FIRST MODIFICATION AGREEMENT
THIS FIRST MODIFICATION AGREEMENT ("Agreement") is entered into as of
March 28, 1997, among the Borrowers named herein, the Banks listed on the
signature pages of this Agreement, and BANK ONE, ARIZONA, NA, a national banking
association, as Agent. The parties hereto agree as follows:
RECITALS:
A. Agent, Banks and RICHMOND AMERICAN HOMES OF CALIFORNIA, INC., a
Colorado corporation, RICHMOND AMERICAN HOMES OF MARYLAND, INC., a Maryland
corporation, RICHMOND AMERICAN HOMES OF NEVADA, INC., a Colorado corporation,
RICHMOND AMERICAN HOMES OF VIRGINIA, INC., a Virginia corporation, RICHMOND
AMERICAN HOMES OF ARIZONA, INC., a Delaware corporation (formerly known as
Richmond American Homes, Inc.), RICHMOND AMERICAN HOMES OF COLORADO, INC., a
Delaware corporation (formerly known as Richmond Homes, Inc. I) and RICHMOND
HOMES, INC. II, a Delaware corporation (subsequently merged into Richmond Homes,
Inc. I), as Borrowers (collectively, the "Borrowers") entered into a Credit
Agreement dated as of April 10, 1996 and an Agreement dated March 3, 1997
(collectively, the "Credit Agreement"). Pursuant to the Credit Agreement, Banks,
among other things, established a credit facility ("Credit Facility") for
Borrowers, which is evidenced by the Notes. Capitalized terms not otherwise
defined herein shall have the same meanings ascribed to such terms in the Credit
Agreement.
B. Borrowers have requested, among other things, that Banks increase
the amount of the Credit Facility, extend the maturity date of the Credit
Facility, and modify certain covenants in the Credit Agreement. Banks have
agreed to so modify the Credit Facility and to amend the Credit Agreement and
other Loan Documents on the terms and subject to the conditions set forth in
this Agreement.
AGREEMENTS:
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrowers, Bank and Agent agree as follows:
SECTION 1. ACCURACY OF RECITALS.
The parties acknowledge the accuracy of the Recitals.
SECTION 2. MODIFICATION OF CREDIT AGREEMENT.
Effective as of the Effective Date (as hereafter defined), the Credit
Agreement shall be modified as follows:
2.1. The following definitions are hereby added to Article I of the
Credit Agreement, or modified in their entirety if currently set forth in
Article I:
"Aggregate Commitment" means the aggregate of the Commitments
of all Banks, as reduced from time to time pursuant to the terms
hereof. As of March 28, 1997, the Aggregate Commitment is
$175,000,000.00.
"Borrowers" means RICHMOND AMERICAN HOMES OF CALIFORNIA, INC.,
a Colorado corporation, RICHMOND AMERICAN HOMES OF MARYLAND, INC., a
Maryland corporation, RICHMOND AMERICAN HOMES OF NEVADA, INC., a
Colorado corporation, RICHMOND AMERICAN HOMES OF VIRGINIA, INC., a
Virginia corporation, RICHMOND AMERICAN HOMES OF ARIZONA, INC., a
Delaware corporation (formerly known as Richmond American Homes, Inc.),
RICHMOND AMERICAN HOMES OF COLORADO, INC., a Delaware corporation
(formerly known as Richmond Homes, Inc. I) and their successors and
assigns, and any Subsidiary that shall hereafter become a Borrower in
accordance with Section 11.4 hereof, and any successors and assigns of
any of the foregoing. "Borrower" means any one of the Borrowers.
"Consolidated Tangible Net Worth" means, as to Guarantor, at
any date, the sum of all capital accounts (including without
limitation, any paid-in capital, capital surplus, and retained
earnings) determined on a consolidated basis in conformity with
Agreement Accounting Principles, plus (i) the amount paid by Guarantor
to repurchase its common stock after December 31, 1996, such amount not
to exceed $10,000,000.00, plus (ii) the after-tax effect, as calculated
in accordance with Agreement Accounting Principles, attributed to any
premium paid by Guarantor to repurchase a portion of its Senior Notes
between March 25, 1997 and June 30, 1997, such after-tax effect not to
exceed $2,000,000.00, less (iii) its consolidated Intangible Assets,
and less (iv) loans and advances to directors, officers and employees
of Guarantor but excluding (I) loans for purposes of exercising options
to purchase capital stock in Guarantor to the extent not otherwise
netted out in the determination of shareholders' equity, and (II) any
arms-length mortgage loans made by any Subsidiary in the ordinary
course of such Subsidiary's business, and (III) any advances made to
employees in the ordinary course of business for travel and other
items, and (IV) other such loans and advances not to exceed $5,000,000
in the aggregate outstanding at any one time, all determined as of such
date. For purposes of this definition "Intangible Assets" means the
amount (to the extent reflected in determining such consolidated
shareholders' equity) of (A) all write-ups in the book value of any
asset owned by Guarantor or any Subsidiary, (B) any amount, however
designated on the balance sheet, representing the excess of the
purchase price paid for assets or stock
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acquired over the value assigned thereto on the books of Guarantor
or any Subsidiary, (C) all unamortized debt discount, goodwill,
patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible items, and
(D) all items that would be considered intangible assets under
Agreement Accounting Principles.
"Conversion Period" means the period of time commencing on the
Conversion Date and expiring on the Facility Termination Date. The
Conversion Period shall be either (A) a Secured Conversion Period, (B)
an Unsecured Conversion Period, or (C) a Modified Secured Conversion
Period.
"Facility Maturity Date" means June 30, 2001, as the same may
be extended as provided in Section 2.21.
"Facility Termination Date" means the earlier of (i) the
Facility Maturity Date, or (ii) the last day of the Conversion Period
(if applicable) then in effect, as calculated pursuant to Section 2.22.
2.2 The phrase "Facility Termination Date", as it appears in the
following provisions of the Credit Agreement, is hereby amended to be
"Facility Maturity Date:"
(i) The definition of "Modified Secured Conversion
Period" in Article I;
(ii) Section 2.21, in each place that it appears;
(iii) Sections 2.22(d) and (e), in each place that it
appears.
2.3 The Commitment of Sanwa Bank California, as set forth opposite
its signature on the Credit Agreement, is hereby amended to be $25,000,00.00.
The Commitment of KeyBank National Association, a national banking
association formerly known as Key Bank of Colorado ("KeyBank"), as set forth
opposite its signature on the Credit Agreement, is hereby amended to be
$35,000,000.00.
SECTION 3. OTHER MODIFICATIONS; RATIFICATION OF LOAN DOCUMENTS.
3.1 As of the Effective Date, each reference in the Loan
Documents to any of the Loan Documents is hereby amended to be a reference to
such document as modified herein.
3.2 The Loan Documents are ratified and affirmed by Borrowers
and shall remain in full force and effect as modified herein.
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SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.
Borrowers represent and warrant to Banks and Agent:
4.1 As of March 26, 1997, the outstanding principal balance
of the Notes is $17,602,065.76; interest has been paid through the due date.
4.2 No Event of Default under any of the Loan Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be an Event of Default under the Loan Documents as
modified herein has occurred and is continuing.
4.3 There has been no material adverse change in the
financial condition of any Borrower or Guarantor or any other person whose
financial statement has been delivered to Agent in connection with the Credit
Facility from the most recent financial statement received by Agent.
4.4 Each and all representations and warranties of Borrowers
in the Loan Documents are accurate on the date hereof, except as may have been
previously disclosed to Banks in writing.
4.5 Borrowers have no claims, counterclaims, defenses, or
set-offs with respect to the Credit Facility or the Loan Documents as
modified herein.
4.6 The Loan Documents as modified herein are the legal, valid,
and binding obligation of Borrowers, enforceable against Borrowers in
accordance with their terms, subject to bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity.
4.7 Each Borrower is validly existing under the laws of the
State of its formation or organization and has the requisite power and
authority to execute and deliver this Agreement and to perform the Loan
Documents as modified herein. The execution and delivery of this Agreement and
the performance of the Loan Documents as modified herein have been duly
authorized by all requisite action by or on behalf of each Borrower. This
Agreement has been duly executed and delivered on behalf of each Borrower.
SECTION 5. BORROWER COVENANTS.
Borrowers covenant with Agent and Banks as follows:
5.1 Borrowers shall execute, deliver, and provide to Agent
such additional agreements, documents, and instruments as reasonably
required by Agent to effectuate the intent of this Agreement.
5.2 Borrowers fully, finally, and absolutely and forever release
and discharge Agent and Banks and their present and former directors,
shareholders, officers, employees, agents,
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representatives, successors and assigns, and their separate and respective
heirs, personal representatives, successors and assigns, from any and all
actions, causes of action, claims, debts, damages, demands, liabilities,
obligations, and suits, of whatever kind or nature, in law or equity of
Borrowers, whether now known or unknown to Borrowers, and whether contingent or
matured, (i) in respect of the Credit Facility, the Loan Documents, or the
actions or omissions of Agent or Banks in respect of the Credit Facility or the
Loan Documents and (ii) arising from events occurring prior to the date of this
Agreement.
SECTION 6. CONDITIONS PRECEDENT.
The agreements of Banks and Agent and the modifications contained
herein shall not be binding upon Banks and Agent until Borrowers have executed
and delivered this Agreement and Agent has received, at Borrowers' expense, all
of the following on or before March 28, 1997 (the "Effective Date"), and each of
which shall be in form and content satisfactory to Agent and Banks and shall be
subject to approval by Agent and Banks:
6.1 An original of this Agreement fully executed by Borrowers and
Guarantor;
6.2 Replacement Notes payable to the order of Sanwa Bank
California and KeyBank, each in the amount of $25,000,000.00 and
$35,000,000.00, respectively, in the form attached hereto as Exhibit A, fully
executed by Borrowers;
6.3 An extension fee in the amount of $112,500.00;
6.4 A commitment fee, for the increase in the Aggregate
Commitment to $175,000,000.00, in the amount of $82,500.00;
6.5 The fees payable to Agent as set forth in the letter
agreement of even date herewith between Agent and Borrowers;
6.6 Such resolutions or authorizations and such other
documents as Agent may require relating to the existence and good standing of
each Borrower and Guarantor, and the authority of any person executing this
Agreement or other documents on behalf of each Borrower and Guarantor;
6.7 A written opinion of Haligman & Lottner, P.C., counsel to
Borrowers and Guarantor, addressed to Agent and Banks in substantially the
form of Exhibit B hereto; and
6.8 Payment of all the internal and external costs and expenses
incurred by Banks and Agent in connection with this Agreement (including,
without limitation, inside and outside attorneys and processing costs, expenses,
and fees).
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SECTION 7. ADJUSTMENT OF PRO RATA SHARES.
7.1 Pursuant to the provisions of the Credit Agreement, Advances
made by the Banks (excluding Swing Line Advances) consist of Loans made by the
several Banks ratably in proportion to the ratio that their respective
Commitments bear to the Aggregate Commitment. As a result of the increase in the
Commitment of Sanwa Bank California and KeyBank, and the resulting increasing in
the Aggregate Commitment, such ratio has been changed. As of the Effective Date,
each Bank whose proportionate share of such Advances decreased as a result of
the change in such ratio (an "Assignor Bank") hereby sells and assigns to each
Bank whose proportionate share of Advances increased as a result of the change
in such ratio (an "Assignee Bank"), and each Assignee Bank hereby purchases and
assumes, without recourse, from each Assignor Bank, all of Assignor Bank's
rights and obligations in respect of the portion of its Commitment and the
portion of all Advances owing to the Assignor that are outstanding on the date
hereof, to the extent required in order to appropriately adjust the
proportionate shares and the Advances. In connection with the foregoing
assignment, on or before 11:00 a.m., Phoenix time, on the Effective Date, each
Assignee Bank shall wire transfer to Agent the applicable amount necessary to
make the foregoing adjustment, and Agent shall wire transfer the respective
amount to each Assignor Bank on the Effective Date.
SECTION 8. GENERAL.
8.1 The Loan Documents as modified herein contain the
complete understanding and agreement of Borrowers, Banks and Agent in
respect of the Credit Facility and supersede all prior representations,
warranties, agreements, arrangements, understandings, and negotiations.
No provision of the Loan Documents as modified herein may be changed,
discharged, supplemented, terminated, or waived except in a writing signed by
the parties thereto.
8.2 The Loan Documents as modified herein shall be binding upon
and shall inure to the benefit of Borrowers, Banks and Agent and their
successors and assigns; provided, however, Borrowers may not assign any of
their rights or delegate any of their obligations under the Loan Documents
and any purported assignment or delegation shall be void.
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8.3 This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona, without giving effect to
conflicts of law principles.
8.4 This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same document. Signature pages may be detached from the
counterparts and attached to a single copy of this Agreement to physically form
one document.
IN WITNESS WHEREOF, Borrowers, Banks, and Agent have executed this
Agreement as of the date set forth above.
BORROWERS:
ATTEST: RICHMOND AMERICAN HOMES OF
CALIFORNIA, INC., a Colorado corporation
----------------------------
By:
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
ATTEST: RICHMOND AMERICAN HOMES OF
MARYLAND, INC., a Maryland corporation
-----------------------------
By:
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
ATTEST: RICHMOND AMERICAN HOMES OF NEVADA,
INC., a Colorado corporation
------------------------------
By:
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
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ATTEST: RICHMOND AMERICAN HOMES OF VIRGINIA,
INC., a Virginia corporation
------------------------------
By:
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
ATTEST: RICHMOND AMERICAN HOMES OF ARIZONA,
INC., a Delaware corporation, formerly
known as Richmond American Homes, Inc.
-------------------------------
By:
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
ATTEST: RICHMOND AMERICAN HOMES OF
COLORADO, INC., a Delaware corporation,
formerly known as Richmond Homes, Inc. I,
successor by merger to Richmond Homes,
Inc. II
--------------------------------
By:
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
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BANKS AND AGENT:
ATTEST: BANK ONE, ARIZONA, NA, a national
banking association, Individually and as
Agent
---------------------------
By:
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
ATTEST: BANK UNITED OF TEXAS FSB, a federal
savings bank
---------------------------
By:
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
ATTEST: SANWA BANK CALIFORNIA, a California
corporation
----------------------------
By:
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
ATTEST: KEYBANK NATIONAL ASSOCIATION, a
national banking association formerly
known as KEY BANK OF COLORADO,
a Colorado state bank
-----------------------------
By:
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
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