FIRST MODIFICATION AGREEMENT
THIS FIRST MODIFICATION AGREEMENT ("Agreement") is entered into as of
April 11, 1997, among CONTINENTAL HOMES HOLDING CORP., a Delaware corporation
("Borrower"), 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:
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A. Agent, Banks and Borrower entered into a Credit Agreement dated as
of June 27, 1996 (the "Credit Agreement") pursuant to which the banks named
therein (the "Original Banks"), among other things, established a credit
facility ("Credit Facility") for Borrower, 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. Borrower has requested that Original Banks increase the amount of
the Credit Facility and add an additional bank as a party to the Credit
Agreement. Original 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:
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For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower, Banks (as hereinafter defined) and
Agent agree as follows:
SECTION 1. ACCURACY OF RECITALS.
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The parties acknowledge the accuracy of the Recitals.
SECTION 2. MODIFICATION OF CREDIT AGREEMENT.
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Effective as of the Effective Date (as hereafter defined), the Credit
Agreement shall be modified as follows:
2.1. The definition of "Aggregate Commitment", as set forth in Article
I of the Credit Agreement, is modified in its entirety to read as follows:
"Aggregate Commitment" means the aggregate of the Commitments
of all Banks, as reduced from time to time pursuant to the terms hereof. As of
April 11, 1997, the Aggregate Commitment is $140,000,000.00.
2.2. The word "monthly" is hereby inserted into the second sentence of
Section 2.15 of the Credit Agreement, immediately after the word "payable."
2.3. The proviso in the third sentence of Section 2.22(f) of the Credit
Agreement is hereby modified in its entirety to read as follows:
provided, however, that the Conversion Period shall be a Modified
Secured Conversion Period if a Significant Event has occurred.
2.4. Section 9.3 of the Credit Agreement is hereby modified in its
entirety to read as follows:
9.3 Spec and Model Unit Inventory. Borrower will not at any
time permit the aggregate number of all Spec Units and Model Units owned by
Guarantors to exceed the greater of (i) fifty percent (50%) of the number of
Housing Unit Closings during the preceding twelve (12) months, or (ii) one
hundred ten percent (110%) of the number of Housing Unit Closings during the
preceding six (6) months. Borrower will not at any time permit any Guarantor to
own any Spec Units except those Spec Units where the certificate of occupancy
was issued during the preceding six (6) months. A failure to satisfy the
requirements of this Section 9.3 shall not constitute an Event of Default or an
Unmatured Event of Default, but the Housing Unit Costs of any Spec Units and
Model Units owned by Guarantors in excess of the foregoing requirements shall
not be included in the Borrowing Base.
2.5. The following sentence is hereby added to the end of Section 9.4
of the Credit Agreement:
A failure to satisfy the requirements of this Section 9.4 shall not
constitute an Event of Default or an Unmatured Event of Default, but the book
value of Finished Lots and the book value of Land Under Development owned by
Guarantors in excess of the foregoing requirements shall not be included in the
Borrowing Base.
2.6. The reference to "Section 2.22(c)", as it appears in Section
10.16(b) of the Credit Agreement, is hereby amended to be Section 2.22(d).
2.7. The last sentence of Section 11.4 of the Credit Agreement is
hereby amended in its entirety to read as follows:
Any Person released from its obligations as a Guarantor under the
Indenture shall be released from its obligations under the Guaranty so long as
(i) no Event of Default has occurred and is continuing, (ii) the value of such
Person's assets, as determined in accordance with GAAP, is less than
$1,000,000.00, and (iii) Borrower pays all amounts due under Section 2.2 of this
Agreement.
2.8. The last sentence of Section 13.11 of the Credit Agreement is
hereby amended in its entirety to read as follows:
Upon the effectiveness of the resignation or removal of Agent, the
resigning or removed Agent shall be discharged from its duties and obligations
hereunder and under the Loan Documents. After the effectiveness of the
resignation or removal of an Agent, the provisions of this Article XIII shall
continue in effect for the benefit of such Agent in respect of any actions taken
or omitted to be taken by it while it was acting as the Agent hereunder and
under the Loan Documents.
2.9. Subparagraph 15.1(i) of the Credit Agreement is hereby modified in
its entirety to read as follows: "(i) Borrower shall not have the right to
assign its rights or obligations under the Loan Documents (except as otherwise
permitted under Section 8.3), and."
2.10. The reference to "public information", as it appears in Section
15.4 of the Credit Agreement, is hereby amended to be "non-public information."
2.11. All of the references to twenty-four (24) months that appear in
Schedule "2.21" of the Credit Agreement are hereby amended to be twelve (12)
months.
2.12. As of the Effective Date, Guaranty Federal Bank, FSB shall be
deemed to be a Bank under the Credit Agreement, and the definition of "Banks" in
the Credit Agreement is hereby amended to include Guaranty Federal Bank, FSB and
its successors and assigns. The Commitment of Guaranty Federal Bank, FSB, shall
be $30,000,000.00. The Commitments of the remaining Banks shall remain as set
forth in the Credit Agreement. Guaranty Federal Bank, FSB (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 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.
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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 Borrower and shall
remain in full force and effect as modified herein.
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.
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Borrower represents and warrants to Banks and Agent:
4.1. As of April 10, 1997, the outstanding principal balance of the
Notes is $0; interest has been paid through the due date.
4.2. No default or 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 a default or 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 Borrower or any 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 Borrower in the
Loan Documents are accurate on the date hereof.
4.5. Borrower has 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 Borrower, enforceable against Borrower in accordance with
their terms.
4.7. 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 Borrower. This Agreement has been duly executed and delivered
on behalf of Borrower.
SECTION 5. BORROWER COVENANTS.
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Borrower covenants with Agent and Banks:
5.1. Borrower 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. Borrower fully, finally, and absolutely and forever releases and
discharges 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 that Borrower has or in the future may have, (i) in respect of the Credit
Facility, the Loan Documents, or the actions or omissions of Agent or any Bank
in respect of the Credit Facility or the Loan Documents and (ii) arising from
events occurring prior to the date of this Agreement, and which are known to
Borrower.
SECTION 6. CONDITIONS PRECEDENT.
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The agreements of Banks and Agent and the modifications contained
herein shall not be binding upon Banks and Agent until Borrower has executed and
delivered this Agreement and Agent has received, at Borrower's expense, all of
the following on or before April 11, 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 Borrower and
Guarantors;
6.2. A Promissory Note payable to the order of Guaranty Federal Bank,
FSB in the amount of $30,000,000.00, in the form attached hereto as Exhibit A,
fully executed by Borrower, which shall be deemed to be a Note for all purposes
under the Credit Agreement;
6.3. A commitment fee, for the benefit of Guaranty Federal Bank, FSB
for the increase in the Aggregate Commitment to $140,000,000.00, in the amount
of $82,500.00;
6.4. The fees payable to Agent as set forth in the letter agreement of
even date herewith between Agent and Borrower;
6.5. Such resolutions or authorizations and such other documents as
Agent may require relating to the existence and good standing of Borrower and
each Guarantor, and the authority of any person executing this Agreement or
other documents on behalf of Borrower and each Guarantor;
6.6. A written opinion of Xxxxxxx X. Xxxxxxxx, counsel to Borrower and
Guarantors, addressed to Agent and Banks in substantially the form of Exhibit B
hereto; and
6.7. Payment of all external costs and expenses incurred by 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.
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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 Guaranty Federal Bank, FSB as a Bank,
such ratio has been changed. As of the Effective Date, each Bank except Guaranty
Federal Bank, FSB (an "Assignor Bank") hereby sells and assigns to Guaranty
Federal Bank, FSB ("Assignee Bank"), and 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 all Advances owing to the
Assignor Bank 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, Assignee Bank shall wire transfer to Agent the 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.
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8.1. The Loan Documents as modified herein contain the complete
understanding and agreement of Borrower, 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 Borrower, Banks and Agent and their successors and
assigns; provided, however, Borrower may not assign any of its rights or
delegate any of its 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.
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, Borrower, Banks, and Agent have executed this
Agreement as of the date set forth above.
BORROWER:
CONTINENTAL HOMES HOLDING CORP.,
a Delaware corporation
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
BANKS AND AGENT:
BANK ONE, ARIZONA, NA, a national
banking association, Individually and as
Agent
By: /s/Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/Xxxxxxxx Xxxxxxx
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Name: Xxxxxxxx Xxxxxxx
Title: Vice President
NORWEST BANK ARIZONA, N.A.,
a national banking association
By: /s/Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: Vice President
GUARANTY FEDERAL BANK, FSB
By: /s/Xxxxxx Xxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxx
Title: Senior Vice President
CONSENT AND AGREEMENT OF GUARANTORS
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With respect to the First Modification Agreement, dated April 11, 1997
("Agreement"), among CONTINENTAL HOMES HOLDING CORP., a Delaware corporation
("Borrower"), the Banks listed on the signature pages of the Agreement, and BANK
ONE, ARIZONA, NA, a national banking association, as Agent, the undersigned
(severally and collectively, "Guarantor") agree for the benefit of Agent and
Banks as follows:
1. Guarantor acknowledges (i) receiving a copy of and reading the
Agreement, (ii) the accuracy of the Recitals in the Agreement, and (iii) the
effectiveness of (A) the Guaranty dated June 27, 1996 executed by the
undersigned for the benefit of Agent and Banks, as modified herein (the
"Guaranty"), and (B) any other agreements, documents, or instruments securing or
otherwise relating to the Guaranty, as modified herein. The Guaranty and such
other agreements, documents, and instruments, as modified herein, are referred
to individually and collectively as the "Guarantor Documents."
2. Guarantor consents to the modification of the Loan Documents and all
other matters in the Agreement.
3. Guarantor fully , finally, and absolutely and forever releases and
discharges 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 that Guarantor has or in the future may have, (i) in respect of the
Credit Facility, the Loan Documents, the Guarantor Documents, or the actions or
omissions of Agent or any Bank in respect of the Credit Facility, the Loan
Documents, or the Guarantor Documents and (ii) arising from events occurring
prior to the date hereof and which are known to Guarantor.
4. Guarantor agrees that all references, if any, to the Notes, the
Credit Agreement, and any other Loan Documents in the Guarantor Documents shall
be deemed to refer to such agreements, documents, and instruments as modified by
the Agreement.
5. Guarantor reaffirms the Guarantor Documents and agrees that the
Guarantor Documents continue in full force and effect and remain unchanged,
except as specifically modified by this Consent and Agreement of Guarantors. Any
property or rights to or interests in property granted as security in the
Guarantor Documents shall remain as security for the Guaranty and the
obligations of Guarantor in the Guaranty.
6. Guarantor agrees that the Loan Documents, as modified by the
Agreement, and the Guarantor Documents, as modified by this Consent and
Agreement of Guarantors, are the legal, valid, and binding obligations of
Borrower and the undersigned, respectively, enforceable in accordance with their
terms against Borrower and the undersigned, respectively.
7. Guarantor agrees that Guarantor has no claims, counterclaims,
defenses, or offsets with respect to the enforcement against Guarantor of the
Guarantor Documents.
8. Guarantor represents and warrants that there has been no material
adverse change in the financial condition of any Guarantor from the most recent
financial statement received by Agent.
9. Guarantor 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 Guarantor Documents as modified
herein. The execution and delivery of this Agreement and the performance of the
Guarantor Documents as modified herein have been duly authorized by all
requisite action by or on behalf of Guarantor. This Agreement has been duly
executed and delivered on behalf of Guarantor.
DATED as of the date of the Agreement.
GUARANTORS:
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ACHETER, INC., a Texas corporation
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President
CH MORTGAGE COMPANY, a Colorado
corporation
By: /s/Xxxxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Treasurer
CHI CONSTRUCTION COMPANY, an Arizona
corporation
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
CHI FINANCE CORP., an Arizona
corporation
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President
CONTINENTAL HOMES, INC., a Delaware
corporation
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
CONTINENTAL HOMES OF FLORIDA, INC., a
Florida corporation
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
CONTINENTAL HOMES OF TEXAS, INC., a
Texas corporation
By: /s/W. Xxxxxx Xxxxxxx
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Name: W. Xxxxxx Xxxxxxx
Title: Vice President
CONTINENTAL RANCH, INC., a Delaware
corporation formerly known as RANCHO
XXXXXXX, INC.
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
KDB HOMES, INC., a Delaware corporation
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
L & W INVESTMENTS INC., a California
corporation
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
XXXXXXX INVESTMENTS, INC., a Texas
corporation
By: /s/W. Xxxxxx Xxxxxxx
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Name: W. Xxxxxx Xxxxxxx
Title: Vice President
MILTEX MANAGEMENT, INC., a Texas
corporation
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
MILTEX MORTGAGE OF TEXAS LIMITED
PARTNERSHIP, a Texas limited partnership
BY: MILTEX MANAGEMENT, INC., a Texas
corporation, General Partner
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
R.O.S. CORPORATION, a Texas corporation
By: /s/Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
SETTLEMENT CORPORATION, a Texas
corporation
By: /s/Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
XXXXXX COUNTY TITLE COMPANY, a Texas
corporation
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
Address: 0000 Xxxxx Xxxxxxxxxx Xxxx,
Xxxxx 0000, Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
SCHEDULE 1
Payment and Notice Instructions
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Payment Instructions:
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Name of Bank: Guaranty Federal Bank, F.S.B.
Bank Tax I.D.: 00-0000000
City: Austin
ABA Number: 000-000-000
Account Name: 194070-80862 Residential Lending-Wire Suspense
Reference: Continental Homes
Notice Instructions:
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A. Credit/Business Matters:
Name: Xxxxxxx X. Xxxx
Address: 0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
B. Operational/Administration:
Name: Xxxxxx X. Xxxxxxx
Address: 0000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
C. Legal Matters:
Name: Xxx Xxxxxx - Xxxxxxxx, Xxxxxxxx & Xxxxxx P.C.
Address: 5400 Renaissance Tower, 0000 Xxx Xxxxxx
Xxxxxx, XX 00000-0000
Telephone: 000-000-0000
Fax: 000-000-0000
