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Exhibit 10.33
FOURTH AMENDMENT TO THIRD AMENDED
AND RESTATED CREDIT AGREEMENT AND WAIVER
THIS FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT
AGREEMENT AND WAIVER (the "FOURTH AMENDMENT") dated as of December 5, 2000 by
and among ZARING HOMES, INC. ("ZARING HOMES"), ZARING HOLDINGS, INC., HEARTHSIDE
HOMES, LLC, ZARING NATIONAL LAND HOLDING CORPORATION, ZARING NATIONAL HOMES
HOLDING CORPORATION, and ZARING LEASING, LLC, as Borrowers and Guarantors,
ZARING NATIONAL CORPORATION ("ZARING NATIONAL"), ZARING HOMES OF INDIANA, L.L.C.
and ZARING HOMES KENTUCKY, LLC ("ZARING HOMES KENTUCKY"), as Guarantors, the
Banks set forth below, BANK OF AMERICA, N.A. and BANK ONE, NA, as Co-Agents, and
PNC BANK, NATIONAL ASSOCIATION, in its capacity as Agent for the Banks (the
"AGENT").
W I T N E S S E T H:
WHEREAS, the Borrowers, the Guarantors, the Banks, the
Co-Agents and the Agent are parties to that certain Third Amended and Restated
Credit Agreement dated as of April 13, 2000, as amended by First Amendment to
Third Amended and Restated Credit Agreement dated as of September 29, 2000, the
Second Amendment to Third Amended and Restated Credit Agreement dated as of
October 10, 2000 and the Third Amendment to Third Amended and Restated Credit
Agreement dated as of November 1, 2000 (the "CREDIT AGREEMENT"); and
WHEREAS, the Borrowers and the Guarantors have requested that
certain covenants of the Credit Agreement be amended as set forth herein;
WHEREAS, the Banks are willing to enter into such amendments
on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties hereto, in consideration of their
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, covenant and agree as follows:
1. DEFINITIONS.
Defined terms used herein and not otherwise defined herein shall have
the meanings given to them in the Credit Agreement, as amended by this Fourth
Amendment.
2. AMENDMENT OF CREDIT AGREEMENT.
A. The definition of Borrowing Base in Section 1.1 of the
Credit Agreement is hereby deleted and the following is inserted in lieu
thereof:
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BORROWING BASE shall be determined based on the most
recent Borrowing Base Certificate delivered pursuant to Section 8.3(e) and shall
mean the sum of clauses (A) through (F) MINUS the sum of clause (G), as follows:
(A) 100% of Sold Inventory; PLUS
(B) 70% of Model Inventory; PLUS
(C) 60% of Unsold Building Inventory; PLUS
(D) 50% of Approved Developed Lots Inventory; PLUS
(E) 45% of Approved Land Under Development Inventory;
PLUS
(F) 40% of the Approved Land Inventory; MINUS
(G) the principal amount outstanding of the Senior
Notes;
PROVIDED, if at any time the backlog of units is less than 125, as reflected on
the most recent monthly sales and closing reports delivered pursuant to Section
8.3(a)(iv), the advance rate in clause (A) shall be automatically reduced to 90%
and the advance rate in clause (D) shall be automatically reduced to 45%;
PROVIDED FURTHER, in no event shall the sum of clauses (D) - (F) exceed 45% of
the sum of clauses (A)-(F); and PROVIDED, FURTHER, that no property subject to a
Nonrecourse Purchase Money Security Interest shall be included in clauses (A)-
(F) above; PROVIDED, FURTHER, any "reserve to complete" is expressly excluded as
an asset in calculating the Borrowing Base; and PROVIDED, FURTHER, in no event
shall the Borrowing Base exceed 120% of the projected borrowings as set forth on
the most recent Approved Cash Flow Forecast. Notwithstanding any other provision
to the contrary, the parties expressly acknowledge that, for purposes of
calculating the Borrowing Base, clauses (A)- (F) include only such inventory
owned by the Loan Parties expressly excluding Zaring National from the
definition of Loan Parties.
(B) Exhibit 8.3(e) to the Credit Agreement (the "BORROWING
BASE CERTIFICATE") is hereby amended and restated in its entirety in the form
attached hereto as Exhibit 8.3(e).
3. WAIVER.
The Loan Parties hereby acknowledge that (a) pursuant to the Borrowing
Base Certificate delivered to the Agent and the Banks pursuant to Section 8.3(e)
for the month ending October 31, 2000, the aggregate of the Revolving Facility
Usage MINUS Eligible Development Costs exceeded the Borrowing Base by $2,387,175
as of October 31, 2000 (the "OVERADVANCE") and (b) the Overadvance is a
violation of Section 2.1 of the Credit Agreement and (c) the Overadvance is
continuing. The Banks hereby waive compliance with clause (ii) of the proviso in
the first sentence of Section 2.1 through the date of this Fourth Amendment for
the limited purpose of allowing the Overadvance. The Loan Parties expressly
acknowledge that the waiver of compliance with clause (ii) of the proviso in the
first sentence of Section 2.1 is expressly limited to the time period and the
amount set forth above.
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4. CONDITIONS OF EFFECTIVENESS OF THIS FOURTH AMENDMENT.
The effectiveness of this Fourth Amendment is expressly conditioned
upon satisfaction of each of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES; NO DEFAULTS. The representations
and warranties of the Loan Parties contained in Section 6 of the Credit
Agreement shall be true and accurate on the date hereof with the same effect as
though such representations and warranties had been made on and as of such date
(except representations and warranties which relate solely to an earlier date or
time, which representations and warranties shall be true and correct on and as
of the specific dates or times referred to therein); the Loan Parties shall have
performed and complied with all covenants and conditions of the Credit
Agreement; and, except for the default specified in Section 2 above which is
waived for the period set forth above and the violation of Section 8.2(a)
[Zaring National Net Worth] measured at September 30, 2000, resulting from
Shareholder Subordinated Debt not being included in the calculation of Zaring
National Net Worth for the fiscal quarter ending September 30, 2000, no Event of
Default or Potential Default under the Credit Agreement shall have occurred and
be continuing or shall exist.
(b) COUNTERPARTS OF FOURTH AMENDMENT. The Agent shall have received
counterparts of this Fourth Amendment duly executed by the Loan Parties and the
Banks. This Fourth Amendment may be executed by the parties hereto in any number
of separate counterparts, each of which when taken together and duly executed
and delivered shall together constitute one and the same instrument.
5. FORCE AND EFFECT.
Except as expressly modified by this Fourth Amendment, the Credit
Agreement and the other Loan Documents are hereby ratified and confirmed and
shall remain in full force and effect on and after the date hereof.
6. GOVERNING LAW.
This Fourth Amendment shall be deemed to be a contract under the laws
of the State of Ohio and for all purposes shall be governed by and construed and
enforced in accordance with the internal laws of the State of Ohio without
regard to its conflict of laws principles.
7. FEES AND EXPENSES.
The Borrower hereby agrees to reimburse the Agent and the Banks on
demand for all fees, costs, expenses and disbursements (including without
limitation attorneys' fees) relating to this Fourth Amendment which are payable
by the Loan Parties as previously agreed to by the Borrower and as provided in
Sections 10 and 11 of the Credit Agreement.
[SIGNATURE PAGES FOLLOW]
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[PAGE 1 OF 3 TO FOURTH AMENDMENT TO THIRD AMENDED
AND RESTATED CREDIT AGREEMENT AND WAIVER]
BORROWERS AND GUARANTORS:
ZARING HOMES, INC.
By:_______________________________________________
Name: Ronald G. Gratz
Title: Vice President and Chief Financial Officer
ZARING HOLDINGS, INC.
By:_______________________________________________
Name: Ronald G. Gratz
Title: Treasurer
HEARTHSIDE HOMES, LLC
By: Zaring National Corporation, as member
By:_______________________________________________
Name: Ronald G. Gratz
Title: Secretary/Treasurer
ZARING NATIONAL LAND HOLDING CORPORATION
By:_______________________________________________
Name: Ronald G. Gratz
Title: Secretary/Treasurer
ZARING NATIONAL HOMES HOLDING CORPORATION
By:_______________________________________________
Name: Ronald G. Gratz
Title: Secretary/Treasurer
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[SIGNATURE PAGE 2 OF 3 TO FOURTH AMENDMENT TO THIRD AMENDED
AND RESTATED CREDIT AGREEMENT AND WAIVER]
ZARING LEASING, LLC
By: Zaring National Corporation, as sole member
and manager
By:_______________________________________________
Name: Ronald G. Gratz
Title: Secretary/Treasurer
ZARING NATIONAL CORPORATION
By:_______________________________________________
Name: Ronald G. Gratz
Title: Secretary/Treasurer
ZARING HOMES OF INDIANA, L.L.C.
By: Zaring Homes, Inc., as member
By:_______________________________________________
Name: Ronald G. Gratz
Title: Vice President and Chief Financial Officer
ZARING HOMES KENTUCKY, LLC,
By: Zaring Holdings, Inc., as manager
By:_______________________________________________
Name: Ronald G. Gratz
Title: Treasurer
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[SIGNATURE PAGE 3 OF 3 TO FOURTH AMENDMENT TO THIRD AMENDED
AND RESTATED CREDIT AGREEMENT AND WAIVER]
AGENT:
PNC BANK, NATIONAL ASSOCIATION,
as Agent and as a Bank
By:_______________________________________________
Name: Thomas J. McCool
Title: Senior Vice President
CO-AGENTS:
BANK OF AMERICA, N.A., as a Co-Agent and as a Bank
By:_______________________________________________
Name: Michelle Chen
Title: Vice President
BANK ONE, NA, as a Co-Agent and as a Bank
By:_______________________________________________
Name: Thomas T. Bower
Title: First Vice President
OTHER BANKS:
COMERICA BANK,
By:_______________________________________________
Name: John F. Regan
Title: Vice President
THE FIFTH THIRD BANK
By:_______________________________________________
Name: Brian L. Rogg
Title: Vice President
<PAGE> 7
EXHIBIT 8.3(e)
FORM OF
BORROWING BASE CERTIFICATE
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PNC Bank, National Association, as Agent
One PNC Plaza - Fourth Floor Annex
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Attention: Multi-Bank Loan Administration
Ladies and Gentlemen:
I refer to the Third Amended and Restated Credit Agreement dated as of
April 13, 2000 (the "CREDIT AGREEMENT") among ZARING HOMES, INC., an Ohio
corporation ("ZARING HOMES"), ZARING HOLDINGS, INC., an Ohio corporation
("ZARING HOLDINGS"), HEARTHSIDE HOMES, LLC, an Indiana limited liability company
("HEARTHSIDE"), ZARING NATIONAL LAND HOLDING CORPORATION, an Ohio corporation
("ZARING LAND HOLDING"), ZARING NATIONAL HOMES HOLDING CORPORATION, an Ohio
corporation ("ZARING HOMES HOLDING"), ZARING LEASING, LLC, an Ohio limited
liability company ("ZARING LEASING," and together with Zaring Homes, Zaring
Holdings, Hearthside, Zaring Land Holding and Zaring Homes Holding,
collectively, the "BORROWERS"), ZARING NATIONAL CORPORATION, an Ohio corporation
("ZARING NATIONAL"), ZARING HOMES OF INDIANA, L.L.C., an Indiana limited
liability company ("ZARING INDIANA"), ZARING HOMES KENTUCKY, LLC, a Kentucky
limited liability company ("ZARING KENTUCKY"), the BANKS (as defined in the
Credit Agreement), PNC BANK, NATIONAL ASSOCIATION, in its capacity as agent for
the Banks under the Credit Agreement (hereinafter referred to in such capacity
as the "AGENT"), and BANK OF AMERICA, N.A. (formerly Bank of America NT&SA) and
BANK ONE, NA, as Co-Agents under the Credit Agreement, as amended, restated,
modified or supplemented from time to time. Unless otherwise defined herein,
terms defined in the Credit Agreement are used herein with the same meanings.
I, Ronald G. Gratz, an Authorized Officer of each Loan Party, do hereby
certify on behalf of the Loan Parties as of the month ended _______________,
____ (the "REPORT DATE"), as follows:
(1) SPECULATIVE UNITS (Section 8.2(q)).
(A) The number of Speculative Units in any
Active Community does not exceed five (5) on
or after April 1, 2000, four (4) on or after
May 1, 2000 or three (3) on or after June 1,
2000 as set forth on EXHIBIT A hereto.
(B) The number of Speculative Units in all
Active Communities is _______% of the
aggregate number of Active Units sold during
the previous twelve (12) month period, which
does not exceed the maximum permitted amount
of 15%, computed as follows:
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PNC Bank, National Association
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Page 2
<TABLE>
<S> <C> <C>
(i) number of Speculative Units in all
Active Communities __________
(ii) aggregate number of Active Units
sold during previous 12 months __________
(iii) item (i) divided by item (ii) _________%
expressed as a percentage
</TABLE>
(2) MODEL UNITS (Section 8.2(r)).
(A) The number of Model Units owned or leased
including without limitation Model Units
leased from First Cincinnati Leasing, LLC in
any Active Community does not exceed two (2)
in each distinctive price point as
determined by the Borrowers and acceptable
to the Agent or four (4) in the aggregate,
as set forth on EXHIBIT A hereto.
(B) The number of Model Units in all Active
Communities is _____% of the aggregate
number of Active Communities, which does not
exceed the maximum permitted amount of 100%,
computed as follows:
<TABLE>
<S> <C> <C>
(i) number of Model Units in all Active
Communities __________
(ii) number of Active Communities
__________
(iii) item (i) divided by item (ii)
expressed as a percentage _________%
</TABLE>
(3) LAND OWNERSHIP OR ACQUISITION (Section 8.2(s)). The
Loan Parties have not acquired, owned, purchased,
leased or otherwise invested in, directly or
indirectly, any land or real estate other than (in
each case so long as such acquisition or other
investment is consistent with the then current Cash
Flow Forecast and all such real estate is being
actively marketed or is under an Agreement of Sale):
(A) real estate held or acquired by a Loan Party
for construction and sale of Active Units,
PROVIDED that Regulatory Approval has been
received therefor, as set forth on EXHIBIT B
hereto; and
(B) real estate which does not fall under clause
(A) above, as set forth on EXHIBIT B. The
aggregate investment cost of such real
estate, as set forth on EXHIBIT B, is
$_________, which does not exceed the
maximum permitted amount of $2,000,000.
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PNC Bank, National Association
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Page 3
<TABLE>
<CAPTION>
(4) BORROWING BASE (Section 8.3(e)).
<S> <C> <C>
(A) Sold Inventory* equals $__________
Sold Inventory x 100%/90%** equals $_________
(B) Model Inventory equals $__________
Model Inventory x 70% equals $_________
(C) Unsold Building Inventory equals $_________
Unsold Building Inventory x 60% equals $_________
(D) Approved Developed Lots Inventory* equals
$_________ Approved Developed Lots
Inventory x [50%/45%]** $_________
(E) Approved Land Under Development Inventory equals
$_______ Approved Land Under Development
Inventory x 45% $_________
(F) Approved Land Inventory equals $___________
Approved Land Inventory x 40% equals $_________ $_________
(G) Principal amount outstanding of the Senior Notes $_________
Calculation of Borrowing Base:
(i) the sum of clauses (A)-(F) equals $_________
(ii) the sum of clause (G) equals $_________
</TABLE>
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* At any time the backlog of units is less than 125, as reflected on two most
recent monthly sales and closing reports delivered pursuant to Section
8.3(a)(iv), the advance rate in clause (A) shall be automatically reduced to 90%
and the advance rate in clause (D) shall be automatically reduced to 45%.
**circle the appropriate advance rate
***No property subject to a Nonrecourse Purchase Money Security Interest shall
be included in clauses (A) - (F). All property must be owned by the Loan Parties
but property owned by Zaring National shall be excluded from the calculation.
Any "reserve to complete" is excluded as an asset in calculating the Borrowing
Base.
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PNC Bank, National Association
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Page 4
<TABLE>
<S> <C> <C> <C>
(iii) item (i) minus item (ii) equals the Borrowing Base $_________
PROVIDED, if the sum of clauses
(D through (F) is greater than
45% multiplied by item (i), item
(i) shall be reduced by the
amount of such excess
PROVIDED, FURTHER, in no event
shall the Borrowing Base exceed
120% of the projected borrowings
as set forth on the most recent
Cash Flow Forecast
</TABLE>
<TABLE>
<CAPTION>
(5) REVOLVING FACILITY USAGE AND AVAILABILITY
<S> <C> <C> <C>
(A) Revolving Credit Loans outstanding $_________
(B) Letter of Credit Outstandings:
(i) undrawn face amount of outstanding Letters of $_________
Credit
(ii) aggregate amount of all unpaid and outstanding $_________
Reimbursement Obligations
(C) The sum of clauses 5(A), 5(B)(i) and 5(B)(ii) equals $_________
Revolving Facility Usage
(D) Eligible Development Costs $_________
(E) The lesser of Revolving Credit Commitments ($52,500,000) or $_________
Item 4(iii) (the Borrowing Base) minus the sum of clauses
5(C) and (D) equals remaining availability under the
Revolving Credit Commitments
</TABLE>
[SIGNATURE PAGES FOLLOW]
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[SIGNATURE PAGE 1 OF 3 TO BORROWING BASE CERTIFICATE]
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
____ day of ______________, 200_.
ZARING HOMES, INC.
By:______________________________________________
Name: Ronald G. Gratz
Title: Vice President and Chief Financial Officer
ZARING HOLDINGS, INC.
By:______________________________________________
Name: Ronald G. Gratz
Title: Treasurer
HEARTHSIDE HOMES, LLC
By: Zaring National Corporation, as member
By:______________________________________________
Name: Ronald G. Gratz
Title: Secretary/Treasurer
ZARING NATIONAL LAND HOLDING CORPORATION
By:______________________________________________
Name: Ronald G. Gratz
Title: Secretary/Treasurer
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[SIGNATURE PAGE 2 OF 3 TO BORROWING BASE CERTIFICATE]
ZARING NATIONAL HOMES HOLDING CORPORATION
By:______________________________________________
Name: Ronald G. Gratz
Title: Secretary/Treasurer
ZARING LEASING,, LLC
By: Zaring National Corporation, as sole
member and manager
By:______________________________________________
Name: Ronald G. Gratz
Title: Secretary/Treasurer
ZARING NATIONAL CORPORATION
By:______________________________________________
Name: Ronald G. Gratz
Title: Secretary/Treasurer
ZARING HOMES KENTUCKY, LLC
By: Zaring Holdings, Inc., as manager
By:______________________________________________
Name: Ronald G. Gratz
Title: Treasurer
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[SIGNATURE PAGE 3 OF 3 TO BORROWING BASE CERTIFICATE]
ZARING HOMES OF INDIANA, L.L.C.
By: Zaring Homes, Inc., as member
By:______________________________________________
Name: Ronald G. Gratz
Title: Vice President and Chief Financial Officer
<PAGE> 14
EXHIBIT A
TO
BORROWING BASE CERTIFICATE
--------------------------
List below each Active Community and the number of Speculative Units
and the number of Model Units in each price point in each.
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EXHIBIT B
TO
BORROWING BASE CERTIFICATE
--------------------------
(i) List below all real estate held or acquired by a Loan Party for
construction and sale of Active Units for which Regulatory Approval has
been received:
(ii) List below all real estate which does not fall under clause (i) above,
together with the cost to acquire, own, purchase, lease or otherwise
invest in such real estate:
The aggregate investment cost under clause (ii) above is
$________________________.
