Exhibit 4.2
"EXHIBIT "A"
GUARANTY
TO: BANK ONE, NA, a national banking association, as Administrative Agent
for the Banks that are parties to the Amended and Restated Credit
Agreement dated as of October 8, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among
M.D.C. HOLDINGS, INC., a Delaware corporation, Banks, and
Administrative Agent, and to the Banks. Capitalized terms not otherwise
defined herein shall have the meaning set forth in the Credit
Agreement.
FOR VALUABLE CONSIDERATION, the undersigned (hereinafter called
"Guarantor"), whose address is set forth after Guarantor's signature below,
unconditionally guarantees and promises to pay to Administrative Agent, for the
benefit of Banks and their respective successors, endorsees, transferees and
assigns, or order, within one (1) business day after demand, in lawful money of
the United States, (i) the Notes, principal and interest and all other sums
payable thereunder, or at the election of Administrative Agent any one or more
installments thereof, in the event that Borrower fails to punctually pay any one
or more installments of the Note (principal and/or interest), or any other sum
payable thereunder at the time and in the manner provided therein; and (ii) all
other indebtedness of Borrower to Administrative Agent or to any Bank arising
under or in connection with the Notes, the Credit Agreement or any Loan
Documents (the indebtedness evidenced by the Notes together with all other
indebtedness specified above is hereinafter collectively called the
"Indebtedness").
1. The obligations of Guarantor hereunder are separate and
independent of the obligations of Borrower and of any other guarantor, and a
separate action or actions may be brought and prosecuted against Guarantor
whether action is brought against Borrower or any other guarantor or whether
Borrower or any other guarantor is joined in any action or actions. The
obligations of Guarantor hereunder shall survive and continue in full force and
effect until payment in full of the Indebtedness is actually received by
Administrative Agent for the benefit of Banks and the period of time has expired
during which any payment made by any Borrower or Guarantor to Administrative
Agent for the benefit of Banks may be determined to be a Preferential Payment
(defined below), notwithstanding any release or termination of Borrower's or any
other guarantor's liability by express or implied agreement with Administrative
Agent or any Bank or by operation of law and notwithstanding that the
Indebtedness or any part thereof is deemed to have been paid or discharged by
operation of law or by some act or agreement of Administrative Agent or Banks.
For purposes of this Guaranty, the Indebtedness shall be deemed to be paid only
to the extent that Administrative Agent, on behalf of Banks, actually receives
immediately available funds.
2. Guarantor agrees that to the extent Borrower or Guarantor makes
any payment to Administrative Agent or Banks in connection with the
Indebtedness, and all or any part of such payment is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid by
Administrative Agent or Banks or paid over to a trustee, receiver or any other
entity, whether under any bankruptcy act or otherwise (any such payment is
hereinafter referred to as a "Preferential Payment"), then this Guaranty shall
continue to be effective or shall be reinstated, as the case may be, and, to the
extent of such payment or repayment by Administrative Agent or Banks, the
Indebtedness or part thereof intended to be satisfied by such Preferential
Payment shall be revived and continued in full force and effect as if said
Preferential Payment had not been made.
3. Guarantor is providing this Guaranty at the instance and
request of Borrower to induce Administrative Agent and Banks to extend or
continue financial accommodations to Borrower. Guarantor hereby represents and
warrants that Guarantor is and will continue to be fully informed about all
aspects of the financial condition and business affairs of Borrower that
Guarantor deems relevant to the obligations of Guarantor hereunder and hereby
waives and fully discharges Administrative Agent and each Bank from any and all
obligations to communicate to Guarantor any information whatsoever regarding
Borrower or Borrower's financial condition or business affairs. Guarantor
acknowledges that Borrower owns, directly or indirectly, all of the issued and
outstanding shares of stock of each Guarantor, that Guarantor and Borrower are
engaged in related businesses, and that Guarantor will derive substantial direct
and indirect benefit from the extension of credit by Banks evidenced by the
Indebtedness.
4. Guarantor authorizes Administrative Agent and Banks, without
notice or demand and without affecting Guarantor's liability hereunder, from
time to time, to: (a) renew, modify, compromise, extend, accelerate or otherwise
change the time for payment of, or otherwise change the terms of the
Indebtedness or any part thereof, including increasing or decreasing the rate of
interest thereon; (b) release, substitute or add any one or more endorsers, or
other guarantors; (c) take and hold security for the payment of this Guaranty or
the Indebtedness, and enforce, exchange, substitute, subordinate, waive or
release any such security; (d) proceed against such security and direct the
order or manner of sale of such security as Administrative Agent in its
discretion may determine; and (e) apply any and all payments from Borrower,
Guarantor or any other guarantor, or recoveries from such security, in such
order or manner as Administrative Agent in its discretion may determine.
5. Guarantor waives and agrees not to assert: (a) any right to
require Administrative Agent or Banks to proceed against Borrower or any other
guarantor, to proceed against or exhaust any security for the Indebtedness, to
pursue any other remedy available to Administrative Agent and Banks, or to
pursue any remedy in any particular order or manner; (b) the benefit of any
statute of limitations affecting Guarantor's liability hereunder or the
enforcement hereof; (c) demand, diligence, presentment for payment, protest and
demand, and notice of extension, dishonor, protest, demand, nonpayment and
acceptance of this Guaranty; (d) notice of the existence, creation or incurring
of new or additional indebtedness of Borrower to Administrative
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Agent or any Bank; and (e) any defense arising by reason of any disability or
other defense of Borrower or by reason of the cessation from any cause
whatsoever (other than payment in full of all amounts demanded to be paid by
Guarantor under this Guaranty) of the liability of Borrower for the
Indebtedness. Guarantor hereby expressly consents to any impairment of
collateral, including, but not limited to, failure to perfect a security
interest and release collateral and any such impairment or release shall not
affect Guarantor's obligations hereunder. Until payment in full of the
Indebtedness, Guarantor shall have no right of subrogation and hereby waives any
right to enforce any remedy which Administrative Agent and Banks now have, or
may hereafter have, against Borrower, and waives any benefit of, and any right
to participate in, any security now or hereafter held by Administrative Agent on
behalf of Banks.
6. If from time to time Borrower shall have liabilities or
obligations to Guarantor, whether absolute or contingent, joint, several, or
joint and several, such liabilities and obligations (the "Subordinated
Indebtedness") and any and all assignments as security, grants in trust, liens,
mortgages, security interests, other encumbrances, and other interests and
rights securing such liabilities and obligations shall at all times be fully
subordinate to payment and performance in full of the Obligations. Guarantor
agrees that such liabilities and obligations of Borrower to Guarantor shall not
be secured by any assignment as security, grant in trust, lien, mortgage,
security interest, other encumbrance or other interest or right in any property,
interests in property, or rights to property of such Borrower. Guarantor and, by
their acceptance of this Guaranty, Administrative Agent and each Bank agree that
(i) so long as no Event of Default has occurred and is continuing, payments of
principal and interest on the Subordinated Indebtedness may be made by Borrower
and accepted by Guarantor as such payments become due; and (ii) after the
occurrence and during the continuation of an Event of Default, Borrower shall
not make and Guarantor shall not accept any payments with respect to the
Subordinated Indebtedness. If, notwithstanding the foregoing, subsequent to an
Event of Default, Guarantor receives any payment from Borrower, such payment
shall be held in trust by Guarantor for the benefit of Administrative Agent and
Banks, shall be segregated from the other funds of Guarantor, and shall
forthwith be paid by Guarantor to Administrative Agent for the benefit of Banks
and applied to payment of the Obligations whether or not then due.
(a) In the event of any distribution, division, or
application, partial or complete, voluntary or involuntary, by
operation of law or otherwise, of all or any part of the assets of
Borrower, or the proceeds thereof, to creditors of Borrower, by reason
of the liquidation, dissolution, or other winding up of Borrower's
business, or in the event of any receivership, insolvency or bankruptcy
proceedings by or against Borrower, or assignment for the benefit of
creditors, or of any proceedings by or against Borrower for any relief
under any bankruptcy or insolvency laws, or relating to the relief of
debtors, readjustment of indebtedness, reorganizations, arrangements,
compositions or extensions, or of any other event whereby it becomes
necessary or desirable to file or present claims against Borrower for
the purpose of receiving payment thereof, or on account thereof, then
and in any such event, any payment or distribution of any kind or
character, either
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in cash or other property, which shall be made or shall be payable with
respect to any Subordinated Indebtedness shall be paid over to
Administrative Agent on behalf of Banks for application to the payment
of the Obligations, whether due or not due, and no payments shall be
made upon or in respect of the Subordinated Indebtedness unless and
until the Obligations shall have been paid and satisfied in full. In
any such event, all claims of Administrative Agent and Banks and all
claims of Guarantor shall, at the option of Administrative
Agent and Banks, forthwith become due and payable without demand or
notice.
(b) In the event of any distribution, division, or
application, partial or complete, voluntary or involuntary, by
operation of law or otherwise, of all or any part of the assets of
Borrower, or the proceeds thereof, to creditors of Borrower, by reason
of the liquidation, dissolution, or other winding up of Borrower's
business, or in the event of any receivership, insolvency or bankruptcy
proceedings by or against Borrower, or assignment for the benefit of
creditors, or of any proceedings by or against Borrower for any relief
under any bankruptcy or insolvency laws, or relating to the relief of
debtors, readjustment of indebtedness, reorganizations, arrangements,
compositions or extensions, or of any other event whereby it becomes
necessary or desirable to file or present claims against Borrower for
the purpose of receiving payment thereof, or on account thereof,
Guarantor irrevocably authorizes and empowers Administrative Agent, or
any person Administrative Agent may designate, to act as attorney for
Guarantor with full power and authority in the name of Guarantor, or
otherwise, to make and present such claims or proofs of claims against
Borrower on account of the Subordinated Indebtedness as Administrative
Agent, or its appointee, may deem expedient and proper and, if
necessary, to vote such claims in any proceedings and to receive and
collect for the benefit of Banks any and all dividends or other
payments and disbursements made thereon in whatever form they may be
paid or issued, and to give acquittance therefor and to apply same to
the Obligations, and Guarantor hereby agrees, from time to time and
upon request, to make, execute and deliver to Administrative Agent such
powers of attorney, assignments, endorsements, proofs of claim,
pleadings, verifications, affidavits, consents, agreements or other
instruments as may be requested by Administrative Agent in order to
enable Administrative Agent and Banks to enforce any and all claims
upon, or with respect to, the Subordinated Indebtedness, and to collect
and receive any and all payments or distributions which may be payable
or deliverable at any time upon or with respect to the Subordinated
Indebtedness.
(c) Except as otherwise permitted herein, should any payment
or distribution or security or proceeds thereof be received by
Guarantor upon or with respect to the Subordinated Indebtedness prior
to the satisfaction of the Obligations, Guarantor will forthwith
deliver the same to Administrative Agent on behalf of Banks in
precisely the form as received except for the endorsement or assignment
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of Guarantor where necessary for application on the Obligations,
whether due or not due, and until so delivered the same shall be held
in trust by Guarantor as property of Administrative Agent on behalf of
Banks. In the event of the failure of Guarantor to make any such
endorsement or assignment, Administrative Agent, or any of its officers
or employees, on behalf of Administrative Agent, is hereby irrevocably
authorized to make the same.
(d) Guarantor agrees to maintain in its records notations
satisfactory to Administrative Agent of the rights and priorities of
Administrative Agent and Banks hereunder, and from time to time, upon
request, to furnish Administrative Agent for the benefit of Banks with
sworn financial statements. Banks and Administrative Agent may inspect
the books of account and any records of Guarantor at any time during
business hours. Guarantor agrees that any promissory note now or
hereafter evidencing the Subordinated Indebtedness shall be
nonnegotiable and shall be marked with a specific statement that the
indebtedness thereby evidenced is subject to the provisions of this
Guaranty.
7. It is not necessary for Administrative Agent or any Bank to
inquire into the powers of Borrower or the officers, directors, members,
managers, partners, trustees or Administrative Agents acting or purporting to
act on its behalf, and any of the Indebtedness made or created in reliance upon
the professed exercise of such powers shall be guaranteed hereunder.
8. Guarantor agrees to deliver to Administrative Agent and Banks
financial statements and other financial information relating to Guarantor in
form and level of detail, and containing certifications, as required pursuant to
Section 7.1 of the Credit Agreement. Guarantor further agrees to comply all
covenants, representations and warranties in the Credit Agreement relating to
Guarantor.
9. Guarantor agrees to pay all attorneys' fees and all other costs
and expenses which may be incurred by Administrative Agent or any Bank in
enforcing this Guaranty.
10. This Guaranty sets forth the entire agreement of Guarantor,
Administrative Agent and Banks with respect to the subject matter hereof and
supersedes all prior oral and written agreements and representations by
Administrative Agent or any Bank to Guarantor. No modification or waiver of any
provision of this Guaranty or any right of Administrative Agent or any Bank
hereunder and no release of Guarantor from any obligation hereunder shall be
effective unless in a writing executed by an authorized officer of
Administrative Agent and each Bank. There are no conditions, oral or otherwise,
on the effectiveness of this Guaranty.
11. This Guaranty shall inure to the benefit of Administrative
Agent and each Bank and their respective successors and assigns and shall be
binding upon Guarantor and its heirs, personal representatives, successors and
assigns. Administrative Agent and each Bank may assign this Guaranty in whole or
in part without notice.
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12. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
13. Subject to the provisions of this Section 13, Guarantor
agrees, and Banks and Administrative Agent by accepting this Guaranty agree,
that they shall submit to binding arbitration any and all claims, disputes and
controversies between or among them (and their respective employees, officers,
directors, attorneys, and other agents if permitted by law or a contract between
them and such persons) relating to this Guaranty and the Loan Documents and the
negotiation, execution, collateralization, administration, repayment,
modification, extension or collection thereof or arising thereunder. Such
arbitration shall proceed in Chicago, Illinois, shall be governed by Illinois
law and shall be conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association (the "AAA") as modified in this
Paragraph 13. Judgment upon the award rendered by each arbitrator(s) may be
entered in any court having jurisdiction.
(a) Nothing in the preceding paragraph, nor the exercise of
any right to arbitrate thereunder, shall limit the right of any party
hereto (1) subject to provisions of applicable law, to exercise
self-help remedies such as setoff or repossession or other self-help
remedies provided in the Credit Agreement or any other Loan Document;
or (2) to obtain provisional or ancillary remedies such as replevin,
injunctive relief, attachment, or appointment of a receiver from a
court having jurisdiction, before, during or after the pendency of any
arbitration proceeding, or (3) to defend or obtain injunctive or other
equitable relief against the foregoing or assert mandatory
counterclaims, if any, prior to and during the pendency of a
determination in arbitration of issues of performance, default, damages
and other such claims and disputes.
(b) Arbitration hereunder shall be before a three-person panel
of neutral arbitrators, consisting of one person from each of the
following categories: (1) an attorney who has practiced in the area of
commercial real estate law for at least ten (10) years; (2) a person
with at least ten (10) years' experience in real estate lending; and
(3) a person with at least ten (10) years' experience in the
homebuilding industry. The AAA shall submit a list of persons meeting
the criteria outlined above for each category of arbitrator, and the
parties shall select one person from each category in the manner
established by the AAA.
(c) In any dispute between the parties that is arbitratable
hereunder, where the aggregate of all claims and the aggregate of all
counterclaims is an amount less than Fifty Thousand and No/100ths
Dollars ($50,000.00), the arbitration shall be before a single neutral
arbitrator to be selected in accordance with the Commercial Rules of
the American Arbitration Association and shall proceed under the
Expedited Procedures of said Rules.
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(d) In any arbitration hereunder, the arbitrators shall decide
(by documents only or with a hearing, at the arbitrators' discretion)
any pre-hearing motions which are substantially similar to pre-hearing
motions to dismiss for failure to state a claim or motions for summary
adjudication.
(e) In any arbitration hereunder, discovery shall be permitted
in accordance with the Illinois Code of Civil Procedure. Scheduling of
such discovery may be determined by the arbitrators, and any discovery
disputes shall be finally determined by the arbitrators.
(f) The Illinois rules of evidence shall control the admission
of evidence at the hearing in any arbitration conducted hereunder,
provided, however, no error by the arbitrators in application of the
Rules of Evidence shall be grounds, as such, for vacating the
arbitrators' award.
(g) Notwithstanding any AAA rule to the contrary, the
arbitration award shall be in writing and shall specify the factual and
legal basis for the award, including findings of fact and conclusions
of law.
(h) Each party shall each bear its own costs and expenses and
an equal share of the arbitrators' costs and administrative fees of
arbitration.
14. GUARANTOR, AND BANKS BY ACCEPTING THIS GUARANTY, HEREBY
IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND GUARANTOR, AND
BANKS BY ACCEPTING THIS GUARANTY, HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVE ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING IN THIS PARAGRAPH 15 SHALL LIMIT
THE RIGHT OF ADMINISTRATIVE AGENT OR ANY BANK OR ISSUING BANK TO BRING
PROCEEDINGS AGAINST GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION. SUBJECT
TO THE PROVISIONS OF SECTION 14, UNLESS PROHIBITED BY LAW, ANY JUDICIAL
PROCEEDING BY GUARANTOR AGAINST ADMINISTRATIVE AGENT OR ANY BANK OR ISSUING BANK
OR ANY AFFILIATE OF ADMINISTRATIVE AGENT OR ANY BANK OR ISSUING BANK INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT IN A
COURT IN CHICAGO, ILLINOIS.
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15. SUBJECT TO THE PROVISIONS OF SECTION 14, GUARANTOR HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THE GUARANTY, ANY OTHER LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
16. Guarantor acknowledges that the rights and responsibilities of
Administrative Agent under this Guaranty with respect to any action taken by
Administrative Agent or the exercise or non-exercise by Administrative Agent of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Guaranty shall, as between
Administrative Agent and Banks, be governed by the Credit Agreement and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between Administrative Agent and Guarantor, Administrative Agent shall
be conclusively presumed to be acting as agent for Banks with full and valid
authority so to act or refrain from acting, and Guarantor shall not be under any
obligation or entitlement to make any inquiry respecting such authority.
IN WITNESS WHEREOF these presents are executed as of October 8, 1999.
GUARANTOR:
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ATTEST:
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By:
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Name:
Title:
Address:
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