EXHIBIT 4.1
THIRD MODIFICATION AGREEMENT
THIS THIRD MODIFICATION AGREEMENT ("Agreement") is entered into as of
June 2, 1998, 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, the banks named therein ("Existing 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, an
Agreement dated March 3, 1997, a First Modification Agreement dated as of March
28, 1997, and a Second Modification Agreement dated as of October 29, 1997
(collectively, the "Credit Agreement"). Pursuant to the Credit Agreement,
Existing 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 Existing Banks
increase the amount of the Credit Facility, add parties as Banks under the
Credit Agreement, extend the maturity date of the Credit Facility, and modify
certain covenants in the Credit Agreement. Existing 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, Banks (as hereafter defined) and Agent
agree as follows:
SECTION 1. ACCURACY OF RECITALS.
The parties acknowledge the accuracy of the Recitals.
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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 June 2, 1998, the Aggregate Commitment is
$300,000,000.00.
"Co-Agent" means each Bank, other than Agent and Documentation
Agent, whose Commitment is at least $45,000,000.00.
"Documentation Agent" means NationsBank, N.A., in its capacity
as documentation agent for Banks and not in its individual capacity as
a Bank, and any successor Documentation Agent appointed by Banks.
"Facility Maturity Date" means June 30, 2003, as the same may
be extended as provided in Section 2.21.
"Indenture" means that certain Senior Notes Indenture, dated
as of January 28, 1998, between Guarantor and U.S. Bank National
Association pursuant to which the Senior Notes were issued.
"Senior Notes" means the 8-3/8% Senior Notes due 2008 of
Guarantor issued in the original principal amount of $175,000,000.00
pursuant to the Indenture.
"Subordinated Indebtedness" means any Indebtedness of
Borrowers the payment of which is subordinated to payment of the
Obligations to the reasonable satisfaction of Agent. Subordinated
Indebtedness shall specifically not include Indebtedness of any
Borrower to Guarantor.
Additionally, clause (ii)(B) in the definition of "Permitted Liens" is hereby
amended in its entirety to read as follows: "(B) are delinquent but are being
contested in a timely manner in good faith by appropriate proceedings and for
which adequate reserves shall have been established on such Borrower's or
Guarantor's books in accordance with Agreement Accounting Principles."
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2.2 The table set forth in Section 2.5(c) of the Credit Agreement
is hereby amended to read as follows:
Extension Fee (as a percentage
Bank's Initial Commitment of Bank's Commitment)
------------------------- ------------------------------
$25,000,000 or more .075% per annum
Less than $25,000,000 .050% per annum
2.3 Section 2.21 of the Credit Agreement is hereby modified as
follows:
(i) The first sentence is hereby amended in its entirety
to read as follows: "Borrowers may request a one-year
extension of the Facility Maturity Date by submitting
a request for an extension to Agent (an "Extension
Request") no more than 48 months nor less than 46
months prior to the then scheduled Facility Maturity
Date."
(ii) Each reference to two (2) years is hereby amended to
be one (1) year in each place that it appears in
Section 2.21.
2.4 The amount of $20,000,000.00, as it appears in Section 4.2(ii)
of the Credit Agreement, is hereby amended to be $25,000,000.00.
2.5 The second sentence of Section 6.19 of the Credit Agreement is
hereby deleted.
2.6 Section 6.20 of the Credit Agreement is hereby amended in its
entirety to read as follows: "Each Borrower is a Restricted Subsidiary, as that
term is defined in the Indenture. Each Borrower is a Wholly-Owned Subsidiary of
Guarantor."
2.7 The following Section 6.21 is hereby added to the Credit
Agreement:
6.21 Year 2000 Compliance. Each Borrower and Guarantor has (i)
initiated a review and assessment of all areas within its and each of
its Subsidiaries' business and operations that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by any Borrower or Guarantor or any of their
Subsidiaries) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to, and any date
after, December 31, 1999), (ii) developed a plan and time line for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable. Borrowers
reasonably believe that all computer applications of Guarantor and any
Borrower that are material to the business operations of each Borrower,
Guarantor and their respective Subsidiaries will on a timely basis be
able to perform properly date-sensitive functions for all dates
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before and after December 31, 1999 (that is, be "Year 2000 compliant");
provided, however, that Borrowers shall not be in breach of the
representation and warranty in this sentence unless the failure of any
such computer applications to perform on a timely basis could
reasonably be expected to have a Material Adverse Effect.
2.8 The first sentence of Section 7.2 of the Credit Agreement is
hereby amended in its entirety to read as follows:
Subject to the limitations contained in this Agreement, each
Borrower will use the proceeds of Advances for its own acquisition,
holding and/or development of real property and related appurtenances
and the construction of improvements, including homes, thereon in the
ordinary course of business of such Borrower (including payment of
reimbursement obligations with respect to Facility Letters of Credit),
and any other use permitted within the definition of "Real Property
Indebtedness" under the Indenture, and to repay outstanding Advances.
2.9 The following Section 7.11 is hereby added to the Credit
Agreement:
7.11 Year 2000 Compliance. Each Borrower will, and will cause
Guarantor to, notify promptly Agent in the event that (i) any Borrower
or Guarantor discovers or determines that any computer application that
is material to its or any of its Subsidiaries' business and operations
will not be Year 2000 compliant (as that term is defined in Section
6.21) on a timely basis; and that (ii) such failure to be Year 2000
compliant on a timely basis could reasonably be expected to have a
Material Adverse Effect.
2.10 The last sentence of Section 8.6 of the Credit Agreement is
amended in its entirety to read as follows: "Notwithstanding anything herein to
the contrary, each Borrower will not, and will not permit Guarantor to, create,
incur or suffer to exist any Lien in, of or on the capital stock of any
Borrower."
2.11 The phrase "Guarantor Senior Indebtedness", as it appears in
Section 8.9 of the Credit Agreement, is hereby amended to be "Real Property
Indebtedness."
2.12 Section 8.10 of the Credit Agreement is hereby amended in its
entirety to read as follows:
8.10 Negative Pledge. Borrowers will not, and Guarantor will
not, directly or indirectly enter into any agreement (other than (A)
this Agreement, (B) the Indenture and any indenture or similar
agreement executed in connection with any Refinancing Indebtedness of
the Senior Notes and (C) any indenture or similar agreement executed in
connection with any Public Indebtedness permitted under Section
8.2(xv)) with any Person that prohibits or restricts or limits the
ability of
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Borrowers or Guarantor to create, incur, pledge or suffer to exist any
Lien in favor of Banks granted pursuant to the terms of this Agreement
upon any real property assets of Borrowers or any Guarantor; provided,
however, that those agreements creating Liens permitted under Sections
8.6(iii), (iv), (vii), (viii), (xix), and (xx) and, during an Unsecured
Conversion Period only, Section 8.6(v), may prohibit, restrict or limit
other Liens on those assets encumbered by the Liens created by such
agreements.
2.13 The ratio of .75 to 1, as set forth in Sections 9.3(a) and
9.3(b) of the Credit Agreement, is hereby amended to be 1 to 1. Additionally,
the parenthetical "(except pursuant to the Indenture or any Refinancing
Indebtedness thereof)" is hereby deleted from Section 9.3(b) of the Credit
Agreement.
2.14 Section 11.4(i) of the Credit Agreement is hereby amended in
its entirety to read as follows: "such Person is (a) a Wholly-Owned Subsidiary
of Guarantor, and (b) a Restricted Subsidiary, as defined in the Indenture."
2.15 Schedule "2.22" to the Credit Agreement is hereby modified as
follows:
(i) Section A(1) is hereby modified by adding Section
8.10 to the list of Sections referenced therein.
(ii) The introductory clause to Section B is hereby
amended in its entirety to read as follows: "The
following terms will have the following meanings
during a Secured Conversion Period or a Modified
Secured Conversion Period:".
2.16 As of the Effective Date, NationsBank, N.A., a national
banking association, and AmSouth Bank, an Alabama banking corporation ("New
Banks"), shall each be deemed to be a Bank under the Credit Agreement, and the
definition of "Banks" in the Credit Agreement is hereby amended to include New
Banks and their successors and assigns. The Commitment of each Bank, including
each New Bank, shall be the amount set forth opposite its signature on this
Agreement. Each New Bank (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements requested by it and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Agreement, (ii) agrees that
it will, independently and without reliance upon Agent or any Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents, (iii) appoints and authorizes Agent to take such action as
agent on its behalf and to exercise such powers under the Loan Documents as are
delegated to Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, (iv) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Documents
are required to be performed by it as a Bank, (v) agrees that its payment
instructions and notice instructions are
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as set forth on Schedule 1 hereto; and (vi) confirms that none of the funds,
monies, assets or other consideration being used to make the purchase of its
interest in Advances and Facility Letters of Credit are "plan assets" as defined
under ERISA and that its rights, benefits and interests in and under the Loan
documents will not be "plan assets" under ERISA.
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.
SECTION 4. BORROWERS REPRESENTATIONS AND WARRANTIES.
Borrowers represent and warrant to Banks and Agent:
4.1 As of May 27, 1998, the outstanding principal balance of the
Notes is $85,558,428.35; 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
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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, 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 June 2, 1998 (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 A Promissory Note payable to the order of NationsBank, N.A.
in the amount of $50,000,000.00, in the form attached hereto as Exhibit A, fully
executed by Borrowers, which shall be deemed to be a Note for all purposes under
the Credit Agreement;
6.3 A Promissory Note payable to the order of AmSouth Bank
in the amount of $25,000,000.00, in the form attached hereto as Exhibit B, fully
executed by Borrowers, which shall be deemed to be a Note for all purposes under
the Credit Agreement;
6.4 A Replacement Promissory Note payable to the order of Bank
United of Texas FSB in the amount of $75,000,000.00, in the form attached hereto
as Exhibit C, fully executed by Borrowers, which shall be deemed to be a Note
for all purposes under the Credit Agreement;
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6.5 A Replacement Promissory Note payable to the order of
KeyBank National Association in the amount of $50,000,000.00, in the form
attached hereto as Exhibit D, fully executed by Borrowers, which shall be deemed
to be a Note for all purposes under the Credit Agreement;
6.6 An extension fee in the amount of $262,500.00;
6.7 A commitment fee, for the benefit of Banks, for the increase
in the Aggregate Commitment to $300,000,000.00, in the amount of $468,750.00;
6.8 The fees payable to Agent as set forth in the letter agreement
of even date herewith between Agent and Borrowers;
6.9 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;
6.10 A written opinion of Haligman Xxxxxxx Xxxxx & Xxxxxxx, counsel
to Borrowers and Guarantor, addressed to Agent and Banks in substantially the
form of Exhibit E hereto; and
6.11 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).
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
Aggregate Commitment and the addition of New Banks as Banks, such ratio has been
changed. As of the Effective Date, Bank One, Arizona, NA, a national banking
association, Sanwa Bank California, a California corporation, and KeyBank
National Association, a national banking association ("Assignor Banks") hereby
sell and assign to NationsBank, N.A., a national banking association, AmSouth
Bank, an Alabama banking corporation, and Bank United of Texas FSB, a federal
savings bank ("Assignee Banks"), and Assignee Banks hereby purchase and assume,
without recourse, from Assignor Banks, all of Assignor Banks' rights and
obligations in respect of the portion of all Advances owing to the Assignor
Banks' and all Facility Letters of Credit that are outstanding on the Effective
Date, to the extent required in order to appropriately adjust the proportionate
shares of the Advances and the Facility Letters of Credit. 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
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amount necessary to make the foregoing adjustment, and Agent shall wire transfer
the respective portion of such 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.
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.
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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: /s/ Xxxx X. Xxxxxx
-------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
ATTEST: RICHMOND AMERICAN HOMES OF
MARYLAND, INC., a Maryland corporation
By: /s/ Xxxx X. Xxxxxx
-------------------------- ---------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
ATTEST: RICHMOND AMERICAN HOMES OF NEVADA,
INC., a Colorado corporation
By: /s/ Xxxx X. Xxxxxx
-------------------------- --------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
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ATTEST: RICHMOND AMERICAN HOMES OF VIRGINIA,
INC., a Virginia corporation
By: /s/ Xxxx X. Xxxxxx
-------------------------- --------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
ATTEST: RICHMOND AMERICAN HOMES OF ARIZONA,
INC., a Delaware corporation, formerly known
as Richmond American Homes, Inc.
By: /s/ Xxxx X. Xxxxxx
--------------------------- --------------------------------
Name: Xxxx X. Xxxxxx
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: /s/ Xxxx X. Xxxxxx
--------------------------- --------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
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Commitments BANKS AND AGENT:
-----------
$75,000,000.00 BANK ONE, ARIZONA, NA, a national banking
association, Individually and as Agent
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
$75,000,000.00 BANK UNITED OF TEXAS FSB, a federal savings
bank
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
$25,000,000.00 SANWA BANK CALIFORNIA, a California
corporation
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
$50,000,000.00 KEYBANK NATIONAL ASSOCIATION, a national
banking association formerly known as
KEY BANK OF COLORADO, a Colorado state bank
By: /s/ Xxxx Xxxxxx
-------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
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$50,000,000.00 NATIONSBANK, N.A., a national banking
association
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
$25,000,000.00 AMSOUTH BANK, an Alabama banking
corporation
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
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