EX-10.49 16 g08826exv10w49.htm EX-10.49 SECOND LIEN TERM LOAN CREDIT AGREEMENT EX-10.49 Second Lien Term Loan Credit Agreement
EXHIBIT 10.49
SECOND LIEN TERM LOAN CREDIT AGREEMENT
Among
TOUSA, Inc. (f/k/a Technical Olympic, Inc.) and
the other Entities Party Hereto From Time to Time,
as Borrowers,
and
The Lenders Party Hereto
and
Citicorp North America, Inc.,
as Administrative Agent,
Citigroup Global Markets Inc.,
as Sole Lead Arranger and Book Running Manager
Dated as of July 31, 2007
$300,000,000
TABLE OF CONTENTS
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ARTICLE I |
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DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS |
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Section 1.1 Defined Terms | | | 1 | |
Section 1.2 Computation of Time Periods | | | 39 | |
Section 1.3 Accounting Terms and Principles | | | 40 | |
Section 1.4 Certain Terms | | | 40 | |
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ARTICLE II |
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THE FACILITY |
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Section 2.1 The Term Loan Commitments | | | 41 | |
Section 2.2 Borrowing Procedures | | | 41 | |
Section 2.3 [Reserved] | | | 42 | |
Section 2.4 [Reserved] | | | 42 | |
Section 2.5 Reduction and Termination of the Term Loan Commitments | | | 42 | |
Section 2.6 Repayment of Term Loans | | | 42 | |
Section 2.7 Evidence of Debt | | | 42 | |
Section 2.8 Prepayments | | | 43 | |
Section 2.9 Interest | | | 46 | |
Section 2.10 Conversion/Continuation Option | | | 48 | |
Section 2.11 Fees | | | 49 | |
Section 2.12 Payments and Computations | | | 49 | |
Section 2.13 Special Provisions Governing Eurodollar Rate Loans | | | 51 | |
Section 2.14 Capital Adequacy | | | 53 | |
Section 2.15 Taxes | | | 53 | |
Section 2.16 Substitution of Lenders | | | 55 | |
Section 2.17 Certain Accounts | | | 56 | |
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ARTICLE III |
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CONDITIONS TO TERM LOANS |
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Section 3.1 Conditions Precedent to the Effectiveness of This Agreement | | | 56 | |
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ARTICLE IV |
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REPRESENTATIONS AND WARRANTIES |
Section 4.1 Existence; Compliance with Law | | | 60 | |
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Section 4.2 Power; Authorization; Enforceable Obligations | | | 61 | |
Section 4.3 Ownership of Subsidiaries | | | 62 | |
Section 4.4 Financial Statements | | | 62 | |
Section 4.5 Material Adverse Change | | | 63 | |
Section 4.6 Litigation | | | 63 | |
Section 4.7 Taxes | | | 63 | |
Section 4.8 Full Disclosure | | | 64 | |
Section 4.9 Margin Regulations | | | 65 | |
Section 4.10 No Burdensome Restrictions; No Defaults | | | 65 | |
Section 4.11 Investment Company Act | | | 65 | |
Section 4.12 Use of Proceeds | | | 65 | |
Section 4.13 Insurance | | | 65 | |
Section 4.14 Labor Matters | | | 66 | |
Section 4.15 ERISA | | | 66 | |
Section 4.16 Environmental Matters | | | 66 | |
Section 4.17 Intellectual Property | | | 67 | |
Section 4.18 Title; Real Property | | | 67 | |
Section 4.19 Anti-Terrorism Laws | | | 68 | |
Section 4.20 Solvency | | | 69 | |
Section 4.21 Collateral Documents | | | 69 | |
Section 4.22 Related Documents | | | 69 | |
Section 4.23 Subordinated Indebtedness | | | 70 | |
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ARTICLE V |
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FINANCIAL COVENANTS |
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Section 5.1 Maximum Secured Indebtedness | | | 70 | |
Section 5.2 Maximum Total Leverage Ratio | | | 70 | |
Section 5.3 Minimum Interest Coverage Ratio | | | 71 | |
Section 5.4 Total Land to Adjusted Consolidated Tangible Net Worth | | | 71 | |
Section 5.5 Unsold Units to Units Closed | | | 71 | |
Section 5.6 Maximum Land Supply | | | 72 | |
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ARTICLE VI |
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AFFIRMATIVE COVENANTS |
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Section 6.1 Reporting Requirements | | | 72 | |
Section 6.2 Preservation of Corporate Existence, Etc | | | 76 | |
Section 6.3 Compliance with Laws, Etc | | | 76 | |
Section 6.4 Conduct of Business | | | 76 | |
Section 6.5 Payment of Taxes, Etc | | | 77 | |
Section 6.6 Maintenance of Insurance | | | 77 | |
Section 6.7 Asset Sales | | | 77 | |
Section 6.8 Access | | | 78 | |
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Section 6.9 Keeping of Books | | | 78 | |
Section 6.10 Maintenance of Properties, Etc. | | | 78 | |
Section 6.11 Application of Proceeds | | | 79 | |
Section 6.12 Environmental | | | 79 | |
Section 6.13 Additional Subsidiary Borrowers; Additional Collateral | | | 79 | |
Section 6.14 Security Interests; Further Assurances | | | 81 | |
Section 6.15 Information Regarding Collateral | | | 81 | |
Section 6.16 Designation of Restricted and Unrestricted Subsidiaries | | | 82 | |
Section 6.17 Mortgage Requirements | | | 84 | |
Section 6.18 Release of Mortgaged Property; Subordination; Consent | | | 86 | |
Section 6.19 [Reserved] | | | 87 | |
Section 6.20 Designated Account Deposits | | | 87 | |
Section 6.21 Maintenance of Ratings | | | 88 | |
Section 6.22 Post-Closing Requirements | | | 88 | |
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ARTICLE VII |
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NEGATIVE COVENANTS |
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Section 7.1 Liens, Etc | | | 88 | |
Section 7.2 Investments | | | 90 | |
Section 7.3 Restricted Payments | | | 93 | |
Section 7.4 Limitation on Indebtedness | | | 93 | |
Section 7.5 Restriction on Fundamental Changes | | | 95 | |
Section 7.6 Change in Nature of Business | | | 95 | |
Section 7.7 Transactions with Affiliates | | | 96 | |
Section 7.8 Restrictions on Subsidiary Distributions; No New Negative Pledge | | | 96 | |
Section 7.9 Sale/Leasebacks | | | 97 | |
Section 7.10 Compliance with ERISA | | | 97 | |
Section 7.11 Environmental | | | 97 | |
Section 7.12 Designated Account Proceeds | | | 97 | |
Section 7.13 Limitation on Issuance of Stock | | | 98 | |
Section 7.14 Prepayments of Revolving Loans and First Lien Loans; Modifications of Constituent Documents and Other Documents | | | 98 | |
Section 7.15 Fiscal Year | | | 98 | |
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ARTICLE VIII |
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EVENTS OF DEFAULT |
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Section 8.1 Events of Default | | | 98 | |
Section 8.2 Remedies | | | 101 | |
Section 8.3 [Reserved] | | | 101 | |
Section 8.4 Rescission | | | 101 | |
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ARTICLE IX |
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THE ADMINISTRATIVE AGENT |
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Section 9.1 Authorization and Action | | | 102 | |
Section 9.2 Administrative Agent’s Reliance, Etc | | | 102 | |
Section 9.3 The Administrative Agent Individually | | | 103 | |
Section 9.4 Lender Credit Decision | | | 104 | |
Section 9.5 Indemnification | | | 105 | |
Section 9.6 Successor Administrative Agent | | | 106 | |
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ARTICLE X |
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MISCELLANEOUS |
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Section 10.1 Amendments, Waivers, Etc. by Lenders | | | 107 | |
Section 10.2 Assignments and Participations | | | 109 | |
Section 10.3 Costs and Expenses | | | 111 | |
Section 10.4 Indemnities | | | 112 | |
Section 10.5 Limitation of Liability | | | 114 | |
Section 10.6 Right of Set-off | | | 114 | |
Section 10.7 Sharing of Payments, Etc | | | 114 | |
Section 10.8 Notices, Etc | | | 115 | |
Section 10.9 No Waiver; Remedies | | | 116 | |
Section 10.10 Binding Effect | | | 117 | |
Section 10.11 Governing Law | | | 117 | |
Section 10.12 Submission to Jurisdiction; Service of Process | | | 117 | |
Section 10.13 Waiver of Jury Trial | | | 118 | |
Section 10.14 Section Titles | | | 118 | |
Section 10.15 Execution in Counterparts | | | 118 | |
Section 10.16 Entire Agreement | | | 118 | |
Section 10.17 Confidentiality | | | 118 | |
Section 10.18 USA Patriot Act | | | 119 | |
Section 10.19 Agent Communications | | | 119 | |
Section 10.20 Joint and Several Liability | | | 121 | |
Section 10.21 Administrative Borrower | | | 123 | |
Section 10.22 Intercreditor Agreement | | | 123 | |
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Schedules | | | | |
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Schedule I | | - | | Term Loan Commitments |
Schedule II | | - | | Applicable Lending Offices and Addresses for Notices |
Schedule 1.1(a) | | - | | Refinancing Indebtedness to be Repaid |
Schedule 1.1(b) | | - | | Land Supply Ratio Adjustments |
Schedule 3.1(a)(vii) | | - | | Local Counsel |
Schedule 4.2 | | - | | Consents |
Schedule 4.3 | | - | | Ownership of Subsidiaries; Investments |
Schedule 4.4 | | - | | Material Obligations |
Schedule 4.6 | | - | | Litigation |
Schedule 4.7 | | - | | Taxes |
Schedule 4.13(a) | | - | | Insurance |
Schedule 4.13(b) | | - | | Insurance |
Schedule 6.22 | | - | | Bank Accounts of the Transeastern JV Entities |
Schedule 7.1 | | - | | Existing Liens |
Schedule 7.2 | | - | | Existing Investments |
Schedule 7.4(b) | | - | | Existing Indebtedness |
Schedule 7.8 | | - | | Restrictions on Subsidiary Distributions |
| | |
Exhibits | | |
| | |
Exhibit A | | Form of Assignment and Acceptance |
Exhibit B | | Form of Assumption Agreement |
Exhibit C | | Form of Term Loan Note |
Exhibit D | | Form of Notice of Borrowing |
Exhibit E | | [Reserved] |
Exhibit F | | Form of Notice of Conversion or Continuation |
Exhibit G | | Form of Credit Agreement Supplement |
Exhibit H | | Form of Guaranty |
Exhibit I | | Form of Solvency Certificate |
Exhibit J | | Form of Intercreditor Agreement |
Exhibit K | | Form of Security Agreement |
Exhibit L | | Form of Compliance Certificate |
Exhibit M | | Form of Deposit Account Security Agreement |
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SECOND LIEN TERM LOAN CREDIT AGREEMENT, dated as of July 31, 2007, among TOUSA, INC. (f/k/a Technical Olympic, Inc.), a Delaware corporation (the “Administrative Borrower”), each subsidiary of the Administrative Borrower listed on the signature pages hereof as a “Subsidiary Borrower” and any other subsidiary of the Administrative Borrower which hereafter becomes a Subsidiary Borrower pursuant to the terms hereof (each, a “Subsidiary Borrower” and collectively, the “Subsidiary Borrowers”; together with the Administrative Borrower, each a “Borrower” and collectively, the “Borrowers”), the Lenders (as defined below) and CITICORP NORTH AMERICA, INC. (“CNAI”), as agent for the Lenders (in such capacity and including any successor or permitted assign, the “Administrative Agent”).
PRELIMINARY STATEMENTS
(1) The Administrative Borrower and the Subsidiary Borrowers are parties to the Amended and Restated Credit Agreement, dated as of January 30, 2007 (as amended, supplemented or otherwise modified from time to time through the Effective Date (as defined below), the “January 2007 Credit Agreement”), under which certain lenders provided a revolving credit facility in the aggregate principal amount of $800,000,000 for the making of revolving loans and swing loans and the issuance of letters of credit.
(2) The Administrative Borrower has requested that the lenders thereunder consent to certain amendments to the January 2007 Credit Agreement contained therein and continue making revolving loans and swing loans and issue letters of credit from time to time in accordance therewith in an aggregate principal amount not to exceed $700,000,000 (as such amount may be increased from time to time pursuant to the terms thereof). The Administrative Borrower shall enter into (i) the Revolving Credit Agreement (as defined below), amending and restating the January 2007 Credit Agreement and providing for Revolving Loans (as defined below) in the aggregate principal amount of up to $700,000,000 simultaneously herewith and (ii) the First Lien Term Loan Credit Agreement providing for First Lien Term Loans in the aggregate principal amount of $200,000,000 simultaneously herewith.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
Section 1.1 Defined Terms.
As used in this Agreement, the following terms have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
“
Acquisition” means (i) the contribution by the Administrative Borrower to the Transeastern JV Entities of an amount necessary to discharge all amounts of outstanding Indebtedness of the Transeastern JV Entities listed on
Schedule 1.1(a) on terms and conditions set forth
in the Settlement Documents and (ii) the cancellation of Falcone/Ritchie’s membership interests in TE/TOUSA, LLC as contemplated in Section 1 of the Falcone Settlement Agreement resulting in TE/TOUSA, LLC becoming a Wholly-Owned Subsidiary of the Administrative Borrower.
“Adjusted Consolidated Tangible Net Worth” means with, respect to the Administrative Borrower and its Restricted Subsidiaries on a Consolidated basis, as of any date, the sum of (a) Tangible Net Worth, plus (b) the lowest of (i) fifty percent (50%) of the aggregate principal amount of all then outstanding Subordinated Indebtedness of the Administrative Borrower and its Restricted Subsidiaries having no amortization and a maturity date later than one year following the Scheduled Termination Date, (ii) twenty percent (20%) of Tangible Net Worth and (iii) $200,000,000.
“Administrative Agent” has the meaning assigned to such term in the preamble hereto.
“Administrative Borrower” has the meaning assigned to such term in the preamble hereto.
“Affected Lender” has the meaning assigned to such term in Section 2.16.
“Affiliate” means, with respect to any Person, any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person, each officer, director, general partner or joint-venturer of such Person, and each Person who is the beneficial owner of 10% or more of any class of Voting Stock of such Person. For the purposes of this definition, “control” means the possession of the power to direct or cause the direction of management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. Solely for purposes of Section 7.7, Affiliates of the Borrowers shall include Unrestricted Subsidiaries of the Administrative Borrower and Joint Ventures.
“Affiliated Title Company” means Universal Land Title, Inc., a Florida corporation, and any of its Subsidiaries or Affiliates authorized under applicable Requirement of Law to conduct business as an agent for a title insurance company.
“Agreement” means this Credit Agreement, as amended, amended and restated, supplemented, waived or otherwise modified from time to time.
“AHYDO Catch-Up Payment” has the meaning assigned to such term in Section 2.8(b).
“Anti-Terrorism Laws” has the meaning assigned to such term in Section 4.19(a).
“Applicable Lending Office” means, with respect to each Lender, its Domestic Lending Office in the case of a Base Rate Loan, and its Eurodollar Lending Office in the case of a Eurodollar Rate Loan.
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“Applicable Margin” means, as of any date of determination, a per annum rate equal to (A) for Eurodollar Rate Loans, 7.25%, and (B) for Base Rate Loans, 6.25% (subject to increase in accordance with Section 2.9(d)).
“Appraised Value” means, as of any date, with respect to Completed Unsold Homes, Land/Lots Under Development, Unimproved Land and Unsold Homes Under Construction (x) the value of such Completed Unsold Homes, Land/Lots Under Development, Unimproved Land or Unsold Homes Under Construction, as the case may be, determined in accordance with GAAP multiplied by (y) the applicable Appraised Value Percentage.
“Appraised Value Percentage” means, as of any date, with respect to Completed Unsold Homes, Land/Lots Under Development, Unimproved Land and Unsold Homes Under Construction, the applicable fraction (expressed as a decimal) as set forth in the most recent report of the Appraiser delivered in accordance with Section 6.19.
“Appraiser” means Crown Appraisal Group or any other third party independent appraiser meeting FIRREA requirements selected by the Administrative Agent (for the account of the Lenders) from time to time with, so long as no Event of Default has occurred and is continuing, the consent of the Administrative Borrower (not to be unreasonably withheld or delayed).
“Approved Fund” means, with respect to any Fund that is a fund that invests in bank loans and is advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or Affiliate of an entity that administers or manages a Lender.
“Arranger” means Citigroup Global Markets Inc., in its capacity as sole lead arranger and book manager.
“Asset Sale” means (a) any conveyance, sale, lease, sublease, assignment, transfer or other disposition (including by way of merger or consolidation and including any sale and leaseback transaction) of any property, by the Administrative Borrower or any of its Subsidiaries excluding (i) inventory (which shall include land, spec homes and Model Homes) sold in the ordinary course of business, (ii) any sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof, (iii) dispositions of cash and Cash Equivalents, (iv) conveyances, sales, leases, subleases, assignments, transfers, exchanges or dispositions between the Loan Parties so long as the Administrative Agent continues to have a perfected second priority Lien (subject only to Customary Permitted Liens and Liens permitted pursuant to Section 7.1(b)) on such property after giving effect to such sale, transfer or disposition, and (v) a swap exchange of assets of the Administrative Borrower or any of its Subsidiaries for similar assets), and (b) any issuance or sale of any Stock of any Subsidiary of the Administrative Borrower, in the case of clause (a) or (b), to any Person other than any other Borrower.
“Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, substantially in the form of Exhibit A.
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“Assumption Agreement” means an assumption agreement entered into by a Lender or an Eligible Assignee, and accepted by the Administrative Agent, substantially in the form of Exhibit B.
“Bankruptcy Code” means Title 11, United States Code, as amended from time to time.
“Base Rate” means the greater of (i) the interest rate per annum announced from time to time by the Administrative Agent at its Domestic Lending Office as its then base rate, or (ii) the Federal Funds Rate plus 0.50% per annum.
“Base Rate Loan” means any Term Loan during any period in which it bears interest based on the Base Rate.
“Board of Directors” means the board of directors of the Administrative Borrower or any committee thereof authorized with respect to any particular matter to exercise the power of the board of directors of the Administrative Borrower.
“Borrower” and “Borrowers” have the meaning assigned to such terms in the preamble hereto.
“Borrowing” means a borrowing consisting of Term Loans of the same Type made on the same date and, in the case of Eurodollar Rate Loans, as to which a single Interest Period is in effect.
“Borrowing Base” means “Borrowing Base” as defined in the First Lien Term Loan Credit Agreement.
“Borrowing Base Certificate” means the “Borrowing Base Certificate” as defined in the First Lien Term Loan Credit Agreement.
“Business Day” means a day of the year on which banks are not required or authorized to close in New York City and, if the applicable Business Day relates to notices, determinations, fundings and payments in connection with the Eurodollar Rate or any Eurodollar Rate Loans, a day on which dealings in Dollar deposits are also carried on in the London interbank market.
“Capital Assets” means, with respect to any person, all equipment, fixed assets or improvements (other than Real Property) of such person, or replacements or substitutions therefor or additions thereto, that, in accordance with GAAP, have been or should be reflected as additions to property, plant or equipment on the balance sheet of such person.
“Capital Expenditures” means, for any period, without duplication, all expenditures made directly or indirectly by the Administrative Borrower and its Restricted Subsidiaries during such period for Capital Assets (whether paid in cash or other consideration, financed by the incurrence of Indebtedness or accrued as a liability).
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“Capital Lease” means, with respect to any Person, any lease of, or other arrangement conveying the right to use, property by such Person as lessee that would be accounted for as a capital lease on a balance sheet of such Person prepared in conformity with GAAP.
“Capital Lease Obligations” means, with respect to any Person, the capitalized amount of all obligations of such Person or any of its Restricted Subsidiaries under Capital Leases, as determined on a Consolidated basis in conformity with GAAP.
“Cash Equivalents” means
(a) securities issued or fully guaranteed or insured by the United States government or any agency thereof;
(b) certificates of deposit, eurodollar time deposits, overnight bank deposits and bankers’ acceptances of any commercial bank organized under the laws of the United States, any state thereof, the District of Columbia, any foreign bank, or its branches or agencies (fully protected against currency fluctuations) which, at the time of acquisition, are rated at least “A-1” by S&P or “P-1” by Moody’s;
(c) commercial paper of an issuer rated at least “A-1” by S&P, “P-1” by Moody’s or “1” by the National Association of Investors Corporation;
(d) short-term repurchase agreements, municipal trusts and obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (b) above; and
(e) shares of any money market fund that (i) has at least 95% of its assets invested continuously in the types of investments referred to in clauses (a), (b), (c) and (d) above, (ii) has net assets of not less than $500,000,000 and (iii) is rated at least “A-1” by S&P, “P-1” by Moody’s or “1” by the National Association of Investors Corporation;
provided, however, that the maturities of all obligations of the type specified in clauses (a), (b), (c) and (d) above shall not exceed 180 days.
“Cash Interest Incurred” means, for any period, Consolidated Interest Incurred for such period, less the sum of (a) interest on any debt paid by the increase in the principal amount of such debt including by issuance of additional debt of such kind and (b) gross interest income of Borrower and its Restricted Subsidiaries for such period.
“
Casualty Event” means any involuntary loss of title, any involuntary loss of, damage to or any destruction of, or any condemnation or other taking (including by any Governmental Authority) of, any property of the Administrative Borrower or any of its Subsidiaries. “Casualty Event” shall include but not be limited to any taking of all or any part of any Real Property of any Person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any Requirement of Law, or by reason of the temporary requisition of the
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use or occupancy of all or any part of any Real Property of any Person or any part thereof by any Governmental Authority, civil or military, or any settlement in lieu thereof.
“Change of Control” means the occurrence of any of the following events:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to either of the preceding), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than any one or more of the Permitted Holders, becomes the “beneficial owner,” directly or indirectly, of 40% or more of the total voting power of the Voting Stock of the Administrative Borrower; or
(b) any of the Permitted Holders or any Person controlling or under common control with the Permitted Holders, either individually or acting together, becomes the “beneficial owner,” directly or indirectly, of 75% or more of the total voting power of the Voting Stock of the Administrative Borrower; or
(c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election or appointment by such board of directors or whose nomination for election by the holders of the Stock of the Administrative Borrower was approved by a vote of not less than two-thirds of the board of directors or other governing body then still in office who were either directors (or analogous governing Persons) at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors or other governing body then in office; or
(d) the holders of the Stock of the Administrative Borrower shall have approved any plan of liquidation or dissolution of the Administrative Borrower; or the shares of the Administrative Borrower shall cease to be listed on at least one of the New York Stock Exchange, American Stock Exchange or Nasdaq National Market System for any reason; or
(e) any “change of control” as defined in the Revolving Credit Agreement, the First Lien Term Loan Credit Agreement, the indentures governing any of the Existing Notes or the Settlement Subordinated Debt or the certificate of designation governing the Settlement Preferred Stock.
For the purposes of this definition of “Change of Control,” the term “beneficial owner” shall be as defined in Rule 13d-3 under the Exchange Act, except that a person will be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time. For the purposes of
clauses (a) and
(b) of this definition of “Change of Control,” a person or group shall be deemed to beneficially own any Voting Stock of a corporation or other Person held by any other corporation or other Person (the “parent entity”) so long as such person or group beneficially
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owns, directly or indirectly, in the aggregate a majority of the total voting power of the Voting Stock of such parent entity.
“Citibank” means Citibank, N.A., a national banking association.
“CNAI” has the meaning assigned to such term in the preamble hereto.
“Code” means the Internal Revenue Code of 1986 (or any successor legislation thereto), as amended from time to time.
“Collateral” means all Mortgaged Property and “Collateral” as referred to in the Collateral Documents and all other property that is or is intended to be subject to any Lien in favor of the Administrative Agent for the benefit of the Secured Parties and will include, without limitation, all Borrowing Base Assets (as defined in the First Lien Term Loan Credit Agreement).
“Collateral Documents” means the Security Agreement, the Intercreditor Agreement, the Deposit Account Security Agreement, the Deposit Account Control Agreements, the Mortgages, the Equity Pledge Agreement and each Pledge Agreement delivered in accordance with applicable local or foreign law to grant a valid, perfected security interest in any Collateral securing the Obligations, and all UCC or other financing statements or instruments of perfection required by this Agreement, the Security Agreement, any Mortgage or any other such security document or Pledge Agreement to be filed with respect to the security interests in property and fixtures created pursuant to the Security Agreement or any Mortgage and any other document or instrument utilized to pledge or grant or purport to pledge or grant a security interest or Lien on any Collateral to secure the Obligations.
“Communications” has the meaning assigned to such term in Section 10.19(a).
“Completed Unsold Homes” means all Units (including all Model Homes) for which construction has been “completed” but for which there is in existence no written Contract for Sale, the value of which is the lesser of (x) value determined in conformity with GAAP and (y) the Appraised Value. Construction will be considered “completed” when a temporary certificate of occupancy, certificate of occupancy or similar certificate has been issued by the applicable Governmental Authority or, if the applicable Governmental Authority does not issue such a certificate until a purchaser has been identified or no Governmental Authority issues such a certificate with respect to such Unit, when construction of such Unit has been substantially completed (exclusive of items of a punchlist nature) in compliance with all applicable building codes and other Requirements of Law, and such Unit has satisfied the Administrative Borrower’s criteria for and has been classified by the Administrative Borrower as “complete” in its accounting system.
“Compliance Certificate” has the meaning assigned to such term in Section 6.1(c).
“Confidential Information Memorandum” means that certain Confidential Information Memorandum dated July 2007 and posted electronically on Intralinks relating to the Administrative Borrower and this Agreement.
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“Consolidated” means, with respect to any Person, the consolidation of accounts of such Person and its Subsidiaries or Restricted Subsidiaries, as the case may be, in conformity with GAAP.
“Consolidated Current Assets” means, as at any date of determination, without duplication, inventory plus accounts receivable from unconsolidated joint ventures, in each case as set forth on a consolidated balance sheet of the Borrowers and their Restricted Subsidiaries in accordance with GAAP; provided that inventory not owned shall not constitute a Consolidated Current Asset.
“Consolidated Current Liabilities” means, as at any date of determination, without duplication, homebuilding accounts payable and other liabilities which may properly be classified as current liabilities plus customer deposits, in each case on a consolidated balance sheet of Borrower and its Restricted Subsidiaries in accordance with GAAP; provided that solely for the purposes of calculating Excess Cash Flow for the Excess Cash Flow Period ending on December 31, 2007, accruals related to the provision for settlement of loss contingency related to the Transeastern JV Entities taken at December 31, 2006 shall be excluded from the definition of “Consolidated Current Liabilities”.
“Consolidated Net Income” means, for any Person for any period, the net income (or loss) of such Person and its Restricted Subsidiaries, as the case may be, for such period, determined on a Consolidated basis in conformity with GAAP.
“Constituent Documents” means, with respect to any Person, (a) the articles of incorporation, certificate of incorporation or certificate of formation (or the equivalent organizational documents) of such Person, (b) the by-laws or operating agreement (or the equivalent governing documents) of such Person and (c) any document setting forth the manner of election and duties of the directors or managing members of such Person (if any) and the designation, amount or relative rights, limitations and preferences of any class or series of such Person’s Stock.
“Contaminant” means any material, substance, chemical, constituent, waste, contaminant or pollutant, including, without limitation, any petroleum or petroleum-derived substance or waste, asbestos and polychlorinated biphenyls regulated or which can give rise to liability under any Environmental Law.
“Contract for Sale” means a written sale and purchase agreement for one or more Units and/or Land/Lots Under Development between the Administrative Borrower or any of its Restricted Subsidiaries and an unrelated third party purchaser, who has been pre-qualified by the Administrative Borrower, one of its Restricted Subsidiaries or an institutional lender.
“Contractual Obligation” of any Person means any obligation, agreement, undertaking or similar provision of any Security issued by such Person or of any agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or other instrument (excluding a Loan Document) to which such Person is a party or by which it or any of its property is bound or to which any of its property is subject.
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“Credit Agreement Supplement” means a supplement to this Agreement substantially in the form of Exhibit G, pursuant to which each Subsidiary of the Administrative Borrower named therein becomes an additional Subsidiary Borrower under this Agreement.
“Customary Permitted Liens” means, with respect to any Person, any of the following Liens:
(a) Liens with respect to the payment of taxes, assessments, or governmental charges, including liens securing community development district bonds or similar bonds issued by any Governmental Authority to accomplish similar purposes, in each case that are not yet due or that are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained to the extent required by GAAP;
(b) Liens of landlords arising by statute and liens of suppliers, mechanics, carriers, materialmen, warehousemen or workmen and other liens imposed by law and/or created in the ordinary course of business for amounts not yet due or that are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained to the extent required by GAAP;
(c) deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other types of social security benefits;
(d) Liens or deposits to secure the performance of bids, tenders, sales, options, contingent payments to sellers of real property, contracts (other than for the repayment of borrowed money), participation agreements, joint development agreements, surety, stay, appeal, customs, indemnity, performance obligations or other similar bonds or obligations (not constituting Indebtedness), arising in the ordinary course of business;
(e) encumbrances arising by reason of zoning restrictions, easements, licenses, reservations, covenants, rights-of-way, utility easements, building restrictions and other similar encumbrances on the use of real property which do not materially detract from the value of such real property or interfere with the ordinary conduct of the business conducted and proposed to be conducted at such real property;
(f) encumbrances arising under leases or subleases of real property which do not in the aggregate materially detract from the value of such real property or interfere with the ordinary conduct of the business conducted and proposed to be conducted at such real property;
(g) financing statements with respect to a lessor’s rights in and to personal property leased to such Person in the ordinary course of such Person’s business;
(h) Mortgages or Deeds of Trust securing the payment to a seller or master developer of premium participation payments, marketing fees and/or deferred consideration; and
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(i) encumbrances not otherwise permitted hereby to the extent described as an exception to coverage under any policy of title insurance insuring a Mortgage.
“Debt Issuance” means the incurrence by the Administrative Borrower or any of its Restricted Subsidiaries of any Indebtedness after the Effective Date (other than as permitted by Section 7.4).
“Debt Service” means, with respect to the Administrative Borrower and its Restricted Subsidiaries on a consolidated basis for any period, Cash Interest Incurred for such period plus scheduled principal amortization of all Indebtedness and fees paid in respect of letters of credit issued under the Revolving Credit Agreement for such period paid in cash in such period.
“Default” means any event which is, or with the lapse of a grace period or the giving of notice or both would become, an Event of Default.
“Deposit Account” has the meaning assigned to such term in the Security Agreement.
“Deposit Account Control Agreement” means an agreement among the bank maintaining a Designated Account, the Borrower that is the owner of such Designated Account and such bank’s customer, and the Administrative Agent as secured party, in form and substance reasonably satisfactory to the Administrative Agent.
“Deposit Account Security Agreement” means that certain Deposit Account Security Agreement substantially in the form of Exhibit M dated as of the Effective Date between the Administrative Borrower and certain of its Subsidiaries, as grantors, and the Administrative Agent, as secured party, as amended, modified or supplemented from time to time.
“Designated Account” means a Deposit Account or Securities Account maintained with a bank or other financial institution and owned by a Borrower to the extent such Deposit Account or Securities Account, as applicable, is subject to the second priority perfected security interest contemplated by the Deposit Account Security Agreement or the Security Agreement, as applicable.
“Disclosure Documents” means, collectively: (i) the Administrative Borrower’s annual report on Form 10-K for the fiscal year ended December 31, 2006 as filed with the SEC on March 20, 2007, (ii) the Administrative Borrower’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2007 as filed with the SEC on May 10, 2007, (iii) the Administrative Borrower’s current Reports on Form 8-K filed with the Securities and Exchange Commission prior to the Effective Date (but subsequent to filing of the SEC Report described in clause (ii) above) and (iv) the Confidential Information Memorandum.
“
Disqualified Capital Stock” means any Stock of a Person or a Subsidiary thereof issued after the Effective Date which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder), or upon the happening of any event other than a change of control, matures or is mandatorily redeemable, pursuant to a
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sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, or would require the mandatory payment of cash dividends prior to the date that is six months after Scheduled Termination Date, for cash or securities constituting Indebtedness or other Disqualified Capital Stock (other than to the extent the payment of such dividends is permitted under this Agreement). Without limitation of the foregoing, Disqualified Capital Stock shall be deemed to include any preferred stock of a Person or a Subsidiary of such Person, with respect to which, under the terms of such preferred stock, by agreement or otherwise, such Person or Subsidiary is obligated to pay current dividends or distributions in cash during the period prior to the Scheduled Termination Date; provided, however, that preferred stock of a Person that is issued with the benefit of provisions requiring a change of control offer to be made for such preferred stock in the event of a change of control of such Person will not be deemed to be Disqualified Capital Stock solely by virtue of such provisions. In no event shall “Disqualified Capital Stock” include the Settlement Preferred Stock (or any pay-in-kind dividends thereon) issued in connection with the Transactions.
“Disqualified Capital Stock Issuance” means the issuance or sale by the Administrative Borrower or any of its Subsidiaries of any Disqualified Capital Stock after the Effective Date.
“Dollars” and the sign “$” each mean the lawful money of the United States of America.
“Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” opposite its name on Schedule II or on the Assignment and Acceptance by which it became a Lender or such other office of such Lender as such Lender may from time to time specify to the Administrative Borrower and the Administrative Agent.
“Domestic Subsidiary” means any Subsidiary of a Borrower organized under the laws of any state of the United States of America or the District of Columbia.
“Early Maturity Date” means the date that is three months before the maturity dates of each of (i) the 9% Senior Notes due 2010 of the Administrative Borrower, (ii) the 71/2% Senior Subordinated Notes due 2011 of the Administrative Borrower, (iii) the 81/4% Senior Notes due 2011 of the Administrative Borrower and (iv) the 103/8% Senior Subordinated Notes due 2012 of the Administrative Borrower, in each case if such series of notes has not been Refinanced on or prior to such date in its entirety with Permitted Refinancing Indebtedness having a final maturity date at least six months after the Scheduled Termination Date.
“
EBITDA” means, for the Administrative Borrower and its Restricted Subsidiaries for the twelve (12) month period ending on any date of determination, an amount equal to (a) the Consolidated Net Income for such period,
plus (b) cash dividends from Unrestricted Subsidiaries paid to the Administrative Borrower during such period, plus (c) the sum of (i) any provision for income taxes for such period, (ii) Interest Expense deducted in the calculation of Consolidated Net Income for such period in conformity with GAAP (including, without duplication, previously capitalized Interest Expense which would be included in “cost of goods sold” and
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deducted from Consolidated revenues in determining Consolidated Net Income), (iii) the amount of depreciation and amortization for such period, (iv) any write-off of goodwill, (v) the amount of any non-cash charges (including without limitation, land impairment or abandonment charges, abandonment charges relating to option agreements with respect to land or interests in land entered into in the ordinary course of business and impairment of investments) in such period (other than any non-cash charges that represent an accrual or reserve for potential cash items in the future), (vi) expenses and charges related to the Transactions incurred on or prior to the Effective Date or within 90 days thereafter, (vii) certain other cash charges related to the termination of any option agreements with respect to land or interests in land entered into in the ordinary course of business, (viii) any expenses, fees, premiums or charges paid in cash in connection with any Asset Sales, investments, acquisitions, Permitted Acquisitions, issuance of debt, equity securities or any refinancing transaction or any amendment or other modification of any debt instrument permitted hereunder, (ix) restructuring charges and expenses related to the closure of office facilities and severance costs and litigation costs and professional fees related to the foregoing, in each case to the extent included in the calculation of Consolidated Net Income for such period in conformity with GAAP, but without duplication and (x) any non-cash charges related to embedded derivatives or stock-based compensation expense under SFAS No. 123R in each case for which the Administrative Borrower or its Restricted Subsidiaries are not obligated to settle in cash (provided that EBITDA shall be decreased by any related cash settlements made during such period); provided that extraordinary gains or extraordinary losses shall be excluded from the computation of EBITDA (including any extraordinary gains or extraordinary losses from Asset Sales). In the case of any Person that becomes a Restricted Subsidiary during any period of calculation, EBITDA shall, for the purposes of the foregoing calculations, be adjusted by increasing, if positive, or decreasing, if negative, EBITDA by the EBITDA of such Subsidiary during such period of calculation occurring prior to the date such Subsidiary became a Restricted Subsidiary.
Other than for purposes of calculating Excess Cash Flow, Consolidated EBITDA shall be calculated on a pro forma basis to give effect to the Acquisition, any Permitted Acquisition and Asset Sales consummated at any time on or after the first day of the measurement period and prior to the date of determination as if the Acquisition and each such Permitted Acquisition had been effected on the first day of such period and as if each such Asset Sale had been consummated on the day prior to the first day of such period.
“Effective Date” has the meaning assigned to such term in Section 3.1.
“Election” shall have the meaning assigned to such term in Section 2.9(d)(i).
“
Eligible Assignee” means (a) a Lender or any Affiliate or Approved Fund of such Lender; (b) a commercial bank having total assets in excess of $5,000,000,000; (c) a finance company, insurance company, or any other financial institution or fund, in each case reasonably acceptable to the Administrative Agent and regularly engaged in making, purchasing or investing in loans, and having a net worth, determined in conformity with GAAP, in excess of $250,000,000 (or, to the extent net worth is less than such amount, a finance company, insurance company, other financial institution or fund, reasonably acceptable to the Administrative Agent) or (d) a savings and loan association or savings bank organized under the laws of the United
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States or any State thereof having a net worth, determined in conformity with GAAP, in excess of $250,000,000.
“Entitled Land” means all land owned by the Administrative Borrower or any of its Restricted Subsidiaries, as part of their respective real estate development business that has all requisite residential zoning approvals (other than approvals which are solely ministerial and non-discretionary in nature).
“Environmental Laws” means all applicable Requirements of Law now or hereafter in effect, as amended or supplemented from time to time, relating to pollution or the regulation and protection of human health, safety, the environment or natural resources, including any applicable Requirements of Law relating to the protection of areas of particular environmental concern, including wetlands, areas inhabited by endangered species, and areas above protected aquifers.
“Environmental Lien” means any Lien in favor of any Governmental Authority for environmental liabilities and costs.
“Equity Issuance” means, without duplication, (i) any issuance or sale by the Administrative Borrower after the Effective Date of any Stock in the Administrative Borrower (including any Stock issued upon exercise of any warrant or option) or any warrants or options to purchase Stock or (ii) any contribution to the capital of the Administrative Borrower; provided, however, that an Equity Issuance shall not include (w) any Disqualified Capital Stock Issuance or Debt Issuance, (x) any issuance permitted by Section 7.3(c), (y) any issuance to any director, officer, manager or employee or (z) issuance of Stock in connection with the consummation of the Transactions.
“Equity Pledge Agreement” means the certain Pledge and Security Agreement, dated the Effective Date, under which each Loan Party shall pledge in favor of the Administrative Agent all of the equity interests held by such Loan Party in all of its presently existing and after-acquired direct Domestic Subsidiaries and 66% of the Stock of “first tier” Foreign Subsidiaries (other than any Unaffiliated Joint Ventures).
“ERISA” means the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control or treated as a single employer with the Borrower or any of its Subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of the Code.
“
ERISA Event” means (a) a reportable event described in Section 4043(b) or 4043(c)(1), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a Title IV Plan, with respect to which the notice requirement has not been waived pursuant to applicable regulations; (b) the withdrawal of the Administrative Borrower, any of its Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of
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the Administrative Borrower, any of its Subsidiaries or any ERISA Affiliate from any Multiemployer Plan; (d) notice of reorganization or insolvency of a Multiemployer Plan; (e) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan amendment as a termination under Section 4041 of ERISA; (f) the institution of proceedings to terminate a Title IV Plan by the PBGC; (g) the failure of the Administrative Borrower, any of its Subsidiaries or any ERISA Affiliate to make any required contribution to a Title IV Plan or Multiemployer Plan; (h) the imposition of a lien under Section 412 of the Code or Section 302 of ERISA on the Administrative Borrower or any of its Subsidiaries or any ERISA Affiliate; or (i) any other event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA.
“Escrow Proceeds Receivables” means, with respect to the Administrative Borrower and any of its Restricted Subsidiaries, the aggregate amount of funds held in escrow by a title company or escrow agent which are payable (without any requirement of the satisfaction or waiver of any further condition) to the Administrative Borrower or such Restricted Subsidiary and which constitute net proceeds of sales of Units, Land/Lots Under Development and Unimproved Land.
“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the Federal Reserve Board, as in effect from time to time.
“Eurodollar Base Rate” means, with respect to any Interest Period for any Eurodollar Rate Loan, the rate determined by the Administrative Agent to be the offered rate for deposits in Dollars for the applicable Interest Period appearing on the Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, two Business Days prior to the first day of each Interest Period. In the event that such rate does not appear on the Reuters Screen LIBOR01 Page (or otherwise on the Reuters screen), the Eurodollar Base Rate for the purposes of this definition shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent.
“Eurodollar Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule II or on the Assignment and Acceptance by which it became a Lender (or, if no such office is specified, its Domestic Lending Office) or such other office of such Lender as such Lender may from time to time specify to the Administrative Borrower and the Administrative Agent.
“
Eurodollar Rate” means, with respect to any Interest Period for any Eurodollar Rate Loan, an interest rate per annum equal to the rate per annum obtained by dividing (a) the Eurodollar Base Rate by (b) a percentage equal to 100%
minus the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that
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includes deposits by reference to which the Eurodollar Rate is determined) having a term equal to such Interest Period.
“Eurodollar Rate Loan” means any Term Loan that, for an Interest Period, bears interest based on the Eurodollar Rate.
“Event of Default” has the meaning assigned to such term in Section 8.1.
“Excess Cash Flow” means, for any Excess Cash Flow Period, EBITDA for such Excess Cash Flow Period, minus, without duplication:
(a) Debt Service, plus, to the extent not otherwise included in Debt Service, letter of credit fees, commitment fees and any premiums paid in cash in connection with the repayment of any Indebtedness during such Excess Cash Flow Period;
(b) Capital Expenditures made in cash and lease payments made in respect of Capital Lease Obligations during such Excess Cash Flow Period, other than amounts already reflected in Debt Service, to the extent such Capital Expenditures or lease payments were financed with Internally Generated Funds;
(c) Capital Expenditures committed to be made but not made during such Excess Cash Flow Period, provided that the Administrative Borrower shall deliver a certificate to the Administrative Agent not later than 90 days after the end of such Excess Cash Flow Period, signed by a Responsible Officer of the Administrative Borrower and certifying that such Capital Expenditures and the delivery of the related equipment will be made within 180 days after the end of such Excess Cash Flow Period, to the extent such Capital Expenditures will be financed with Internally Generated Funds;
(d) taxes of the Administrative Borrower and its Subsidiaries that were paid in cash during such Excess Cash Flow Period or will be paid within six months after the end of such Excess Cash Flow Period (as reasonably determined in good faith by the Administrative Borrower) and for which reserves have been established;
(e) the difference, if negative, of the amount of Net Working Capital at the end of the prior Excess Cash Flow Period (or the beginning of the Excess Cash Flow Period in the case of the first Excess Cash Flow Period) over the amount of Net Working Capital at the end of such Excess Cash Flow Period;
(f) amounts paid in cash during such Excess Cash Flow Period on account of (x) items that were accounted for as non-cash reductions of Consolidated Net Income in determining EBITDA of the Administrative Borrower and its Subsidiaries in a prior Excess Cash Flow Period, (y) reserves or accruals established in purchase accounting and (z) other reserves with respect to long-term liabilities;
(g) to the extent not deducted in the computation of Net Cash Proceeds in respect of any asset disposition or condemnation giving rise thereto, the amount of any mandatory prepayment of Indebtedness (other than Indebtedness created hereunder or
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under any other Loan Document), together with any interest, premium or penalties required to be paid (and actually paid) in connection therewith;
(h) the amount related to items that were added to or not deducted from Consolidated Net Income in calculating EBITDA to the extent either (x) such items represented a cash payment (which had not reduced Excess Cash Flow upon the accrual thereof in a prior Excess Cash Flow Period), or an accrual for a cash payment, by the Administrative Borrower and its Subsidiaries or (y) such items did not represent cash received by the Administrative Borrower and its Subsidiaries, in each case on a Consolidated basis during such Excess Cash Flow Period;
(i) losses excluded from the calculation of EBITDA as a result of Asset Sales or extraordinary losses that are paid in cash during such Excess Cash Flow Period;
(j) restructuring charges paid in cash during such Excess Cash Flow Period to the extent added to or not deducted from Consolidated Net Income in determining EBITDA;
(k) solely with respect to each of the first two Excess Cash Flow Periods, fees and expenses paid in connection with the Transactions and the settlement of the Transeastern Events during such Excess Cash Flow Period (including all fees paid to financial institutions, legal fees, accountant fees, advisor fees and consulting fees (whether or not retained by the Administrative Borrower or one of its Subsidiaries or by another Person in connection with the Transactions but paid by the Administrative Borrower or one of its Subsidiaries)), to the extent added to or not deducted from Consolidated Net Income in determining EBITDA;
(l) any expenses, fees, premiums or charges paid in cash in connection with any Asset Sales, investments, acquisitions, Permitted Acquisitions, issuance of debt, equity securities or any refinancing transaction or any amendment or other modification of any debt instrument during such Excess Cash Flow Period; and
(m) permitted investments made in cash during such Excess Cash Flow Period in Unaffiliated Joint Ventures or Unaffiliated Unrestricted Subsidiaries, to the extent such investments were financed with Internally Generated Funds;
provided that any amount deducted pursuant of any of the foregoing clauses that will be paid after the close of such Excess Cash Flow Period shall not be deducted again in a subsequent Excess Cash Flow Period; provided further that extraordinary non-cash gains or extraordinary non-cash losses shall be excluded from the computation of Excess Cash Flow;
plus, without duplication:
(i) the difference, if positive, of the amount of Net Working Capital at the end of the prior Excess Cash Flow Period (or the beginning of the Excess Cash Flow Period in the case of the first Excess Cash Flow Period) over the amount of Net Working Capital at the end of such Excess Cash Flow Period;
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(ii) any return received in cash (other than from a Restricted Subsidiary) during such Excess Cash Flow Period from permitted investments, Unaffiliated Joint Ventures or Unaffiliated Unrestricted Subsidiaries;
(iii) income or gain excluded from the calculation of Consolidated Net Income as a result of Asset Sales or extraordinary gains that is realized in cash during such Excess Cash Flow Period (except to the extent such gain is subject to the mandatory prepayments section of this Agreement or the Second Lien Credit Agreement);
(iv) to the extent any permitted Capital Expenditures and the corresponding delivery of equipment referred to in clause (c) above do not occur in the 180-day period specified in the certificate of the Administrative Borrower provided pursuant to clause (c) above, the amount of such Capital Expenditures that were not so made in the Excess Cash Flow Period of the Administrative Borrower specified in such certificate;
(v) amounts received in cash during such Excess Cash Flow Period on account of items that were accounted for as non-cash increases of Consolidated Net Income in determining EBITDA of the Administrative Borrower and its Subsidiaries in a prior Excess Cash Flow Period;
(vi) the amount related to items that were deducted from or not added to Consolidated Net Income in calculating EBITDA to the extent either (x) such items represented cash received by the Administrative Borrower or any Subsidiary or (y) does not represent cash paid by the Administrative Borrower or any Subsidiary, in each case on a consolidated basis during such Excess Cash Flow Period; and
(vii) if deducted in the computation of EBITDA, interest income.
“Excess Cash Flow Period” means (i) the period taken as one accounting period from January 1, 2007 and ending on December 31, 2007 and (ii) each fiscal year of the Administrative Borrower thereafter.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Real Property” means any Entitled Land of the Borrowers (i) for which preliminary subdivision approval has been obtained but a subdivision plat, map or similar instrument has not yet been filed of record; (ii) those phases within Entitled Land being developed as a phased development condominium where a master declaration of condominium has been filed of record, but the supplemental declaration creating individual condominium units has not yet been recorded; and (iii) Entitled Land in Pennsylvania that would otherwise constitute Unimproved Land that is being developed under a master or common subdivision approval process with respect to which no subdivision plat, map or similar instrument has yet been filed of record.
“
Excluded Taxes” means, with respect to the Administrative Agent and any Lender (a) taxes imposed on or measured by its overall net income and franchise taxes imposed on it (in lieu of net income taxes) by a jurisdiction (or any political subdivision thereof) as a result of a present or former connection between the recipient and the jurisdiction of the
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Governmental Authority imposing such tax or any taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document), (b) any branch profits taxes imposed by a jurisdiction described in clauses (a) and (c) in the case of a Non-U.S. Lender (other than an assignee pursuant to a request by any Borrower under Section 2.16), any U.S. federal withholding tax (i) that is imposed on amounts payable to such Non-U.S. Lender at the time such Non-U.S. Lender becomes a party hereto (or designates a new lending office), except to the extent that such Non-U.S. Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Loan Parties pursuant to Section 2.15 or (ii) that is attributable to such Non-U.S. Lender’s failure to comply with Section 2.15(f).
“Executive Order” has the meaning assigned to such term in Section 4.19(a).
“Existing Notes” means the Senior Notes and the Subordinated Notes.
“Facility Information” has the meaning assigned to such term in Section 10.17(b).
“Fair Market Value” means (a) with respect to any asset or group of assets (other than a marketable Security) at any date, the value of the consideration obtainable in a sale of such asset at such date assuming a sale by a willing seller to a willing purchaser dealing at arm’s length, and (b) with respect to any marketable Security at any date, the closing sale price of such Security on the Business Day next preceding such date, as appearing in any published list of any national securities exchange or the Nasdaq Stock Market or, if there is no such closing sale price of such Security, the final price for the purchase of such Security at face value quoted on such business day by a financial institution of recognized standing which regularly deals in securities of such type selected by the Administrative Agent.
“Falcone Ritchie” has the meaning assigned to such term in the definition of “Settlement Documents.”
“Falcone Settlement Agreement” has the meaning assigned to such term in the definition of “Settlement Documents.”
“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Administrative Agent on such day on such transactions as determined by the Administrative Agent.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any successor thereto.
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“Financial Statements” means the financial statements of the Administrative Borrower and its Subsidiaries delivered in accordance with Sections 4.4 and 6.1.
“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989.
“First Lien Term Loan Secured Parties” means the First Lien Term Loan Administrative Agent and each Person that is a lender under the First Lien Term Loan Credit Agreement.
“First Lien Term Loan Administrative Agent” means CNAI, in its capacity as administrative agent under the First Lien Term Loan Credit Agreement, and its successors and assigns.
“First Lien Term Loan Commitments” means the “Commitments” as defined in the First Lien Term Loan Agreement.
“First Lien Term Loan Credit Agreement” means (i) that certain first lien term loan credit agreement dated as of the Effective Date among the Borrowers, the lenders party thereto and CNAI as administrative agent for the First Lien Secured Parties, as amended, restated, supplemented or modified from time to time to the extent permitted by this Agreement and the Intercreditor Agreement and (ii) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has been incurred to extend (subject to the limitations set forth herein and in the Intercreditor Agreement) or refinance or replace in whole or in part the Indebtedness and other obligations outstanding under the credit agreement or credit agreements referred to in clauses (i) and (ii) unless such agreement or instrument expressly provides that it is not intended to be and is not a “First Lien Term Loan Credit Agreement” hereunder. Any reference to the First Lien Term Loan Credit Agreement hereunder shall be deemed a reference to any First Lien Term Loan Credit Agreement then in existence.
“First Lien Term Loan Documents” means the First Lien Term Loan Credit Agreement and the other “Loan Documents” as defined in the First Lien Term Loan Credit Agreement, including each mortgage and other security documents, guaranties and the notes (if any) issued thereunder.
“First Lien Term Loan Obligations” means the “Obligations” as defined in the First Lien Term Loan Agreement.
“First Lien Term Loans” means the senior secured first lien term loans under the First Lien Term Loan Credit Agreement.
“First Priority Obligations Payment Date” has the meaning assigned to such term in the Intercreditor Agreement.
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“Five Year Projections” means those Consolidated financial projections included in the Confidential Information Memorandum and covering each fiscal quarter ending in 2007 and 2008 and each fiscal year from 2007 through and including 2012.
“Foreign Subsidiary” means any Subsidiary other than a Domestic Subsidiary.
“Full PIK Payment” shall have the meaning assigned to such term in Section 2.9(d)(i).
“Fund” means any Person (other than a natural Person) that is or will be engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of determination; provided that with respect to determining compliance with any financial covenant (including related definitions), “GAAP” shall be determined based upon those accounting principles referred to above as of the Original Effective Date.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“Guarantor” means each Restricted Subsidiary of the Administrative Borrower party to the Guaranty.
“Guaranty” means the guaranty agreement substantially in the form of Exhibit H, dated as of the Effective Date, executed by each Restricted Subsidiary of the Administrative Borrower named therein or that has executed a joinder to the Guaranty.
“Hedging Contracts” means all Interest Rate Contracts, foreign exchange contracts, currency swap or option agreements, forward contracts, commodity swap, purchase or option agreements, other commodity price hedging arrangements, and all other similar agreements or arrangements designed to alter the risks of any Person arising from fluctuations in interest rates, currency values or commodity prices.
“Hedging Obligations” means obligations under or with respect to Hedging Contracts.
“
Indebtedness” of any Person means without duplication (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments that bear interest (including trust preferred securities), (c) all reimbursement and all other obligations with respect to letters of credit, bankers’ acceptances,
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bank guarantees, surety bonds and performance bonds, (d) all indebtedness for the deferred purchase price of property or services, other than trade payables incurred in the ordinary course of business that are no more than 90 days overdue and accrued expenses, (e) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (f) all Capital Lease Obligations of such Person and the present value of future rental payments under all synthetic leases, (g) all guaranty obligations of such Person with respect to obligations of another Person that would otherwise constitute Indebtedness in clauses (a) through (f) and (h) through (j) herein, (h) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any Disqualified Capital Stock of such Person valued at the greater of its voluntary liquidation preference and its involuntary liquidation preference plus accrued and unpaid dividends, (i) all payments that such Person would have to make in the event of an early termination on the date Indebtedness of such Person is being determined in respect of Hedging Contracts of such Person and (j) all Indebtedness of the type referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and general intangibles) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness but only to the extent of the lesser of (x) the amount of such Indebtedness and (y) the Fair Market Value of the property securing such Indebtedness. Notwithstanding the foregoing, “Indebtedness” shall not include (i) the face amount of any undrawn Performance Letters of Credit or the amount of any obligations in respect of surety bonds or performance bonds, in each case to the extent unmatured, (ii) Indebtedness Associated with Assets Not Owned or (iii) obligations with respect to options to purchase real property that have not been exercised, or (iv) any sale-leaseback transactions to the extent the lease or sublease thereunder is not required to be recorded under GAAP as a Capital Lease.
“Indebtedness Associated with Assets Not Owned” means any Indebtedness of any land bank or similar institution, or any other third party Indebtedness that would be required to be included on the balance sheet or financial statements of the Administrative Borrower or any of its Subsidiaries pursuant to any accounting rule requiring such consolidation, including Indebtedness of any Joint Venture or Indebtedness of any Unrestricted Subsidiary, except to the extent that such Indebtedness would otherwise fall under clause (g) of the definition of “Indebtedness” with respect to the Administrative Borrower or a Restricted Subsidiary.
“Indemnified Matter” has the meaning assigned to such term in Section 10.4.
“Indemnified Taxes” means all Taxes other than Excluded Taxes.
“Indemnitees” has the meaning assigned to such term in Section 10.4.
“Intercreditor Agreement” means that certain intercreditor agreement contemplated by Section 3.1(a)(vi) and substantially in the form of Exhibit J, dated as of the Effective Date among the Administrative Agent, the Revolving Credit Administrative Agent and the First Lien Term Loan Administrative Agent, as the same may be amended, modified or supplemented from time to time.
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“Interest Coverage Ratio” means, with respect to the Administrative Borrower and its Restricted Subsidiaries for any period, the ratio of (a) EBITDA for such period to (b) the Consolidated Interest Incurred for such period.
“Interest Expense” means, for any Person for any period, total interest expense of such Person and its Restricted Subsidiaries plus all dividend payments on any series of Disqualified Capital Stock of such Person or any of its Restricted Subsidiaries (other than dividend payments to the Administrative Borrower or any of its Restricted Subsidiaries) for such period determined on a Consolidated basis in conformity with GAAP. Notwithstanding that GAAP may otherwise provide, the Administrative Borrower shall not be required to include in Interest Expense the amount of any premium paid to prepay Indebtedness.
Interest Expense shall be calculated on a pro forma basis to give effect to any Indebtedness (other than Indebtedness incurred for ordinary course working capital needs under ordinary course revolving credit facilities) incurred, assumed or permanently repaid or extinguished at any time on or after the first day of the measurement period and prior to the date of determination in connection with the Acquisition, any Permitted Acquisitions, any Asset Sales and any Equity Issuances, in each case as if such incurrence, assumption, repayment or extinguishing had been effected on the first day of such period.
“Interest Incurred” means, for any period, the aggregate amount (without duplication and determined in each case in conformity with GAAP) of interest incurred and all dividend payments made on any series of Disqualified Capital Stock of such Person or any of its Restricted Subsidiaries (other than dividend payments to the Administrative Borrower or any of its Restricted Subsidiaries) during such period, whether such interest or dividend payment was expensed or capitalized, paid, accrued, or scheduled to be paid or accrued by the Administrative Borrower and its Restricted Subsidiaries during such period, including (a) original issue discount and non-cash interest payments of accruals on any Indebtedness, (b) the interest portion of all deferred payment obligations, and (c) all commissions, discounts, and other fees and charges owed with respect to bankers’ acceptance and letter of credit and similar financings and Interest Rate Contracts. For purposes of this definition, (i) interest on any Capital Lease Obligations shall be deemed to accrue at an interest rate reasonably determined by the Administrative Borrower to be the rate of interest implicit in such obligations in conformity with GAAP, and (ii) interest expense attributable to any Indebtedness represented by the guaranty of an obligation of another Person shall be deemed to be the interest expense attributable to the Indebtedness so guaranteed.
Interest Incurred shall be calculated on a pro forma basis to give effect to any Indebtedness (other than Indebtedness incurred for ordinary course working capital needs under ordinary course revolving credit facilities) incurred, assumed or permanently repaid or extinguished at any time on or after the first day of the measurement period and prior to the date of determination in connection with the Acquisition, any Permitted Acquisitions, any Asset Sales and any Equity Issuances, in each case as if such incurrence, assumption, repayment or extinguishing had been effected on the first day of such period.
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“Interest Period” means, in the case of any Eurodollar Rate Loan, (a) initially, the period commencing on the date such Eurodollar Rate Loan is made or on the date of conversion of a Base Rate Loan to such Eurodollar Rate Loan and ending one, two, three or six months thereafter as selected by the Administrative Borrower in its Notice of Borrowing or Notice of Conversion or Continuation given to the Administrative Agent pursuant to Section 2.2 or 2.10, and (b) thereafter, if such Term Loan is continued, in whole or in part, as a Eurodollar Rate Loan pursuant to Section 2.10, a period commencing on the last day of the immediately preceding Interest Period therefor and ending one, two, three or six months thereafter as selected by the Administrative Borrower in its Notice of Conversion or Continuation given to the Administrative Agent pursuant to Section 2.10; provided, however, that all of the foregoing provisions relating to Interest Periods in respect of Eurodollar Rate Loans are subject to the following:
(i) if any Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless the result of such extension would be to extend such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month;
(iii) the Administrative Borrower may not select any Interest Period in respect of Term Loans having an aggregate principal amount of less than $5,000,000;
(iv) there shall be outstanding at any one time no more than (A) one Interest Period on or prior to the date that is 18 months after the Effective Date and (B) thereafter, ten Interest Periods in the aggregate; and
(v) any Interest Period that would end after the Scheduled Termination Date or Early Maturity Date, as applicable, shall end on the Scheduled Termination Date or Early Maturity Date, as applicable.
“Interest Rate Contracts” means all interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and interest rate insurance.
“Internally Generated Funds” means any amount expended by the Administrative Borrower and its Restricted Subsidiaries and not representing (i) a reinvestment by the Administrative Borrower or any Restricted Subsidiaries of the Net Cash Proceeds of any Asset Sale outside the ordinary course of business or Casualty Event, (ii) the proceeds of any issuance of Indebtedness of the Administrative Borrower or any Restricted Subsidiary or (iii) any credit received by the Administrative Borrower or any Restricted Subsidiary with respect to any trade in of property for substantially similar property or any “like kind exchange” of assets.
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“Investment” means, with respect to any Person, (a) any purchase or other acquisition by such Person of (i) any Security issued by, (ii) a beneficial interest in any Security issued by, or (iii) any other equity ownership interest in, any other Person, (b) any purchase by such Person of all or a significant part of the assets of a business conducted by another Person or all or substantially all of the assets constituting the business of a division, branch or other unit operation of any other Person, and (c) any loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, accounts receivable and similar items made or incurred in the ordinary course of business as presently conducted), or capital contribution by such Person to any other Person, including all Indebtedness of any other Person to such Person arising from a sale of property by such Person other than in the ordinary course of its business, (d) any guaranty obligation incurred by such Person in respect of Indebtedness of any other Person and (e) any derivative instrument or other contract providing for the economic equivalent of all or any part of any investment referred to in clause (a), (b), (c) or (d) above.
“IRS” means the Internal Revenue Service of the United States or any successor thereto.
“January 2007 Credit Agreement” has the meaning assigned to such term in the recitals hereto.
“Joint Venture” means any Person (other than a Subsidiary) in which the Administrative Borrower or a Restricted Subsidiary holds any Investment (other than an Investment described in clause (b) or (d) of the definition thereof); provided that such Joint Venture (i) is formed for and is or will be engaged in real estate activities and (ii) shall only involve assets located in the Permitted Markets.
“Joint Venture Acquisitions” means the acquisition by the Administrative Borrower or any of its Restricted Subsidiaries of all of the assets or Stock of any Joint Venture not owned prior to such acquisition or of any operating division thereof, or the merger of such Joint Venture with or into the Administrative Borrower or any Restricted Subsidiary of the Administrative Borrower (with the Administrative Borrower, in the case of a merger with the Administrative Borrower, being the surviving corporation); provided that such (i) Joint Venture Acquisition shall only involve assets located in the Permitted Markets and only for use in the lines of business of the Administrative Borrower or its Restricted Subsidiaries existing on the Effective Date and (ii) upon any such Joint Venture Acquisition, such Joint Venture shall constitute a Restricted Subsidiary hereunder and comply with Section 6.13.
“Land/Lots Under Development” means Entitled Land where site improvements have commenced and either are continuing or have been completed (including utilities and all major infrastructure) and for which no Contract for Sale is in effect, plus the community site development costs incurred with respect to owned lots included in such Entitled Land, the value of which is the lesser of (x) value determined in conformity with GAAP (provided that such value for any owned lot included in such Entitled Land shall not exceed the budgeted finished lot cost with respect to such owned lot) or (y) the Appraised Value.
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“Land Supply Ratio” means, with respect to the Administrative Borrower and its Restricted Subsidiaries for any period, the ratio of (a) the number of lots owned to (b) the number of Units Closed for such period. The Land Supply Ratio shall be calculated on a pro forma basis to give effect to the delivery of Sold Homes or lots acquired or disposed of at any time on or after the first day of the measurement period and prior to the date of determination in connection with the Acquisition, any Permitted Acquisitions and Asset Sales as if such incurrence, assumption, repayment or extinguishing had been effected on the first day of such period; provided that the Land Supply Ratio shall give pro forma effect to the Acquisition as set forth on Schedule 1.1(b).
“Lender” means each financial institution or other entity that (a) is listed on the signature pages hereof as a “Lender” or (b) from time to time becomes a party hereto by execution of an Assignment and Acceptance.
“Lien” means, with respect to any property, asset or right, any mortgage, lien, pledge, collateral assignment, charge, security interest, levy, execution, seizure, attachment, garnishment, or other encumbrance of any kind in the nature of the foregoing in respect of such property, asset or right, whether or not choate, vested or perfected.
“Linked Deposit Accounts” means the following Deposit Accounts maintained by Wachovia Bank National Association: (a) Account No. 200003341735 in the name of Engle Homes Delaware, Inc.; (b) Account No. 2000012137765 in the name of TOUSA Delaware Inc.; and (c) Account No. 2000029799620 in the name of TOUSA Funding LLC.
“Loan Documents” means, collectively, this Agreement, the Term Loan Notes (if any), the Guaranty, the Collateral Documents, and each certificate, agreement or document executed by a Loan Party and delivered to the Administrative Agent or any Lender in connection with or pursuant to any of the foregoing.
“Loan Party” means each Borrower, each Guarantor and each other Restricted Subsidiary of the Administrative Borrower that executes and delivers a Loan Document (other than any Restricted Subsidiary that only executes and delivers an acknowledgement of the pledge of its Stock to the Administrative Agent for the benefit of the Secured Parties).
“Management Services Agreement” means the Amended and Restated Management Services Agreement, dated as of June 13, 2003, between the Administrative Borrower and TOSI as amended, amended and restated, supplemented or otherwise modified from time to time, provided that the terms thereof are no more adverse to the Lenders than the terms as of the Effective Date.
“Material Adverse Change” means a material adverse change in the business, prospects, performance, assets, operations, condition (financial or otherwise), contingent and other liabilities or material agreements of the Administrative Borrower and the other Loan Parties, taken as a whole.
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“Material Adverse Effect” means a material adverse effect on any of (a) the business, prospects, performance, assets, operations, condition (financial or otherwise), contingent and other liabilities or material agreements of the Administrative Borrower and the other Loan Parties, taken as a whole, or (b) the ability of the Administrative Borrower and the other Loan Parties, taken as a whole, to pay the Obligations when due or (c) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Administrative Agent or the Lenders thereunder.
“Model Homes” means all Units which are used as models, sales offices, or design centers to market a particular real estate development project and the contents therein.
“Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.
“Mortgage” means a mortgage, deed of trust, trust deed or similar instrument (including any spreader, amendment, amendment and restatement or similar modification of any existing Mortgage) in form and substance reasonably satisfactory to the Administrative Agent creating a Lien on any Completed Unsold Home, Unsold Home Under Construction, Sold Home, Land/Lots Under Development or Unimproved Land and other Real Property in a principal amount of at least the then aggregate Term Loans.
“Mortgaged Property” means all “Mortgaged Property” referred to in the Mortgages and shall include all Real Property of the Borrowers (other than Excluded Real Property).
“Mortgage Requirements” means, with respect to each individual Mortgaged Property, the following conditions:
(i) the Mortgage has been recorded in the appropriate land records of the applicable Governmental Authority, provided that in connection with such recording, subject to the prior approval of the Administrative Agent, the Borrowers may undertake customary procedures to reduce mortgage recording, transfer, documentary stamp, intangible and similar taxes to be imposed as a result of such recording;
(ii) a Phase I environmental report and, to the extent the relevant Phase I environmental report reveals conditions that would reasonably suggest that a Phase II environmental report should be obtained, a Phase II environmental report, with respect to such Mortgaged Property reviewed (and, as appropriate, updated) by an independent environmental consultant retained by the Administrative Agent on behalf of the Lenders, each in form and substance reasonably satisfactory to the Administrative Agent;
(iii) a fully paid ALTA lender’s policy of title insurance (which may initially be in the form of a “marked-up” title commitment or pro forma policy, provided that the final policy is delivered within a reasonable time thereafter) in an amount equal to the Required Title Insurance Amount, showing no exceptions that would materially impair the value of the applicable Mortgaged Property, containing customary endorsements and otherwise in form and substance reasonably satisfactory to the Administrative Agent,
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insuring the applicable Mortgage to be a valid second and subsisting Lien on the applicable Mortgaged Property; and
(iv) a certificate of property insurance covering such Mortgaged Property naming the Administrative Agent or any third-party security agent as loss payee under property casualty coverages (excluding any such Mortgaged Property constituting Land/Lots Under Development or Unimproved Land), and in all cases, a certificate of liability insurance naming the Administrative Agent and any third party security agent, the Lenders as additional insureds under liability coverages.
“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Administrative Borrower, any of its Restricted Subsidiaries or any ERISA Affiliate has any obligation or liability, contingent or otherwise.
“Net Cash Proceeds” means:
(a) with respect to any Asset Sale (other than any issuance or sale of Stock), the cash proceeds received by the Administrative Borrower or any of its Subsidiaries (including cash proceeds subsequently received (as and when received by the Administrative Borrower or any of its Subsidiaries) in respect of non-cash consideration initially received) net of (i) selling expenses (including reasonable brokers’ fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes and the Administrative Borrower’s good faith estimate of any other taxes paid or payable in connection with such sale) and other expenses incurred or amounts paid to any person other than the Administrative Borrower or any Restricted Subsidiary in connection with such Asset Sale; (ii) amounts provided as a reserve, in accordance with GAAP, or amounts placed in a funded escrow against (x) any liabilities under any indemnification obligations associated with such Asset Sale or (y) any other liabilities retained by the Administrative Borrower or any of its Subsidiaries associated with the properties sold in such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds); (iii) the Administrative Borrower’s good faith estimate of payments required to be made with respect to unassumed liabilities relating to the properties sold within 120 days of such Asset Sale (provided that, to the extent such cash proceeds are not used to make payments in respect of such unassumed liabilities within 120 days of such Asset Sale, such cash proceeds shall constitute Net Cash Proceeds); and (iv) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which is secured by a Lien on the properties sold in such Asset Sale (so long as such Lien was permitted to encumber such properties under the Loan Documents at the time of such sale) and which is repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such properties);
(b) with respect to any Debt Issuance, any Equity Issuance or any other issuance or sale of Stock by the Administrative Borrower or by any of its Subsidiaries (other than a Borrower), the cash proceeds thereof, net of customary fees, commissions, costs
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and other expenses payable to any person other than the Administrative Borrower or any Restricted Subsidiary and incurred in connection therewith; and
(c) with respect to any Casualty Event, the cash insurance proceeds (other than business interruption insurance), condemnation awards and other compensation received in respect thereof, net of all reasonable costs and expenses payable to any person other than the Administrative Borrower or any Restricted Subsidiary and incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Casualty Event and awards or other compensation and repayment of Indebtedness for borrowed money which is secured by a senior Lien on the property subject to such Casualty Event and which is repaid with such proceeds in respect of such Casualty Event.
“Net Working Capital” means, at any time, Consolidated Current Assets at such time minus Consolidated Current Liabilities at such time.
“Non-Consenting Lender” has the meaning assigned to such term in Section 10.1(c) and Section 10.1A(b).
“Non-Funding Lender” has the meaning assigned to such term in Section 2.2(d).
“Non-U.S. Lender” means each Lender or Administrative Agent that is not a United States person as defined in Section 7701(a)(30) of the Code.
“Notice of Borrowing” has the meaning assigned to such term in Section 2.2(a).
“Notice of Conversion or Continuation” has the meaning assigned to such term in Section 2.10(a).
“Obligations” means, without duplication, the Term Loans and all other amounts owing by the Borrowers to the Administrative Agent, any Lender, any Affiliate of any of them or any Indemnitee of every type and description, present or future, arising under this Agreement or any other Loan Document, whether direct or indirect, including all fees, interest (including interest accruing after the maturity of the Term Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrowers, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), charges, expenses, attorneys’ fees and disbursements and other sums chargeable to the Borrowers under this Agreement or any other Loan Document.
“Officers’ Certificate” means, with respect to any Person, a certificate executed by the chairman of the Board of Directors (if an officer), the chief executive officer or the president and one of the financial officers of such Person, each in his or her official (and not individual) capacity.
“OID” has the meaning assigned to such term in Section 2.8(b).
“Original Effective Date” means March 9, 2006.
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“Other Taxes” has the meaning assigned to such term in Section 2.15(b).
“Partial PIK Payment” shall have the meaning assigned to such term in Section 2.9(d)(i).
“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.
“Performance Letters of Credit” means any letter of credit issued (a) on behalf of a Person in favor of a Governmental Authority, including, without limitation, any utility, water, or sewer authority, or other similar entity, for the purpose of assuring such Governmental Authority that such Person or an Affiliate of such Person will properly and timely complete work it has agreed to perform for the benefit of such Governmental Authority; or (b) in lieu of other contract performance, including, without limitation, bid and performance bonds.
“Permit” means any permit, approval, authorization, license, variance or permission required from a Governmental Authority under an applicable Requirement of Law.
“Permitted Acquisition” means the acquisition by the Administrative Borrower or any of its Restricted Subsidiaries of all or substantially all of the assets or Stock of any Person or of any operating division thereof (the “Target”), or the merger of the Target with or into the Administrative Borrower or any Restricted Subsidiary of the Administrative Borrower (with the Administrative Borrower, in the case of a merger with the Administrative Borrower, being the surviving corporation) (each, an “Acquisition”); provided that such Acquisition shall only involve assets located in the Permitted Markets and only for use in the lines of business of the Administrative Borrower or its Restricted Subsidiaries existing on the Effective Date.
“Permitted Holders” means (a) TOSA or any Person of which TOSA “beneficially owns” (as defined in Rule 13d-3 under the Exchange Act), individually or collectively, at least a majority of the total voting power of the Voting Stock of such Person or (b) Deutsche Bank Securities Inc., Highland Capital or any of their respective Affiliates, solely with respect to any Voting Stock owned by any of them converted from the Settlement Preferred Stock or Warrants issued in connection with the Transactions.
“Permitted Markets” means housing markets located in the continental United States of America.
“
Permitted Refinancing Indebtedness” means any Indebtedness issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund (collectively, to “
Refinance”), the Indebtedness being Refinanced (or previous Refinancings thereof constituting Permitted Refinancing Indebtedness);
provided that (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest, closing costs, expenses, fees and premium thereon), (b) the final maturity and average life to maturity of such Permitted Refinancing Indebtedness is greater than or equal to that of the Indebtedness being Refinanced, (c) the covenants, events of default,
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subordination and other provisions thereof (including any guarantees thereof) shall be, in the aggregate, no less favorable to the Lenders than those contained in the Indebtedness being renewed or refinanced, (d) if the Indebtedness being Refinanced is subordinated in right of payment to the Obligations under this Agreement, such Permitted Refinancing Indebtedness shall be subordinated in right of payment to such Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being Refinanced, and (e) no Permitted Refinancing Indebtedness shall have different obligors, or greater guarantees or security, than the Indebtedness being Refinanced.
“Person” means an individual, partnership, corporation (including a business trust), joint stock company, estate, trust, limited liability company, unincorporated association, Joint Venture or other entity, or a Governmental Authority.
“PIK Payment” shall have the meaning assigned to such term in Section 2.9(d)(i).
“Platform” has the meaning assigned to such term in Section 10.19(b).
“Pledge Agreement” means a pledge agreement in form and substance reasonably satisfactory to the Administrative Agent, executed by the Administrative Borrower or any Restricted Subsidiary of the Administrative Borrower, as applicable, owning the equity interest in the applicable Unaffiliated Joint Venture or Unaffiliated Unrestricted Subsidiary, pursuant to which shall be pledged to the Administrative Agent all of the Administrative Borrower’s or such Restricted Subsidiary’s (as the case may be) equity ownership interest in such Unaffiliated Joint Venture or Unaffiliated Unrestricted Subsidiary.
“Proposed Change” has the meaning assigned to such term in Section 10.1(c) and Section 10.1A(b).
“Purchasing Lender” has the meaning assigned to such term in Section 10.7(a).
“Qualified Capital Stock” means all Stock of the Administrative Borrower (other than Disqualified Capital Stock).
“Ratable Portion” or “ratably” means the percentage obtained by dividing (a) the Term Loans of such Lender by (b) the aggregate amount of Term Loans outstanding.
“Real Property” means all of those plots, pieces or parcels of land now owned, leased or hereafter acquired or leased by a Borrower (the “Land”), together with the right, title and interest of such Borrower in and to the streets, the land lying in the bed of any streets, roads or avenues, opened or proposed, in front of, the air space and development rights pertaining to the Land and the right to use such air space and development rights, all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining thereto, all fixtures, all easements now or hereafter benefiting the Land and all royalties and rights appertaining to the use and enjoyment of the Land necessary for the residential development of such Land, together with all of the buildings and other improvements now or hereafter erected on the Land, and any fixtures appurtenant thereto.
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“Register” has the meaning assigned to such term in Section 10.2(c).
“Release” means, with respect to any Person, any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration, in each case, of any Contaminant into the indoor or outdoor environment or into or out of any property owned or operated by such Person, including the movement of Contaminants through or in the air, soil, surface water, ground water or property.
“Remedial Action” means all actions required to (a) clean up, remove, treat or in any other way address any Contaminant in the indoor or outdoor environment, (b) prevent the Release or threat of Release or minimize the further Release of a Contaminant so that it does not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment or (c) perform pursuant to Environmental Laws pre-remedial studies and investigations and post-remedial monitoring and care.
“Required Title Insurance Amount” means with respect to any Mortgage covering Mortgaged Property located in the State of Texas, not less than 25% of the aggregate value of the Mortgaged Property then covered by such Mortgage determined in conformity with GAAP.
“Requirement of Law” means, with respect to any Person, the common law and all federal, state, local and foreign laws, rules and regulations, orders, judgments, decrees and other determinations of any Governmental Authority or arbitrator, applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject (including, without limitation, any Environmental Law).
“Requisite Lenders” means, collectively, Lenders having a majority of the aggregate outstanding amount of the Term Loan Commitments or, after the Effective Date, a majority of the aggregate Term Loans outstanding. No Non-Funding Lender nor any Affiliate of any Loan Party that is a Lender shall be included in the calculation of “Requisite Lenders.”
“Responsible Officer” means, with respect to any Person, any of the principal executive officers, managing members or general partners of such Person, but in any event, with respect to financial matters, the chief financial officer, chief accounting officer, treasurer, assistant treasurer, vice president of finance or controller of such Person.
“Restricted Payment” means (a) any dividend, distribution or any other payment whether direct or indirect, on account of any Stock or Stock Equivalents of the Administrative Borrower or any of its Restricted Subsidiaries now or hereafter outstanding, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Stock or Stock Equivalents of the Administrative Borrower now or hereafter outstanding and (c) any payment of principal or premium on, the Existing Notes, the Settlement Subordinated Debt, any other Senior Unsecured Indebtedness or any other Subordinated Indebtedness, in each case prior to the stated maturity thereof.
“Restricted Subsidiary” means each Subsidiary of the Administrative Borrower, other than (i) those that have been properly designated pursuant to Section 6.16 as an
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Unrestricted Subsidiary and (ii) those Subsidiaries engaged primarily in the business of originating residential home loans, title insurance and reinsurance.
“Revolving Credit Administrative Agent” means CNAI, in its capacity as administrative agent under the Revolving Credit Agreement, and its successors and assigns.
“Revolving Credit Agreement” means (i) that certain amended and restated revolving credit agreement dated as of the Original Effective Date and amended and restated on the Effective Date among the Borrowers, the lenders party thereto and CNAI as administrative agent for the Revolving Credit Secured Parties, as amended, restated, supplemented or modified from time to time to the extent permitted by this Agreement and the Intercreditor Agreement and (ii) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has been incurred to extend (subject to the limitations set forth herein and in the Intercreditor Agreement) or refinance or replace in whole or in part the Indebtedness and other obligations outstanding under the credit agreement or credit agreements referred to in clauses (i) and (ii) unless such agreement or instrument expressly provides that it is not intended to be and is not a “Revolving Credit Agreement” hereunder. Any reference to the Revolving Credit Agreement hereunder shall be deemed a reference to any Revolving Credit Agreement then in existence.
“Revolving Credit Commitments” means the “Revolving Credit Commitments” as defined in the Revolving Credit Agreement.
“Revolving Credit Loan Documents” means the Revolving Credit Agreement and the other “Loan Documents” as defined in the Revolving Credit Agreement, including each mortgage and other security documents, guaranties and the notes (if any) issued thereunder.
“Revolving Credit Outstandings” means at any particular time, the sum of (a) the principal amount of the revolving loans outstanding at such time plus (b) the letter of credit obligations outstanding at such time plus (c) the principal amount of the swing loans outstanding at such time, in each case under the Revolving Credit Agreement.
“Revolving Credit Secured Parties” means the Revolving Credit Administrative Agent and each Person that is a lender under the Revolving Credit Agreement.
“Revolving Loans” means the senior secured first lien revolving loans under the Revolving Credit Agreement.
“S&P” means Standard & Poor’s Rating Services or any successor to the rating agency business thereof.
“Scheduled Termination Date” means the sixth anniversary of the Effective Date.
“SEC” means the Securities and Exchange Commission.
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“Secured Hedging Contract” means any Hedging Contract between any Loan Party and a lender under the Revolving Credit Agreement or the First Lien Term Loan Credit Agreement or an Affiliate of any such lender or any Person that was a lender under the Revolving Credit Agreement or the First Lien Term Loan Credit Agreement or an Affiliate of any such lender at the time such agreement was entered into.
“Secured Parties” means the Administrative Agent and the Lenders.
“Security” means any Stock, Stock Equivalent, voting trust certificate, bond, debenture, note or other evidence of Indebtedness, whether secured, unsecured, convertible or subordinated, or any certificate of interest, share or participation in, or any temporary or interim certificate for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing, but shall not include any evidence of the Obligations.
“Securities Account” has the meaning assigned to such term in the Security Agreement.
“Security Agreement” means that certain Security Agreement dated as of the Effective Date between the Administrative Borrower, and certain of its Subsidiaries, as grantors, and the Administrative Agent, as secured party, as amended, modified or supplemented from time to time.
“Selling Lender” has the meaning assigned to such term in Section 10.7(a).
“Senior Notes” means, collectively, (i) the 9% Senior Notes due 2010 issued by the Administrative Borrower pursuant to the Indenture dated as of February 3, 2003 between the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to Wells Fargo Bank Minnesota, National Association), as trustee, and the Indenture dated as of June 25, 2002, between the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to Wells Fargo Bank Minnesota, National Association), as trustee, and (ii) the 81/4% Senior Notes due 2011 issued by the Administrative Borrower pursuant to the Indenture dated as of April 12, 2006 between the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to Wells Fargo Bank Minnesota, National Association), as trustee or any Permitted Refinancing Indebtedness of any Indebtedness identified in clause (i) or (ii).
“Senior Unsecured Indebtedness” means, at any time, the Indebtedness of the Administrative Borrower and its Subsidiaries comprised of (a) the outstanding principal amount of the Senior Notes outstanding at such time and (b) the outstanding principal amount of all other unsecured Indebtedness which is pari passu to the Senior Notes other than trade payables that are not more than 90 days past the original invoice date thereof.
“Settlement Documents” means (i) each of the settlement and release documents and/or payoff letters, (ii) each exhibit, schedule, annex or other attachment thereto and (iii) each agreement, certificate, instrument, registration rights agreement, letter or other document contemplated thereby or any item referred to in clause (ii) to be entered into (including without limitation various mutual release and/or consent agreements contemplated thereby), executed or
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delivered or to become effective in connection with the Acquisition or the settlement of claims with respect to the Transeastern Events or otherwise entered into, executed or delivered in connection with the Acquisition or the settlement of claims with respect to the Transeastern Events, and including each certificate, agreement or document executed in connection with or pursuant to any of the foregoing, relating to the Acquisition or the settlement of claims with respect to the Transeastern Events and providing for a release and discharge of all claims and obligations relating thereto, including, without limitation, all liabilities relating to certain guarantees issued in connection with the Transeastern JV Credit Agreements (as defined below), entered into by TOUSA, Inc., TOUSA LLC, TOUSA Homes, L.P., and TOI, LLC and the Transeastern JV Entities, on the one hand, with each of the following parties, on the other hand:
(a) Falcone/TEP Holdings, LLC, f/k/a Falcone/Ritchie LLC (“Falcone Ritchie”), TEP Holdings, Inc., f/k/a Transeastern Properties, Inc., Arthur J. Falcone; Edward W. Falcone; and certain affiliates of the foregoing dated as of May 30, 2007 (as extended and amended by that certain letter agreement, dated as of June 29, 2007, the “Falcone Settlement Agreement”);
(b) Kendall Land Development, LLC, Boschetti Capital Partners LLC, Prestige Builders Capital Investments, LLC, Jose Boschetti, Sylvia Boschetti, Martin Caparros, Jr. and Patricia Caparros dated as of June 29, 2007;
(c) the lenders party to the Transeastern Credit Agreement and the CIT Group/Business Credit, Inc., as administrative agent, dated as of June 29, 2007;
(d) the lenders party to the Transeastern Senior Mezzanine Credit Agreement, Deutsche Bank, as Administrative Agent, and Deutsche Bank Securities Inc., as Sole Lead Arranger and Sole Book Running Manager and plaintiff in the action commenced on March 26, 2007 in the Commercial Division of the Supreme Court for the State of New York, County of New York, styled Deutsche Bank Securities Inc. v. Technical Olympic USA, Inc., EH/Transaction, LLC and TE/TOUSA Senior, LLC, Index No. 600974/07 (the “DBSI Action”), dated as of June 29, 2007; and
(e) the lenders party to the Transeastern Junior Mezzanine Credit Agreement, Deutsche Bank, as Administrative Agent, and Deutsche Bank Securities Inc., as Sole Lead Arranger and Sole Book Running Manager and plaintiff in the DBSI Action, dated as of June 29, 2007.
“Settlement Preferred Stock” means the 8% Series A Convertible Pay-in-Kind Preferred Stock issued by the Administrative Borrower pursuant to that certain certificate of designation filed with Secretary of State of the state of Delaware on the Effective Date.
“Settlement Subordinated Debt” means the 14.75% Senior Subordinated PIK Election Notes due 2015 issued by the Administrative Borrower pursuant to the Indenture dated as of July 31, 2007 between the Administrative Borrower, the subsidiary guarantors and Wells Fargo Bank, National Association, as trustee.
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“Sold Homes” means all Entitled Land (other than Unimproved Land) on which a Unit has been, is being or will be constructed pursuant to a Contract for Sale and for which such Contract for Sale is in effect, the value of which is determined in conformity with GAAP.
“Stock” means shares of capital stock (whether denominated as common stock or preferred stock), beneficial, partnership or membership interests, participations or other equivalents (regardless of how designated) or other equity equivalents of any nature of or in a corporation, partnership, limited liability company or equivalent entity, whether voting or non-voting.
“Stock Equivalents” means all securities convertible into or exchangeable for Stock and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently convertible, exchangeable or exercisable.
“Subordinated Indebtedness” means any Indebtedness of the Administrative Borrower and its Restricted Subsidiaries that is subordinated to the Obligations on terms and conditions not materially less favorable to the Lenders than the terms and conditions of the Subordinated Notes.
“Subordinated Notes” means, collectively, (i) the 103/8% Senior Subordinated Notes due 2012 issued by the Administrative Borrower pursuant to the Indenture dated as of June 25, 2002, between the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to Wells Fargo Bank National Association), as trustee, (ii) the 71/2% Senior Subordinated Notes due 2011 issued by the Administrative Borrower pursuant to the Indenture dated as of March 10, 2004 between the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to Wells Fargo Bank Minnesota, National Association), as trustee, and (iii) the 71/2% Senior Subordinated Notes due 2015 issued by the Administrative Borrower pursuant to the Indenture dated as of December 21, 2004 between the Administrative Borrower and Wells Fargo Bank, N.A. (as successor by consolidation to Wells Fargo Bank Minnesota, National Association), as trustee; or any Permitted Refinancing Indebtedness of any Indebtedness identified in clauses (i), (ii) or (iii).
“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company or other business entity of which an aggregate of over 50% of the outstanding Voting Stock is, at the time, directly or indirectly, owned or controlled by such Person and/or one or more Subsidiaries of such Person.
“Subsidiary Borrower” and “Subsidiary Borrowers” have the meanings assigned to such terms in the preamble hereto.
“Tangible Net Worth” means, with respect to the Administrative Borrower and its Restricted Subsidiaries, the net worth of the Administrative Borrower and its Restricted Subsidiaries, determined in conformity with GAAP, less all intangible assets of the Administrative Borrower and its Restricted Subsidiaries but excluding any non-cash gain or loss resulting from any mark-to-market adjustments made directly to the net worth of the Administrative Borrower and its Restricted Subsidiaries on a Consolidated basis as a result of fluctuations in the value of
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financial instruments owned by the Administrative Borrower and its Restricted Subsidiaries as required under SFAS 133.
“Tax Affiliate” means, with respect to any Person, (a) any Subsidiary of such Person, and (b) any Affiliate of such Person with which such Person files or is eligible to file Consolidated, combined or unitary tax returns.
“Tax Allocation Agreement” means the Tax Allocation Agreement dated as of March 15, 2000 between Technical Olympic, Inc. and the Administrative Borrower, as amended, amended and restated or otherwise modified from time to time, provided that the terms thereof (other than any statutory change in tax rates) are no more adverse to the Lenders than the terms as of the Effective Date.
“Tax Return” has the meaning assigned to such term in Section 4.7(a).
“Taxes” means any and all present or future taxes, duties, levies, imposts, assessments, deductions, withholdings or other similar charges imposed by any Governmental Authority whether computed on a separate, consolidated, unitary, combined or other basis and any interest, fines, penalties or additions to tax with respect to the foregoing.
“Term Loan” has the meaning assigned to such term in Section 2.1.
“Term Loan Commitment” means, with respect to each Lender, the commitment of such Lender to make Term Loans in the aggregate principal amount outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule I under the caption “Term Loan Commitment,” as amended to reflect each Assignment and Acceptance or Assumption Agreement executed by such Lender and as such amount may be increased or reduced pursuant to this Agreement. The initial aggregate amount of the Lenders’ Term Loan Commitments is $300,000,000.
“Term Loan Note” means a promissory note of the Borrowers substantially in the form of Exhibit C payable to the order of any Lender in a principal amount equal to the amount of Term Loans made by such Lender evidencing the aggregate Indebtedness of the Borrowers to such Lender resulting from the Term Loans owing to such Lender.
“Term Loan Termination Date” means the earliest of (a) the Scheduled Termination Date, (b) the Early Maturity Date and (c) the date on which the Obligations become due and payable pursuant to Section 8.2.
“Title IV Plan” means a pension plan, other than a Multiemployer Plan, covered by Title IV of ERISA and to which the Borrower, any of its Restricted Subsidiaries or any ERISA Affiliate has any obligation or liability (contingent or otherwise).
“TOSA” means Technical Olympic SA, a Greek publicly traded company.
“TOSI” means Technical Olympic Services, Inc., a Delaware corporation.
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“Total Assets” of any Person means, at any date, (a) the total assets of such Person and its Restricted Subsidiaries at such date determined on a Consolidated basis in conformity with GAAP minus (b) any Securities issued by such Person or its Subsidiaries held as treasury securities.
“Total Land” means Unimproved Land and Land/Lots Under Development.
“Total Leverage Ratio” means, with respect to the Administrative Borrower at any date of determination, the ratio of (a) all Indebtedness of the Administrative Borrower and its Restricted Subsidiaries as of such date less (i) Unrestricted Cash in excess of $10,000,000 and (ii) any Escrow Proceeds Receivables in connection with Contracts for Sale to (b) Adjusted Consolidated Tangible Net Worth of the Administrative Borrower and its Restricted Subsidiaries at such date.
For purposes of this definition, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Administrative Borrower. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of calculation of the Total Leverage Ratio had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capital Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Administrative Borrower in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Administrative Borrower may designate.
“Transactions” means the settlement of the Transeastern Events, the Acquisition, the repayment of Indebtedness listed on Schedule 1.1(a), the issuance of the Settlement Preferred Stock warrants, and the execution, delivery and negotiation of the Loan Documents, the Revolving Credit Loan Documents and the First Lien Loan Documents and the initial borrowings hereunder and thereunder.
“Transeastern Credit Agreement” means that certain $450,000,000 Credit Agreement, and all ancillary documents related thereto (the “Senior Debt”), dated as of August 1, 2005, by and among EH/Transeastern, LLC (“EHT”) and TE/TOUSA Senior, LLC (“TE/TOUSA Senior”), as borrowers, the lenders from time to time party thereto, Deutsche Bank Trust Company Americas (“Deutsche Bank”), as administrative agent, and Deutsche Bank Securities Inc., as Sole Lead Arranger and Sole Book Running Manager, which Senior Debt is secured by first liens on substantially all the assets of EHT and a pledge of the membership interests in EHT held by TE/TOUSA Senior.
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“Transeastern Events” means the matters disclosed by the Administrative Borrower in its report on Form 10-Q for the quarter ending March 31, 2007 filed with the SEC on May 9, 2007 relating to EH/Transeastern, LLC and the Transeastern JV Entities.
“Transeastern Junior Mezzanine Credit Agreement” means that certain $87,500,000 Junior Mezzanine Credit Agreement, and all ancillary documents related thereto (the “Junior Mezz Debt”), dated as of August 1, 2005, by and among TE/TOUSA Mezzanine Two, LLC (“TE/TOUSA Mezz Two”), as borrower, the lenders from time to time a party thereto, Deutsche Bank Trust Company Americas, as administrative agent, and Deutsche Bank Securities Inc., as Sole Lead Arranger and Sole Book Running Manager, which Junior Mezz Debt is secured by a pledge of the membership interests of TE/TOUSA Mezzanine, LLC and TE/TOUSA Mezz Two held, respectively, by TE/TOUSA Mezz Two and TE/TOUSA, LLC.
“Transeastern JV Credit Agreements” means the Transeastern Credit Agreement, the Transeastern Senior Mezzanine Credit Agreement, the Transeastern Junior Mezzanine Credit Agreement and all ancillary documents related thereto.
“Transeastern JV Entities” means TE/TOUSA, LLC and each of its subsidiaries.
“Transeastern Senior Mezzanine Credit Agreement” means that certain $137,500,000 Senior Mezzanine Credit Agreement, and all ancillary agreements related thereto (the “Senior Mezz Debt”) dated as of August 1, 2005, by and among TE/TOUSA Mezzanine, LLC, as borrower, the lenders from time to time a party thereto, Deutsche Bank Trust Company Americas, as administrative agent, and Deutsche Bank Securities Inc., as Sole Lead Arranger and Sole Book Running Manager, which Senior Mezz Debt is secured by a pledge of the membership interests of TE/TOUSA Senior, LLC held by TE/TOUSA Mezzanine, LLC.
“Type,” when used in reference to any Term Loan or Borrowing, refers to whether the rate of interest on such Term Loan, or on the Term Loans comprising such Borrowing, is determined by reference to the Eurodollar Base Rate or the Base Rate.
“UCC” means the Uniform Commercial Code then in effect for the State of New York, or such other jurisdiction as the context may require.
“Unaffiliated” means, with respect to a Joint Venture or an Unrestricted Subsidiary, as the case may be, an entity for which all of the ownership or equity interests that are not owned by the Administrative Borrower or any Restricted Subsidiary of the Administrative Borrower are owned by persons who are not Permitted Holders or Affiliates of Permitted Holders.
“Unimproved Land” means all Entitled Land not included in any other category of Borrowing Base Assets, the value of which is the lesser of (x) value determined in conformity with GAAP and (y) the appraised value determined, from time to time in accordance with the Mortgage Requirements.
“Unit” means a single or multi-family residential unit, including a condominium and townhouse unit located on Entitled Land that would, but for the existence of such Unit, constitute Land/Lots Under Development.
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“Units Closed” means a Unit for which the purchase price therefor has been paid and the title therefor has been delivered to a purchaser in accordance with a Contract for Sale for such Unit.
“Unrestricted Cash” means all cash and Cash Equivalents of the Administrative Borrower and its Restricted Subsidiaries that is not subject to a Lien or other restriction other than Liens in favor of the Administrative Agent, any Lender, any Affiliate of any of them or any Indemnitee.
“Unrestricted Subsidiary” means any Subsidiary of the Administrative Borrower designated as an “Unrestricted Subsidiary” in accordance with Section 6.16 and which is not a Restricted Subsidiary.
“Unsold Homes Under Construction” means all Units for which building permits have been issued and construction has commenced, but not completed, and for which there is no Contract for Sale is in effect, the value of which is the lesser of (x) value determined in conformity with GAAP and (y) the Appraised Value.
“Unsold Units” means Unsold Homes Under Construction and Completed Unsold Homes.
“USA Patriot Act” has the meaning assigned to such term in Section 4.19(a).
“U.S. Bank Accounts” means the following custodial accounts maintained by U.S. Bank: (a) Account No. ###-###-#### in the name of Engle Homes Delaware, Inc.; (b) Account No. ###-###-#### in the name of TOUSA Delaware Inc.; and (c) Account No. ###-###-#### in the name of TOUSA Funding LLC.
“Voting Stock” means Stock of any Person having ordinary power to vote in the election of members of the board of directors, managers, trustees or other controlling Persons, of such Person (irrespective of whether, at the time, Stock of any other class or classes of such entity shall have or might have voting power by reason of the happening of any contingency).
“Warrants” has the meaning assigned to such term in Section 3.1(c)(v).
“Wholly-Owned Subsidiary” means, in respect of any Person, any Subsidiary of such Person, all of the Stock of which (other than director’s qualifying shares as may be required by law) is owned by such Person either directly or indirectly through one or more Wholly-Owned Subsidiaries of Such Person.
Section 1.2 Computation of Time Periods.
In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including.”
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Section 1.3 Accounting Terms and Principles.
Except as set forth below, all accounting terms not specifically defined herein shall be construed in conformity with GAAP and all accounting determinations required to be made pursuant hereto shall, unless expressly otherwise provided herein, be made in conformity with GAAP.
Section 1.4 Certain Terms.
(a) The words “herein,” “hereof” and “hereunder” and similar words refer to this Agreement as a whole, and not to any particular Article, Section, subsection or clause in this Agreement.
(b) Unless otherwise expressly indicated herein, references in this Agreement to an Exhibit, Schedule, Article, Section, subsection or clause refer to the appropriate Exhibit or Schedule to, or Article, Section, subsection or clause in this Agreement.
(c) Each agreement defined in this Article I or otherwise referred to herein or in any other Loan Document shall include all appendices, exhibits and schedules thereto. Unless the prior written consent of the Requisite Lenders is required hereunder for an amendment, restatement, supplement or other modification to any such agreement and such consent is not obtained, references in this Agreement to any such agreement shall be to such agreement as so amended, restated, supplemented, modified or replaced.
(d) References in this Agreement to any statute shall be to such statute as amended or modified and in effect at the time any such reference is operative.
(e) The term “including” when used in any Loan Document means “including without limitation” except when used in the computation of time periods.
(f) The terms “Lender” and “Administrative Agent” include their respective successors.
(g) Upon the appointment of any successor Administrative Agent pursuant to Section 9.6, references to CNAI in Section 9.3 shall be deemed to refer to the financial institution then acting as the Administrative Agent or one of its Affiliates if it so designates.
(h) Unless otherwise defined herein or in any other Loan Document, terms used in this Agreement that are defined in the UCC shall have the meanings given to such terms in the UCC.
(i) Unless otherwise expressly indicated herein, references in this Agreement to interest shall include default interest.
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ARTICLE II
THE FACILITY
Section 2.1 The Term Loan Commitments.
On the terms and subject to the conditions contained in this Agreement, including with respect to any PIK Payment under Section 2.9, each Lender severally agrees to make loans (each, a “Term Loan”) in Dollars to the Borrowers on the Effective Date in an aggregate principal amount not to exceed for all such loans by such Lender such Lender’s Term Loan Commitment, which Term Loan Commitments are set forth in Schedule I hereto. Term Loans repaid may not be reborrowed. Such Term Loans shall include, without limitation, any increase in the principal amount of the Loans as a result of a PIK Payment.
Section 2.2 Borrowing Procedures.
(a) The initial Borrowing shall be made on written notice (or verbal notice followed by written notice within six hours of such verbal notice) given by the Administrative Borrower on behalf of the Borrowers to the Administrative Agent not later than 1:00 p.m. (New York City time) (i) one Business Day, in the case of a Borrowing of Base Rate Loans and (ii) three Business Days, in the case of a Borrowing of Eurodollar Rate Loans, prior to the Effective Date. Each written notice shall be in substantially the form of Exhibit D (a “Notice of Borrowing”) specifying (A) the date of such proposed Borrowing, which shall be the Effective Date, (B) the aggregate amount of such proposed Borrowing, (C) whether any portion of the proposed Borrowing will be of Base Rate Loans or Eurodollar Rate Loans and (D) the initial Interest Period or Periods for any such Eurodollar Rate Loans. The Term Loans shall be made as Base Rate Loans unless, subject to Section 2.13, the Notice of Borrowing specifies that all or a portion thereof shall be Eurodollar Rate Loans. Each Borrowing of Eurodollar Rate Loans shall be in an aggregate amount of not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and each Borrowing of Base Rate Loans shall be in an aggregate amount of not less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof.
(b) The Administrative Agent shall give to each Lender prompt notice of the Administrative Agent’s receipt of a Notice of Borrowing and, if Eurodollar Rate Loans are properly requested in such Notice of Borrowing, the applicable interest rate determined pursuant to Section 2.13(a). Each Lender shall, before 11:00 a.m. (New York City time) on the Effective Date, make available to the Administrative Agent at its address referred to in Section 10.8, in immediately available funds, such Lender’s Ratable Portion of such proposed Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Section 3.1 and Section 3.2, the Administrative Agent shall make such funds available to the Borrowers.
(c) Unless the Administrative Agent shall have received notice from a Lender prior to the Effective Date that such Lender will not make available to the Administrative Agent such Lender’s Ratable Portion of the Borrowing, the Administrative Agent may assume that such Lender has made such Ratable Portion available to the Administrative Agent on the Effective
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Date in accordance with this Section 2.2 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrowers on such date a corresponding amount. If and to the extent that such Lender shall not have so made such Ratable Portion available to the Administrative Agent, such Lender (on the one hand) and the Borrowers (on the other hand) severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrowers until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrowers, the interest rate applicable at the time to the Term Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate for the first Business Day and thereafter at the interest rate applicable at the time to the Term Loans comprising such Borrowing. If such Lender shall repay to the Administrative Agent such corresponding amount, such corresponding amount so repaid shall constitute such Lender’s Term Loan as part of such Borrowing for purposes of this Agreement. If the Borrowers shall repay to the Administrative Agent such corresponding amount, such payment shall not relieve such Lender of any obligation it may have hereunder to the Borrowers.
(d) The failure of any Lender to make the Term Loan or any payment required by it on the date specified (each such Lender, a “Non-Funding Lender”) shall not relieve any other Lender of its obligations to make such Term Loan or payment on such date, but no such other Lender shall be responsible for the failure of any Non-Funding Lender to make a Term Loan or payment required under this Agreement.
Section 2.3 [Reserved].
Section 2.4 [Reserved].
Section 2.5 Reduction and Termination of the Term Loan Commitments. The Term Loan Commitments shall automatically terminate upon the earlier of the funding of the Term Loans and 5:00 p.m., New York City time, on the Effective Date.
Section 2.6 Repayment of Term Loans. The Borrowers promise to repay the entire unpaid principal amount of the Term Loans (which, for the avoidance of doubt, shall equal an aggregate principal amount of $300,000,000, plus any increase in the principal amount of the outstanding Term Loans as a result of PIK Payments, less any repayments prior to the Term Loan Termination Date) on the Term Loan Termination Date.
Section 2.7 Evidence of Debt.
(a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing Indebtedness of the Borrowers to such Lender resulting from each Term Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.
(b) The Administrative Agent shall maintain accounts in accordance with its usual practice in which it shall record (i) the amount of each Term Loan made and, if a Eurodollar Rate Loan, the Interest Period applicable thereto, (ii) the amount of any principal or interest
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due and payable by the Borrowers to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrowers, whether such sum constitutes principal or interest, fees, expenses or other amounts due under the Loan Documents and each Lender’s Ratable Portion thereof, if applicable.
(c) The entries made in the accounts maintained pursuant to clauses (a) and (b) of this Section 2.7 shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations recorded therein; provided, however, that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrowers to repay the Term Loans in accordance with their terms.
(d) Notwithstanding any other provision of the Agreement, in the event that any Lender requests that the Borrowers execute and deliver a promissory note or notes payable to such Lender in order to evidence the Indebtedness owing to such Lender by the Borrowers hereunder, the Borrowers will promptly execute and deliver a Term Loan Note or Term Loan Notes to such Lender evidencing any Term Loans of such Lender.
Section 2.8 Prepayments.
(a) Optional Prepayments of Term Loans. The Term Loans may not be prepaid prior to the first anniversary of the Effective Date. On or after the first anniversary of the Effective Date, the Borrowers may prepay the outstanding principal amount of any Term Loans in whole or in part, subject to Section 2.8(j) and (k); provided, however, that (i) if any prepayment of any Eurodollar Rate Loan is made by the Borrowers other than on the last day of an Interest Period for such Term Loan, the Borrowers shall also pay any amounts owing pursuant to Section 2.8(j) and Section 2.13(e) and (ii) each partial prepayment of Eurodollar Rate Loans shall be in an aggregate principal amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof (or the remaining balance of the Term Loans, if less) and each partial prepayment of Base Rate Loans shall be in an aggregate principal amount not less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof (or the remaining balance of the Term Loans, if less). Upon the giving of such notice of prepayment, the principal amount of Term Loans specified to be prepaid shall become due and payable on the date specified for such prepayment (except that any notice of prepayment in connection with the refinancing of all of the Term Loans may be contingent upon the consummation of such refinancing).
(b) Mandatory Prepayment of Term Loans. If at the end of any accrual period (as defined in section 1272(a)(5) of the Code) ending on or after the fifth anniversary of the Effective Date, the aggregate amount of original issue discount (within the meaning of sections 163(i) and 1272 of the Code) (“OID”) accrued on any Term Loan from the Effective Date to the end of such accrual period less any cash payments received before the end of such accrual period in respect of such OID exceeds the product of (x) the issue price (as defined in sections 1273(b) and 1274(a) of the Code) of such Term Loan and (y) the yield to maturity (as defined in Treasury Regulation section 1.1272-1(b)(1)(i)) of such Term Loan, then the Borrower shall prepay in cash a portion of such Term Loan equal to such excess amount (any such cash payment, an “AHYDO Catch-Up Payment”).
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(c) Asset Sales. Not later than five Business Days following the receipt of any Net Cash Proceeds of any Asset Sale by the Administrative Borrower or any of its Subsidiaries, the Administrative Borrower shall (x) deliver a Borrowing Base Certificate as required by Section 6.1(i)(ii) and (y) subject to Section 2.8(k), make prepayments of Loans in accordance with Sections 2.8(h) and (i) in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that:
(i) no such prepayment shall be required under this Section 2.8(c) with respect to (A) the disposition of property which constitutes a Casualty Event, or (B) Asset Sales for Fair Market Value resulting in no more than $10,000,000 in any fiscal year; provided that clause (B) shall not apply in the case of any Asset Sale described in clause (b) of the definition thereof; and
(ii) so long as no Event of Default shall then exist or would arise therefrom, such proceeds shall not be required to be so applied on such date to the extent that the Administrative Borrower shall have delivered an Officers’ Certificate to the Administrative Agent on or prior to such date stating that such Net Cash Proceeds are expected to be reinvested or committed to be reinvested in inventory in housing markets in which the Loan Parties operate on the Effective Date within 180 days following the date of receipt of Net Cash Proceeds from such Asset Sale (which Officers’ Certificate shall set forth the estimates of the proceeds to be so expended); provided that if all or any portion of such Net Cash Proceeds is not so reinvested or committed to be re-invested within such 180-day period, such unused portion shall be applied on the last day of such period as a mandatory prepayment as provided in this Section 2.8(c).
(d) Debt Issuance or Disqualified Capital Stock Issuance. Not later than three Business Days following the receipt of any Net Cash Proceeds of any Debt Issuance or Disqualified Capital Stock Issuance by the Administrative Borrower or any of its Subsidiaries, the Administrative Borrower shall, subject to Section 2.8(k), make prepayments of Term Loans in accordance with Sections 2.8(h) and (i) in an aggregate amount equal to 100% of such Net Cash Proceeds.
(e) Equity Issuance. Not later than three Business Days following the receipt of any Net Cash Proceeds of any Equity Issuance (including without limitation, Qualified Capital Stock), the Administrative Borrower shall, subject to Section 2.8(k), make pre-payments of Term Loans in accordance with Sections 2.8(h) and (i) in an aggregate amount equal to 50% of such Net Cash Proceeds; provided that the percentage in this Section 2.8(e) shall be reduced to 25% if the Total Leverage Ratio shall not exceed 1.50:1.00 and the Interest Coverage Ratio shall not be less than 1.75:1.00, in each case for the most recent period for which financial statements have been delivered pursuant to Section 6.1(a) or (b).
(f) Casualty Events. Not later than five Business Days following the receipt of any Net Cash Proceeds from a Casualty Event by the Administrative Borrower or any of its Subsidiaries, the Administrative Borrower shall, subject to Section 2.8(k), make prepayments of Term Loans in accordance with Sections 2.8(h) and (i) in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that:
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(i) so long as no Event of Default shall then exist or arise therefrom, such proceeds shall not be required to be so applied on such date to the extent that such Net Cash Proceeds shall not exceed $10,000,000 in any fiscal year and the Administrative Borrower shall have delivered an Officers’ Certificate to the Administrative Agent on or prior to such date stating that such proceeds are expected to be used or committed to be used to repair, replace or restore any property in respect of which such Net Cash Proceeds were paid or to reinvest in inventory in housing markets in which the Loan Parties operate on the Effective Date, no later than 180 days following the date of receipt of such Net Cash Proceeds; and
(ii) if any portion of such Net Cash Proceeds shall not be so applied or committed to be applied within such 180-day period, such unused portion shall be applied on the last day of such period as a mandatory prepayment as provided in this Section 2.8(f).
(g) Excess Cash Flow. No later than five Business Days after the date on which the financial statements with respect to such fiscal year in which such Excess Cash Flow Period occurs are or are required to be delivered pursuant to Section 6.1(a), the Administrative Borrower shall make prepayments of Term Loans in accordance with Sections 2.8(h) and (i) in an aggregate amount equal to (i) 75% of Excess Cash Flow for the Excess Cash Flow Period then ended, minus (ii) any voluntary prepayments of Term Loans and any voluntary prepayments of Second Lien Loans, other than in each case voluntary prepayments funded directly or indirectly with the proceeds of Indebtedness, minus (iii) the difference, if positive, of the amount of Revolving Loans and Swing Loans outstanding at the end of the prior Excess Cash Flow Period (or the beginning of the Excess Cash Flow Period in the case of the first Excess Cash Flow Period) over the amount of Revolving Loans and Swing Loans outstanding at the end of such Excess Cash Flow Period, minus (iv) any prepayments of Revolving Loans from such Excess Cash Flow required to be made pursuant to the terms of the Revolving Credit Agreement as in effect on the Effective Date; provided that the percentage in this clause (g) shall be reduced to 50% if the Total Leverage Ratio shall not exceed 1.50:1.00 and the Interest Coverage Ratio shall not be less than 1.75:1.00, in each case as of the last day of such fiscal year.
(h) Application of Prepayments. Prior to any optional or mandatory prepayment hereunder, the Administrative Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to Section 2.8(i), subject to the provisions of this clause (h). Notwithstanding anything to the contrary in this clause (h), during the continuance of an Event of Default, optional and mandatory prepayments shall be applied in accordance with Section 2.12(f).
(i) Notice of Prepayment. The Administrative Borrower shall notify the Administrative Agent by written notice (including by facsimile or electronic transmission) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Rate Borrowing, not later than 11:00 a.m. (New York City time) three Business Days before the date of prepayment and (ii) in the case of prepayment of an Base Rate Borrowing, not later than 11:00 a.m. (New York City time) one Business Day before the date of prepayment. Each such notice shall be irrevocable (except that any notice of prepayment in connection with the refinancing of all of the Term Loans may be contingent upon the consummation of such refinancing). Each such notice shall
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specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof.
(j) Prepayment Premium. Each prepayment pursuant to this Section 2.8 (whether optional or mandatory) shall be accompanied by a premium payable by the Administrative Borrower equal to (i) if such prepayment or payment is made after the first anniversary of the Effective Date but on or prior to the second anniversary of the Effective Date, 2.00% of the principal amount of the Term Loans so prepaid and (ii) if such prepayment or payment is made after the second anniversary of the Effective Date but on or prior to the third anniversary of the Effective Date, 1.00% of the principal amount of the Term Loans so prepaid. All such premium payments shall be paid to the Administrative Agent for the ratable benefit of the Lenders.
(k) Compliance with Revolving Credit Agreement and First Lien Term Loan Credit Agreement. Notwithstanding anything to the contrary in this Section 2.8,
(i) no prepayments of Term Loans shall be permitted pursuant to Section 2.8(a) or required pursuant to Section 2.8(g) unless (A)(x) no Revolving Loans (including swing loans) are outstanding (other than undrawn letters of credit) and (y) the First Lien Term Loans have been repaid in full or (B) the Revolving Lenders and the First Lien Term Loan Lenders each permit the prepayment under the Revolving Credit Agreement and the First Lien Term Loan Credit Agreement, respectively; and
(ii) no prepayments of Term Loans shall be required pursuant to Section 2.8(c), (d), (e) or (f) unless (A) the First Lien Term Loans have been repaid in full or (B) the First Lien Term Loan Lenders permit the prepayment under the First Lien Term Loan Credit Agreement;
it being understood that amounts actually applied towards the mandatory prepayment of Revolving Credit Obligations pursuant to the applicable provisions of the Revolving Credit Agreement or the mandatory prepayment of First Lien Term Loan Obligations pursuant to the applicable provisions of the First Lien Term Loan Credit Agreement, in each case analogous to Section 2.8(c), (d), (e), (f) or (g) of this Agreement, shall reduce the amount required to be applied toward prepayments under Section 2.8(c), (d), (e), (f) or (g), as applicable, of this Agreement).
Section 2.9 Interest.
(a) Rate of Interest. All Term Loans and the outstanding amount of all other Obligations shall bear interest, in the case of Term Loans, on the unpaid principal amount thereof from the date such Term Loans are made and, in the case of such other Obligations, from the date such other Obligations are due and payable until, in all cases, paid in full, except as otherwise provided in Section 2.9(c), as follows:
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(i) if a Base Rate Loan or such other Obligation, at a rate per annum equal to the sum of (A) the Base Rate as in effect from time to time, plus (B) the Applicable Margin; and
(ii) if a Eurodollar Rate Loan, at a rate per annum equal to the sum of (A) the Eurodollar Rate determined for the applicable Interest Period, plus (B) the Applicable Margin in effect from time to time during such Interest Period.
(b) Interest Payments. (i) Interest accrued on each Base Rate Loan shall be payable in arrears (A) on the last day of each calendar quarter, commencing on the first such day following the making of such Base Rate Loan and (B) if not previously paid in full, at maturity (whether by acceleration or otherwise) of such Base Rate Loan; (ii) interest accrued on each Eurodollar Rate Loan shall be payable in arrears (A) on the last day of each Interest Period applicable to such Term Loan and if such Interest Period has a duration of more than three months, on each day during such Interest Period occurring every three months from the first day of such Interest Period, (B) upon the payment or prepayment thereof in full or in part and (C) if not previously paid in full, at maturity (whether by acceleration or otherwise) of such Eurodollar Rate Loan; and (iii) interest accrued on the amount of all other Obligations shall be payable on written demand from and after the time such Obligation becomes due and payable (whether by acceleration or otherwise).
(c) Default Interest. Notwithstanding the rates of interest specified in Section 2.9(a) or elsewhere herein, effective immediately upon the occurrence of an Event of Default, and for as long thereafter as such Event of Default shall be continuing, (i) the principal balance of all Term Loans then due and payable shall bear interest at a rate that is 2% per annum in excess of the rate of interest applicable to such Term Loans pursuant to clause (a)(i) or (a)(ii) above from time to time and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and promptly following demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Loans pursuant to clause (a)(i) above.
(d) PIK Election.
(i) For each Interest Period ending on or prior to the date that is 18 months after the Effective Date, the Administrative Borrower may elect (an “Election”) to (i) pay interest on the entire principal amount in cash, (ii) pay interest on the entire principal amount by adding such interest to such principal amount (a “Full PIK Payment”) or (iii) pay interest on 50% of the principal amount in cash and pay interest on the remaining portion of the principal amount by adding such interest to such principal amount (a “Partial PIK Payment”; and, together with a Full PIK Payment, “PIK Payments”); provided that the Applicable Margin otherwise applicable to the Term Loans will be increased by 0.75% per annum solely with respect to such portion that is not paid in cash during such Interest Period. Unless the context otherwise requires, for all purposes hereof, references to “principal amount” of Term Loans refers to the face amount of the Term Loans and not
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gross proceeds funded and includes any increase in the principal amount of the outstanding Term Loans as a result of a PIK Payment.
(ii) The Administrative Borrower shall make an Election by providing notice to the Administrative Agent at least five Business Days prior to the beginning of such Interest Period (other than for the initial Interest Period, for which the Administrative Borrower shall have made a Full PIK Payment Election and shall have given notice to the Administrative Agent three Business Days prior to the Effective Date). The Administrative Agent shall promptly deliver a corresponding notice to the Lenders. If an Election is not made by the Administrative Borrower in a timely fashion or at all with respect to the method of payment of interest for an Interest Period, interest for such Interest Period shall be payable in cash.
Section 2.10 Conversion/Continuation Option.
(a) The Administrative Borrower may elect (i) at any time on any Business Day to convert Base Rate Loans or any portion thereof to Eurodollar Rate Loans, and (ii) at the end of any applicable Interest Period, to convert Eurodollar Rate Loans or any portion thereof into Base Rate Loans or to continue such Eurodollar Rate Loans or any portion thereof for an additional Interest Period; provided, however, that (x) on or prior to the date that is 18 months after the Effective Date, all Term Loans that are Eurodollar Rate Loans shall have the same Interest Period and (y) the aggregate amount of the Eurodollar Rate Loans for each Interest Period must be in the amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof. Each conversion or continuation shall be allocated among the Term Loans of each Lender in accordance with each applicable Lender’s Ratable Portion. Each such election shall be in substantially the form of Exhibit F (a “Notice of Conversion or Continuation”) and shall be made by giving the Administrative Agent at least three Business Days’ prior written notice specifying (A) the amount and Type of Term Loan being converted or continued, (B) in the case of a conversion to or a continuation of Eurodollar Rate Loans, the applicable Interest Period, and (C) in the case of a conversion, the date of conversion.
(b) The Administrative Agent shall promptly notify each Lender of its receipt of a Notice of Conversion or Continuation and of the options selected therein. Notwithstanding the foregoing, no conversion in whole or in part of Base Rate Loans to Eurodollar Rate Loans, and no continuation in whole or in part of Eurodollar Rate Loans upon the expiration of any applicable Interest Period, shall be permitted at any time at which (i) a Default or Event of Default shall have occurred and be continuing or (ii) the continuation of, or conversion into Eurodollar Rate Loans, would violate or otherwise not be permitted under any of the provisions of Section 2.13. If, within the time period required under the terms of this Section 2.10, the Administrative Agent does not receive a Notice of Conversion or Continuation from the Administrative Borrower containing a permitted election to continue any Eurodollar Rate Loans for an additional Interest Period or to convert any such Term Loans, then, upon the expiration of the applicable Interest Period, such Term Loans shall be automatically converted to Base Rate Loans. Each Notice of Conversion or Continuation shall be irrevocable.
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Section 2.11 Fees.
The Borrowers agree to pay to the Administrative Agent and the Arrangers fees, the amount and dates of payment of which are embodied in a separate fee letter entered into between or among such parties.
Section 2.12 Payments and Computations.
(a) The Borrowers shall make each payment of Term Loans hereunder (including fees and expenses) not later than 1:00 p.m. (New York City time) on the day when due, in Dollars, to the Administrative Agent at its address referred to in Section 10.8 in immediately available funds without deduction, set-off or counterclaim. The Administrative Agent will promptly thereafter cause to be distributed immediately available funds relating to the payment of principal or interest or fees to the Lenders, in accordance with the application of payments set forth in clauses (e) and (f) of this Section 2.12, as applicable, for the account of their respective Applicable Lending Offices; provided, however, that amounts payable pursuant to Section 2.13(c), Section 2.13(e), Section 2.14 or Section 2.15 shall be paid only to the affected Lender or Lenders. Payments received by the Administrative Agent after 1:00 p.m. (New York City time) shall be deemed to be received on the next Business Day.
(b) All computations of interest based on the Base Rate shall be made by the Administrative Agent on the basis of a year of 365/366 days, as the case may be, and all computations of all other interest and all fees shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest and fees are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.
(c) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees, as the case may be; provided, however, that if such extension would cause payment of interest on or principal of any Eurodollar Rate Loan to be made in the next calendar month, such payment shall be made on the immediately preceding Business Day. All repayments of any Term Loans shall be applied as follows: first, to repay such Term Loans outstanding as Base Rate Loans and then to repay such Term Loans outstanding as Eurodollar Rate Loans, with those Eurodollar Rate Loans having earlier expiring Interest Periods being repaid prior to those having later expiring Interest Periods.
(d) Unless the Administrative Agent shall have received notice from the Administrative Borrower to the Lenders prior to the date on which any payment is due hereunder that the Borrowers will not make such payment in full, the Administrative Agent may assume that the Borrowers have made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrowers shall not have made such payment in full to the Administrative Agent,
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each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon at the Federal Funds Rate, for the first Business Day, and, thereafter, at the rate applicable to Base Rate Loans, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent.
(e) Subject to the provisions of Section 2.12(f) (and except as otherwise provided in Section 2.8), all payments and any other amounts received by the Administrative Agent from or for the benefit of the Borrowers shall be applied as follows: first, to pay principal of and interest on any portion of the Term Loans that the Administrative Agent may have advanced pursuant to the express provisions of this Agreement on behalf of any Lender, for which the Administrative Agent has not then been reimbursed by such Lender or the Borrowers, second, to pay all other Obligations then due and payable, and third, as the Administrative Borrower so designates. Payments in respect of Term Loans received by the Administrative Agent shall be distributed to each Lender in accordance with such Lender’s Ratable Portion; and all payments of fees and all other payments in respect of any other Obligation shall be allocated among such of the Lenders as are entitled thereto, and, for such payments allocated to the Lenders, in proportion to their respective Ratable Portions.
(f) During the continuance of an Event of Default, the Borrowers hereby irrevocably waive the right to direct the application of any and all payments in respect of the Obligations and agree that, notwithstanding the provisions of clause (e) above, the Administrative Agent may, and shall upon either (A) the written direction of the Requisite Lenders or (B) the acceleration of the Obligations pursuant to Section 8.2, subject to the terms of the Intercreditor Agreement, apply all payments in respect of any Obligations and all funds on deposit in any cash collateral account in the following order (after first paying all expenses incurred by the Administrative Agent in the performance of its duties and in the enforcement of the rights of the Lenders under the Loan Documents, including, without limitation, all costs and expenses of collection, reasonable attorneys’ fees (including all allocated costs of internal counsel) and other professional fees, court costs and other amounts in respect of expense reimbursement and indemnities then due the Administrative Agent in connection therewith):
(i) first, ratably, pay any advances, fees, indemnities, expense reimbursements or other liabilities then due and owing to the Administrative Agent from any Borrower;
(ii) second, to pay any expense reimbursements then due and owing to the Lenders from the Borrowers to the extent such obligations are secured by the Collateral, ratably;
(iii) third, to pay interest due and payable in respect of the Term Loans to the extent such obligations are secured by the Collateral, ratably;
(iv) fourth, to prepay principal on the Term Loans to the extent such obligations are secured by the Collateral, ratably;
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(v) fifth, to the payment of any other Secured Obligation due and owing to the Agent or any Lender that are secured by the Collateral; and
(vi) sixth, to the applicable Loan Party or as the Administrative Borrower shall direct.
provided, however, that if sufficient funds are not available to fund all payments to be made in respect of any Obligation described in any of clauses (i) through (vi), the available funds being applied with respect to any such Obligation (unless otherwise specified in such clause) shall be allocated to the payment of such Obligations ratably, based on the proportion of the Administrative Agent’s and each Lender’s interest in the aggregate outstanding Obligations described in such clauses. The order of priority set forth in clauses (i) through (vi) of this clause (f) may at any time and from time to time be changed by the agreement of all Lenders without necessity of notice to or consent of or approval by any Borrower or any other Person. The order of priority set forth in clauses (i) through (v) of this clause (f) may be changed only with the prior written consent of the Administrative Agent in addition to all Lenders. Each Lender and each Loan Party acknowledges and agrees to the relative rights, priorities and agreements of the First Lien Term Loan Secured Parties, the Revolving Credit Secured Parties and the Secured Parties, as set forth in the Intercreditor Agreement and this Agreement, including as set forth in this Section 2.12 and Section 10.22.
Section 2.13 Special Provisions Governing Eurodollar Rate Loans.
(a) Determination of Interest Rate. The Eurodollar Rate for each Interest Period for Eurodollar Rate Loans shall be determined by the Administrative Agent pursuant to the procedures set forth in the definition of “Eurodollar Rate.” The Administrative Agent’s determination shall be presumed to be correct, absent manifest error, and shall be binding on the Borrowers.
(b) Interest Rate Unascertainable, Inadequate or Unfair. In the event that: (i) the Administrative Agent determines that adequate and fair means do not exist for ascertaining the applicable interest rates by reference to which the Eurodollar Rate then being determined is to be fixed; or (ii) the Requisite Lenders notify the Administrative Agent that the Eurodollar Rate for any Interest Period will not adequately reflect the cost to the Lenders of making or maintaining such Term Loans for such Interest Period, the Administrative Agent shall forthwith so notify the Administrative Borrower and the Lenders, whereupon each Eurodollar Rate Loan shall automatically, on the last day of the current Interest Period for such Term Loan, convert into a Base Rate Loan and the obligations of the Lenders to make Eurodollar Rate Loans or to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended until the Administrative Agent shall notify the Administrative Borrower that the Requisite Lenders have determined that the circumstances causing such suspension no longer exist.
(c)
Increased Costs. If at any time after the Effective Date any Lender determines that the introduction of or any change in or in the interpretation of any law, treaty or governmental rule, regulation or order (other than (i) any change by way of imposition or increase of reserve requirements included in determining the Eurodollar Rate and (ii) any change in the rate
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of tax on the overall net income of such Lender or its lending office imposed by the jurisdiction in which such Lender’s principal executive office or lending office is located) or the compliance by such Lender with any guideline, request or directive from any central bank or other Governmental Authority (whether or not having the force of law), shall have the effect of increasing the cost to such Lender of agreeing to make or making, funding or maintaining any Eurodollar Rate Loans, then the Borrowers shall from time to time, upon demand by such Lender delivered to the Administrative Borrower (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Administrative Borrower and the Administrative Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error.
(d) Illegality. Notwithstanding any other provision of this Agreement, if any Lender determines that the introduction of or any change in or in the interpretation of any law, treaty or governmental rule, regulation or order after the Effective Date shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender or its Eurodollar Lending Office to make Eurodollar Rate Loans or to continue to fund or maintain Eurodollar Rate Loans, then, on notice thereof and demand therefor by such Lender to the Administrative Borrower through the Administrative Agent, (i) the obligation of such Lender to make or to continue Eurodollar Rate Loans and to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended, and each such Lender shall make a Base Rate Loan as part of any requested Borrowing of Eurodollar Rate Loans and (ii) if the affected Eurodollar Rate Loans are then outstanding, the Administrative Borrower shall immediately convert each such Term Loan into a Base Rate Loan. If at any time after a Lender gives notice under this Section 2.13(d) such Lender determines that it may lawfully make Eurodollar Rate Loans, such Lender shall promptly give notice of that determination to the Administrative Borrower and the Administrative Agent, and the Administrative Agent shall promptly transmit the notice to each other Lender. The Administrative Borrower’s right to request, and such Lender’s obligation, if any, to make Eurodollar Rate Loans shall thereupon be restored.
(e)
Breakage Costs. In addition to all amounts required to be paid by the Borrowers pursuant to
Section 2.9, the Borrowers shall compensate each Lender, upon demand made to the Administrative Borrower, for all losses, expenses and liabilities (including any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain such Lender’s Eurodollar Rate Loans to the Borrowers but excluding any loss of the Applicable Margin on the relevant Term Loans) which that Lender may sustain (i) if for any reason a proposed Borrowing, conversion into or continuation of Eurodollar Rate Loans does not occur on a date specified therefor in a Notice of Borrowing or a Notice of Conversion or Continuation given by the Administrative Borrower or in a telephonic request by it for borrowing or conversion or continuation or a successive Interest Period does not commence after notice therefor is given pursuant to
Section 2.10, (ii) if for any reason any Eurodollar Rate Loan is repaid or converted into a Base Rate Loan on a date which is not the last day of the applicable Interest Period, (iii) as a consequence of a required conversion of a Eurodollar Rate Loan to a Base Rate Loan as a result of any of the events indicated in
Section 2.13(d), or (iv) as a consequence of any failure by the Borrowers to repay Eurodollar Rate Loans when required by the terms hereof. The Lender making demand for such compensation shall deliver to the Admin-
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istrative Borrower concurrently with such demand a written statement as to such losses, expenses and liabilities, and this statement shall be conclusive as to the amount of compensation due to such Lender, absent manifest error.
Section 2.14 Capital Adequacy.
If at any time any Lender determines that (a) the adoption of or any change in or in the interpretation of any law, treaty or governmental rule, regulation or order after the Effective Date regarding capital adequacy, (b) compliance with any such law, treaty, rule, regulation, or order, or (c) compliance with any guideline or request or directive from any central bank or other Governmental Authority (whether or not having the force of law) after the Effective Date shall have the effect of reducing the rate of return on such Lender’s (or any corporation controlling such Lender’s) capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change, compliance or interpretation, then, upon written demand from time to time by such Lender made to the Administrative Borrower (with a copy of such demand to the Administrative Agent), the Borrowers shall pay to the Administrative Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender for such reduction. A certificate as to such amounts submitted to the Administrative Borrower and the Administrative Agent by such Lender shall be conclusive and binding for all purposes absent manifest error.
Section 2.15 Taxes.
(a) Any and all payments by any Loan Party under each Loan Document shall be made free and clear of and without deduction or withholding for any Indemnified Taxes; provided that if any Indemnified Taxes shall be required by law to be deducted or withheld from or in respect of any sum paid under any Loan Document to any Lender or the Administrative Agent (w) the sum payable shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions or withholdings applicable to additional sums payable under this Section 2.15) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (x) the relevant Loan Party shall make such deductions or withholdings, (y) the relevant Loan Party shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law, and (z) the relevant Loan Party shall deliver to the Administrative Agent evidence of such payment.
(b) In addition, the Borrowers agree to pay any present or future stamp or documentary taxes or any other excise, property or similar taxes, charges or levies of the United States or any political subdivision thereof or any applicable foreign jurisdiction, and all interest, penalties and other liabilities with respect thereto, which arise from any payment made under any Loan Document or from the execution, delivery, enforcement or registration of, or otherwise with respect to, any Loan Document (collectively, “Other Taxes”).
(c) The Borrowers will indemnify each Lender and the Administrative Agent for the full amount of Indemnified Taxes and Other Taxes (including any Indemnified Taxes and
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Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.15) paid by such Lender or the Administrative Agent (as the case may be) and any liability (including for penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or the Administrative Agent (as the case may be) makes written demand therefor to the Administrative Borrower. A certificate setting forth the amount of such payment or liability delivered to the Administrative Borrower by a Lender or the Administrative Agent shall be conclusive absent manifest error; provided further, that the Borrowers shall not be required to compensate any Lender pursuant to this Section 2.15 for any amounts incurred in any fiscal year for which such Lender is claiming compensation if such Lender does not furnish notice of such claim within six (6) months from the end of such fiscal year; provided further, that if the circumstances giving rise to such claim have a retroactive effect, then the beginning of such six (6) month period shall be extended to include such period of retroactive effect.
(d) Within 30 days after the date of any payment of Indemnified Taxes or Other Taxes by any Loan Party, the Administrative Borrower shall furnish to the Administrative Agent, at its address referred to in Section 10.8, the original or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section 2.15 shall survive the payment in full of the Obligations.
(f) To the extent it is legally entitled to do so, on or prior to the Effective Date in the case of each Non-U.S. Lender that is a signatory hereto, and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender in the case of each other Non-U.S. Lender and from time to time thereafter if requested by the Administrative Borrower or the Administrative Agent, each Non-U.S. Lender that is entitled at such time to an exemption from United States federal withholding tax, or that is subject to such tax at a reduced rate under an applicable tax treaty, shall provide the Administrative Agent and the Administrative Borrower with two completed originals of whichever of the following is applicable: (i) Form W-8ECI (claiming exemption from withholding because the income is effectively connected with a U.S. trade or business) (or any successor form); (ii) Form W-8BEN (claiming exemption from, or a reduction of, withholding tax under an income tax treaty) (or any successor form); (iii) in the case of a Non-U.S. Lender claiming exemption under Sections 871(h) or 881(c) of the Code, a Form W-8BEN (claiming exemption from withholding under the portfolio interest exemption) or any successor form; or (iv) any other applicable form, certificate or document prescribed by the IRS certifying as to such Non-U.S. Lender’s entitlement to such exemption from United States federal withholding tax or reduced rate with respect to payments to be made to such Non-U.S. Lender under the Loan Documents. Unless the Administrative Borrower and the Administrative Agent have received forms or other documents satisfactory to them indicating that payments under any Loan Document to or for a Non-U.S. Lender are not subject to United States federal withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, the Borrowers or the Administrative Agent shall withhold amounts required to be withheld by applicable
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Requirements of Law from such payments at the applicable statutory rate (which amounts may be grossed up pursuant to clause (a) if applicable).
(g) Any Lender claiming any additional amounts payable pursuant to this Section 2.15 shall use its reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) at the Administrative Borrower’s expense to change the jurisdiction of its Applicable Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that would be payable or may thereafter accrue and would not, in the sole determination of such Lender, be disadvantageous to such Lender.
Section 2.16 Substitution of Lenders.
In the event that (a) (i) any Lender makes a claim under
Section 2.13(c) or
Section 2.14, or (ii) it becomes illegal for any Lender to continue to fund or make any Eurodollar Rate Loan and such Lender notifies the Administrative Borrower pursuant to
Section 2.13(d), or (iii) the Borrowers are required to make any payment pursuant to
Section 2.15 that is attributable to any Lender, or (iv) any Lender is a Non-Funding Lender, and (b) in the case of
clause (a)(i) above, as a consequence of increased costs in respect of which such claim is made, the effective rate of interest payable to such Lender under this Agreement with respect to its Term Loans materially exceeds the effective average annual rate of interest payable to the Requisite Lenders under this Agreement (any such Lender, an “
Affected Lender”), the Administrative Borrower may substitute another financial institution for such Affected Lender hereunder, upon reasonable prior written notice (which written notice must be given within 90 days following the occurrence of any of the events described in
clause (a)) by the Administrative Borrower to the Administrative Agent and the Affected Lender that the Administrative Borrower intends to make such substitution, which substitute financial institution must be an Eligible Assignee and, if not a Lender, reasonably acceptable to the Administrative Agent;
provided,
however, that if more than one Lender claims increased costs, illegality or right to payment arising from the same act or condition and such claims are received by the Administrative Borrower within 30 days of each other, then the Administrative Borrower may substitute all, but not (except to the extent the Administrative Borrower has already substituted one of such Affected Lenders before the Administrative Borrower’s receipt of the other Affected Lenders’ claim) less than all, Lenders making such claims. In the event that the proposed substitute financial institution or other entity is reasonably acceptable to the Administrative Agent and the written notice was properly issued under this
Section 2.16, the Affected Lender shall sell and the substitute financial institution or other entity shall purchase at par, pursuant to an Assignment and Acceptance, all rights and claims of such Affected Lender under the Loan Documents and the substitute financial institution or other entity shall assume and the Affected Lender shall be relieved of the Term Loan Commitments and all other prior unperformed obligations of the Affected Lender under the Loan Documents (other than in respect of any damages (other than exemplary or punitive damages, to the extent permitted by applicable law) in respect of any such unperformed obligations). Upon the effectiveness of such sale, purchase and assumption (which, in any event shall be conditioned upon the payment in full by the Borrowers to the Affected Lender in cash of all fees, unreimbursed costs and expenses and indemnities accrued and unpaid through such effective date), the substitute financial institution or other entity shall become a “Lender” hereunder for all purposes of this Agreement holding Term Loans in the aggregate principal amount of such Affected Lender’s Term
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Loans assumed by it and such Term Loans of the Affected Lender shall be repaid, provided that all indemnities under the Loan Documents shall continue in favor of such Affected Lender, provided that all indemnities under the Loan Documents shall continue in favor of such Affected Lender.
Section 2.17 Certain Accounts.
Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, no Loan Party shall be required to cause any U.S. Bank Account to be subject to a Deposit Account Control Agreement so long as (i) such U.S. Bank Account is and continues to be a custodial account and does not constitute a Deposit Account or Securities Account and (ii) the custodian of such U.S. Bank Account remains under written instruction by an authorized officer of the customer of such U.S. Bank Account to automatically transfer any cash that is deposited in such U.S. Bank Account to a Linked Deposit Account (or such other Deposit Account as to which the Administrative Agent shall have entered into an agreement which provides the Administrative Agent with “control” (as such term is defined under the UCC) with respect to such Deposit Account).
ARTICLE III
CONDITIONS TO TERM LOANS
Section 3.1 Conditions Precedent to the Effectiveness of This Agreement.
This Agreement shall be effective on the date (the “Effective Date”) on which all of the following conditions precedent have been first satisfied (unless waived by the Requisite Lenders or unless the time for satisfaction thereof has been extended by the Administrative Agent):
(a) Certain Documents. The Administrative Agent shall have received on the Effective Date each of the following, each dated the Effective Date unless otherwise indicated or agreed to by the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent and (except for any Term Loan Notes) in sufficient copies for each Lender:
(i) this Agreement, duly executed and delivered by the Borrowers and each other party hereto, and, for the account of each Lender requesting the same a reasonable time prior to the Effective Date, a Term Loan Note or Term Loan Notes of the Borrowers conforming to the requirements set forth herein;
(ii) the Security Agreement, substantially in the form of Exhibit K, and the Deposit Account Security Agreement, substantially in the form of Exhibit M, in each case duly executed and delivered by the applicable Loan Parties;
(iii) the Guaranty Agreement duly executed and delivered by the applicable Loan Parties;
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(iv) the Revolving Credit Agreement, duly executed by the Borrowers and each other party thereto;
(v) the First Lien Term Loan Credit Agreement, duly executed by the Borrowers and each other party thereto;
(vi) the Intercreditor Agreement, duly executed and delivered by each party thereto, substantially in the form of Exhibit J and in full force and effect as of the Effective Date;
(vii) an opinion of (i) Kirkland and Ellis LLP, counsel to the Loan Parties, (ii) Greenberg Traurig, LLP, local counsel to the Loan Parties, and (iii) the firms listed in Schedule 3.1(a)(vii), each in form and substance reasonably satisfactory to the Administrative Agent;
(viii) a good standing certificate of each Loan Party, certified as of a recent date by the Secretary of State of the state of organization or formation of such Loan Party;
(ix) a certificate of the Secretary or an Assistant Secretary of each Loan Party certifying (A) the names and true signatures of each officer of such Loan Party who has been authorized to execute and deliver any Loan Document or other document required hereunder to be executed and delivered by or on behalf of such Loan Party, (B) that attached thereto are the certificate of incorporation (or equivalent Constituent Document) and by-laws (or equivalent Constituent Document) of such Loan Party as in effect and delivered to the Administrative Agent certified (to the extent applicable) as of a recent date by the Secretary of State of the state of its organization and (C) that attached thereto are the resolutions of such Loan Party’s board of directors (or equivalent governing body) approving and authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party;
(x) a certificate of a Responsible Officer to the effect that (A) there is no Default or Event of Default which has occurred and is continuing under this Agreement, (B) the representations and warranties set forth in Article IV and in the other Loan Documents are true and correct in all material respects as of the Effective Date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct on and as of such earlier date (except that any representation or warranty that is qualified by “materiality” or “Material Adverse Effect” shall be true and correct in all respects) and (C) except for any demands that have been settled pursuant to the Settlement Documents, no Joint Venture of the Administrative Borrower or any of its Subsidiaries and no creditor of any such Joint Venture has made a demand, monetary or otherwise, against the Administrative Borrower or any of its Subsidiaries;
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(xi) a solvency certificate confirming the solvency of the Administrative Borrower and its subsidiaries on a consolidated basis substantially in the form of Exhibit I, signed by the chief financial officer of the Administrative Borrower;
(xii) the financial statements described in Section 4.4 and the Five Year Projections;
(xiii) an opinion of solvency of AlixPartners, LLP in form and substance reasonably satisfactory to the Administrative Agent;
(xiv) a duly executed Notice of Borrowing; and
(xv) such other certificates, documents, agreements and information respecting any Loan Party as any Lender through the Administrative Agent may reasonably request.
(b) Collateral Requirements.
(i) Subject to Section 6.22, the Administrative Agent shall have received on the Effective Date (A) an executed counterpart to the Equity Pledge Agreement executed by each Loan Party, (B) original stock or equivalent ownership certificates evidencing the equity interests pledged pursuant to the Equity Pledge Agreement (to the extent such equity interests are certificated), together with stock (or equivalent) powers undated and executed in blank by a Responsible Officer of such Loan Party, (C) UCC financing statements in appropriate form for filing under the UCC, filings with the United States Patent and Trademark Office and United States Copyright Office and such other agreements and documents, including Deposit Account Control Agreements, under applicable Requirements of Law in each jurisdiction as may be necessary or appropriate or, in the reasonable opinion of the Administrative Agent, necessary to perfect the Liens created, or purported to be created, by the Collateral Documents and (D) all intercompany notes valued in excess of $1,000,000 owing from the Administrative Borrower or any of its Subsidiaries to any other Loan Party and notes valued in excess of $500,000 owing from any other Person to any Loan Party, in each case, together with instruments of transfer executed and delivered in blank by a duly authorized officer of such Loan Party; provided that the conditions precedent set forth in clauses (B) and (D) may be satisfied by the receipt of reasonably satisfactory evidence that the applicable Collateral shall have been delivered to the Revolving Credit Administrative Agent (who shall act as bailee for the Administrative Agent); and
(ii) The Administrative Agent shall have received on the Effective Date Mortgages on all Real Property of the Loan Parties and the Mortgage Requirements set forth in clauses (iii) and (iv) of the definition of “Mortgage Requirements”, shall have been satisfied with respect to each Mortgage at the expense of the Loan Parties; (provided that there shall be excluded from this clause (ii)(A) Excluded Real Property, (B) any Borrowing Base Assets acquired by a Loan Party less than 90 days prior to the Effective Date (other than as successor by merger, directly or indirectly, to any of the Transeastern JV
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Entities)) and (C) any Real Property acquired by the Transeastern JV Entities less than 90 days prior to the Effective Date, but including the Real Property previously identified to the Administrative Agent as “Independence” and “Live Oak”, which are being acquired by the EH/Transeastern, LLC on the Effective Date).
(c) Certain Transactions.
(i) The Settlement Documents shall be in full force and effect and shall be reasonably satisfactory in form and substance to the Administrative Agent.
(ii) The Acquisition shall have been consummated or shall be consummated simultaneously on the Effective Date, in each case in all material respects in accordance with the terms hereof and the terms of the Falcone Settlement Agreement, without the waiver or amendment of any such terms not approved by the Administrative Agent and the Arrangers.
(iii) The refinancing and exchange of Indebtedness under the Transeastern JV Credit Agreements shall have been consummated in full to the satisfaction of the Lenders with all Liens in favor of the existing lenders being terminated and discharged; the Administrative Agent shall have received a “pay-off” letter in form and substance reasonably satisfactory to the Administrative Agent with respect to all Indebtedness being refinanced under the Transeastern JV Credit Agreement; and the Administrative Agent shall have received such UCC termination statements, mortgage satisfactions and other instruments, in each case in proper form for recording, as the Administrative Agent shall have reasonably requested to terminate the Liens securing such Indebtedness.
(iv) $20,000,000 in aggregate principal amount of the Settlement Subordinated Debt and $117,500,000 of the Settlement Preferred Stock shall have been issued (or shall be issued contemporaneously with the Effective Date) to holders of Indebtedness under the Transeastern Senior Mezzanine Credit Agreement in exchange for the termination of all obligations under the Transeastern Senior Mezzanine Credit Agreement and all fees and expenses payable by the Administrative Borrower pursuant to the Settlement Documents shall have been satisfied.
(v) $16,250,000 of Warrants (the “Warrants”) to acquire shares of the common stock of the Administrative Borrower shall have been issued (or shall be issued contemporaneously with the Effective Date) by the Administrative Borrower to the holders of Indebtedness under the Transeastern Junior Mezzanine Credit Agreement in exchange for the termination of all obligations under the Transeastern Junior Mezzanine Credit Agreement and all fees and expenses payable by the Administrative Borrower pursuant to the Settlement Documents shall have been satisfied.
(vi) The Administrative Borrower shall have $700,000,000 in commitments under the Revolving Credit Agreement.
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(vii) The Administrative Borrower shall have received (or shall receive contemporaneously with the Effective Date) $200,000,000 in gross proceeds from borrowings under the First Lien Term Loan Credit Agreement.
(d) Fees and Expenses Paid. There shall have been paid to the Administrative Agent, for the account of the Administrative Agent and the Lenders, as applicable, all fees due and payable on or before the Effective Date (including all such fees described in any fee letter referred to in Section 2.11 and all reasonable fees and expenses of counsel for which invoices in reasonable detail have been presented at least one Business Day prior to the Effective Date), and all invoiced expenses due and payable on or before the Effective Date.
(e) Consents, Etc. Each Borrower shall have received all material consents and authorizations required pursuant to any material Contractual Obligation with any other Person (including the consent of the Requisite Lenders as required by Section 10.1) and shall have obtained all material consents and authorizations of, and effected all notices to and filings with, any Governmental Authority, in each case, as may be necessary to allow each Borrower lawfully to execute, deliver and perform, in all material respects, its respective obligations hereunder, and under the other Loan Documents to which each of them, respectively, is, or shall be, a party and each other agreement or instrument to be executed and delivered by each of them, respectively, pursuant thereto or in connection herewith or therewith.
(f) Defaults. No Default or Event of Default has occurred and is continuing.
The submission by the Administrative Borrower to the Administrative Agent of a Notice of Borrowing and the acceptance by the Borrowers of the proceeds of the Term Loans requested therein shall be deemed to constitute a representation and warranty by the Borrowers as to the matters specified in Section 3.1(a)(x)(B) and 3.1(f) on and as of the making of such Term Loans on the Effective Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders and the Administrative Agent to enter into this Agreement, each Borrower represents and warrants to the Lenders and the Administrative Agent on and as of the Effective Date after giving effect to the Transactions:
Section 4.1 Existence; Compliance with Law.
Each of the Administrative Borrower and its Restricted Subsidiaries (a) is duly organized or incorporated, validly existing and (to the extent applicable) in good standing under the laws of the jurisdiction of its organization; (b) is duly qualified to do business as a foreign corporation or entity and in good standing under the laws of each jurisdiction where such qualification is necessary, except where the failure to be so qualified or in good standing could not, in
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the aggregate, be reasonably expected to result in a Material Adverse Effect; (c) has all requisite power and authority and the legal right to own, pledge, mortgage and operate its properties, to lease the property it operates under lease and to conduct its business as now or currently proposed to be conducted; (d) is in compliance with its Constituent Documents; (e) is in compliance with all applicable Requirements of Law except where the failure to be in compliance could not, in the aggregate, be reasonably expected to result in a Material Adverse Effect; and (f) has all necessary licenses, permits, consents or approvals from or by, has made all necessary filings with, and has given all necessary notices to, each Governmental Authority having jurisdiction, to the extent required for such ownership, operation and conduct, except for licenses, permits, consents, approvals or filings that can be obtained or made by the taking of ministerial action to secure the grant or transfer thereof or the failure to obtain or make could not, in the aggregate, be reasonably expected to result in a Material Adverse Effect.
Section 4.2 Power; Authorization; Enforceable Obligations.
(a) The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party and the consummation of the transactions contemplated thereby:
(i) are within such Loan Party’s corporate, limited liability company, partnership or other similar powers, as applicable;
(ii) have been or, at the time of delivery thereof pursuant to Article III, will have been duly authorized by all necessary corporate or other entity action, including the consent of shareholders, partners and members where required;
(iii) do not and will not (A) contravene any Loan Party’s or any of its Subsidiaries’ respective Constituent Documents, (B) violate any other Requirement of Law applicable to any Loan Party (including Regulations T, U and X of the Federal Reserve Board), or any order or decree of any Governmental Authority or arbitrator applicable to any Loan Party, (C) conflict with or result in the breach of, or constitute a default under, or result in or permit the termination or acceleration of, any Contractual Obligation of any Loan Party, or (D) result in the creation or imposition of any Lien upon any of the property of any Loan Party (other than any Lien securing the Obligations or Customary Permitted Liens), except in the case of clauses (B) and (C), where such violation could not reasonably be expected to result in a Material Adverse Effect; and
(iv) do not require the consent of, authorization by, approval of, notice to, or filing or registration with, any Governmental Authority or any other Person, other than those listed on Schedule 4.2 and which have been prior to the Effective Date, obtained or made, copies of which have been delivered to the Administrative Agent and each of which is in full force and effect.
(b) This Agreement and the Guaranty have been, and each of the other Loan Documents will have been upon delivery thereof pursuant to the terms of this Agreement, duly executed and delivered by each Loan Party thereto. This Agreement and the Guaranty are, and
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the other Loan Documents will be, when delivered hereunder, the legal, valid and binding obligation of each Loan Party thereto, enforceable against such Loan Party in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally.
Section 4.3 Ownership of Subsidiaries.
Set forth on Schedule 4.3 is a complete and accurate list showing, as of the Effective Date, all Restricted Subsidiaries of the Administrative Borrower and, as to each such Subsidiary, the jurisdiction of its organization, the number of shares of each class of Stock authorized (if applicable), the number outstanding on the Effective Date and the number and percentage of the outstanding shares of each such class owned (directly or indirectly) by the Administrative Borrower. Except as set forth on Schedule 4.3, no Stock of any Restricted Subsidiary of the Administrative Borrower is subject to any outstanding option, warrant, right of conversion or purchase or any similar right. All of the outstanding Stock of each Restricted Subsidiary of the Administrative Borrower owned (directly or indirectly) by the Administrative Borrower has been validly issued, is fully paid and non-assessable (to the extent applicable) and, as of the Effective Date, is owned by the Administrative Borrower or a Restricted Subsidiary of the Administrative Borrower, free and clear of all Liens (other than Liens securing the Obligations, Liens securing the obligations under the Revolving Credit Agreement and the Second Lien Credit Agreement and Customary Permitted Liens created pursuant to any applicable law). Neither the Administrative Borrower nor any such Restricted Subsidiary is a party to, or has knowledge of, any agreement restricting the transfer or hypothecation of any Stock of any such Restricted Subsidiary, other than (i) the Loan Documents and (ii) such customary restrictions related to the interest of the Administrative Borrower and its Restricted Subsidiaries in the Constituent Documents governing the Administrative Borrower or such Restricted Subsidiary.
Section 4.4 Financial Statements.
(a) The Consolidated statement of financial position of the Administrative Borrower and its Subsidiaries as at December 31, 2006 and March 31, 2007, and the related Consolidated statements of operations and cash flows of the Administrative Borrower and its Subsidiaries for the fiscal year or fiscal quarter, as the case may be, then ended (and the December 31, 2006 financial statements certified by Ernst & Young LLP), copies of which have been furnished to each Lender, fairly present in all material respects the Consolidated financial condition of the Administrative Borrower and its Subsidiaries as at such date and the Consolidated results of the operations of the Administrative Borrower and its Subsidiaries for the period ended on such date, all in conformity with GAAP (subject, in the case of the financial statements as of and for the period ended March 31, 2007, to normal year-end adjustments and to the absence of all footnotes required for annual financial statements).
(b) Except as set forth on Schedule 4.4, neither the Administrative Borrower nor any of its Restricted Subsidiaries has any material obligation, material contingent liability or material liability for taxes, material long-term leases or unusual forward or long-term material commitment that is not reflected in the Financial Statements referred to in clause (a) above or in the notes thereto and not otherwise permitted by this Agreement.
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(c) The pro forma consolidated balance sheet of the Administrative Borrower as of March 31, 2007 was prepared giving effect to the Transactions as if the Transactions had occurred on such date. Such pro forma consolidated balance sheet (i) was prepared in good faith based on assumptions set forth therein that were reasonable at the time made and at the time such pro forma consolidated balance sheet was delivered to the Arranger, (ii) accurately reflects in all material respects all adjustments necessary to give effect to the Transactions and (iii) presents fairly in all material respects the pro forma consolidated financial position of the Administrative Borrower, as of the date on which the balance sheets were prepared, as if the Transactions had occurred on such date.
(d) The Five Year Projections were prepared by the Administrative Borrower in light of the past operations of its business, and reflect projections for (i) the two-year period beginning on January 1, 2007 on a quarterly basis and (ii) the five-year period beginning on January 1, 2007 on an annual basis. The Five Year Projections are based upon estimates and assumptions stated therein, that the Administrative Borrower believes in each case to be reasonable and fair in light of current conditions and current facts known to the Administrative Borrower on the Effective Date and, as of the Effective Date, reflect the Administrative Borrower’s good faith and reasonable estimates of the future financial performance of the Administrative Borrower and its Restricted Subsidiaries and of the other information projected therein for the periods set forth therein; it being recognized and agreed by the Lenders that whether such projections or forward-looking statements are in fact achieved will depend upon future events which are not in the control of the Loan Parties, and such projections and forward-looking statements may be affected by known or unknown risks and uncertainties. Accordingly, actual results may vary from the projections and forward-looking statements, and such variances may be material.
Section 4.5 Material Adverse Change.
There has been no Material Adverse Change and there have been no events or developments (other than the Transeastern Events) that in the aggregate have had a Material Adverse Effect since December 31, 2006.
Section 4.6 Litigation.
Except as set forth on Schedule 4.6, there are no pending or, to the knowledge of the Administrative Borrower, threatened actions, investigations or proceedings affecting the Administrative Borrower or any of its Restricted Subsidiaries before any court, Governmental Authority or arbitrator other than those that in the aggregate are not reasonably likely to be determined adversely to any Loan Party and, if so determined, could not, in the aggregate, be reasonably expected to result in a Material Adverse Effect. The performance of any action by any Loan Party required or contemplated by any Loan Documents is not restrained or enjoined (either temporarily, preliminarily or permanently).
Section 4.7 Taxes.
(a) All federal, state, local and foreign income and franchise and other material tax returns, reports and statements (collectively, the “
Tax Returns”) required to be filed by
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the Administrative Borrower or any of its Tax Affiliates have been timely filed (including any extensions) with the appropriate Governmental Authorities in all jurisdictions in which such Tax Returns are required to be filed, all such Tax Returns are true and correct in all material respects, and all taxes, charges and other impositions reflected therein have been paid prior to the date on which any fine, penalty, interest, late charge or loss may be added thereto for non-payment thereof except where contested in good faith and by appropriate proceedings if adequate reserves therefor have been established on the books of the Administrative Borrower or such Tax Affiliate in conformity with GAAP. Except as set forth on Schedule 4.7, no Tax Return is under audit or examination by any Governmental Authority and no written notice of such an audit or examination or any assertion of any claim for Taxes has been given or made by any Governmental Authority except to the extent such audits or examinations could not, in the aggregate, be reasonably expected to result in a Material Adverse Effect. Proper and accurate amounts have been withheld by the Administrative Borrower and each of its Tax Affiliates from their respective employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable Requirements of Law and such withholdings have been timely paid to the respective Governmental Authorities.
(b) Except as set forth on Schedule 4.7, none of the Administrative Borrower or any of its Tax Affiliates has on or before the Effective Date (i) incurred any obligation under any tax sharing agreement or arrangement other than those of which the Administrative Agent has received a copy prior to the Effective Date, or (ii) been a member of an affiliated, combined or unitary group other than the group of which the Administrative Borrower (or its Tax Affiliate) is the common parent.
(c) None of the Administrative Borrower or any of its Tax Affiliates has ever “participated” in a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4, except as would not, individually or in the aggregate, have a Material Adverse Effect.
Section 4.8 Full Disclosure.
(a) The information (other than projections, other forward-looking information or third-party general industry data) prepared or furnished by or on behalf of any Loan Party in connection with this Agreement, the other Loan Documents or the consummation of the transactions contemplated hereby or thereby, including the information contained in the Disclosure Documents (when taken as a whole), does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein or herein not misleading.
(b) The Administrative Borrower has delivered to the Administrative Agent (or has publicly filed) a true, complete and correct copy of the Disclosure Documents. The Disclosure Documents (other than the Confidential Information Memorandum) comply as to form in all material respects with all applicable requirements of all applicable state and Federal securities laws.
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Section 4.9 Margin Regulations.
No Borrower is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Federal Reserve Board), and no proceeds of any Term Loan will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock in contravention of Regulation T, U or X of the Federal Reserve Board.
Section 4.10 No Burdensome Restrictions; No Defaults.
(a) Neither the Administrative Borrower nor any of its Restricted Subsidiaries (i) is a party to any Contractual Obligation the performance of which by any thereof, either unconditionally or upon the happening of an event, would result in the creation of a Lien (other than a Lien permitted under Section 7.1) on the property or assets of any thereof or (ii) is subject to any restrictions in their respective Constituent Documents that could, in the aggregate, be reasonably expected to result in a Material Adverse Effect.
(b) Neither the Administrative Borrower nor any of its Restricted Subsidiaries is in default under or with respect to any Contractual Obligation and no other party is in default under or with respect to any Contractual Obligation owed to any Loan Party, other than, in either case, those defaults that, in the aggregate, could not be reasonably expected to result in a Material Adverse Effect.
(c) There are no Requirements of Law applicable to any Loan Party the compliance with which by such Loan Party could, in the aggregate, be reasonably expected to result in a Material Adverse Effect.
Section 4.11 Investment Company Act.
Neither the Administrative Borrower nor any of its Restricted Subsidiaries is an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.
Section 4.12 Use of Proceeds.
The proceeds of the Term Loans shall be used by the Borrowers to finance the Acquisition and to pay transaction costs, fees and expenses related thereto and to this Agreement.
Section 4.13 Insurance.
Except as set forth on Schedule 4.13(a), all policies of insurance of any kind or nature of the Administrative Borrower or any of its Restricted Subsidiaries, including policies of life, fire, theft, product liability, public liability, property damage, other casualty, employee fidelity, workers’ compensation and employee health and welfare insurance, are in full force and effect and are of a nature and provide such coverage as is customarily carried by, and to the best knowledge and belief of the Administrative Borrower is sufficient for, businesses of the size and
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character of such Person. Except as set forth on Schedule 4.13(b), none of the Administrative Borrower or any of its Restricted Subsidiaries has in the three years preceding the Effective Date been refused insurance for any material coverage for which it had applied or had any policy of insurance terminated (other than at its request).
Section 4.14 Labor Matters.
(a) There are no strikes, work stoppages, slowdowns or lockouts pending or threatened against or involving the Administrative Borrower or any of its Subsidiaries, other than those that, in the aggregate, could not be reasonably expected to result in a Material Adverse Effect.
(b) There are no unfair labor practices, grievances or complaints pending, or, to the Administrative Borrower’s knowledge, threatened, against or involving the Administrative Borrower or any of its Restricted Subsidiaries, nor are there any pending or, to the Administrative Borrower’s knowledge, threatened arbitrations or grievances involving the Administrative Borrower or any of its Restricted Subsidiaries, other than those that, in the aggregate, are reasonably likely to be resolved adversely and, if resolved adversely to the Administrative Borrower or such Restricted Subsidiary, could not, in the aggregate, be reasonably expected to result in a Material Adverse Effect.
Section 4.15 ERISA.
Each Title IV Plan is in compliance in all material respects with applicable provisions of ERISA, the Code and other Requirements of Law except for non-compliances that in the aggregate could not be reasonably expected to result in a Material Adverse Effect. There has been no, nor is there reasonably expected to occur, any ERISA Event other than those that, in the aggregate, could not be reasonably expected to result in a Material Adverse Effect. Neither the Administrative Borrower nor any ERISA Affiliate has contributed or been obligated to contribute to, any Multiemployer Plan within the last six years.
Section 4.16 Environmental Matters.
(a) The Real Property and operations of each Borrower and each of its Subsidiaries have been and are in compliance with all Environmental Laws, other than non-compliances that individually or in the aggregate could not be reasonably expected to result in a Material Adverse Effect.
(b) There are no facts, circumstances or conditions which could reasonably be expected to give rise to liability under any Environmental Laws arising out of or relating to the operations of any Borrower or any of its Subsidiaries, or any Real Property now or formerly owned, operated or leased by any Borrower or any of its Subsidiaries which are not specifically included in the information furnished to the Lenders other than those that individually or in the aggregate could not be reasonably expected to result in a Material Adverse Effect.
(c) There is no complaint, claim, action, suit, demand, notice or proceeding pending, or to the knowledge of any Borrower or any of its Subsidiaries threatened, based on or
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resulting from any alleged violation of or liability under any Environmental Law, other than any such matters which could not reasonably be expected to result in a Material Adverse Effect.
(d) No Borrower or any of its Subsidiaries is conducting or paying for, in whole or in part, any Remedial Action at any location other than any such action that could not reasonably be expected to result in a Material Adverse Effect.
(e) No Borrower or any of its Subsidiaries is subject or a party to any judgment, injunction, decree, or agreement which imposes any obligation under any Environment Law, or has assumed any obligation under any Environmental Law under any contract, except for any such obligation which could not reasonably be expected to result in a Material Adverse Effect.
(f) This Section 4.16 sets forth the only representations and warranties of Borrowers and each Subsidiary relating to Environmental Laws and Contaminants.
Section 4.17 Intellectual Property.
The Administrative Borrower and its Restricted Subsidiaries own or license or otherwise have the right to use all licenses, permits, patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, copyright applications, franchises, authorizations and other intellectual property rights that are material for the operations of their respective businesses, without infringement upon or conflict with the rights of any other Person with respect thereto, including all trade names associated with any private label brands of the Administrative Borrower or any of its Restricted Subsidiaries except for those the failure to own, license or otherwise have the right to use, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. To the Administrative Borrower’s knowledge, no slogan or other advertising device, product, process, method, substance, part or component, or other material now employed, or now contemplated to be employed, by the Administrative Borrower or any of its Restricted Subsidiaries infringes upon or conflicts with any rights owned by any other Person, and no action, proceeding, claim or litigation regarding any of the foregoing is pending or threatened.
Section 4.18 Title; Real Property.
(a) Each of the Administrative Borrower and its Restricted Subsidiaries has good and marketable title to, or valid leasehold interests in, all Real Property and good title to all material personal property in each case that is purported to be owned or leased by it, including those reflected on the most recent Financial Statements delivered by the Administrative Borrower, and none of such properties and assets is subject to any Lien, except Liens permitted under Section 7.1.
(b) All Permits required to have been issued or appropriate to enable all Real Property of the Administrative Borrower or any of its Restricted Subsidiaries to be lawfully occupied and used for all of the purposes for which they are currently occupied and used have been
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lawfully issued and are in full force and effect, other than those that, in the aggregate, could not be reasonably expected to result in a Material Adverse Effect.
(c) None of the Borrower or any of its Restricted Subsidiaries has received any notice, or has any knowledge, of any pending, threatened or contemplated condemnation proceeding affecting any Real Property of the Borrower or any of its Subsidiaries or any part thereof, except those that, in the aggregate, could not be reasonably expected to result in a Material Adverse Effect.
Section 4.19 Anti-Terrorism Laws.
(a) Neither the Administrative Borrower nor, to the knowledge of any of the Loan Parties, any of its Affiliates is in violation of any laws relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 23, 2001 (the “Executive Order”), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (signed into law on October 26, 2001) (the “USA Patriot Act”).
(b) Neither the Administrative Borrower nor, to the knowledge of any of Loan Parties, any of its Affiliates acting or benefiting in any capacity in connection with the Term Loans is any of the following:
(i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;
(ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;
(iii) a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
(iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order; or
(v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website or any replacement website or other replacement official publication of such list.
(c) Neither the Administrative Borrower nor, to the knowledge of any Loan Party, any of its Affiliates acting in any capacity in connection with the Term Loans (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in clause (b) above, (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or
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has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.
Section 4.20 Solvency.
On the Effective Date and immediately after the consummation of the transactions to occur on the Effective Date (including the Transactions), (a) the fair value of the assets of the Loan Parties (on a Consolidated basis with their Subsidiaries) will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the assets of the Administrative Borrower (on a Consolidated basis with its Subsidiaries) will be greater than the amount of its debts and other liabilities, subordinated, contingent or otherwise; (c) the Administrative Borrower (on a Consolidated basis with its Subsidiaries) will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) the Administrative Borrower (on a Consolidated basis with its Subsidiaries) will not have unreasonably small capital with which to conduct its business in which it is engaged as such business is now conducted and will be conducted following the Effective Date.
Section 4.21 Collateral Documents.
Except as otherwise provided in the applicable Collateral Documents, the provisions of the Collateral Documents create legal and valid second priority Liens on all the Collateral in favor of the Administrative Agent, for the benefit of the Secured Parties; and upon the proper filing of (x) UCC financing statements in the applicable jurisdictions (and payment of the applicable fees), (y) any Mortgages with respect to Mortgaged Properties (and payment of the applicable fees) and (z) the Security Agreement (or a short form thereof) with the United States Patent and Trademark Office or the United States Copyright Office (as applicable), such Liens constitute second priority perfected and continuing Liens on the Collateral, securing the Obligations, enforceable (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights and by general equitable principles (whether enforcement is sought by proceedings in equity or at law)) against the applicable Loan Party and all third parties, and having priority over all other Liens, including Liens created in favor of the Second Lien Administrative Agent and for the benefit of the Second Lien Secured Parties, on the Collateral except in the case of (a) Liens permitted by clauses (a), (b), (c), (d), (e) and (f) of Section 7.1, to the extent any such Liens would have priority over the Liens in favor of the Agent pursuant to any applicable law and Customary Permitted Liens to the extent having priority by provisions of applicable law and (b) Liens perfected only by possession or notation (including possession or notation of any certificate of title) to the extent the Administrative Agent has not obtained or does not maintain possession of or notation on such Collateral.
Section 4.22 Related Documents.
The Arranger has been furnished true and complete copies of each material Settlement Document to the extent filed and/or executed and delivered, as the case may be, on or prior to the Effective Date. All representations and warranties of any Loan Party set forth in any Settlement Document were true and correct in all material respects as of the time such represen-
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tations and warranties were made and shall be true and correct in all material respects as of the Effective Date as if such representations and warranties were made on and as of such date, unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date.
Section 4.23 Subordinated Indebtedness.
The Obligations constitute “Senior Indebtedness” (or similar term) referring to the Obligations under the Subordinated Notes or any other Subordinated Indebtedness and the subordination provisions relating to the Subordinated Notes and such other Subordinated Indebtedness are effective, valid and enforceable, exist for the benefit of the Administrative Agent and the Lenders and all payments of principal of or premium and interest on the Subordinated Notes or any other Subordinated Indebtedness, or realized from the liquidation of any property of any Loan Party, shall be subject to any of such subordination provisions.
ARTICLE V
FINANCIAL COVENANTS
As long as any of the Obligations remain outstanding (other than contingent indemnification obligations), unless the Requisite Lenders otherwise consent in writing, the Borrowers agree with the Lenders and the Administrative Agent that:
Section 5.1 Maximum Secured Indebtedness.
The sum of (i) the aggregate outstanding principal amount of Term Loans plus (ii) the aggregate outstanding principal amount of First Lien Term Loans plus (iii) Revolving Credit Outstandings at any time outstanding shall not exceed 70% of value of assets designated as “inventory” on the then most recent balance sheet of the Administrative Borrower, as determined in accordance with GAAP minus (x) obligations for inventory not owned, (y) customer deposits and (z) costs associated with option deposits
Section 5.2 Maximum Total Leverage Ratio.
The Administrative Borrower shall maintain a Total Leverage Ratio, measured as of the last day of each fiscal quarter set forth below, of not more than the ratio set forth below opposite such fiscal quarter:
| | |
| | Maximum Total |
Fiscal Quarter Ending | | Leverage Ratio |
September 30, 2007 to and including September 30, 2008 | | 3.75 to 1.0 |
December 31, 2008 to and including June 30, 2009 | | 3.50 to 1.0 |
September 30, 2009 | | 3.25 to 1.0 |
December 31, 2009 | | 3.00 to 1.0 |
March 31, 2010 and thereafter | | 2.40 to 1.0 |
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Section 5.3 Minimum Interest Coverage Ratio.
The Administrative Borrower shall maintain an Interest Coverage Ratio, measured as of the last day of each fiscal quarter set forth below, for the four fiscal quarter period ending on such day, of not less than the ratio set forth below opposite such fiscal quarter:
| | |
| | Minimum Interest |
Fiscal Quarter Ending | | Coverage Ratio |
September 30, 2007 | | 1.05 to 1.0 |
December 31, 2007 | | 0.65 to 1.0 |
March 31, 2008 to and including June 30, 2008 | | 0.45 to 1.0 |
September 30, 2008 | | 0.55 to 1.0 |
December 31, 2008 to and including March 31, 2009 | | 0.65 to 1.0 |
June 30, 2009 | | 0.75 to 1.0 |
September 30, 2009 | | 0.95 to 1.0 |
December 31, 2009 | | 1.20 to 1.0 |
March 31, 2010 and thereafter | | 1.65 to 1.0 |
Section 5.4 Total Land to Adjusted Consolidated Tangible Net Worth.
The Administrative Borrower shall maintain a ratio, measured as of the last day of each fiscal quarter set forth below, of (a) Total Land of the Administrative Borrower and its Restricted Subsidiaries, the value of which is determined in conformity with GAAP, to (b) Adjusted Consolidated Tangible Net Worth of not more than (x) 2.25 to 1.00 for the fiscal quarter ending September 30, 2007 to and including the fiscal quarter ending June 30, 2008, (y) 2.15 to 1.00 for the fiscal quarter ending September 30, 2008 to and including the fiscal quarter ending June 30, 2009 and (z) 2.00 to 1.00 for the fiscal quarter ending September 30, 2009 and for each fiscal quarter thereafter.
Section 5.5 Unsold Units to Units Closed.
The Administrative Borrower shall maintain a ratio, measured as of the last day of each fiscal quarter ending after June 30, 2007, of (a) the aggregate number of Units owned by the Administrative Borrower and its Restricted Subsidiaries that constitute Unsold Units to (b) Units Closed by the Administrative Borrower and its Restricted Subsidiaries, determined as of the last
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day of each calendar month, for the twelve months ending on such day, of not more (a) 1.00 to 3.50 for the fiscal quarter ending September 30, 2007 to and including the fiscal quarter ending December 31, 2010 and (b) 1.00 to 2.50 for the fiscal quarter ending March 31, 2011 and for each fiscal quarter thereafter; provided that for any fiscal quarter in which the Total Leverage Ratio of the Administrative Borrower shall be less than 1.50 to 1.00 and the Interest Coverage Ratio shall not be less than 1.75:1.00, the Administrative Borrower shall maintain a ratio of Unsold Units to Units Closed as of the last day of such fiscal quarter of not more than 1.00 to 2.50. For the avoidance of doubt, for any period, the calculation of the ratio of Unsold Units to Units Closed shall give pro forma effect to the Unsold Units and Units Closed acquired by the Administrative Borrower or its Restricted Subsidiaries in connection with a Permitted Acquisition consummated during such period.
Section 5.6 Maximum Land Supply.
The Administrative Borrower shall maintain a Land Supply Ratio, measured as of the last day of each fiscal quarter set forth below, of less than (x) 4.50 to 1.00 for the fiscal quarter ending December 31, 2007 to and including the fiscal quarter ending June 30, 2009, (y) 4.00 to 1.00 for the fiscal quarter ending September 30, 2009 and (z) 3.50 to 1.00 for the fiscal quarter ending December 31, 2009 and for each fiscal quarter thereafter.
ARTICLE VI
AFFIRMATIVE COVENANTS
As long as the Obligations remain outstanding (other than contingent indemnification obligations), unless the Requisite Lenders otherwise consent in writing, the Borrowers agree with the Lenders and the Administrative Agent that:
Section 6.1 Reporting Requirements.
The Administrative Borrower shall furnish to the Administrative Agent and the Lenders each of the following:
(a) Quarterly Reports. Within 45 days after the end of each fiscal quarter (other than fiscal quarters ending December 31) (or such earlier date on which the Administrative Borrower is required to file a Form 10-Q under the Exchange Act (including all permitted extensions)), financial information regarding the Administrative Borrower and its Subsidiaries consisting of Consolidated and consolidating unaudited balance sheets as of the close of such quarter and the related statements of income and cash flow for such quarter and that portion of the fiscal year ending as of the close of such quarter, setting forth in comparative form the figures for the corresponding period in the prior year and the figures contained in the Five Year Projections, or, if applicable the latest business plan provided pursuant to clause (d) below, for the current fiscal year, in each case certified by the Chief Financial Officer of the Administrative Borrower as fairly presenting in all material respects the Consolidated and consolidating financial position of the Administrative Borrower and its Subsidiaries as at the dates indicated and the results
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