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Exhibit 10.8
FIRST AMENDMENT TO CREDIT AGREEMENT
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THIS AMENDMENT (this "Amendment") to the Credit Agreement is entered
into as of the 3rd day of September, 1999, by and between (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, "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 Amendment dated
as of August 9, 1999 (collectively 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) (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 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.
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" shall mean (without duplication) the aggregate sum of
the following:
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(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.
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
amended to recite in its entirety as follows:
2.3 DEVELOPED 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, 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.
4. Section 8.8, "ACQUISITION OF CAPITAL STOCK," of the Credit Agreement
is hereby amended to recite in its entirety as follows:
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8.8 ACQUISITION OF CAPITAL STOCK.
The Company shall not redeem or acquire any of its own capital
stock or any options or other interests in respect thereof having an
aggregate value in excess of (i) $2,500,000.00 in the aggregate during
the period beginning January 1, 1999, and ending December 31, 2001, and
(ii) $500,000.00 in any fiscal year beginning with the fiscal year
ending December 31, 2002, and continuing thereafter, except (a) the
purchase or redemption of capital stock in connection with a
simultaneous sale of an equivalent or greater amount of capital stock
for not less than the same aggregate purchase or redemption price, or
(b) up to the aggregate amount of $1,000,000.00 in any fiscal year for
the purchase of capital stock, options or other interests in respect
thereto using funds escrowed pursuant to the Company's Amended and
Restated Executive Deferred Compensation Plan or otherwise pursuant to
any of the Company's management incentive plans. None of the
Subsidiaries shall redeem or acquire any of its own capital stock.
5. Section 8.13, "TANGIBLE NET WORTH," of the Credit Agreement is
hereby amended to recite in its entirety as follows:
8.13 TANGIBLE NET WORTH.
At all times, the Company shall maintain a Consolidated
Tangible Net Worth of the sum of (i) $45,000,000, plus (ii) 75% of the
Company's Consolidated Net Income after taxes in each fiscal year which
the Company's Consolidated Net Income after taxes is positive,
beginning with the fiscal year ending December 31, 1999, and ending
with the most recently ended fiscal year as of the date of calculation.
6. Section 8.14, "LEVERAGE RATIO," of the Credit Agreement is hereby
amended to recite in its entirety as follows:
8.14 LEVERAGE RATIO.
The Company shall maintain at all times a Leverage Ratio of
(a) not greater than 2.50 to 1.00, beginning September 30, 1999, and
continuing through and including December 31, 2001, and (b) not greater
than 2.25 to 1.00 for the period beginning January 1, 2002, and
continuing at all times thereafter.
7. Section 8.16, "RATIO OF UNCOMMITTED LAND HOLDINGS TO CONSOLIDATED
TANGIBLE NET WORTH," of the Credit Agreement is hereby amended to recite in its
entirety as follows:
8.16 RATIO OF UNCOMMITTED LAND HOLDINGS TO CONSOLIDATED TANGIBLE
NET WORTH.
The Company and its Subsidiaries shall maintain at all times a
ratio of Uncommitted Land Holdings to Consolidated Tangible Net Worth
of (a) not greater than 2.00 to 1.00 beginning September 30, 1999, and
continuing through and including December 31, 2001, and (b) not greater
than 1.75 to 1.00 for the period beginning January 1, 2002, and
continuing at all times thereafter.
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8. 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
its inventory of Speculative Homes and other dwellings built for
speculation, whether now owned or hereafter acquired, to exceed
$10,000,000.00 in the aggregate outstanding at any time, valued at cost
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9. Section 8.22, "FURTHER REAL ESTATE ACQUISITION LIMITATIONS, NEW
MARKET INVESTMENT AMOUNT," of the Credit Agreement is hereby amended to recite
in its entirety as follows:
8.22 FURTHER REAL ESTATE ACQUISITION LIMITATIONS, NEW MARKET
INVESTMENT AMOUNT.
The Company and its Subsidiaries shall not permit the Maximum
New Market Investment Amount to exceed the sum of $25,000,000.00
outstanding at any time, valued at cost; provided, however the
Company's total Investment or purchase of any Uncommitted Land
Holdings, Speculative Homes, Model Homes and all other real or personal
property constituting one or more "start up operations" or other de
novo entries in any markets outside Central Ohio or the metropolitan
Louisville, Kentucky area shall not exceed the aggregate sum of
$15,000,000.00 outstanding at any time, valued at cost. In addition,
the Company shall not build homes or develop real estate in any
locations or markets other than the State of Ohio or any contiguous
state. Furthermore, the Company's total Investment or purchase of any
Uncommitted Land Holdings, Speculative Homes, Model Homes and all other
real or personal property in the metropolitan Louisville, Kentucky area
shall not exceed $20,000,000.00 in the aggregate outstanding at any
time, valued at cost.
10. The definition of "MAXIMUM NEW MARKET INVESTMENT AMOUNT," in
Section 14.3, "DEFINED TERMS," of the Credit Agreement is hereby amended to
recite as follows:
"Maximum New Market Investment Amount" means, with respect to the
Company and its Subsidiaries, the aggregate amount of (a) each Purchase
Price for an Acquisition of a Person or the assets of a Person whose
principal business is outside Central Ohio or the metropolitan
Louisville, Kentucky area, (b) the aggregate amount of Investments in
Restricted Subsidiaries or in Investments in Joint Ventures, whose
principal operations or property are outside Central Ohio or the
metropolitan Louisville, Kentucky area, and (c) the aggregate cost of
all Uncommitted Land Holdings, Speculative Homes, Model Homes and all
other real or personal property located outside Central Ohio or the
metropolitan Louisville, Kentucky area.
11. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective
as of September 3, 1999, upon satisfaction of all of the following conditions
precedent:
(a) The Administrative Agent shall have received seven duly executed
copies of the First Amendment to Credit Agreement, and such other certificates,
instruments, documents,
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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 $156,250.00, 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 12 below shall be true
and accurate.
12. 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.
13. 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 agreement set forth
therein continue to be legal, valid and binding agreements, and enforceable in
accordance with their respective terms.
14. 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,
regulations or by-laws 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
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Borrower; and (d) this Amendment constitutes a valid and legally binding
obligation upon the Borrower in every respect.
15. 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.
16. 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.
17. 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: ADMINISTRATIVE AGENT:
DOMINION HOMES, INC. THE HUNTINGTON NATIONAL BANK
By: /s/ Jon M. Donnell By: /s/ William R. Reimas
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Jon M. Donnell William R. Reimas
President, Chief Operating Officer Vice President
THE LENDERS:
THE HUNTINGTON NATIONAL BANK
By: /s/ William R. Reimas
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William R. Reimas
Vice President
BANK ONE, MICHIGAN f/k/a NBD BANK
By: /s/ Steve Mahr
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Steve Mahr
First Vice President
KEYBANK NATIONAL ASSOCIATION
By: /s/ Robert L. Zelina
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Robert L. Zelina
Vice President Commercial Real Estate Division
NATIONAL CITY BANK
By: /s/ Steven A. Smith
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Steven A. Smith
Senior Vice President
FIRSTAR BANK, N.A. f/k/a STAR BANK, N.A.
By: /s/ Marilyn K. Miller
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Marilyn K. Miller
Vice President
COMERICA BANK
By: /s/ Charles L. Weddell
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Charles L. Weddell
Vice President
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