FIRSTMODIFICATION OF CREDIT AGREEMENT
Exhibit 10.1(b)
FIRST MODIFICATION OF CREDIT AGREEMENT
THIS FIRST MODIFICATION OF CREDIT AGREEMENT (this “Modification”) is made as of the 15th day of December, 2006, by and among: (a) KIMBALL HILL, INC., an Illinois corporation (the “Borrower”), (b) the Guarantors party to the Credit Agreement (as hereinafter defined), (c) the several financial institutions signatory hereto that are party to the Credit Agreement (the “Lenders”), and (d) HARRIS N.A., as Administrative Agent for itself and the Lenders (“Agent”).
RECITALS
WHEREAS, the Agent, the Lenders, the Borrower, the Guarantors, and certain other agent and lender parties are party to that certain Credit Agreement, dated December 21, 2005 (the “Credit Agreement”); and
WHEREAS, the Agent, the Lenders, the Borrowers, and the Guarantors wish to amend and modify the Credit Agreement as set forth in this Modification;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto under the Credit Agreement.
2. Section 5.1 Amendment. Section 5.1 of the Credit Agreement is hereby amended by adding the following defined terms:
“Global Land” means all Real Property owned by any of the Borrower or any Subsidiary for current or future development or for the future construction of Housing Units, excluding any subdivided portions thereof upon which construction of a Housing Unit has commenced beyond the foundation.
“Global Land Value” means the sum of all costs incurred by the Borrower or any Subsidiary with respect to the acquisition and development of Global Land, excluding any marketing, corporate, general, or administrative expenses.
“Interest Incurred” means, for any period, the total interest paid or accrued by the Borrower, the Wholly-owned Subsidiaries and the Special Project Subsidiaries (including the interest component of any Capital Lease) as calculated in accordance with GAAP, minus, to the extent included in the foregoing amount, amortization of any financing fees and costs.
3. Section 8.22 Modification. Section 8.22 of the Credit Agreement is hereby amended by deleting the text thereof and inserting the following text in lieu thereof:
(a) Tangible Net Worth. The Borrower shall, as of the end of each fiscal quarter of the Borrower, maintain a Tangible Net Worth in an amount not less than the sum of (i) $300,000,000.00 and (ii) 50% of the positive Net Income as earned subsequent to September 30, 2006.
(b) Leverage Ratio. The Borrower shall not, at the end of any fiscal quarter of the Borrower, permit the Leverage Ratio to exceed the ratios set forth in the below table as corresponding to the fiscal quarters of the Borrower specified therein:
| Fiscal Quarter Ending |
| Maximum Leverage |
| December 31, 2006 |
| 2.00 to 1.00 |
| March 31, 2007 |
| 2.00 to 1.00 |
| June 30, 2007 through September 30, 2008 |
| 1.75 to 1.00 |
| December 31, 2008 and thereafter |
| 2.50 to 1.00 |
(c) Builder Leverage Ratio. The Borrower shall not, at the end of any fiscal quarter of the Borrower, permit the Builder Leverage Ratio to exceed 1.50 to 1.00.
(d) Interest Coverage Ratio. The Borrower shall not, at the end of any fiscal quarter of the Borrower, permit the ratio of EBITDA to Interest Incurred, as calculated over the preceding four fiscal quarters of the Borrower, to be less than the ratios set forth in the below table as corresponding to the fiscal quarters of the Borrower specified therein:
| Fiscal Quarter Ending |
| Minimum Interest |
| December 31, 2006 |
| 1.75 to 1.00 |
| March 31, 2007 |
| 1.50 to 1.00 |
| June 30, 2007 |
| 1.40 to 1.00 |
| September 30, 2007 |
| 1.35 to 1.00 |
| December 31, 2007 |
| 1.50 to 1.00 |
| March 31, 2008 |
| 1.75 to 1.00 |
| June 30, 2008 and thereafter |
| 2.25 to 1.00 |
(e) Global Land Value to Adjusted Tangible Net Worth Ratio. The Borrower shall not, at the end of any fiscal quarter of the Borrower, permit the ratio of Global Land Value to Adjusted Tangible Net Worth to be greater than 1.50 to 1.00.
4. Ratification. Except as modified hereby, the terms and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect, and the Borrower and the Guarantors hereby ratify the terms and conditions thereof.
5. No Default or Event of Default. The Borrower and the Guarantors reaffirm as of the date hereof, all of the covenants, representations, and warranties contained in the Credit Agreement and the other Loan Documents. The Borrower and the Guarantors further warrant and represent, as of the date hereof, the following:
(a) The Credit Agreement and the Loan Documents are binding and enforceable, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law);
(b) There does not exist a Default or Event of Default under the Credit Agreement or any of the Loan Documents; and
(c) None of the Borrower or any Guarantor has any claim, defense, right to set-off, or counterclaim against the obligations evidenced or secured by the Credit Agreement or any of the Loan Documents or against the Agent or the Lenders.
6. Successors and Assigns. This Modification shall be binding upon and inure to the benefit of the Agent, the Lenders, the Borrower, the Guarantors and their respective successors and assigns.
7. Cross Reference. All references in the Loan Documents to the Credit Agreement shall hereafter include the modifications to the Credit Agreement set forth herein.
8. Time of the Essence. Time is of the essence of this Modification.
9. Counterparts. This Modification may be executed in multiple counterparts, each of which shall be deemed an original, and all of which when taken together shall constitute one and the same instrument.
[SIGNATURES ON FOLLOWING PAGES]
IN WITNESS WHEREOF, the undersigned have duly executed this Modification as of the date first set forth above.
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| BORROWER: | ||||
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| KIMBALL HILL, INC., an Illinois corporation | ||||
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| By: | /s/ David K. Hill |
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| Name: | David K. Hill |
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| Title: | Chairman & CEO |
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| GUARANTORS: | ||||
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| CACTUS HILLS, LLC | |||
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| KIMBALL HILL HOMES AUSTIN | |||
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| KIMBALL HILL HOMES AUSTIN | |||
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| KIMBALL HILL HOMES DALLAS | |||
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| KIMBALL HILL HOMES DALLAS | |||
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| KIMBALL HILL HOMES HOUSTON | |||
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| KIMBALL HILL HOMES HOUSTON | |||
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| KIMBALL HILL TEXAS INVESTMENT | |||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| Chairman and CEO | ||
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| EAST LAKE PARK, INC. | |||
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| KIMBALL HILL STATEWAY, INC. | |||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| President | ||
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| KIMBALL HILL FAR EAST DETROIT, LLC | |||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| Chairman and CEO | ||
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| KH FINANCIAL HOLDING COMPANY | ||
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| KHH TEXAS TRADING COMPANY L.P. | ||
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| KIMBALL HILL HOMES AUSTIN, L.P. | ||
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| KIMBALL HILL HOMES CALIFORNIA, INC. | ||
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| KIMBALL HILL HOMES DALLAS, L.P. | ||
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| KIMBALL HILL HOMES FLORIDA, INC. | ||
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| KIMBALL HILL HOMES HOUSTON, L.P. | ||
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| KIMBALL HILL HOMES ILLINOIS, LLC | ||
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| KIMBALL HILL HOMES NEVADA, INC. | ||
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| KIMBALL HILL HOMES OHIO, INC. | ||
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| KIMBALL HILL HOMES OREGON, INC. | ||
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| KIMBALL HILL HOMES REALTY FLORIDA, | ||
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| KIMBALL HILL HOMES SAN ANTONIO, L.P. | ||
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| KIMBALL HILL HOMES TEXAS, INC. | ||
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| KIMBALL HILL HOMES WASHINGTON, INC. | ||
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| KIMBALL HILL HOMES WISCONSIN, | ||
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| NATIONAL CREDIT AND GUARANTY | ||
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| RIVER OAKS REALTY, L.P. | ||
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| By: | /s/ David K. Hill |
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| David K. Hill | |
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| 18TH AND PEORIA, LLC | ||
| By: | Kimball Hill Suburban Centers, | |||
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| By: | Kimball Hill, Inc., its | |
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| By: | /s/ David K. Hill |
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| David K. Hill |
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| Chairman and CEO |
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| KIMBALL HILL SUBURBAN CENTERS, | ||||
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| KIMBALL HILL URBAN CENTERS, L.L.C. | ||||
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| THE GLENS AT WESTLAKE, L.L.C. | ||||
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| By: | Kimball Hill, Inc., its manager | ||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| Chairman and CEO | ||
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| KIMBALL HILL URBAN CENTERS | ||||
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| KIMBALL HILL URBAN CENTERS | ||||
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| KIMBALL HILL URBAN CENTERS SPECIAL | ||||
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| By: | Kimball Hill Urban Centers, L.L.C., | ||||
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| By: | Kimball Hill, Inc., its | |||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| Chairman and CEO | ||
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| BRIDLE RIDGE LIMITED PARTNERSHIP | ||||
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| PARKVIEW LIMITED PARTNERSHIP | ||||
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| RIVER POINTE LIMITED PARTNERSHIP | ||||
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| SONATA AT MORADA RANCH LIMITED | ||||
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| WINDMILL PARK LIMITED PARTNERSHIP | ||||
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| By: | Kimball Hill Homes California, Inc., | ||
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| its general partner | |||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| Chairman and CEO | ||
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| KIMBALL HILL BELLEVUE RANCH, LLC | ||||
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| KIMBALL HILL REFLECTIONS, LLC | ||||
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| KIMBALL HILL SHELDON LAKES, LLC | ||||
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| KIMBALL HILL VILLAGES, LLC | ||||
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| By: | Kimball Hill Homes California, Inc., | ||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| Chairman and CEO | ||
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| KIMBALL HILL CHADWICK FARMS | ||||
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| KIMBALL WEST FRISCO LIMITED | ||||
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| By: | Kimball Hill Homes Dallas, | ||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| Chairman and CEO | ||
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| KIMBALL HILL CALUSA PALMS LIMITED | ||||
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| KIMBALL HILL MARBELLA ESTATES | ||||
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| By: | Kimball Hill Homes Florida, Inc., its | ||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| INDIAN TRAILS LIMITED PARTNERSHIP | |||||
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| By: | Kimball Hill Homes Houston, L.P., | ||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| Chairman and CEO | ||
| KIMBALL HILL TX PROPERTIES, LLC | |||||
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| By: | Kimball Hill Homes Houston, L.P., | ||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| Chairman and CEO | ||
| ASTOR PLACE LIMITED PARTNERSHIP | |||||
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| BOLINGBROOK LIMITED PARTNERSHIP | ||||
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| EDGEWATER LIMITED PARTNERSHIP | ||||
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| HUNTINGTON CHASE LIMITED | ||||
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| LEGEND LAKES LIMITED PARTNERSHIP | ||||
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| THE GLEN TOWNHOMES LIMITED | ||||
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| THE HAMILTON PLACE PARTNERSHIP | ||||
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| WATERFORD LIMITED PARTNERSHIP | ||||
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| WHISPERING MEADOW LIMITED | ||||
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| WHITE OAK LIMITED PARTNERSHIP | ||||
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| By: | Kimball Hill Homes Illinois, LLC, | ||
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| By: | /s/ David K. Hill |
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| David K. Hill | ||
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| Chairman and CEO | ||
| KH INGHAM PARK SOUTH, LLC |
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| KH SRAV II, LLC |
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| By: | Kimball Hill Homes Illinois, LLC, |
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| Chairman and CEO |
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| KIMBALL HILL CENTENNIAL HEIGHTS | |||||||
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| KIMBALL HILL HEATHERS/CAPAROLA | ||||||
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| KIMBALL MOUNTAIN FIRST LIMITED | ||||||
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| By: | Kimball Hill Homes Nevada, Inc., its |
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| KIMBALL COVE LIMITED PARTNERSHIP |
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| KIMBALL HILL LYNDEN PARK II LIMITED |
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| By: | Kimball Hill Homes Texas, Inc., its |
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| David K. Hill |
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| RIVER OAKS HOMES, LLP | |||||
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| By: | Kimball Hill Homes Texas, Inc., | |||
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| David K. Hill | |||
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| Chairman and CEO | |||
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| GABLES AT HIDDENBROOK LIMITED | |||||
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| By: | Kimball Hill Homes Washington, | |||
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| By: |
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| David K. Hill | |||
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| Chairman and CEO | |||
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| PARK SHORE, L.L.C. | |||||
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| By: | Kimball Hill Homes Wisconsin, Inc., | |||
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| By: |
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| David K. Hill | |||
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| Chairman and CEO | |||
| HARRIS N.A., as Administrative Agent, L/C Issuer, | |||||
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| By: |
| /s/ Scott W. Morris |
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| Name: | Scott W. Morris |
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| BANK OF AMERICA, N.A., as a Lender | ||||||
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| By: |
| /s/ Patricia A. Provenzano |
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| Patricia A. Provenzano |
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| Title: |
| Senior Vice President |
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| KEYBANK NATIONAL ASSOCIATION, as a | ||||||
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| By: |
| /s/ Kevin DeLozier |
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| Kevin DeLozier |
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| Title: |
| Senior Vice President |
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| WACHOVIA BANK, NATIONAL | ||||||
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| By: |
| /s/ Maurice M. Ryan |
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| Name: |
| Maurice M. Ryan |
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| Title: |
| Vice President |
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| CHARTER ONE BANK, N.A., as a Lender | ||||||
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| By: |
| /s/ Jason K. Welch |
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| Name: |
| Jason K. Welch |
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| Title: |
| Vice President |
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| FIRST BANK, as a Lender | ||||||
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| By: |
| /s/ James C. Brennan |
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| Name: |
| James C. Brennan |
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| Title: |
| Vice President |
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| LaSALLE BANK, NATIONAL ASSOCIATION, as | ||||||
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| By: |
| /s/ Nathan Weyer |
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| Nathan Weyer |
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| Title: |
| First Vice President |
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| FIFTH THIRD BANK, as a Lender | ||||||
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| By: |
| /s/ Thomas W. O’Connell |
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| Name: |
| Thomas W. O’Connell |
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| Title: |
| Assistant Vice President |
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| ASSOCIATED BANK NATIONAL | ||||||
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| By: |
| /s/ Robert J. Burda |
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| Name: |
| Robert J. Burda |
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| Title: |
| Vice President |
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| NATIONAL CITY BANK, as a Lender | ||||||
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| By: |
| /s/ Gina Fridberg |
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| Name: |
| Gina Fridberg |
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| Title: |
| Assistant Vice President |
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| CITIBANK, N.A., as a Lender | ||||||
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| By: |
| /s/ Glen R. Bell |
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| Name: |
| Glen R. Bell |
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| Title: |
| Vice President |
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| FRANKLIN BANK, SSB, as a Lender | ||||||
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| By: |
| /s/ Sherry K. Day |
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| Name: |
| Sherry K. Day |
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| Title: |
| Senior Vice President |
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| JPMORGAN CHASE BANK, N.A., as a Lender | ||||||
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| By: |
| /s/ Elizabeth Ritenour |
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| Name: |
| Elizabeth Ritenour |
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| Title: |
| Vice President |
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| MB FINANCIAL BANK, N.A., Successor in | ||||||
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| By: |
| /s/ Christopher Hutter |
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| Name: |
| Christopher Hutter |
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| Title: |
| Vice President |
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| BANK OF THE WEST, as a Lender | ||||||
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| By: |
| /s/ Lynn Foster |
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| Name: |
| Lynn Foster |
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| Title: |
| Senior Vice President |
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| COMERICA BANK, as a Lender | ||||||
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| By: |
| /s/ Charles Weddell |
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| Name: |
| Charles Weddell |
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| Title: |
| Vice President |
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| COMPASS BANK, as a Lender | ||||||
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| By: |
| /s/ Johanna Duke Paley |
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| Name: |
| Johanna Duke Paley |
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| Title: |
| Senior Vice President |
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