple of $1,000,000.
Borrower shall follow the following procedures whenever Borrower is
required to round amounts to integral multiples of $1,000,000. Borrower
shall round amounts to the nearest integral multiple of $1,000,000 (or to the
next higher integral multiple of $1,000,000 if two integral multiples of
$1,000,000 are equally close to such amount) if such rounding shall not cause
Borrower to violate one of the requirements in Paragraphs (1) to (6) above or
in the First through Fifth Steps above. If rounding in the proceeding
sentence shall cause Borrower to violate one of the requirements referred to
in such sentence, Borrower shall round such amount to the next higher or
lower integral multiple of $1,000,000 in Borrower's sole discretion provided
that the result thereof shall cause Borrower to comply with such requirement.
2.19 Borrowing.
(a) Notice of Borrowing.
If Borrower accepts any Offers from Facility A Banks (and Other
Banks, if applicable) and desires that such Facility A Banks (and Other Banks,
if applicable) fund the Facility B Loans, Borrower shall deliver a request
for borrowing in the form of Exhibit Q(4) (each a "Facility B Borrowing
Notice") (i) at least three (3) Business Days before the Borrowing Date
and (ii) within five (5) Business Days after the date on which Borrower
delivered its Facility A Bank Acceptance to the Agent (the "Facility A Bank
Acceptance Date"). Such Facility B Borrowing Notice shall state the
Borrowing Date, which shall be no more than eight (8) Business Days following
the Facility A Bank Acceptance Date. If Borrower does not deliver Facility B
Borrowing Notice within five (5) Business Days after the Facility A Bank
Acceptance Date, Borrower's acceptances of all Offers from the Facility A
Banks and the Other Banks for Facility B Loans shall be canceled. If
Borrower delivers a Facility B Borrowing Notice, the Facility A
Banks and Other Banks whose Offers Borrower has accepted shall, subject to
Section 6.02, make the Facility B Loans which Borrower has accepted on the
Borrowing Date requested by Borrower.
(b) Delivery of Facility B Notes.
Borrower shall at least three Business Days prior to the Borrowing
Date with respect to any Borrowing Tranche of Facility B Loans execute and
deliver to each Facility A Bank and Other Bank who shall make such Facility B
Loans a promissory Note in the form of Exhibit (E)(2) (each a "Facility B
Note") in the principal amount of such Bank's Facility B Loan and with
a maturity that is the Facility B Due Date of such Facility B Loan.
2.20 Renewal of Option .
Borrower may request that the Banks renew the Facility B Loan
Election Period for subsequent one-year periods if the amount of Facility B
Loans outstanding at the end of the initial Facility B Loan Election Period
or any subsequent renewal period is $75,000,000 or less, provided that
Borrower's request to extend such Facility B Loan Election Period shall be in
writing and shall accompany a request by Borrower to extend the Mandatory
Reduction Date and, if Borrower is permitted to do so, also the Expiration
Date pursuant to Section 2.04. Any such request for renewal shall be
effective upon the written approval of the Required Majority of Banks.
2.21 Fees.
Borrower also shall pay to each Facility A Bank which makes a
Facility B Loan a nonrefundable fee (the "Facility B Closing Fee") in the
amount of .125% times the amount of such Facility B Loan, due and payable on
the Borrowing Date with respect to such Facility B Term Loan.
2.22 Prepayment Penalty.
Borrower may prepay the Facility B Loans subject to the Term Loan
Prepayment Premium described in Section 4.04(a)(2)(a).
2.23 Interest After Default.
The provisions in Section 3.03 relating to the rate of interest
payable on obligations under this Agreement apply to the Facility B Loans,
interest thereon and fees and other obligations relating thereto.
2.24 Use of Proceeds .
The proceeds of the Facility B Loans shall be used by Borrower for
the same purposes as Borrower uses the proceeds of the Facility A Loans as
described in Section 2.09.
C. BOTH FACILITIES
2.25 Reduction of Commitments
(a) Bank Exclusion Event. Upon the occurrence of a Bank
Exclusion Event with respect to any Bank, the following shall occur:
(i) Reduction of Commitment. Such Bank's
Facility A Commitment (if any) shall be reduced to equal the sum of its
Facility A Loans outstanding and its Contingent Exposure under Letters of
Credit which it has issued and Escrow Agreements to which it is a party.
Such Bank's Facility A Commitment shall be further reduced immediately
upon the repayment or other reduction of such Facility A Loans, Letters of
Credit or obligations under Escrow Agreements (including repayments or
reductions pursuant to clause (v) below and any other payments or
reductions). Such Bank shall not be permitted to make any new Loans,
issue any Letters of Credit, enter into any Escrow Agreements or receive any
Facility A Commitment Fees.
(ii) Termination of Payments. Such Bank shall
receive interest on its Loans but shall not receive payments of principal on
its Loans until either (A) the Loans of all Banks become due and payable
pursuant to Section 9.02 (at such time this Section 2.25(a)(ii)
shall cease to apply to such Loans), (B) such Loans become due and payable
upon the Term Loan Due Date if such Loans are Term Loans, or (C) the
Expiration Date (without giving effect to any extension thereof occurring
after the Bank Exclusion Event) (the "Next Expiration Date").
Borrower and a Simple Majority of Banks may waive this Section 2.25(a)(ii) to
accelerate payment of principal on such Loans.
(iii) Termination of Voting Rights. Such Bank
shall not be entitled to vote on any actions which require approval of any of
the Banks and its Facility A Commitment, Facility B Commitment and Commitment
and outstanding Loans shall be excluded in determining whether a Required
Majority of Facility A Banks, Required Majority, Simple Majority of Facility
A Banks or Simple Majority has approved of such action.
(iv) Extension of Expiration Date. Such Bank
shall be treated as a Non-Extending Facility A Bank under Section 2.04 in the
event that such Bank is a Facility A Bank and Borrower requests an extension
of the Expiration Date pursuant to Section 2.04, and the Bank shall be
removed pursuant to the procedures set forth in Sections 2.04 and 2.25(b).
(Such Bank will not be permitted to vote under Section 2.04 and its
Facility A Commitment will be excluded in determining whether a Required
Majority of Facility A Banks has approved of the request.)
(v) Assignment of Interest. A Simple Majority
of the Banks may require such Bank to assign all of its rights and interests
hereunder to another Bank or to a new bank which shall be a Qualified Bank.
If the assignment is to a new bank it shall be subject to Borrower's approval
of such new bank which approval shall not be unreasonably withheld. Such
assignment shall be subject to the acceptance of the assignee and its execution
of the Assignment and Assumption Agreement and the other requirements of
Section 11.11(b) hereof.
(vi) Termination of Commitments. A Simple
Majority of the Banks may request that the Commitments of such Bank be
terminated and that such Bank be removed as a Bank hereunder. Such
termination shall be subject to the consent of the Borrower which shall not
be unreasonably withheld. If Borrower consents to such termination, such Bank
shall be removed pursuant to the procedures set forth in Section 2.25(a)(vii).
(vii) Procedures for Termination. If a Bank is
to be removed (the "Bank to be Terminated") as a Bank hereunder pursuant to
this Section 2.25 the provisions of Section 2.25(a)(i) through (iv) shall
remain in effect with respect to the Bank to be Terminated, except as set
forth below:
(A) This paragraph (A) shall apply only if the Bank to be
Terminated is a Facility A Bank. The transactions described in this
paragraph (A) shall occur simultaneously as soon as any increase in
the Net Exposure of any of the Facility A Banks which may occur as
a result of such transactions will not cause the sum of the Net
Exposure and Facility A Loans outstanding of such Facility A Banks to
exceed their Facility A Commitments. The Bank to be Terminated
shall cease to participate in or otherwise be liable upon any
Letters of Credit or Escrow Agreements issued by any other Bank or
to which any other Bank is a party. The Net Exposure of the other
Facility A Banks in such Letters of Credit and Escrow
Agreements shall be increased according to their Revolving Credit
Ratable Shares.
Each of the other Facility A Banks shall cease to participate in or
otherwise be liable upon any Letters of Credit issued by the Bank
to be Terminated or to which the Bank to be Terminated is a party.
The Borrower shall Cash Collateralize any Letters of Credit or
Escrow Agreements with respect to which such Bank is the
Issuing Bank or Escrow Bank. The Facility A Commitment of the Bank
to be Terminated shall be reduced to equal the amount of its
Facility A Loans outstanding (as the same may be reduced pursuant
to paragraph (B) below or by reason of other payments thereon from
time to time) plus its Contingent Exposure in Letters of Credit and
Escrow Agreements which it has issued or entered into.
(B) The waiver contained in the second sentence of
Section 2.25(a)(ii) may be made by Borrower alone without the
approval of a Simple Majority of the Banks so that Borrower may
accelerate payment on the Loans of the Bank to be Terminated at
any time.
(C) The Bank to be Terminated shall deliver its original
Notes to the Borrower within one Business Day of the completion of
the events described in subsections (A) and (B) above and repayment
by the Borrower of all Loans of the Bank to be Terminated.
(viii) No Waiver. The procedures set forth in
clauses (i) through (vii) above do not constitute a cure of any
default committed by a Bank which is subject to a Bank
Exclusion Event and neither the Borrower nor the other Banks waive
any rights or remedies against such a Bank by electing to apply the
provisions in such clauses to such Bank.
(b) Bank Extension or Mutual Agreement.
(i) Mutual Agreement. The Borrower and any
Bank may at any time with the consent of a Simple Majority of the Banks agree
that Borrower shall remove such Bank effective upon a mutually agreed upon
date pursuant to the procedures set forth in Section 2.25(b)(ii) below.
(ii) Bank Removal. Borrower shall complete all
of the following steps with respect to any Non-Extending Facility A Bank
which is to be removed pursuant to Section 2.04 [Extension of Expiration
Date] or any Bank which is to be removed pursuant to Section 2.25(b)(i)
[Mutual Agreement] (in either case referred to as the "Bank to be
Removed"; the date on which such removal is to take place under Section 2.04
or 2.25(b)(i), as the case may be, is referred to as "Removal Date"):
(i) Borrower shall on the Removal Date repay the Loans of such Bank to be
Removed and all interest accrued thereon (whether or not then due
and payable) and any other amount which is then due to such Bank to be
Removed but has not yet been paid; (ii) if the Bank to be Removed is an Issuing
Bank under any Letters of Credit and the termination date of such Letters of
Credit extends beyond the Removal Date, Borrower shall Cash Collateralize
such Letters of Credit at least fifteen (15) days prior to the Removal Date;
and (iii) if any Bank to be Removed is an Escrow Bank under any Escrow
Agreements and the termination date of such Escrow Bank's obligations
thereunder extends beyond the Removal Date, Borrower shall Cash Collateralize
such Escrow Agreements at least fifteen (15) days prior to the Removal
Date. (Borrower is not required to repay any of the Loans of, or provide
cash or other collateral to, any of the Banks other than the Bank to be
Removed (hereinafter referred to as the "Remaining Banks") when it makes the
repayments or provides the collateral described in clauses (i) through
(iii) of the preceding sentence.) The following shall occur on the Removal
Date, subject to Borrower's completion of steps listed in clauses
(i) through (iii) above: (A) the Commitments of the Bank to be Removed and
its participation in and Net Exposure under Letters of Credit or Escrow
Agreements issued or entered into by the Remaining Banks shall terminate; and
(B) the Bank to be Removed shall cease to be a Bank hereunder.
ARTICLE III
FACILITY A INTEREST RATES
3.01 Interest Rate Options. The Borrower shall pay interest in
respect of the outstanding unpaid principal amount of the Facility A Loans
at the rates under the Prime Rate Option, Federal Funds/Euro-Rate Option,
CD Rate Option, Revolving Credit Euro-Rate Option or Facility A Term Loan
Option selected by it as set forth below applicable to the Facility A Loans it
being understood that, subject to the provisions of this Agreement, including
without limitation restrictions imposed on the selection of interest rates
governing the Facility A Term Loans and on the repayment of the Facility A
Term Loans set forth below, the Borrower may select different Interest Rate
Options and different CD Rate Interest Periods or Euro-Rate Interest Periods to
apply simultaneously to the Facility A Loans comprising different Borrowing
Tranches and may convert to or renew one or more Interest Rate Options with
respect to all or any portion of the Facility A Loans comprising any
Borrowing Tranche provided that there shall not be at any one time
outstanding more than nine (9) Borrowing Tranches in the aggregate among all
the Facility A Loans accruing interest at the CD Rate Option or any Euro-Rate
Option. The Agent's determination of a rate of interest and any change
therein shall in the absence of manifest error be conclusive and binding upon
all parties hereto. If at any time the designated rate applicable to any
Facility A Loan made by any Facility A Bank exceeds such Facility A Bank's
highest lawful rate, the rate of interest on such Facility A Bank's Facility
A Loan shall be limited to such Facility A Bank's highest lawful rate.
(a) Revolving Credit Interest Rate Options. The Borrower
shall have the right at any time to select from the following Interest Rate
Options applicable to Facility A Loans:
(i) Prime Rate Option: A fluctuating rate per
annum (computed on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed) equal to the Prime Rate, such interest rate to
change automatically from time to time effective as of the effective date of
each change in the Prime Rate;
(ii) Revolving Credit Euro-Rate Option: A rate
per annum (computed on the basis of a year of 360 days and actual days
elapsed) equal to the Euro-Rate plus a percentage per annum (the "Euro-Rate
Spread") which shall be determined at any time based on the Company Debt
Rating at such time as follows:
Euro-Rate
Spread (expressed
Company as basis points
Debt Rating per annum)
First Level Debt Rating 72.5
Second Level Debt Rating 95.0
Third Level Debt Rating 110.0
Fourth Level Debt Rating 125.0
The Euro-Rate Spread shall change automatically with any change in the
Company Debt Rating. Any Borrowing Tranche of Facility A Loans under the
Revolving Credit Euro-Rate Option outstanding on the Sixth Amendment
Effective Date will remain outstanding for the duration of the Interest
Period applicable thereto but shall be subject to the interest rates set
forth above; or
(iii) Federal Funds/Euro-Rate Option: A rate
per annum (computed on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed) equal to the greater of (1) sum of the
Federal Funds Effective Rate plus the Euro-Rate Spread plus one quarter of
one percent (1/4%) or (2) the one-month Euro-Rate plus the Euro-Rate Spread; the
rate under this option shall be computed each day; the rate in clause (1)
shall be computed each day based on the weighted average of the rates on
overnight Federal funds transactions on the trading day which precedes such
day and the rate in clause (2) shall be computed each day as the Euro-Rate
which would apply to a borrowing to be made two Business Days after such day
with an Interest Period of one month;
(iv) CD Rate Option: A rate per annum
(computed on the basis of a year of 360 days and actual days elapsed) equal
to the CD Rate plus a percentage per annum (the "CD Rate Spread") which shall
be determined at any time based on the Company Debt Rating at such time as
follows:
CD Rate
Spread (expressed
Company as basis points
Debt Rating per annum)
First Level Debt Rating 87.5
Second Level Debt Rating 110.0
Third Level Debt Rating 125.0
Fourth Level Debt Rating 140.0
The CD Rate Spread shall change automatically with any change in the Company
Debt Rating. Any Borrowing Tranche of Facility A Loans under the CD Rate
Option outstanding on the Sixth Amendment Effective Date will remain
outstanding for the duration of the Interest Period applicable thereto but
shall be subject to the interest rates set forth above; or
(b) Facility A Term Loan Interest Rate Option. Borrower
shall select the following Interest Rate Option set forth in this clause (b).
(i) Intentionally omitted.
(ii) Facility A Term Loan Option. Facility A Loans under
the Facility A Term Loan Option shall bear interest at a rate per annum
(computed on the basis of a year of 365 or 366 days as the case may be and
actual days elapsed) equal to the Treasury Rate in effect two (2) Business
Days prior to the effective date of Borrower's election to have Facility A
Loans bear interest at the Treasury Rate plus one and three hundred and
twenty-five thousandths of one percent (1.325%), subject to the following
conditions:
(A) The Borrower shall make each election hereunder,
and such election must become effective, during the Facility A Term Loan
Election Period.
(B) Each election by Borrower under this clause
(ii) shall govern at least $25,000,000 of Facility A Loans. The aggregate of
all Facility A Term Loans may not at any time exceed $75,000,000. The
aggregate of Facility A Term Loans subject to the Expiration Date Facility A
Term Loan Option (as described in clause (D) below) may not at any
time exceed $50,000,000.
(C) Intentionally omitted.
(D) Each election by Borrower under this clause
(ii) shall state the due date of the Facility A Loans subject to the Facility
A Term Loan Option (the "Facility A Term Loan Due Date") which due date shall
be either (a) the earlier of the Mandatory Reduction Date or three (3) years
from the effective date of such election (a "Mandatory Reduction Date
Facility A Term Loan Option") or (b) the earlier of the Expiration Date or
five (5) years from the effective date of such election (an "Expiration Date
Facility A Term Loan Option"); provided, however, that Borrower may elect
only the Mandatory Reduction Date Facility A Term Loan Option (and may not
elect the Expiration Date Facility A Term Loan Option) if Borrower makes its
election under this clause (ii) during a Facility A Term Loan Election Period
which falls in 1996 or any year after 1996 and the Facility A Term Loan Due Date
in such event shall be the Mandatory Reduction Date (and not the Expiration
Date). If Borrower elects a Facility A Term Loan Option hereunder and the
Mandatory Reduction Date or Expiration Date is extended after such election,
the Facility A Term Loan Due Date shall not be extended by reason of the
extension of such Mandatory Reduction Date or Expiration Date, as the case
may be.
Borrower shall repay the Facility A Term Loans on the Facility A Term Loan
Due Date; provided, however, that if Borrower does not repay the Facility A
Term Loans on or before the Facility A Term Loan Due Date and the following
two conditions exist, Borrower shall be deemed to request and the Facility A
Banks shall be deemed to make a Revolving Credit Loan under the Prime Rate
Option in an amount equal to the aggregate amount of the Facility A Term
Loans with a Borrowing Date on the Facility A Term Loan Due Date and the
proceeds of such Loan shall be deemed to repay the Facility A Term Loans:
(1) the Facility A Term Loan Due Date occurs prior to the Expiration Date,
and (2) there exist no Non-electing Additional Facility A Banks so that on
the Facility A Term Loan Due Date the proportion of each Facility A Bank's
Facility A Term Loan to all of the Facility A Banks' Facility A Term Loans
equals such Facility A Bank's Facility A Ratable Share;
(E) Borrower may repay Facility A Loans subject to the
Facility A Term Loan Option before the Facility A Term Loan Due Date subject
to the prepayment penalty described in Sections 4.04 and 4.05.
(c) Rate Quotations. The Borrower may call the Agent on or
before the date on which a Facility A Loan Request is to be delivered to
receive an indication of the rates then in effect, but it is acknowledged
that such projection shall not be binding on the Agent or the Facility A
Banks nor affect the rate of interest which thereafter is actually in effect
when the election is made.
3.02 Interest Periods. At any time when the Borrower shall select,
convert to or renew the CD Rate Option, Revolving Credit Euro-Rate Option or
Facility A Term Loan Option, the Borrower shall notify the Agent thereof by
delivering a Facility A Loan Request at least one (1) Business Day prior to
the effective date of a CD Rate Option, three (3) Business Days prior to
the effective date of a Revolving Credit Euro-Rate Option or the Facility A
Term Loan Option, and one (1) Business Day prior to the effective date of
the Federal Funds/Euro-Rate Option. The notice shall specify an interest
period during which such Option shall apply, such periods may be (i) 30, 60,
90, 180, 270 or 360 days in the event of a CD Rate Option (the "CD Rate Interest
Period"), provided that the Facility A Banks shall not be required to accept
a request by Borrower for a CD Interest Period of 270 or 360 days unless all
of the Facility A Banks in their discretion agree to such a period, (ii) one,
two, three or six, nine or twelve months in the event of a Revolving Credit
Euro-Rate Option provided that the Facility A Banks shall not be required to
accept a request by Borrower for an interest period of nine or twelve months
unless all of the Facility A Banks in their discretion agree to such a period
(the "Revolving Credit Euro-Rate Interest Period"), (iii) for a period
beginning on the date of the election and ending on the Mandatory Reduction
Date in the case of a Mandatory Reduction Date Facility A Term Loan
Option, and (iv) for a period beginning on the date of the election and
ending on the Expiration Date in the case of an Expiration Date Facility A
Term Loan Option. The CD Rate Interest Period and any Euro-Rate Interest
Period shall be subject to the following additional requirements:
(a) any CD Rate Interest Period or Euro-Rate Interest Period
which would otherwise end on a date which is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls
in the next calendar month, in which case such CD Rate Interest Period or
Euro-Rate Interest Period shall end on the next preceding Business Day;
(b) any Euro-Rate Interest Period which begins on the last
day of a calendar month for which there is no numerically corresponding day
in the subsequent calendar month during which such Interest Period is to end
shall end on the last Business Day of such subsequent month;
(c) the CD Rate Portion and the Euro-Rate Portion for each CD
Rate Interest Period and Euro-Rate Interest Period shall be in integral
multiples of $100,000 and each such Portion shall not be less than $2,000,000;
(d) the Borrower shall not select, convert to or renew a CD Rate
Interest Period or a Euro-Rate Interest Period for any portion of the
Facility A Loans that would end after the Expiration Date; and
(e) in the case of the renewal of a CD Rate Option at the end
of a CD Rate Interest Period or the renewal of a Euro-Rate Option at the end of
a Euro-Rate Interest Period, the first day of the new Interest Period shall
be the last day of the preceding Interest Period, without duplication in
payment of interest for such day.
3.03 Interest After Default. To the extent permitted by Law, upon the
occurrence and during the continuation of an Event of Default, any principal
(except for principal of the Term Loans), interest, fee or other amount
payable hereunder shall bear interest for each day thereafter until paid in
full (before and after judgment) at a rate per annum which shall be equal to
(2%) per annum above the Prime Rate and principal of each Term Loan shall bear
interest bear interest for each day thereafter until paid in full (before
and after judgment) at a rate equal to (2%) over the rate otherwise
applicable to such Term Loan. The Borrower acknowledges that such increased
interest rate reflects, among other things, the fact that such Loans or other
amounts have become a substantially greater risk given their default status
and that the Banks are entitled to additional compensation for such risk.
3.04 CD Rate or Euro-Rate Unascertainable.
If on any date on which a CD Rate or a Euro-Rate would
otherwise be determined, the Agent shall have determined (which determination
shall be conclusive absent manifest error) that:
(i) adequate and reasonable means do not exist
for ascertaining such CD Rate or Euro-Rate, or
(ii) a contingency has occurred which
materially and adversely affects the secondary market for negotiable
certificates of deposit maintained by dealers of recognized standing
relating to the CD Rate or the London interbank market relating to the
Euro-Rate, then the Agent shall promptly so notify the Facility A Banks and
the Borrower thereof. Upon such date as shall be specified in such notice
(which shall not be earlier than the date such notice is given) the
obligation of the Facility A Banks to allow the Borrower to select, convert
to or renew a CD Rate Option or a Euro-Rate Option shall be suspended until
the Agent shall have later notified the Borrower or such Facility A Bank of
the Agent's determination (which determination shall be conclusive absent
manifest error) that the circumstances giving rise to such previous
determination no longer exist. If at any time the Agent makes a determination
under this Section 3.04 and the Borrower has previously notified the Agent of
its selection of, conversion to or renewal of a CD Rate Option or a Euro-Rate
Option and such Interest Rate Option has not yet gone into effect, such
notification shall be deemed to provide for selection of, conversion to or
renewal of the Prime Rate Option otherwise available with respect to such
Facility A Loans. If Agent makes a determination under this Section 3.04,
the Borrower shall, subject to the Borrower's indemnification obligations
under Section 4.06(b), as to any Facility A Loan of the Facility A Bank to
which a CD Rate Option or a Euro-Rate Option applies, on the date specified
in such notice either convert such Facility A Loan to the Prime Rate Option
otherwise available with respect to such Loan or prepay such Loan in
accordance with Section 4.04 hereof. Absent due notice from the Borrower of
conversion or prepayment such Facility A Loan shall automatically be
converted to the Prime Rate Option otherwise available with respect to such
Loan upon such specified date.
3.05 Selection of Interest Rate Options. If the Borrower fails to
select a CD Rate Interest Period or a Revolving Credit Euro-Rate Interest
Period in accordance with the provisions of Section 3.02 in the case of
renewal of the CD Rate Portion or Euro-Rate Portion of a Revolving Credit
Loan, as the case may be, the Borrower shall be deemed to have converted such
Revolving Credit Loan or portion thereof to the Prime Rate Option otherwise
available with respect to such Revolving Credit Loan, commencing upon the
last day of that Interest Period. If Borrower does not repay in full any
Facility A Term Loan on the Facility A Term Loan Due Date, whether pursuant
to a deemed repayment of such Term Loan under Section 3.01(b) or otherwise,
the unpaid portion of such Facility A Term Loan shall bear interest at the
interest rate applicable under the Prime Rate Option until it is repaid
(subject to increase under Section 3.03).
ARTICLE IV
PAYMENTS
4.01 Payments. All payments and prepayments to be made in respect of
principal, interest, Facility A Commitment Fees, Facility B Closing Fees,
Letter of Credit Fees, Escrow Fees, Agent's Fee or other fees or amounts due
from the Borrower hereunder shall be payable prior to 12:00 noon
(Philadelphia time) on the date when due without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived by the Borrower,
and without setoff, counterclaim or other deduction of any nature, and an
action therefor shall immediately accrue. Such payments shall be made to
the Agent at the Principal Office for the ratable accounts of the Banks to
which such obligations are owed in U.S. Dollars and in same day funds, and
the Agent shall promptly distribute such amounts to the Banks in same day funds,
provided that in the event payments are received by 12:00 noon (Philadelphia
time) by the Agent with respect to the Loans and such payments are not
distributed to the Banks on the same day received by the Agent, the Agent
shall pay the Banks the federal funds effective rate with respect to the
amount of such payments for each day held by the Agent and not distributed to
the Banks. The Agent's and each Bank's statement of account, ledger or other
relevant record shall, in the absence of manifest error, be conclusive as the
statement of the amount of principal of, interest on and Term Loan
Prepayment Premium with respect to the Loans and other amounts owing under
this Agreement and shall be deemed an "account stated."
4.02 Pro Rata Treatment of Banks. Obligations of the Banks to make
Loans and rights to receive payments hereunder shall be allocated among the
Banks as set forth below except as expressly provided in Section 2.04
[Extension of Expiration Date], Section 2.25(a) [Bank Exclusion Event],
Section 2.25(b) [Bank Extension or Mutual Agreement], Section 3.04 [CD Rate
or Euro-Rate Unascertainable], Section 4.04(b) [Voluntary Prepayments],
Section 4.06(a) [Additional Compensation in Certain Circumstances] or Section
11.11(c) [Additional Banks]:
(i) Obligations to make Revolving Credit Loans
or Facility A Term Loans shall be allocated based on Revolving Credit Ratable
Shares as of the date on which such Loans are made, except that an Additional
Facility A Bank being added pursuant to clause 11.11(c) may make a Facility A
Term Loan in which the other Banks shall not participate as more fully set
forth in Section 11.11(c);
(ii) Payments of principal on Loans comprising
each Borrowing Tranche shall be allocated to the Banks based on the amount of
such Loans (it being acknowledged that each Facility A Term Loan made by an
Additional Facility A Bank on the date of its joinder hereto in respect of a
Borrowing Tranche of Facility A Term Loans outstanding on such date shall be
deemed to be part of such Borrowing Tranche for purposes of this sentence)
held by each Bank and payments of interest on such Loans shall be allocated
to the Banks based on the amount of interest due to each Bank on its
outstanding principal (it being acknowledged that the rate of interest
payable to Banks on the Term Loans may differ). If each of the conditions
listed in Clauses (A) through (C) below exists on the date on which a payment
on any Loan is made then such payment shall be allocated on a pro-rata basis
between the holders of the Term Loans and holders of the Revolving Credit
Loans based upon the respective amounts of such Term Loans and Revolving
Credit Loans outstanding if it is a payment of principal and shall be
allocated on a pro rata basis between holders of the Term Loans and holders
of the Revolving Credit Loans based on the amount of interest due to such
holders if it is a payment of interest: (A) an Event of Default exists and
is continuing and has not been waived, (B) the Loans have been accelerated or
otherwise shall have become due, and (C) the fractional share of one or more
of the Banks in the total amount of outstanding Term Loans does not equal its
fractional share of the total amount of outstanding Revolving Credit Loans;
(iii) Net Exposures under Letters of Credit and
Escrow Agreement shall be allocated based on the Revolving Credit Ratable
Shares, except for certain temporary deviations which may occur after an
Additional Facility A Bank joins this Agreement as described in
Section 11.11(c);
(iv) Facility A Commitment Fees, Letter of
Credit Fees and Escrow Fees shall be allocated as set forth in Sections 2.03,
2.10(c) and 2.11(c); and
(v) Other fees or amounts due from the
Borrower hereunder to the Banks with respect to the Loans shall be allocated
in proportion to the relative share of such fee or amount which is due to
each Bank hereunder.
4.03 Interest Payment Dates. Interest on Loans shall be payable
in arrears and billed monthly by Agent on the first day of each month on
account of the prior month and shall be due and payable to the Agent for the
accounts of the applicable Banks not later than the twelfth day of such
month. Interest on mandatory prepayments of principal under Section 4.05
shall be due on the date such mandatory prepayment is due.
4.04 Voluntary Prepayments.
(a)
(1) Revolving Credit Loans. The Borrower shall have the
right at its option from time to time to prepay the Revolving Credit Loans in
whole or part without premium or penalty (except as provided in Section 4.06
hereof):
(i) at any time with respect to any Revolving
Credit Loan to which the Prime Rate Option applies,
(ii) on the last day of the applicable CD Rate
Interest Period or Euro-Rate Interest Period with respect to Revolving Credit
Loans to which a CD Rate Option or a Euro-Rate Option applies,
(iii) on the date specified in a notice by any
Facility A Bank pursuant to Section 3.04 [CD Rate or Euro-Rate
Unascertainable] hereof with respect to any Revolving Credit Loan to which a
CD Rate Option or a Euro-Rate Option applies.
(2) Term Loans.
(A) Prepayment Premium. The Borrower shall have the
right at its option to prepay the Term Loans in whole or in part at any time
at the principal amount so prepaid plus a premium in an amount equal to the
Term Loan Prepayment Premium (if any).
(B) Adjustments Required if Additional Facility A
Banks Have Joined This Agreement. This Section 4.04(a)(2)(B) applies if
(1) one or more Additional Facility A Banks have joined this Agreement after
the Fifth Amendment Effective Date and Facility A Term Loans were outstanding
on the date of such Additional Facility A Bank's joinder and the Borrower
and such Additional Facility A Bank did not elect pursuant to clause
(D)(1) of Section 11.11(c) to have such Additional Facility A Bank make a
Facility A Term Loan (each Additional Facility A Bank described in this
clause (1) shall be referred to as a "Non-electing Additional Facility
A Bank") and (2) the Borrower pays in whole or in part after the effective
date of such Non-electing Additional Facility A Bank's joinder the
Facility A Term Loans of the Facility A Banks (the "Facility A Term Loan
Banks") which had Facility A Term Loans outstanding on such effective date.
It is acknowledged that the following shall occur when the Borrower pays the
Facility A Term Loans, whether or not such payment occurs before, on or
after the maturity of such Loans: (i) the Facility A Revolving Credit
Commitments of each Facility A Term Loan Bank shall increase in an amount
equal to the reduction of its Facility A Term Loan; and (ii) the Revolving
Credit Ratable Share of each Facility A Term Loan Bank shall increase and
the Revolving Credit Ratable Share of each Non-electing Additional
Facility A Bank shall decrease. The following adjustments will be made on
or after such payment in order to make the allocations of existing
Revolving Credit Loans and Net Exposures equal to the Facility
A Banks' new Revolving Credit Ratable Shares, provided that no Event of
Default exists and is continuing and has not been waived: (A) on the first
Business Day of the fiscal quarter following the date of such payment, the
Net Exposure of each Term Loan Bank in outstanding Letters of
Credit and Escrow Agreements shall increase and the Net Exposure of
each Non-electing Facility A Bank thereon shall decrease so that the Net
Exposure of each Facility A Bank shall then equal its Revolving Credit
Ratable Share; no adjustments in such Net Exposures shall be made prior to
such Business Day; (B) on the date on which Borrower makes such payment,
Borrower shall repay all outstanding Revolving Credit Loans to which the
Prime Rate Option applies and reborrow a like amount of Revolving Credit
Loans under the Prime Rate Option from the Facility A Banks according to
their new Revolving Credit Ratable Shares; (C) if the Borrower should
(i) renew after the date of such payment the CD Rate Option or Euro-Rate
Option with respect to Revolving Credit Loans existing on such date,
or (ii) convert after the date of such payment from the CD Rate Option
or Euro-Rate Option to a different Interest Rate Option with respect to
Revolving Credit Loans existing on such date, Borrower shall be deemed
to repay the applicable Revolving Credit Loans on the conversion or
renewal date, as the case may be, and then reborrow a similar amount on
such date so that the Facility A Banks shall participate in such Revolving
Credit Loans after such renewal or conversion date according to their new
Revolving Credit Ratable Shares; except as provided in this clause
(C) above interests of the Facility A Banks in Revolving Credit Loans to
which either the CD Rate Option or the Euro-Rate Option applies
which are outstanding on the date of the payment shall not be adjusted; and
(D) the Facility A Banks shall participate in all Facility A Loans made
after the payment date according to their Revolving Credit Ratable Shares.
(3) Intentionally Omitted.
Borrower shall provide a prepayment notice to the Agent on or
before the date on which it prepays any Revolving Credit Loan and at least
three (3) Business Days before it prepays any of the Term Loans. Such
notice shall set forth the following information:
(x) the date, which shall be a Business Day, on which the
proposed prepayment is to be made;
(y) the total principal amount of such prepayment, which (1) if
Borrower is prepaying Revolving Credit Loans such principal amount
shall not be less than $1,000,000, (2) if the Borrower is prepaying
Facility A Term Loans and one or more Non-electing Additional
Facility A Banks exist at the time of such prepayment, such
principal amount shall not be less than $5,000,000 and shall be
in integral multiples of $1,000,000, or (3) if the Borrower is
either prepaying the Facility A Term Loans and there do not exist
any Non-electing Additional Facility A Banks at the time of such
prepayments or if Borrower is prepaying the Facility B Loans, such
principal amount shall not be less than $1,000,000 and shall be in
integral multiples of $1,000,000.
All prepayment notices shall be irrevocable. The following amounts
shall be due and payable on the date specified in a prepayment notice as the
date on which the proposed prepayment is to be made: (i) the principal amount
of the Loans for which a prepayment notice is given, (ii) the interest on
such principal amount except with respect to Loans to which the Prime Rate
Option applies, (iii) any Term Loan Prepayment Premium and (iv) any related
indemnity obligations. Unless otherwise specified by the Borrower with
respect to prepayments of the CD Rate Portion or Euro-Rate Portion of the
Revolving Credit Loans permitted under Section 4.04(a)(i), (ii) or
(iii) above, all prepayments of the Revolving Credit Loans shall be applied
first to the Prime Rate Portion of such Loans, then to the CD Rate Portion of
such Loans, and then to the Euro-Rate Portion of such Loans, subject to
Section 4.06(b) hereof.
(b) In the event any Bank gives notice under Section 4.06(a)
[Additional Compensation in Certain Circumstances] hereof, Borrower may at
any time after the date on which Borrower receives such notice notify Agent
and such Bank that Borrower desires to replace such Bank with a new bank
designated by Borrower in the notice, provided that Borrower shall deliver
satisfactory evidence to Agent that such proposed new bank is a Qualified Bank
at least fifteen Business Days prior to such replacement. The Bank to be
replaced shall assign all of its Commitments and Loans hereunder to the new
bank pursuant to the procedures for assignments contained in
Section 11.11(b) below.
4.05 Mandatory Prepayments.
(a) Facility A Commitments or Borrowing Base Exceeded. Whenever
(i) the sum of the outstanding principal balance of Facility A Loans by the
Facility A Banks plus the aggregate undrawn face amount of outstanding
Letters of Credit issued pursuant to Section 2.10 plus the obligations under
the Escrow Agreements entered into pursuant to Section 2.11 exceeds the
Facility A Commitments, or (ii) the covenant contained in Section 8.01(e) is
violated, Borrower shall make, within one (1) Business Day after the Borrower
learns of such excess or violation, as the case may be, and whether or not
the Agent has given notice to such effect, a mandatory prepayment of
principal of the Loans equal to such excess as necessary to cure such
violation, together with accrued interest on such principal amount.
(b) Application Among Interest Rate Options; Indemnity. All
prepayments required pursuant to this Section 4.05 shall first be applied
among the Interest Rate Options to the principal amount of the Revolving
Credit Loans subject to a Prime Rate Option, then to Revolving Credit Loans
subject to the Federal Funds/Euro-Rate Option, then to Revolving Credit Loans
subject to the CD Rate Option, then to Revolving Credit Loans subject to the
Revolving Credit Euro-Rate Option then to the Term Loans in Borrower's
discretion or as set forth in Section 9.02 if an Event of Default has
occurred and is continuing. In accordance with Section 4.06(b), the
Borrower shall indemnify the Banks for any loss or expense including loss of
margin incurred with respect to any such prepayments applied against Loans
subject to a CD Rate Option or a Euro-Rate Option on any day other than the
last day of the applicable CD Rate Interest Period or Euro-Rate Interest Period.
(c) Premiums and Adjustments Upon Prepayment of the Facility A
Term Loans. Any prepayment whether pursuant to this Section 4.05 or
otherwise of the Facility A Term Loans shall be subject to the Term Loan
Prepayment Premium and to the adjustments described in Section 4.04(a)(2)(B).
4.06 Additional Compensation in Certain Circumstances.
(a) Increased Costs or Reduced Return Resulting From Taxes,
Reserves, Capital Adequacy Requirements, Expenses, Etc. If any introduction
of any new Law, guideline or interpretation or any change in any Law,
guideline or interpretation or application of
a Law by any Official Body charged with the interpretation or administration
thereof or compliance with any request or directive (whether or not having
the force of Law) of any central bank or other Official Body:
(i) subjects at least a Required Threshold of
Banks to any tax or changes the basis of taxation with respect to this
Agreement, the Notes, the Loans, the Letters of Credit or the Escrow
Agreements or payments by the Borrower of principal, interest, Facility A
Commitment Fees, or other amounts due from the Borrower hereunder or under
the Notes (except for taxes on the overall net income of such Bank),
(ii) imposes, modifies or deems applicable any
reserve, special deposit or similar requirement against credits or
commitments to extend credit extended by, or assets (funded or contingent)
of, deposits with or for the account of, or other acquisitions of funds
by, at least a Required Threshold of Banks, or
(iii) imposes, modifies or deems applicable any
capital adequacy or similar requirement (A) against assets (funded or
contingent) of, or letters of credit, other credits or commitments to extend
credit extended by, at least a Required Threshold of Banks, or
(B) otherwise applicable to the obligations of at least a Required Threshold
of Banks under this Agreement, and the result of any of the foregoing is to
increase the cost to, reduce the income receivable by, or impose any expense
(including loss of margin) upon at least a Required Threshold of Banks each
with respect to this Agreement, the Notes or the making, maintenance or
funding of any part of the Loans (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on the
capital of at least a Required Threshold of Banks, taking into consideration
such Banks' customary policies with respect to capital adequacy),
such Banks shall from time to time notify the Borrower and the Agent of the
amount determined in good faith (using any averaging and attribution methods
employed in good faith) by such Banks (which determination shall be
conclusive absent manifest error) to be necessary to compensate such Banks
for such increase in cost, reduction of income or additional expense for
periods on and after the date on which such Banks notify Borrower thereof.
Such notice shall set forth in reasonable detail the basis for such
determination and shall be delivered within three (3) months after the date
on which a Required Threshold of Banks have become aware of such
increase in cost reduction in income or additional expenses and ascertained
the amount thereof.
Such amount shall be due and payable by the Borrower to such Banks thirty
(30) days after such notice is given.
(b) Indemnity. In addition to the compensation required by
subsection (a) of this Section 4.06, the Borrower shall indemnify each Bank
against all liabilities, losses or expenses (including loss of margin, any
loss or expense incurred in liquidating or employing deposits from third
parties and any loss or expense incurred in connection with funds acquired by
a Bank to fund or maintain Loans subject to the CD Rate Option or any
Euro-Rate Option) which such Bank sustains or incurs as a consequence of any
(i) payment, prepayment, conversion or renewal
of any Facility A Loan to which the CD Rate Option or any Euro-Rate Option
applies on a day other than the last day of the corresponding Interest Period
(whether or not such payment or prepayment is then due), except for payments
or prepayments required by Section 3.04,
(ii) attempt by the Borrower to revoke
(expressly, by later inconsistent notices or otherwise) in whole or part any
notice relating to Loan Requests under Sections 2.06, 3.02 or 11.11(c) or
prepayments under Section 4.04, or
(iii) default by the Borrower in the performance
or observance of any covenant or condition contained in this Agreement or
any other Loan Document, including without limitation any failure of the
Borrower to pay when due (by acceleration or otherwise) any principal,
interest, Facility A Commitment Fee or any other amount due hereunder.
If any Bank sustains or incurs any such loss or expense it shall from time to
time notify the Borrower of the amount determined in good faith by such
Bank (which determination shall be conclusive absent manifest error and may
include such assumptions, allocations of costs and expenses and averaging or
attribution methods as such Bank shall deem reasonable) to be
necessary to indemnify such Bank for such loss or expense. Such notice shall
set forth in reasonable detail the basis for such determination. Such
amount shall be due and payable by the Borrower to such Bank thirty (30) days
after such notice is given.
(c) Reduction in Indemnity. If any Bank sustains losses,
expenses or reductions in income and has requested reimbursement therefor
pursuant to Section 4.06(a) and (b) and such Bank ceases to sustain such
losses, expenses or reductions in income, the reimbursement obligations of
Borrower shall terminate as appropriate to reflect the cessation of
such losses, expenses or reductions in income.
(d) Replacement of a Bank. If a Bank sustains or incurs a
loss or expense or reduction of income and requests reimbursement therefor
from the Borrower pursuant to Sections 4.06(a) or (b), Borrower may within
thirty (30) days after the date on which Borrower receives such request
notify Agent and such Bank that Borrower desires to replace such Bank
with a new bank designated by Borrower in the notice, provided that (i)
Borrower shall deliver satisfactory evidence to the Agent that such proposed
new bank is a Qualified Bank at least fifteen Business Days prior to such
replacement and (ii) Borrower shall have paid any amounts due
pursuant to Section 4.06(a) or (b) to the Bank to be replaced on or before
such replacement. The Bank to be replaced shall assign all of its
Commitments and Loans hereunder to the new bank pursuant to the procedures
for assignments contained in Section 11.11(b) below.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
5.01 Representations and Warranties. The Loan Parties jointly and
severally represent, warrant, covenant and agree as set forth below. The
covenants set forth below shall remain in effect until payment in full of the
Loans and interest thereon, satisfaction of all of the Loan Parties' other
obligations hereunder and termination of the Commitments. Each statement
contained below which uses the word "will" or "shall" and describes a future
event does not constitute a representation or warranty by the Loan Parties
with respect to the future but rather constitutes a covenant of the Loan
Parties with respect to their future actions or obligations. Each
reference to Loan Parties (below and otherwise in this Agreement) is
intended to refer to those entities which have joined this Agreement as
Loan Parties as of the applicable date so that an entity which exists but is
not required to join this Agreement until after the end of the fiscal quarter
pursuant to Section 11.12 shall not be bound by the covenants herein until it
has joined this Agreement.
(a) Organization and Qualification. On the date hereof and
at all times in the future, each of the Loan Parties is or will continue to
be, as the case may be, a corporation or partnership, duly organized,
validly existing and in good standing under the laws of their respective
jurisdiction of organization. Each of the Loan Parties is licensed or qualified
to conduct business and is in good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such
license or qualification necessary and such license or qualification is
material to the operation of such Loan Party's business. The Loan
Parties have and shall continue to have the lawful power to own or lease
their properties and to engage in the business they presently conduct or
propose to conduct. The Loan Parties are and shall continue to be duly
licensed or qualified and in good standing in each jurisdiction where the
property owned or leased by them or the nature of the business transacted
by them or both makes such licensing or qualification necessary and such
license or qualification is material to the operation of such Loan Party's
business. Notwithstanding the foregoing, any violation or failure
of this Section 5.01(a) shall be permitted if it constitutes a Permitted
Exception or if it results from a liquidation, merger, consolidation or
disposition permitted under Sections 8.01(f) or (g), provided that no such
Permitted Exceptions exist on the Closing Date.
(b) Capitalization and Ownership. As of June 5, 1995, the
authorized capital stock of the Company consisted of 40,000,000 shares, of
which 33,528,948 shares were issued and outstanding. As of June 5, 1995,
there were no material options, warrants or other rights outstanding to
purchase any such shares except as described in the Form 10-Q filed with the
Securities and Exchange Commission for the fiscal quarter ended April 30, 1995.
(c) Consolidated Subsidiaries. Schedule 5.01(c) attached
hereto and, as the same may be amended from time to time, states as of the
date hereof and hereafter will state as of the date on which the Company
delivers, or is required to deliver (whichever is earlier) its Compliance
Certificate pursuant to Section 8.02(b) the name of each of the Company's
Consolidated Subsidiaries, its jurisdiction and type of organization and its
authorized capital stock, its Consolidated Subsidiary Shares and the owners
thereof and whether such Consolidated Subsidiary is a Guarantor hereunder.
The Company and each Consolidated Subsidiary of the Company have and shall
continue to have good and marketable title to all of the Consolidated
Subsidiary Shares they purport to own, free and clear in each case of any
Lien except for dispositions or other transfers in connection with
liquidations, mergers, consolidations or disposition permitted under
Sections 8.01(f) or (g). All Consolidated Subsidiary Shares in existence
from time to time have been or will continue to be validly issued and are
fully paid and nonassessable.
(d) Power and Authority. Each of the Loan Parties now has
and shall continue to have (except if it should cease to exist pursuant to a
liquidation, merger, consolidation or disposition permitted under
Sections 8.01(f) or (g)) full power to enter into, execute, deliver
and carry out this Agreement and the other Loan Documents to which it is
a party, to incur the Indebtedness contemplated by the Loan Documents
and to perform its obligations under the Loan Documents to which it is a
party and all such actions have been duly authorized by all necessary
proceedings on its part.
(e) Validity and Binding Effect. This Agreement has been and
each other Loan Document, when duly executed and delivered by each of the
Loan Parties, will have been duly and validly executed and delivered by such
Loan Party. This Agreement and each of the other Loan Documents now
constitutes legal, valid and binding obligations of each of the Loan Parties,
enforceable against such Loan Parties in accordance with their respective
terms and shall continue to constitute such legal, valid and binding
obligations except to the extent any unenforceability does not have a
material adverse effect on the ability of the Banks to substantially realize
the benefits of the Loan Documents (it being understood that the parties will
work together to remedy any such illegality, invalidity or unenforceability),
except to the extent that enforceability of any of the foregoing Loan
Documents may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of
creditors' rights generally or limiting the right of specific performance.
(f) No Conflict. Neither the execution and delivery of this
Agreement or the other Loan Documents by the Loan Parties nor the
consummation of the transactions herein or therein contemplated or
compliance with the terms and provisions hereof or thereof by them
will conflict with, constitute a default under or result in any breach of
(i) the terms and conditions of the certificate of incorporation, by-laws or
other organizational documents of any of the Loan Parties or (ii) of any Law
or of any material agreement or instrument or order, writ, judgment,
injunction or decree to which such Loan Party is a party or by which it
is bound or to which it is subject, or result in the creation or enforcement
of any Lien, charge or encumbrance whatsoever upon any property (now or
hereafter acquired) of such Loan Party.
(g) Litigation. There are not now and except for Permitted
Exceptions will not in the future be any actions, suits, proceedings or
investigations pending or, to the knowledge of the Loan Parties, threatened
against any of the Loan Parties at law or equity before any Official Body
which individually or in the aggregate may reasonably be expected to result in
any Material Adverse Change. Neither the Borrower nor any other Loan Party
is or except for Permitted Exceptions in the future shall be in violation of
any order, writ, injunction or any decree of any Official Body which may
reasonably be expected to result in any Material Adverse Change.
(h) Title to Properties. Each Loan Party now has and shall
continue to have good and marketable title to all properties, assets
(tangible or intangible) and other rights which it purports to own or which
are reflected as owned on its books and records, free and clear of all Liens
and encumbrances except Permitted Liens, and imperfections of title (excluding
Liens) which do not materially reduce the value of such properties, assets
and rights in the aggregate. Assets of the Loan Parties under lease or
located on leased real property are not material to the business of the Loan
Parties.
(i) Financial Statements.
Historical Statements. The Company has delivered to the
Agent copies of its audited consolidated year-end financial statements for
and as of the end of the two fiscal years ended October 31, 1991 and
October 31, 1992, respectively (the "Annual Statements"). In addition,
the Company has delivered to the Agent copies of its unaudited consolidated
interim financial statements for the fiscal year to date and as of the end of
the fiscal quarter ended July 31, 1993 (the "Interim Statements") (the Annual
and Interim Statements being collectively referred to as the "Historical
Statements"). The Historical Statements were compiled from the books and
records maintained by the Company's management, are correct and complete
and fairly represent the consolidated financial condition of the Company and
its Consolidated Subsidiaries as of their dates and the results of operations
for the fiscal periods then ended and have been prepared in accordance with
GAAP consistently applied, subject (in the case of the Interim Statements)
to normal year-end audit adjustments. Since October 31, 1992 no Material
Adverse Change has occurred.
(j) Margin Stock. None of the Loan Parties engages or
intends to engage principally, or as one of its important activities, in the
business of extending credit for the purpose, immediately, incidentally or
ultimately, of purchasing or carrying margin stock (within the meaning of
Regulation U). No part of the proceeds of any Loan has been or will be used,
immediately, incidentally or ultimately, to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock or to refund Indebtedness originally incurred
for such purpose, or for any purpose which entails a violation of or which is
inconsistent with the provisions of the regulations of the Board of
Governors of the Federal Reserve System. None of the Loan Parties holds or
intends to hold margin stock in such amounts that more than 25% of the
reasonable value of the assets of any Loan Party are or will be represented
by margin stock.
(k) Full Disclosure. Neither this Agreement nor any other Loan
Document, nor any certificate, statement, agreement or other documents
furnished to the Agent or any Bank in connection herewith or therewith,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein,
in light of the circumstances under which they were made, not misleading.
There is no fact known to any Senior Executive of the Company about a fact
which could reasonably be expected to result in a Material Adverse Change,
which has not been set forth in the Agreement or in the certificates,
statements, agreements or other documents furnished in writing to the Agent
and the Banks prior to or at the date hereof in connection with the transactions
contemplated hereby.
(l) Taxes; Payment of Liabilities. On the date hereof and at
all times in the future all federal, state, local and other tax returns
required to have been filed with respect to the Loan Parties have been or
will have been, as the case may be, filed and payment or adequate
provision made for the payment of all taxes, fees, assessments and other
governmental charges which have or may become due pursuant to said returns
or to assessments received except to the extent that such taxes, fees,
assessments and other charges are being contested in good faith by
appropriate proceedings diligently conducted and for which such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall have
been made. Each of the Loan Parties shall duly pay and discharge all other
liabilities to which it is subject or which are asserted against
it, promptly as and when the same shall become due and payable, including
all assessments and governmental charges upon it or any of its properties,
assets, income or profits, prior to the date on which penalties attach
thereto, except to the extent that such liabilities, assessments or charges,
are being contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made.
Notwithstanding the foregoing, any violations or failures of this Section
shall be permitted if they are not materially adverse to the business of the
applicable Loan Party or they constitute a Permitted Exception provided that
there exist no such Permitted Exceptions on the Closing Date.
(m) Consents and Approvals. No consent, approval, exemption,
order or authorization of, or a registration or filing with any Official Body
or any other Person is required by any Law or any agreement in connection
with the execution, delivery and carrying out of this Agreement and the
other Loan Documents by the Loan Parties.
(n) No Event of Default; Compliance with Instruments. On the
date hereof and at all times in the future no event has occurred and is
continuing or will occur and be continuing and no condition exists or will
exist which constitutes an Event of Default or a Potential Default which
might not be cured before it results in an Event of Default. None of the
Loan Parties is or will be in violation of (i) any term of its certificate
of incorporation, by-laws, certificates of partnership, partnership
agreement or other organizational documents, as applicable, or (ii) any
material agreement or instrument to which it is a party or by which it or any
of its properties may be subject or bound where such violation would
reasonably be expected to result in a Material Adverse Change.
(o) Patents, Trademarks, Copyrights, Licenses, Etc. Each
Loan Party now owns or possesses and shall continue to own or possess all
the material patents, trademarks, service marks, trade names, copyrights,
licenses, registrations, franchises, permits and rights necessary to own
and operate its properties and to carry on its business as conducted and planned
to be conducted by such Loan Party, without known conflict with the rights of
others, except for violations or failures which constitute Permitted
Exceptions. There are no such Permitted Exceptions on the date hereof.
(p) Insurance. The Company shall on a consolidated basis
insure the properties and assets of the Loan Parties against loss or damage
by fire and such other insurable hazards as such assets are commonly insured
(including fire, extended coverage, property damage, worker's compensation,
public liability and business interruption insurance) and against other
risks (including errors and omissions) in such amounts as similar properties
and assets are insured by prudent companies in similar circumstances carrying
on similar businesses, and with reputable and financially sound insurers,
including self-insurance to the extent customary, all as reasonably
determined by the Agent. At the request of the Agent, the Company shall
deliver (x) an original certificate of insurance signed by the Loan Parties'
independent insurance broker describing and certifying as to the existence
of the insurance then in effect with respect to the Loan Parties
required to be maintained by this Agreement and the other Loan Documents,
together with riders and endorsements relating to such insurances and proof
of premium payments (y) from time to time a summary schedule indicating all
insurance then in force with respect to the Borrower and (z) originals or
copies of the policies relating to such insurance. Such policies of
insurance shall contain endorsements, in form and substance acceptable to the
Agent, which shall (i) specify the Agent as an additional insured, mortgagee
and lender loss payee as its interests may appear, with the understanding
that any obligation imposed upon the insured (including, without limitation, the
liability to pay premiums) shall be the sole obligation of the Borrower and not
that of the insured and (ii) provide that no reduction in the type and
amount of coverage, cancellation or termination
of such policies for any reason (including, without limitation, non-payment
of premium) nor any change therein shall be effective until at least thirty
(30) days after receipt by the Agent of written notice of such cancellation
or change. The insurance policies of the Loan Parties on the date
hereof comply with the foregoing covenant.
(q) Compliance with Laws. Each of the Loan Parties now is
and shall continue to be in compliance in all material respects with all
applicable Laws (other than Environmental Laws which are specifically
addressed in subsection (v) in all jurisdictions in which such Loan Party is
presently or will be doing business except for violations or failures
which constitute Permitted Exceptions. There are no such Permitted
Exceptions on the date hereof.
(r) Material Contracts. Except for the Development
Agreements and the documents governing the Subordinated Indebtedness none
of the Loan Parties is a party to a contract relating to its business
operations, including, without limitation, all employee benefit
plans, employment agreements, collective bargaining agreements and labor
contracts (the "Labor Contracts") which, if breached, directly or
indirectly would reasonably be expected to result in a Material Adverse
Change. All such material contracts are valid, binding and enforceable upon the
applicable Loan Party and each of the parties thereto in accordance with their
respective terms, and there is no default thereunder, to the Loan Parties'
knowledge, with respect to parties other than the Loan Parties.
(s) Investment Companies. None of the Loan Parties is an
"investment company" registered or required to be registered under the
Investment Company Act of 1940 or under the "control" of an "investment
company" as such terms are defined in the Investment Company Act of 1940
and shall not become such an "investment company" or under such "control."
(t) Plans and Benefit Arrangements. Except as set forth on
Schedule 5.01(t) hereto or to the extent a violation of the foregoing would
not reasonably be expected to result in a Material Adverse Change:
(i) The Company and each member of the ERISA
Group now are and shall continue to be in compliance in all material
respects with any applicable provisions of ERISA with respect to all
Benefit Arrangements, Plans and Multiemployer Plans. There has not been any
Prohibited Transaction with respect to any Benefit Arrangement or any Plan or,
to the best knowledge of the Company, with respect to any Multiemployer Plan
or Multiple Employer Plan, which could result in any material liability of
the Company or any other member of the ERISA Group and the Company shall
not permit a Prohibited Transaction to occur. The Company and all members
of the ERISA Group have made and will make when due any and all
payments required to be made under any agreement relating to a
Multiemployer Plan or a Multiple Employer Plan or any Law pertaining
thereto. With respect to each Plan and Multiemployer Plan, the Company and
each member of the ERISA Group (i) have fulfilled and will continue to
fulfill in all material respects their obligations under the minimum funding
standards of ERISA, (ii) have not incurred and will not incur any liability
to the PBGC and (iii) have not had asserted and will not have asserted
against them any penalty for failure to fulfill the minimum funding
requirements of ERISA.
(ii) To the best of the Company's knowledge
now and at anytime in the future, each Multiemployer Plan and Multiple
Employer Plan is and shall be able to pay benefits thereunder when due.
(iii) Neither the Company nor any other member
of the ERISA Group has instituted or shall institute proceedings to terminate
any Plan.
(iv) No event requiring notice to the PBGC under
Section 302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur
or shall in the future occur or be reasonably expected to occur with respect
to any Plan, and no amendment with respect to which security is required
under Section 307 of ERISA has been made or is reasonably expected to be made
to any Plan.
(v) The aggregate actuarial present value of
all benefit liabilities (whether or not vested) under each Plan, determined
on a plan termination basis, as disclosed from time to time in and as of
the date of the actuarial reports for such Plan shall not exceed the
aggregate fair market value of the assets of such Plan.
(vi) Neither the Company nor any other member
of the ERISA Group has incurred or reasonably expects to incur or shall in
the future incur or reasonably expect to incur any material withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Company nor any other member of the ERISA Group has been or
shall be notified by any Multiemployer Plan or Multiple Employer Plan that
such Multiemployer Plan or Multiple Employer Plan has been terminated within
the meaning of Title IV of ERISA and, to the best knowledge of the Company,
no Multiemployer Plan or Multiple Employer Plan is or shall be reasonably
expected to be reorganized or terminated, within the meaning of Title IV of
ERISA.
(vii) To the extent that any Benefit Arrangement
is insured, the Company and all members of the ERISA Group have paid and
shall pay when due all premiums required to be paid. To the extent that any
Benefit Arrangement is funded other than with insurance, the Company and all
members of the ERISA Group have made and shall make when due all
contributions required to be paid for all prior periods.
(u) Employment Matters. The Loan Parties are and shall
continue to be in compliance with the Labor Contracts and all applicable
federal, state and local labor and employment Laws including, but not
limited to, those related to equal employment opportunity and affirmative
action, labor relations, minimum wage, overtime, child labor, medical insurance
continuation, worker adjustment and relocation notices, immigration controls
and worker and unemployment compensation, where the failure to comply would
constitute a Material Adverse Change. There are and shall continue to be no
outstanding grievances, arbitration awards or appeals therefrom arising out
of the Labor Contracts or current or threatened strikes, picketing,
handbilling or other work stoppages or slowdowns at facilities of the
Company or any Consolidated Subsidiary of the Company which in any case
would constitute a Material Adverse Change. The Company has delivered to
the Agent true and correct copies of each of the Labor Contracts.
(v) Environmental Matters. Except as disclosed on
Schedule 5.01(v) hereto:
(i) Except for violations or failures which
are not reasonably likely to result in a Material Adverse Change, none of the
Loan Parties has received or shall receive any Environmental Complaint from
any Official Body or private Person alleging that any Loan Party or any prior
or subsequent owner of the Property is a potentially responsible party
under the Comprehensive Environmental Response, Cleanup and Liability Act,
42 U.S.C. Sect. 9601, et seq., and none of the Loan Parties has any reason to
believe that such an Environmental Complaint might be received. There are
and shall continue to be no pending or, to any Loan Party's knowledge,
threatened Environmental Complaints relating to any Loan Party or, to any
Loan Party's knowledge, any prior or subsequent owner of the Property
pertaining to, or arising out of, any Environmental Conditions.
(ii) Except for conditions, violations or
failures which individually and in the aggregate are not reasonably likely to
result in a Material Adverse Change, there are and shall continue to be no
circumstances at, on or under the Property that constitute a
breach of or non-compliance with any of the Environmental Laws, and there are
and shall continue to be no past or present Environmental Conditions at,
on or under the Property or, to any Loan Party's knowledge, at, on or under
adjacent property, that prevent compliance with the Environmental Laws at
the Property.
(iii) Neither the Property nor any structures,
improvements, equipment, fixtures, activities or facilities thereon or
thereunder now or in the future shall contain or use Regulated Substances
except in compliance with Environmental Laws. There are and shall
continue to be no processes, facilities, operations, equipment or any other
activities at, on or under the Property, or, to any Loan Party's knowledge,
at, on or under adjacent property, that currently result in the release or
threatened release of Regulated Substances on to the Property, except to the
extent that such releases or threatened releases are not a breach of or
otherwise not a violation of the Environmental Laws, or are not likely to
result in a Material Adverse Change.
(iv) Except for violations or failures which
individually or in the aggregate are not likely to result in a Material
Adverse Change, there are and shall continue to be no underground storage
tanks, or underground piping associated with such tanks, used for the
management of Regulated Substances at, on or under the Property that do not
have a full operational secondary containment system in place and are not in
compliance with all Environmental Laws, and there are no abandoned
underground storage tanks or underground piping associated with such tanks,
previously used for the management of Regulated Substances at, on or under
the Property that have not been either abandoned in place, or removed, in
accordance with the Environmental Laws.
(v) Except for violations or failures which
individually or in the aggregate are not likely to result in a Material
Adverse Change, each Loan Party has and shall have all material permits,
licenses, authorizations and approvals necessary under the Environmental
Laws for the conduct of the business of such Loan Party as then conducted by
such Loan Party. The Loan Parties have submitted and will continue to submit
all material notices, reports and other filings required by the
Environmental Laws to be submitted to an Official Body which pertain to past
and current operations on the Property.
(vi) Except for violations which individually
and in the aggregate are not likely to result in a Material Adverse Change,
all past and present on-site generation, storage, processing, treatment,
recycling, reclamation or disposal of Solid Waste at, on, or under the
Property and all off-site transportation, storage, processing, treatment,
recycling, reclamation or disposal of Solid Waste has been and shall
continue to be done in accordance with the Environmental Laws.
(w) Senior Debt Status. The obligations of the Borrower
under this Agreement and the Notes and each Guarantor under the Guaranty
Agreement do rank and will rank at least pari passu in priority of payment
with all other indebtedness of the Borrower or such Guarantor except
indebtedness of the Borrower or such Guarantor to the extent secured by
Permitted Liens.
(x) Maintenance of Properties and Leases. Each Loan Party shall
maintain in good repair, working order and condition (ordinary wear and tear
excepted) in accordance with the general practice of other businesses of
similar character and size, all of those properties useful or necessary to
its business, and from time to time, make or cause to be made all appropriate
repairs, renewals or replacements thereof, except for any violations or
failures which constitute Permitted Exceptions. There are no such Permitted
Exceptions on the date hereof.
(y) Visitation Rights. Each Loan Party shall permit any of
the officers or authorized employees or representatives of the Agent or any
of the Banks to visit and inspect any of its properties and to examine and
make excerpts from its books and records and discuss its business affairs,
finances and accounts with the Senior Executives, all in such detail and at such
times and as often as any of the Banks may reasonably request, provided that
each Bank shall provide the Borrower and the Agent with reasonable notice
prior to any visit or inspection.
(z) Keeping of Records and Books of Account. The books and
records of the Loan Parties shall be maintained so as to enable the Company
to issue consolidated financial statements in accordance with GAAP and as
otherwise required by applicable Laws of any Official Body having
jurisdiction over the Loan Parties, and in which full, true and correct
entries shall be made in all material respects of all the dealings and
business and financial affairs of the Loan Parties as a group.
(aa) Use of Proceeds. The Borrower and each Guarantor will
use the proceeds of the Loans only for lawful purposes in accordance with
Section 2.09 hereof as applicable and such uses shall not contravene
any applicable Law or any other provision hereof.
(bb) Intercompany Loans, Loans and Advances to the Borrower.
Borrower shall make Intercompany Loans available to the Guarantors using
proceeds of the Loans. Each Intercompany Loan shall be evidenced either
by a promissory note of the obligor under such Intercompany Loan
(individually, an "Intercompany Note" and collectively, the "Intercompany
Notes") or an intercompany account agreement between Borrower and the obligor
under such Intercompany Loan (individually, an "Intercompany Agreement" and
collectively, the "Intercompany Agreements") which shall provide for
repayment of such Intercompany Loans on such terms as Borrower and
Guarantors agree. Each Intercompany Loan shall be subordinated to
the Guarantors' obligations under the Guaranty Agreements pursuant to the
terms of the Intercompany Subordination Agreement in the form attached as
Exhibit I (the "Intercompany Subordination Agreement") and shall become due
and payable upon the acceleration of the Notes pursuant to Section 9.02
hereof after the occurrence of an Event of Default hereunder. Any
Intercompany Note or Intercompany Agreement may in turn be assigned by Borrower
to another Guarantor as a capital contribution to such Guarantor. The
originals of the Intercompany Notes and the Intercompany Agreements shall
be retained by Borrower or such assignee until the occurrence of a Security
Event after which they shall be subject to the provisions of Section 7.01
hereof. Borrower shall establish and maintain such books and records
relating to Intercompany Loans and other investments in Guarantors as are
required to enable it and Agent to trace advances and repayments of principal
of Intercompany Loans and other investments in Guarantors.
(cc) Appraisals.
(i) Procedures. The Loan Parties shall
cooperate with Banks and the appraiser in making appraisals of the Borrowing
Base Assets which Agent, at the direction of a Simple Majority of Banks, may
from time to time request. Borrower may, within 30 days following any such
request by Agent, specify which other of Borrowing Base Assets and which of the
Loan Parties' Qualified Options it requests to have similarly appraised.
Following the first to occur of (A) completion of all appraisals requested at
any one time by Agent and Borrower under this Section 5.01(cc), and (B) a d
ate specified by Agent no earlier than 45 days after the last request for an
appraisal has (or could have) been made by Borrower in accordance
with the immediately preceding sentence, the appraised values of all Borrowing
Base Assets which have been appraised (rather than their book value) shall
be used for purposes of applying the covenant contained in
Section 8.01(e)(i). The percentages in that Section applicable to
Category 1 Borrowing Base Assets whether or not appraised shall thereafter
be 85% rather than 90%. If the Loan parties would be in compliance with
the covenant contained in Section 8.01(e)(i) without giving effect to
appraised values of assets or other adjustments pursuant to this
Section 5.01(cc), Borrower may include one or more of the Loan Parties'
Qualified Options at their appraised value in computing the Borrowing
Base for purposes of complying with Section 8.01(e)(i) as modified hereby.
Banks shall have the right to request appraisals pursuant to this
Section 5.01(cc) not more than two times in any consecutive twelve-month
period and shall specify in such request all of the assets as for which
it desires appraisals.
(ii) Costs. Any appraisals requested by Agent
and Borrower pursuant to Section 5.01(cc)(i) shall be at Banks' expense
(shared ratably among the Banks) (except appraisals requested pursuant to the
provisions of Section 8.01(e)(ii) which shall always be at Borrower's
expense), unless using such appraised values and a percentage of 85% to
Category 1 Borrowing Base Assets rather than 90% would result in the covenant
contained in Section 8.01(e)(i) being exceeded, in which event all such
appraisals shall be at Borrower's expense.
(iii) Appraisers. Any appraisals pursuant to
this Section 5.01(cc) shall be made by one or more appraisers for all
properties (there shall be no more than one appraiser for each property)
located in each state selected by Borrower from a list of at least three
appraisers submitted by Agent with respect to such state at the time it makes
its request. All appraisers submitted by Agent pursuant to this
Section 5.01(cc) shall either be listed on Exhibit J attached hereto or be
appraisers who have been approved by a Simple Majority of Banks and
Borrower and in either event have committed to prepare appraisals within
45 days following the date such appraisals are requested. Agent, with the
approval of a Simple Majority of Banks, and Borrower may agree from time to
time to add any appraisers to or delete any appraisers listed on Exhibit J,
provided that there are at least three approved appraisers for each state at
all times. Agent shall have the right to request Borrower to approve
appraisers pursuant to this Section 5.01(cc)(iii) not more than once with
respect to each state in any consecutive twelve-month period.
(dd) Collateral Documents. Borrower and Guarantors shall
execute and deliver to the Agent the Collateral Documents within ninety (90)
days following the Closing Date as more fully described in Section 7.01.
(ee) Mortgage Subsidiaries. The Loan Parties shall notify
Agent of the creation of any Mortgage Subsidiary within seven (7) Business
Days after such creation. Such notice shall include the name, state of
incorporation and ownership of the capital stock thereof.
The Loan Parties shall cause the Mortgage Subsidiaries to engage exclusively
in Mortgage Banking Business. The Loan Parties shall deliver information
relating to the organization, operation and finances of the Mortgage
Subsidiaries as the Agent may reasonably request.
(ff) Senior Indebtedness Ratings.
(1) Delivery of Qualified Ratings. The Company shall at all
times have received at least two Qualified Ratings of the Company's Senior
Indebtedness or the Indebtedness under the Agreement or any Indebtedness
senior to the Subordinated Indebtedness from at least two Qualified Rating
Agencies, at least one of which shall be either Moody's or Standard &
Poor's, and the Company shall have contracted with each such Qualified
Rating Agency for the periodic modification and updating of such Qualified
Ratings. As of the Fourth Amendment Effective Date those ratings described
on Schedule 1.01(Q) shall be the Qualified Ratings hereunder. If the Company
desires to obtain a Qualified Ratings from an agency which is not a
Qualified Rating Agency as of the Fourth Amendment Effective Date, the
Company must obtain the approval by the Required Majority of Banks of such
agency pursuant to Section 5.01(ff)(2) below before the Company requests
such a rating. The Company shall notify the Agent of any new rating of the
Company's Senior Indebtedness or its Indebtedness under this Agreement which
the Company or any of its Subsidiaries receives or any modification of an
existing rating of any such Indebtedness which the Company or any Subsidiary
receives, in each instance within two (2) Business Days following the date of
such receipt. The Company shall deliver to the Agent copies
of any documents which the Company receives evidencing, describing or
explaining or relating to such new or modified Rating within such two- (2-)
Business Day Period. Any new rating which meets the requirements of a
Qualified Rating (contained in the definition of such term) or change
in an existing Qualified Rating shall be effective under this Agreement
(i) on the date on which the Company receives such new or modified rating if
such rating would result in any higher Facility A Commitment Fee or
interest rate or no change in any Facility A Commitment Fee or interest rate
under Section 2.03 or 3.01 and (ii) on the date on which the Company notifies
the Agent of such new or modified Rating if such Rating would result in a
lower Facility A Commitment Fee or interest rate under Section 2.03 or 3.01.
If the Company shall at any time fail to have two Qualified Ratings of which
at least one Qualified Rating is from either Standard & Poor's or Moody's
pursuant to the first sentence above: (i) the Company shall immediately notify
Agent of such failure; and (ii) the Company Debt rating shall be deemed to be
a Fourth Level Debt Rating for all purposes under this Agreement immediately
upon the occurrence of such failure whether or not the Company delivers the
notice described in clause (i). The Company Debt Rating shall continue to
be a Fourth Level Debt Rating until such time as the Company (1) cures such
failure and is in compliance with the first sentence above and (2) otherwise
qualifies for a rating higher than a Fourth Level Debt Rating pursuant to
the procedures set forth herein.
(2) Approval of Qualified Rating Agencies. Moody's, Standard &
Poor's and the Agencies listed on Part 1 of Schedule 1.01(Q) shall be
Qualified Rating Agencies on and immediately after the Fourth Amendment
Effective Date. The Company may request that the Banks approve of other
agencies after the Fourth Amendment Effective Date pursuant to the following
procedures. The Company shall deliver to the Agent, information provided by the
proposed rating agency describing its rating scale, the nature of the rating
which the Company proposes to request from such agency and any other
information reasonably requested by the Agent or the Banks regarding such
agency. Such information shall include a comparison of such rating agency's
rating scale with those of Moody's and Standard & Poor's if such comparison is
available. The Company also shall deliver to the Agent a revised Part 1 of
Schedule 1.01(Q) which identifies those ratings of the proposed agency
which the Company believes are equivalent to the ratings of Moody's and
Standard & Poor's listed in the definition of "Company Debt Rating." Such
proposed agency shall become a Qualified Agency hereunder and the Company's
proposed Part 1 of Schedule 1.01(Q) shall replace the existing Part 1 of
such Schedule if the Required Majority of Banks approve in writing such
agency and such revised Part 1.
5.02 Updates to Schedules. Should any of the information or
disclosures provided on Schedules 5.01(t) and 5.01(v) attached hereto become
outdated or incorrect in any material respect, the Company shall promptly
provide the Agent in writing with such revisions or updates to such Schedule
as may be necessary or appropriate to update or correct the applicable
schedules hereto (i) simultaneously with or promptly following the notice by
any of the Loan Parties of a breach of covenant which renders one or more of
such schedules misleading or (ii) within 5 Business Days following the
Agent's request that Borrower provide updates to either of those Schedules;
provided, however that neither Schedule 5.01(t) nor 5.01(v) shall be deemed
to have been amended, modified or superseded by any such correction or
update, nor shall any breach of warranty or representation resulting from
the inaccuracy or incompleteness of either Schedule be deemed to have been
cured thereby, unless and until the Required Majority of Banks, in their
sole and absolute discretion, shall have accepted in writing such revisions
or updates to such Schedule. Borrower shall deliver to Agent an updated
Schedule 5.01(c), together with the delivery of Borrower's quarterly
Compliance Certificate pursuant to Section 8.02(b) if the information
contained on the Schedule 5.01(c) then in effect shall have changed.
ARTICLE VI
CONDITIONS OF LENDING,
ISSUING LETTERS OF CREDIT OR
ENTERING INTO ESCROW AGREEMENTS
The obligation of each Bank to make Loans, issue Letters of Credit
or enter into Escrow Agreements hereunder is subject to the performance by
each of the Loan Parties of its obligations to be performed hereunder at or
prior to the making of any such Loans and to the satisfaction of the
following further conditions:
6.01 Closing Date. On the Closing Date:
(a) Each of the Loan Parties shall have performed and
complied with all covenants and conditions hereof; no Event of Default or
Potential Default which might not be cured before it results in an Event of
Default under this Agreement shall have occurred and be continuing or shall
exist; and there shall be delivered to the Agent for the benefit of each Bank a
certificate of each of the Loan Parties, dated the Closing Date and signed by
the Chief Executive Officer, President or Chief Financial Officer of such
Loan Party, to each such effect.
(b) There shall be delivered to the Agent for the benefit
of each Bank a certificate dated the Closing Date and signed by the
Secretary or an Assistant Secretary of each of the Loan Parties, certifying
as appropriate as to:
(i) all corporate or partnership action
taken by the Loan Parties in connection with this Agreement and the other
Loan Documents;
(ii) the names of the officer or officers
authorized to sign this Agreement and the other Loan Documents and the true
signatures of such officer or officers and specifying the Authorized Officers
permitted to act on behalf of the Loan Parties for purposes of this Agreement
and the true signatures of such officers, on which the Agent and each Bank may
conclusively rely; and
(iii) copies of its organizational documents of,
including its certificate of incorporation, bylaws and corporate resolutions
if it is a corporation or its partnership agreement and certificates of
limited partnership or fictitious name registration if it is a partnership,
as in effect on the Closing Date certified by the appropriate state official
where such documents are filed in a state office together with certificates
from the appropriate state officials as to the continued existence and good
standing of each of the Loan Parties in each state where organized or
qualified to do business. The Agent in its discretion may accept appropriate
updates to organizational documents previously delivered to the Agent in
lieu of new copies thereof.
(c) Guaranty Agreement, Notes, Intercompany Subordination
Agreement, and Indemnity shall have been duly executed and delivered to the
Agent for the benefit of the Banks.
(d) There shall be delivered to the Agent for the benefit of
each Bank a written opinion of Hangley Connolly Epstein Chicco Foxman &
Ewing, counsel for the Loan Parties (who may rely on the opinions of such
other counsel as may be acceptable to the Agent), dated the Closing Date and
in form and substance satisfactory to the Agent and its counsel:
(i) as to the matters set forth in Exhibit G
hereto; and
(ii) as to such other matters incident to the
transactions contemplated herein as the Agent may reasonably request.
(e) All legal details and proceedings in connection with the
transactions contemplated by the Agreement and the other Loan Documents
shall be in form and substance satisfactory to the Agent and counsel for
the Agent, and the Agent shall have received all such other counterpart
originals or certified or other copies of such documents and proceedings in
connection with such transactions, in form and substance satisfactory to the
Agent and said counsel, as the Agent or said counsel may reasonably request.
(f) The Borrower shall pay or cause to be paid to the Agent
for itself and for the account of the Banks to the extent not previously paid
the closing fees, all other commitment and other fees accrued through the
Closing Date and the costs and expenses for which the Agent and the Banks
are entitled to be reimbursed.
(g) All material consents required to effectuate the
transactions contemplated hereby shall have been obtained.
(h) Prior to the Closing Date, there shall be no material
change in the management of any of the Loan Parties and there shall be
delivered to the Agent for the benefit of each Bank a certificate dated the
Closing Date and signed by the Chief Executive Officer, President or Chief
Financial Officer of each of the Loan Parties to such effect.
(i) The making of the Loans shall not contravene any Law
applicable to the Loan Parties or any of the Banks.
(j) No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of this Agreement or the
consummation of the transactions contemplated hereby or which, in the
Agent's sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents.
(k) The banks under the Existing Agreement shall have delivered
appropriate payoff letters or other documents confirming that the Existing
Agreement shall be terminated and the banks thereunder paid in full
effective as of the Closing Date.
6.02 Each Additional Loan, Letter of Credit or Escrow Agreement.
At the time of making any Loans, issue additional Letters of Credit or enter
into Escrow Agreements other than those made, issued or entered into on the
Closing Date hereunder and after giving effect thereto: (A) each of the Loan
Parties shall have performed and complied in all material respects
with all covenants and conditions hereof; (B) no Event of Default or
Potential Default which might not be cured before it results in an Event of
Default shall have occurred and be continuing or shall exist; (C) no
proceeding shall have occurred and be continuing which would be an Event
of Default under Section 9.01(m) except that such proceeding has not yet
remain undismissed, or unstayed and in effect for a period of thirty
(30) days (as required in Section 9.01(m)) and such proceeding is against
(i) the Borrower, (ii) the Company, or (iii) one or more of the Guarantors
and book value of the assets of such Guarantors collectively exceeds 25% of
the aggregate book value of the assets of all of the Guarantors; (D) the
making of the Loans, the issuing of Letters of Credit or entering into such
Escrow Agreements shall not contravene any Law applicable to the
Loan Parties or any of the Banks; and (E) the Borrower shall have delivered
to the Agent a duly executed and completed Loan Request if they are
requesting a Loan.
ARTICLE VII
SECURITY
7.01 Granting of Security.
(a) Creation of Liens. Upon the occurrence of any Security
Event, each of Borrower and Guarantors will create liens under mortgages,
deeds of trust, assignments, pledges, and security agreements upon all of
its properties and assets, whether now owned or hereafter acquired, including
without limitation real estate, personal property, agreements of sale,
purchase options stock or partnership interests in Affiliates and the
Intercompany Notes and Intercompany Agreement of Guarantors and any
collateral for any thereof, in favor of Agent on behalf of Banks, so that
obligations of the Loan Parties to the Banks under Revolving Credit
Loans and Term Loans and otherwise hereunder or under the other Loan
Documents shall be secured equally and ratably by all of Borrower's and
Guarantors' assets. In the event that the Agent and the Banks enter into a
Collateral Sharing Agreement with a holder of Permitted Additional Senior
Indebtedness, then provisions in this Agreement stating that the Loan Parties
shall grant Liens in their assets in favor of the Agent for the benefit of
the Banks upon the occurrence of a Security Event or that the Agent shall
administer such collateral security shall, to the extent provided in the
Collateral Sharing Agreement, be deemed to state that the Loan Parties
shall grant Liens in their assets in favor of the collateral agent under the
Collateral Sharing Agreement (and not in favor of the Agent) and that such
collateral agent shall administer such collateral.(b) Delivery and
Recordation of Documents. All instruments creating or perfecting such
mortgages, deeds of trust, assignments, pledges and security interests
(collectively with the Guaranty, the "Collateral Documents") shall be
substantially in the forms approved by Agent and Banks with such changes as
Agent may approve including, without limitation, such changes as may be
required by virtue of differences in the laws of the state where the collateral
is located, and shall be accompanied by such additional documents and
agreements relating thereto, including additional evidence of casualty and
liability insurance, copies of subdivision plans, and environmental studies,
and legal opinions as Agent may require. In furtherance of the foregoing,
Borrower and each Guarantor shall execute and deliver to the Agent within
ninety (90) days after the Closing Date all of the Collateral Documents
(other than the Guaranty Agreement which shall have been executed and
delivered pursuant to Section 6.01) relating to assets owned by the Loan
Parties as of the Closing Date. Borrower and each Guarantor shall execute,
acknowledge (if required) and deliver to the Agent all Collateral Documents
relating to each property acquired by the Borrower or Guarantors after the
Closing Date within thirty (30) days after acquiring such property. The
Banks shall grant a reasonable extension of time for delivery of any Collateral
Document as to which additional time to correct or complete the applicable
legal description or related title work is required because of circumstances
beyond Borrower's or Guarantor's reasonable control. The Agent shall hold
the Collateral Documents in escrow until the occurrence
of a Security Event. Upon the occurrence of a Security Event, the
Collateral Documents shall, without further act on the part of Borrower
or Guarantors, be fully delivered to Agent free of any limitation or
restriction imposed by this Agreement and shall be recorded or filed
by Agent, at Borrower's expense, in all locations as Agent may deem
necessary or appropriate. From time to time upon request of Agent
following the occurrence of a Security Event, Borrower and Guarantors shall
provide to Agent such information as may be required to update and
correct any property descriptions constituting a part of any
Collateral Documents to reflect sales or other dispositions of portions of
the property so described.
(c) Power of Attorney. Each of Borrower and Guarantors hereby
appoints any officer or agent of the Agent as its true and lawful attorney,
for it and in its name, place and stead, to make, execute, deliver, and
cause to be recorded or filed any or all such mortgages, deeds of trust,
assignments, pledges and security interests and additional documents
and agreements relating thereto, granting unto said attorney full power
to do any and all things he may consider reasonably necessary or
appropriate to be done with respect to the Collateral Documents as fully
and effectively as Borrower and Guarantors might or could do, and hereby
ratifying and confirming all its said attorney shall lawfully do or cause
to be done by virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this Agreement and all
transactions hereunder.
7.02 Security Events. Each of the following shall be a security
event ("Security Event") hereunder unless waived by a Required Majority of
Banks in writing:
(a) the occurrence of an Event of Default hereunder;
(b) the financial statements required by Section 8.02(a)(ii)
hereof are accompanied by an opinion which contains a qualification which
is, in the reasonable judgment of a Simple Majority of Banks, adverse;
(c) the Loan Parties fail to comply with Section 8.01(e)
(i) for a period of five (5) Business Days after Borrower becomes aware
thereof without giving effect to any adjustment pursuant to Sections 8.01(e)
(ii) or 5.01(cc);
(d) either (i) any of the Loan Parties is required
immediately to grant, or grants, any Liens in any of its assets in
favor of the holders of any Permitted Additional Senior Indebtedness,
or (ii) any event shall occur which permits the holders of any Permitted
Additional Senior Indebtedness to require any Loan Party to grant any
Liens in any of its assets in favor of the holders of such Permitted
Additional Senior Indebtedness.
7.03 Release of Liens. Borrower may request that the Agent on
behalf of the Banks release the Liens which it acquires in the assets of the
Loan Parties pursuant to Section 7.01 hereof following a Security Event if
Borrower cures such Security Event and at any time thereafter no Security
Event shall exist for a period of 12 consecutive calendar months. If
Borrower establishes to Agent's satisfaction that no Security Event has
existed for such 12-month period, Agent shall, after receiving such
notice, execute and record appropriate releases and take other appropriate
steps to release the Liens created pursuant to Section 7.01. Thereafter,
the Loan Parties shall comply with the covenants contained in
Section 7.01 which apply prior to the occurrence of a Security Event.
ARTICLE VIII
NEGATIVE COVENANTS
8.01 Negative Covenants. The Loan Parties, jointly and
severally, covenant and agree that until payment in full of the Loans and
interest thereon, satisfaction of all of the Loan Parties' other obligations
hereunder and termination of the Commitments, the Loan Parties shall
comply with the following negative covenants:
(a) Indebtedness. Each of the Loan Parties shall not, at
any time create, incur, assume or suffer to exist any Indebtedness, except
(i) Indebtedness under the Loan Documents;
(ii) Existing Indebtedness as set forth on
Schedule 8.01(a)(ii) hereto;
(iii) Existing subordinated Indebtedness
described on Schedule 8.01(a)(iii) hereto and any other unsecured
Indebtedness subordinated under terms as favorable to the Banks as the
terms of the subordination governing the Indebtedness described on
Schedule 8.01(a)(iii) as determined by the Agent in its sole discretion
(collectively the "Subordinated Indebtedness");
(iv) Intercompany Loans which are evidenced
by Intercompany Notes or an Intercompany Agreement which has been delivered
to the Agent in accordance with the provisions of Section 5.01(bb) or any
other unsecured obligations of any Guarantor or Borrower to any other
Guarantor or to Borrower;
(v) Permitted Additional Senior Indebtedness;
(vi) Unsecured obligations in respect of
improvement and/or maintenance bonds provided by insurance companies where
required by municipalities (collectively, the "Bond Obligations");
(vii) Indebtedness secured by purchase money
security interests in equipment or evidenced by leases of equipment or
leases of real property capitalized by Company for accounting purposes,
provided that the aggregate of all such Indebtedness does not
exceed ten percent (10%) of Company's Adjusted Shareholders' Equity;
(viii) Permitted Nonrecourse Indebtedness;
(ix) Seller Purchase Money Loans;
(x) Commercial Purchase Money Loans;
(xi) Assumed Joint Venture Loans;
(xii) Assumed Purchase Money Loans;
(xiii) Obligations to return deposits of cash or
notes described in clause (iii) of the definition of "Permitted Liens";
(xiv) The Permitted Investment in Mortgage
Subsidiaries.
(b) Affiliate Transactions. The Loan Parties shall not enter
into or carry out any transaction (including, without limitation, purchasing
property or services from or selling property or services to any Loan Party
or any Affiliate of the Loan Parties) unless such transaction is not
otherwise prohibited by this Agreement, is entered into in the ordinary
course of business upon fair and reasonable arm's-length terms and
conditions and is in accordance with all applicable law, except that
notwithstanding the foregoing (i) this Section 8.01(b) shall not apply
to a transaction if all of the parties to the transaction are Loan Parties
and are directly or indirectly wholly-owned by the Company; (ii) this
Section 8.01(b) shall not prohibit a Loan Party which is directly or
indirectly wholly- owned by the Company from entering into a transaction
with other Loan Parties or Affiliates thereof which are not directly or
indirectly wholly-owned by the Company provided that the term of such
transaction are more favorable to the wholly-owned Loan Party than to the
other parties to the transaction; and (iii) this Section 8.01(b) shall not
prohibit the Company from purchasing stock of the Company from the estate of
Robert I. Toll or Bruce E. Toll following his death using the insurance
proceeds received by the Company in respect of a Senior Officer Life Policy.
(c) Guaranties. The Loan Parties shall not at any time,
directly or indirectly, become or be liable in respect of any Guaranty, or
assume, guarantee, become surety for, endorse or otherwise agree, become or
remain directly or contingently liable upon or with respect to any obligation
or liability of any other person except for (i) guaranties of Indebtedness
permitted under Section 8.01(a), (ii) endorsements of negotiable instruments
for deposit or collection in the usual course of business, (iii) covenants
to hold Persons who are not Affiliates of the Loan Parties harmless or
indemnify such Persons for losses contained in contracts entered into
in the ordinary course of business, (iv) agreements to indemnify officers
and directors of the Company and the other Loan Parties in their capacity
as such officers and directors pursuant to articles of incorporation or
bylaws of such entities, indemnification agreements entered into by such
entities or by law, (v) guaranties for the benefit of Affiliates of the
Loan Parties, and (vi) guaranties of completion or guaranties of payment
related to on- and off-site improvements and utilities required in order to
permit the sale of residential units in the ordinary course of business.
(d) Loans and Investments. The Loan Parties shall not at any
time make or suffer to remain outstanding any loan or advance to, or
purchase, acquire or own any stock, bonds, notes or securities of, or any
partnership interest (whether general or limited) in, or any other investment
or interest in, or make any capital contribution to, any other Person, or
agree, become or remain liable to do any of the foregoing, except:
(i) trade credit extended on usual and
customary terms in the ordinary course of business including mortgage loans
to purchasers of houses from the Guarantors;
(ii) advances to employees to meet expenses
incurred by such employees in the ordinary course of business in the
aggregate not exceeding $5,000,000;
(iii) acquisitions of stock or other interests
in Persons and acquisitions of interests in assets within the limitations
contained in Section 8.01(f);
(iv) loans, advances and investments in other
Loan Parties and in other Consolidated Subsidiaries;
(v) cash equivalents;
(vi) loans to employees, except for Robert Toll
and Bruce Toll, to purchase stock of the Company in connection with stock
option plans or stock purchase plans;
(vii) the Permitted Investment in Mortgage
Subsidiaries.
(e) Loans; Permitted Purchase Money Loans; Letters of Credit and
Permitted Additional Senior Indebtedness.
(i) The Loan Parties shall not permit the sum of:
(A) all Loans from all Banks,
(B) all Permitted Purchase Money Loans of all Loan
Parties,
(C) all Financial Letters of Credit, and
(D) all Permitted Additional Senior Indebtedness,
except for any such Indebtedness which consists of Performance Letters of
Credit, to exceed the lesser of the following (collectively referred to as
the "Borrowing Base"):
(1) the sum of the following:
(x) 90% of the book value determined in
accordance with GAAP of Category 1 Borrowing Base Assets,
after reduction for any Remediation Adjustments
applicable to the land included in the Category 1
Borrowing Base Assets, and
(y) 60% of the book value determined in
accordance with GAAP of Adjusted Category 2 Borrowing Base
Assets, and
(z) 50% of the book value determined in
accordance with GAAP of Adjusted Category 3 Borrowing Base
Assets, after reduction for any Remediation Adjustments
applicable to the land included in the Adjusted Category
3 Borrowing Base Assets; or
(2) 360% of the book value determined in
accordance with GAAP of Category 1 Borrowing Base Assets, after reduction for
any Remediation Adjustments applicable to the land included in Category 1
Borrowing Base Assets. An example of the computation of this Borrowing Base
is set forth on Exhibit H hereto. It is acknowledged that the applicable
percentage in clause (x) above will change from 90% to 85% and some or all
of the assets described in clauses (x), (y) and (z) above will be valued using
appraised values rather than book values if Borrower or Banks request
appraisals pursuant to and as more fully set forth in Sections 8.01(e)(ii)
or 5.01(cc).
(ii) If at any time the covenant contained in
Section 8.01(e)(i) would be exceeded, Company shall have the right, and if
Company exercises such right Banks shall also have the right, at Borrower's
expense, to have one or more of the Borrowing Base Assets appraised following
substantially the same procedural requirements as are set forth in
Section 5.01(cc). After obtaining such an appraisal: (1) the value of any
appraised asset for purposes of Section 8.01(e)(i) shall be its appraised
value less any Remediation Adjustments rather than its book value less such
adjustments, (2) the percentage for purposes of applying the covenant
contained in Section 8.01(e)(i) to Category 1 Borrowing Base Assets shall be
85% rather than 90%, and (3) the percentages for purposes of applying such
covenant to Category 2 Borrowing Base Assets and Category 3 Borrowing Base
Assets shall remain at 60% and 50%, respectively. If the sum of Loans and
Permitted Purchase Money Loans exceeds at any time 90% of the book value of
the Borrowing Base Assets, then notwithstanding the immediately preceding
sentence, the covenant contained in Section 8.01(e)(i) shall be deemed
breached. If and so long as Company avails itself of the foregoing right to
have any assets appraised and to have such assets included at the appraised
values, Agent at the direction of a Simple Majority of Banks, shall have
the right to request, at Borrower's expense, a reappraisal of any such asset up
to two times in any twelve-month period. If any such reappraisal indicates
that the value of such asset is either higher or lower than that indicated on
any previous appraisal, such asset shall thereafter be included at
the value established by the most recent reappraisal.
(f) Liquidations, Mergers, Consolidations, Acquisitions.
Each of the Loan Parties shall not, and shall not permit any other
Consolidated Subsidiary of the Company to wind-up, liquidate or dissolve its
affairs, convey, sell, lease or otherwise distribute or dispose of (whether
in one transaction or in a series of transactions other than in the ordinary
course of business) all or a substantial portion (which for this purpose
shall mean dispositions during the period which includes the elapsed portion
of the Company's current fiscal quarter and the immediately preceding three
fiscal quarters of an aggregate of 25% or more of Company's consolidated
assets as of the beginning of such period) of its properties or assets (whether
now owned or hereafter acquired), or enter into any transaction of merger or
consolidation except (a) for a merger or mergers of another entity or
entities into Company where the aggregate purchase price for all such
entities acquired in one fiscal year either pursuant to merger or consolidations
referred to in this Section 8.01(f) or by acquisition of stock or other
interests in Persons referred to in Section 8.01(d) or by acquisition of
interests in assets referred to in Section 8.01(d) is less than one hundred
fifty percent (150%) of Adjusted Shareholders' Equity, determined as of the
end of the prior fiscal year, (b) any other merger or consolidation in
respect of which Banks have been provided with all such information as they
have requested and which a Required Majority of Banks have either approved
in writing or not disapproved within thirty (30) days following their
receipt of such information, or, in the case of a merger or consolidation
with a residential real estate development company, a Simple Majority of
Banks have either approved in writing or not disapproved within thirty
(30) days following their receipt of such information, and (c) that any
Loan Party other than the Company or the Borrower may merge, consolidate or
liquidate into any other Loan Party provided that the Company or Borrower
shall be the surviving corporation if it is a party to such merger,
consolidation or liquidation and, after giving effect to any merger referred
to in this Section, no Event of Default, or event which, with the passage of
time or the giving of notice, or both would constitute an Event of Default,
shall exist.
(g) Dispositions of Assets or Subsidiaries. The Loan Parties
shall not sell, convey, assign, lease, abandon or otherwise transfer or
dispose of, voluntarily or involuntarily, any of its properties or assets,
tangible or intangible (including but not limited to sale, assignment,
discount or other disposition of accounts, contract rights, chattel paper,
equipment or general intangibles with or without recourse or of capital
stock, shares of beneficial interest or partnership interests of another Loan
Party or an Affiliate of a Loan Party), except:
(i) transactions involving the sale of
Inventory in the ordinary course of business;
(ii) any sale, transfer or lease of assets
which are no longer necessary or required in the conduct of such Loan Party's
business;
(iii) any sale, transfer or lease of assets to
any other Loan Party;
(iv) any sale, transfer or lease of assets
which are replaced by substitute assets acquired or leased; or
(v) mergers and consolidations permitted in
Section 8.01(f); or
(vi) any transfer or disposition of assets
which is a Permitted Exception.
(h) Subsidiaries, Partnerships and Joint Ventures. The Loan
Parties shall not own or create directly or indirectly any Subsidiaries of
which any Loan Parties individually or the Loan Parties collectively own,
directly or indirectly, through one or more intermediaries, 80% or more of
the outstanding stock, partnership interests or other interests, except for
(i) the Mortgage Subsidiary, (ii) those Subsidiaries which are or shall
become Loan Parties and Guarantors of the Indebtedness hereunder, and
(iii) any entity which has Assumed Joint Venture Loans or Assumed Purchase
Money Loans and the aggregate amount thereof exceeds 80% of the Indebtedness
(including liabilities to any Consolidated Subsidiaries of the Company or its
Affiliates under intercompany loans) of such Subsidiary. The Loan Parties may
cause any other Subsidiary they form or acquire subsequent to the date
hereof, to become a Loan Party and Guarantor. Subsidiaries shall join the
Agreement pursuant to the procedures contained in Section 11.12 hereof.
(i) Continuation of or Change in Business. The Loan Parties
shall not (a) permit more than five percent (5%) of the consolidated assets
of the Company and its Homebuilder Consolidated Subsidiaries (excluding the
Permitted Investment in Mortgage Subsidiaries) to be applicable to business
activities unrelated to the Regular Business Activities of Company and its
Homebuilder Consolidated Subsidiaries, (b) permit more than twenty percent
(20%) of the consolidated assets of the Company and its Homebuilder
Consolidated Subsidiaries (excluding the Permitted Investment in Mortgage
Subsidiaries) which are applicable to their Regular Business Activities to
be related to other than their residential real estate activities, or
(c) change the legal form in which Company conducts its business activities.
(j) Change in Control. The Company shall not permit any
Change of Control of the Company to occur.
(k) Changes in Subordinated Loan Documents. Except as
provided in the following sentence, the Borrower and the Company shall not,
and shall not permit any Loan Party to, amend or modify any provisions of
the Subordinated Loan Documents without providing at least thirty (30)
calendar days' prior written notice to the Agent and the Banks, and obtaining
the prior written consent of the Required Majority of Banks. The Loan
Parties may amend the agreements evidencing the Subordinated Indebtedness
without obtaining the consent of the Required Majority of the Banks if after
giving effect to such amendment (A) the subordination provisions therein
would be permitted under Section 8.01(a)(iii), and (B) Agent in its sole
discretion determines that the covenants governing such Subordinated
Indebtedness are no more onerous than those contained under this Agreement.
(l) Plans and Benefit Arrangements. The Loan Parties shall not:
(i) fail to satisfy the minimum funding
requirements of ERISA and the Internal Revenue Code with respect to any Plan;
(ii) request a minimum funding waiver from the
Internal Revenue Service with respect to any Plan;
(iii) engage in a Prohibited Transaction with
any Plan, Benefit Arrangement or Multiemployer Plan which, alone or in
conjunction with any other circumstances or set of circumstances resulting
in liability under ERISA, would constitute a Material Adverse Change;
(iv) permit the aggregate actuarial present
value of all benefit liabilities (whether or not vested) under each Plan,
determined on a plan termination basis, as disclosed in the most recent
actuarial report completed with respect to such Plan, to exceed, as of
any actuarial valuation date, the fair market value of the assets of such Plan;
(v) fail to make when due any contribution to any
Multiemployer Plan that the Company or any member of the ERISA Group may be
required to make under any agreement relating to such Multiemployer Plan,
or any Law pertaining thereto;
(vi) withdraw (completely or partially) from
any Multiemployer Plan or withdraw (or be deemed under Section 4062(e)
of ERISA to withdraw) from any Multiple Employer Plan, where any such
withdrawal is likely to result in a material liability of Borrower or
any member of the ERISA Group;
(vii) terminate, or institute proceedings to
terminate, any Plan, where such termination is likely to result in a
material liability to the Borrower or any member of the ERISA Group;
(viii) make any amendment to any Plan with
respect to which security is required under Section 307 of ERISA; or
(ix) fail to give any and all notices and make
all disclosures and governmental filings required under ERISA or the
Internal Revenue Code, where such failure is likely to result in a Material
Adverse Change.
(m) Changes in Organizational Documents. Neither the Company
nor the Borrower shall amend in any respect its certificate of incorporation
without providing at least thirty (30) calendar days' prior written notice to
the Agent and the Banks and, in the event such change would be adverse to the
Banks as determined by the Agent in its sole discretion, obtaining
the prior written consent of the Required Majority of Banks. Notwithstanding
the foregoing, the Company may amend its certificate of incorporation to
increase the number of authorized shares of its common or preferred stock or
to create one or more series of preferred stock (as the creation of such
series of preferred stock is currently contemplated by the Company's
certificate of incorporation and Section 151 of the Delaware General
Corporation Law) without obtaining the consent of the Banks or notifying
the Agent and the Banks thereof.
(n) Development Limitations. The Loan Parties shall not:
(i) Permit as of the end of any fiscal quarter
of Company the number of housing units in multi-family projects of Guarantors
and other Consolidated Subsidiaries on which construction has commenced
(whether under construction or completed) and which are not subject to an
Agreement of Sale to exceed in the aggregate the product of 24 multiplied by
each separate multi-family project then under development by one of Guarantors
or another Consolidated Subsidiary (excluding units which had been but are
no longer subject to an Agreement of Sale solely because of a breach by the
purchaser thereunder). For purposes of this Section 8.01(n), (A) the
construction of a unit through the completion of the foundation will not
be considered the commencement of construction of a unit, (B) two or more
projects with substantially similar product type and price will be
considered separate projects if marketed as separate projects and are not
located adjacent to each other, and (C) substantially dissimilar
product types even within the same subdivision or community will be
considered separate projects.
(ii) Permit as of the end of any fiscal
quarter of Company the number of housing units in each separate single
family community of Guarantors and other Consolidated Subsidiaries then
under development on which construction has commenced (whether under
construction or completed) and which are not subject to an Agreement of Sale
(excluding units which had been but are no longer subject to an Agreement
of Sale solely because of a breach by the purchaser thereunder) to exceed
the sum of (A) six (6) plus (B) an additional number of units in that
community certified by the Company to have been constructed as
additional models, but in no event shall the number of such additional
units exceed four (4) in any community nor shall the sum of all additional
models exceed in the aggregate one for every community under development.
The Guarantors may develop communities which contain single
family housing units under construction which are not subject to any
Agreement of Sale in excess of the amounts permitted above if construction
of such units was commenced before the applicable Guarantor acquired the
real estate comprising such community, subject to the following limitations:
(1) the total number of such communities may not
exceed five (5) at any one time;
(2) the total number of acquired units which are not
subject to an Agreement of Sale in any such community may not
exceed twenty-five (25);
(3) the total number of units constructed by such
Guarantor in any such community after the Guarantor acquires such
real estate shall comply with the numerical limitations set forth
in the first sentence of this Section 8.01(n)(ii) (the units
described in clause (2) above which were in existence
at the time the Guarantor acquired such real estate shall be
excluded in determining Guarantor's compliance with the limitations
in that first sentence).
(iii) Permit as of the end of any fiscal
quarter of Company the total number of housing units of Guarantors and other
Consolidated Subsidiaries on which construction has commenced (whether under
construction or completed) and which are not subject to an Agreement of Sale
to exceed the sum of (A) thirty-five percent (35%) of the total number of
housing units sold by Guarantors and other Consolidated Subsidiaries during
the immediately preceding four fiscal quarters (whether or not such
Guarantor or other Consolidated Subsidiary was owned by Company during the
entire four quarter period) plus (B) an amount equal to the product of
three (3) multiplied by the number of Net New Communities, provided that for
purposes of determining compliance with the foregoing covenant, a housing
unit which had been but is no longer subject to an Agreement of Sale solely
because of a breach by the purchaser thereunder shall not be included as
an unsold unit so long as the total number of unsold units,
including any such units which had previously been subject to an
Agreement of Sale, dues not exceed the sum of (x) forty percent (40%) of
the total number of housing units sold by the Guarantors and other
Consolidated Subsidiaries during the immediately preceding four fiscal
quarters, and (y) the amount calculated in accordance with subsection (B) above.
(iv) Permit as of the end of any fiscal
quarter of Company the total amount of either commercial or industrial
space held or to be held by Guarantors or other Consolidated Subsidiaries
for lease on which construction has commenced (whether under construction or
completed) but which is either not leased to third parties at fair market
rents, not subject to a valid and binding agreement of sale or not subject
to a permanent financing commitment, in either of the latter two cases in
form and substance and with a buyer or a lender acceptable to Agent and under
which all approvals and preconditions have been satisfied (except completion
of construction and related preconditions which by their nature cannot or
would not be satisfied until closing under such agreement or commitment)
to exceed 100,000 leasable square feet. Within the 100,000 square feet of
unleased space permitted by the foregoing provision, not more than the
lesser of (i) 50,000 leasable square feet, or (ii) the number of leasable
square feet the total construction cost of which would not exceed
$5,000,000 will be commercial office space. Notwithstanding the foregoing
limitations, Borrower and Guarantors may acquire, hold or
develop real estate which is used as offices by Borrower or any Guarantor.
The existing panel plant facility of Company located in Morrisville,
Pennsylvania, any additional panel plant facility and any Qualified Golf
Course developed or acquired by the Loan Parties shall not be included as
commercial or industrial space for purposes of this Section 8.01(n)(iv).
(v) Acquire or own real estate which has
not at any time while owned or controlled by the Company or a Consolidated
Subsidiary received Preliminary Approval and, except for Qualified Golf
Courses, which has an acquisition and carrying cost in the aggregate more
than the greater of (i) $25,000,000 or (ii) twenty percent (20%) of Adjusted
Shareholders' Equity, or acquire or own real estate, except for golf clubs,
which is not presently and was not at any time while owned by the Company
or a Consolidated Subsidiary zoned for residential development having an
acquisition and carrying cost in the aggregate more than the greater of
(i) $15,000,000 or (ii) fifteen percent (15%) of Adjusted Shareholders'
Equity, in either case not including within such limitations real estate
acquired subject to Permitted Non-Recourse Indebtedness.
(vi) If Borrower determines as of the end of
any fiscal quarter that it is not in compliance with any of the covenants
contained in Sections 8.01(n)(i) through (iv), it shall have a period of
twenty days after the end of such quarter within which to complete such
action as may be necessary to comply with the limitations otherwise
applicable as of the end of such quarter.
(o) Senior Leverage. The Loan Parties shall not at any
time permit the ratio of (i) Consolidated Senior Liabilities less the
amount of any Permitted Nonrecourse Indebtedness to (ii) the sum of
Adjusted Shareholders' Equity plus outstanding Subordinated Indebtedness
to exceed 1.15 to 1.0.
(p) Mortgage Subsidiaries Leverage. The Loan Parties shall
not permit the ratio of Mortgage Subsidiary Liabilities to Mortgage
Subsidiaries' Adjusted Shareholders' Equity to exceed 10.0 to 1.0.
(q) Senior Leverage Plus Contingent Liabilities. The Loan
Parties shall not at any time permit the ratio of Adjusted Consolidated
Senior Liabilities to the sum of Adjusted Shareholders' Equity plus
outstanding Subordinated Indebtedness to exceed 1.50 to 1.0.
(r) Subordinated Debt to Equity. The Loan Parties shall not
at any time permit Subordinated Indebtedness to exceed the sum of:
(A) two times Adjusted Shareholders' Equity up to and including $150,000,000
(in Adjusted Shareholders' Equity), plus (B) 1.0 times the excess of
Adjusted Shareholders' Equity over $150,000,000 (in Adjusted Shareholders'
Equity).
(s) Minimum Adjusted Shareholders' Equity. The Loan Parties
shall not permit Adjusted Shareholders' Equity to be less than Base
Shareholders' Equity calculated at the end of each fiscal quarter.
(t) Incorporation by Reference. Any covenants contained in
agreements evidencing Permitted Additional Senior Indebtedness which are more
restrictive to the Loan Parties than the covenants contained herein as
determined by the Agent shall be incorporated by reference herein.
8.02 Reporting Requirements. The Loan Parties, jointly and
severally, covenant and agree that until payment in full of the Loans and
interest thereon, satisfaction of all of the Loan Parties' other obligations
hereunder and termination of the Commitments, the Company or
the Borrower, as applicable, will furnish or cause to be furnished to the
Agent and each of the Banks:
(a) Financial Statements.
(i) Quarterly Statements.
(A) As soon as available and in any event within fifty
(50) calendar days after the end of each fiscal quarter in each fiscal year
consolidated financial statements of the Company and its Consolidated
Subsidiaries, consisting of a balance sheet as of the end of such fiscal
quarter and related statements of income and cash flows for the fiscal year
through the end of such quarter, all in reasonable detail and certified
(subject to normal year-end audit adjustments) by the Chief Executive
Officer, President, Chief Financial Official or Chief Accounting Officer of
the Company as having been prepared in accordance with GAAP, consistently
applied, and setting forth in comparative form the statements of income and cash
flows for the corresponding period in the previous fiscal year.
(B) Together with the delivery of the Compliance
Certificate pursuant to Section 8.02(b)(i), separate balance sheets and
income statements showing the financial positions as of the end of the
previous fiscal quarter and results of operations for the fiscal year
through the end of such quarter of the Homebuilder Consolidated Subsidiaries and
Mortgage Subsidiaries with aggregate totals that correspond to the
consolidated figures which appear on the financial statements delivered for
such quarter described in Section 8.02(a)(i)(A) in a form acceptable to the
Required Majority of Banks.
(ii) Annual Statements. As soon as available
and in any event within ninety-five (95) days after the end of each fiscal
year of the Company, consolidated financial statements of the Company and
its Consolidated Subsidiaries consisting of a balance sheet as of the end of
such fiscal year, and related statements of income and cash flows for the
fiscal year then ended, all in reasonable detail and setting forth in
comparative form the financial statements as of the end of and for the
preceding fiscal year, and certified by independent certified
public accountants of nationally recognized standing reasonably
satisfactory to the Agent. The certificate or report of accountants shall
be free of qualifications which is adverse in the reasonable judgment of a
Simple Majority of the Banks.
(iii) Discussions with Certified Public
Accountants; Disclosure. Upon the request of a Simple Majority of the
Banks, the Agent shall discuss Company's affairs directly with Company's
independent certified public accountants after notice to Company and
opportunity of Company to be present at any such discussions. Agent or
any Bank is authorized to show or deliver a copy of any financial statement
or any other information relating to the business, operations or financial
condition of Company which may be furnished to Agent or come to its
attention pursuant to this Agreement or otherwise, to any regulatory body or
agency having jurisdiction over any Bank and to any bank or other financial
institution which is a present or potential participant with any Bank,
provided that Agent or such Bank has taken appropriate steps
to ensure the confidentiality of such information in a manner satisfactory
to the Company.
(b) Compliance Certificate; Joinders; Updates to Schedules
of the Borrower.
(i) Compliance Certificate. (i) Within 10
days following the earlier of (A) delivery of the financial statements of
the Company to the Agent and to the Banks pursuant to Sections 8.02(a)(i) and
(ii) hereof, or (B) the due date for such delivery, a certificate of the
Loan Parties signed by the Chief Executive Officer, President, Chief
Financial Officer or Chief Accounting Officer of the Loan Parties in the
form of Exhibit L hereto (the "Compliance Certificate"), to the effect that,
except as described pursuant to Section 8.02(g) below, (i) the Loan
Parties have performed and complied with all covenants and conditions hereof,
(ii) no Event of Default or Potential Default which might not be cured
before it becomes an Event of Default exists and is continuing on the date
of such certificate, (iii) containing calculations in sufficient detail to
demonstrate compliance as of the date of the financial statements with
all financial covenants contained in Section 8.01 hereof, and (iv) a list of
any changes which have occurred since delivery of the most recent Compliance
Certificate pursuant to this Section 8.02(b) in the states and counties in
which the business offices, panel plants or other operating facilities of the
Loan Parties are located.
(ii) Joinders. Together with the delivery of the
Compliance Certificate pursuant to Section 8.02(b)(i), the joinders of
Guarantors pursuant to Section 11.12.
(iii) Updates to Schedules. Together with the
delivery of the Compliance Certificate pursuant to Section 8.02(b)(i), any
update to Schedule 5.01(c) described in Section 5.02.
(c) Project Reports. As soon as practicable, and in any
event within thirty (30) days after the end of each calendar month,
statements accompanied by a certificate of the chief financial officer,
chief accounting officer or controller of Company, accurately setting
forth at a date proximate to the end of the prior month sales reports
showing unit sales and unsold inventory completed or under construction by
Guarantors in connection with each project of Guarantors together with such
additional detail as to such sales and inventory as a Simple Majority of
Banks may reasonably request.
(d) Purchase Money Loan Reports. As soon as practicable,
and in any event within sixty (60) days after the end of each fiscal quarter,
information as to the amount of and the name of the borrower under each
Permitted Purchase Money Loan incurred during such quarter, a copy of the note
evidencing such Permitted Purchase Money Loan (and the address of
the payee of such note if not indicated thereon), a description of the real
estate covered by such Permitted Purchase Money Loan and an update as to
the outstanding principal amount of all Permitted Purchase Money Loans as of
the end of such quarter.
(e) Environmental Certificates. Prior to the acquisition by any
Guarantor of any parcel of real property having a cost of $1,000,000 or more
or containing ten (10) or more acres, a completed Certificate (including
accompanying Phase I environmental report which shall be in conformity with
(i) the Agent's "Minimum Requirements for Phase I Environmental Assessments,"
as in effect on the date hereof, and (ii) any additions or modifications
thereto the extent that such modifications or additions reflect a change in
the law or industry standards or are otherwise satisfactory to Borrower)
in respect of such property in substantially the form of Exhibit B attached
hereto (an "Environmental Certificate") from an independent environmental
engineer reasonably acceptable to Agent. Agent shall notify the other
Banks of any decision disapproving an Environmental Certificate which
contains any exceptions on exhibit A thereto, and the other Banks shall
have ten (10) Business Days to reverse such disapproval by the vote of a
Simple Majority of Banks in the absence of which vote Agent's
decision shall stand. Borrower or such Guarantor shall have the right
from time to time to submit another Environmental Certificate in respect of
land which was not initially Environmentally Approved Land following the
cleanup of any hazardous materials which constituted exceptions to a prior
Environmental Certificate in respect of such land. Agent shall not be liable
to any other Bank or to any Loan Party for any initial approval or
disapproval of any Environmental Certificate made by it in good faith.
(f) Subordinated Indebtedness Documentation. As promptly as
possible upon receipt by any Loan Party, copies of each draft of
documentation intended to relate to or evidence Subordinated Indebtedness
proposed to be incurred by any Loan Party.
(g) Notice of Default. Promptly after any Senior Executive
of any Loan Party has learned of the occurrence of an Event of Default or
Potential Default which might not be cured before it becomes an Event of
Default, a certificate signed by the Chief Executive Officer, President,
Chief Financial Officer or Chief Accounting Officer of such Loan Party setting
forth the details of such Event of Default or Potential Default which might
not be before it becomes an Event of Default and the action which such Loan
Party proposes to take with respect thereto.
(h) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, proceedings or investigations before
or by any Official Body or any other Person against any Loan Party which
would be required to be reported by the Company on Forms 10-Q, 10-K or
8-K filed with the Securities and Exchange Commission.
(i) Notices Relating to Permitted Additional Senior
Indebtedness. Written notice, and where applicable copies of (A) any notice
delivered to Borrower or any other Loan Party from holders of the Permitted
Additional Senior Indebtedness or delivered from such holders to any Loan
Party of any default under such Permitted Additional Senior Indebtedness or
the Agreements relating thereto; and (B) any amendments to the documentation
governing the Permitted Additional Senior Indebtedness.
(j) Certain Events. Written notice to the Agent within the
time limits set forth in Section 8.01(m), any amendment to the organizational
documents of any of the Company or the Borrower.
(k) Other Reports and Information. Promptly upon their becoming
available to any of the Loan Parties:
(i) management letters submitted to the
Company by independent accountants in connection with any annual or interim
audit and other information provided by such accountants at the request of
the Agent and at the expense of the Banks,
(ii) any reports, notices or proxy statements
generally distributed by the Company to its stockholders on a date no later
than the date supplied to the stockholders,
(iii) regular or periodic reports, including
Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed
by the Company with the Securities and Exchange Commission,
(iv) such other reports and information as the
Banks may from time to time reasonably request.
(l) Notices Regarding Plans and Benefit Arrangements.
(i) Promptly upon becoming aware of the occurrence thereof, notice (including
the nature of the event and, when known, any action taken or threatened by
the Internal Revenue Service or the PBGC with respect thereto) of:
(A) any Reportable Event with respect to the Company or any
member of the ERISA Group (regardless of whether the obligation to report
said Reportable Event to the PBGC has been waived),
(B) any Prohibited Transaction which could subject the
Company or any member of the ERISA Group to a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Internal Revenue Code in connection with any Plan, Benefit Arrangement or
any trust created thereunder,
(C) any assertion of material withdrawal liability
with respect to any Multiemployer Plan,
(D) any partial or complete withdrawal from a Multiemployer
Plan by the Company or any member of the ERISA Group under Title IV of
ERISA (or assertion thereof), where such withdrawal is likely to result in
material withdrawal liability,
(E) any cessation of operations (by the Company or
any member of the ERISA Group) at a facility in the circumstances described
in Section 4063(e) of ERISA,
(F) withdrawal by the Company or any member of the ERISA
Group from a Multiple Employer Plan,
(G) a failure by the Company or any member of the ERISA
Group to make a payment to a Plan required to avoid imposition of a lien
under Section 302(f) of ERISA,
(H) the adoption of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA, or
(I) any change in the actuarial assumptions or funding
methods used for any Plan, where the effect of such change is to materially
increase or materially reduce the unfunded benefit liability or obligation
to make periodic contributions.
(ii) Promptly after receipt thereof, copies of
(a) all notices received by the Company or any member of the ERISA Group of
the PBGC's intent to terminate any Plan administered or maintained by the
Company or any member of the ERISA Group, or to have a trustee appointed to
administer any such Plan; and (b) at the request of the Agent or any
Bank each annual report (IRS Form 5500 series) and all accompanying
schedules, the most recent actuarial reports, the most recent financial
information concerning the financial status of each Plan administered or
maintained by the Company or any member of the ERISA Group, and schedules
showing the amounts contributed to each such Plan by or on behalf of the
Company or any member of the ERISA Group in which any of their personnel
participate or from which such personnel may derive a benefit, and each
Schedule B (Actuarial Information) to the annual report filed by the Company
or any member of the ERISA Group with the Internal Revenue Service with
respect to each such Plan.
(iii) Promptly upon the filing thereof, copies
of any Form 5310, or any successor or equivalent form to Form 5310, filed
with the PBGC in connection with the termination of any Plan.
ARTICLE IX
DEFAULT
9.01 Events of Default. An Event of Default shall mean the
occurrence or existence of any one or more of the following events or
conditions (whatever the reason therefor and whether voluntary, involuntary
or effected by operation of Law):
(a) Borrower fails to pay within five (5) days after the date on
which notice is given by Agent or any Bank to Borrower of Borrower's failure
to pay when due, whether on demand or otherwise, any Indebtedness to a Bank
hereunder, including but not limited to, principal of any Note or any
interest thereon or the Facility A Commitment Fees or other fees, provided
that Borrower shall not be entitled to any such notice if Agent or any Bank
has given such notice three times in any consecutive twelve month period, in
which event any such failure to pay shall be an Event of Default if not
cured within five (5) days after the due date therefor;
(b) Any representation or warranty made at any time by any of
the Loan Parties herein or by any of the Loan Parties in any other Loan
Document, or in any certificate, other instrument or statement furnished
pursuant to the provisions hereof or thereof, shall prove to have been false
or misleading in any material respect as of the time it was made or
furnished;
(c) Any of the Loan Parties shall default in the observance or
performance of any covenant contained in Section 5.01(y) or Section 8.01
hereof and such default shall not be cured within 30 days following the
date on which any Senior Executive becomes aware of the occurrence thereof
(such grace period to be applicable only in the event such default can be
remedied by corrective action of the Loan Parties as determined by the Agent in
its sole discretion);
(d) The Borrower shall fail to provide cash or other collateral
satisfactory to, and indemnification agreements as required by, an Issuing
Bank pursuant to Section 2.10 or 2.14 or an Escrow Bank pursuant to
Section 2.11 or 2.14 on or before the later of the following dates:
(i) fifteen (15) calendar days after such Issuing Bank or Escrow Bank, as the
case may be, or the Agent notifies Borrower that Borrower must provide such
collateral and enter into agreements, or (ii) the date on which Borrower is
required to have provided such collateral and entered into such agreements;
(e) Any of the Loan Parties shall default in the observance or
performance of any other covenant, condition or provision hereof or of any
other Loan Document and such default shall continue unremedied for a
period of thirty (30) days after any Senior Executive becomes aware of the
occurrence thereof (such grace period to be applicable only in the event such
default can be remedied by corrective action of the Loan Parties as
determined by the Agent in its sole discretion);
(f) A default or event of default shall occur at any time
under or in connection with (i) any Subordinated Indebtedness with an unpaid
principal balance, whether singly or in the aggregate, in excess of
$1,000,000 and any applicable notice or grace period in respect thereof has
expired, thereby entitling the holder(s) of such Subordinated Indebtedness to
declare the unpaid principal of, and any interest on, such Subordinated
Indebtedness due and
payable, (ii) any Bond Obligations in excess of $1,000,000 individually or
$2,000,000 in the aggregate, (iii) any Permitted Additional Senior
Indebtedness or the agreements governing such Indebtedness and any
applicable notice or grace period in respect thereof has expired, thereby
entitling the holder(s) of such Permitted Additional Senior Indebtedness to
declare the unpaid principal of, and any interest on, such Permitted
Additional Senior Indebtedness due and payable; or (iv) except for defaults
or events of default which constitute Permitted Exceptions, defaults or
events of default in any other agreement (except for agreements evidencing
Nonrecourse Indebtedness) involving borrowed money or the extension of
credit or any other Indebtedness under which any Loan Party may be obligated
as borrower or guarantor in excess of $2,000,000 in
the aggregate, and such default or event of default consists of the failure
to pay (beyond any period of grace permitted with respect thereto, whether
waived or not) any indebtedness when due (whether at stated maturity, by
acceleration or otherwise) or if such default or event of default
permits or causes the acceleration of any indebtedness (whether or not such
right shall have been waived) or the termination of any commitment to lend;
(g) Any final judgments or orders for the payment of money
in excess of $1,000,000 individually or $2,000,000 in the aggregate shall be
entered against any Loan Party by a court having jurisdiction in the
premises which judgment is not discharged, vacated, bonded or stayed pending
appeal within a period of thirty (30) days from the date of entry, except for
violations which constitute Permitted Exceptions;
(h) Any of the Loan Documents (i) shall cease to be legal,
valid and binding agreements enforceable against the party executing the
same or such party's successors and assigns (as permitted under the Loan
Documents) in accordance with the respective terms thereof or shall in any
way be terminated (except in accordance with its terms) or become or be
declared ineffective or inoperative or cease to give or provide the
respective Liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby and the effect thereof
has a material adverse effect on the ability of the Banks to substantially
realize the benefits of the Loan Documents (it being understood that the
parties will work together to remedy any such illegality, invalidity or
unenforceability), or (ii) shall in any way be challenged or contested by
any of the Loan Parties;
(i) A notice of lien or assessment in excess of $500,000 is
filed of record with respect to all or any part of any of the Loan Parties'
assets by the United States, or any department, agency or instrumentality
thereof, or by any state, county, municipal or other governmental agency,
including, without limitation, the Pension Benefit Guaranty Corporation, or
if any taxes or debts owing at any time or times hereafter to any one of
these becomes payable and the same is not paid within thirty (30) days
after the same becomes payable, except for violations which constitute
Permitted Exceptions;
(j) Any of the Loan Parties ceases to be solvent or admits
in writing its inability to pay its debts as they mature, except for
violations which constitute Permitted Exceptions;
(k) Any of the following occurs: (i) any Reportable Event,
which the Agent determines in good faith constitutes grounds for the
termination of any Plan by the PBGC or the appointment of a trustee to
administer or liquidate any Plan, shall have occurred and be continuing;
(ii) proceedings shall have been instituted or other action taken to
terminate any Plan, or a termination notice shall have been filed with
respect to any Plan; (iii) a trustee shall be appointed to administer or
liquidate any Plan; (iv) the PBGC shall give notice of its intent to
institute proceedings to terminate any Plan or Plans or to appoint a
trustee to administer or liquidate any Plan; and, in the case of the
occurrence of (i), (ii), (iii) or (iv) above, the Agent determines in good
faith that the amount of Company's liability is likely to exceed 10% of its
Adjusted Shareholders' Equity; (v) the Company or any member of the ERISA
Group shall fail to make any contributions when due to a Plan or a
Multiemployer Plan; (vi) the Company or any member of the ERISA Group shall
make any amendment to a Plan with respect to which security
is required under Section 307 of ERISA; (vii) the Company or any member of the
ERISA Group shall withdraw completely or partially from a Multiemployer
Plan; (viii) the Company or any member of the ERISA Group shall withdraw
(or shall be deemed under Section 4062(e) of ERISA to withdraw) from a
Multiple Employer Plan; or (ix) any applicable Law is adopted, changed or
interpreted by any Official Body with respect to or otherwise affecting one
or more Plans, Multiemployer Plans or Benefit Arrangements and, with respect
to any of the events specified in (v), (vi), (vii), (viii) or (ix), the
Agent determines in good faith that any such occurrence would be reasonably
likely to materially and adversely affect the total enterprise represented
by the Company and the other members of the ERISA Group;
(l) The Loan Parties as a whole cease to conduct, or one or
more of the Loan Parties are enjoined, restrained or in any way prevented
by court order from conducting business which constitutes all or a material
part of the business of the Loan Parties taken as a whole and such
injunction, restraint or other preventive order is not dismissed within
thirty (30) days after the entry thereof, except for violations which
constitute Permitted Exceptions;
(m) A proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect
of any Loan Party in an involuntary case under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter in effect,
or a receiver, liquidator, assignee, custodian, trustee, sequestrator,
conservator (or similar official) of such Loan Party for any substantial
part of its property, or for the winding-up or liquidation of its affairs,
and such proceeding shall remain undismissed or unstayed and in effect for a
period of thirty (30) consecutive days or such court shall enter a decree
or order granting any of the relief sought in such proceeding, except for
violations which constitute Permitted Exceptions; or
(n) Any Loan Party shall commence a voluntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now
or hereafter in effect, shall consent to the entry of an order for relief in
an involuntary case under any such law, or shall consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator, conservator (or other similar official) of itself
or for any substantial part of its property or shall make a general
assignment for the benefit of creditors, or shall fail generally
to pay its debts as they become due, or shall take any action in
furtherance of any of the foregoing, except for violations which constitute
Permitted Exceptions.
9.02 Consequences of Event of Default.
(a) If an Event of Default specified under subsections (a)
through (l) of Section 9.01 hereof shall occur and be continuing (i) the
Facility A Banks shall be under no further obligation to make Revolving
Credit Loans or Facility A Term Loans, issue Letters of Credit or enter into
Escrow Agreements hereunder and the Facility B Banks shall be under no
further obligation to make Facility B Loans (provided that, so long as a
Simple Majority of the Banks do not accelerate the Notes pursuant to clause
(ii) below, a Required Majority of Facility A Banks may continue to bind
the Facility A Banks to make Revolving Credit Loans or Facility A Term Loans,
issue Letters of Credit and enter into Escrow Agreements to the extent the
Required Majority of Facility A Banks agree upon at the time by sending
written notice of such election to the other Facility A Banks and all of
the Facility A Banks shall be bound by such agreement) and (ii) upon the
request of a Simple Majority of the Banks, the Agent shall by written notice
to the Borrower, declare the unpaid principal amount of the Notes then
outstanding and all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrower to the Banks hereunder and thereunder to be
forthwith due and payable, and the same shall thereupon become and be
immediately due and payable to the Agent for the benefit of each Bank without
presentment, demand, protest or any other notice of any kind, all of which
are hereby expressly waived, and (iii) upon the request of a Simple
Majority of Facility A Banks, the Agent shall require the Borrower to, and
the Borrower shall thereupon, deposit in a non-interest bearing account with
the Agent, as cash collateral for its obligations under the Loan Documents, an
amount equal to the maximum amount currently or at any time thereafter
available to be drawn on all outstanding Letters of Credit and obligations
under Escrow Agreements, and the Borrower hereby pledges to the Agent and
the Facility A Banks, and grants to the Agent and the Banks a security
interest in, all such cash as security for such obligations. Upon the
curing of all existing Events of Default to the satisfaction of the
Required Majority of Facility A Banks, the Agent shall
return such cash collateral to the Borrower; and
(b) If an Event of Default specified under subsections (m) or
(n) of Section 9.01 hereof shall occur, the Banks shall be under no further
obligations to make Loans, issue Letters of Credit or enter into Escrow
Agreements hereunder and the unpaid principal amount of the Notes then
outstanding and all interest accrued thereon, any unpaid fees and all
other Indebtedness of the Loan Parties to the Banks hereunder and
thereunder shall be immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly
waived; and
(c) If an Event of Default shall occur and be continuing,
any Bank to whom any obligation is owed by the Loan Parties hereunder or
under any other Loan Document or any participant of such Bank which has
agreed in writing to be bound by the provisions of Section 11.11(b) hereof
and any branch, subsidiary or affiliate of such Bank or participant
anywhere in the world shall have the right, in addition to all other
rights and remedies available to it, without notice to the Loan Parties,
to set-off against and apply to the then unpaid balance of all
the Loans and all other obligations of the Loan Parties hereunder or under
any other Loan Document any debt owing to, and any other funds held in any
manner for the account of, the Loan Parties by such Bank or participant or
by such branch, subsidiary or affiliate, including, without limitation, all
funds in all deposit accounts (whether time or demand, general or special,
provisionally credited or finally credited, or otherwise) now or hereafter
maintained by the Loan Parties for its own account (but not including
funds held in custodian or trust accounts) with such Bank or participant or
such branch, subsidiary or affiliate. Such right shall exist whether or not
any Bank or the Agent shall have made any demand under this Agreement or any
other Loan Document, whether or not such debt owing to or funds held for the
account of the Loan Parties is or are matured or unmatured and regardless
of the existence or adequacy of any Collateral, Guaranty or any other
security, right or remedy available to any Bank or the Agent; and
(d) If an Event of Default shall occur and be continuing
and the Agent shall have accelerated the maturity of Loans of the Borrower
or such Loans otherwise shall have been accelerated pursuant to any of the
foregoing provisions of this Section 9.02, the Agent, at the
request of a Simple Majority of the Banks, will proceed to protect and
enforce its and the Banks' rights by suit in equity, action at law and/or
other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement or the Notes, including as
permitted by applicable Law the obtaining of the ex parte appointment of a
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal
or equitable right of the Agent or the Banks; and
(e) In addition to the other remedies set forth in this
Section 9.02, as provided in Section 7.01(b) and 7.02 hereof, the
occurrence of an Event of Default hereunder shall constitute a Security
Event, entitling the Agent to record all Collateral Documents;
(f) From and after the date on which the Agent has taken
any action pursuant to this Section 9.02 upon the authorization of a
Simple Majority of the Banks and until all obligations of the Loan Parties
have been paid in full, any and all proceeds received by the Agent from
any sale or other disposition of the collateral under the Collateral
Documents, if any, or any part thereof, or the exercise of any other
remedy by the Agent, shall be applied as follows:
(i) first, to reimburse the Agent and the
Banks for out-of-pocket costs, expenses and disbursements, including
without limitation reasonable attorneys' fees and legal expenses, incurred
by the Agent or the Banks in connection with realizing on such collateral
or collection of any obligations of the Loan Parties under any of the Loan
Documents, including advances made by the Banks or any one of them or the
Agent for the reasonable maintenance, preservation, protection or enforcement
of, or realization upon, such collateral, including without limitation,
advances for taxes, insurance, repairs and the like and reasonable expenses
incurred to sell or otherwise realize on, or prepare for sale or other
realization on, any of such collateral;
(ii) second, to the repayment of all
Indebtedness then due and unpaid of the Loan Parties to the Banks
incurred under this Agreement or any of the Loan Documents, whether of
principal, interest, fees, expenses or otherwise, in such manner as the
Agent may determine in its discretion, provided that (1) such proceeds shall
first be allocated to the Facility A Banks as a group and to each Borrowing
Tranche of Facility B Banks as a group based on the amount of principal
interest and other obligations (including any unreimbursed obligations under
outstanding Letters of Credit or Escrow Agreements or obligations to Cash
Collateralize any Letters of Credit or Escrow Agreements) due to each of
these groups of Banks and (2) after giving effect to the allocation in
clause (1) payments of principal and interest and other amounts shall be
allocated to the Banks within each group of Banks described in clause (1)
on a pro rata basis as set forth in Section 4.02; and
(iii) the balance, if any, as required by Law.
(g) In addition to all of the rights and remedies contained
in this Agreement or in any of the other Loan Documents, the Agent shall
have all of the rights and remedies under applicable Law, all of which rights
and remedies shall be cumulative and non-exclusive, to the extent permitted by
Law. The Agent may, and upon the request of the Simple
Majority of Banks shall, exercise all post-default rights granted to the
Agent and the Banks under the Loan Documents or applicable Law.
9.03 Notice of Sale. Any notice required to be given by the Agent
of a sale, lease, or other disposition of the collateral under the
Collateral Documents, if any, or any other intended action by the Agent, if
given ten (10) days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to the Loan Parties.
ARTICLE X
THE AGENT
10.01 Appointment. Each Bank hereby irrevocably designates,
appoints and authorizes PNC Bank to act as Agent for such Bank under this
Agreement to execute and deliver or accept on behalf of each of the Banks
the other Loan Documents. Each Bank hereby irrevocably authorizes, and
each holder of any Note by the acceptance of a Note shall be deemed
irrevocably to authorize, the Agent to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and
any other instruments and agreements referred to herein, and to exercise
such powers (other than voting rights, which each Bank reserves for itself
and does not authorize the Agent to exercise on its behalf) and to perform
such duties hereunder as are specifically delegated to or required of the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. PNC Bank agrees to act as the Agent on behalf of the
Banks to the extent provided in this Agreement.
10.02 Delegation of Duties. The Agent may perform any of its
duties hereunder by or through agents or employees (provided such delegation
does not constitute a relinquishment of its duties as Agent) and, subject
to Sections 10.05 and 10.06 hereof, shall be entitled to engage
and pay for the advice or services of any attorneys, accountants or other
experts concerning all matters pertaining to its duties hereunder and to
rely upon any advice so obtained.
10.03 Nature of Duties; Independent Credit Investigation.
The Agent shall have no duties or responsibilities except those expressly
set forth in this Agreement and the Collateral Documents and no implied
covenants, functions, responsibilities, duties, obligations, or liabilities
shall be read into this Agreement and the Collateral Documents or otherwise
exist. The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Agreement a fiduciary or
trust relationship in respect of any Bank; and nothing in this Agreement,
expressed or implied, is intended to or shall be so construed as to impose
upon the Agent any obligations in respect of this Agreement except as
expressly set forth herein. In performing its duties and functions under
this Agreement and the Collateral Documents, Agent will exercise the same
care which it normally exercises in making and handling loans and in handling
collateral in which it alone is interested, but it does not assume any further
responsibility. Each Bank expressly acknowledges (i) that the Agent has not
made any representations or warranties to it and that no act by the Agent
hereafter taken, including any review of the affairs of the Loan Parties,
shall be deemed to constitute any representation or warranty by the Agent to
any Bank; (ii) that it has made and will continue to make, without
reliance upon the Agent, its own independent investigation of the financial
condition and affairs and its own appraisal of the creditworthiness of the
Loan Parties in connection with this Agreement and the making and continuance
of the Loans hereunder; and (iii) except as expressly provided herein, that
the Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Bank with any credit or other information with
respect thereto, whether coming into its possession before the making of any
Loan or at any time or times thereafter.
10.04 Actions in Discretion of Agent; Instructions from the
Banks. The Agent agrees, upon the written request of the Simple Majority of
Banks, to take or refrain from taking any action of the type specified as
being within the Agent's rights, powers or discretion herein, provided that
the Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or any other Loan
Document or applicable Law. In the absence of a request by the Simple
Majority of Banks, the Agent shall have authority, in its sole discretion,
to take or not to take any such action, unless this Agreement specifically
requires the consent of some or all of the Banks. Any action taken or
failure to act pursuant to such instructions or discretion shall be binding
on the Banks, subject to Section 10.06 hereof. Subject to the provisions
of Section 10.06, no Bank shall have any right of action whatsoever against
the Agent as a result of the Agent acting or refraining from acting hereunder in
accordance with the instructions of the Simple Majority of Banks, or in the
absence of such instructions, in the absolute discretion of the Agent.
10.05 Reimbursement and Indemnification of Agent by the
Borrower. The Borrower unconditionally agrees to pay or reimburse the Agent
and save the Agent harmless against (a) liability for the payment of all
reasonable out-of-pocket costs, expenses and disbursements, including but not
limited to fees and expenses of legal counsel, appraisers and environmental
consultants (except that no appraisers or environmental consultants have been or
shall be engaged in connection with matters described in clauses (i) or (ii)
below or in connection with the enforcement of this Agreement or any other
Loan Document prior to an Event of Default), incurred by the Agent (i) in
connection with the development, negotiation, preparation, printing,
execution and syndication of this Agreement and the other Loan Documents,
(ii) relating to any requested amendments, waivers or consents pursuant to
the provisions hereof, (iii) in connection with the enforcement of this
Agreement or any other Loan Document or collection of amounts due hereunder
or thereunder or the proof and allowability of any claim arising under this
Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (iv) in any workout, restructuring or in
connection with the protection, preservation, exercise or enforcement of
any of the terms hereof or of any rights hereunder or under any other Loan
Document or in connection with any foreclosure, collection or bankruptcy
proceedings, (b) liability for reasonable fees and expenses of legal counsel in
connection with the administration (including documentation of Collateral
upon the occurrence of a Security Event), interpretation and performance of
this Agreement and the other Loan Documents not in excess of $50,000 in any
fiscal year of the Company exclusive of fees and expenses relating to the
documentation of Collateral, and (c) all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent, in its capacity as such, in any way
relating to or arising out of this Agreement or any other Loan Documents or any
action taken or omitted by the Agent hereunder or thereunder, provided that
the Borrower shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements if the same results from the Agent's gross
negligence or willful misconduct, or if the Borrower was not given notice
of the subject claim and the opportunity to participate in the defense
thereof, at its expense, or if the same results from a compromise or
settlement agreement entered into without the consent of the Borrower.
In addition, the Borrower agrees to reimburse and pay all reasonable
out-of-pocket expenses of the Agent's regular employees and agents engaged
periodically to perform audits of the Loan Parties' books, records
and business properties.
10.06 Exculpatory Provisions. Neither the Agent nor any of its
directors, officers, employees, agents, attorneys or affiliates shall (a) be
liable to any Bank for any action taken or omitted to be taken by it or them
hereunder, or in connection herewith including without limitation pursuant
to any Loan Document, unless caused by its or their own gross negligence or
willful misconduct, (b) be responsible in any manner to any of the Banks for
the effectiveness, enforceability, genuineness, validity or the due execution
of this Agreement or any other Loan Documents or for any recital,
representation, warranty, document, certificate, report or statement
herein or made or furnished under or in connection with this Agreement or
any other Loan Documents, or (c) be under any obligation to any of the
Banks to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions hereof or thereof on the
part of the Loan Parties, or the financial condition of the Loan Parties, or the
existence or possible existence of any Event of Default or Potential Default.
Neither the Agent nor any Bank nor any of their respective directors,
officers, employees, agents, attorneys or affiliates shall be liable to
the Loan Parties for consequential damages resulting from any breach of
contract, tort or other wrong in connection with the negotiation,
documentation, administration or collection of the
Loans or any of the Loan Documents.
10.07 Reimbursement and Indemnification of Agent by Banks.
Each Bank agrees to reimburse and indemnify the Agent (to the extent not
reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so) in proportion to its Ratable Share from and against all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against the Agent, in its
capacity as such, in any way relating to or arising out of this Agreement or
any other Loan Documents or any action taken or omitted by the Agent
hereunder or thereunder, provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
(a) if the same results from the Agent's gross negligence or willful
misconduct, or (b) if such Bank was not given notice of the subject claim
and the opportunity to participate in the defense thereof,
at its expense, or (c) if the same results from a compromise and settlement
agreement entered into without the consent of such Bank. In addition, each
Bank agrees promptly upon demand to reimburse the Agent (to the extent not
reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so) in proportion to its Ratable Share for all amounts due and
payable by the Borrower to the Agent in connection with the Agent's periodic
audit of the Loan Parties' books, records and business properties.
10.08 Reliance by Agent. The Agent shall be entitled to
rely upon any writing, telegram, telex or teletype message, resolution,
notice, consent, certificate, letter, cablegram, statement, order or other
document or conversation by telephone or otherwise believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon the advice and opinions of counsel and other
professional advisers selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
10.09 Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Potential Default or
Event of Default unless the Agent has received written notice from a Bank or
the Borrower referring to this Agreement, describing such Potential Default
or Event of Default and stating that such notice is a "notice of default."
10.10 Notices; Litigation.
(a) The Agent shall promptly send to each Bank a copy of
all notices received from the Borrower pursuant to the provisions of this
Agreement or the other Loan Documents promptly upon receipt thereof.
The Agent shall promptly notify the Borrower and the other Facility A Banks
of each change in the Prime Rate and the effective date thereof.
(b) Agent will promptly furnish to Banks copies of all
material reports, certificates and other written statements furnished by
Borrower or Guarantors to Agent pursuant to this Agreement (and which are
not required by this Agreement to have been sent directly to
Banks by Borrower or Guarantors); provided that if furnishing such
copies of any nonfinancial materials is impractical or not beneficial to
the Banks in Agent's judgment, Agent may make such copies available for
inspection at Agent's offices at reasonable times during its business hours
upon reasonable advance notice to Agent by the Bank requesting such
inspection; provided further that Agent assumes no responsibility for the
authenticity, validity, accuracy or completeness of any such financial or
nonfinancial materials. Agent will keep Banks informed of the status of
payments of principal and interest on the Loans and any fees and expenses.
Agent will promptly furnish to Banks copies of any proposed modifications to
this Agreement or the Collateral Documents presented to Agent for approval.
(c) Agent will give to Banks prompt telephonic notice
(confirmed in writing) (i) of any changes to the forms of the Collateral
Documents proposed to be made by Agent prior to their execution by Borrower
or Guarantors (which changes shall be deemed approved by Banks unless within
three (3) Business Days of such notice a Required Majority of Banks objects
thereto), and (ii) that a Bank has requested a meeting or polling of Banks with
respect to a matter that requires the vote of Banks, but, in the absence of
willful misconduct or gross negligence of Agent, no failure to give any such
notice shall result in liability on the part of Agent for failing to provide
the notices described in (i) and (ii) above. No knowledge, information or
notice relating to this Agreement or the Collateral Documents will be deemed to
have been received by Agent for purposes of this Agreement until such time as
it has been received in the department or division to which notices are
required to be given to the Agent hereunder.
(d) Agent shall give each Bank prompt notice of any litigation
commenced by or against Agent and/or Banks with respect to this Agreement or
any matter referred to herein of which Agent receives written notice and of
any other disposition of or realization upon the collateral covered by the
Collateral Documents of which Agent receives written notice. Notwithstanding
the foregoing, after the receipt of notice of any litigation or other
proceeding and of any proposed action by Agent with respect to settling,
prosecuting or defending such litigation or other proceeding, a Required
Majority of Banks shall have the right to disapprove any such proposed
action and to direct Agent to take such other action as such Required
Majority of Banks may direct, provided that the Agent shall not be required
to take any action thereunder unless one or more Banks shall have offered to
the Agent indemnity acceptable to the Agent in its sole discretion against
costs, expenses and liabilities to be incurred in compliance with such
direction.
10.11 Banks in Their Individual Capacities. With respect to its
Commitments and the Loans made by it, the Agent shall have the same rights
and powers hereunder as any other Bank and may exercise the same as though
it were not the Agent, and the term "Banks" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. PNC Bank
and its affiliates and each of the Banks and their respective affiliates may,
without liability to account, except as prohibited herein, make Loans to,
accept deposits from, discount drafts for, act as trustee under indentures
of, and generally engage in any kind of banking or trust business with,
the Borrower and its affiliates, in the case of the Agent, as though it were
not acting as Agent hereunder and in the case of each Bank, as though such
Bank were not a Bank hereunder.
10.12 Holders of Notes. The Agent may deem and treat any payee
of any Note as the owner thereof for all purposes hereof unless and until
written notice of the assignment or transfer thereof shall have been filed
with the Agent. Any request, authority or consent of any Person who at the
time of making such request or giving such authority or consent is the holder of
any Note shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Note or of any Note or Notes issued in exchange therefor.
10.13 Equalization of Banks. The Banks and the holders of any
participation in any Notes agree among themselves that, with respect to all
amounts received by any Bank or any such holder for application on any
obligation hereunder or under any Note or under any such participation,
whether received by voluntary payment, by realization upon security, by the
exercise of the right of set-off or banker's lien, by counterclaim or by any
other non-pro rata source, equitable adjustment will be made in the manner
stated in the following sentence so that, in effect, all such excess amounts
will be shared among the Banks and such holders as provided in Section 4.02,
except as otherwise provided in Sections 2.04, 2.14, 3.04, 4.04(b), 4.06(a) or
11.11(c) hereof. The Banks or any such holder receiving any such amount
shall purchase for cash from each of the other Banks, by depositing such
cash with the Agent for the ratable benefit of the other Banks, an interest
in such Bank's Loans in such amount as shall result in a ratable
participation by the Banks and each such holder in the aggregate unpaid
amount under the Notes, provided that if all or any portion of such excess
amount is thereafter recovered from the Bank or the holder making such
purchase, such purchase shall be rescinded and the purchase price restored
to the extent of such recovery, together with interest or other amounts, if
any, required by law (including court order) to be paid by the Bank or the
holder making such purchase.
10.14 Successor Agent. The Agent may resign as Agent upon
not less than sixty (60) days' prior written notice to the Borrower and the
Banks or a Simple Majority of the Banks may remove the Agent upon not less
than sixty (60) days' prior written notice to the Borrower and Agent. If the
Agent shall resign or be removed under this Agreement, then either (a) the
Simple Majority of Banks shall appoint from among the Banks a successor
agent for the Banks, subject to the acceptance of such successor, or (b) if a
successor agent shall not be so appointed and approved within the sixty
(60) day period following the Agent's notice to the Banks of its resignation
or Banks' notice to Agent of Agent's removal, then the Agent (in the case of a
resignation) or the Simple Majority of the Banks (in the case of a removal)
shall appoint, with the consent of the Borrower, such consent not to be
unreasonably withheld, a successor agent who shall, subject to the
acceptance of such successor, serve as Agent until such time as the Simple
Majority of Banks appoint a successor agent. Upon its appointment pursuant
to either clause (a) or (b) above, such successor agent shall succeed to
the rights, powers and duties of the Agent and the term "Agent" shall mean
such successor agent, effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated without any
other or further act or deed on the part of such former Agent or any of the
parties to this Agreement. After the resignation of any Agent hereunder,
the provisions of this Article X shall inure to the benefit of such former
Agent and such former Agent shall not by reason of such resignation be
deemed to be released from liability for any actions taken or not taken
by it while it was an Agent under this Agreement.
10.15 Agent's Fee. The Borrower shall pay to the Agent a
nonrefundable fee (the "Agent's Fee") equal to $100,000 per annum (subject
to adjustment below) payable in equal quarterly installments in arrears on
the first Business Day of each February, May, August and November after
the date hereof and on the date on which all Loans shall be paid in full and all
Letters of Credit and Escrow Agreements shall have expired or terminated.
The first installment of the Agent's Fee shall be prorated from the Closing
Date to the date of payment and the final installment shall be prorated
from the date of the last quarterly installment until the obligations of
Borrower hereunder are paid in full and all Letters of Credit and Escrow
Agreements have expired or terminated. The Borrower shall also pay to the
Agent a fee as set forth in a separate letter between Agent and Borrower
(the "Agent's Letter").
10.16 Availability of Funds. Unless the Agent shall have
been notified by a Bank prior to the date upon which a Loan is to be made
that such Bank does not intend to make available to the Agent such Bank's
portion of such Loan, the Agent may assume that such Bank has made or
will make such proceeds available to the Agent on such date and the
Agent may, in reliance upon such assumption (but shall not be
required to), make available to the Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the Agent
by such Bank, the Agent shall be entitled to recover such amount on demand
from such Bank (or, if such Bank fails to pay such amount
forthwith upon such demand from the Borrower) together
with interest thereon, in respect of each day during the period
commencing on the date such amount was made available to the Borrower and
ending on the date the Agent recovers such amount, at a rate per annum
equal to the applicable interest rate in respect of the Loan.
10.17 Calculations. In the absence of gross negligence or
willful misconduct, the Agent shall not be liable for any error
in computing the amount payable to any Bank whether in
respect of the Loans, fees or any other amounts due to the Banks
under this Agreement. In the event an error in computing any amount
payable to any Bank is made, the Agent, the Borrower and each affected
Bank shall, forthwith upon discovery of such error, make such adjustments as
shall be required to correct such error, and any compensation by Agent
to the Banks or the Banks to the Agent therefor will be calculated at the
Federal Funds Effective Rate and any compensation by the Borrower to the
Banks or the Banks to the Borrower therefor will be calculated at the
applicable interest rate relating to such amount.
10.18 Beneficiaries. Except as expressly provided herein,
the provisions of this Article X are solely for the benefit of the
Agent and the Banks, and the Loan Parties shall not have any rights to
rely on or enforce any of the provisions hereof. In performing its
functions and duties under this Agreement, the Agent shall act solely as
agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust
with or for the Loan Parties.
ARTICLE XI
MISCELLANEOUS
11.01 Modifications, Amendments or Waivers. Except for
matters addressed in Sections 11.01 (a), (b), (d) and (e), with the written
consent of the Required Majority of Banks, the Agent, acting on behalf of
all the Banks, and the Borrower on behalf of the Loan Parties may from time
to time enter into written agreements amending or changing any provision of this
Agreement or any other Loan Document or the rights of the Banks or the
Loan Parties hereunder or thereunder, or may grant written waivers or
consents to a departure from the due performance of the obligations of
the Loan Parties hereunder or thereunder. Any such agreement, waiver or
consent made with such written consent shall be effective to bind all the
Banks; provided, that:
(a) An agreement, waiver, or consent which does any of
the following shall require the written consent of all of the Banks:
(i) Amends Sections 4.02 [Pro Rata Treatment
of Banks], 10.06 [Exculpatory Provisions] and 10.13 [Equalization of Banks]
hereof;
(ii) Accelerates the time for payment of any
Loans, except for acceleration pursuant to Section 9.02 by a Simple
Majority of the Banks or pursuant to any other provisions hereunder which
expressly permit acceleration by fewer than 100% of the Banks, whether or
not any Loans are outstanding;
(iii) Except for sales of assets permitted by
Section 8.02(g), releases any collateral or other security, if any, for
any of the Loan Parties' obligations hereunder;
or
(iv) Amends this Section 11.01(a), changes
the definition of Required Majority of Banks, or changes any requirement
providing for the Banks or the Required Majority of Banks to authorize the
taking of any action hereunder; and
(b) An agreement, waiver, or consent which does any of the
following shall require the written consent of all of the Facility A Banks:
(i) Reduces the amount of the Facility A
Commitment Fee or any other fees payable only to Facility A Banks hereunder,;
(ii) Whether or not any Loans are outstanding,
extends the time for payment of principal or interest of any Facility A Loan,
or reduces the principal amount of or the rate of interest borne by any
Facility A Loan, or otherwise affect the terms of payment of the principal
of or interest of any Facility A Loan except that approval of a rating agency
as a Qualified Rating Agency shall require the Required Majority of
Banks and except for agreements, waivers or consents
described in Section 11.01(a)(ii) above;
(iii) Amend this Section 11.01(b), changes the
definition of Required Majority of Facility A Banks, or changes any
requirement providing for the Facility A Banks (without authorization of
the Facility B Banks) or the Required Majority of Facility A
Banks to authorize the taking of any action hereunder; or
(iv) Modifies any provision regarding the Cash
Collateralization of Letters of Credit or Escrow Agreements and
(c) An agreement, waiver, or consent which does any of the
following shall require the written consent of all of the Facility B Banks:
(i) Reduces the amount of the Facility B
Closing Fee or any other fees payable only to Facility B Banks hereunder,;
(ii) Whether or not any Loans are outstanding,
extends the time for payment of principal or interest of any Facility B
Loan, or reduces the principal amount of or the rate of interest borne by
any Facility B Loan, or otherwise affect the terms of payment of the
principal of or interest of any Facility B Loan except that approval of
a rating agency as a Qualified Rating Agency shall require the Required
Majority of Banks and except for agreements, waivers or consents described
in Section 11.01(a)(ii) above;
(iii) Amends this Section 11.01(c) or changes
any requirement providing for the Facility A Banks (acting without
authorization of the Facility B Banks) or the Required Majority of
Facility A Banks to authorize the taking of any action hereunder; and
(d) Without the written consent of any Bank, no such agreement,
waiver or consent may be made which will increase such Bank's Facility A
Commitment or Facility B Commitment.
(e) Amendments, changes, waivers or consents shall be made
upon the request of a Simple Majority of Facility A Banks, or a Simple
Majority of the Banks if this Agreement expressly so provides.
11.02 No Implied Waivers; Cumulative Remedies; Writing
Required. No course of dealing and no delay or failure of the Agent or
any Bank in exercising any right, power, remedy or privilege under this
Agreement or any other Loan Document shall affect any other or future
exercise thereof or operate as a waiver thereof; nor shall any single or
partial exercise thereof or any abandonment or discontinuance of steps
to enforce such a right, power, remedy or privilege preclude any further
exercise thereof or of any other right, power, remedy or privilege. The rights
and remedies of the Agent and the Banks under this Agreement and any
other Loan Documents are cumulative and not exclusive of any rights or
remedies which they would otherwise have. Any waiver, permit, consent or
approval of any kind or character on the part of any Bank of any
breach or default under this Agreement or any such waiver of any
provision or condition of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing.
11.03 Reimbursement and Indemnification of Banks by the
Borrower; Taxes. The Borrower agrees unconditionally upon demand to pay or
reimburse to each Bank (other than the Agent, as to which the Borrower's
obligations are set forth in Section 10.05) and to save such Bank harmless
against (i) liability for the payment of all reasonable out-of-pocket costs,
expenses and disbursements (including fees and expenses of counsel for
each Bank except with respect to (a) and (b) below), incurred by such Bank
(a) relating to any amendments, waivers or consents pursuant to the
provisions hereof, (b) in connection with the enforcement of this Agreement or
any other Loan Document, or collection of amounts due hereunder or thereunder
prior to an Event of Default, (c) in connection with (1) the enforcement of
this Agreement or any Loan Document after an Event of Default, (2) collection
of amounts due hereunder or thereunder after an Event of
Default or (3) the proof and allowability of any claim arising under this
Agreement or any other Loan Document, in each instance whether in bankruptcy
or receivership proceedings or otherwise, and (d) in any workout,
restructuring or in connection with the protection, preservation, exercise
or enforcement of any of the terms hereof or of any rights hereunder or
under any other Loan Document or in connection with any foreclosure,
collection or bankruptcy proceedings, or (ii) all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against such Bank, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan
Documents or any action taken or omitted by such Bank hereunder
or thereunder, provided that the Borrower shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
(A) if the same results from such Bank's gross negligence or
willful misconduct, or (B) if the Borrower was not given notice of the
subject claim and the opportunity to participate in the
defense thereof, at its expense, or (C) if the same results from a
compromise or settlement agreement entered into without the consent of the
Borrower. The Banks will attempt to minimize the fees and expenses of
legal counsel for the Banks which are subject to reimbursement by the
Borrower hereunder by considering the usage of one law firm to represent
the Banks and the Agent if appropriate under the circumstances.
The Borrower agrees unconditionally to pay all stamp, document, transfer,
recording or filing taxes or fees and similar impositions now or
hereafter determined by the Agent or any Bank to be payable in connection
with this Agreement or any other Loan Document, and the Borrower agrees
unconditionally to save the Agent and the Banks harmless from and
against any and all present or future claims, liabilities or losses with
respect to or resulting from any omission to pay or delay in paying
any such taxes, fees or impositions.
11.04 Holidays. Whenever any payment or action to be made
or taken hereunder shall be stated to be due on a day which is not a
Business Day, such payment or action shall be made or taken on the next
following Business Day (except as provided in Section 3.02(a) with
respect to CD Rate Interest Periods or Euro-Rate Interest Periods),
and such extension of time shall be included in computing interest or
fees, if any, in connection with such payment or action.
11.05 Funding by Branch, Subsidiary or Affiliate.
(a) Notional Funding. Each Facility A Bank shall have
the right from time to time, without notice to any Loan Party, to
deem any branch, subsidiary or affiliate (which for the purposes of
this Section 11.05 shall mean any corporation or association which is directly
or indirectly controlled by or is under direct or indirect common control
with any corporation or association which directly or indirectly
controls such Bank) of such Facility A Bank to have made, maintained or
funded any Facility A Loan to which any Euro-Rate Option applies at any
time, provided that immediately following (on the assumption that a
payment were then due from the Borrower to such other office) and as a
result of such change the Facility A Bank may not invoke Section 3.04
and the Borrower would not be under any greater financial obligation
pursuant to Section 4.06 hereof than it would have been in the absence
of such change. Notional funding offices may be selected by each Bank
without regard to the Bank's actual methods of making, maintaining or
funding the Loans or any sources of funding actually used by or available
to such Bank.
(b) Actual Funding. Without relieving such Bank of
any obligation or liability hereunder, each Bank shall have the
right from time to time to make or maintain any Loan by arranging for
a branch, subsidiary or affiliate of such Bank to make or maintain such
Loan subject to the last sentence of this Section 11.05(b). If any Bank
causes a branch, subsidiary or affiliate to make or maintain
any part of the Loans hereunder, all terms and conditions of this
Agreement shall, except where the context clearly requires otherwise,
be applicable to such part of the Loans to the same extent as if
such Loans were made or maintained by such Bank but in no
event shall any Bank's use of such a branch, subsidiary or
affiliate to make or maintain any part of the Loans hereunder cause
such Bank or such branch, subsidiary or affiliate to incur any cost or
expenses payable by any Borrower hereunder or under any Loan Document
or require the Borrower to pay any other compensation
to any Bank (including, without limitation, any expenses
incurred or payable pursuant to Section 4.06 hereof) which would
otherwise not be incurred or allow such Bank, branch subsidiary or
affiliate to invoke Section 3.04 hereof.
11.06 Notices. All notices, requests, demands, directions
and other communications (collectively "notices") given to or made upon
any party hereto under the provisions of this Agreement shall
be by telephone or in writing (including telex or facsimile communication)
unless otherwise expressly permitted hereunder and shall be delivered or sent by
telex or facsimile to the Borrower or Guarantors at the addresses and
numbers set forth under their respective names on the signature
pages hereof and to the Agent or the Banks at the addresses and numbers
set forth on Schedule 1.01(C) hereof or, in each instance, in accordance
with any subsequent unrevoked written direction from any party to
the others. All notices shall, except as otherwise expressly herein
provided, be effective (a) in the case of telex or facsimile, when
received, (b) in the case of hand-delivered notice, when hand
delivered, (c) in the case of telephone, when telephoned, provided,
however, that in order to be effective, telephonic notices
must be confirmed in writing no later than the next day by letter,
facsimile or telex, (d) if given by mail, four (4) days after such
communication is deposited in the mails with first class postage
prepaid, return receipt requested, and (e) if given by any other
means (including by air courier), when delivered; provided, that
notices to the Agent shall not be effective until received. Any Bank
giving any notice to any Loan Party shall simultaneously send a copy
thereof to the Agent, and the Agent shall promptly notify the other
Banks, as applicable, of the receipt by it of any such notice.
11.07 Severability. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any
jurisdiction such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability
without in any manner affecting the validity or enforceability thereof
in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
11.08 Governing Law. This Agreement shall be deemed to be a
contract under the laws of the Commonwealth of Pennsylvania and for all
purposes shall be governed by and construed and enforced in accordance with
the laws of the Commonwealth of Pennsylvania without regard to its c
onflict of laws principles.
11.09 Prior Understanding. This Agreement supersedes
all prior understandings and agreements, whether written or oral,
between the parties hereto and thereto relating to the transactions
provided for herein and therein, including any prior confidentiality
agreements and commitments, except to the extent letters of credit
previously issued by any Facility A Bank are to become Letters of Credit
hereunder.
11.10 Duration; Survival. All representations and warranties
of the Loan Parties contained herein or made in connection herewith
shall survive the making of Loans and shall not be waived by the execution
and delivery of this Agreement, any investigation by the Agent or the
Banks, the making of Loans, or payment in full of the Loans. All
covenants and agreements of the Loan Parties contained in Sections 5.01,
8.01 and 8.02 herein shall continue in full force and effect from and
after the date hereof so long as the Borrower may borrow hereunder and until
termination of the Commitments and payment in full of the Loans.
All covenants and agreements of the Borrower contained herein relating
to the payment of principal, interest, premiums, additional compensation or
expenses and indemnification, including those set forth in the Notes,
Article IV and Sections 10.05, 10.07 and 11.03 hereof, shall survive payment
in full of the Loans and termination of the Commitments.
11.11 Successors and Assigns; Assignment and Participations;
Additional Banks.
(a) Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Banks, the Agent, the Loan Parties
and their respective successors and assigns, except that the Loan Parties
may not assign or transfer any of their rights and obligations hereunder
or any interest herein.
(b) Assignments and Participations. Each Bank may, at
its own cost, make assignments of or sell participations in all or any
part of its Commitment and the Loans made by it, subject to the consent of
the Borrower and the Agent with respect to any assignee, such consent not
to be unreasonably withheld, and provided that (i) assignments shall be made
only to Qualified Banks; (ii) assignments of the Facility A Commitments
may not be made in amounts less than $5,000,000 and assignments of
Facility A Commitments and Facility B Loans must be in integral multiples
of $1,000,000; (iii) no Bank which is a party hereunder may reduce
its Facility A Commitment to an amount less than the greater
of (A) $10,000,000; or (B) 50% of its initial Facility A Commitment or
reduce its Facility B Loans to an amount less than 50% of the
principal amount thereof which such Bank loaned to Borrower on the Borrowing
Date thereof; (iv) if a Bank assigns less than 100% of its Facility A
Commitment it shall assign a proportion of its outstanding Facility A
Term Loans and its outstanding Revolving Credit Loans which, in each
instance, equals the proportion of its Commitment which it is assigning and
(v) no assignment shall:
(1) cause the total amount of any Bank's share of any Borrowing
Tranche of Facility B Loans to exceed 30% of the total amount of such
Borrowing Tranche; or
(2) cause the amount of any Borrowing Tranche of Facility B
Loans held by Facility B Banks which are not also Facility A Banks to
exceed 66-2/3% of the total amount of Facility B Loans held by all of
the Facility A Banks.
In the case of an assignment, upon receipt by the Agent of the Assignment
and Assumption Agreement, the assignee shall have, to the extent of
such assignment (unless otherwise provided therein), the same rights,
benefits and obligations as it would have if it had been a signatory
Facility A Bank or Facility B Bank hereunder, as the case may be, the
Commitments and the appropriate Ratable Shares, Revolving Credit Ratable
Shares and Facility A Ratable Shares shall be adjusted accordingly, and
upon surrender of any Facility A Note or Facility B Note subject to
such assignment, the Borrower shall execute and deliver a new Facility A
Note or Facility B Note, as the case may be, to the assignee in an amount
equal to the amount of the Facility A Commitment or Facility B Commitment
assumed by it and new Notes to the assigning Bank as appropriate.
The assigning Bank shall pay to the Agent a service fee in the amount
of $2,000 for each assignment, payable on or before the effective
date of the assignment. In the case of a participation, the participant
shall only have the rights specified in Section 9.02(c) (the participant's
rights against such Bank in respect of such participation to be those
set forth in the agreement executed by such Bank in favor of the
participant relating thereto and not to include
any voting rights except with respect to changes of the type
referenced in the parenthetical clauses in Sections 11.01(a), (b) or
(c) as applicable.), all of such Bank's obligations under this
Agreement or any other Loan Document shall remain unchanged and all
amounts payable by the Loan Parties hereunder or thereunder shall be
determined as if such Bank had not sold such participation. Each Bank
may furnish any publicly available information concerning the Loan
Parties and any other information concerning the Loan Parties in the
possession of such Bank from time to time to assignees and participants
(including prospective assignees or participants) provided such assignees
and participants agree to be bound by the provisions of Section 11.13
hereof.
(c) Additional Banks.
(i) Additional Facility A Bank. Any bank becoming a
party to this Agreement as a Facility A Bank pursuant to Section 2.15 hereof
(each an "Additional Facility A Bank") shall, at least seven (7) days before
the effective date of such bank's joinder hereto, complete, execute and
deliver to Agent a New Bank Joinder and Information Package. Such New
Bank Joinder and Information Package shall include, among other things,
a joinder to this Agreement, in substantially the form attached hereto
as Exhibit M and otherwise satisfactory to Agent and Borrower. Upon the
effective date of such joinder, such Additional Facility A Bank
shall be a party hereto and added to Schedule 1.01(C) and shall be
one of the Facility A Banks hereunder for all purposes except that such
Additional Facility A Bank's rights shall be limited in the following
respects as more fully set forth in such joinder: (A) such Additional
Facility A Bank shall not participate in Letters of Credit or Escrow
Agreements pursuant to Section 2.13 hereof or be entitled to issue new
Letters of Credit or Escrow Agreements until the first Business
Day of the fiscal quarter following the effective date of the joinder,
(B) on the effective date of such joinder the Borrower shall repay all
outstanding Facility A Loans to which the Prime Rate Option applies and
reborrow a like amount of Facility A Loans under the Prime Rate Option
from the Facility A Banks, including the Additional Facility A Bank,
according to their new Revolving Credit Ratable Shares, (C) such Additional
Facility A Bank shall not participate in any Facility B Loans or any
Facility A Loans to which either the CD Rate Option, the Revolving Credit
Euro-Rate Option or the Facility A Term Loan Option applies which are
outstanding on the effective date of such joinder but shall participate in
all new Facility A Loans, and shall be entitled to make offers for new
Facility B Loans, made to Borrower after the effective date of such joinder
including, without limitation, new Facility A Loans and renewals and
conversions of Facility A Loans subject to the CD Rate Option, the Revolving
Credit Euro-Rate Option or the Facility A Term Loan Option; and (D) if
Facility A Term Loans are outstanding on the date of such joinder,
Borrower and such Additional Facility A Bank may elect either: (1) to
have such Additional Facility A Bank make a Facility A Term Loan to the
Borrower on the effective date of such joinder in an amount equal to such
Additional Facility A Bank's Facility A Ratable Share of each Borrowing
Tranche (the Additional Facility A Bank shall make a separate Facility A Term
Loan for each such Borrowing Tranche) of Facility A Term Loans
outstanding (after giving effect to the Facility A Term Loan to be made
by such Additional Facility A Bank) with a term that expires on the
Facility A Term Loan Due Date with respect to the Loans comprising
such Borrowing Tranche and bearing interest at a rate which is less
than or equal to the Additional Facility A Bank Treasury Rate Ceiling
with respect to such Borrowing Tranche computed by the Agent two (2)
Business Days prior to the making of such Loan; Borrower shall deliver a
Loan Request to the Agent at least three (3) Business Days before the
effective date of such joinder; or, alternatively (2) not to have such
Additional Facility A Bank make any Facility A Term Loans in which case
such Additional Facility A Bank shall not have an interest in, make or
otherwise participate in the Facility A Term Loans or in repayments
thereof when required or permitted under this Agreement; it is acknowledged
that an election under this clause (2) shall result in such
Additional Facility A Bank's having a Facility A Revolving Credit
Commitment equal to its Facility A Commitment, while other Facility A Banks
will have Facility A Revolving Credit Commitments which are less than their
Facility A Commitments; when Borrower repays the Facility A Term Loans of
such other Facility A Banks their Facility A Revolving Credit Commitments
and participations in Revolving Credit Loans, Letters of Credit and Escrow
Agreements will increase and certain adjustments will be made as more fully
discussed in Section 4.04(a)(2)(B). If Borrower should (i) renew after the
effective date of such joinder the CD Rate Option or Euro-Rate Option with
respect to Revolving Credit Loans existing on such date or (ii) convert after
the date of such joinder from the CD Rate Option or any Euro-Rate Option to a
different Interest Rate Option with respect to Revolving Credit Loans
existing on such date, Borrower shall be deemed to repay the applicable
Revolving Credit Loans on the conversion or renewal date, as the case may
be, and then reborrow a similar amount on such date so that the
Additional Facility A Bank shall participate in such Revolving Credit Loans
after such renewal or conversion date. Schedule 1.01(C) shall be amended
and restated on the date of such joinder to read as set forth
on the attachment to such joinder. Simultaneously with the execution and
delivery of such joinder, Borrower shall execute a Facility A Note and
deliver it to such Additional Facility A Bank together with originals
of such other documents described in Section 6.01 hereof as such Additional
Facility A Bank may reasonably require. Agent, Borrower and
Guarantors shall acknowledge any joinders delivered pursuant to this
Section 11.11(c)(i) and promptly provide copies thereof to each of the
other Banks. All such joinders shall be effective and binding upon
all Banks without any requirement for the execution of such joinder by the
Banks other than the Additional Facility A Bank.
(ii) Additional Facility B Bank. Any bank becoming a
party to this Agreement as a Facility B Bank pursuant to Section 2.18
hereof (each an "Additional Facility B Bank") shall, at least seven (7)
days before the effective date of such bank's joinder hereto,
complete, execute and deliver to the Agent a New Bank Joinder and Information
Package. Such New Bank Joinder and Information Package shall include,
among other things, a joinder to this Agreement, in substantially the
form attached hereto as Exhibit M and otherwise satisfactory to
Agent and Borrower. Upon the effective date of such joinder, such
Additional Facility B Bank shall be a party hereto and added to
Schedule 1.01(C) and shall be one of the Facility B Banks hereunder for
all purposes. Simultaneously with the execution and delivery of such joinder,
Borrower shall execute a Facility B Note and deliver it to such Additional
Facility B Bank together with originals of such other documents
described in Section 6.01 hereof as such Additional Facility B Bank may
reasonably require. Agent, Borrower and Guarantors shall
acknowledge any joinders delivered pursuant to this Section 11.11(c)(ii)
and promptly provide copies thereof to each of the other Banks.
All such joinders shall be effective and binding upon all Banks without
any requirement for the execution of such joinder by the Banks other than the
Additional Facility B Bank.
11.12 Joinder of Guarantors.
(i) Subsidiaries which are required or elect to join this
Agreement pursuant to Section 8.01(h) must execute and deliver to Agent a
joinder to this Agreement, the Guaranty and the Indemnity in substantially
the form attached hereto as Exhibit K and otherwise
satisfactory to Agent. The Loan Parties shall deliver such joinders to
the Agent on a quarterly basis simultaneously with their delivery of the
Compliance Certificate pursuant to Section 8.02(b) and such joinders shall
be due on the due date for the delivery of the Compliance Certificate.
Upon execution and delivery of a joinder, a Subsidiary shall be a party
hereto, an obligor under the Guaranty and the Indemnity, one of the Loan
Parties and Guarantors hereunder, under the Indemnity and each of the other
Loan Documents for all purposes, all as of the date of such joinder. Each
such additional Loan Party and Guarantor shall simultaneously with the
delivery of such joinder deliver to Banks originals of such other documents
described in Section 6.01 [First Loans], provided, however, that no opinion
of counsel shall be required in connection with the joinder of any such
Subsidiary.
(ii) Agent shall acknowledge any joinders delivered pursuant
to this Section 11.12 and promptly provide copies thereof to Banks and
Loan Parties and Guarantors. All joinders shall be effective and binding
upon all Banks and Loan Parties and Guarantors without any requirement for
the execution of such joinder by Banks and Loan Parties or Guarantors.
(iii) The Borrower shall not become or agree to become
a general or limited partner in any general or limited partnership or a
joint venturer in any joint venture.
11.13 Confidentiality. The Agent and the Banks each agree to
keep confidential all information obtained from the Borrower which is
nonpublic and confidential or proprietary in nature (including any
information the Borrower specifically designates as confidential), except as
provided below, and to use such information only in connection with their
respective capacities under this Agreement and for the purposes
contemplated hereby. The Agent and the Banks shall
be permitted to disclose such information (i) to outside legal counsel,
accountants and other professional advisors who need to know such
information in connection with the administration
and enforcement of this Agreement, subject to agreement of such
Persons to maintain the confidentiality, (ii) assignees and participants
as contemplated by Section 11.11, (iii) to the extent requested by any
bank regulatory authority or, with notice to the Borrower, as otherwise required
by applicable Law or by any subpoena or similar legal process, or in
connection with any investigation or proceeding arising out of the
transactions contemplated by this Agreement, (iv) if it becomes publicly
available other than as a result of a breach of this Agreement or becomes
available from a source not subject to confidentiality restrictions, or
(v) the Borrower shall have consented to such disclosure.
11.14 Counterparts. This Agreement may be executed by
different parties hereto on any number of separate counterparts, each of
which, when so executed and delivered, shall be an original, and all such
counterparts shall together constitute one and the same instrument.
11.15 Exceptions. The representations, warranties and
covenants contained herein shall be independent of each other and no
exception to any representation, warranty or covenant shall be deemed to
be an exception to any other representation, warranty or covenant
contained herein unless expressly provided, nor shall any such exceptions
be deemed to permit any action or omission that would be in contravention
of applicable Law.
11.16 Consent to Forum; Waiver of Jury Trial. For all
purposes hereunder and under any of the Loan Documents, each of the Loan
Parties hereby irrevocably consents to the nonexclusive jurisdiction of the
Court of Common Pleas of Philadelphia County and the United States District
Court for the Eastern District of Pennsylvania, and waives personal service
of any and all process upon it and consents that all such service of process
be made by certified or registered mail directed to the Loan Parties at the
addresses provided for in Section 11.06 hereof and service so made shall be
deemed to be completed upon actual receipt thereof. The Loan Parties waive
any objection to jurisdiction and venue of any action instituted against it as
provided herein and agree not to assert any defense based on lack of
jurisdiction or venue. The Loan Parties, the Agent and the Banks hereby
waive trial by jury in any action, suit, proceeding or counterclaim of any
kind arising out of or related to this Agreement, any other Loan Document or
any collateral under the Collateral Documents to the full extent permitted
by Law.
11.17 Tax Withholding Clause. At least five (5) Business Days
prior to the first date on which interest or fees are payable hereunder for
the account of any Bank, each Bank that is not incorporated under the laws of
the United States of America or a state thereof agrees that it will deliver
to each of the Borrower and the Agent two (2) duly completed copies of
(i) Internal Revenue Service Form W-9, 4224 or 1001, or other applicable
form prescribed by the Internal Revenue Service, certifying in either case
that such Bank is entitled to receive payments under this Agreement and the
other Loan Documents without deduction or withholding of any United
States federal income taxes, or is subject to such tax at a reduced
rate under an applicable tax treaty, or (ii) Form W-8 or other
applicable form or a certificate of the Bank indicating that no
such exemption or reduced rate is allowable with respect to such
payments. Each Bank which so delivers a Form W-8, W-9, 4224 or 1001 further
undertakes to deliver to each of the Borrower and the Agent two
(2) additional copies of such form (or a successor form) on or before the date
that such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, either certifying
that such Bank is entitled to receive payments under this Agreement and
the other Loan Documents without deduction or withholding of any United
States federal income taxes or is subject to such tax at a reduced rate
under an applicable tax treaty or stating that no such exemption or
reduced rate is allowable. The Agent shall be entitled to withhold
United States federal income taxes at the full withholding rate unless the
Bank establishes an exemption or at the applicable reduced rate as
established pursuant to the above provisions.
11.18 Existing Agreement. The Loan Parties and the Banks
acknowledge that the Agreement replaces the Existing Agreement effective
as of the Closing Date and the Existing Agreement shall terminate
effective as of the Closing Date.
11.19 Pari Passu Treatment of Loans. Revolving Credit Loans,
Facility A Term Loans and Facility B Loans shall be pari passu in
priority of repayment and collection. All Liens and Guaranties and
other security granted by the Loan Parties shall secure such Revolving Credit
Loans, Facility A Term Loans and Facility B Loans on a pari passu basis.
EXHIBIT A
AMENDMENT TO THE
TOLL BROTHERS, INC.
CASH BONUS PLAN
WHEREAS, the "outside directors" who have been
designated to act as the administrative committee (the
"Committee") for the Toll Brothers, Inc. Cash Bonus Plan (the
"Plan") amended the Plan on May 29, 1996, in order to permit
bonuses to be paid in shares of common stock of the Company as
well as in cash; and
WHEREAS, the Committee now desires to clarify and
further amend the Plan in order to permit the Committee, in
certain situations, to terminate the provisions of the Plan as
amended that permit the payment of bonuses in the form of shares
of common stock of the Company; and
WHEREAS, the amendment in the Plan desired by the
Committee will potentially permit a change in the bonus otherwise
payable under the Plan that may benefit the Company through
payment of a reduced bonus under certain situations and cannot in
any situation result in a payment of a bonus having a greater
value than is otherwise payable under the Plan; and
WHEREAS, for purposes of simplicity of administration
the Committee desires to restate in its entirety the terms of the
May 29, 1996 amendment to the Plan, as modified by this
amendment, and to eliminate thereby the need to refer to both to
this amendment and the amendment made on May 29, 1996; and
WHEREAS, the Committee is generally authorized under
Section 8(b) of the Plan to amend the Plan from time to time in
such manner as it may deem advisable, subject to disclosure to
and approval by the shareholders of the Company of such
amendment; and
WHEREAS, the Committee desires to amend the Plan,
subject to shareholder approval, while otherwise continuing the
Plan without amendment in the event shareholder approval of this
amendment is not obtained.
NOW, THEREFORE, the Plan is hereby amended, effective
as of the May 29, 1996, subject to shareholder approval, as
follows:
1. Section 5 of the Plan is amended to read as
follows:
"5. Bonus Entitlement
(a) Each Participant shall be entitled to receive
a bonus in accordance with the provisions of Section 6
of the Plan only after certification by the Committee
that the performance goals set forth in Section 6 have
been satisfied. The bonus payment under the Plan shall
be paid to each Participant during the last week of
December or the first week of January after the close
of the fiscal year with respect to which the bonus is
to be paid. No bonus shall be payable under the Plan
without the prior disclosure of the terms of the Plan
to the shareholders of the Company and the approval of
the Plan by such shareholders.
(b) Notwithstanding anything contained herein to
the contrary, all bonus payments made under the Plan
with respect to the Plan Years ending October 31, 1996,
October 31, 1997 and October 31, 1998 shall be paid in
the form of shares of the Company's Common Stock, par
value $0.01 per share (the "Shares"), which payments
shall be in the form of an award under the terms of the
Toll Brothers, Inc. Stock Option and Incentive Stock
Plan (1995) (the "1995 Plan"). The number of Shares
awarded pursuant to this Section 5(b) shall be
determined by dividing the dollar amount of each bonus
(as determined in accordance with Section 6 of the
Plan) by the fair market value of a Share determined as
of May 29, 1996 in accordance with the provisions for
determination of fair market value as set forth in the
1995 Plan.
(c) Notwithstanding the provisions of Sections
5(a) and 5(b) set forth above, the bonus payment that
would otherwise be payable under the Plan with respect
to the fiscal year ending October 31, 1996 shall not be
payable until after the first shareholders' meeting
that occurs after January 1, 1997. In addition, the
Committee shall have the discretion at any time to
terminate the application of Section 5(b), effective no
sooner than six months following the Committee's
determination to act under this Section 5(c). In the
event the Committee terminates the application of
Section 5(b), all bonuses payable on or after the
effective date of such action shall be payable in cash
only.
(d) Notwithstanding anything to the contrary
contained in this Section 5, the Participants may, if
they believe that a payment of their bonus in Shares
would, as a result of a change in Federal tax laws, or
in regulations promulgated thereunder by the IRS, have
a material adverse impact on the Participants, request
the Committee to either suspend or terminate the
application of Section 5(b). Upon receipt of such
request from both Participants, the Committee may, at
its sole discretion, and provided that its action
pursuant to this Section 5(d) will not cause any
increase in the amount or value of the bonus that would
otherwise be payable under the Plan, suspend the
application of Section 5(b), and all bonuses payable
under the Plan shall be payable in cash only in
accordance with Section 6 until such time as the
Committee determines to reinstate Section 5(b)."
2. In all other respects, the provisions of the Plan
shall remain in full force and effect.
EXHIBIT B
AMENDMENT TO THE
TOLL BROTHERS, INC.
STOCK OPTION AND INCENTIVE STOCK PLAN
(1995)
WHEREAS, the Company desires to amend the Toll
Brothers, Inc. Stock Option and Incentive Plan (1995) (the
"Plan") to coordinate awards of shares of common stock of the
Company under the Plan with amendments to the Toll Brothers, Inc.
Cash Bonus Plan; and
WHEREAS, the Board of Directors is generally authorized
under Section 10 of the Plan to amend the Plan from time to time
in such manner as it may deem advisable.
NOW, THEREFORE, the Plan is hereby amended, effective
as of May 29, 1996, subject to the approval of the Company's
shareholders, as follows:
1. Section 3 of the Plan is amended to read as
follows:
"3. Eligibility. All employees of the Company or
its Affiliates (who may also be directors of the
Company or its Affiliates) shall be eligible to receive
ISOs hereunder. All Optionees shall be eligible to
receive Options and Awards hereunder; provided,
however, that only an Executive Officer is eligible to
be granted an Option under Section 8 and provided
further that no Executive Officer shall be eligible to
receive an Award except to the extent an Award is
required to be granted to an Executive Officer pursuant
to the terms of the Toll Brothers, Inc. Cash Bonus
Plan. The Committee, in its sole discretion, shall
determine whether an individual qualifies as an
employee or an Optionee. An Optionee may receive more
than one Option or Award, but only on the terms and
subject to the restrictions of the Plan."
2. In all other respects, the provisions of the Plan
shall remain in full force and effect.
TOLL BROTHERS, INC. & SUBSIDIARIES EXHIBIT 11
STATEMENT: COMPUTATION OF EARNINGS PER SHARE
(In thousands except per share amounts)
<TABLE>
YEAR ENDED OCTOBER 31,
1996 1995 1994
<S> <C> <C> <C>
Net income per income statement $53,744 $49,932 $36,177
Addback: Interest on
convertible debentures, net
of income taxes 1,543 1,585 1,285
Net income (Fully diluted) $55,287 $51,517 $37,462
Earnings per share:
Primary $ 1.56 $ 1.47 $ 1.08
Fully Diluted $ 1.50 $ 1.41 $ 1.05
PRIMARY SHARES:
Weighted average shares
outstanding 33,868 33,510 33,398
Common stock equivalents -
stock options 624 399 228
TOTAL 34,492 33,909 33,626
FULLY DILUTED SHARES:
Weighted average share
outstanding 33,868 33,510 33,379
Common stock equivalents -
stock options 634 690 256
Shares issuable on conversion
of subordinated debentures 2,389 2,451 2,029
TOTAL 36,891 36,651 35,664
</TABLE>
EXHIBIT 22
Subsidiaries of the Registrant
A. Wholly-owned subsidiaries.
Amwell Chase, Inc., a Delaware corporation.
Bennington Hunt, Inc., a Delaware corporation.
Broad Run Sewer Co., Inc., a Delaware corporation.
Bunker Hill Estates, Inc., a Delaware corporation.
Chesterbrooke, Inc., a Delaware corporation.
Connecticut Land Corp., a Delaware corporation.
Corner Ketch, Inc., a Delaware corporation.
Daylesford Development Corp., a Delaware corporation.
Dover General, Inc., a Massachusetts corporation.
Eastern States Engineering, Inc., a Delaware corporation.
Edmunds-Toll Construction Company, an Arizona corporation.
Fairway Valley, Inc., a Delaware corporation.
First Brandywine Investment Corp., a Delaware corporation.
First Brandywine Investment Corp. II, a Delaware corporation.
First Brandywine Investment Corp. III, a Delaware corporation.
First Brandywine Management Del. Corp., a Delaware corporation.
First Huntingdon Finance Corp., a Delaware corporation.
Franklin Farms G.P., Inc., a Delaware corporation.
MA Limited Land Corporation, a Delaware corporation.
Mansfield Development Corp., a Delaware corporation.
Maple Point, Inc., a Delaware corporation.
Maryland Limited Land Corporation, a Delaware corporation.
Montgomery Development, Inc., a Delaware corporation.
Mountain View Real Estate, Inc., a Pennsylvania corporation.
Polekoff Farm, Inc., a Pennsylvania corporation.
Shrewsbury Hills, Inc., a Delaware corporation.
Springfield Chase, Inc., a Delaware corporation.
Stewarts Crossing, Inc., a Delaware corporation.
Suncoast Properties, Inc., a California corporation.
TB Proprietary Corp., a Delaware corporation.
TBGP Corp., a Pennsylvania corporation.
Tenby Hunt, Inc., a Delaware corporation.
Toll AZ GP Corp., a Delaware corporation.
Toll Bros., Inc., a Delaware corporation.
Toll Bros., Inc., a Pennsylvania corporation.
Toll Bros. of North Carolina, Inc., a North Carolina corporation.
Toll Bros. of Texas, Inc., a Texas corporation.
Toll CA GP Corp., a California corporation.
Toll Corp., a Delaware corporation.
Toll FL GP Corp., a Florida corporation.
Toll Holdings, Inc., a Delaware corporation.
Toll Land Corp. No. 6, a Pennsylvania corporation.
Toll Land Corp. No. 10, a Delaware corporation.
Toll Land Corp. No. 20, a Delaware corporation.
Toll Land Corp. No. 25, a Delaware corporation.
Toll Land Corp. No. 43, a Delaware corporation.
Toll Land Corp. No. 45, a Delaware corporation.
Toll Land Corp. No. 46, a Delaware corporation.
Toll Land Corp. No. 47, a Delaware corporation.
Toll Land Corp. No. 48, a Delaware corporation.
Toll Land Corp. No. 49, a Delaware corporation.
Toll Land Corp. No. 50, a Delaware corporation.
Toll NC GP Corp., a North Carolina corporation.
Toll PA GP Corp., a Pennsylvania corporation.
Toll Peppertree, Inc., a New York corporation.
Toll Philmont Corporation, a Delaware corporation.
Toll TX GP Corp., a Delaware corporation.
Toll VA GP Corp., a Delaware corporation.
Toll Wood Corporation, a Delaware corporation.
Warren Chase, Inc., a Delaware corporation.
Westminster Abstract Company, a Pennsylvania corporation.
Westminster Mortgage Corporation, a Delaware corporation.
Westminster Security Company, a New Jersey corporation.
Windsor Development Corp., a Pennsylvania corporation.
<PAGE>
B. Wholly-owned partnerships
Afton Chase, L.P., a Pennsylvania limited partnership.
Alexandria Hunt, L.P., a New Jersey limited partnership
Audubon Ridge, L.P., a Pennsylvania limited partnership.
BBCC Golf, L.P., a Pennsylvania limited partnership.
Belmont Country Club, L.P., a Virginia limited partnership.
Belmont Land, L.P., a Virginia limited partnership.
Bennington Hunt, L.P., a New Jersey limited partnership.
Bernards Chase, L.P., a New Jersey limited partnership.
Binks Estates Limited Partnership, a Florida limited partnership.
Blue Bell Country Club, L.P., a Pennsylvania limited partnership.
Brandywine Knoll, L.P., a Pennsylvania limited partnership.
Brandywine River Estates, L.P., a Pennsylvania limited partnership.
Bridle Estates, L.P., a Pennsylvania limited partnership.
Buckingham Woods, L.P., a Pennsylvania limited partnership.
CC Estates Limited Partnership, a Massachusetts limited partnership.
Calabasas View, L.P., a California limited partnership.
Camden Forest Limited Partnership, a North Carolina limited partnership.
Charlestown Hills, L.P., a New Jersey limited partnership.
Chesterbrooke Limited Partnership, a New Jersey limited partnership.
Chesterfield Hunt, L.P., a New Jersey limited partnership.
Cobblestones at Thornbury, L.P., a Pennsylvania limited partnership.
Cold Spring Hunt, L.P., a Pennsylvania limited partnership.
Conant Valley Estates, L.P., a New York limited partnership.
Crosswicks Chase, L.P., a New Jersey limited partnership.
Dolington Estates, L.P., a Pennsylvania limited partnership.
Eagle Farm Limited Partnership, a Massachusetts limited partnership.
Edmunds-Toll Limited Partnership, an Arizona limited partnership.
Eldorado Country Estates, L.P., a Texas limited partnership.
Estates at Autumnwood, L.P., a Delaware limited partnership.
The Estates at Brooke Manor Limited Partnership, a Maryland limited
partnership.
The Estates at Century Oak, L.P., a Virginia limited partnership.
Estates at Coronado Pointe, L.P., a California limited partnership.
The Estates at Potomac Glen Limited Partnership, a Maryland limited
partnership.
Estates at Princeton Junction, L.P., a New Jersey limited partnership.
Estates at Rivers Edge, L.P., a Pennsylvania limited partnership.
Estates at San Juan Capistrano, L.P., a California limited partnership.
Estates at Shore Oaks, L.P., a New Jersey limited partnership.
The Estates at Summit Chase, L.P., a California limited partnership.
Fair Oaks Hunt, L.P., a Virginia limited partnership.
Fairfax Station Hunt, L.P., a Virginia limited partnership.
Fairfield Chase Limited Partnership, a Connecticut limited partnership.
Fairway Mews Limited Partnership, a New Jersey limited partnership.
Farmwell Hunt, L.P., a Virginia limited partnership.
Franklin Chase Limited Partnership, a Massachusetts limited partnership.
Franklin Farms Limited Partnership, a Massachusetts limited partnership.
Franklin Oaks Limited Partnership, a Massachusetts limited partnership.
Freehold Chase, L.P., a New Jersey limited partnership.
Great Falls Hunt, L.P., a Virginia limited partnership.
Greens at Waynesborough, L.P., a Pennsylvania limited partnership.
Greenwich Chase, L.P., a New Jersey limited partnership.
Greenwich Station, L.P., a New Jersey limited partnership.
Holland Ridge, L.P., a New Jersey limited partnership.
Hopewell Hunt, L.P., a New Jersey limited partnership.
Huckins Farm Limited Partnership, a Massachusetts limited partnership
Hunter Mill, L.P., a Virginia limited partnership.
Hunterdon Chase, L.P., a New Jersey limited partnership.
Huntington Estates Limited Partnership, a Connecticut limited partnership.
Kensington Woods Limited Partnership, a Massachusetts limited partnership.
Knolls of Birmingham, L.P., a Pennsylvania corporation.
Lakeridge, L.P., a Pennsylvania limited partnership.
Lakeway Hills Properties, L.P., a Texas limited partnership.
Lakewood of Wellington, L.P., a Texas limited partnership.
Laurel Creek, L.P., a New Jersey limited partnership.
Mainland Ridge, L.P., a Pennsylvania limited partnership.
Makefield Glen Limited Partnership, a Pennsylvania limited partnership.
Mallard Lakes, L.P., a Texas limited partnership.
Manalapan Hunt, L.P., a New Jersey limited partnership.
Marshallton Chase, L.P.. a Pennsylvania limited partnership.
Montgomery Chase, L.P., a New Jersey limited partnership.
Montgomery Crossing, L.P., a New Jersey limited partnership.
Montgomery Development, L.P., a New Jersey limited partnership.
Mongomery Oaks, L.P., a New Jersey limited partnership.
Moorestown Hunt, L.P., a New Jersey limited partnership.
Mount Kisco Chase, L.P., a New York limited partnership.
Newtown Chase Limited Partnership, a Connecticut limited partnership.
Northampton Hunt, L.P., a Pennsylvania limited partnership.
Norwalk Hunt Limited Partnership, a Connecticut limited partnership.
Pickering Hill Farms, L.P., a Pennsylvania limited partnership.
The Preserve Limited Partnership, a North Carolina limited partnership.
The Preserve at Annapolis Limited Partnership, a Maryland limited
partnership.
Preserve at Boca Raton Limited Partnership, a Florida limited partnership.
Preston Village Limited Partnership, a North Carolina limited partnership.
Princeton Hunt, L.P., a New Jersey limited partnership.
Providence Limited Partnership, a North Carolina limited partnership.
Providence Hunt, L.P., a Pennsylvania limited partnership.
Providence Plantation Limited Partnership, a North Carolina limited
partnership.
River Crossing, L.P., a Pennsylvania limited partnership.
Rolling Greens, L.P., a New Jersey limited partnership.
Rose Hollow Crossing Associates, a Pennsylvania limited partnership.
Rose Tree Manor, L.P., a Pennsylvania limited partnership.
Salem Chase, L.P., a New York limited partnership.
Shrewsbury Hills Limited Partnership, a Massachusetts limited partnership.
Somers Chase, L.P., a New York limited partnership.
Somerset Development Limited Partnership, a North Carolina limited
partnership.
Southport Landing Limited Partnership, a Connecticut limited partnership.
Springton Pointe, L.P., a Pennsylvania limited partnership.
Suncoast Properties, L.P., a California limited partnership.
TBB, L.P., a Pennsylvania limited partnership.
TBI Belmont, L.P., a Pennsylvania limited partnership.
TBI Laurel Creek, L.P., a Pennsylvania limited partnership.
Tenby Hunt, L.P., a Delaware limited partnership.
Thornbury Knoll, L.P., a Pennsylvania limited partnership.
Thornbury Treatment Plant, L.P., a Pennsylvania limited partnership.
Toll at Payne Ranch, L.P., a California limited partnership.
Toll at Potomac Woods L.P., a Virginia limited partnership.
Toll at Princeton Walk, L.P., a New Jersey limited partnership.
Toll Land Limited Partnership, a Connecticut limited partnership.
Toll Land II Limited Partnership, a New Jersey limited partnership.
Toll Land III Limited Partnership, a Delaware limited partnership.
Toll Land IV Limited Partnership, a New Jersey limited partnership.
Toll Land V Limited Partnership, a New York limited partnership.
Toll Land VI Limited Partnership, a New York limited partnership.
Toll Land VII Limited Partnership, a New York limited partnership.
Toll Land VIII Limited Partnership, a New York limited partnership.
Toll Land X Limited Partnership, a Pennsylvania limited partnership.
Toll Land XI Limited Partnership, a New Jersey limited partnership.
Toll Land XII Limited Partnership, a New York limited partnership.
Toll Land XIII Limited Partnership, a New York limited partnership.
Toll Land XIV Limited Partnership, a New York limited partnership.
Toll Land XV Limited Partnership, a Virginia limited partnership.
Toll Land XVI Limited Partnership, a New Jersey limited partnership.
Toll Land XVII Limited Partnership, a Connecticut limited partnership.
Toll Land XVIII Limited Partnership, a Connecticut limited partnership.
Toll Land XIX Limited Partnership, a California limited partnership.
Toll Land XX Limited Partnership, a California limited partnership.
Toll Land XXI Limited Partnership, a Virginia limited partnership.
Toll Land XXII Limited Partnership, a California limited partnership.
Toll Land XXIII Limited Partnership, a California limited partnership.
Toll Land XXIV Limited Partnership, a Virginia limited partnership.
Toll Naval Associates, a Pennsylvania general partnership.
Toll Peppertree, L.P., a New York limited partnership.
Trumbull Hunt Limited Partnership, a Connecticut limited partnership.
Uwchlan Woods, L.P., a Pennsylvania limited partnership.
Valley Forge Woods, L.P., a Pennsylvania limited partnership.
Valley View Estates Limited Partnership, a Massachusetts limited
partnership.
Warwick Chase, L.P., a Pennsylvania limited partnership.
Washington Greene Development, L.P., a New Jersey limited partnership.
West Amwell Limited Partnership, a New Jersey limited partnership.
Whiteland Woods, L.P., a Pennsylvania limited partnership.
Whitford Ridge, L.P., a Pennsylvania limited partnership.
Willowdale Crossing, L.P., a Pennsylvania limited partnership.
Wilton Hunt Limited Partnership, a Connecticut limited partnership.
Woodbury Estates, L.P., a New Jersey limited partnership.
The Woods at Muddy Branch Limited Partnership, a Maryland limited
partnership.
Wrightstown Hunt, L.P., a Pennsylvania limited partnership.
Yardley Estates, L.P., a Pennsylvania limited partnership.
C. Finance partnerships.
Toll Brothers Finance Co., a New Jersey general partnership.
TBI Finance Co. II, a New Jersey general partnership.
D. Business trust.
First Brandywine Business Trust, a Delaware business trust.
EXHIBIT 24
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-60180) pertaining to the Amended and Restated Stock
Option Plan (1986), the Registration Statement (Form S-8 No. 33-16250)
pertaining to the Amended and Restated Stock Purchase Plan, the Registration
Statement (Form S-8 No. 33-60285) pertaining to the Key Executives and
Non-Employee Directors Stock Option Plan (1993), as amended, the Registration
Statement (Form S-8 No. 33-60289) pertaining to the Stock Option and
Incentive Stock Plan (1995), and the Registration Statement (Form S-3 No.
33-51775) and related Prospectus of Toll Brothers, Inc. of our Report dated
December 10, 1996, with respect to the consolidated financial statements and
schedule of Toll Brothers, Inc. included in the Annual Report (Form 10-K)
for the year ended October 31, 1996.
Philadelphia, Pennsylvania
January 6, 1997
/s/ Ernst & Young LLP
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000794170
<NAME> TOLL BROTHERS, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<CASH> 22,891
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 772,471
<CURRENT-ASSETS> 0
<PP&E> 29,107
<DEPRECIATION> 16,159
<TOTAL-ASSETS> 837,926
<CURRENT-LIABILITIES> 0
<BONDS> 208,415
<COMMON> 339
0
0
<OTHER-SE> 314,338
<TOTAL-LIABILITY-AND-EQUITY> 837,926
<SALES> 759,303
<TOTAL-REVENUES> 760,707
<CGS> 580,990
<TOTAL-COSTS> 650,725
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,189
<INCOME-PRETAX> 85,793
<INCOME-TAX> 32,049
<INCOME-CONTINUING> 53,744
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,744
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.50
</TABLE>
