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Exhibit 10.36
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT to Credit Agreement (this "Amendment") is entered
into as of the 31st day of October, 2000, by and among (a) Dominion Homes, Inc.
(the "Borrower"), (b) the institutions from time to time party to the Credit
Agreement (as defined below) as lenders (individually, a "Lender" and
collectively, the "Lenders"), and (c) The Huntington National Bank
("Huntington"), in its separate capacity as administrative agent for the Lenders
(with its successors in such capacity, the "Administrative Agent").
RECITALS:
A. As of May 29, 1998, the Borrower, the Lenders, the Administrative
Agent, Huntington, in its capacity as Issuing Bank, and Huntington Capital
Corp., in its capacity as Syndication Agent for the Lenders executed a certain
Credit Agreement, which was amended by a certain First Consent Agreement dated
as of August 9, 1999, a certain First Amendment to Credit Agreement dated as of
September 3, 1999, a certain Second Consent and Modification dated as of
December 30, 1999, and a certain Second Amendment to Credit Agreement dated as
of May 26, 2000 (as so amended, the "Credit Agreement"), setting forth the terms
of certain extensions of credit to the Borrower; and
B. As of May 29, 1998, the Borrower executed and delivered to the
Administrative Agent, inter alia, promissory notes in favor of each Lender, in
the original aggregate principal sum of One Hundred Twenty Five Million Dollars
($125,000,000.00), that were thereafter replaced by certain replacement
revolving notes, each dated May 26, 2000, in the aggregate principal sum of One
Hundred Fifty Million Dollars ($150,000,000.00) (hereinafter collectively, the
"Notes"); and
C. In connection with the Credit Agreement and the Notes, the Borrower
executed and delivered to the Administrative Agent certain other loan documents,
consents, assignments, agreements, and instruments in connection with the
indebtedness referred to in the Credit Agreement (all of the foregoing, together
with the Notes and the Credit Agreement, are hereinafter collectively referred
to as the "Loan Documents"); and
D. The Borrower has requested that the Lenders and the Administrative
Agent amend the definition of Borrowing Base and to increase certain limits in
respect thereof; and amend and modify certain terms and covenants in the Credit
Agreement, and the Lenders and the Administrative Agent are willing to do so
upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and promises contained herein, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties hereto for
themselves and their successors and assigns do hereby agree, represent and
warrant as follows:
1. DEFINITIONS. All capitalized terms not otherwise defined herein shall have
the meanings ascribed to such terms in the Credit Agreement.
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2. Section 2.1, "BORROWING BASE," of the Credit Agreement is hereby amended to
recite in its entirety as follows:
2.1 BORROWING BASE.
"Borrowing Base" means (without duplication) the aggregate sum of the
following:
(a) 100% of Available Cash, plus
(b) 80% of Eligible Accounts Receivable, plus
(c) 75% of Eligible Lumber Inventory, plus
(d) 90% of Eligible Home Work-in-Process, plus
(e) the lesser of $15,000,000.00 or 50% of Eligible Real Estate
Held for Development, plus
(f) the lesser of $10,000,000.00 or 50% of Eligible Investments in
Joint Ventures, plus
(g) the lesser of or $5,850,000.00 or 90% of the aggregate sum of
Eligible Model Homes, plus
(h) the lesser of $6,000,000.00 or 90% of Eligible Speculative
Homes, plus
(i) 70% of Eligible Developed Lots that have been added to the
Developed Lots category within 18 months immediately preceding
the date of calculation, and 62.5% of Eligible Developed Lots
that have been added to the Developed Lots category more than
18 months, but less than 24 months immediately preceding the
date of calculation, plus
(j) 60% of Eligible Lots Under Development, plus
(k) 100% of the Eligible Acquisition Assets, plus
(l) the lesser of $4,500,000.00 or 50% of Eligible Fall Foundation
Lots.
The Administrative Agent shall deduct from any borrowing availability
under the Borrowing Base 100% of the amounts of outstanding Excess
Permitted Nonrecourse Borrowings (the "Excess Permitted Nonrecourse
Borrowings Reserve").
3. Section 2.3, "DEVELOPED LOTS," of the Credit Agreement is hereby
redesignated and amended to recite in its entirety as follows:
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2.3 DEVELOPED LOTS AND FALL FOUNDATION LOTS.
"Developed Lots" means all lots of the Company and its Restricted
Subsidiaries located in the State of Ohio or any contiguous state on
which all development activity has been completed, including without
limitation, all site development for streets and sewers, and for which
application has been made for final acceptance by the applicable
controlling municipality, but excluding any Fall Foundation Lots,
valued at the lesser of cost or market, provided however, that no
Developed Lot which the Company or a Restricted Subsidiary owns for
more than 24 months from the time the same became a Developed Lot shall
be an Eligible Developed Lot.
"Fall Foundation Lots" means, during the time period from October 1st
of each calendar year continuing through and including March 31st of
the immediately succeeding calendar year, those Developed Lots on which
the Company has commenced the excavation of a foundation for a single
family residential dwelling through the completion of such foundation,
valued at the lesser of cost or market, provided, however, that no Fall
Foundation Lot in excess of 200 Fall Foundation Lots outstanding at any
time shall be an Eligible Fall Foundation Lot.
4. Section 2.7, "ELIGIBLE REAL ESTATE," of the Credit Agreement is hereby
amended to recite in its entirely as follows:
2.7 ELIGIBLE REAL ESTATE.
With respect to Developed Lots, Fall Foundation Lots, Lots under
Development, Model Homes, Real Estate Held for Development, Home
Work-In-Process, Speculative Homes, or any other form or type of real
estate of the Company or any Restricted Subsidiary which may be
considered for the purposes of the Borrowing Base, the term "Eligible"
used in connection with any such type of real estate shall mean that
portion of real property (a) owned in fee simple title by the Company
or a Restricted Subsidiary, and (b) which is not subject to any
mortgage, lien, or encumbrance, except for Unleveraged Seller
Financing, and except for reservations, exceptions, encroachments,
easements, rights-of-way, restrictions, leases or other similar title
exceptions which do not materially detract from the value of such real
estate or interfere with its use or resale.
5. Section 2.13, "SPECULATIVE HOMES," of the Credit Agreement is hereby amended
to recite in its entirety as follows:
2.13 "SPECULATIVE HOMES."
"Speculative Homes" shall mean residential dwellings or lots other than
Fall Foundation Lots on which the Company or a Restricted Subsidiary
has commenced construction for such dwellings, which such entity
presently intends to sell, but for which such entity does not have an
Arm's-Length Contract, valued at the lesser of cost or market.
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6. Section 8.21, "SPECULATIVE HOMES," of the Credit Agreement is hereby amended
to recite in its entirety as follows:
8.21 SPECULATIVE HOMES.
The Company and its Subsidiaries, shall not permit at any time their
inventory of Speculative Homes and other dwellings built for
speculation, whether now owned or hereafter acquired, to exceed
$12,500,000.00 in the aggregate outstanding at any time, valued at
cost. In further limitation, the Company shall not, and shall not
permit its Subsidiaries, at any time to have their consolidated
inventories of Speculative Homes consisting of the "Independence
Series" models or other new products to exceed $4,500,000.00 in the
aggregate outstanding at any time, valued at cost.
7. A new Section 8.26, "FALL FOUNDATION LOTS" is hereby added to the Credit
Agreement and shall recite in its entirety as follows:
8.26 FALL FOUNDATION LOTS.
The Company shall not, and shall not permit its Subsidiaries, at any
time to have their consolidated inventories of Fall Foundation Lots
exceed 200 lots or exceed $9,000,000 in the aggregate outstanding,
valued at cost.
8. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective as of
October 31, 2000, upon satisfaction of all of the following conditions
precedent:
(a) The Administrative Agent shall have received seven duly executed
copies of the Third Amendment to Credit Agreement and such other certificates,
instruments, documents, agreements, and opinions of counsel as may be required
by the Administrative Agent, each of which shall be in form and substance
satisfactory to the Administrative Agent and its counsel; and
(b) The Administrative Agent shall have received a fee in respect of
this Amendment in the amount of $35,000.00, which shall be shared according to
each Lender's Pro Rata Share, and the Borrower shall have paid all other fees
owing to the Administrative Agent; and
(c) The representations contained in paragraph 9 below shall be true
and accurate.
9. REPRESENTATIONS. The Borrower represents and warrants that after
giving effect to this Amendment (a) each and every one of the representations
and warranties made by or on behalf of the Borrower in the Credit Agreement or
the Loan Documents is true and correct in all respects on and as of the date
hereof, except to the extent that any of such representations and warranties
related, by the expressed terms thereof, solely to a date prior hereto; (b) the
Borrower has duly and properly performed, complied with and observed each of its
covenants, agreements and obligations contained in the Credit Agreement and Loan
Documents; and (c) no event has occurred or is continuing, and no condition
exists which would constitute an Event of Default or a Potential Default.
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10. AMENDMENT TO CREDIT AGREEMENT. (a) Upon the effectiveness of this
Amendment, each reference in the Credit Agreement to "Credit Agreement,"
"Agreement," the prefix "herein," "hereof," or words of similar import, and each
reference in the Loan Documents to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby. (b) Except as modified
herein, all of the representations, warranties, terms, covenants and conditions
of the Credit Agreement, the Loan Documents and all other agreements executed in
connection therewith shall remain as written originally and in full force and
effect in accordance with their respective terms, and nothing herein shall
affect, modify, limit or impair any of the rights and powers which the Lenders
and the Administrative Agent may have thereunder. The amendment set forth herein
shall be limited precisely as provided for herein, and shall not be deemed to be
a waiver of, amendment of, consent to or modification of any of the rights of
the Lenders or the Administrative Agent under or of any other term or provisions
of the Credit Agreement, any Loan Document, or other agreement executed in
connection therewith, or of any term or provision of any other instrument
referred to therein or herein or of any transaction or future action on the part
of the Borrower which would require the consent of the Lenders and the
Administrative Agent, including, without limitation, waivers of Events of
Default which may exist after giving effect hereto. The Borrower ratifies and
confirms each term, provision, condition and covenant set forth in the Credit
Agreement and the Loan Documents and acknowledges that the agreements set forth
therein continue to be legal, valid and binding agreements, and enforceable in
accordance with their respective terms.
11. AUTHORITY. The Borrower hereby represents and warrants to the
Administrative Agent and the Lenders that (a) the Borrower has legal power and
authority to execute and deliver the within Amendment; (b) the officer executing
the within Amendment on behalf of the Borrower has been duly authorized to
execute and deliver the same and bind the Borrower with respect to the
provisions provided for herein; (c) the execution and delivery hereof by the
Borrower and the performance and observance by the Borrower of the provisions
hereof do not violate or conflict with the articles of incorporation or code of
regulations of the Borrower or any law applicable to the Borrower or result in
the breach of any provision of or constitute a default under any agreement,
instrument or document binding upon or enforceable against the Borrower; and (d)
this Amendment constitutes a valid and legally binding obligation upon the
Borrower in every respect.
12. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which together shall constitute one and the same document.
Separate counterparts may be executed with the same effect as if all parties had
executed the same counterparts.
13. COSTS AND EXPENSES. The Borrower agrees to pay on demand in
accordance with the terms of the Credit Agreement all costs and expenses of the
Administrative Agent in connection with the preparation, reproduction, execution
and delivery of this Amendment and all other loan documents entered into in
connection herewith, including the reasonable fees and out-of-pocket expenses of
the Administrative Agent's counsel with respect thereto.
14. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the law of the State of Ohio.
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IN WITNESS WHEREOF, the Borrower, the Lenders and the
Administrative Agent have hereunto set their hands as of the date first set
forth above.
THE BORROWER:
DOMINION HOMES, INC.
By:/s/ Xxxxx X. X'Xxxxxx
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Its: Chief Financial Officer
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THE LENDERS:
THE HUNTINGTON NATIONAL BANK
By:/s/ Xxxxxxx X. Xxxxxx
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Its: Vice President
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Revolving Credit Commitment: $42,000,000
BANK ONE, MICHIGAN f/k/a NBD BANK
By:/s/ Xxxxx X. Xxxx
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Its: Vice President
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Revolving Credit Commitment: $30,000,000
KEYBANK NATIONAL ASSOCIATION
By:/s/ Xxxxxx X. Xxxxxx
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Its: Vice President
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Revolving Credit Commitment: $27,000,000
NATIONAL CITY BANK
By:/s/ Xxxxxx X. Xxxxx
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Its: Senior Vice President
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Revolving Credit Commitment: $21,000,000
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FIRSTAR BANK, N.A. f/k/a STAR BANK, N.A.
By:/s/ Xxxxxxx X. Xxxxxx
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Its: Vice President
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Revolving Credit Commitment: $15,000,000
COMERICA BANK
By:/s/ Xxxxxxx X. Xxxxxxx
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Its: Vice President
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Revolving Credit Commitment: $15,000,000
ADMINISTRATIVE AGENT:
THE HUNTINGTON NATIONAL BANK
By:/s/ Xxxxxxx X. Xxxxxx
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Its: Vice President
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CONSENT OF GUARANTOR
The undersigned, being a guarantor of the Borrower's indebtedness to
the Bank pursuant to certain guaranty agreements with the Bank, hereby consents
and agrees to be bound by the terms, conditions and execution of the above
Amendment and hereby further agrees that its obligations shall be continuing as
provided in said guaranty agreements and said guaranty agreements shall remain
as written originally and continue in full force and effect in all respects.
DOMINION HOMES OF KENTUCKY GP, LLC
a Kentucky limited liability company
By:/s/ Xxxxxx X. Xxxxx, Xx.
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Its: Senior Vice President
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