Exhibit 10.3
FIFTH AMENDMENT TO CREDIT AGREEMENT
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THIS FIFTH AMENDMENT to Credit Agreement (this "Amendment") is entered
into as of the 9th day of October, 2001, by and among (a) Dominion Homes, Inc.
(the "Company"), (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 Company, 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, a certain Second Amendment to Credit
Agreement dated as of May 26, 2000, a certain Third Amendment to Credit
Agreement dated as of October 31, 2000, and a certain Fourth Amendment to
Credit Agreement dated as of May 23, 2001 (as so amended, collectively the
"Credit Agreement"), setting forth the terms of certain extensions of
credit to the Company; and
B. As of May 29, 1998, the Company 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
"2000 Notes"); and
C. As of May 23, 2001, the Company executed and delivered to the
Administrative Agent, inter alia, second replacement promissory notes in favor
of The Huntington National Bank, KeyBank National Association, and Firstar Bank,
N.A. (collectively, the "Replacement Notes"), which increased the aggregate
principal sum owing to the Lenders to One Hundred Seventy Five Million Dollars
($175,000,000.00) (the Replacement Notes, together with the 2000 Notes in favor
of Bank One, Michigan, National City Bank and Comerica Bank are hereinafter
collectively, the "Notes"); and
D. In connection with the Credit Agreement and the Notes, the Company 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
E. The Company intends to form and own an insurance Subsidiary for the purpose
of issuing home warranty insurance and has represented that such business
is related and incidental to the current conduct of business of the Company
and its Subsidiaries.
F. THE COMPANY HAS REQUESTED THAT THE REQUIRED LENDERS AND THE
ADMINISTRATIVE AGENT AMEND AND MODIFY CERTAIN TERMS AND COVENANTS IN THE CREDIT
AGREEMENT TO PERMIT THE COMPANY TO (i) ESTABLISH A LETTER OF CREDIT FOR SUB
INSURANCE SUBSIDIARY AND (ii) ENTER INTO GUARANTIES OF THE OBLIGATIONS OF
ENTITIES IN WHICH THE COMPANY MAKES INVESTMENTS PERMITTED BY THE CREDIT
AGREEMENT, AND THE REQUIRED LENDERS AND THE ADMINISTRATIVE AGENT ARE WILLING TO
DO SO UPON THE TERMS AND CONDITIONS CONTAINED HEREIN.
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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.
2. Subsection (e), "USE OF PROCEEDS FOR LETTERS OF CREDIT," of Section
1.2, "Letters of Credit," of the Credit Agreement is hereby amended to recite:
(e) USE OF PROCEEDS FOR LETTERS OF CREDIT. The Letters
of Credit shall be used by the Company, a Restricted
Subsidiary or any Approved Joint Venture (i) to support
bonding requirements for real estate site improvements or
maintenance in favor of various municipal entities, (ii) to
secure the Company's, a Restricted Subsidiary's or any
Approved Joint Venture's contractual performance with
respect to the Company's land and lot development
activities, (iii) to secure the Company's, a Restricted
Subsidiary's or any Approved Joint Venture's contractual
performance in connection with land acquisition activities,
and (iv) to provide admitted capital in connection with the
Insurance Sub, subject to the limitations set forth in this
Agreement.
The remainder of Section 1.2, "LETTERS OF CREDIT," shall remain as
originally written.
3. Section 8.6, "CONTINGENT LIABILITIES," of the Credit Agreement is
hereby amended to recite in its entirely as follows:
8.6 CONTINGENT LIABILITIES.
Neither the Company nor any of the Subsidiaries
directly or indirectly will create or become liable with
respect to any Contingent Obligations, except (a) by
indorsement of negotiable instruments for deposit or
collection in the ordinary course of business; (b) the
guaranty of Letters of Credit issued in connection with
Approved Joint Ventures, (c) up to the maximum aggregate
stated amount of $10,000,000.00 in guaranteed obligations
outstanding at any time in connection with (i) Non-Facility
Contingent Obligations, (ii) Indebtedness incurred by Approved
Joint Ventures to sellers of real property and (iii)
Indebtedness incurred by a Qualified Joint Venture; (d) the
guaranty of any Indebtedness of the Company or any Subsidiary
that is permitted to be incurred under Section 8.5 above; (e)
the Company's contingent liability as a partner or joint
venture partner in connection with joint ventures or
partnerships; (f) the guaranty of any other Indebtedness not
to exceed the sum of $100,000.00 in the aggregate outstanding
at any time; (g) obligations, warranties and indemnities not
relating to Indebtedness, which have been or are undertaken or
made in the ordinary course of business; and (h) Contingent
Obligations with respect to surety, appeal and performance
bonds obtained by the Company or any Restricted Subsidiary.
"Qualified Joint Venture" means any corporation, partnership,
limited liability company or joint venture which meets all of
the following criteria (i) the Company or a Restricted
Subsidiary owns and controls not less than 50% of the
ownership and voting power of such entity, (ii) the interest
of the Company or such Restricted Subsidiary in such entity is
an Investment in Joint Venture, and (iii) the Administrative
Agent has approved the guaranty of such entity's Indebtedness.
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4. Section 8.11, "INVESTMENTS, LOANS AND ADVANCES," of the Credit
Agreement is hereby amended to recite in its entirely as follows:
8.11 INVESTMENTS, LOANS AND ADVANCES.
Neither the Company nor any of its Subsidiaries shall
directly or indirectly make or own any Investment except: (a)
cash or cash equivalents (marketable direct obligations issued
or unconditionally guaranteed and backed by the full faith and
credit of the United States government), bonds or other
obligations of the United States of America, certificates of
deposit issued by commercial banks with a minimum capital of
$500,000,000.00, and commercial paper rated at least A-1 or
P-1 and having a maturity of not more than one year; (b)
Investments in Joint Ventures, provided that such Investment
does not cause the Company and its Subsidiaries to exceed the
Maximum New Market Investment Amount; (c) Investments in
Permitted Acquisitions not to exceed the aggregate Purchase
Price of $25,000,000.00 after the date hereof, provided,
however, that such Acquisition does not cause the Company and
its Subsidiaries to exceed the Maximum New Market Investment
Amount; (d) Investments in Restricted Subsidiaries, provided,
however, that such Investments does not cause the Company and
its Subsidiaries to exceed the Maximum New Market Investment
Amount; (e) investments consisting of deposit accounts
maintained or managed by the Company or its Subsidiaries; (f)
loans or advances to employees of the Company or any
Subsidiary, which loans and advances shall not in the
aggregate exceed $200,000.00 outstanding at any time; (g)
Investments up to the sum of $2,000,000 after the date hereof
in one or more mortgage companies which (i) conduct business
in areas in which the Company or its Subsidiaries also conduct
business and (ii) are principally in the residential mortgage
lending business; (h) loans and advances evidenced by
promissory notes from the purchasers of any of the Company's
real property (individually which shall not exceed the
purchase price paid for such property) in an amount not to
exceed the aggregate sum of $2,000,000.00 outstanding at any
time; (i) Investments in Dominion Homes Structural Insurance
Risk Retention Group, LLC or similar entity, a South Carolina
limited liability company (the "Insurance Sub") not to exceed
the aggregate sum of $500,000 outstanding at any time; and (j)
any other Investment (including Alliance Title Agency, Ltd.)
not to exceed the aggregate amount of $100,000 outstanding at
any time.
5. The following defined terms are hereby added to Section 14.3,
"DEFINED TERMS," of the Credit Agreement in their appropriate alphabetical order
and shall recite in their entirety as follows:
"Insurance Sub" is defined in Section 8.11.
"Qualified Joint Venture" is defined in Section 8.6.
The remainder of Section 14.3, "DEFINED TERMS," of the Credit Agreement shall
remain as originally written.
6. Schedule 7.4 - CORPORATE INFORMATION to the Loan Agreement is hereby
replaced with Schedule 7.4 - CORPORATE INFORMATION attached hereto and made a
part hereof.
7. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective
as of October 9, 2001, upon satisfaction of all of the following conditions
precedent:
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(a) The Administrative Agent shall have received seven duly executed
copies of this Amendment, the loan documents referenced on Exhibit 7(a) attached
hereto, 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 representations contained in paragraph 8 below shall be true and
accurate in all respects.
8. REPRESENTATIONS. The Company 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 Company 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
Company 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.
9. 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 Company 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 Company 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.
10. AUTHORITY. The Company hereby represents and warrants to the
Administrative Agent and the Lenders that (a) the Company has legal power and
authority to execute and deliver the within Amendment; (b) the officer executing
the within Amendment on behalf of the Company has been duly authorized to
execute and deliver the same and bind the Company with respect to the provisions
provided for herein; (c) the execution and delivery hereof by the Company and
the performance and observance by the Company of the provisions hereof do not
violate or conflict with the articles of incorporation or code of regulations of
the Company or any law applicable to the Company 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 Company; and (d) this Amendment
constitutes a valid and legally binding obligation upon the Company in every
respect.
11. 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.
12. COSTS AND EXPENSES. The Company 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.
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13. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the law of the State of Ohio.
IN WITNESS WHEREOF, the Company, the Lenders and the
Administrative Agent have hereunto set their hands as of the date first set
forth above.
THE COMPANY:
DOMINION HOMES, INC.
By: /s/ Xxxxx X. X'Xxxxxx
Its: Chief Financial Officer
THE LENDERS:
THE HUNTINGTON NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxx
Its: Vice President
Revolving Credit Commitment: $49,000,000
BANK ONE, MICHIGAN f/k/a NBD BANK
By: /s/ Xxxx Xx Xxxxx
Its: First Vice President
Revolving Credit Commitment: $30,000,000
KEYBANK NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxx
Its: Vice President
Revolving Credit Commitment: $35,000,000
NATIONAL CITY BANK
By: /s/ Xxxxxx X. Xxxxx
Its: Senior Vice President
Revolving Credit Commitment: $21,000,000
FIRSTAR BANK, N.A. f/k/a STAR BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxxx
Its: Vice President
Revolving Credit Commitment: $25,000,000
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COMERICA BANK
By:/s/ Xxxxxxx X. Xxxxxxx
Its: Vice President
Revolving Credit Commitment: $15,000,000
ADMINISTRATIVE AGENT:
THE HUNTINGTON NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxx
Its: Vice President
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EXHIBIT 7(a)
1. Certification of Resolutions by Company and Guarantors
2. If available, Closing Certificate of Dominion Homes Structural Insurance
Risk Retention Group, LLC ("Insurance Sub") with the following exhibits:
a. Certificate of Authorization from the South Carolina Secretary of
State
b. Certified copy of formation document from the South Carolina Secretary
of State
c. Bylaws
SCHEDULE 7.4 - CORPORATE INFORMATION
As of October 9, 2001, Dominion Homes, Inc. has:
One class of capital stock authorized by the Company's Articles of
Incorporation consisting of 12 million common shares without stated value.
The Company has the following subsidiaries:
1. Dominion Homes of Kentucky GP, LLC ("DHKGPLLC"), which is wholly
owned by the Borrower; and
2. Dominion Homes of Kentucky Ltd, which is 99% owned by the Borrower
and 1% by DHKGPLLC.
3. Dominion Homes Financial Services, Ltd. ("DHFS"), which is wholly
owned by the Borrower.
6,368,470 common shares issued and outstanding.
The Company's federal tax identification number is 00-0000000.
DHKGPLLC's federal tax identification number is 00-0000000.
Dominion Homes of Kentucky Ltd's federal tax identification number is
00-0000000.
DHFS's federal tax identification number is 00-0000000.
