Exhibit 10.2
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
This Amended and Restated Credit Agreement is entered into as of the
24TH day of October, 2001 by and between ESCALADE, INCORPORATED, an Indiana
corporation (the "Company"), and BANK ONE, INDIANA, NA, a national banking
association with its principal office in Indianapolis, Indiana (the "Bank").
WHEREAS, the Company and the Bank are parties to that certain Amended
and Restated Credit Agreement dated May 31, 1996, as amended from time to time
(the "Prior Agreement").
WHEREAS, the Company has requested and the Bank has agreed to amend the
existing credit facilities previously extended to the Company by the Bank as
evidenced by the Prior Agreement.
WHEREAS, the parties have executed this Amended and Restated Credit
Agreement to amend and restate in its entirety the Prior Agreement.
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein, and each act performed and to be performed
hereunder, the Company and the Bank agree as follows:
Section 1. ACCOUNTING TERMS -- DEFINITIONS. All accounting and
financial terms used in this Agreement are used with the meanings such terms
would be given in accordance with generally accepted accounting principles
except as may be otherwise specifically provided in this Agreement. The
following terms have the meanings indicated when used in this Agreement with the
initial letter capitalized:
- "ADVANCE" means a disbursement of proceeds of the Revolving
Loan.
- "AGREEMENT" means this Credit Agreement between the Company
and the Bank, as it may from time to time be amended, restated
or otherwise modified.
- "APPLICABLE COMMISSION RATE" means that number of percentage
points which will, during any period of time, be used in
calculating the amount of Commission payable with respect to
each of the Standby Letters of Credit. Such number of
percentage points shall be determined by reference to the
Applicable Spread.
- "APPLICABLE ISSUANCE FEE RATE" means that number of percentage
points which will, during any period of time, be used in
calculating the Issuance Fee payable with respect to each of
the Commercial Letters of Credit. Such number of percentage
points shall be determined by reference to the Applicable
Spread.
- "APPLICABLE SPREAD" means that number of percentage points to
be taken into account in determining the Applicable Spread
which is used in computing the rate at which interest accrues
on the Loan and the Applicable Unused Fee Rate which is used
in calculating the Unused Fee, the Applicable Commission Rate
which is used in calculating the amount of Commission which is
payable with respect to Standby Letters of Credit, and the
Applicable
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Issuance Fee Rate which is used in calculating the amount of
Issuance Fees payable with respect to Commercial Letters of
Credit, determined by reference to the Company's Leverage
Ratio in accordance with the following table:
UNUSED APPLICABLE APPLICABLE
LEVEL LEVERAGE RATIO LIBOR PRIME FEE COMMISSION ISSUANCE
RATE FEE RATE
V greater than 2.50:1.00 +200bps +0bps +37.5bps +137.5 bps +62.5 bps
IV 2.00 to 2.49:1.00 +175bps -37.5bps +25bps +125 bps +50 bps
III 1.50 to 1.99:1.00 +150bps -75bps +25bps +112.5 bps +37.5 bps
II 1.00 to 1.49:1.00 +125bps -112.5bps +25bps +100 bps +25 bps
I less than 1.00:1.00 +100bps -150bps +25bps +87.5 bps +12.5 bps
Initially, from the date of this Agreement and until receipt
by the Bank of the Company's fourth quarter end financial
statements furnished after such date to the Bank pursuant to
the requirements of Section 5.b, the Applicable Spread shall
be determined assuming a Leverage Ratio of less than 1.50 to
1.00. Thereafter, the Applicable Spread shall be determined on
the basis of the financial statements of the Company for each
fiscal quarter furnished to the Bank pursuant to the
requirements of Section 5.b, with prospective effect for the
following fiscal quarter. Interest and Unused Fees will accrue
and be payable in any fiscal quarter on the basis of the
Applicable Spread in effect during the preceding fiscal
quarter until an adjustment is made under the provisions of
this definition. The Applicable Spread shall be adjusted on
the first interest payment date which follows receipt by the
Bank of the financial statements upon which such adjustment is
based, but such adjustment shall not be effective as to any
LIBOR-based Rate elected prior to the date of such adjustment
until the expiration of the period of time for which such
LIBOR-based Rate shall have been elected by the Company. In
the event that the Company fails to deliver the financial
statements and compliance certificates required under Section
5.b for any month which ends a fiscal quarter, then the
Applicable Spread shall be the largest spread shown on the
above table from the date such financial statements were
required to be delivered until the first interest payment date
which follows delivery to the Bank of such financial
statements. Commissions and Issuance Fees with respect to
Letters of Credit shall be determined from the Applicable
Spread in effect when the related Letter of Credit is issued
or renewed, and no adjustment shall be made to the amount of
Commission and Issuance Fees paid on account of a subsequent
change in the Applicable Spread, unless and until the
expiration date of the Letter of Credit is extended. It is
noted that the above table provides an Applicable Spread for a
ratio of total liabilities to Net Worth greater than that
which will be permissible under the terms of Section 5(g)(iv).
For the avoidance of doubt, it is agreed that it is the intent
of the parties that the Bank shall be free to exercise all
remedies otherwise provided for in this Agreement in the event
of the violation by the Company of the covenant stated in
Section 5.g.(ii), notwithstanding the accrual of interest upon
the Loan at a rate determined in accordance with this
definition.
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- "APPLICABLE UNUSED FEE RATE" means any number of percentage
points which will, during any period of time, be used in
calculating the Unused Fee. Such number of percentage points
shall be determined by reference to the Applicable Spread.
- "APPLICATION FOR REVOLVING LOAN ADVANCE" or "APPLICATION"
means a written application of the Company for a disbursement
of proceeds of the Revolving Loan substantially in the form of
EXHIBIT "A" attached hereto.
- "AUTHORIZED OFFICER" means the Chairman, Chief Executive
Officer or the Chief Financial Officer of the Company or such
other officer whose authority to perform acts to be performed
only by an Authorized Officer under the terms of this
Agreement is evidenced to the Bank by a certified copy of an
appropriate resolution of the Board of Directors of the
Company.
- "BANK" is used as defined in the preamble.
- "BANKING DAY" means a day on which the principal office of the
Bank in the City of Indianapolis, Indiana, is open for the
purpose of conducting substantially all of the Bank's business
activities.
- "CODE" means the Internal Revenue Code of 1986, as amended.
- "COMMERCIAL LETTER OF CREDIT" is used as defined in Section
2.b.
- "COMMISSION" is used as defined in Section 2.b.
- "COMMITMENT" means the agreement of the Bank to extend the
Revolving Loan to the Company until the Revolving Loan
Maturity Date, and if the context so requires, the term may
also refer to the maximum principal amount which is permitted
to be outstanding under the Revolving Loan at any time.
- "COMPANY" is used as defined in the Preamble.
- "CONSOLIDATED EBITDA" shall mean, with respect to any period
of time, an amount equal to the sum of (i) the consolidated
net income of the Company and the Subsidiaries determined with
respect to such time period plus (ii) to the extent deducted
in determining such consolidated net income, an amount equal
to the consolidated income tax, depreciation, amortization and
interest expense of the Company and the Subsidiaries and
determined with respect to such time period.
"CONSOLIDATED FUNDED DEBT" shall mean, with respect to any
specific period of time, the sum of the following, all of
which shall be determined on a consolidated basis for the
Company and the Subsidiaries: (i) the aggregate principal
amount of all indebtedness for borrowed money, including,
without limitation, the aggregate principal amount of all
indebtedness for the deferred purchase price of property and
services and the aggregate principal amount of all
indebtedness created and arising under all conditional sales
and
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title retention agreements, and (ii) the aggregate amount of
all obligations under all capital leases for which the Company
or and Subsidiary is liable.
- "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
- "EVENT OF DEFAULT" means any of the events described in
Section 8.
- "GUARANTY AGREEMENT" is used as defined in Section 4.d.
- "HAZARDOUS SUBSTANCE" means any hazardous or toxic substance
regulated by any federal, state or local statute or regulation
including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act and the Toxic Substance Control
Act, or by any federal, state or local governmental agencies
having jurisdiction over the control of any such substance
including but not limited to the United States Environmental
Protection Agency.
- "ISSUANCE FEE" is used as defined in Section 2.b.
- "LETTER OF CREDIT" means a Standby Letter of Credit or
Commercial Letter of Credit as the context requires, and when
used in the plural form, refers to all such Letters of Credit.
- "LETTER OF CREDIT AGREEMENT" is used as defined in Section
5.k.
- "LEVERAGE RATIO" means the ratio, determined with reference to
any specified period of time, of (i) the Company's
Consolidated Funded Debt determined on the last day of such
period of time, to (ii) the Company's Consolidated EBITDA,
determined with respect to such period of time.
- "LIBOR-BASED RATE" means that per annum rate of interest which
is equal to the sum of the LIBOR Applicable Spread plus the
LIBOR Rate.
- "LIBOR RATE" means the offered rate for the period equal to or
next greater than the Interest Period for U.S. Dollar deposits
of not less than $1,000,000.00 as of 11:00 A.M. City of
London, England time two London Business Days prior to the
first day of the Interest Period as shown on the display
designated as "British Bankers Association Interest Settlement
Rates" on Reuters Screen FRBD, or such other screen as may
replace such screen on Reuters for the purpose of displaying
such rate. In the event that such rate is not available on
Reuters, then such offered rate shall be otherwise
independently determined by Bank from an alternate,
substantially similar independent source available to Bank or
shall be calculated by Bank by a substantially similar
methodology as that theretofore used to determine such offered
rate.
- "LOAN" means the Revolving Loan.
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- "LOAN DOCUMENT" means any of this Agreement, the Revolving
Note, the Guaranty Agreement, and any other instrument or
document which evidences or secures the Loan or which
expresses an agreement as to terms applicable to the Loan, and
in the plural means any two or more of the Loan Documents, as
the context requires.
- "LONDON BUSINESS DAY" means any day other than a Saturday,
Sunday or a day on which banking institutions are generally
authorized or obligated by law or executive order to close in
the City of London, England.
- "NEGOTIATION FEE" is used as defined in Section 2.b.
- "NET WORTH" means the shareholders' equity of the Company.
- "NOTE" means the Revolving Note.
- "OBLIGATIONS" means all obligations of the Company in favor of
the Bank of every type and description, direct or indirect,
absolute or contingent, due or to become due, now existing or
hereafter arising, including but not limited to: (i) all of
such obligations on account of the Loan, including any
Advances made pursuant to any extension of the Commitment
beyond the initial Revolving Loan Maturity Date or pursuant to
any other amendment of this Agreement; (ii) all other
obligations arising under any Loan Document as amended from
time to time; and (iii) all other obligations, agreements,
including interest rate risk management agreements, or
indebtedness between the Company and the Bank in existence
from time to time.
- "OFFICER'S CERTIFICATE" means a certificate in the form
included as a part of EXHIBIT "A" attached hereto signed by
the chief executive officer or the chief financial officer of
the Company, confirming that all of the representations and
warranties contained in Section 3 of this Agreement are true
and correct as of the date of such certificate except as
specified therein and with the further exceptions that: (i)
the representation contained in Section 3.d shall be construed
so as to refer to the latest financial statements which have
been furnished to the Bank as of the date of any Officer's
Certificate, (ii) the representations contained in Section 3.k
(with respect to Hazardous Substances) will be construed so as
to apply not only to the Company, but also to any
Subsidiaries, whether now owned or hereafter acquired, (iii)
the representation contained in Section 3.l shall be deemed to
be amended to reflect the existence of any Subsidiary
hereafter formed or acquired by the Company with the consent
of the Bank, and (iv) all other representations will be
construed to have been amended to conform with any changes of
which the Company shall have previously given the Bank notice
in writing. The Certificate shall further confirm that no
Event of Default or Unmatured Event of Default shall have
occurred and be continuing as of the date of the Certificate
or shall describe any such event which shall have occurred and
be then continuing and the steps being taken by the Company to
correct it.
- "PLAN" means an employee pension benefit plan as defined in
ERISA.
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- "PREPAYMENT PREMIUM" means the excess, if any, as determined
by the Bank of: (i) the present value at the time of
prepayment of the interest payments which would have been
payable on account of an amount prepaid from the date of
prepayment until the end of the period during which interest
would have accrued at an LIBOR-based Rate but for repayment
over (ii) the present value at the time of prepayment of
interest payments calculated at the rate (the "Reinvestment
Rate") which the bank then estimates it would receive upon
reinvesting the principal amount of the prepayment in an
obligation which presents a credit risk substantially similar
(as determined in accordance with the commercial credit rating
system then used by the Bank) to that which is then presented
by the Loan for a period approximately equal to the balance of
the period during which interest would accrue on the portion
of the Loan prepaid at an LIBOR-based Rate, but for
prepayment. The discount rate used by the Bank in determining
such present value shall be the Reinvestment Rate.
- "PRIME-BASED RATE" means any variable rate at which interest
may accrue on all or a portion of the Loan under the terms of
this Agreement, which rate is determined by reference to the
Prime Rate.
- "PRIME RATE" means a rate per annum equal to the prime rate of
interest announced from time to time by BANK ONE, INDIANA, NA
or its parent (which is not necessarily the lowest rate
charged to any customer), changing when and as said prime rate
changes.
- "REINVESTMENT RATE" is used as defined in this Section 1 in
the definition of Prepayment Penalty.
- "REVOLVING LOAN" is used as defined in Section 2.a(i).
- "REVOLVING LOAN MATURITY DATE" means initially March 31, 2006,
and hereafter any subsequent date to which the Commitment may
be extended by the Bank pursuant to the terms of Section
2.a(iv).
- "REVOLVING NOTE" is used as defined in Section 2.a(ii).
- "STANDBY LETTERS OF CREDIT" is used as defined in Section 2.b.
- "SUBSIDIARY" means any corporation, partnership, joint venture
or other business entity over which the Company exercises
control, provided that it shall be conclusively presumed that
the Company exercises control over any such entity 51% or more
of the equity interest in which is owned by the Company,
directly or indirectly.
- "UNMATURED EVENT OF DEFAULT" means any event specified in
Section 8, which is not initially an Event of Default, but
which would, if uncured, become an Event of Default with the
giving of notice or the passage of time or both.
- "UNUSED FEE" is used as defined in Section 2.d(v).
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Section 2. THE LOANS. Subject to all of the terms and conditions of
this Agreement, the Bank will make the Loans described in this Section to the
Company.
a. THE REVOLVING LOAN. The Bank will make a revolving loan to the
Company on the following terms and subject to the following
conditions:
(i) The Commitment -- Use of Proceeds. From this date and
until the Revolving Loan Maturity Date, the Bank
agrees to make Advances (collectively, the "Revolving
Loan") under a revolving line of credit from time to
time to the Company of amounts not exceeding in the
aggregate at any time outstanding Twenty-Five Million
and No/100 Dollars ($25,000,000.00) (the
"Commitment"), as decreased from time to time as
hereinafter set forth, provided that all of the
conditions of lending stated in Section 7 of this
Agreement as being applicable to the Revolving Loan
have been fulfilled at the time of each Advance.
Proceeds of the Revolving Loan shall initially be
used to renew, extend the maturity of and restructure
the principal balance outstanding under the
"Revolving Loan" (as that term was defined in the
Prior Agreement), and hereafter may be used by the
Company only to fund working capital requirements.
The initial Commitment shall be available to the
Company until March 31, 2002, on which date and on
each March 31 thereafter until March 31, 2006, the
Commitment shall reduce by $5,000,000.00. In the
event Advances outstanding under the Revolving Loan
on such dates exceed the new Commitment amount, after
giving effect to the required reduction set forth
above, the Company shall, on such dates and without
demand, immediately repay such excess to the Bank.
(ii) METHOD OF BORROWING. The obligation of the Company to
repay the Revolving Loan shall be evidenced by a
promissory note (the "Revolving Note") of the Company
in the form of EXHIBIT "B". So long as no Event of
Default or Unmatured Event of Default shall have
occurred and be continuing and until the Revolving
Loan Maturity Date, the Company may borrow, repay and
reborrow (subject to Section 2.a.(i) above) under the
Revolving Note on any Banking Day, provided that no
borrowing may cause the principal balance of the Loan
to exceed the Commitment or may result in an Event of
Default or an Unmatured Event of Default. Each
Advance under the Revolving Loan shall be conditioned
upon receipt by the Bank from the Company of an
Application for Revolving Loan Advance and an
Officer's Certificate, provided that the Bank may, at
its discretion, make a disbursement upon the oral
request of the Company made by an Authorized Officer,
or upon a request transmitted to the Bank by
telephone facsimile ("fax") machine, or by any other
form of written electronic communication (all such
requests for Advances being hereafter referred to as
"informal requests"). In so doing, the Bank may rely
on any informal request which shall have been
received by it in good faith from a person reasonably
believed to be an Authorized Officer. Each informal
request shall be promptly confirmed by a duly
executed Application and Officer's Certificate if the
Bank so requires and shall in and of itself
constitute the representation of the Company that no
Event of Default or Unmatured Event of Default has
occurred and is continuing or would result from the
making of the requested Advance and that
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the making of the requested Advance shall not cause
the principal balance of the Revolving Loan to exceed
the current Commitment. All borrowings and
reborrowings and all repayments shall be in amounts
of not less than Twenty Five Thousand Dollars
($25,000.00), except for repayment of the entire
principal balance of the Revolving Loan and except
for special prepayments of principal required under
the terms of Section 2.a.(i). Upon receipt of an
Application, or at the Bank's discretion upon receipt
of an informal request for an Advance and upon
compliance with any other conditions of lending
stated in Section 7 of this Agreement applicable to
the Revolving Loan, the Bank shall disburse the
amount of the requested Advance to the Company. All
Advances by the Bank and payments by the Company
shall be recorded by the Bank on its books and
records, and the principal amount outstanding from
time to time, plus interest payable thereon, shall be
determined by reference to the books and records of
the Bank. The Bank's books and records shall be
presumed PRIMA FACIE to be correct as to such
matters.
(iii) INTEREST ON THE REVOLVING LOAN. The principal amount
of the Revolving Loan outstanding from time to time
shall bear interest until maturity of the Revolving
Note at a rate per annum equal to the Prime Rate plus
the Applicable Spread except that at the option of
the Company, exercised from time to time as provided
in Section 2.d.(i), interest may accrue prior to
maturity on the entire outstanding balance of the
Revolving Loan or on any portion thereof which is in
excess of $1,000,000.00 and as to which no
LIBOR-based Rate previously elected remains in
effect, at a LIBOR-based Rate for a period of 30, 90
or 180 days; provided that an election of a
LIBOR-based Rate for a period extending beyond the
Revolving Loan Maturity Date shall be permitted only
at the discretion of the Bank. Those elections of a
"LIBOR-based Rate" which have been made under the
"Revolving Loan" (as that term was defined in the
Prior Agreement) and which remain in effect on the
date of this Agreement, shall continue, under this
Agreement, to be in effect through the end of the
interest period for which elected. After maturity,
whether on the Revolving Loan Maturity Date or on
account of acceleration of maturity upon the
occurrence of an Event of Default, and until paid in
full, the Revolving Loan shall bear interest at a
rate equal to the Prime Rate plus two percent (2%)
plus the Applicable Spread, except as to any portion
of the Loan for which the Company may have elected an
LIBOR-based Rate for a period of time that has not
expired at maturity, such portion shall, during the
remainder of such period, bear interest at the
greater of the Prime Rate plus the Applicable Spread
plus two percent (2%) per annum or the LIBOR-based
Rate then in effect plus two percent (2%) per annum.
Accrued interest shall be due and payable monthly on
the last Banking Day of each month prior to maturity.
After maturity, interest shall be payable as accrued
and without demand.
(iv) EXTENSIONS OF REVOLVING LOAN MATURITY DATE. The Bank
may, upon the request of the Company, but at the
Bank's sole discretion, extend the Revolving Loan
Maturity Date from time to time to such date or dates
as the Bank may elect by notice in writing to the
Company, and upon any such extension and upon
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execution and delivery by the Company of a Revolving
Note reflecting the extended maturity date, the date
to which the Commitment is then extended will become
the "Revolving Loan Maturity Date" for purposes of
this Agreement.
(v) UNUSED FEE. In addition to interest on the Revolving
Loan, the Company shall pay to the Bank a fee (the
"Unused Fee") for each partial or full calendar
quarter during which the Commitment is outstanding
equal to the Applicable Unused Fee Rate per annum of
the amount of the average daily excess of the
Commitment over the average daily principal balance
outstanding under the Revolving Loan. Unused fees for
each calendar quarter shall be due and payable within
ten (10) days following the Bank's submission of a
statement of the amount due. Such fees may be debited
by the Bank when due to any demand deposit account of
the Company carried with the Bank without further
authority.
(vi) PROCEDURES FOR ELECTING LIBOR-BASED RATES -- CERTAIN
EFFECTS OF ELECTION. LIBOR-based Rates may be elected
only in accordance with the following procedures,
shall be subject to the following conditions and the
election of an LIBOR-based Rate shall have the
following consequences in addition to other
consequences stated in this Agreement:
A. The LIBOR-based Rate may be elected only for
Loans or portions of Loans in a minimum
amount of $1,000,000.00.
B. No LIBOR-based Rate may be elected at any
time that an Event of Default or Unmatured
Event of Default has occurred and is
continuing.
C. Voluntary prepayment prior to scheduled
maturity of all or any portion of a Loan on
which interest is accruing at a LIBOR-based
Rate shall be subject to contemporaneous
payment of the Prepayment Premium if, at the
time of prepayment, the Reinvestment Rate is
less than the LIBOR-based Rate at which
interest accrues on the Loan. A Prepayment
Premium shall also be due and payable on
prepayment of all or any portion of the Loan
prior to scheduled maturity because of
acceleration of maturity on account of an
Event of Default if, at the time of
acceleration of maturity, the Reinvestment
Rate is less than the LIBOR-based Rate at
which interest is accruing on the Loan. If
at the time of any voluntary or mandatory
prepayment of any portion of the principal
of any Loan, interest accrues at both a
LIBOR-based Rate or Rates and at a
LIBOR-based Rate on portions of the Loan,
then any prepayment of principal will be
applied first to portion of the Loan on
which interest accrues at the LIBOR-based
Rate and next to the portion or portions at
which interest accrues at an LIBOR-based
Rate or Rates, and if interest accrues on
the Loan at more than one LIBOR-based Rate,
first to that portion or those portions on
which interest accrues at a Rate or Rates
which results in no Prepayment Premium or
the lowest Prepayment Premium or Premiums.
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D. On any Banking Day, the Company may request
a quotation of the LIBOR-based Rate then in
effect from the Bank. As soon as possible,
and in any event before the close of
business on the next following Banking Day,
the Bank shall quote such LIBOR-based Rate.
The Company shall then have until the end of
the Banking Day on which such quotation is
given or within such shorter time as the
Bank may specify, to exercise its option to
elect a LIBOR-based Rate quoted, subject to
all other conditions and limitations stated
in this Agreement. The period for which any
LIBOR-based Rate is effective shall begin on
the second Banking Day following the day on
which the quotation is given.
E. An election of a LIBOR-based Rate may be
communicated to the Bank on behalf of the
Company only by an Authorized Officer. Such
election may be communicated by telephone,
or by telephone facsimile (fax) machine or
any other form of written electronic
communication, or by a writing delivered to
the Bank. At the request of the Bank, the
Company shall confirm any election in
writing and such written confirmation shall
be signed by an Authorized Officer. The Bank
shall be entitled to rely on any oral or
written electronic communication of an
election of a LIBOR-based Rate which is
received by an appropriate Bank employee
from anyone reasonably believed in good
faith by such employee to be an Authorized
Officer.
F. The Bank may elect not to quote a
LIBOR-based Rate on any day on which the
Bank has determined that it is not practical
to quote such rate because of the
unavailability of sufficient funds to the
Bank for appropriate terms at rates
approximating the relevant London Interbank
Offered Rate, or because of legal or
regulatory changes which make it impractical
or burdensome for the Bank to lend money at
LIBOR-based Rate.
G. If, as a result of any regulatory change,
the basis of taxation of payments to the
Bank of the principal of or any interest on
any Loan bearing interest at a LIBOR-based
Rate or any other amounts payable hereunder
in respect thereof, other than taxes imposed
on the overall net income of the Bank, is
changed, or any reserve, special deposit, or
similar requirement relating to any
extensions of credit or other assets of or
any deposits with or other liabilities of
the Bank are imposed, modified, or deemed
applicable, and the Bank reasonably
determines that, by reason thereof, the cost
to it of making, issuing, or maintaining any
Loan at a LIBOR-based Rate is increased by
an amount deemed by it to be material, then
the Company shall pay promptly upon demand
to the Bank such additional amounts as the
Bank reasonably determines will compensate
for such increased costs; provided, however,
that the Company shall not be the only
borrower of the Bank that is singled out
from a group of similarly situated borrowers
of the Bank subject to this
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type of provision that is requested to remit
increased costs. Any determination by the
Bank of increased costs of maintaining
deposits made pursuant to the provisions of
this section shall be final, absent manifest
error.
(vii) CALCULATION OF INTEREST. Interest on the Loan shall
be computed by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by
the outstanding principal balance, multiplied by the
actual number of days the principal balance is
outstanding.
(viii) MANNER OF PAYMENT - APPLICATION. Unless otherwise
agreed to, in writing, or otherwise required by
applicable law, payments will be applied first to
accrued, unpaid interest, then to principal, and any
remaining amount to any unpaid collection costs, late
charges and other charges, provided, however, upon
delinquency or other default, the Bank reserves the
right to apply payments among principal, interest,
late charges, collection costs and other charges at
its discretion. All prepayments shall be applied to
the indebtedness owing hereunder in such order and
manner as the Bank may from time to time determine in
its sole discretion.
(ix) LATE PAYMENT. If any payment required under the Loan
is not paid within ten (10) days after such payment
is due, then, at the option of Bank, Company shall
pay a late charge equal to five percent (5.0%) of the
amount of such payment or $25.00, whichever is
greater, up to the maximum amount of $1500.00 per
late charge to compensate Bank for administrative
expenses and other costs of delinquent payments. This
late charge may be assessed without notice, shall be
immediately due and payable and shall be in addition
to all other rights and remedies available to Bank.
(x) DEFAULT RATE OF INTEREST. Upon the occurrence of an
Event of Default and during the continuation thereof,
and after maturity, including maturity upon
acceleration, Bank, at its option, may, if permitted
under applicable law, do one or both of the
following: (i) increase the interest rate under the
Loan to the rate that is three percent (3%) above the
rate that would otherwise be payable thereunder, and
(ii) add any unpaid accrued interest to principal and
such sum will bear interest therefrom until paid at
the rate provided herein or under the Note (including
any increased rate). The interest rate under the Loan
will not exceed the maximum rate permitted by
applicable law under any circumstances.
(xi) REIMBURSEMENT OF DOCUMENTATION FEES AND EXPENSES. The
Company, either upon execution of this Agreement or
promptly upon demand therefor, shall reimburse the
Bank for all reasonable out-of-pocket costs and
expenses of the Bank (including reasonable attorneys'
fees and legal expenses) incurred by it in connection
with the preparation and negotiation of this
Agreement and the other Loan Documents.
12
b. STANDBY AND COMMERCIAL LETTERS OF CREDIT. At any time that the
Company is entitled to an Advance under the Revolving Loan,
the Bank shall, upon the application of the Company or any
Subsidiary, issue for the account of the Company or any
Subsidiary, a standby or commercial letter of credit (each a
"Letter of Credit") in an amount not in excess of the maximum
Advance that the Company would then be entitled to obtain
under the Revolving Loan, provided that (A) the total amount
of Letters of Credit which are outstanding at any time shall
not exceed $2,000,000.00, (B) the issuance of any Letter of
Credit with a maturity date beyond the Revolving Loan Maturity
Date shall be entirely at the discretion of the Bank, (C) the
form of the requested Letter of Credit shall be satisfactory
to the Bank in the reasonable exercise of the Bank's
discretion, and (D) the Company or any Subsidiary, shall have
executed an application and reimbursement agreement for the
Letter of Credit (a "Reimbursement Agreement") in the Bank's
standard form. While any Letter of Credit is outstanding, the
maximum amount of Advances which may be outstanding under the
Revolving Loan shall be reduced by the maximum amount
available to be drawn under the Letter of Credit. The issuance
of each Commercial Letter of Credit shall be subject to the
payment by the applicant (the "Account Party") to the Bank of
a fee (an "Issuance Fee") which shall be equal to the
Applicable Issuance Fee Rate multiplied by the amount thereof,
which Issuance Fee shall be due and payable within ten (10)
days following the issuance of any Commercial Letter of
Credit. Upon presentation of each draft drawn under a
Commercial Letter of Credit to the Bank by the beneficiary
thereof, the Account Party shall also pay the Bank a fee (a
"Negotiation Fee"), which shall be an amount equal to the
greater of (i) one-eighth percent (1/8%) multiplied by the
amount drawn under such commercial Letter of Credit, or (ii)
$75.00. The issuance and each renewal of each Standby Letter
of Credit shall be subject to the payment by the Account Party
to the Bank of a fee (a "Commission"), which shall be equal to
the Applicable Commission Rate per annum (calculated on the
basis that an entire year's Commission is earned in 360 days)
multiplied by the amount thereof, which Commission shall be
due and payable within ten (10) days following the issuance or
renewal of any Standby Letter of Credit. The Company shall pay
the Bank's standard transaction fees with respect to any
transactions occurring on account of any Letter of Credit.
Transaction fees shall be payable upon completion of the
transaction as to which they are charged. All such
Commissions, Issuance Fees, Negotiation Fees and transaction
fees may be debited by the Bank to any deposit account of the
Company carried with the Bank without further authority.
Section 3. REPRESENTATIONS AND WARRANTIES. To induce the Bank to make
the Loan, the Company represents and warrants to the Bank that:
a. ORGANIZATION OF THE COMPANY. The Company is a corporation
organized, existing and in good standing under the laws of the
State of Indiana. The Company is qualified to do business in
every jurisdiction in which: (i) the nature of the business
conducted or the character or location of properties owned or
leased, or the residences or activities of employees make such
qualification necessary, and (ii) failure so to qualify might
impair the title of the Company to material properties or the
Company's right to enforce material contracts or result in
exposure of the Company to liability for material penalties in
such jurisdiction. No jurisdiction in which the Company is not
qualified to do business has asserted that the Company is
required to be qualified therein. The principal
13
office of the Company is located at 000 Xxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxx 00000-0000. The Company does not conduct
any material operations or keep any material amounts of
property at any other location, except the following: 000
Xxxxxx Xxxxx, Xxxxxx, Xxxxxxx 00000; 000 Xxxx Xxxxx Xxxxxx,
Xxxxx, Xxxxxxxx 00000; 0000 Xxxx 00xx Xxxxxx, Xxxxxxxx Xxxx,
Xxxxxxxxxx 00000; 0000-0000 Xxxx 00xx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000-0000; 0000 Xxxxxx Xxxxxx, Xxxx Xxxxx, 00000,
Xxxxxxx, X.X. Xxxxxx; and Centro Industrial IA Arboledas Xxxxx
Xx. 0, Xx Xxxx, 00000, Xxxxxxx, X.X. Mexico.
b. AUTHORIZATION; NO CONFLICT. The execution and delivery of this
Agreement, the borrowings hereunder, the execution and
delivery of all of the other Loan Documents and the
performance by the Company of its obligations under this
Agreement and all of the other Loan Documents are within the
Company's corporate powers, have been duly authorized by all
necessary corporate action, have received any required
governmental or regulatory agency approvals and do not and
will not contravene or conflict with any provision of law or
of the articles of incorporation or bylaws of the Company or
of any agreement binding upon the Company or its properties.
c. VALIDITY AND BINDING NATURE. This Agreement and all of the
other Loan Documents are the legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms, except to the extent
that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws enacted
for the relief of debtors generally and other similar laws
affecting the enforcement of creditors' rights generally or by
equitable principles which may affect the availability of
specific performance and other equitable remedies.
d. FINANCIAL STATEMENTS. The Company has delivered to the Bank
its audited financial statements as of December 30, 2000, and
for the fiscal year of the Company then ended and its
unaudited interim financial statements as of September 8,
2001, and for the fiscal quarter and partial fiscal year then
ended. Such statements have been prepared in accordance with
generally accepted accounting principles consistently applied
except, as to the interim statements, for the absence of a
statement of cash flows, footnotes and adjustments normally
made at year end which are not material in amount. Such
statements present fairly the financial position of the
Company as of the dates thereof and the results of its
operations for the periods covered and since the date of the
latest of such statements there has been no material adverse
change in the financial position of the Company or in the
results of its operations.
e. LITIGATION AND CONTINGENT LIABILITIES. No litigation,
arbitration proceedings or governmental proceedings are
pending or threatened against the Company which would, if
adversely determined, materially and adversely affect its
financial position or continued operations. The Company has no
material contingent liabilities not provided for or disclosed
in the financial statements referred to in Section 3.d or in
the "Schedule of Exceptions" attached as EXHIBIT "D."
f. LIENS. None of the assets of the Company are subject to any
mortgage, pledge, title retention lien, or other lien,
encumbrance or security interest except for liens and security
interests described in the exceptions enumerated in Section
6.b.
g. EMPLOYEE BENEFIT PLANS. Each Plan maintained by the Company is
in material compliance with ERISA, the Code, and all
applicable rules and regulations adopted by
14
regulatory authorities pursuant thereto, and the Company has
filed all reports and returns required to be filed by ERISA,
the Code and such rules and regulations. No Plan maintained by
the Company and no trust created under any such Plan has
incurred any "accumulated funding deficiency" within the
meaning of Section 412(c)(1) of the Code, and the present
value of all benefits vested under each Plan did not exceed,
as of the last annual valuation date, the value of the assets
of the respective Plans allocable to such vested benefits. The
Company has no knowledge that any "reportable event" as
defined in ERISA has occurred with respect to any Plan.
h. PAYMENT OF TAXES. The Company has filed all federal, state and
local tax returns and tax related reports which the Company is
required to file by any statute or regulation and all taxes
and any tax related interest payments and penalties that are
due and payable have been paid, except for such as are being
contested in good faith and by appropriate proceedings and as
to which appropriate reserves have been established. Adequate
provision has been made for the payment when due of all tax
liabilities which have been incurred, but are not as yet due
and payable.
i. INVESTMENT COMPANY ACT. The Company is not an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
j. REGULATION U. The Company is not engaged principally, or as
one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock
within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System. Not more than twenty-five
percent (25%) of the consolidated assets of the Company or of
any Subsidiary of the Company consists of margin stock, within
the contemplation of Regulation U, as amended.
k. HAZARDOUS SUBSTANCES. Except as disclosed on the "Schedule of
Exceptions" attached as EXHIBIT "D", to the best knowledge of
the Company after due inquiry and investigation; (i) there are
no underground storage tanks of any kind on any premises owned
or occupied by or under lease to the Company; (ii) there are
no tanks, drums or other containers of any kind on premises
owned or occupied by or under lease to the Company, the
contents of which are unknown to the Company; (iii) no
premises owned or occupied by or under lease to the Company
have ever been used, and as of the date of this Agreement, no
such premises are being used for any activities involving the
use, treatment, transportation, generation, storage or
disposal of any Hazardous Substances in reportable quantities,
and (iv) no Hazardous Substances in reportable quantities have
been released on any such premises nor is there any threat of
release of any Hazardous Substances in reportable quantities
on any such premises.
l. SUBSIDIARIES. The only Subsidiaries of the Company as of the
date of this Agreement are Harvard Sports, Inc., a California
corporation, Indian Industries, Inc., an Indiana corporation,
Xxxxxx Yale Industries, Inc., an Indiana corporation, Master
Products Manufacturing, Inc., a Delaware corporation, U.S.
Weight, Inc., an Illinois corporation, Indian Xxxxxx, XX, a
Switzerland corporation, EIM, a Nevada Corporation, and SOP
Services, a Nevada corporation.
15
m. USE OF PROCEEDS. No portion of any advance or loan made
hereunder shall be used directly or indirectly to purchase
ineligible securities, as defined by applicable regulations of
the Federal Reserve Board, underwritten by any affiliate of
Banc One Corporation during the underwriting period and for 30
days thereafter.
Section 4. COLLATERAL FOR THE OBLIGATIONS. The Obligations are and will
continue to be supported by the unconditional unlimited guaranties of prompt
payment of Harvard Sports, Inc., Indian Industries, Inc., Xxxxxx Yale
Industries, Inc., each of which executed a Guaranty Agreement effective as of
May 31, 1996, Master Products Manufacturing, Inc., a California corporation
which executed a Guaranty Agreement effective as of June 17, 1997, and Indian
Xxxxxx, XX. Each such entity shall execute and deliver on the date hereof a
Reaffirmation of Guaranty in the form attached as EXHIBIT "E ". U.S. Weight,
Inc. and any other Subsidiary hereinafter formed or otherwise acquired by the
Company shall also guaranty the Obligations which guaranty shall be evidenced by
a Guaranty Agreement in the form of EXHIBIT "F ".
Section 5. AFFIRMATIVE COVENANTS OF THE COMPANY. Until all Obligations
of the Company terminate or are paid and satisfied in full, and so long as the
Commitment or any Letter of Credit is outstanding, the Company shall strictly
observe the following covenants:
a. CORPORATE EXISTENCE. The Company shall preserve its corporate
existence.
b. REPORTS, CERTIFICATES AND OTHER INFORMATION. The Company shall
furnish to the Bank copies of the following financial
statements, certificates and other information:
(i) ANNUAL STATEMENTS. As soon as available and in any
event within one hundred twenty (120) days after the
close of each fiscal year, consolidated and
consolidating financial statements of the Company and
its Subsidiaries for such fiscal year prepared and
presented in accordance with generally accepted
accounting principles, consistently applied (except
for changes in which the independent accountants of
the Company concur) in each case setting forth in
comparative form corresponding figures for the
preceding fiscal year, together with the audit
report, unqualified as to scope, of independent
certified public accountants approved by the Bank,
which approval shall not be unreasonably withheld.
(ii) INTERIM STATEMENTS. As soon as available and in any
event within forty-five (45) days after the end of
each fiscal quarter, a copy of the consolidated and
consolidating interim financial statements of the
Company and its Subsidiaries, consisting at a minimum
of:
A. the balance sheet as of the end of the
quarter, and
B. a statement of income for the quarter and
for the partial or full fiscal year ended as
of the end of the quarter,
16
all in reasonable detail and accompanied by the
written representation of the chief financial officer
of the Company that such financial statements have
been prepared in accordance with generally accepted
accounting principles (except that they need not
include a statement of cash flows and footnotes and
need not reflect adjustments normally made at year
end, if such adjustments are not material in amount),
consistently applied, (except for changes in which
the independent accountants of the Company concur)
and present fairly the financial position of the
Company and the results of its operation as of the
dates of such statements and for the fiscal periods
then ended. Notwithstanding any other provision of
this item (ii), the Company may, at its discretion,
omit a statement of cash flows from the financial
statements delivered in response hereto for any
interim period for which the Company does not prepare
such a statement.
(iii) CERTIFICATES. Contemporaneously with the furnishing
of each set of financial statements provided for in
Sections 5.b(i) and 5.b(ii), an Officer's
Certificate.
(iv) ORDERS. Prompt notice of any orders in any material
proceedings to which the Company is a party, issued
by any court or regulatory agency, federal or state,
and if the Bank should so request, a copy of any such
order.
(v) NOTICE OF DEFAULT OR LITIGATION. Immediately upon
learning of the occurrence of an Event of Default or
Unmatured Event of Default, or the institution of or
any adverse determination in any litigation,
arbitration proceeding or governmental proceeding
which is material to the Company, or the occurrence
of any event which could have a material adverse
effect upon the Company, written notice thereof
describing the same and the steps being taken with
respect thereto.
(vi) COMPLIANCE CERTIFICATES. Within forty-five (45) days
following each fiscal quarter end, a certificate of
the Chief Financial Officer or other appropriate
officer of the Company demonstrating compliance with
the financial covenants stated in Section 5.g and
compliance with the covenant limiting capital
expenditures of the Company stated in Section 6.k.
Such certificate shall relate the covenants to the
quarter-end figures and shall otherwise be in such
form and provide such detail as may be reasonably
satisfactory to the Bank.
(vii) REGISTRATION STATEMENTS AND REPORTS. Promptly upon
filing with the Securities and Exchange Commission or
any state securities regulatory authority, copies of
all registration statements and all periodic and
special reports required or permitted to be filed
under federal or state securities laws and
regulations.
(viii) OTHER INFORMATION. From time to time such other
information concerning the Company as the Bank may
reasonably request.
c. BOOKS, RECORDS AND INSPECTIONS. The Company shall maintain
complete and accurate books and records, and permit access
thereto by the Bank for purposes of inspection, copying and
audit, and the Company shall permit the Bank to inspect its
properties and operations at all reasonable times.
17
d. INSURANCE. The Company shall maintain such insurance as may be
required by law and such other insurance, to such extent and
against such hazards and liabilities, as is customarily
maintained by companies similarly situated. The Company agrees
to name the Bank as additional loss payee on any such
insurance policy under a standard lender's loss payable clause
and to provide a copy of any such policy to the Bank.
e. TAXES AND LIABILITIES. The Company shall pay when due all
taxes, license fees, assessments and other liabilities except
such as are being contested in good faith and by appropriate
proceedings and for which appropriate reserves have been
established.
f. COMPLIANCE WITH LEGAL AND REGULATORY REQUIREMENTS. The Company
shall maintain material compliance with the applicable
provisions of all federal, state and local statutes,
ordinances and regulations and any court orders or orders of
regulatory authorities issued thereunder.
g. FINANCIAL COVENANTS. The Company shall observe, on a
consolidated basis, each of the following financial covenants:
(i) LEVERAGE RATIO. For each period of four consecutive
fiscal quarters of the Company ending during the
periods indicated in the table below, the Company
shall maintain a Leverage Ratio, at levels not
greater than 2.50 to 1.0.
(ii) NET WORTH. The Company shall maintain its Net Worth,
determined on a consolidated basis, of not less than
an amount equal to Twenty Six Million One Hundred
Sixty Two Thousand and No/100 Dollars
($26,162,000.00). At December 29, 2001 and at the
last day of each fiscal quarter end thereafter, the
Net Worth to be maintained by the Company on that
date and at all times thereafter until the last day
of the next quarter shall be increased by an amount
equal to seventy-five percent (75%) of the Company's
consolidated net profit for the fiscal quarter then
ended.
(iii) DEBT SERVICE COVERAGE. For each period of four
consecutive fiscal quarters ending during the periods
indicated in the table below, the Company shall
maintain a debt service coverage ratio (hereinafter
defined), determined on a consolidated basis, of not
less than that indicated in the table below.
Period Ratio
-----------------------------------------
from the date of this Agreement and
until December 30, 2001 1.10 to 1.0
at December 31 , 2001 and at all
times thereafter 1.20 to 1.0
18
For purposes of this covenant, the phrase "debt
service coverage ratio" means the ratio of (A) the
sum of consolidated net income before taxes plus
interest expense plus depreciation and amortization
expense plus non-recurring and extraordinary charges,
all for the period for which the ratio is being
determined, over (B) the sum of scheduled debt
payments plus interest expense plus cash income taxes
plus capital expenditures which were not financed
plus stock repurchased and cash dividends made, all
for the period for which such ratio is being
determined.
h. PRIMARY BANKING RELATIONSHIP. The Company shall maintain its
primary concentration and deposit accounts with the Bank.
i. EMPLOYEE BENEFIT PLANS. The Company shall maintain and shall
cause any Subsidiary to maintain any Plan in material
compliance with ERISA, the Code, and all rules and regulations
of regulatory authorities pursuant thereto and shall file and
shall cause any Subsidiary to file all reports required to be
filed pursuant to ERISA, the Code, and such rules and
regulations.
j. HAZARDOUS SUBSTANCES. If the Company or any Subsidiary should
commence the use, treatment, transportation, generation,
storage or disposal of any Hazardous Substance in reportable
quantities in its operations in addition to those noted in
EXHIBIT "D ", the Company shall immediately notify the Bank of
the commencement of such activity with respect to each such
Hazardous Substance. The Company shall cause any Hazardous
Substances which are now or may hereafter be used or generated
in the operations of the Company or any Subsidiary in
reportable quantities to be accounted for and disposed of in
compliance with all applicable federal, state and local laws
and regulations. The Company shall notify the Bank immediately
upon obtaining knowledge that:
(i) any premises which have at any time been owned or
occupied by or have been under lease to the Company
or any Subsidiary are the subject of an environmental
investigation by any federal, state or local
governmental agency having jurisdiction over the
regulation of any Hazardous Substances, the purpose
of which investigation is to quantify the levels of
Hazardous Substances located on such premises, or
the Company or any Subsidiary has been named or is
threatened to be named as a party responsible for the
possible contamination of any real property or ground
water with Hazardous Substances, including, but not
limited to the contamination of past and present
waste disposal sites.
If the Company or any Subsidiary is notified of any event
described at items (i) or (ii) above, the Company shall
immediately engage or cause the Subsidiary to engage a firm or
firms of engineers or environmental consultants appropriately
qualified to determine as quickly as practical the extent of
contamination and the potential financial liability of the
Company or the Subsidiary with respect thereto, and the Bank
shall be provided with a copy of any report prepared by such
firm or by any governmental agency as to such matters as soon
as any such report becomes available to the Company, and
Company
19
shall immediately establish reserves in the amount of the
potential financial liability of the Company or the Subsidiary
identified by such environmental consultants or engineers. The
selection of any engineers or environmental consultants
engaged pursuant to the requirements of this Section shall be
subject to the approval of the Bank, which approval shall not
be unreasonably withheld.
k. LETTER OF CREDIT AGREEMENT OBLIGATIONS. The Company shall
perform in a timely manner all of its obligations under the
terms of the Credit Agreement (the "Letter of Credit
Agreement") among the Company's Subsidiary, Xxxxxx Yale
Industries, Inc., an Indiana corporation, the Company and the
Bank, dated September 30, 1998, as amended, pursuant to which
the Bank has issued its Letter of Credit No. ST-110831 for the
account of Xxxxxx Yale Industries, Inc.; provided, however,
that so long as no Event of Default or Unmatured Event of
Default has occurred and is now continuing under the terms of
this Agreement as it may be amended from time to time, or so
long as the Bank in its sole discretion has expressly waived
in writing any existing Event of Default or Unmatured Event of
Default under this Agreement or has entered into a forbearance
agreement with respect thereto, then the Company shall be
considered for purposes of this Agreement and the Letter of
Credit Agreement to be in compliance with Sections 5.b, 5.h
and 6.j of the Letter of Credit Agreement.
Section 6. NEGATIVE COVENANTS OF THE COMPANY. Until all Obligations of
the Company terminate or are paid and satisfied in full, and so long as the
Commitment or any Letter of Credit is outstanding, the Company shall strictly
observe the following covenants:
a. RESTRICTED PAYMENTS. If an Event of Default has occurred and
is continuing or would occur as a result of any of the
following, the Company shall not purchase or redeem any shares
of the capital stock of the Company or declare or pay any
dividends thereon except for dividends payable entirely in
capital stock; and the Company shall not make any other
distributions to shareholders as shareholders, or set aside
any funds for any such purpose, or prepay, purchase or redeem
any subordinated indebtedness of the Company.
b. LIENS. The Company shall not create or permit to exist any
mortgage, pledge, title retention lien or other lien,
encumbrance or security interest (all of which are hereafter
referred to in this subsection as a "lien" or "liens") with
respect to any property or assets now owned or hereafter
acquired except:
- liens in favor of the Bank created pursuant to the
requirements of this Agreement or otherwise;
(ii) any lien or deposit with any governmental agency
required or permitted to qualify the Company to
conduct business or exercise any privilege, franchise
or license, or to maintain self-insurance or to
obtain the benefits of or secure obligations under
any law pertaining to worker's compensation,
unemployment insurance, old age pensions, social
security or similar matters, or to obtain any stay or
discharge in any legal or administrative proceedings,
or any similar lien or deposit arising in the
ordinary course of business;
(iii) any mechanic's, worker's, repairmen's, carrier's,
warehousemen's or other like liens arising in the
ordinary course of business for amounts not yet due
and for
20
the payment of which adequate reserves have been
established, or deposits made to obtain the release
of such liens;
(iv) easements, licenses, minor irregularities in title or
minor encumbrances on or over any real property which
do not, in the judgment of the Bank, materially
detract from the value of such property or its
marketability or its usefulness in the business of
the Company;
(v) liens for taxes and governmental charges which are
not yet due or which are being contested in good
faith and by appropriate proceedings and for which
appropriate reserves have been established;
(vi) liens created by or resulting from any litigation or
legal proceeding which is being contested in good
faith and by appropriate proceedings and for which
appropriate reserves have been established;
(vii) purchase money security interests in the property
acquired with the proceeds of such purchase money
indebtedness, provided that the aggregate principal
amount of all purchase money indebtedness secured by
all of such purchase money security interests shall
not at any time exceed the sum of $250,000.00; and
(vii) those specific liens now existing described on the
"Schedule of Exceptions" attached as EXHIBIT "D"
c. GUARANTIES. The Company shall not be a guarantor or surety of,
or otherwise be responsible in any manner with respect to any
undertaking of any other person or entity, whether by guaranty
agreement or by agreement to purchase any obligations, stock,
assets, goods or services, or to supply or advance any funds,
assets, goods or services, or otherwise, except for:
(i) guaranties in favor of the Bank;
(ii) guaranties by endorsement of instruments for deposit
made in the ordinary course of business; and
(iii) those specific existing guaranties listed in the
"Schedule of Exceptions" attached as EXHIBIT "D."
d. LOANS OR ADVANCES. The Company shall not make or permit to
exist any loans or advances to any other person or entity,
except for:
- extensions of credit or credit accommodations to
customers or vendors made by the Company in the
ordinary course of its business as now conducted;
(ii) reasonable salary advances to non-executive
employees, and other advances to agents and employees
for anticipated expenses to be incurred on behalf of
the Company in the course of discharging their
assigned duties; and
21
(iii) the specific items listed in the "Schedule of
Exceptions" attached as EXHIBIT "D."
e. MERGERS, CONSOLIDATIONS, SALES, ACQUISITION OR FORMATION OF
SUBSIDIARIES. The Company shall not be a party to any
consolidation or to any merger and shall not purchase the
capital stock of or otherwise acquire any equity interest in
any other business entity, unless at the time of such
consolidation, merger or acquisition no Event of Default or
Unmatured Event of Default has occurred or is continuing or
would occur as a result of such consolidation, merger or
acquisition, and provided that the Company is the surviving
entity in the case of any consolidation or merger. The Company
shall not sell, transfer, convey or lease all or any material
part of its assets, except in the ordinary course of business,
or sell or assign with or without recourse any receivables.
The Company shall not cause to be created or otherwise acquire
any Subsidiary, unless such Subsidiary, contemporaneously with
its becoming a Subsidiary, executes and delivers to Bank a
Guaranty Agreement with respect to the Obligations in the form
of EXHIBIT "F".
f. MARGIN STOCK. The Company shall not use or cause or permit the
proceeds of the Loan to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock within
the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended from time to time.
g. OTHER AGREEMENTS. The Company shall not enter into any
agreement containing any provision which would be violated or
breached in material respect by the performance of its
obligations under this Agreement or under any other Loan
Document.
h. JUDGMENTS. The Company shall not permit any uninsured judgment
or monetary penalty rendered against it in any judicial or
administrative proceeding to remain unsatisfied for a period
in excess of forty-five (45) days unless such judgment or
penalty is being contested in good faith by appropriate
proceedings and execution upon such judgment has been stayed,
and unless an appropriate reserve has been established with
respect thereto.
i. PRINCIPAL OFFICE. The Company shall not change the location of
its principal office unless it gives not less than ten (10)
days prior written notice of such change to the Bank.
j. HAZARDOUS SUBSTANCES. The Company shall not allow or permit to
continue the release or threatened release of any Hazardous
Substance on any premises owned or occupied by or under lease
to the Company or any Subsidiary.
k. DEBT. The Company shall not incur nor permit to exist any
indebtedness for borrowed money except to the Bank and except
for those existing obligations disclosed on the "Schedule of
Exceptions" attached as EXHIBIT "D " For purposes of this
covenant, the phrase "indebtedness for borrowed money," shall
be construed to include capital lease obligations.
22
Section 7. CONDITIONS OF LENDING. The obligation of the Bank to make
any Advance shall be subject to fulfillment of each of the following conditions
precedent:
a. NO DEFAULT. No Event of Default or Unmatured Event of Default
shall have occurred and be continuing, and the representations
and warranties of the Company contained in Section 3 shall be
true and correct as of the date of this Agreement and as of
the date of each Advance, except that after the date of this
Agreement: (i) the representations contained in Section 3.d
will be construed so as to refer to the latest financial
statements furnished to the Bank by the Company pursuant to
the requirements of this Agreement, (ii) the representations
contained in Section 3.k (with respect to Hazardous
Substances) will be construed so as to apply not only to the
Company, but also to any Subsidiaries, (iii) the
representation contained in Section 3.l will be construed so
as to except any Subsidiary which may hereafter be formed or
acquired by the Company with the consent of the Bank, and (iv)
all other representations will be construed to have been
amended to conform with any changes of which the Bank shall
previously have been given notice in writing by the Company.
b. DOCUMENTS TO BE FURNISHED AT CLOSING. The Bank shall have
received contemporaneously with the execution of this
Agreement, the following, each duly executed, currently dated
and in form and substance satisfactory to the Bank:
(i) The Revolving Note.
(ii) The Reaffirmations of Guaranty.
(iii) The Guaranty Agreement.
(iv) A certified copy of a Resolution of the Board of
Directors of the Company authorizing the execution,
delivery and performance, respectively, of this
Agreement and the other Loan Documents provided for
in this Agreement to which the Company is a party.
(v) A certificate of the Secretary of the Company
certifying the names of the officer or officers
authorized to sign this Agreement and the other Loan
Documents provided for in this Agreement to which the
Company is a party, together with a sample of the
true signature of each such officer.
(vi) A certified copy of a Resolution of the board of
directors of U.S. Weight, Inc. authorizing the
execution, delivery and performance of the Guaranty
Agreement.
(vii) Currently dated certificates of existence of the
Company and U.S. Weight, Inc. issued by the Secretary
of State of the jurisdiction of each entities'
organization.
(viii) Certificates evidencing the existence of all
insurance required under the terms of this Agreement
or any other Loan Documents.
23
(ix) The documentation reimbursement fee required under
the terms of Section 2.d(vii).
(x) Such other documents as the Bank may reasonably
require.
c. DOCUMENTS TO BE FURNISHED AT TIME OF EACH ADVANCE. The Bank
shall have received the following prior to making any Advance,
each duly executed and currently dated, unless waived at the
Bank's discretion as provided in Section 2.a(ii):
(i) An Application for the Advance.
(ii) An Officer's Certificate.
(iii) Such other documents as the Bank may reasonably
require.
Section 8. EVENTS OF DEFAULT. Each of the following shall constitute an
Event of Default under this Agreement:
a. NONPAYMENT OF THE LOAN. Default in the payment when due of any
amount payable under the terms of the Note, or otherwise
payable to the Bank or any other holder of the Note under the
terms of this Agreement.
- NONPAYMENT OR NONPERFORMANCE OF OTHER OBLIGATIONS. Subject to
the expiration of any applicable grace period, default by the
Company in the payment or performance of any other
obligations.
- LETTER OF CREDIT AGREEMENT DEFAULT. The occurrence and
continuance of an "Event of Default" as defined in the Letter
of Credit Agreement.
d. NONPAYMENT OF OTHER INDEBTEDNESS FOR BORROWED MONEY. Default
by the Company or any Subsidiary in the payment when due,
whether by acceleration or otherwise, of any other material
indebtedness for borrowed money, or default in the performance
or observance of any obligation or condition with respect to
any such other indebtedness if the effect of such default is
to accelerate the maturity of such other indebtedness or to
permit the holder or holders thereof, or any trustee or agent
for such holders, to cause such indebtedness to become due and
payable prior to its scheduled maturity, unless the Company or
any Subsidiary is contesting the existence of such default in
good faith and by appropriate proceedings and that appropriate
reserves have been established with respect thereto.
e. OTHER MATERIAL OBLIGATIONS. Subject to the expiration of any
applicable grace period, default by the Company or any
Subsidiary in the payment when due, or in the performance or
observance of any material obligation of, or condition agreed
to by the Company or any Subsidiary with respect to any
material purchase or lease of goods, securities or services
except only to the extent that the existence of any such
default is being contested in good faith and by appropriate
proceedings and that appropriate reserves have been
established with respect thereto.
24
f. BANKRUPTCY, INSOLVENCY, ETC. The Company or any Subsidiary
admitting in writing its inability to pay its debts as they
mature or an administrative or judicial order of dissolution
or determination of insolvency being entered against the
Company or any Subsidiary; or the Company or any Subsidiary
applying for, consenting to, or acquiescing in the appointment
of a trustee or receiver for the Company or any Subsidiary or
any property thereof, or the Company or any Subsidiary making
a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a
trustee or receiver being appointed for the Company or any
Subsidiary or for a substantial part of its property and not
being discharged within sixty (60) days; or any bankruptcy,
reorganization, debt arrangement, or other proceeding under
any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding being instituted by or against the
Company or any Subsidiary, and, if involuntary, being
consented to or acquiesced in by the Company or any Subsidiary
or remaining for sixty (60) days undismissed.
g. WARRANTIES AND REPRESENTATIONS. Any warranty or representation
made by the Company in this Agreement proving to have been
false or misleading in any material respect when made, or any
schedule, certificate, financial statement, report, notice, or
other writing furnished by the Company to the Bank proving to
have been false or misleading in any material respect when
made or delivered.
h. VIOLATIONS OF NEGATIVE AND FINANCIAL COVENANTS. Failure by the
Company to comply with or perform any covenant stated in
Section 5.g or Section 6 of this Agreement.
i. NONCOMPLIANCE WITH OTHER PROVISIONS OF THIS AGREEMENT. Failure
of the Company to comply with or perform any covenant or other
provision of this Agreement or to perform any other Obligation
(which failure does not constitute an Event of Default under
any of the preceding provisions of this Section 8) and
continuance of such failure for thirty (30) days after notice
thereof to the Company from the Bank.
Section 9. EFFECT OF EVENT OF DEFAULT. If any Event of Default
described in Section 8.f shall occur, maturity of the Loan shall immediately be
accelerated and the Note and the Loan evidenced thereby, and all other
indebtedness and any other payment Obligations of the Company to the Bank shall
become immediately due and payable, and the Commitment shall immediately
terminate, all without notice of any kind. When any other Event of Default has
occurred and is continuing, the Bank or any other holder of the Note may
accelerate payment of the Loan and declare the Note and all other payment
Obligations due and payable, whereupon maturity of the Loan shall be accelerated
and the Note and the Loan evidenced thereby, and all other payment Obligations
shall become immediately due and payable and the Commitment shall immediately
terminate, all without notice of any kind. The Bank or such other holder shall
promptly advise the Company of any such declaration, but failure to do so shall
not impair the effect of such declaration. The remedies of the Bank specified in
this Agreement or in any other Loan Document shall not be exclusive, and the
Bank may avail itself of any other remedies provided by law as well as any
equitable remedies available to the Bank.
Section 10. WAIVER -- AMENDMENTS. No delay on the part of the Bank, or
any holder of the Note in the exercise of any right, power or remedy shall
operate as a waiver thereof, nor shall any
25
single or partial exercise by any of them of any right, power or remedy preclude
any other or further exercise thereof, or the exercise of any other right, power
or remedy. No amendment, modification or waiver of, or consent with respect to
any of the provisions of this Agreement or the other Loan Documents or otherwise
of the Obligations shall be effective unless such amendment, modification,
waiver or consent is in writing and signed by the Bank.
Section 11. NOTICES. Any notice given under or with respect to this
Agreement to the Company or the Bank shall be in writing and, if delivered by
hand or sent by overnight courier service, shall be deemed to have been given
when delivered and, if mailed, shall be deemed to have been given five (5) days
after the date when sent by registered or certified mail, postage prepaid, and
addressed to the Company or the Bank (or other holder of the Note) at its
address shown below, or at such other address as any such party may, by written
notice to the other party to this Agreement, have designated as its address for
such purpose. The addresses referred to are as follows:
As to the Company: Escalade, Incorporated
000 Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxx 00000-0000
As to the Bank: Bank One, Indiana, XX
Xxxx Xxx Xxxxxx/Xxxxx - 0xx Xxxxx
000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Manager, Specialty Industries
Section 12. COSTS, EXPENSES AND TAXES. The Company shall pay or
reimburse the Bank on demand for all reasonable out-of-pocket costs and expenses
of the Bank (including reasonable attorneys' fees and legal expenses) incurred
by it in connection with the enforcement, or restructuring in the nature of a
workout, of this Agreement or any other Loan Document. The Company shall also
reimburse the Bank for expenses incurred by the Bank in connection with any
audit of the books and records or physical assets of the Company conducted
pursuant to any right granted to the Bank under the terms of this Agreement or
any other Loan Document. Such reimbursement shall include, without limitation,
reimbursement of the Bank for its overhead expenses reasonably allocated to such
audits. In addition, the Company shall pay or reimburse the Bank for all
expenses incurred by the Bank in connection with the perfection of any security
interests or mortgage liens granted to the Bank by the Company and for any stamp
or similar documentary or transaction taxes which may be payable in connection
with the execution or delivery of this Agreement or any other Loan Document or
in connection with any other instruments or documents provided for herein or
delivered or required in connection herewith including, without limitation,
expenses incident to any lien or title search or title insurance commitment or
policy. All obligations provided for in this Section shall survive termination
of this Agreement.
Section 13. SEVERABILITY. If any provision of this Agreement or any
other Loan Document is determined to be illegal or unenforceable, such provision
shall be deemed to be severable from the balance of the provisions of this
Agreement or such Document and the remaining provisions shall be enforceable in
accordance with their terms.
26
Section 14. CAPTIONS. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
Section 15. GOVERNING LAW -- JURISDICTION. Except as may otherwise be
expressly provided in any other Loan Document, this Agreement and all other Loan
Documents are made under and will be governed in all cases by the substantive
laws of the State of Indiana, notwithstanding the fact that Indiana conflicts of
law rules might otherwise require the substantive rules of law of another
jurisdiction to apply. The Company consents to the jurisdiction of any state or
federal court located within Xxxxxx County, Indiana, and waives personal service
of any and all process upon the Company. All service of process may be made by
messenger, by certified mail, return receipt requested, or by registered mail
directed to the Company at the address stated in Section 11. The Company waives
any objection which the Company may have to any proceeding commenced in a
federal or state court located within Xxxxxx County, Indiana, based upon
improper venue or FORUM NON CONVENIENS. Nothing contained in this Section shall
affect the right of the Bank to serve legal process in any other manner
permitted by law or to bring any action or proceeding against the Company or its
property in the courts of any other jurisdiction.
Section 16. PRIOR AGREEMENTS, ETC. This Agreement supersedes all
previous agreements and commitments made by the Bank and the Company with
respect to the Loan and all other subjects of this Agreement, including, without
limitation, any oral or written proposals or commitments made or issued by the
Bank.
Section 17. SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents shall be binding upon and shall inure to the benefit of the Company
and the Bank and their respective successors and assigns, provided that the
Company's rights under this Agreement shall not be assignable without the prior
written consent of the Bank.
Section 18. JURY WAIVER. COMPANY AND BANK HEREBY VOLUNTARILY,
KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO THIS
DOCUMENT, ANY OTHER LOAN DOCUMENT OR ANY RELATIONSHIP BETWEEN BANK AND COMPANY.
THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO PROVIDE THE FINANCING
DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS.
IN WITNESS WHEREOF, the parties by their respective duly authorized
officers have executed this Amended and Restated Credit Agreement this 24TH day
of October, 2001.
ESCALADE, INCORPORATED
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Xxxx X. Xxxxxx, Vice President and
Chief Financial Officer
27
BANK ONE, INDIANA, NA
By: /s/ Xxxxxx X. XxXxxxxx
---------------------------------------------
Xxxxxx X. XxXxxxxx, First Vice President
28
Exhibit D
SCHEDULE OF EXCEPTIONS
This Schedule is a part of the Amended and Restated Credit Agreement
between ESCALADE, INCORPORATED, an Indiana corporation (the "Company"), and BANK
ONE, INDIANA, NA (the "Bank") dated as of the date of this Schedule.
1. LITIGATION AND CONTINGENT LIABILITIES. There are no exceptions
to the representations contained in Section 3.e with respect
to litigation and contingent liabilities. [except the
following: NONE
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
]
-----------------
2. HAZARDOUS SUBSTANCES. There are no exceptions to the
representation contained in Section 3.k. [except the
FOLLOWING:NONE
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
]
-----------------
3. LIENS. There are no "liens" (as defined in Section 6.b) on any
property of the Company except for liens of the types
described in items (i) through (vi) of the enumeration
contained in Section 6.b. [and except for the following: NONE
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
]
-----------------
4. GUARANTIES. The Company is not a guarantor or surety of, or
otherwise responsible in any manner with respect to any
undertaking of any other person or entity, except for the
items of the type described in items (i) and (ii) of the
enumeration contained in Section 6.c. [and except for the
following: NONE
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
]
-----------------
5. LOANS AND ADVANCES. The Company does not have outstanding any
loans or advances to any person or entity except for items of
a type described in items (i) and (ii) of the enumeration
contained in Section 6.d. [and except for the following: NONE
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
]
-----------------
6. INDEBTEDNESS AND CAPITAL LEASES. The Company presently has no
indebtedness for borrowed money nor is the Company a lessee
under any capital lease except for such obligations to
29
the Bank and except for Deferred Acquisition Purchase Price of
approximately $2,275,000.00 due to Xxxxx X. Xxxxxxxx and
Xxxxxxx X. Xxxxxxxx sellers of U.S. Weight LLC with
approximately $1,400,000.00 due on March 31, 2002 and
$875,000.00 due on September 10, 2002. Deferred Acquisition
Purchase Price of $833,335.00 due to Accudart in 5 annual
installments of $166,667 starting on April 1, 2002.
By its execution of this Schedule, the Company acknowledges that it was
prepared in accordance with information provided by the Company.
Dated: OCTOBER 24, 2001
------------------------------
ESCALADE, INCORPORATED
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx, Vice President and CFO
--------------------------------------
(printed name and title)
IM-359856-4
