UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-13970
CHROMCRAFT REVINGTON, INC.
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(Exact name of registrant as specified in its charter)
Delaware 35-1848094
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1100 North Washington Street, Delphi, IN 46923
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(Address, including zip code, of registrant's principal executive offices)
(765) 564-3500
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each
Title of each class exchange on which registered
---------------------------- ----------------------------
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of February 15, 2001, there were 9,573,248 shares of the registrant's
common stock ($.01 par value) outstanding. The aggregate market value of the
voting stock held by nonaffiliates of the registrant as of February 15, 2001
was $38.6 million.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the annual shareholders meeting to be held
May 1, 2001 are incorporated by reference into Part III.
INDEX
Page Number
PART I -----------
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote of Security Holders . . . 6
Executive Officers of the Registrant . . . . . . . . . . . . . . . 6
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . 6
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . 7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 8
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk . . . . . . . . . . . . . . . . . . . . . . . 11
Item 8. Financial Statements and Supplementary Data . . . . . . . 11
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . 11
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . 11
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . 11
Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 13. Certain Relationships and Related Transactions . . . . . . 11
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
PART I
Item 1. Business
-----------------
General
Chromcraft Revington, Inc. ("Chromcraft Revington"), incorporated in 1992
under the laws of Delaware, is engaged in the design, manufacture and sale of
residential and commercial furniture through its wholly-owned subsidiaries,
Chromcraft Corporation ("Chromcraft"), Peters-Revington Corporation ("Peters-
Revington"), Silver Furniture Co., Inc. ("Silver Furniture"), Cochrane
Furniture Company, Inc. ("Cochrane Furniture") and Korn Industries,
Incorporated ("Korn Industries"). Chromcraft Revington is headquartered in
Delphi, Indiana.
In 1992, Chromcraft Revington acquired all of the outstanding common stock of
Chromcraft and Peters-Revington from Consolidated Furniture Corporation
(formerly Mohasco Corporation) pursuant to merger agreements. Concurrently,
Chromcraft Revington completed its initial public offering and restructured
its long-term debt. Chromcraft Revington had no operations prior to 1992.
Chromcraft, located in Senatobia, Mississippi, manufactures casual dining and
commercial furniture. Peters-Revington, located in Delphi, Indiana,
manufactures occasional furniture. Chromcraft and Peters-Revington were both
founded in 1946.
On April 3, 1995, Chromcraft Revington acquired Silver Furniture, a
manufacturer and importer of occasional furniture. Silver Furniture has
manufacturing and warehousing operations in Knoxville, Tennessee. On November
8, 1996, Chromcraft Revington acquired Cochrane Furniture, a manufacturer of
dining room, bedroom and upholstered furniture. Cochrane Furniture has
manufacturing facilities in Lincolnton and Warrenton, North Carolina. On
September 2, 1999, Chromcraft Revington acquired Korn Industries, based in
Sumter, South Carolina. Korn Industries manufactures and sells bedroom and
dining room furniture through its Sumter Cabinet Company ("Sumter Cabinet")
division.
On December 22, 2000, Chromcraft Revington received a proposal from Court
Square Capital Limited ("Court Square Capital"), a unit of Citigroup, under
which the holders of Chromcraft Revington's publicly traded shares would
receive cash of $10.30 per share in a transaction to take Chromcraft Revington
private. The offer is contingent upon the execution of a definitive merger
agreement, confirmatory due diligence and the approval of Chromcraft
Revington's board of directors and stockholders. Court Square Capital owns
5,695,418 shares, or 59.5%, of Chromcraft Revington's common stock at December
31, 2000. An independent committee of Chromcraft Revington's board of
directors is evaluating the proposal and has engaged ING Barings, LLC as its
financial advisor to assist the committee in regard to the proposal.
Chromcraft Revington and its subsidiaries have several operating segments
which are aggregated into one reportable segment, in accordance with Financial
Accounting Standards Board Statement No. 131, "Disclosures about Segments of an
Enterprise and Related Information." No material amount of Chromcraft
Revington's sales is dependent upon a single customer. Sales outside of the
United States represent approximately 1% of total sales.
Products and Distribution
Occasional Furniture
Medium-priced occasional furniture, including tables, bookcases, entertainment
centers, library and modular wall units, curio cabinets and home office
furniture in traditional, contemporary and country styles, are manufactured
and sold under the Peters-Revington brand name. Occasional furniture is
manufactured primarily from American hardwoods, such as oak, cherry and maple.
Many Peters-Revington table collections include twelve or more pieces in
matching styles. In addition, different pieces of occasional furniture
2
incorporate the same design and styling themes, thereby enabling consumers to
coordinate furniture for the same room. Peters-Revington's furniture is sold
in the United States and Canada through independent sales representatives
primarily to independent furniture retailers.
Entry level-to-medium priced occasional tables and entertainment centers are
designed, manufactured, imported and sold under the Silver Furniture brand
name. These products are generally designed with a contemporary appeal,
utilizing special finishes and unique styling. Silver Furniture tables are
constructed using a variety of materials, including wood, medium-density
fiber board, glass and metal. Internally designed imported occasional tables
and parts are sourced mainly from factories located in the Far East and Mexico.
Silver Furniture occasional furniture is sold primarily in the United States
and Canada through company sales personnel to national and regional furniture
retailers and through independent sales representatives to independent
furniture retailers.
Bedroom Furniture
Solid wood bedroom furniture, primarily in oak, cherry, ash or maple, is
manufactured and sold at medium price points under the Cochrane Furniture
brand name and at mid-to-higher price points under the Sumter Cabinet brand
name. Bedroom furniture includes beds, dressers, night stands, entertainment
armoires and mirrors primarily in traditional styling. Cochrane Furniture and
Sumter Cabinet bedroom furniture is sold through independent sales
representatives to regional and independent furniture retail stores.
In 1999, Silver Furniture began selling bedroom furniture imported from the
Far East. Silver Furniture's bedroom furniture is designed internally, mainly
in traditional styling, and is sold primarily at medium price points through
company sales personnel to national, regional and independent furniture
retailers.
Dining Room Furniture
Casual dining furniture is manufactured and sold under the Chromcraft brand
name. Casual dining furniture is designed for use in dining rooms, family
rooms, recreation rooms, kitchens and apartments without formal dining areas.
The product line consists primarily of coordinated dining suites in a
contemporary or traditional style that include tables with laminated, wood or
glass table tops, stationary and tilt-swivel chairs, pedestal chairs and
barstools. Chairs are upholstered in a variety of fabrics and vinyls, while
tables are manufactured from metal, wood, glass, faux marble and other
materials, and come in a variety of shapes. Chromcraft competes at the
medium-to-higher price points in casual dining. Chromcraft's casual dining
furniture is sold in the United States through company sales personnel and
independent sales representatives to national, regional, independent and
specialty dining retail furniture stores.
Dining room furniture, primarily in oak, cherry, ash or maple, is manufactured
and sold at medium price points under the Cochrane Furniture brand name and at
mid-to-higher price points under the Sumter Cabinet brand name. Dining room
furniture includes a broad line of tables, armed and side chairs, buffets,
chinas and serving pieces, mainly in traditional or country styling. Cochrane
Furniture dining room tables are offered in solid wood or a high pressure
laminate table top. Sumter Cabinet dining room tables feature solid wood
tops, leaves, and legs. Dining room furniture is sold primarily in the United
States through independent sales representatives to regional and independent
furniture retail stores.
Upholstered Furniture
Upholstered sofas, chairs and ottomans are manufactured and sold under the
Cochrane Furniture brand name. Upholstered furniture is styled in traditional
or contemporary patterns in a wide selection of fabrics using a heat tempered
coil seat construction to evenly distribute body weight. Cochrane Furniture
uses primarily hardwoods in the construction of its furniture frames. Seat
cushions are made with high-density, high-resilience polyurethane foam, wrapped
in polyester fiber for consistent comfort. Cochrane Furniture's upholstered
furniture is sold primarily at medium price points. Upholstered furniture is
sold through independent sales representatives primarily to independent
furniture retail stores.
3
Commercial Furniture
Commercial furniture, sold under the Chromcraft brand name, includes stationary
and tilt-swivel office chairs, conference and meeting room tables and lounge-
area seating products for airports and other public waiting areas. Chairs are
offered in both contemporary and transitional styles and are upholstered in
various grades and colors of fabric or leather. They include executive models
with high backs, management models, ergonomic computer task chairs and
secretarial models with no arm rests. Products are sold through company sales
personnel and independent sales representatives to office product dealers,
wholesalers/distributors and various contract customers.
Manufacturing
Manufacturing operations include cutting, shaping, sanding, finishing and
final assembly of wood furniture, metal fabricating, plating, powder-coat
painting, chair foam production for casual dining furniture and cutting and
sewing of upholstery fabric. Cochrane Furniture and Sumter Cabinet also have
rough mill operations and woodworking plants which process green lumber into
parts for internal use.
Raw Materials
Major raw materials are wood, steel, fabrics, glass, medium-density fiber
board, wood finishing materials, cartons, foam for cushions and paddings and
mechanisms. Suppliers are selected for their ability to deliver high quality
products on a timely basis and at competitive prices. Chromcraft Revington
believes that supplies of raw materials are available in sufficient quantities
from an adequate number of suppliers. No significant shortages of raw
materials were experienced during 2000.
Inventory and Seasonal Requirements
Chromcraft Revington maintains a finished goods inventory for occasional,
dining room and bedroom furniture in order to respond quickly to customer
delivery needs. Most casual dining, upholstered and commercial furniture is
made to customer specifications and, therefore, not carried in stock. A
limited number of casual dining, upholstered and commercial furniture items
are maintained for quick delivery programs. Sales have historically not been
subject to material seasonal fluctuations.
Competition
Chromcraft Revington encounters domestic and import competition in the sale of
all its products. Many of Chromcraft Revington's competitors, some of which
are larger and have greater financial resources, produce a number of products
which are not competitive with Chromcraft Revington's products. In many cases,
such companies do not disclose the portion of their sales attributable to
products similar to those manufactured by Chromcraft Revington. It is,
therefore, impractical to state with any certainty Chromcraft Revington's
relative position in a particular product line. Competition in Chromcraft
Revington's products is in the form of the quality of its products, service and
selling prices.
Backlog
Chromcraft Revington's backlog of sales orders was approximately $22.1 million
at December 31, 2000, as compared to approximately $27.0 million at December
31, 1999. Order backlog at any particular time is not necessarily indicative
of the level of future shipments.
4
Environment
Chromcraft Revington believes it is in compliance in all material respects
with all federal, state and local environmental laws and regulations which
impose limitations on the discharge of pollutants into the air and water, and
establish standards for the treatment of hazardous wastes.
Employees
Chromcraft Revington employs a total of approximately 2,400 people.
Production employees at Silver Furniture's Knoxville, Tennessee
location are represented by a labor union under a collective
bargaining agreement. Chromcraft Revington considers its relations
with its employees to be good.
Item 2. Properties
-------------------
The following table summarizes Chromcraft Revington's facilities as of
December 31, 2000.
Square Type of Owned/
Location Feet Operations Furniture Leased
------------- ------- -------------- -------------- --------------
Delphi, IN 519,000 Manufacturing/ Occasional Owned
warehousing
Knoxville, TN 160,000 Manufacturing/ Occasional Owned
warehousing
Knoxville, TN 117,000 Warehousing Occasional Leased
(expires 2001)
Lincolnton, NC 368,000 Manufacturing/ Dining room/ Owned
warehousing bedroom
Lincolnton, NC 152,000 Manufacturing Upholstery Owned
Lincolnton, NC 159,000 Manufacturing/ Upholstery Owned
warehousing
Senatobia, MS 560,000 Manufacturing/ Casual dining/ Leased
warehousing commercial (expires 2061)
Sumter, SC 521,000 Manufacturing/ Dining room/ Owned
warehousing bedroom
Warrenton, NC 166,000 Manufacturing Dining room/ Owned
bedroom
Chromcraft Revington also leases trucks, trailers and other transportation
equipment and showroom facilities in High Point, North Carolina and Chicago,
Illinois. Management believes the properties and equipment of its subsidiaries
are well maintained, in good operating condition and adequate to support
present operations.
5
Item 3. Legal Proceedings
--------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
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Not applicable.
Executive Officers of Chromcraft Revington, Inc.
------------------------------------------------
Michael E. Thomas President, Chief Executive Officer and Director since
(age 59) Chromcraft Revington's organization in 1992. Mr. Thomas
is a director of TEU Holdings, Inc., the parent company of
furniture retailer This End Up. TEU Holdings, Inc. and
its subsidiaries filed for bankruptcy in 2000.
Frank T. Kane Vice President-Finance, Chief Financial Officer and
(age 47) Secretary since Chromcraft Revington's organization in 1992.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
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Chromcraft Revington's common stock is traded on the New York Stock Exchange.
The following table sets forth the high and low sales prices of Chromcraft
Revington's common stock, as reported on the New York Stock Exchange.
2000 1999
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High Low High Low
-------- -------- -------- --------
First quarter 10 1/2 7 1/2 17 7/8 14
Second quarter 13 1/2 7 1/2 17 14 1/8
Third quarter 11 9/16 8 14 3/4 11 7/8
Fourth quarter 10 1/16 6 13/16 12 13/16 10 1/8
As of February 15, 2001, there were approximately 53 security holders of
record of Chromcraft Revington's common stock. Chromcraft Revington intends
to retain cash for internal and external growth and development of its business
and currently does not anticipate paying cash dividends. At December 31, 2000,
unrestricted retained earnings available for dividends were $31,911,000.
6
Item 6. Selected Financial Data
--------------------------------
(Dollars in thousands, except per share data)
Year Ended December 31,
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2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
Operating Results
Sales $ 259,402 $ 245,385 $ 236,744 $ 225,629 $ 175,899
Cost of sales 197,165 188,411 176,988 169,802 128,217
--------- --------- --------- --------- ---------
Gross margin 62,237 56,974 59,756 55,827 47,682
Selling, general and
administrative expenses 34,901 34,340 31,964 30,200 24,235
--------- --------- --------- --------- ---------
Operating income 27,336 22,634 27,792 25,627 23,447
Interest expense 2,008 988 739 1,265 221
--------- --------- --------- --------- ---------
Earnings before income tax expense 25,328 21,646 27,053 24,362 23,226
Income tax expense 9,878 8,572 10,794 9,720 9,290
--------- --------- --------- --------- ---------
Net earnings $ 15,450 $ 13,074 $ 16,259 $ 14,642 $ 13,936
========= ========= ========= ========= =========
Earnings per share of common stock
Basic $ 1.59 $ 1.25 $ 1.46 $ 1.28 $ 1.21
========= ========= ========= ========= =========
Diluted $ 1.57 $ 1.22 $ 1.41 $ 1.25 $ 1.19
========= ========= ========= ========= =========
Shares used in computing earnings per share
Basic 9,727 10,448 11,137 11,418 11,474
Diluted 9,847 10,720 11,533 11,755 11,740
Financial Position (December 31,)
Total assets $ 160,092 $ 159,135 $ 129,645 $ 126,144 $ 129,942
Total debt 19,200 26,700 5,400 9,000 20,200
Stockholders' equity 110,245 99,770 97,117 90,906 77,925
Other Data
Depreciation and amortization $ 5,855 $ 4,947 $ 4,534 $ 4,383 $ 3,729
Capital expenditures 4,953 3,630 3,388 2,712 3,060
-----------------------
Cochrane Furniture and Korn Industries are included in Chromcraft Revington's
consolidated financial results from their acquisition dates of November 8, 1996
and September 2, 1999, respectively.
Per share data has been adjusted, where applicable, for the two-for-one common
stock split distributed June 10, 1998.
7
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
------------------------------------------------------------------------
General
Chromcraft Revington designs, manufactures and sells residential and commercial
furniture through its wholly-owned subsidiaries, Chromcraft, Peters-Revington,
Silver Furniture, Cochrane Furniture and Korn Industries. Chromcraft
Revington's operating results include the operations of Korn Industries,
acquired September 2, 1999, from the date of its acquisition (see Note 3 to
the consolidated financial statements). Korn Industries manufactures and sells
bedroom and dining room furniture.
The following table sets forth the results of operations of Chromcraft
Revington for the years ended December 31, 2000, 1999 and 1998 expressed as a
percentage of sales.
Year Ended December 31,
-----------------------------------
2000 1999 1998
--------- --------- ---------
Sales 100.0% 100.0% 100.0%
Cost of sales 76.0 76.8 74.8
--------- --------- ---------
Gross margin 24.0 23.2 25.2
Selling, general and
administrative expenses 13.5 14.0 13.5
--------- --------- ---------
Operating income 10.5 9.2 11.7
Interest expense .7 .4 .3
--------- --------- ---------
Earnings before income tax expense 9.8 8.8 11.4
Income tax expense 3.8 3.5 4.5
--------- --------- ---------
Net earnings 6.0% 5.3% 6.9%
========= ========= =========
2000 Compared to 1999
Consolidated sales for the year ended December 31, 2000 increased 5.7% to
$259,402,000 from $245,385,000 reported in 1999. The sales increase was due
to higher shipments of bedroom and commercial furniture, partially offset by
lower occasional, dining room and upholstered furniture sales. Bedroom
furniture shipments were boosted in 2000 from the Korn Industries acquisition.
Sales in 2000 were negatively impacted by the U.S. economic slowdown.
Chromcraft Revington's consolidated sales orders began to slow at the end of
the second quarter of this year as compared to 1999. Weak retail conditions
continued for the remainder of 2000. Occasional and dining room furniture
shipments were also lower due to several major retailer bankruptcies and
increased import and domestic competition. Higher commercial furniture
shipments in 2000 were due, in part, to increased airport gate lounge seating
and an improved office furniture market. Selling prices for 2000 were slightly
higher as compared to the prior year.
Gross margin increased to $62,237,000, or 24.0% of sales, in 2000, from
$56,974,000, or 23.2% of sales, in 1999. The higher gross margin percentage
in 2000 was primarily due to lower material costs and improved manufacturing
efficiencies. The lower material costs were due, in part, to sourcing of
furniture components from low-cost suppliers in the Far East. The inclusion
of Korn Industries' operating results for the full year 2000 partially offset
the gross margin percentage increase.
Selling, general and administrative expenses increased $561,000 to $34,901,000,
or 13.5% of sales, in 2000 from $34,340,000, or 14.0%, in 1999. Bad debt
expense increased $1,322,000 in 2000 as compared to 1999 primarily due to the
bankruptcy of a major furniture retailer. The inclusion of Korn Industries'
operating results in 2000 partially offset the selling, general and
administrative expense percentage increase due to higher bad debt expense.
The higher expense percentage in 1999 was due to a $1,000,000 charge for
employee termination and severance costs at Chromcraft.
8
Operating income for 2000 increased $4,702,000 to $27,336,000 from $22,634,000
in 1999. The increase in operating income was primarily due to the Cochrane
and Korn Industries subsidiaries.
Interest expense for the year ended December 31, 2000 was $2,008,000 as
compared to $988,000 for the prior year period. The increase in interest
expense for 2000 was primarily attributable to higher average bank borrowings
due to the Korn Industries acquisition and purchases of common stock under
Chromcraft Revington's share repurchase program. The average interest rate
under the revolving credit facility was about 1% higher in 2000 as compared
to 1999.
Chromcraft Revington's effective income tax rate was 39.0% for 2000 as compared
to 39.6% for 1999. The decrease in the effective tax rate for 2000 was due to
lower state income taxes.
Diluted earnings per share increased to $1.57 in 2000 from $1.22 in 1999. For
the year ended December 31, 2000, shares used in computing diluted earnings per
share decreased 8.1% to 9,847,000 from 10,720,000 for 1999. The share
reduction in 2000 was primarily due to purchases of common stock under
Chromcraft Revington's share repurchase program.
1999 compared to 1998
Consolidated sales increased 3.6% for the year ended December 31, 1999 to
$245,385,000 from $236,744,000 for the year ended December 31, 1998. The
increase in sales was primarily due to higher shipments of bedroom and dining
room furniture, partially offset by lower shipments of upholstered, commercial
and occasional furniture. The increase in bedroom and dining room shipments
was due, in part, to the Korn Industries acquisition, which was completed
September 2, 1999. The decrease in upholstered furniture shipments was
primarily attributable to the repositioning of the product line price points
and styling. Commercial furniture shipments were lower for 1999, as compared
to 1998, due, in part, to a general softening in demand in the office
furniture industry. Shipments of occasional furniture at Silver Furniture
declined principally due to competitive price pressure.
Gross margin was $56,974,000, or 23.2% of sales, in 1999 as compared to
$59,756,000, or 25.2% of sales, in 1998. Factors which contributed to the
decrease in gross margin percentage included: manufacturing inefficiencies at
Chromcraft due to a product mix change and employee attrition resulting from
the tight labor market; unabsorbed fixed overhead due to the lower sales volume
at Chromcraft and Silver Furniture; a $400,000 write down of discontinued
inventory at Chromcraft; and the inclusion of Korn Industries' operating
results.
Selling, general and administrative expenses increased to $34,340,000, or 14.0%
of sales, for 1999 from $31,964,000, or 13.5% of sales, for 1998. The
percentage increase was primarily due to a $1,000,000 charge for employee
termination and severance costs at Chromcraft.
Interest expense increased to $988,000 in 1999 as compared to $739,000 in 1998.
The increase was due to higher average bank borrowings during 1999 attributable
to the Korn Industries acquisition and the refinancing of Korn Industries' bank
indebtedness under Chromcraft Revington's revolving credit facility. Weighted
average interest rates were slightly lower in 1999 as compared to 1998.
Chromcraft Revington's effective income tax rate was 39.6% and 39.9% for the
years ended December 31, 1999 and 1998, respectively. The decrease in the
effective tax rate for 1999 was due to lower state income taxes.
Diluted earnings per share were $1.22 in 1999 and $1.41 in 1998. Average
common shares used in the calculation of diluted earnings per share included
dilutive potential common shares (stock options) of 272,000 in 1999 and 396,000
9
in 1998. Shares used in computing diluted earnings per share decreased 7.0%
for 1999, to 10,720,000, from 11,533,000 for 1998. During 1999, Chromcraft
Revington purchased, under a share repurchase program, 845,500 shares of its
common stock.
Liquidity and Capital Resources
Operating activities provided $16,647,000 of cash for the year ended December
31, 2000, an increase of $1,890,000 from the amount provided in 1999. Cash
generated from operating activities improved in 2000 primarily due to higher
earnings and depreciation and amortization expense partially offset by an
increase in working capital investment. Inventories increased $4,929,000
during 2000 primarily due to the weak retail sales environment. Generally,
inventories are purchased or produced based on internal sales forecasts which
were higher than actual results. Chromcraft Revington adjusted production
levels during the second half of 2000 to begin reducing inventory levels and
expects to further reduce inventories in 2001. Accounts receivable decreased
$4,022,000 during 2000 due to the lower sales in the fourth quarter.
Investing activities used $4,879,000 and $10,971,000 of cash during the years
ended December 31, 2000 and 1999, respectively. Capital expenditures,
primarily for equipment purchases, were $4,953,000 during 2000 as compared to
$3,630,000 during 1999. Chromcraft Revington expects capital expenditures
during 2001 to be below $4,000,000. Investing activities for 1999 include a
cash payment to Korn Industries' stockholders and related acquisition expenses
of $8,525,000 and proceeds from asset disposals of $1,184,000.
Financing activities used $12,475,000 of cash during 2000, primarily to reduce
bank indebtedness and to acquire shares of Chromcraft Revington's common stock.
During 2000, Chromcraft Revington acquired, under its share repurchase program,
568,900 shares of its common stock for $5,086,000.
Cash used in financing activities during 1999 totaled $2,638,000. During 1999,
Chromcraft Revington borrowed $21,300,000 under its bank revolving credit
facility in connection with the Korn Industries acquisition and the
repurchase of Chromcraft Revington's common stock. As part of the acquisition,
Korn Industries' bank indebtedness of $13,517,000 was refinanced with
borrowings under Chromcraft Revington's revolving credit facility. During
1999, Chromcraft Revington acquired, under its share repurchase program,
845,500 shares of its common stock for $12,079,000.
Chromcraft Revington has a revolving credit facility with a commitment level of
$47,500,000 that matures in December 2005. The interest rate under the
facility is based on floating rate indices or a bank prime lending rate. Total
borrowings under the facility were $19,200,000 at December 31, 2000. Unused
capacity under the revolving credit facility, after reduction for outstanding
letters of credit, was $26,051,000 at the end of the year. Under the
revolving credit facility, Chromcraft Revington has the option of increasing
the facility commitment amount from $47,500,00 to $67,500,000. If the
existing bank group elect not to participate in the increase, Chromcraft
Revington can seek other potential lenders to fully commit to the requested
increase.
Management expects that cash flow from operations and availability under the
bank revolving credit facility will continue to be sufficient to meet future
needs. Chromcraft Revington plans to grow its businesses internally and
through acquisitions. Accordingly, Chromcraft Revington plans to retain cash
in the business and currently does not anticipate paying cash dividends on its
common stock. In 2001, absent further acquisitions, Chromcraft Revington
expects to generate excess cash flow from operations, which will be used to
reduce bank indebtedness, to repurchase its common stock, or for general
corporate purposes.
First Quarter 2001 Outlook
--------------------------
Due to the weak retail sales environment, management anticipates that 2001
first quarter sales will be between 15% and 18% below last year's first
quarter sales. Diluted earnings per share for the first quarter of 2001 are
expected to be between $.33 and $.37, as compared to $.49 in 1999.
10
Recently Issued Accounting Standards
------------------------------------
The Financial Accounting Standards Board has issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended by
FASB Statement Nos. 137 and 138. The Statements apply to all derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. The Statements will require Chromcraft
Revington to recognize all derivatives on the balance sheet at fair value. The
Statements are effective for fiscal years beginning after June 15, 2000.
Chromcraft Revington's adoption of these Statements will not have a significant
effect on its results of operations or financial position.
Safe Harbor Statement Under the Private Litigation Reform Act of 1995
---------------------------------------------------------------------
Certain matters included in this Annual Report on Form 10-K are forward-
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements can be generally
identified as such because the context of the statements includes words such
as "plans," "may," "anticipates," and "expects" or words of similar import.
All forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those reported or
expected as of the date of this report. Among the risks and uncertainties
that could cause actual results to differ materially from those reported or
anticipated are (i) general economic conditions, (ii) cyclical nature of the
furniture industry, and (iii) competition in the furniture industry.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
--------------------------------------------------------------------
Borrowings under Chromcraft Revington's bank revolving credit facility bear
interest at a variable rate and, therefore, are subject to changes in interest
rates. The impact of an interest rate change is not considered material.
Item 8. Financial Statements and Supplementary Data
----------------------------------------------------
The financial statements and schedule are listed in Part IV, Items 14(a) (1)
and (2).
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
------------------------------------------------------------------------
None.
PART III
Items 10 Through 13.
--------------------
In accordance with the provisions of General Instruction G to Form 10-K, the
information required by Item 10 (Directors and Executive Officers of the
Registrant), Item 11 (Executive Compensation), Item 12 (Security Ownership of
Certain Beneficial Owners and Management) and Item 13 (Certain Relationships
and Related Transactions) is not set forth herein because Chromcraft Revington
intends to file with the Securities and Exchange Commission a definitive Proxy
Statement pursuant to Regulation 14A not later than 120 days following the end
of its 2000 fiscal year, which Proxy Statement will contain such information.
The information required by Items 10, 11, 12 and 13 is incorporated herein by
reference to such Proxy Statement.
11
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
-------------------------------------------------------------------------
(a) 1. and 2. List of Financial Statements and Financial Statement Schedule:
The following Consolidated Financial Statements of Chromcraft Revington are
included in this report on Form 10-K:
Page Reference
--------------
Consolidated Statements of Earnings for the years ended
December 31, 2000, 1999 and 1998 F-1
Consolidated Balance Sheets at December 31, 2000 and 1999 F-2
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 2000, 1999 and 1998 F-3
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998 F-4
Notes to Consolidated Financial Statements F-5
Independent Auditors' Report F-13
Quarterly Financial Information (unaudited) F-14
The following consolidated financial statement schedule of
Chromcraft Revington is included in response to Item 14(d):
Schedule II - Valuation and Qualifying Accounts S-1
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and, therefore, have been omitted.
(a) 3. Listing of Exhibits
(3)(i) Certificate of Incorporation of the Registrant, as amended, filed
as Exhibit No. 3.1 to Form S-1, registration number 33-45902, as
filed with the Securities and Exchange Commission on February 21,
1992, is incorporated herein by reference.
(3)(ii) By-laws of the Registrant, filed as Exhibit No. 3.2 to Form S-1,
registration number 33-45902, as filed with the Securities and
Exchange Commission on February 21, 1992, is incorporated herein
by reference.
(4.7) Credit Agreement, dated December 20, 2000, among the Registrant,
the Banks party thereto and Bank One, Indiana, N.A., as agent for
the Banks (filed herewith).
(10.1) Lease, dated February 15, 1962, between the Board of Supervisors
of Tate County, Mississippi as Landlord and Chromcraft
Corporation as Tenant, filed as Exhibit No. 10.1 to Form S-1,
12
registration number 33-45902, as filed with the Securities and
Exchange Commission on February 21, 1992, is incorporated herein
by reference.
(10.3) Form of Registration Rights Agreement between the Registrant and
Court Square Capital Limited, filed as Exhibit No. 10.3 to Form
S-1, registration number 33-45902, as filed with the Securities
and Exchange Commission on February 21, 1992, is incorporated
herein by reference.
(10.12) Contract, dated April 3, 1961, between the City of Senatobia,
Tate County, Mississippi, the Board of Supervisors of Tate
County, Mississippi and Chromcraft Corporation, filed as Exhibit
No. 10.12 to Form S-1, Pre-Effective Amendment No. 1,
registration number 33-45902, as filed with the Securities and
Exchange Commission on March 17, 1992, is incorporated herein by
reference.
(10.13) Lease, dated September 9, 1966, between the Board of Supervisors
of Tate County, Mississippi as Landlord and Chromcraft
Corporation as Tenant, filed as Exhibit No. 10.13 to Form S-1,
Pre-Effective Amendment No. 1, registration number 33-45902, as
filed with the Securities and Exchange Commission on March 17,
1992, is incorporated herein by reference.
(10.14) Contract, dated May 5, 1969, between the Board of Supervisors of
Tate County, Mississippi and Chromcraft Corporation, filed as
Exhibit No. 10.14 to Form S-1, Pre-Effective Amendment No. 1,
registration number 33-45902, as filed with the Securities and
Exchange Commission on March 17, 1992, is incorporated herein by
reference.
(10.15) Contract and Lease Agreement, dated April 17, 1972, between Tate
County, Mississippi as Landlord and Chromcraft Corporation as
Tenant, filed as Exhibit No. 10.15 to Form S-1, Pre-Effective
Amendment No. 1, registration number 33-45902, as filed with the
Securities and Exchange Commission on March 17, 1992, is
incorporated herein by reference.
Executive Compensation Plans and Arrangements
---------------------------------------------
(10.4) Chromcraft Revington, Inc. 1992 Stock Option Plan, as amended,
filed as Exhibit No. 10.4 to Form 10-Q for the quarter ended June
27, 1998, is incorporated herein by reference.
(10.51) Chromcraft Revington, Inc. Short Term Executive Incentive Plan,
effective January 1, 1998, filed as Exhibit No. 10.51 to Form
10-K for the year ended December 31, 1998, is incorporated herein
by reference.
(10.55) Chromcraft Revington, Inc. Long Term Executive Incentive Plan,
effective January 1, 2000, filed as Exhibit 10.55 to Form 10-Q
for the quarter ended July 1, 2000, is incorporated herein by
reference.
(10.6) Chromcraft Revington Directors Deferred Compensation Plan,
effective January 1, 1999, filed as Exhibit 10.6 to Form 10-K
for the year ended December 31, 1998, is incorporated herein by
reference.
(10.7) Chromcraft Revington, Inc. Supplemental Executive Retirement
Plan, as amended and restated, effective December 3, 1998, filed
as Exhibit 10.7 to Form 10-K for the year ended December 31,
1998, is incorporated herein by reference.
13
(10.75) Supplemental Executive Retirement Plan Trust Agreement, dated
April 16, 1993, between the Registrant and Bank One, Indianapolis,
National Association, filed as Exhibit No. 10.75 to Form 10-Q for
the quarter ended July 3, 1993, is incorporated herein by
reference.
(10.8) Employment Agreement, dated March 31, 1992, between the
Registrant and Michael E. Thomas, filed as Exhibit No. 10.8 to
Form 10-K for the year ended December 31, 1992, is incorporated
herein by reference.
(10.85) Supplemental Retirement Benefits Agreement, dated August 21, 1992,
between the Registrant and Michael E. Thomas, filed as Exhibit No.
10.85 to Form 10-K for the year ended December 31, 1992, is
incorporated herein by reference.
-----------------------
(21.1) Subsidiaries of the Registrant (filed herewith).
(23.1) Consent of Independent Auditors (filed herewith).
(24.1) Powers of Attorney (filed herewith).
(27.0) Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
December 31, 2000.
(c) Exhibits
The response to this portion of Item 14 is submitted as a separate
section of this report.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate
section of this report.
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Chromcraft Revington, Inc. has duly caused this annual report on
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.
Chromcraft Revington, Inc.
----------------------------
(Registrant)
Date: March 2, 2001 By: /s/ Michael E. Thomas
------------- ----------------------------
Michael E. Thomas, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Chromcraft
Revington, Inc. and in the capacities and on the date indicated.
Signatures Title Date
---------------------- -------------------------- -------------
/s/ Michael E. Thomas President, Chief Executive March 2, 2001
---------------------- Officer and Director -------------
Michael E. Thomas
/s/ Frank T. Kane Vice President - Finance March 2, 2001
---------------------- (principal accounting and -------------
Frank T. Kane financial officer)
*David L. Kolb Director
----------------------
David L. Kolb
*Larry P. Kunz Director
----------------------
Larry P. Kunz
*M. Saleem Muqaddam Director
----------------------
M. Saleem Muqaddam
*Warren G. Wintrub Director
----------------------
Warren G. Wintrub
By: /s/ Michael E. Thomas March 2, 2001
------------------------- -------------
Michael E. Thomas,
Attorney-in-fact*
15
Consolidated Statements of Earnings
Chromcraft Revington, Inc.
(In thousands, except per share data)
Year Ended December 31,
-----------------------------------
2000 1999 1998
--------- --------- ---------
Sales $ 259,402 $ 245,385 $ 236,744
Cost of sales 197,165 188,411 176,988
--------- --------- ---------
Gross margin 62,237 56,974 59,756
Selling, general and administrative expenses 34,901 34,340 31,964
--------- --------- ---------
Operating income 27,336 22,634 27,792
Interest expense 2,008 988 739
--------- --------- ---------
Earnings before income tax expense 25,328 21,646 27,053
Income tax expense 9,878 8,572 10,794
--------- --------- ---------
Net earnings $ 15,450 $ 13,074 $ 16,259
========= ========= =========
Earnings per share of common stock
Basic $ 1.59 $ 1.25 $ 1.46
Diluted $ 1.57 $ 1.22 $ 1.41
Shares used in computing earnings per share
Basic 9,727 10,448 11,137
Diluted 9,847 10,720 11,533
See accompanying notes to the consolidated financial statements
F-1
Consolidated Balance Sheets
Chromcraft Revington, Inc.
(In thousands, except share data)
December 31,
----------------------
2000 1999
--------- ---------
Assets
Cash $ 441 $ 1,148
Accounts receivable, less allowances
of $1,253 and $1,266 25,552 29,574
Inventories 55,379 50,450
Other assets 3,447 3,642
--------- ---------
Current assets 84,819 84,814
Property, plant and equipment, at cost, less
accumulated depreciation 44,747 44,480
Goodwill and tradenames, less accumulated
amortization of $9,181 and $7,933 29,484 28,932
Other assets 1,042 909
--------- ---------
Total assets $ 160,092 $ 159,135
========= =========
Liabilities and Stockholders' Equity
Accounts payable $ 6,474 $ 8,200
Accrued liabilities 13,694 15,851
Revolving credit facility - 26,700
--------- ---------
Current liabilities 20,168 50,751
Revolving credit facility 19,200 -
Deferred compensation 5,998 5,824
Other long term liabilities 4,481 2,790
--------- ---------
Total liabilities 49,847 59,365
--------- ---------
Stockholders' equity
Common stock, $.01 par value, 20,000,000 shares
authorized 10,949,048 and 10,939,048 shares issued 109 109
Capital in excess of par value 10,385 10,274
Retained earnings 116,301 100,851
--------- ---------
126,795 111,234
Less cost of common shares in treasury, 1,375,800
shares in 2000 and 806,900 shares in 1999 (16,550) (11,464)
--------- ---------
Total stockholders' equity 110,245 99,770
--------- ---------
Total liabilities and stockholders' equity $ 160,092 $ 159,135
========= =========
See accompanying notes to the consolidated financial statements
F-2
Consolidated Statements of Stockholders' Equity
Chromcraft Revington, Inc.
(In thousands, except share data)
Total
Capital in Stock-
Common Excess of Retained Treasury holders'
Stock Par Value Earnings Stock Equity
--------- --------- --------- --------- ---------
Balance at January 1, 1998 $ 114 $ 19,274 $ 71,518 $ - $ 90,906
Repurchase and cancellation
of stock (590,548 shares) (6) (10,190) (10,196)
Exercise of stock options
(17,800 shares) - 148 148
Net earnings 16,259 16,259
--------- --------- --------- --------- ---------
Balance at December 31, 1998 108 9,232 87,777 - 97,117
Repurchase and cancellation
of stock (38,600 shares) - (615) (615)
Exercise of stock options
(181,860 shares) 1 1,657 1,658
Purchase of treasury stock
(806,900 shares) (11,464) (11,464)
Net earnings 13,074 13,074
--------- --------- --------- --------- ---------
Balance at December 31, 1999 109 10,274 100,851 (11,464) 99,770
Exercise of stock options
(10,000 shares) - 111 111
Purchase of treasury stock
(568,900 shares) (5,086) (5,086)
Net earnings 15,450 15,450
--------- --------- --------- --------- ---------
Balance at December 31, 2000 $ 109 $ 10,385 $ 116,301 $ (16,550) $ 110,245
========= ========= ========= ========= =========
See accompanying notes to the consolidated financial statements
F-3
Consolidated Statements of Cash Flows
Chromcraft Revington, Inc.
(In thousands)
Year Ended December 31,
-----------------------------------
2000 1999 1998
--------- --------- ---------
Operating Activities
Net earnings $ 15,450 $ 13,074 $ 16,259
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation and amortization 5,855 4,947 4,534
Deferred income taxes 347 531 893
Changes in assets and liabilities, net
of effects of acquired company
Accounts receivable 4,022 1,435 21
Inventories (4,929) (1,831) (2,958)
Accounts payable (1,726) (4,030) (1,511)
Accrued liabilities (2,157) 72 293
Other (215) 559 (546)
--------- --------- ---------
Cash provided by operating activities 16,647 14,757 16,985
--------- --------- ---------
Investing Activities
Investment in acquired company - (8,525) -
Capital expenditures (4,953) (3,630) (3,388)
Proceeds from disposals of property, plant and equipment 74 1,184 51
--------- --------- ---------
Cash used in investing activities (4,879) (10,971) (3,337)
--------- --------- ---------
Financing Activities
Net borrowing (repayment) under revolving credit facility (7,500) 21,300 (3,600)
Refinance indebtedness of acquired company - (13,517) -
Repurchase of common stock (5,086) (12,079) (10,196)
Proceeds from exercise of stock options 111 1,658 148
--------- --------- ---------
Cash used in financing activities (12,475) (2,638) (13,648)
--------- --------- ---------
Increase (decrease) in cash (707) 1,148 -
Cash at beginning of the year 1,148 - -
--------- --------- ---------
Cash at end of the year $ 441 $ 1,148 $ -
========= ========= =========
See accompanying notes to the consolidated financial statements
F-4
Notes to Consolidated Financial Statements
Chromcraft Revington, Inc.
December 31, 2000
Note 1. Summary of Significant Accounting Policies
The consolidated financial statements include the accounts of Chromcraft
Revington, Inc. and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Chromcraft Revington manufactures and sells residential and commercial
furniture. Products are sold primarily through furniture dealers throughout
the United States and Canada. Chromcraft Revington has several operating
segments which are aggregated into one reportable segment, in accordance with
Financial Accounting Standards Board Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information."
Use of Estimates
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Inventories
All inventories (materials, labor and overhead) are valued at the lower of
cost or market. Inventories valued using the last-in, first-out (LIFO) basis
represent approximately 61% and 64% of total inventories at December 31, 2000
and 1999, respectively. Remaining inventories are valued using the first-in,
first-out (FIFO) basis.
Property, Plant and Equipment
Property, plant and equipment is stated on the basis of cost. Depreciation is
computed principally by the straight-line method for financial reporting
purposes and by accelerated methods for tax purposes.
Revenue Recognition
Revenue from sales is recognized when the goods are shipped to the customer.
Intangibles
Intangible assets are stated on the basis of cost. The excess of purchase
price over the fair value of net assets acquired (goodwill) and tradenames are
being amortized on a straight-line basis over periods ranging from 15 to 40
years. Chromcraft Revington reviews the carrying value of goodwill whenever
changes in circumstances indicate that the carrying amount may not be
recoverable. When factors indicate that the recoverability of goodwill should
be evaluated, Chromcraft Revington uses an estimate of the undiscounted cash
flows of the acquired businesses in determining whether an impairment loss is
required.
F-5
Deferred Income Taxes
Deferred income taxes are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled.
Earnings per Share
Basic earnings per share is calculated based on the average number of common
shares outstanding. Diluted earnings per share include dilutive potential
common shares (stock options).
Stock Options
Chromcraft Revington applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related Interpretations in
accounting for stock options and discloses the fair value of options granted
as permitted by Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation."
Financial Instruments
The carrying amounts reported in the balance sheets for accounts receivable,
accounts payable and borrowings under a bank revolving credit facility
approximate their fair values. Concentration of credit risk with respect to
trade accounts receivable is limited due to the large number of entities
comprising Chromcraft Revington's customer base.
Note 2. Purchase Offer from Court Square Capital Limited
On December 22, 2000, Chromcraft Revington received a proposal from Court
Square Capital Limited ("Court Square Capital"), a unit of Citigroup, under
which the holders of Chromcraft Revington's publicly traded shares would
receive cash of $10.30 per share in a transaction to take Chromcraft Revington
private. The offer is contingent upon the execution of a definitive merger
agreement, confirmatory due diligence and the approval of Chromcraft
Revington's board of directors and stockholders. Court Square Capital owns
5,695,418 shares, or 59.5%, of Chromcraft Revington's common stock at
December 31, 2000. An independent committee of Chromcraft Revington's board
of directors is evaluating the proposal and has engaged ING Barings, LLC as its
financial advisor to assist the committee in regard to the proposal.
Note 3. Acquisition of Korn Industries, Incorporated
On September 2, 1999, CRI Corporation-Sumter, a wholly-owned subsidiary of
Chromcraft Revington, Inc., acquired all of the outstanding common stock of
Korn Industries, Incorporated ("Korn Industries") for $8,525,000 in cash
(including acquisition-related expenses) and the assumption of Korn Industries'
liabilities. Korn Industries is headquartered in Sumter, South Carolina and
manufactures and sells bedroom and dining room furniture through its Sumter
Cabinet Company division. The operations of Korn Industries are included in
the Consolidated Statements of Earnings commencing on September 2, 1999. The
transaction was accounted for as a purchase and the purchase price has been
allocated to assets acquired and liabilities assumed based on their fair
F-6
market values at the date of acquisition. The purchase price allocation was
finalized during 2000, which resulted in an increase in goodwill of $1,800,000.
Goodwill and other intangibles are being amortized on a straight-line basis
over periods ranging from 15 to 25 years.
The following unaudited pro forma results of operations for the year ended
December 31, 1999 give effect to the Korn Industries acquisition as if it had
occurred on January 1, 1999. The unaudited pro forma results of operations
for the year ended December 31, 1998 combine the operating results of Korn
Industries for the fiscal year ended November 28, 1998 and Chromcraft
Revington's operating results for the year ended December 31, 1998 and give
effect to the Korn Industries acquisition as if it had occurred at the
beginning of the period.
(In thousands,
except per share data)
----------------------
1999 1998
--------- ---------
Sales $ 281,168 $ 291,395
Net earnings 11,280 14,310
Earnings per share of common stock
Basic 1.08 1.28
Diluted 1.05 1.24
The pro forma information is presented for comparative purposes only and is
not necessarily indicative of the operating results that would have occurred
had the acquisition been consummated as of the above dates, nor is it
necessarily indicative of future operating results.
Note 4. Inventories
Inventories at December 31, 2000 and 1999 consisted of the following:
(In thousands)
----------------------
2000 1999
--------- ---------
Raw materials $ 17,729 $ 18,521
Work-in-process 9,083 8,069
Finished goods 30,870 25,866
--------- ---------
Inventories at FIFO cost 57,682 52,456
LIFO reserve (2,303) (2,006)
--------- ---------
$ 55,379 $ 50,450
========= =========
Note 5. Property, Plant and Equipment
Property, plant and equipment at December 31, 2000 and 1999 consisted of the
following:
(In thousands)
----------------------
2000 1999
--------- ---------
Land $ 2,231 $ 2,208
Buildings and improvements 34,168 32,869
Machinery and equipment 50,257 46,986
Leasehold improvements 862 862
Construction in progress 391 239
--------- ---------
87,909 83,164
Less accumulated depreciation and amortization (43,162) (38,684)
--------- ---------
$ 44,747 $ 44,480
========= =========
F-7
Note 6. Accrued Liabilities
Accrued liabilities at December 31, 2000 and 1999 consisted of the following:
(In thousands)
----------------------
2000 1999
--------- ---------
Employee benefit plans $ 4,450 $ 5,434
Salaries, wages and commissions 1,586 1,907
Vacation and holiday pay 1,035 1,162
Workers' compensation plans 1,013 1,451
Deferred income taxes 1,018 562
Other accrued liabilities 4,592 5,335
--------- ---------
$ 13,694 $ 15,851
========= =========
Note 7. Income Taxes
Components of the provision for income taxes for the years ended December 31,
2000, 1999 and 1998 were as follows:
(In thousands)
-----------------------------------
2000 1999 1998
--------- --------- ---------
Current:
Federal $ 8,420 $ 7,029 $ 8,666
State 1,111 1,012 1,235
--------- --------- ---------
9,531 8,041 9,901
--------- --------- ---------
Deferred:
Federal 257 502 738
State 90 29 155
--------- --------- ---------
347 531 893
--------- --------- ---------
Total provision for income taxes $ 9,878 $ 8,572 $ 10,794
========= ========= =========
A reconciliation of the provision for income taxes included in the Consolidated
Statements of Earnings and the amount computed by applying the U.S. Federal
income tax rate for the years ended December 31, 2000, 1999 and 1998 is
summarized below:
(In thousands)
-----------------------------------
2000 1999 1998
--------- --------- ---------
Tax expense, at U.S. statutory rate $ 8,865 $ 7,577 $ 9,469
State taxes, net of federal benefit 729 682 1,030
Non-deductible amortization of goodwill 321 253 222
Other, net (37) 60 73
--------- --------- ---------
Total provision for income taxes $ 9,878 $ 8,572 $ 10,794
========= ========= =========
F-8
The tax effects of temporary differences that give rise to significant
portions of net deferred tax assets (liabilities) at December 31, 2000 and
1999 are summarized below:
(In thousands)
----------------------
2000 1999
--------- ---------
Deferred tax assets attributable to:
Accounts receivable $ 566 $ 794
Accrued vacation and holiday pay 373 486
Deferred compensation 2,680 2,965
Contingent liabilities 1,200 -
Net operating loss carryforwards 2,445 3,407
Other 1,981 2,209
--------- ---------
Total gross deferred tax assets 9,245 9,861
--------- ---------
Deferred tax liabilities attributable to:
Inventories (3,443) (3,744)
Property, plant and equipment (5,656) (5,630)
Other (1,272) (1,266)
--------- ---------
Total gross deferred tax liabilities (10,371) (10,640)
--------- ---------
Net deferred tax liabilities $ (1,126) $ (779)
========= =========
Balance sheet classifications of deferred taxes at December 31, 2000
and 1999 were as follows:
(In thousands)
----------------------
2000 1999
--------- ---------
Deferred tax liability, current $ (1,018) $ (562)
Deferred tax liability, noncurrent (108) (217)
--------- ---------
Net deferred tax liability $ (1,126) $ (779)
========= =========
In connection with the acquisitions of Cochrane Furniture and Korn Industries,
Chromcraft Revington acquired federal and state net operating loss
carryforwards ("NOL's") of $5,173,000 and $8,174,000, respectively, with
expiration dates through 2010 and 2018, respectively. The use of the NOL's is
limited to the future taxable earnings of the acquired companies.
Note 8. Revolving Credit Facility
In December 2000, Chromcraft Revington entered into an unsecured revolving
loan facility (the "Facility") with a group of banks that allows it to borrow
up to $47,500,000 for working capital requirements, capital expenditures and
acquisitions. At December 31, 2000, Chromcraft Revington had $26,051,000 in
availability under the Facility. The interest rate under the Facility is
determined at the time of borrowing, at Chromcraft Revington's option, at the
higher of the bank prime lending rate or Fed Funds rate plus .5%, or a rate
based on the Fed Funds rate or the London Interbank Offered Rate (LIBOR). The
weighted average interest rate on borrowings outstanding as of December 31, 2000
and 1999 was 7.42% and 5.12%, respectively. There is a commitment fee ranging
from .125% to .225% (depending on a leverage ratio) on the unused portion of
the credit line. Chromcraft Revington had outstanding letters of credit under
the Facility of $2,249,000 and $2,432,000 at December 31, 2000 and 1999,
respectively. The Facility expires December 31, 2005.
The Facility requires compliance with certain financial loan covenants related
to net worth, interest and fixed charge coverages and debt leverage. At
December 31, 2000, unrestricted retained earnings available for dividends were
$31,911,000.
F-9
Note 9. Earnings Per Share of Common Stock
Weighted average shares used in the calculation of diluted earnings per share
included dilutive potential common shares (stock options) of approximately
120,000, 272,000 and 396,000 for the years ended December 31, 2000, 1999 and
1998, respectively.
Certain stock options to purchase shares of common stock were outstanding
during 2000, 1999 and 1998, but were not included in the computation of
diluted earnings per share because the options' exercise prices were greater
than the average market price of the common shares during those periods and,
therefore, their effect would be antidilutive. Options excluded from the
computation of diluted earnings per share and their weighted average exercise
prices at December 31, 2000, 1999 and 1998 were 376,060 shares at $13.48,
138,426 shares at $16.85 and 58,000 shares at $19.78, respectively.
Note 10. Stockholders' Equity
Chromcraft Revington is authorized to issue up to 100,000 shares of $1.00 par
value preferred stock, none of which is outstanding.
Chromcraft Revington effected a two-for-one stock split in the form of a 100%
stock dividend to stockholders of record on May 27, 1998. The additional
shares were distributed to stockholders on June 10, 1998. All references to
the number of shares outstanding and per share amounts, where applicable, in
the consolidated financial statements and notes reflect the stock split.
Chromcraft Revington has entered into a Registration Rights agreement dated
April 23, 1992 (the "Agreement") between Chromcraft Revington and Court Square
Capital Limited, which owned 5,695,418 shares, or 59.5%, of Chromcraft
Revington's outstanding common stock at December 31, 2000. The Agreement
permits Court Square Capital Limited and transferees, as defined, to request
certain registration rights under the Securities Act of 1933 for all or part
of its shares of common stock under certain conditions. In connection with
such registrations as may occur, Chromcraft Revington will be obligated for
the payment of all registration expenses incurred in the performance of, or
compliance with, this Agreement, subject to certain limitations set forth
therein.
Note 11. Employee Benefit Plans
Chromcraft Revington sponsors a number of tax-qualified defined contribution
retirement and savings plans. Employees may be eligible to participate in one
or more of these plans. Company contributions to these plans are based on
either a percentage of an employee's compensation or a matching portion of the
employee's contributions. The cost of these plans was $1,235,000 in 2000,
$1,299,000 in 1999 and $1,188,000 in 1998.
Chromcraft Revington also provides supplemental retirement benefits and "make
up" benefits to key executives of Chromcraft Revington whose benefits are
reduced by Internal Revenue Service Code restrictions. Contributions and
expenses under these arrangements were $198,000 in 2000, $390,000 in 1999 and
$338,000 in 1998.
Note 12. Stock Options
Chromcraft Revington's 1992 Stock Option Plan, as amended, (the "Plan")
provides for the granting of either incentive stock options ("ISO's") or stock
options which do not qualify as incentive stock options ("non-ISO's"). The
total number of shares of common stock which may be issued under stock options
granted pursuant to the Plan is 1,800,000 shares. ISO's granted under the Plan
vest over no greater than a 10-year period, and are granted at exercise prices
no less than the fair market value of Chromcraft Revington's common shares as
of the date of grant.
F-10
Non-ISO's vest and are at exercise prices as determined by the compensation
committee of the Board of Directors. At December 31, 2000 and 1999, there
were 623,730 and 605,606 shares, respectively, available for future grants.
The estimated per share weighted average fair value of stock options granted
during 2000, 1999 and 1998 was $3.38, $6.02 and $7.85, respectively, on the
date of grant. The fair value of stock options on the date of grant was
estimated using the Black-Scholes model with the following weighted average
assumptions:
2000 1999 1998
--------- --------- ---------
Expected life (years) 6 6 6
Interest rate 6.8% 5.0% 5.7%
Volatility 27.5% 27.2% 27.8%
The following table summarizes the pro forma effects assuming compensation
cost for such awards had been recorded based upon the estimated fair value:
(In thousands, except per share data)
--------------------------------------------------------------------------
2000 1999 1998
---------------------- ---------------------- ----------------------
As Pro As Pro As Pro
Reported Forma Reported Forma Reported Forma
--------- --------- --------- --------- --------- ---------
Net earnings $ 15,450 $ 15,232 $ 13,074 $ 12,622 $ 16,259 $ 15,875
Earnings per share
of common stock
Basic 1.59 1.57 1.25 1.21 1.46 1.43
Diluted 1.57 1.55 1.22 1.18 1.41 1.38
A summary of Chromcraft Revington's stock option activity and related
information for the three years ended December 31, 2000 follows:
Weighted
Average
Number Exercise
of Shares Price
--------- ---------
1998
Outstanding at beginning of year 959,542 $ 8.68
Granted 58,000 $ 19.78
Exercised (17,800) $ 7.25
Outstanding at end of year 999,742 $ 9.35
Exercisable 861,310 $ 8.38
1999
Granted 47,064 $ 16.00
Exercised (181,860) $ 6.98
Canceled (9,500) $ 18.32
Outstanding at end of year 855,446 $ 10.12
Exercisable 791,228 $ 9.74
2000
Granted 54,202 $ 8.08
Exercised (10,000) $ 11.00
Canceled (72,326) $ 13.15
Outstanding at end of year 827,322 $ 9.71
Exercisable 795,322 $ 9.56
F-11
Significant option groups outstanding at December 31, 2000 and related weighted
average price and remaining life information follows:
Options Outstanding Options Exercisable
---------------------- ----------------------
Grant Number Exercise Number Exercise Remaining
Date of Shares Price of Shares Price Life (Years)
--------- --------- --------- --------- --------- -----------
4-15-92 310,960 $ 5.50 310,960 $ 5.50 1.3
2-19-93 86,100 $ 9.50 86,100 $ 9.50 2.1
1-11-94 98,000 $ 11.63 98,000 $ 11.63 3.0
All other 332,262 $ 13.14 300,262 $ 13.10 6.5
Note 13. Supplemental Cash Flow Information
Interest paid during the years ended December 31, 2000, 1999 and 1998 was
$2,104,000, $873,000 and $774,000, respectively. Income taxes paid during the
years ended December 31, 2000, 1999 and 1998 were $8,247,000, $7,334,000 and
$10,062,000, respectively.
Note 14. Rental Commitments
Chromcraft Revington leases certain showroom facilities and transportation
equipment under non-cancelable operating leases. The future minimum lease
payments under non-cancelable leases for the years ending December 31, 2001,
2002, 2003, 2004 and 2005 are $1,386,000, $1,177,000, $1,049,000, $822,000 and
$37,000, respectively. It is expected that, in the normal course of business,
leases that expire will be renewed or replaced.
Rental expense was $1,772,000, $1,825,000 and $1,919,000 for the years ended
December 31, 2000, 1999 and 1998, respectively.
F-12
Independent Auditors' Report
The Board of Directors and Stockholders
Chromcraft Revington, Inc.:
We have audited the consolidated financial statements of Chromcraft Revington,
Inc. and subsidiaries as listed in item 14(a) (1) and (2). In connection with
our audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in item 14(a) (1) and (2). These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Chromcraft
Revington, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America. Also in our
opinion, the related consolidated financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
KPMG LLP
Indianapolis, Indiana
January 31, 2001
F-13
Quarterly Financial Information (unaudited)
Chromcraft Revington, Inc.
(In thousands, except per share data)
-------------------------------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
--------- --------- --------- --------- ---------
2000
Sales $ 73,740 $ 65,667 $ 62,062 $ 57,933 $ 259,402
Gross margin 18,115 16,094 14,050 13,978 62,237
Operating income 8,476 6,973 5,037 6,850 27,336
Net earnings 4,859 3,924 2,732 3,935 15,450
Earnings per share
of common stock
Basic .49 .40 .28 .41 1.59
Diluted .49 .40 .28 .41 1.57
1999
Sales $ 61,898 $ 55,881 $ 59,279 $ 68,327 $ 245,385
Gross margin 15,515 13,847 13,527 14,085 56,974
Operating income 7,333 6,182 5,822 3,297 22,634
Net earnings 4,368 3,692 3,365 1,649 13,074
Earnings per share
of common stock
Basic .41 .35 .33 .16 1.25
Diluted .39 .34 .32 .16 1.22
--------------------
Operating results for the quarter ended December 31, 1999 include a non-
recurring pre-tax charge of $1.5 million ($.09 per share on a diluted basis)
for employee termination costs, the writing down of discontinued inventory and
other related costs at Chromcraft Revington's Chromcraft subsidiary.
F-14
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Chromcraft Revington, Inc.
(In thousands)
Additions
----------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Classification of Period Expenses Accounts Deductions of Year
-------------- --------- --------- --------- ---------- ---------
Year ended December 31, 2000
Allowance for doubtful
accounts $ 1,266 $ 1,568 $ - $ (1,581)(a) $ 1,253
Year ended December 31, 1999
Allowance for doubtful
accounts $ 1,211 $ 246 $ 277(b) $ (468)(a) $ 1,266
Year ended December 31, 1998
Allowance for doubtful
accounts $ 1,462 $ 328 $ - $ (579)(a) $ 1,211
(a) Represents charge-offs, net of recoveries, to the allowance for doubtful
accounts.
(b) Represents the allowance for doubtful accounts associated with the Korn
Industries acquisition.
S-1
EXHIBIT (4.7)
CREDIT AGREEMENT
among
CHROMCRAFT REVINGTON, INC.
and
BANK ONE, INDIANA, N.A.,
NATIONAL CITY BANK OF INDIANA
SUNTRUST BANK
THE NORTHERN TRUST COMPANY
and
BANK ONE, INDIANA, N.A., AS AGENT
Dated as of December 20, 2000
TABLE OF CONTENTS
Page
----
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Rules of Construction . . . . . . . . . . . . . . . . . . . . 12
1.3. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2. Credit . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.1. Revolving Commitment . . . . . . . . . . . . . . 12
2.1.2. Cash Management Line/Mandatory Funding . . . . . 13
2.2. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2.1. Revolving Commitment . . . . . . . . . . . . . . 13
2.2.2. Cash Management Line . . . . . . . . . . . . . . 14
2.2.3. General . . . . . . . . . . . . . . . . . . . . 14
2.3. Payments of Principal and Interest . . . . . . . . . . . . . 14
2.3.1. Revolving Commitment . . . . . . . . . . . . . . 14
2.3.2. Cash Management Line . . . . . . . . . . . . . . 15
2.3.3. Method of Payment . . . . . . . . . . . . . . . 15
2.3.4. Banking Day . . . . . . . . . . . . . . . . . . 15
2.4. Method of Advance . . . . . . . . . . . . . . . . . . . . . . 15
2.4.1. Revolving Commitment . . . . . . . . . . . . . . 15
2.4.2. Cash Management Line . . . . . . . . . . . . . . 16
2.4.3. General . . . . . . . . . . . . . . . . . . . . 17
2.5. Procedures for Electing Optional Rates . . . . . . . . . . . 17
2.6. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.6.1. Commitment Fee - Revolving Commitment . . . . . 19
2.6.2. Agent Fee . . . . . . . . . . . . . . . . . . . 19
2.7. Reductions and Increases of Revolving Commitment . . . . . . 19
2.7.1. Reductions . . . . . . . . . . . . . . . . . . . 19
2.7.2. Increases . . . . . . . . . . . . . . . . . . . 20
2.8. Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . 20
2.9. Issuance of Letters of Credit . . . . . . . . . . . . . . . . 21
2.10. Letters of Credit Participation and Fees . . . . . . . . . . 22
2.11. Reimbursement of Letters of Credit . . . . . . . . . . . . . 23
2.12. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 24
2.13. Lending Installations . . . . . . . . . . . . . . . . . . . . 24
PAGE
----
SECTION 3. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4. Representations and Warranties . . . . . . . . . . . . . 25
4.1. Due Organization . . . . . . . . . . . . . . . . . . . . . . 25
4.2. Due Qualification . . . . . . . . . . . . . . . . . . . . . . 25
4.3. Corporate Power . . . . . . . . . . . . . . . . . . . . . . . 25
4.4. Corporate Authority . . . . . . . . . . . . . . . . . . . . . 25
4.5. Financial Statements . . . . . . . . . . . . . . . . . . . . 26
4.6. No Material Adverse Change . . . . . . . . . . . . . . . . . 26
4.7. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 26
4.8. Binding Obligations . . . . . . . . . . . . . . . . . . . . . 26
4.9. Marketable Title . . . . . . . . . . . . . . . . . . . . . . 26
4.10. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 26
4.11. Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.12. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.13. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.14. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.15. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . 27
4.16. Contracts of Surety . . . . . . . . . . . . . . . . . . . . . 27
4.17. Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.18. Compliance with Law . . . . . . . . . . . . . . . . . . . . . 28
4.19. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . 28
4.20. Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . 28
4.21. Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.22. Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.23. Regulation . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.24. Environmental Compliance . . . . . . . . . . . . . . . . . . 29
4.25. General . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5. Covenants . . . . . . . . . . . . . . . . . . . . . . . . 29
5.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . 29
5.1.1. Financial Reporting . . . . . . . . . . . . . . 29
5.1.2. Good Standing . . . . . . . . . . . . . . . . . 31
5.1.3. Taxes, Etc . . . . . . . . . . . . . . . . . . 31
5.1.4. Maintain Properties . . . . . . . . . . . . . . 31
5.1.5. Insurance . . . . . . . . . . . . . . . . . . . 31
5.1.6. Books and Records . . . . . . . . . . . . . . . 31
5.1.7. Reports . . . . . . . . . . . . . . . . . . . . 32
5.1.8. Licenses . . . . . . . . . . . . . . . . . . . 32
5.1.9. Notice of Material Adverse Change . . . . . . . 32
5.1.10. Conduct of Business . . . . . . . . . . . . . . 32
PAGE
----
5.1.11. Compliance with Laws . . . . . . . . . . . . . 32
5.1.12. Use of Proceeds . . . . . . . . . . . . . . . . 32
5.1.13. Loan Payments . . . . . . . . . . . . . . . . . 32
5.1.14. Adjusted Consolidated Tangible Net Worth . . . 33
5.1.15. Consolidated Net Worth . . . . . . . . . . . . 33
5.1.16. Senior Leverage Ratio . . . . . . . . . . . . . 33
5.1.17. Fixed Charge Coverage Ratio . . . . . . . . . . 33
5.1.18. Notice of Environmental Matters . . . . . . . . 33
5.1.19. Banking Accounts . . . . . . . . . . . . . . . 34
5.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . 34
5.2.1. Dispose of Property . . . . . . . . . . . . . . 34
5.2.2. Further Encumber . . . . . . . . . . . . . . . 34
5.2.3. Dividends . . . . . . . . . . . . . . . . . . . 34
5.2.4. Purchase Stock . . . . . . . . . . . . . . . . 34
5.2.5. Borrowings . . . . . . . . . . . . . . . . . . 35
5.2.6. Loans, Etc. . . . . . . . . . . . . . . . . . . 35
5.2.7. Guarantees . . . . . . . . . . . . . . . . . . 35
5.2.8. Merger, Acquisitions, Etc. . . . . . . . . . . 35
5.2.9. Change Name and Place of Business . . . . . . . 36
5.2.10. Accounting Policies . . . . . . . . . . . . . . 36
5.2.11. Change of Business . . . . . . . . . . . . . . 36
5.2.12. Benefit Plan . . . . . . . . . . . . . . . . . 36
SECTION 6. Conditions Precedent to Loans . . . . . . . . . . . . . . 37
6.1. Conditions to Initial Advance . . . . . . . . . . . . . . . . 37
6.1.1. Authorization . . . . . . . . . . . . . . . . . 37
6.1.2. Loan Documents . . . . . . . . . . . . . . . . 37
6.1.3. Guaranty . . . . . . . . . . . . . . . . . . . 37
6.1.4. Incumbency Certificates . . . . . . . . . . . . 37
6.1.5. Opinion of Counsel . . . . . . . . . . . . . . 37
6.1.6. UCC Searches . . . . . . . . . . . . . . . . . 37
6.1.7. Regulation U . . . . . . . . . . . . . . . . . 37
6.1.8. Compliance Certificate . . . . . . . . . . . . 37
6.1.9. Facility Fees . . . . . . . . . . . . . . . . . 38
6.1.10. Termination of Existing Credit Agreement . . . 38
6.1.11. Additional Documentation . . . . . . . . . . . 38
6.2. Conditions to Subsequent Advances . . . . . . . . . . . . . . 38
6.2.1. No Default . . . . . . . . . . . . . . . . . . 38
6.2.2. Representations and Warranties . . . . . . . . 38
6.2.3. Legal Matters . . . . . . . . . . . . . . . . . 38
6.2.4. Expenses . . . . . . . . . . . . . . . . . . . 38
PAGE
----
6.3. Special Conditions to Advances for Permitted Acquisitions . . 38
6.3.1. Written Requests . . . . . . . . . . . . . . . 38
6.3.2. Acquisition Documents . . . . . . . . . . . . . 39
6.3.3. Representations of Target's Financial
Statements . . . . . . . . . . . . . . . . . . 39
6.3.4. Expenses . . . . . . . . . . . . . . . . . . . 39
6.4. General . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7. Default . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8. Remedy . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.1. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2. Deposit to Secure Reimbursement Obligations . . . . . . . . . 42
8.3. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.4. Preservation of Rights . . . . . . . . . . . . . . . . . . . 42
8.5. Actions by the Agent/Default Rate . . . . . . . . . . . . . . 42
SECTION 9. The Agent . . . . . . . . . . . . . . . . . . . . . . . . 43
9.1. Appointment; Nature of Relationship . . . . . . . . . . . . . 43
9.2. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.3. General Immunity . . . . . . . . . . . . . . . . . . . . . . 43
9.4. No Responsibility for Loans, Recital, etc. . . . . . . . . . 43
9.5. Action on Instructions of Lenders . . . . . . . . . . . . . . 44
9.6. Employment of Agents and Counsel . . . . . . . . . . . . . . 44
9.7. Reliance on Documents; Counsel . . . . . . . . . . . . . . . 44
9.8. Agent's Reimbursement and Indemnification . . . . . . . . . . 44
9.9. Notice of Default . . . . . . . . . . . . . . . . . . . . . . 45
9.10. Rights as a Lender . . . . . . . . . . . . . . . . . . . . . 45
9.11. Lender Credit Decision . . . . . . . . . . . . . . . . . . . 45
9.12. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . 45
9.13. Delegation to Affiliates . . . . . . . . . . . . . . . . . . 46
SECTION 10. Benefit of Agreement; Assignment, Participations . . . . 46
10.1. Successors and Assigns . . . . . . . . . . . . . . . . . . . 46
10.2. Participations . . . . . . . . . . . . . . . . . . . . . . . 47
10.2.1. Permitted Participants; Effect . . . . . . . . 47
10.2.2. Voting Rights . . . . . . . . . . . . . . . . . 47
10.2.3. Benefit of Setoff . . . . . . . . . . . . . . . 47
PAGE
----
10.3. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.3.1. Permitted Assignments . . . . . . . . . . . . . 48
10.3.2. Effect; Effective Date . . . . . . . . . . . . 48
10.4. Dissemination of Information . . . . . . . . . . . . . . . . 49
10.5. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11. General Provisions . . . . . . . . . . . . . . . . . . . 49
11.1. Waivers, Amendments and Remedies . . . . . . . . . . . . . . 49
11.2. Survival of Representations . . . . . . . . . . . . . . . . . 50
11.3. Governmental Regulation . . . . . . . . . . . . . . . . . . . 50
11.4. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.5. Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . 50
11.6. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.7. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 50
11.8. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.9. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 51
11.10. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 51
11.11. Giving Notice . . . . . . . . . . . . . . . . . . . . . . . . 51
11.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 51
11.13. Incorporation by Reference . . . . . . . . . . . . . . . . . 52
11.14. Time of Essence . . . . . . . . . . . . . . . . . . . . . . . 52
11.15. No Joint Venture . . . . . . . . . . . . . . . . . . . . . . 52
11.16. Severability . . . . . . . . . . . . . . . . . . . . . . . . 52
11.17. Waiver of Setoff . . . . . . . . . . . . . . . . . . . . . . 52
11.18. Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.19. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . 52
11.20. Lenders Not in Control . . . . . . . . . . . . . . . . . . . 53
11.21. Additional Amounts Payable . . . . . . . . . . . . . . . . . 53
11.22. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.23. Application of Proceeds . . . . . . . . . . . . . . . . . . . 54
11.24. Foreign Lender Withholding Tax . . . . . . . . . . . . . . . 54
11.25. Replacement of Lenders . . . . . . . . . . . . . . . . . . . 55
11.26. Relationship of Parties; Mutual Release of Consequential
Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.27. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . 55
Schedule I Lenders and Lenders' Revolving Commitments
Schedule II Permitted Encumbrances
Schedule 4.7 Subsidiaries
Schedule 4.10 Indebtedness
Exhibit A Compliance Certificate
Exhibit B Form of Revolving Note
Exhibit C Credit Note (Cash Management Line)
Exhibit D Form of Subsidiary Guaranty
Exhibit E Assignment Agreement
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT, dated as of the 20th day of December, 2000,
among CHROMCRAFT REVINGTON, INC., a Delaware corporation (the "Borrower"),
the Lenders party hereto as listed on Schedule I hereto, and BANK ONE,
INDIANA, N.A., a national banking association, as agent for the Lenders
hereunder (in such capacity, the "Agent"). The parties agree as follows:
SECTION 1
---------
Definitions
-----------
1.1. Defined Terms. As used in this Agreement:
"Adjusted Consolidated Tangible Net Worth" means, on any date of
determination, the amount by which (a) Consolidated Net Worth exceeds
(b) the sum of (i) all assets which would be classified as intangible
assets under GAAP, including without limitation, goodwill (whether
representing the excess of cost over book value of assets acquired or
otherwise), patents, trademarks, trade names, copyrights, franchises,
operating permits, unamortized debt discount and expense, organization
costs, and research and development costs, (ii) minority interests in
subsidiaries, (iii) cash set apart and held in a sinking or other
similar fund established for the purpose of redemption or other
retirement of capital stock, (iv) to the extent not otherwise
deducted, reserves for depreciation, depletion, obsolescence and/or
amortization of properties and all other reserves or appropriations of
retained earnings which, in accordance with GAAP, should be
established in connection with the business conducted by Borrower and
(v) any revaluation or other write-up in book value of assets
subsequent to the date hereof.
"Adjusted LIBOR" means, for each LIBOR Loan, the rate per annum
(rounded up, if necessary, to the nearest 1/16%) determined by the
Agent to be equal to the quotient of (a) the LIBOR divided by (b) 1
minus the Reserve Requirement.
"Advance" means a disbursement of proceeds of the Loans.
"Affiliate" means, with respect to any Person, any other Person
(a) directly or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with, such Person,
and (b) that directly or indirectly owns more than Ten Percent (10%)
of any class of the voting securities or capital stock of or equity
interests in such Person. A Person shall be deemed to control another
Person if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such
other Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agent" means Bank One, Indiana, NA., in its capacity as agent
for the Lenders hereunder, and any successor Agent appointed pursuant
to this Agreement.
"Agreement" means this Credit Agreement, as amended from time to time.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Prime Rate for such day, and (ii) the sum of
the Federal Funds Effective Rate for such day plus 1/2% per annum.
"Alternate Base Rate Loan" means any Loan when and to the extent
that the interest rate thereof is determined by reference to the
Alternate Base Rate.
"Applicable Margin" and "Applicable Fee" is determined by
reference to the following tables:
Applicable Margin
Applicable Margin for Federal Funds
Senior Leverage Ratio for LIBOR Loans Loans
--------------------- ----------------- -----------------
Equal to or greater than
2.00 to 1.00 1.125% 1.25%
Less than 2.00 to 1.00
but greater than or equal
to 1.50 to 1.00 .875% 1.00%
Less than 1.50 to 1.00
but greater than or equal
to 1.00 to 1.00 .75% .875%
Less than 1.00 to 1.00
but greater than or equal
to .50 to 1.00 .625% .75%
Less than .50 to 1.00 .50% .625%
Applicable Fee Applicable Fee
for Standby Letters for Commitment
Senior Leverage Ratio of Credit Fee
--------------------- ------------------- --------------
Equal to or greater than
2.0 to 1.00 1.125% .225%
Less than 2.0 to 1.00 but
greater than or equal to
1.5 to 1.00 .875% .20%
Less than 1.50 to 1.00 but
greater than or equal to
1.00 to 1.00 .75% .175%
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Less than 1.00 to 1.00 but
greater than or equal to
.50 to 1.00 .625% .15%
Less than .50 to 1.00 .50% .125%
The Applicable Margin and the Applicable Fee shall initially be
determined based on the Senior Leverage Ratio determined from
Borrower's most recent quarterly Financial Statements. Adjustments,
if any, to the Applicable Margin and the Applicable Fee shall be
effective five (5) Banking Days after the Agent has received
Borrower's Financial Statements delivered to the Lenders pursuant to
Section 5.1.1 hereof for the immediately preceding fiscal quarter. In
the event the Lenders have not received the required Financial
Statements pursuant to Section 5.1.1 hereof within the time periods
provided therein, the maximum Senior Leverage Ratio and the highest
Applicable Margin and Applicable Fee set forth in the foregoing tables
shall be conclusively presumed to be correct until five (5) Banking
Days after the applicable Financial Statements are so delivered. In
no event shall the Applicable Margin and the Applicable Fee be
adjusted downward if there exists a Default on the date on which such
downward adjustment would otherwise become effective until such time
as the Default has been cured, waived or ceases to exist. The
provisions of this definition are not intended to, and shall not be
construed to, authorize any violation by Borrower of Section 5.1.16
hereof or to constitute a waiver thereof or any commitment by the
Lenders to waive any violation by Borrower of Section 5.1.16 hereof.
"Authorized Officer" means any officer or employee of Borrower
whose authority to perform acts to be performed only by an Authorized
Officer under the terms of this Agreement are evidenced by (a) a
certified copy of an appropriate resolution of the Board of Directors
of Borrower, or (b) a written authorization specifying an employee of
Borrower signed by an Authorized Officer.
"Bank One" means Bank One, Indiana, N.A., a national banking
association, having its principal offices in Indianapolis, Indiana, in
its individual capacity.
"Banking Day" means a day on which the principal domestic office
of all the Lenders is open for the purpose of conducting substantially
all of its business activities, and, if the applicable day relates to
a LIBOR Loan, LIBOR Interest Period, or notice with respect to a LIBOR
Loan, a day on which dealings in U.S. dollar deposits are carried on
in the London interbank market and Lenders are open for business in
London.
"Borrower" shall have the meaning ascribed in the first paragraph
of this Agreement.
"Capitalized Lease" means any lease of property which would be
capitalized on a balance sheet of a Person prepared in accordance with
GAAP.
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"Capitalized Lease Obligations" means the amount of the
obligations of a Person under Capitalized Leases which would be shown
as liabilities on a balance sheet of such Person prepared in
accordance with GAAP.
"Cash Management Line" means the unsecured cash management line
of credit in the maximum principal amount of Five Million Dollars
($5,000,000) provided by Bank One to Borrower, governed by this
Agreement, including any renewal or extension thereof.
"Cash Management Note" means the Credit Note (Cash Management
Line), in substantially the form of Exhibit C hereto, duly executed by
Borrower to Bank One to evidence the Cash Management Line, including
any amendment, modification, renewal, extension or replacement
thereof.
"A Change in Control" shall be deemed to have occurred if (a) any
Person or group of Persons (other than (i) Borrower, (ii) any
Subsidiary of Borrower, (iii) any employee or director benefit plan or
stock plan of Borrower or a Subsidiary of Borrower or any trustee or
fiduciary with respect to any such plan when acting in that capacity
or any trust related to any such plan or (iv) 399 Venture Partners,
Inc.) shall have acquired beneficial ownership of shares representing
more than Twenty-Five Percent (25%) of the combined voting power
represented by the outstanding voting shares of Borrower (within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended, and the applicable rules and regulations thereunder)
or (b) during any period of twelve (12) consecutive months, commencing
before or after the date of this Agreement, individuals who on the
first day of such period were directors of Borrower (together with any
replacement or additional directors who were nominated or elected by a
majority of directors then in office) cease to constitute a majority
of the Board of Directors of Borrower.
"Commitment Fee" means the fee required to be paid by Borrower
pursuant to Section 2.6.1 hereof.
"Compliance Certificate" means a Compliance Certificate, in the
form attached hereto as Exhibit A, duly executed by the chief
executive officer or chief financial officer of Borrower.
"Consolidated Net Worth" means the excess of Borrower's
consolidated total assets over Borrower's Consolidated Total
Liabilities, each determined in accordance with GAAP and as shown on
the balance sheets furnished to the Lenders from time to time pursuant
to Section 5.1.1 hereof.
"Consolidated Total Liabilities" means the consolidated total
liabilities of Borrower and its Subsidiaries, determined in accordance
with GAAP and as shown on the financial statements furnished to the
Lenders from time to time pursuant to Section 5.1.1 hereof.
"Default" means an event described in Section 7 hereof.
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"Defaulting Lender" shall mean any Lender with respect to which a
Lender Default is in effect.
"Eligible Transferees" means a commercial bank, financial
institution or other "accredited investor" (as defined in Regulation D
of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder).
"Environmental Laws" means all provisions of laws, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by any
Governmental Authority concerning the protection of, or regulation of
the discharge of substances into, the environment or concerning the
health or safety of persons with respect to environmental hazards, and
includes, without limitation, the Hazardous Materials Transportation
Act, 42 U.S.C. Section 1801 et seq., the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Section
9601 et seq., Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Solid and Hazardous Waste
Amendments of 1984, 42 U.S.C. Section 6901 et seq., Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977,
33 U.S.C. Section 1251 et seq., Clean Air Act of 1966, as amended,
42 U.S.C. Section 7401 et seq., Toxic Substances Control Act of 1976,
15 U.S.C. Section 2601 et seq., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. Section 7401 et seq., Occupational Safety and
Health Act of 1970, as amended, 29 U.S.C. Section 651 et seq., Emergency
Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001
et seq., National Environmental Policy Act of 1975, 42 U.S.C. Section
4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 U.S.C.
Section 300(f) et seq., and any similar or implementing state law, and
all amendments, rules, and regulations promulgated thereunder.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, which together with Borrower would be treated as a
single employer under ERISA.
"Existing Credit Agreement" means the Credit Agreement dated as
of December 20, 1995 among Borrower, the banks party thereto and the
Agent.
"Facilities" means the Revolving Commitment, the Cash Management
Line, the Letters of Credit, and any other credit facility provided by
the Lenders from time to time pursuant to this Agreement.
"Federal Funds Effective Rate" means, for any day, an interest
rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published for such
day (or, if such day is not a Banking Day, for the immediately
preceding Banking Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Banking Day, the
average of the quotations at approximately 10:00 A.M. (Chicago time)
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on such day on such transactions received by the Agent from three (3)
Federal funds brokers of recognized standing selected by the Agent in
its sole discretion (rounded upward, if necessary, to the nearest
1/16%).
"Federal Funds Loans" means any Revolving Loan when and to the
extent that the interest rate thereof is determined by reference to
the Federal Funds Effective Rate.
"Financial Statements" means, as the context may require, (a) the
consolidated balance sheets of Borrower and its Subsidiaries as of
June 30, 2000 and their consolidated statements of income and retained
earnings and consolidated statement of cash flows for the periods then
ended, and (b) the consolidated financial statements of Borrower and
its Subsidiaries furnished from time to time pursuant to Section 5.1.1
hereof; in all cases, together with any accompanying notes thereto,
and any other documents or data furnished in connection therewith.
"Fixed Charge Coverage Ratio" means, as of the last day of any
fiscal quarter, the ratio of (a) the sum of (i) consolidated net
income before taxes for the 12-month period ending on such date of
determination, plus (ii) consolidated interest expense for the 12-
month period ending on such date of determination, plus (iii)
consolidated operating lease rental expense for the 12-month period
ending on such date of determination, divided by (b) the sum of (i)
consolidated interest expense for the 12-month period ending on such
date of determination, plus (ii) consolidated operating lease rental
expense for the 12-month period ending on such date of determination.
The Fixed Charge Coverage Ratio shall be determined in accordance with
GAAP and as shown in the Financial Statements furnished to the Lenders
from time to time pursuant to Section 5.1.1 hereof.
"GAAP" means generally accepted accounting principles in the
United States of America in effect from time to time as promulgated by
the Financial Accounting Standards Board and recognized and
interpreted by the American Institute of Certified Public Accountants.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including,
without limiting the generality of the foregoing, any agency, body,
commission, court or department thereof, whether federal, state, local
or foreign.
"Guarantors" means, jointly and severally, Chromcraft
Corporation, Peters-Revington Corporation, Silver Furniture Co., Inc.,
Silver Furniture Manufacturing Co., Inc., CRI Capital Corporation,
Korn Industries, Incorporated, CRI Corporation-Sumter, Cochrane
Furniture Company, Inc. and any other Subsidiaries of Borrower from
time to time.
"Guaranty" means the Subsidiary Guaranty, in substantially the
form of Exhibit D hereto, duly executed by each of the Guarantors to
the Lenders in connection with the Obligations, including any
modification or replacement thereof.
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"Indebtedness" means, for any Person, (a) all indebtedness or
other obligations of such Person for borrowed money or for the
deferred purchase price of property or services; (b) all indebtedness
or other obligations of any other Person for borrowed money or for the
deferred purchase price of property or services, the payment or
collection of which the subject Person has guaranteed (except by
reason of endorsement for collection in the ordinary course of
business) or in respect of which the subject Person is liable,
contingently or otherwise, including, without limitation, liability by
way of agreement to purchase, to provide funds for payment, to supply
funds to or otherwise to invest in such other Person, or otherwise to
assure a creditor against loss; (c) all indebtedness or other
obligations of any other Person for borrowed money or for the deferred
purchase price of property or services secured by (or for which the
holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, deed of trust, pledge,
lien, security interest or other charge or encumbrance upon or in
property owned by the subject Person, whether or not such Person has
assumed or become liable for the payment of such indebtedness or
obligations; and (d) Capitalized Lease Obligations.
"LC Issuer" means Bank One (or any subsidiary or affiliate of
Bank One designated by Bank One which has a credit rating not less
Bank One's credit rating) in its capacity as issuer of the Letters of
Credit hereunder.
"Lender" means the lending institutions listed on Schedule I
hereto, their successors and assigns, as well as any Person which
becomes a "Lender" hereunder pursuant to Section 10.3 hereof.
"Lender Default" shall mean (a) the refusal (which has not been
retracted) of a Lender to make available its portion of any borrowing
hereunder or (b) a Lender having notified in writing Borrower and/or
the Agent that it does not intend to comply with its obligations under
Section 2 hereof, in the case of either clause (a) or (b) as a result
of any takeover of such Lender by any regulatory authority or agency.
"Lending Installation" means, with respect to a Lender or the
Agent, the office, branch, subsidiary or affiliate of such Lender or
the Agent listed on the signature pages hereof or on a Schedule or
otherwise selected by such Lender or the Agent pursuant to Section
2.13 hereof.
"Letters of Credit" means standby and commercial letters of
credit, now or hereafter issued by the LC Issuer, from time to time,
at the request of, and for the account of, Borrower and issued on
behalf of Borrower or a Guarantor.
"Letter of Credit Applications" means, collectively, each
Application for Standby Letter of Credit and each Application and
Agreement for Irrevocable Letter of Credit, in the forms prescribed by
the LC Issuer, duly executed by Borrower in favor of the LC Issuer,
from time to time, to govern a Letter of Credit, as any of the same
may be amended from time to time.
"LIBOR" means, with respect to each LIBOR Advance for the
relevant LIBOR Interest Period, the applicable British Bankers'
Association Interest Settlement Rate for deposits in U.S. dollars
7
appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two
(2) Banking Days prior to the first day of such LIBOR Interest Period,
and having a maturity equal to such LIBOR Interest Period, provided
that, (a) if Reuters Screen FRBD is not available to the Agent for any
reason, the applicable LIBOR for the relevant LIBOR Interest Period
shall instead be the applicable British Bankers' Association Interest
Settlement Rate for deposits in U.S. dollars as reported by any other
generally recognized financial information service as of 11:00 a.m.
(London time) two (2) Banking Days prior to the first day of such
LIBOR Interest Period, and (b) if no such British Bankers' Association
Interest Settlement Rate is available to the Agent, the applicable
LIBOR for the relevant LIBOR Interest Period shall instead be the rate
determined by the Agent to be the rate at which Bank One or one of its
affiliate banks offers to place deposits in U.S. dollars with first-
class lenders in the London interbank market at approximately 11:00
a.m. (London time) two (2) Banking Days prior to the first day of such
LIBOR Interest Period, in the appropriate amount of Bank One's
relevant LIBOR Advance and having a maturity approximately equal to
such LIBOR Interest Period.
"LIBOR Interest Period" means, with respect to a LIBOR Advance, a
period of one (1), two (2), three (3) or six (6) months commencing on
a Banking Day selected by Borrower pursuant to this Agreement. Such
LIBOR Interest Period shall end on the day which corresponds
numerically to such date one (1), two (2), three (3) or six (6) months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second (2nd), third (3rd) or sixth
(6th) succeeding month, such LIBOR Interest Period shall end on the
last Banking Day of such next, second (2nd), third (3rd) or sixth
(6th) succeeding month. If a LIBOR Interest Period would otherwise
end on a day which is not a Banking Day, such LIBOR Interest Period
shall end on the next succeeding Banking Day, provided, however, that
if said next succeeding Banking Day falls in a new calendar month,
such LIBOR Interest Period shall end on the immediately preceding
Banking Day.
"LIBOR Loans" means any Loan when and to the extent that the
interest rate thereof is determined by reference to the Adjusted
LIBOR.
"Loan Documents" means this Agreement, the Notes, the Guaranty,
any Letter of Credit Applications, and any other documents or
instruments now or hereafter executed and delivered by or on behalf of
Borrower to any Lender or the Agent to evidence, govern or secure the
Obligations.
"Loans" means the Revolving Loans and the Advances under the Cash
Management Line.
"Mandatory Funding" shall have the meaning ascribed thereto in
Section 2.1.3 hereof.
"Net Income" means, for any period, the consolidated net income
of Borrower after deductions for income taxes, determined in
accordance with GAAP and as shown on Borrower's consolidated financial
statements furnished to the Lenders pursuant to Section 5.1.1 hereof.
"Notes" means, collectively, the Revolving Notes and the Cash
Management Note.
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"Obligations" means all of the unpaid principal amount of, and
accrued interest on, the Notes, actual and contingent reimbursement
obligations under the Letters of Credit, all commitment fees, Agent
fees, Letter of Credit fees, all other obligations and liabilities of
Borrower to the Lenders or to any Lender or to the Agent in connection
with the Facilities of every type and description, direct or indirect,
absolute or contingent, due or to become due, now existing or
hereafter arising, or otherwise arising under the Loan Documents
whether or not contemplated by Borrower or the Lenders as of the date
hereof, including, without limitation, all reasonable costs of
collection and enforcement of any and all thereof, including
reasonable attorneys' fees.
"Optional Rate" means a rate selected by Borrower to be
calculated by reference to the Adjusted LIBOR or the Federal Funds
Effective Rate.
"Participants" shall have the meaning ascribed thereto in Section
10.2.1 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to ERISA, or any successor entity.
"Permissible Increment" means a minimum principal amount of Five
Hundred Thousand Dollars ($500,000) and minimum increments of One
Hundred Thousand Dollars ($100,000) above Five Hundred Thousand
Dollars ($500,000).
"Permitted Encumbrances" means (a) liens for taxes or assessments
which are not yet due, liens for taxes or assessments or liens of
judgments which are being contested, appealed or reviewed in good
faith by appropriate proceedings which prevent foreclosure of any such
lien or levy of execution thereunder and against which liens, if any,
adequate insurance or reserves have been provided; (b) pledges or
deposits to secure payment of workers' compensation obligations and
deposits or indemnities to secure public or statutory obligations or
for similar purposes; (c) any liens and other security interests in
favor of the Lenders and/or the Agent under the Loan Documents; (d)
liens imposed by law, such as carrier's, warehousemen's and mechanics'
liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than sixty (60)
days past due; (e) utility easements, building restrictions, zoning
ordinances and such other encumbrances or charges against real
property as are of a nature generally existing with respect to
properties of a similar character and which do not in any material way
affect the marketability of the same or interfere with the use thereof
in the business of a Person; (f) lessors' interests under Capitalized
Leases; (g) liens encumbering only assets not constituting current
assets and securing Indebtedness of Borrower and its Subsidiaries not
exceeding in the aggregate Fifteen Percent (15%) of Borrower's
Adjusted Consolidated Tangible Net Worth at any one time outstanding;
and (h) those further encumbrances (if any) shown on Schedule II
hereto.
"Person" means and includes an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an
unincorporated organization and a Governmental Authority.
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"Plan" means an Employee Benefit Plan which is covered by Title 4
of ERISA or subject to the minimum lending standards under Section 412
of the Internal Revenue Service as to which Borrower may have any
liability.
"Prepayment Premium" means the excess, if any, determined by the
Required Lenders of (a) 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 the Optional Rate,
but for prepayment, less (b) the present value at the time of a
prepayment of interest payments calculated at the Reinvestment Rate.
The discount rate used by the Lenders in determining such present
value calculations shall be the Reinvestment Rate.
"Prime Rate" means a rate per annum equal to the prime rate of
interest announced from time to time by Bank One or its parent (which
is not necessarily the lowest rate charged to any customer), changing
when and as said prime rate changes.
"Pro Rata Share" means, for any Lender, when used with reference
to an aggregate or total amount, an amount equal to the product of (a)
such aggregate or total amount, times (b) a fraction, the numerator of
which shall be such Lender's Revolving Commitment (or, if the
Revolving Commitments have been terminated, the sum of such Lender's
outstanding Revolving Loans and share of the face amount of
outstanding Letters of Credit) and the denominator of which shall be
the sum of the aggregate Revolving Commitments (or, if the Revolving
Commitments have been terminated, the sum of the aggregate outstanding
Revolving Loans and the aggregate face amount of outstanding Letters
of Credit).
"Purchasers" shall have the meaning ascribed thereto in Section
10.3.1 hereof.
"Qualified Investments" means (a) short term obligations of, or
fully guaranteed by, the United States of America, (b) commercial
paper rated A-1 or better by Standard & Poor's Corporation or P-1 or
better by Moody's Investors Service, Inc., (c) demand deposit accounts
maintained in the ordinary course of business, and (d) certificates of
deposit issued by commercial Lenders having capital and surplus in
excess of One Hundred Million Dollars ($100,000,000).
"Reinvestment Rate" means a rate which the Required Lenders
estimate, at the time of a prepayment, they 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
Lenders) to that which is then presented by the LIBOR Loans for a
period approximately equal to the balance of the period during which
interest would accrue on the amount of LIBOR Loans prepaid, but for
prepayment.
"Replaced Lender" shall have the meaning ascribed thereto in
Section 11.25 hereof.
"Replacement Lender" shall have the meaning ascribed thereto in
Section 11.25 hereof.
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"Required Lenders" means Lenders in the aggregate holding
directly or indirectly through participation with respect to the
Letters of Credit at least Fifty-One Percent (51%) of the sum of (a)
the unpaid principal amount of the Loans, plus (b) the outstanding
face amount of all Letters of Credit; or, if no Loans, or Letters of
Credit are outstanding, Lenders in the aggregate having at least
Fifty-One Percent (51%) of the aggregate Revolving Commitments.
"Reserve Requirement" means, for any LIBOR Loan for any LIBOR
Interest Period therefor, the daily average of the stated maximum rate
(expressed as a decimal) at which reserves, including any marginal,
supplemental, or emergency reserves, are required to be maintained
during such LIBOR Interest Period under Regulation D by member Lenders
of the Federal Reserve System against "Eurocurrency liabilities" (as
such term is used in Regulation D), but without benefit or credit of
proration, exemptions, or offsets that might otherwise be available
from time to time under Regulation D. Without limiting the effect of
the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by the Lenders against any category
of liabilities that includes deposits by reference to which the
Adjusted LIBOR is to be determined or any category or extension of
credit or other assets that includes LIBOR Loans.
"Revolving Commitments" means, for each Lender, the amount set
forth opposite such Lender's name on Schedule I hereto directly below
the column entitled "Revolving Commitment."
"Revolving Commitment Period" means the period from the date
hereof until December 31, 2005.
"Revolving Loans" means the loans made by the Lenders to Borrower
under Section 2 hereof pursuant to their respective Revolving
Commitments, including any extensions or renewals thereof.
"Revolving Notes" means the Credit Notes, each substantially in
the form of Exhibit B hereto, duly executed by Borrower to the
respective Lenders to evidence the Revolving Loans, including any and
all renewals, extensions, replacements and modifications thereof.
"Senior Leverage Ratio" means, as of the last day of any fiscal
quarter of Borrower, the ratio of (a) all interest-bearing
Indebtedness (including Capitalized Lease Obligations) excluding
Subordinated Debt, divided by (b) the sum of (i) consolidated net
income before taxes for the 12-month period ending on such date of
determination, plus (ii) consolidated interest expense for the 12-
month period ending on such date of determination, plus (iii)
depreciation and amortization expenses for the 12-month period ending
on such date of determination. The Senior Leverage Ratio shall be
determined in accordance with GAAP and as shown in the Financial
Statements furnished to the Lenders from time to time pursuant to
Section 5.1.1 hereof.
"Subordinated Debt" means any Indebtedness of Borrower that is
subordinated to the full, final and irrevocable payment of the
Obligations in form and substance acceptable to the Lenders.
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"Subsidiary" of a Person means (i) any corporation more than 50%
of the outstanding securities having ordinary voting power of which
shall at the time be owned or controlled, directly or indirectly, by
such Person or by one or more of its Subsidiaries or by such Person
and one or more of its Subsidiaries, or (ii) any partnership, limited
liability company, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of Borrower.
"Target" shall have the meaning ascribed thereto in Section 6.3.1
hereof.
"Transferee" shall have the meaning ascribed in Section 10.4
hereof.
"Unmatured Default" means any event which with notice, or lapse
of time or both, would constitute a Default.
1.2. Rules of Construction. The foregoing definitions shall be
equally applicable to both the singular and plural forms of the
defined terms. Use of the terms "herein" "hereof", and "hereunder"
shall be deemed references to this Agreement in its entirety and not
to the Section clause in which such term appears.
1.3. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent
with those applied in the preparation of the Financial Statements.
SECTION 2
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Credit
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2.1. Commitments.
2.1.1. Revolving Commitment. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to
make Revolving Loans to Borrower from time to time during the
Revolving Commitment Period in a principal amount not in excess
of the unborrowed portion of such Lender's Revolving Commitment
on the borrowing date. No requested Revolving Loan Advance shall
cause the aggregate outstanding balance of the Revolving Loan
Advances plus the face amounts of outstanding Letters of Credit
and unreimbursed drawings thereunder plus the aggregate
outstanding principal balance of the Cash Management Line
Advances to exceed the aggregate Revolving Commitments. During
the Revolving Commitment Period, Borrower may use the Revolving
Commitments by borrowing, prepaying the Revolving Loans in whole
or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The Revolving Loans made by the Lenders
pursuant hereto shall be evidenced by the Revolving Notes.
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2.1.2. Cash Management Line/Mandatory Funding. Subject
to the terms and conditions of this Agreement, Bank One shall
make the Cash Management Line available to Borrower in a maximum
principal amount equal to the lesser of (a) the unborrowed
portion of its Revolving Commitment or (b) Five Million Dollars
($5,000,000). No requested Advance under the Cash Management
Line shall cause the aggregate outstanding principal balance of
Cash Management Line Advances plus the aggregate outstanding
principal balance of the Revolving Loan Advances plus the face
amount of outstanding Letters of Credit and unreimbursed drawings
thereunder to exceed the aggregate Revolving Commitments. During
the Revolving Commitment Period, Borrower may borrow, prepay and
reborrow such available amount under the Cash Management Line
from time to time, all in accordance with the terms and
conditions hereof. The Cash Management Line shall be evidenced
by the Cash Management Note. On any Banking Day, Bank One may,
in its sole discretion, give notice to the Lenders that the
outstanding principal balance of the Cash Management Line
Advances shall be funded with an Advance under the Revolving
Loans (provided that such notice shall be deemed to have been
automatically given upon the occurrence of a Default under
Section 7(f) or (g) hereof), in which case an Advance under the
Revolving Loans (each such Advance being referred to herein as a
"Mandatory Funding") shall be made on the immediately succeeding
Banking Day by all Lenders with a Revolving Loan pro rata based
on each such Lender's Revolving Commitment, and the proceeds
thereof shall be applied directly to Bank One to repay such
outstanding Cash Management Line Advances. Each Lender with a
Revolving Commitment hereby irrevocably agrees to make such
Revolving Loans pursuant to each Mandatory Funding in the amount
and in the manner specified in the preceding sentence and on the
date specified to it by Bank One notwithstanding: (a) that the
amount of the Mandatory Funding may not comply with the minimum
amount for a borrowing specified in Section 2.4.1 hereof; (b)
whether any conditions specified in Section 6 hereof are then
satisfied; (c) the date of such Mandatory Funding; and (d) any
reduction in the total Revolving Commitment after any such
Advances under the Cash Management Line were made. In the event
that any Mandatory Funding cannot for any reason be made on the
date otherwise required above (including, without limitation, as
a result of the commencement of a proceeding under the Bankruptcy
Code in respect of Borrower), each Lender with a Revolving
Commitment hereby agrees that it shall forthwith purchase from
Bank One (without recourse or warranty) such assignment of the
outstanding Advances under the Cash Management Line as shall be
necessary to cause such Lenders to share in such Advances ratably
based upon their respective Revolving Commitment, provided that
all interest payable on such Advances shall be for the account of
Bank One until the date the respective assignment is purchased
and, to the extent attributable to the purchased assignment,
shall be payable to the Lender purchasing same from and after
such date of purchase.
2.2. Interest.
2.2.1. Revolving Commitment. Prior to maturity or
Default, the principal amount of the Revolving Loans outstanding
from time to time shall bear interest at a rate per annum equal
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to the Alternate Base Rate, except that at the option of
Borrower, exercised as provided in Section 2.5 hereof, interest
may accrue prior to maturity on any Permissible Increment of
outstanding Advances of the Revolving Loans at a per annum rate
equal to (a) the Adjusted LIBOR plus the Applicable Margin,
and/or (b) the Federal Funds Effective Rate plus the Applicable
Margin. At the expiration of each LIBOR Interest Period on such
Permissible Increment in the case of LIBOR Loans, or upon the
next Banking Day in the case of Federal Funds Loans, unless, in
each case, Borrower selects an Optional Rate as provided in
Section 2.5 hereof, interest on such Permissible Increment shall
again accrue at the Alternate Base Rate.
2.2.2. Cash Management Line. Prior to maturity or
Default, outstanding Advances under the Cash Management Line from
time to time shall bear interest at a rate per annum equal to the
Alternate Base Rate, except that at the option of Borrower,
communicated by telephone or by telex, facsimile machine or other
form of written or electronic communication delivered to Bank
One, interest may accrue prior to maturity in minimum principal
increments of One Hundred Thousand Dollars ($100,000) of
outstanding Advances of the Cash Management Line for a period
until otherwise notified by Borrower at a per annum rate equal to
the Applicable Margin plus the Adjusted LIBOR having a LIBOR
Interest Period of one (1) month as determined by Bank One;
provided, that such Adjusted LIBOR shall be re-priced on each
Banking Day during such period. The Cash Management Line may
also accrue interest at such interest rate as Borrower and Bank
One mutually agree to in writing.
2.2.3. General. Interest shall be due and payable for
the exact number of days principal is outstanding and shall be
calculated on the basis of a three hundred sixty (360) day year.
Any change in the interest rates occasioned by a change in the
Alternate Base Rate shall be effective on the same day as the
change in the Alternate Base Rate. Subject to Section 8.5
hereof, notwithstanding the Required Lenders may allow the
election of an Optional Rate under Section 2.5(a) hereof while
there exists a Default, after the maturity of any Facility,
whether by acceleration or otherwise, and while and so long as
there shall exist any uncured Default under any Facility, the
Facilities shall bear interest at a per annum rate equal to Three
Percent (3%) above the otherwise applicable rates.
2.3. Payments of Principal and Interest.
2.3.1. Revolving Commitment. Interest only on the
outstanding Advances of the Revolving Loans from time to time
shall be due and payable throughout the term of the Revolving
Commitment (a) on the first day of each calendar month with
respect to each Alternate Base Rate Loan and Federal Funds Loan,
and (b) on the last day of an applicable LIBOR Interest Period
with respect to each LIBOR Loan and, in the case of a LIBOR
Interest Period greater than three (3) months, at three (3)
month intervals after the first day of such LIBOR Interest
Period. Unless the Revolving Commitments are extended by the
Lenders in their sole discretion, the entire principal balance of
the Revolving Loans, together with all accrued and unpaid
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interest thereon, and all fees and charges payable in connection
therewith, shall be due and payable on December 31, 2005.
2.3.2. Cash Management Line. Interest only on the
outstanding balance of the Cash Management Line from time to time
shall be due and payable on the first day of each month. From
time to time, Borrower shall make principal payments in respect
of the Cash Management Line in an amount sufficient so that the
outstanding principal balance of the Cash Management Line plus
the outstanding balance of the Revolving Loans plus the face
amounts of outstanding Letters of Credit and unreimbursed
drawings thereunder does not exceed the aggregate Revolving
Commitment. Unless the Cash Management Line is extended by Bank
One, the entire principal balance of the Cash Management Line,
together with all accrued and unpaid interest thereon, and all
fees and charges payable in connection therewith, shall be due
and payable on December 31, 2005.
2.3.3. Method of Payment. All payments of principal and
interest hereunder shall be made by Borrower to the Agent at its
main office in Indianapolis, Indiana by 12:00 Noon (Indianapolis
time) on the date when due, and shall be applied pro rata among
the Lenders in accordance with the outstanding principal amounts
of the Facilities held by them. Each payment delivered to the
Agent for the account of any Lender shall be delivered by the
Agent for the account of any Lender no later than 2:00 p.m.
(Indianapolis time) on the same day.
2.3.4. Banking Day. If any installment of principal or
interest provided herein becomes due and payable on a date other
than a Banking Day, the maturity of the installment of principal
or interest shall be extended to the next succeeding Banking Day,
and interest shall be payable during such extension of maturity.
2.4. Method of Advance.
2.4.1. Revolving Commitment. As Borrower desires to
obtain Revolving Loans hereunder, Borrower shall give the Agent
notice of Borrower's intention to borrow pursuant to the
Revolving Commitments by not later than 11:00 a.m. (Indianapolis
time), on the proposed Banking Day of borrowing, subject to
Section 2.5 hereof with respect to Optional Rate Advances and
subject to compliance with Section 6.3 hereof. Each request once
received by the Agent shall be irrevocable, subject to Section
2.5(h) hereof. Such notice may be made orally by an Authorized
Officer, or upon a request transmitted to the Agent by telex,
facsimile machine or other form of written electronic
communication and signed by an Authorized Officer. The Agent may
rely, without further inquiry, on all such requests which shall
have been received by it in good faith by anyone reasonably
believed to be an Authorized Officer. The Agent may require
telephonic or other oral requests to be followed immediately by a
written request. Each request shall in and of itself constitute
a representation and warranty on behalf of Borrower that no
Default or Unmatured Default has occurred and is continuing or
would result from the making of the requested Advance and that
the requested Advance shall not cause the principal balance of
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the Revolving Loans to exceed the aggregate Revolving
Commitments. The Agent shall notify the Lenders of Borrower's
intent to borrow by 12:00 p.m. (Indianapolis time) on the
proposed Banking Day of borrowing. Subject to the limitations of
Section 2.1 hereof, the principal amount of each Revolving Loan
made by each Lender shall be that portion of the aggregate loans
made that the Revolving Commitment of such Lender bears to the
aggregate of the Revolving Commitments of the Lenders. By 2:00
p.m. (Indianapolis time) on each such borrowing date, each Lender
severally agrees to make its portion of the Revolving Loan then
being made to Borrower by making available to the Agent, either
by wire transfer to the Agent's main office in Indianapolis,
Indiana, or by deposit to any correspondent account which Agent
may maintain with that Lender, the amount to be advanced by such
Lender. Borrower hereby authorizes the disbursement of each such
Revolving Loan (other than Revolving Loans made by payment of
Letters of Credit and other than Mandatory Fundings) by deposit
to the account of Borrower with Bank One, and Bank One, as Agent,
shall, by 2:30 p.m. (Indianapolis time) on the date received,
credit the amount so received from each Lender to the account of
Borrower with Bank One. The aggregate principal amount of
Revolving Loans (other than Revolving Loans made by payment of
Letters of Credit and other than Mandatory Fundings) made on any
borrowing date shall be a minimum of Five Hundred Thousand
Dollars ($500,000) and in integral multiples of One Hundred
Thousand Dollars ($100,000). Notwithstanding the foregoing,
Mandatory Fundings under the Revolving Loans shall be made in
accordance with Section 2.1.2 hereof with respect to repayment of
Cash Management Line Advances.
2.4.2. Cash Management Line. As Borrower desires to
obtain Advances under the Cash Management Line hereunder,
Borrower shall give the Agent and Bank One notice thereof by not
later than Noon (Indianapolis time), on the proposed Banking Day
of borrowing. Each request once received by Bank One shall be
irrevocable. Such notice may be made orally by an Authorized
Officer, or upon a request transmitted to the Agent and Bank One
by telex, facsimile machine or other form of written electronic
communication and signed by an Authorized Officer. The Agent and
Bank One may rely, without further inquiry, on all such requests
which shall have been received by it in good faith by anyone
reasonably believed to be an Authorized Officer. Bank One may
require telephonic or other oral requests to be followed
immediately by a written request. Each request shall in and of
itself constitute a representation and warranty on behalf of
Borrower that no Default or Unmatured Default has occurred and is
continuing or would result from the making of the requested
Advance. No requested Advance shall cause the principal balance
of the Cash Management Line to exceed Five Million Dollars
($5,000,000). Subject to borrowing availability, by 2:00 p.m.
(Indianapolis time) on each such borrowing date, Bank One agrees
to make its Advance under the Cash Management Line to Borrower by
deposit to the account of Borrower with Bank One. The aggregate
principal amount of Advances under the Cash Management Line made
on any borrowing date shall be a minimum of One Hundred Thousand
Dollars ($100,000) and in integral multiples of One Hundred
Thousand Dollars ($100,000).
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2.4.3. General. All Advances by the Lenders and payments
by Borrower shall be recorded by the Lenders on their books and
records, and the principal amount outstanding from time to time,
plus interest payable thereon shall be determined from the books
and records of the Lenders. The books and records of the Lenders
shall be presumed prima facie correct as to such matters.
2.5. Procedures for Electing Optional Rates. Optional Rates may
be elected only in accordance with the following procedures and
subject to the other conditions contained in this Agreement:
(a) Unless the Required Lenders otherwise agree, no
Optional Rate may be elected at any time a Default exists and
unless the Agent otherwise agrees, no Optional Rate may be
elected at any time an Unmatured Default exists.
(b) Borrower shall notify the Agent of its election or
renewal of an Optional Rate prior to 11:00 a.m. (Indianapolis
time) not less than three (3) Banking Days prior to the
commencement of a LIBOR Interest Period with respect to LIBOR
Loans, and the same Banking Day with respect to Federal Funds
Loans, specifying (i) the election or renewal date, (ii) the
amount of the Loan (or Loans taken together) elected or renewed
which amount shall be in a Permissible Increment, and (iii) in
the case of LIBOR Loans, the duration of the LIBOR Interest
Period selected to apply thereto. The Agent shall immediately
notify the Lenders whenever an Optional Rate is selected by
Borrower.
(c) An election of an Optional Rate may be communicated by
telephone or by telex, facsimile machine or other form of written
electronic communication, or by a writing delivered to the Agent.
Borrower shall confirm in writing any election communicated by
telephone. The Agent shall be entitled to rely on any verbal
communication of the election of an Optional Rate which is
received by a designated employee of the Agent from anyone
reasonably believed in good faith by such employee to be
authorized.
(d) Not more than Six (6) Optional Rate Advances may be
selected at any one time to apply to outstanding Advances.
(e) Notwithstanding any other provision of this Agreement,
in the event that the Agent determines (which determination if
made in good faith shall be conclusive and binding upon Borrower)
that by reason of circumstances affecting the London interbank
market, adequate and reasonable means do not exist for
ascertaining the LIBOR for any LIBOR Interest Period at a time
when LIBOR Loans are outstanding, or quotations of interest rate
for the relevant deposits referred to in definition of the
Adjusted LIBOR are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining the rate
of interest on a LIBOR Loan as provided herein, or if the
Required Lenders determine (which determination if made in good
faith shall be conclusive) that the relevant rates of interest
referred to in the definition of the Adjusted LIBOR upon the
17
basis of which the rate of interest for any such type of Loan is
to be determined, to not accurately cover the cost to the Lenders
of making or maintaining such types of Loans, the Agent shall
forthwith give notice of such determination, confirmed in
writing, to Borrower. If such notice is given, (i) the
obligation of the Lenders to make LIBOR Loans shall be suspended
until the Agent notifies Borrower that the circumstances giving
rise to such suspension no longer exists, and (ii) the then
outstanding principal amount of each LIBOR Loan shall be
converted, on the last day of the then current LIBOR Interest
Period applicable to such Loan, to an Alternate Base Rate Loan
(subject to selection of any other permitted Optional Rate
hereunder, subject to the provisions of Sections 2.2 and 2.5
hereof).
(f) If any law or any governmental regulation, guideline or
order or interpretation or application thereof by any
Governmental Authority charged with the interpretation or
administration thereof or compliance with any request or
directive of any central bank or other Governmental Authority
whether or not having the force of law (i) imposes, modifies or
deems applicable any reserve, special deposit or similar
requirement against assets held by, credit extended by, deposits
with or for the account of, or other acquisition of funds by, any
Lender (other than requirements expressly included herein in the
determination of the applicable Optional Rate hereunder), or (ii)
imposes upon any Lender any other condition or expense with
respect to this Agreement, or the making, maintenance or funding
of any part of the proceeds of an Optional Rate Advance or any
security therefor; and the result of any of the foregoing is to
increase the cost to, reduce the income receivable by, or impose
any expense upon any Lender with respect to the outstanding
balance of the Loans bearing interest at an Optional Rate or the
making, maintenance or funding of any part thereof by an amount
which any Lender deems to be material (any Lender being deemed
for this purpose to have made, maintained or funded the proceeds
of an Optional Rate Advance from certificates of deposit), such
Lender shall from time to time notify Borrower of the amount
determined in good faith (using any averaging and attribution
methods employed in good faith) by such Lender (which
determination if made in good faith shall be conclusive and
binding upon Borrower) to be necessary to compensate such Lender
for such increase in cost, reduction in income or additional
expense. Such amount shall be due and payable by Borrower to
such Lender ten (10) Banking Days after such notice is given. A
certificate as to the amount of such increase in cost, reduction
in income or additional expense delivered by such Lender to
Borrower shall be conclusive as to such amount due and payable.
(g) Any payment of the outstanding principal balance of a
LIBOR Loan on a day other than the last day of the corresponding
LIBOR Interest Period (whether or not such payment is mandatory
or automatic and whether or not such payment is then due) shall
be subject to contemporaneous payment of the Prepayment Premium
if, at the time of prepayment, the Reinvestment Rate is less than
the Adjusted LIBOR plus the Applicable Margin. If at the time of
any voluntary or mandatory prepayment of any portion of the
principal of any Loan, then any prepayment of principal will be
applied first to the portion of a Loan or Loans on which interest
accrues by reference to the Alternate Base Rate and the Federal
18
Funds Effective Rate and next to the portion or portions at which
interest accrues by reference to the Adjusted LIBOR.
(h) In addition to the compensation required by Section 2.5
(f) and (g) hereof, Borrower shall indemnify each Lender (on a
net basis) against any loss or expense (including loss of margin)
which any Lender has sustained or incurred as a consequence of
any attempt by Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or in part any notice
stated herein to be irrevocable (the Agent having in its sole
discretion the option (a) to give effect to such attempted
revocation and obtain indemnity under this Section 2.5(h), or (b)
to treat such attempted revocation as having no force or effect,
as if never made). If any Lender sustains or incurs any such
loss or expense it shall notify Borrower of the amount determined
in good faith by such Lender (which determination shall be
presumed to be correct) to be necessary to indemnify such Lender
for such loss or expense. Such amount shall be due and payable
by Borrower to such Lender ten (10) Banking Days after such
notice is given.
2.6. Fees.
2.6.1. Commitment Fee - Revolving Commitment. Borrower
shall pay to the Agent, for the pro rata benefit of the Lenders,
a Commitment Fee equal to the Applicable Fee on the average daily
unborrowed portion of the Revolving Commitment from the date
hereof to and including the termination of the Revolving
Commitment Period, which fee shall be due and payable quarterly
in arrears, within fifteen (15) days of receipt of an invoice
therefor; provided, however, for purposes of calculating Bank
One's pro rata share of the Commitment Fee due from Borrower,
outstanding Advances under the Cash Management Line shall be
deemed to count as borrowed under the Revolving Commitment. Such
Commitment Fee shall be calculated on the basis of the actual
number of days elapsed and a Three Hundred Sixty (360) day year.
2.6.2. Agent Fee. Borrower shall pay the Agent an
agent's fee, the terms and provisions of which fee shall be
subject to a separate written agreement executed by the Agent and
Borrower.
2.7. Reductions and Increases of Revolving Commitment.
2.7.1. Reductions. Borrower may permanently reduce the
Revolving Commitments in whole, or in part ratably among the
Lenders in integral multiples of Five Million Dollars
($5,000,000), upon at least three (3) Banking Days' written
notice to the Agent, which notice shall specify the amount of any
such reduction, provided, however, that the amount of the
Revolving Commitments may not be reduced below the aggregate
principal amount of the outstanding Revolving Loan Advances plus
the aggregate principal amount of the outstanding Cash Management
Line Advances plus the face amount of any outstanding Letters of
Credit and unreimbursed drawings thereunder.
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2.7.2. Increases. Borrower may request to increase the
Revolving Commitments (in integral multiples of Five Million
Dollars ($5,000,000)) up to an aggregate Revolving Commitment of
Sixty-Seven Million Five Hundred Thousand Dollars ($67,500,000)
upon the same terms, provisions and pricing as provided in this
Agreement. Each Lender shall have the option, but no obligation,
to participate in accordance with its Pro Rata Share in the
requested increase. If any Lender declines to participate in
such requested increase, the other Lenders shall have the option
to further participate in such amount. If a requested increase
is not fully committed by the existing Lenders, the Agent may
seek, after consultation with Borrower, other potential lenders
to fully commit the requested increase. Notwithstanding the
foregoing, Borrower's ability to request an increase in the
Revolving Commitments under this Section 2.7.2 shall be limited
to an amount equal to the difference between Twenty Million
Dollars ($20,000,000) and the amount by which Borrower has
obtained alternative financing for general working capital
purposes and/or acquisition financing from third party lenders or
other Lenders outside the arrangements contemplated by this
Agreement as permitted under Section 5.2.5(f) hereof. No
requested increase in the Revolving Commitments under this
Section 2.7.2 shall be effective until (a) an amendment to this
Agreement, amending Schedule I hereto, has been executed by
Borrower, the Agent and the Lenders providing any part of the
increase in the Revolving Commitment, and (b) Borrower has
executed new or replacement Notes in the principal amounts
reflecting the increase in the Revolving Commitments.
2.8. Non-Receipt of Funds by the Agent.
(a) From the Lenders. Unless the Agent shall have received
notice from a Lender by 2:00 p.m. on a proposed Banking Day on
which such Lender is to provide funds to the Agent for a Loan to
be made by such Lender that such Lender will not make available
to the Agent such funds, the Agent may assume that such Lender
has made such funds available to the Agent on the date of such
Loan in accordance with this Agreement and the Agent in its sole
discretion may, but shall not be obligated to, in reliance upon
such assumption, make available to Borrower on such date a
corresponding amount. If and to the extent such Lender has not
made such funds available to the Agent (and provided such Lender
was given timely notice in accordance with this Agreement), such
Lender agrees to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day
from the date such amount is made available to Borrower until the
date such amount is repaid to the Agent, at a rate per annum
equal to the Federal Funds Effective Rate. If such Lender shall
repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Lender's Loan for purposes of this
Agreement. If such Lender does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall
promptly notify Borrower, and Borrower shall immediately pay such
corresponding amount to the Agent with interest thereon, for each
day from the date such amount is made available to Borrower until
the date such amount is repaid to the Agent, at the rate of
interest applicable at the time to the relevant Loan.
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(b) From Borrower. Unless the Agent shall have received
notice from Borrower prior to the date on which any payment is
due to the Lenders hereunder that Borrower will not make such
payment in full, the Agent may assume that Borrower has made such
payment in full to the Agent on such date and the Agent in its
sole discretion may, but shall not be obligated to, in reliance
upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender.
If and to the extent Borrower has not made such payment in full
to the Agent, each Lender shall repay to the Agent forthwith on
demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is
distributed to such Lender until the date the Agent recovers such
amount at a rate per annum equal to the Federal Funds Effective
Rate.
2.9. Issuance of Letters of Credit. Subject to the terms and
conditions hereof, the LC Issuer agrees, upon receipt of a completed
and executed proper application, to issue on behalf of the Lenders
from time to time during the Revolving Commitment Period, commercial
and standby Letters of Credit for the account of Borrower. The
Letters of Credit shall not be payable to the beneficiary thereof less
than One (1) Banking Day after presentment for payment. The
commercial Letters of Credit shall have an expiration date not later
than the earlier of six months from the date of issuance or one day
before the expiration of the Revolving Commitment Period. The standby
Letters of Credit shall have an expiration date not later than one day
before the expiration of the Revolving Commitment Period. The
aggregate of the Letters of Credit outstanding plus the aggregate
amount of unreimbursed drawings under the Letters of Credit shall not
exceed Seven Million Five Hundred Thousand Dollars ($7,500,000). The
amount of any Letter of Credit outstanding at any time for all
purposes hereof shall be the maximum amount which could be drawn
thereunder under any circumstances from and after the date of
determination. Each Letter of Credit issued pursuant to this
Agreement and each unreimbursed drawing thereunder shall count against
and reduce the Revolving Commitments by the amount of such Letter of
Credit outstanding unless and until such Letter of Credit expires by
its terms or otherwise terminates or the amount of a drawing
thereunder is reimbursed, in which event the Revolving Commitments
shall be reinstated by the amount of such Letter of Credit or the
amount of such reimbursement, as the case may be. Each such Letter of
Credit shall conform to the general requirements of the LC Issuer for
the issuance of such credits, as to form and substance, shall be
subject to the Uniform Customs and Practices for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500
and shall be a letter of credit which the LC Issuer may lawfully
issue. Each payment of a Letter of Credit by the LC Issuer shall be
reimbursed by Advances under the Revolving Commitments evidenced by
the Revolving Notes. If and to the extent a drawing is at any time
made under any Letter of Credit, the LC Issuer shall notify Borrower,
the Agent and the other Lenders of such draw and Borrower agrees to
pay to the LC Issuer immediately and unconditionally upon demand for
reimbursement, in lawful money of the United States, an amount equal
to each amount which shall be so drawn, together with interest from
the date of such drawing to and including the date such payment is
reimbursed to the LC Issuer or converted to Revolving Commitments as
provided herein. Until demand for reimbursement, such interest shall
be calculated at a variable rate per annum equal to the Alternate Base
Rate, and interest shall be calculated after such demand at a variable
21
rate per annum equal to the Alternate Base Rate plus Three Percent
(3%). All such interest shall be calculated on the basis that an
entire year's interest is earned in Three Hundred Sixty (360) days.
On the date of reimbursement, the LC Issuer shall notify the Agent and
the other Lenders by 12:00 Noon (Indianapolis time) that Advances
under the Revolving Commitments are required to reimburse the LC
Issuer. Borrower hereby irrevocably authorizes the Lenders to
refinance, without notice to Borrower, the reimbursement Obligation of
Borrower arising out of any such drawing into Revolving Loans,
evidenced by the Revolving Notes and for all purposes under, on and
subject to the terms and conditions of this Agreement, but without
regard to the conditions precedent to making an Advance under the
Revolving Commitments or to any requirement of this Agreement that
each Revolving Loan be in a minimum amount or multiple; provided,
however, that an Advance under the Revolving Commitments in spite of
Borrower's failure to satisfy any conditions precedent to making an
Advance shall not constitute a waiver of any Default by the Lenders.
This Agreement and the other Loan Documents shall supersede any terms
of any letter of credit applications or other documents which are
irreconcilably inconsistent with the terms hereof or thereof. By 2:00
p.m. (Indianapolis time) on each date the Lenders have received notice
that Advances under the Revolving Commitments are required to
reimburse the LC Issuer for draws under the Letters of Credit, each
Lender severally agrees to make its portion of the Revolving Loans
then being made by making available to the Agent, either by wire
transfer to the Agent's main office in Indianapolis, Indiana, or by
deposit to any correspondent account which the Agent may maintain with
that Lender, the amount to be advanced by such Lender. By 2:30 p.m.
(Indianapolis time) on each such date, the Agent shall reimburse the
LC Issuer, but only from funds received by the Agent, the amount paid
on Letters of Credit that date, either by wire transfer or by deposit
to the LC Issuer's correspondent account with the Agent (or as
otherwise agreed between the LC Issuer and the Agent).
2.10. Letters of Credit Participation and Fees. For
administrative convenience, the LC Issuer shall issue the Letters of
Credit for the account of Borrower pursuant to the arrangements set
forth herein, and, the outstanding portion of each Letter of Credit
shall be deemed to utilize a Pro Rata Share of the Revolving
Commitment of each Lender. Each Lender severally agrees to participate
in each Letter of Credit issued by the LC Issuer hereunder according
to its Pro Rata Share of the Revolving Commitments. Each Lender's
participation shall be funded by funding its Pro Rata Share of the
Revolving Commitments upon any drawing under any Letter of Credit not
reimbursed the same day as a drawing thereunder by Borrower by 2:00
p.m. (Indianapolis time) by making such funds available to the Agent
in accordance with Sections 2.4.1 and 2.9 hereof; and thereupon, each
such Lender shall be entitled to, and the LC Issuer or the Agent, as
applicable, shall remit to each such Lender, their respective Pro Rata
Share of any amounts (including any interest thereon) received by the
LC Issuer or the Agent, as applicable, in reimbursement of such
drawing. The LC Issuer shall furnish to such Lenders, each time any
Letter of Credit either is issued or drawn under (whether in whole or
in part), a participation certificate showing the aggregate amount of
the LC Issuer's Letters of Credit issued and unexpired or unfunded and
the amount of their respective Pro Rata Share thereof. Borrower
agrees to pay to the LC Issuer, Letter of Credit fees of One-Eighth
Percent (1/8%) of the face amount of each commercial Letter of Credit
(subject to a minimum fee in each case of Fifty Dollars ($50) and the
Applicable Fee per annum of the face amount of each standby Letter of
Credit at the time of issuance. Borrower shall also pay a negotiating
22
fee equal to One-Eighth Percent (1/8%) for drafts of commercial
Letters of Credit presented for payment (subject to a minimum fee in
each case of Fifty Dollars ($50). Such Letter of Credit fees will be
allocated among the Lenders in accordance with their respective Pro
Rata Shares and will be remitted to the other Lenders (a) promptly by
the LC Issuer with the participation certificate with respect to
standby Letters of Credit, and (b) quarterly in arrears with respect
to commercial Letters of Credit. The LC Issuer shall also be entitled
to charge to Borrower and retain its standard and customary fees for
the issuance of standby Letters of Credit, which fees shall be due and
payable upon such issuance. Upon not less than one (1) day prior
notice from the LC Issuer, Borrower authorizes the LC Issuer to
collect such fees by deducting the amount thereof from the deposit
account of Borrower.
2.11. Reimbursement of Letters of Credit. The obligation of
Borrower to reimburse any drawing under any Letter of Credit shall be
absolute, unconditional and irrevocable and shall be paid and
performed strictly in accordance with the terms of this Agreement
under all circumstances, whatsoever, including, without limitation,
the following:
(a) any lack of validity or enforceability of any Letter of
Credit, or any Loan Document;
(b) any amendment or waiver of or consent to departure from
the terms of any Loan Document;
(c) the existence of any claim, setoff, defense or other
right which Borrower may have at any time against the beneficiary
or any Letter of Credit, any transferee of any Letter of Credit,
the Lenders or any other Person, whether in connection with the
Loan Documents, such Letter of Credit, or any unrelated
transaction;
(d) any statement, draft or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect whatsoever;
(e) the surrender or impairment of any security for the
performance or observance of the terms of the Loan Documents or
such Letter of Credit; or
(f) any circumstance, happening or admission whatsoever,
whether or not similar to any of the foregoing, including,
without limitation, those matters described below.
The parties benefitted by any Letter of Credit shall be deemed to
be the agents of Borrower, and except as expressly set forth herein,
Borrower assumes all risks for their acts, omissions, or
misrepresentations. Neither the LC Issuer nor any of its affiliates
or correspondents shall be responsible for the validity, sufficiency,
truthfulness or genuineness of any document required to draw under any
Letter of Credit even if such document should in fact prove to be in
any and all respects invalid, insufficient, fraudulent or forged,
provided only that the document appears on its face to be in
accordance with the terms of the Letter of Credit. The LC Issuer, its
23
affiliates and correspondents shall not be responsible for any failure
of any draft to bear reference or adequate reference to the applicable
Letter of Credit or for the failure of any Person to note the amount
of any draft on any Letter of Credit or to surrender or take up any
Letter of Credit, each of which provisions may be waived by the LC
Issuer, or for errors, omissions, interruptions, or delays in
transmission or delivery of any messages or documents. Without
limiting the generality of the foregoing, Borrower agrees that any
action taken by the LC Issuer or any of its affiliates or
correspondents under or in connection with any Letter of Credit shall
be binding upon Borrower and shall not put the LC Issuer or any such
affiliates or correspondents under any such resulting liability to
Borrower except in the case of gross negligence or willful misconduct.
The LC Issuer shall not be liable for consequential damages or for any
action or failure to take action under or in connection with any
Letter of Credit except for any such action or failure to take action
which constitutes gross negligence or willful misconduct. The LC
Issuer is expressly hereby authorized to honor any request for payment
which is made under or in compliance with the terms of any Letter of
Credit without regard to and without any duty on its part to inquire
into the existence of any disputes or controversies between Borrower
and any beneficiary of any Letter of Credit or any other Person or
into respective rights, duties or liabilities of any of them or
whether any facts or occurrences represented in any of the documents
presented under any Letter of Credit are true and correct. No Person,
other than the parties hereto, shall have any rights of any nature
under this Agreement or by reason hereof. The LC Issuer shall not be
liable to the Lenders participating in any Letter of Credit except for
gross negligence or willful misconduct in connection with such Letter
of Credit. In no event shall the LC Issuer's reliance and payment
against documents presented under a Letter of Credit appearing on its
face to substantially comply with the terms thereof be deemed to
constitute gross negligence or willful misconduct.
2.12. Use of Proceeds. The proceeds of Advances under the
Revolving Commitment and the Cash Management Line shall be used for
general working capital purposes of Borrower and its Subsidiaries, to
fund acquisitions as permitted in this Agreement and for other proper
corporate purposes not prohibited by this Agreement.
2.13. Lending Installations. Each Lender may book its Loans and
its participation in any Letters of Credit and the LC Issuer may book
the Letters of Credit at any Lending Installation selected by such Lender
or the LC Issuer, as the case may be, and may change its Lending
Installation from time to time. All terms of this Agreement shall apply
to any such Lending Installation and the Loans, the Letters of Credit,
participations in the Letters of Credit and any Notes issued hereunder
shall be deemed held by each Lender or the LC Issuer, as the case may be,
for the benefit of any such Lending Installation. Each Lender and the LC
Issuer may, by written notice to the Agent and the Borrower in accordance
with Section 10.11 hereof, designate replacement or additional Lending
Installations through which Loans will be made by it or the Letters of
Credit will be issued by it and for whose account Loan payments or payments
with respect to the Letters of Credit are to be made.
24
SECTION 3
---------
Guaranty
--------
The Obligations of Borrower shall be unconditionally, jointly and
severally guaranteed by the Guarantors pursuant to their respective
Guaranty. In addition, any Subsidiary, created or acquired hereafter
by Borrower or a Guarantor, shall execute and deliver to the Agent,
upon the earlier of such acquisition or capitalization of such
Subsidiary but in any event not later than the date Borrower obtains
an Advance to be used in connection with, or related to, such Subsidiary,
a Guaranty substantially in the form of Exhibit D hereto.
SECTION 4
---------
Representations and Warranties
------------------------------
In order to induce the Lenders to enter into this Agreement and
to make Loans pursuant to their Revolving Commitments and the Cash
Management Line, and to issue Letters of Credit, Borrower represents
and warrants to the Lenders, which representations and warranties will
survive the delivery of the Notes, the making of the Loans and the
establishment of the Facilities, that:
4.1. Due Organization. Borrower and each Subsidiary is a
corporation duly organized, validly existing and in good standing (if
applicable) under and by virtue of the laws of its state of
incorporation.
4.2. Due Qualification. Borrower and each Subsidiary is
qualified, in good standing (if applicable) and authorized to do
business as a foreign corporation in such other states wherein the
failure to so qualify would have a material adverse effect on its
business.
4.3. Corporate Power. Borrower possesses the requisite power to
enter into the Loan Documents, to borrow under the Loan Documents, to
execute and deliver the Loan Documents and to perform its respective
obligations thereunder.
4.4. Corporate Authority. Borrower has taken the necessary
corporate action to authorize the execution and delivery of the Loan
Documents and the borrowings thereunder, and none of the provisions of
the Loan Documents violates, breaches, contravenes, conflicts with, or
causes a default under any provision of the articles of incorporation
or by-laws of Borrower or any provision of any existing note, bond,
mortgage, debenture, indenture, trust, license, lease, instrument,
decree, order, judgment, or agreement to which Borrower is a party or
by which it or its assets may be bound or affected. Each Guarantor
has taken the necessary corporate action to authorize the execution
and delivery of its Guaranty, and none of the provisions of the
Guaranty violates, breaches, contravenes, conflicts with, or causes a
default under any provision of the articles of incorporation or by-
laws of any Guarantor or any provision of any existing note, bond,
mortgage, debenture, indenture, trust, license, lease, instrument,
25
decree, order, judgment, or agreement to which such Guarantor is a
party or by which it or its assets may be bound or affected.
4.5. Financial Statements. The Financial Statements were
prepared in accordance with GAAP consistent with prior years, unless
specifically otherwise noted thereon, and fairly present the financial
condition of Borrower as of the date thereof and the results of its
operations for the period then ended, and no material adverse change
in the business, operations, financial condition, properties or
prospects of Borrower has occurred since the date of the Financial
Statements.
4.6. No Material Adverse Change. The information submitted by
Borrower to the Lenders discloses all known or anticipated material
liabilities, direct or contingent, of Borrower as of the dates
thereof, and since such dates, there has been no material adverse
change in Borrower's financial condition.
4.7. Subsidiaries. Except as set forth on Schedule 4.7 hereto,
Borrower has no Subsidiaries or other ownership interest in any
Person. Except as set forth on Schedule 4.7 hereto, there are no
restrictions on Borrower or any of its Subsidiaries which prohibit or
otherwise restrict the transfer of cash or other assets from any
Subsidiary of Borrower to Borrower, other than prohibitions or
restrictions existing under or by reason of (a) this Agreement, and
(b) applicable law.
4.8. Binding Obligations. Each of the Loan Documents, when
issued for value, will constitute legal, valid and binding obligations
of Borrower and its Subsidiaries, as applicable, enforceable against
Borrower and its Subsidiaries, as applicable, in accordance with its
terms, except as the same may be limited by reorganization,
bankruptcy, insolvency, moratorium or other laws affecting generally
the enforcement of creditors' rights.
4.9. Marketable Title. Borrower and each subsidiary has good and
marketable title to all of its real property and good title to all of
its other properties and assets shown on the Financial Statements,
except such properties or assets as have been disposed of since the
date of such statements in the ordinary course of business. Except
for Permitted Encumbrances, none of the assets of Borrower and its
Subsidiaries are subject to any mortgage, pledge, security interest,
title retention lien or other encumbrance. Except to evidence
Permitted Encumbrances, no financing statement or similar instrument
which names Borrower or its Subsidiaries as debtor or relates to any
of its property, has been filed in any state or other jurisdiction and
remains unreleased, and Borrower has not signed any financing
statement or similar instrument or security agreement authorizing the
secured party thereunder to file any such financing statement or
similar instrument.
4.10. Indebtedness. Except as shown on the Financial
Statements, except trade debt incurred in the ordinary course of
business since the date of the Financial Statements, except for
Indebtedness of Borrower owed to a Guarantor and Indebtedness of a
Guarantor owed to Borrower or another Guarantor, and except as shown
on Schedule 4.10 hereto, Borrower and its Subsidiaries have no
outstanding Indebtedness.
26
4.11. Default. Neither Borrower nor any of its Subsidiaries
has committed or suffered to exist any default or any circumstance
which with notice, lapse of time, or both, would constitute a default
under the terms and conditions of any trust, debenture, indenture,
note, bond, instrument, mortgage, lease, agreement, order, decree, or
judgment to which Borrower or its Subsidiaries is a party or by which
it or its assets may be bound or affected, which would have a material
adverse effect upon the business, operations, financial condition, or
properties of the Borrower and its Subsidiaries taken as a whole.
4.12. Tax Returns. All tax returns or reports of Borrower
and its Subsidiaries required by law have been filed, and all taxes,
assessments, contributions, fees and other governmental charges (other
than those presently payable without penalty or interest and those
currently being contested in good faith and against which adequate
reserves have been established) upon Borrower, its Subsidiaries or
their assets, properties or income, which are payable, have been paid.
4.13. Litigation. No litigation or proceeding of any
Governmental Authority or other Person is presently pending or, to
Borrower's knowledge, threatened, nor has any claim been asserted,
against Borrower or its Subsidiaries which, if adversely determined,
would materially affect the business, operations, financial condition,
properties or prospects of Borrower and its Subsidiaries taken as a
whole.
4.14. ERISA. Borrower and each ERISA Affiliate is in
compliance in all material respects with all applicable provisions of
ERISA, and neither Borrower nor any ERISA Affiliate has incurred any
material liability to the PBGC. Neither a "reportable event", nor a
"prohibited transaction", has occurred under, nor has there occurred
any complete or partial withdrawal from, nor has there occurred any
other event, which would constitute grounds for termination of or the
appointment of a trustee to administer any "employee benefit plan"
(including any "multi-employer plan") maintained for employees of
Borrower or any ERISA Affiliate, all within the meanings ascribed by
ERISA, which would have a material adverse effect upon the business,
operations, financial condition or properties of the Borrower and its
Subsidiaries taken as a whole.
4.15. Full Disclosure. No information, exhibit, memorandum,
or report (excluding estimated future operating results and excluding
information prepared by Persons other than Borrower and its employees
and as designated as such by Borrower) furnished by Borrower to the
Lenders in connection with the negotiation of the Facilities contains
any material misstatement of fact, or omits to state any fact
necessary to make the statements contained therein not materially
misleading. To Borrower's knowledge, there presently exists no fact
or circumstance relative to Borrower, whether or not disclosed, which
is presently anticipated to have a material adverse effect upon the
business, operations, financial condition, properties or prospects of
Borrower or the ability of Borrower to fully perform its respective
obligations under the Loan Documents.
4.16. Contracts of Surety. Except for the endorsements of
Borrower and its Subsidiaries of negotiable instruments for deposit or
collection in the ordinary course of business and except for
guaranties of trade debt of Subsidiaries and other operating
obligations of Subsidiaries incurred in the ordinary course of
27
business, neither Borrower nor its Subsidiaries is a party to any
contract of guaranty or surety.
4.17. Licenses. Borrower and each Subsidiary possesses such
franchises, licenses, permits, patents, copyrights, trademarks, and
consents of appropriate Governmental Authorities to own its property
and as are necessary to carry on its business as presently conducted.
4.18. Compliance with Law. Borrower and each Subsidiary is
in substantial compliance with all applicable requirements of law and
of all Governmental Authorities noncompliance with which would have a
materially adverse effect upon the business, operations, financial
condition, properties or prospects of Borrower.
4.19. Force Majeure. Neither the business nor the properties
of Borrower are presently affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other
casualty materially adversely affecting the business, operations,
financial condition, properties or prospects of Borrower.
4.20. Margin Stock. Neither Borrower nor any of its
Subsidiaries is engaged 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),
and no part of the proceeds of the Facilities will be used, either
directly or indirectly, for the purpose, whether immediate, incidental
or remote, of purchasing or carrying any margin stock or of extending
credit to others for the purpose of purchasing or carrying any margin
stock, and Borrower shall furnish to the Lenders, upon its request, a
statement in conformity with the requirements of Federal Reserve Board
Form U-1 referred to in Regulation U. Further, no part of the
proceeds of the Facilities will be used for any purpose that violates,
or which is inconsistent with, the provisions of Regulations T, U or X
of the Board of Governors.
4.21. Approvals. No authorization, consent, approval or any
form of exemption of any Governmental Authority is required in
connection with the execution and delivery by Borrower or its
Subsidiaries, as applicable, of the Loan Documents, the borrowings and
performance thereunder or the issuance of the Notes.
4.22. Insolvency. Neither Borrower nor any of its Subsidiaries
is "insolvent" within the meaning of that term as defined in the
Federal Bankruptcy Code and Borrower and each Subsidiary is able to
pay its debts as they mature.
4.23. Regulation. Neither Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company" or
an "affiliate of a holding company" or a "subsidiary of a holding
company" within the meanings of the Public Utility Holding Company Act
of 1935, as amended.
28
4.24. Environmental Compliance. After the exercise of all
requisite diligence, except as would not have a material adverse
effect upon the business, operations, financial condition or
properties of Borrower and its Subsidiaries taken as a whole, and
except as disclosed in writing to Lender, Borrower and each Subsidiary
is in compliance with all Environmental Laws, including, without
limitation, all Environmental Laws in jurisdictions in which Borrower
or such Subsidiary owns or operates, or has owned or operated, a
facility or site, arranges or has arranged for disposal or treatment
of hazardous substances, solid waste or other waste, accepts or has
accepted for transport any hazardous substances, solid waste or other
wastes or holds or has held any interest in real property or
otherwise. No litigation or proceeding arising under, relating to or
in connection with any Environmental Law is pending or, to Borrower's
knowledge, threatened against Borrower or any Subsidiary, any real
property which Borrower or any Subsidiary holds or has held an
interest or any past or present operation of Borrower or any
Subsidiary, which, if adversely determined, would have a material
adverse effect upon the business, operations, financial condition or
properties of the Borrower and its Subsidiaries taken as a whole. No
release, threatened release or disposal or hazardous waste, solid
waste or other wastes is occurring, or has occurred, on, under or to
any real property in which Borrower or any Subsidiary holds any
interest or performs any of its operations, in violation of any
Environmental Law, which would have a material adverse effect upon the
business, operations, financial condition or properties of the
Borrower and its Subsidiaries taken as a whole. As used in this
Section, "litigation or proceeding" means any demand, claim, notice,
suit, suit in equity, action, administrative action, investigation or
inquiry whether brought by a Governmental Authority or other Person.
4.25. General. All statements contained in any certificate
or financial statement delivered by or on behalf of Borrower to the
Lenders under any Loan Document shall constitute representations and
warranties made by Borrower hereunder.
SECTION 5
---------
Covenants
---------
5.1. Affirmative Covenants. Until the Obligations are paid in
full, and so long as any Revolving Commitment or any Letter of Credit
is outstanding, unless the Required Lenders shall otherwise consent in
writing, Borrower will:
5.1.1. Financial Reporting. Furnish (enough copies for
each of the Lenders) to the Agent:
(a) As soon as practicable, but in any event within
ninety (90) days after the end of each fiscal year,
consolidated financial statements of Borrower certified
after audit by certified public accountants acceptable to
the Lenders, including a balance sheet, statement of income
and retained earnings and a statement of cash flows, with
accompanying notes to financial statements all prepared in
29
accordance with GAAP on a consolidated basis consistent with
prior years unless specifically noted thereon, and
accompanied by an unqualified opinion of said accountants,
and further accompanied by a certificate of the chief
financial officer of Borrower that there exists no Default
or Unmatured Default under the Loan Documents, or if any
Default or Unmatured Default exists, stating the nature and
status thereof;
(b) As soon as practicable, but in any event within
forty-five (45) days after the end of each of Borrower's
first three (3) fiscal quarters, similar unaudited
consolidated statements of Borrower and its Subsidiaries as
of the end of such quarter and the results of their
operations for the portion of the fiscal year then elapsed,
all prepared in accordance with GAAP on a consolidated basis
consistent with prior periods, subject to normal audit and
year-end adjustments, unless specifically otherwise noted
thereon, and accompanied by the certificate of the chief
financial officer of Borrower that there exists no Default
or Unmatured Default under the Loan Documents or if any
Default or Unmatured Default exists, stating the nature and
status thereof;
(c) Within three (3) days of receipt by Borrower, a
copy of the auditor's management letter describing any
deficiencies in the internal controls or other matters of
significance discovered by the auditor during the course of
its audit;
(d) As soon as practicable, but in any event within
forty-five (45) days after the end of each of Borrower's
first three (3) fiscal quarters and within ninety (90) days
after the end of each fiscal year, a fully executed and
completed Compliance Certificate, signed by the chief
executive or chief financial officer of Borrower;
(e) As soon as practicable, but in any event within
five (5) days after Borrower becomes aware thereof, a
written statement signed by the chief executive or chief
financial officer of Borrower as to the occurrence of any
Default or Unmatured Default stating the specific nature
thereof, Borrower's intended action to cure the same and the
time period in which such cure is to occur;
(f) As soon as practicable, but in any event within
ten (10) days after the commencement thereof, a written
statement describing any litigation instituted by or against
Borrower which, if adversely determined, may have a material
effect upon the business, operations, financial condition,
properties or prospects of Borrower;
(g) As soon as practicable, but in any event within
ten (10) days after Borrower becomes aware thereof, a
written statement signed by the chief executive officer or
the chief financial officer of Borrower describing any
Reportable Event or Prohibited Transaction which has
occurred with respect to any Plan (all within the meanings
30
ascribed by ERISA) and the action which Borrower proposes to
take with respect thereto;
(h) As soon as practicable, but in any event within
ten (10) days after the filing with the Securities and
Exchange Commission, or any successor thereto, or any
states' 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; and
(i) Such other information as the Lenders may from
time to time reasonably request.
5.1.2. Good Standing. Maintain, and cause each
Subsidiary to maintain, its corporate existence, good standing
(if applicable), and right to do business.
5.1.3. Taxes, Etc. Pay and discharge, and cause each
Subsidiary to pay and discharge, all taxes, assessments,
judgments, orders, and governmental charges or levies imposed
upon it or on its income or profits or upon its property prior to
the date on which penalties attach thereto and all lawful claims
which, if unpaid, may become a lien or charge upon the property
of Borrower or a Subsidiary, provided that Borrower and its
Subsidiaries shall not be required to pay any tax, assessment,
charge, judgment, order, levy or claim, if such payment is being
contested diligently, in good faith, and by appropriate
proceedings which will prevent foreclosure or levy upon its
property and adequate reserves against such liability have been
established.
5.1.4. Maintain Properties. Maintain, and cause each
Subsidiary to maintain, all properties and assets used by, or
useful to, Borrower or such Subsidiary in the ordinary course of
its business in good working order and condition and suitable for
the purpose for which it is intended, and from time to time, make
any necessary repairs and replacements.
5.1.5. Insurance. Maintain, and cause each Subsidiary to
maintain, in full force and effect public liability insurance,
business interruption insurance, worker's compensation insurance
and casualty insurance policies.
5.1.6. Books and Records. Keep proper books of account
in which full, true and correct entries will be made of all
dealings and transactions of and in relation to the business and
affairs of Borrower, and, at all reasonable times, and as often
as the Lenders may reasonably request, permit authorized
representatives of the Lenders to (a) have access to the premises
and properties of Borrower and to the records relating to the
operations of Borrower; (b) make copies of or excerpts from such
records; (c) discuss the affairs, finances and accounts of
Borrower with and be advised as to the same by the chief
executive and financial officers of Borrower; and (d) audit and
inspect such books, records, accounts, memoranda and
correspondence at all reasonable times, to make such abstracts
31
and copies thereof as the Lenders may deem necessary, and to
furnish copies of all such information to any proposed purchaser
of or participant in the Facilities. So long as there exists no
Default, the costs and expenses associated with such audits and
inspections shall be borne by the Lenders. If the Agent or the
Lenders request after the occurrence of a violation of a
financial covenant or the violation of any covenant contained in
Section 5.2 hereof, Borrower shall furnish to the Lenders
consolidating financial statements of Borrower and its
Subsidiaries.
5.1.7. Reports. File, and cause each Subsidiary to file,
as appropriate, on a timely basis, annual reports, operating
records and any other reports or filings required to be made with
any Governmental Authority.
5.1.8. Licenses. Maintain, and cause each Subsidiary to
maintain, in full force and effect all operating permits,
licenses, franchises, and rights used by it in the ordinary
course of business.
5.1.9. Notice of Material Adverse Change. Give prompt
notice in writing to the Lenders of the occurrence of any
development, financial or otherwise, including pending or
threatened litigation, which might materially adversely affect
the business, properties, affairs, prospects of any of Borrower
or its Subsidiaries or the ability of Borrower to perform the
Obligations.
5.1.10. Conduct of Business. Carry on and conduct its
business in substantially the same manner and in substantially
the same fields of enterprise as presently conducted, and do all
things necessary to remain duly incorporated, validly existing
and in good standing (if applicable) as a corporation in its
jurisdiction of incorporation and maintain all requisite
authority to conduct its respective business in each jurisdiction
in which conducted.
5.1.11. Compliance with Laws. Comply, and cause each
Subsidiary to comply, with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which
Borrower or such Subsidiary may be subject, except where the
failure to comply would not have a material adverse effect on the
rights or remedies of the Lenders or the ability of Borrower to
perform its obligations to the Lenders under the Loan Documents,
and except where the failure to comply would not have a material
adverse effect upon the business, operations, financial
condition, properties or prospects of the Borrower and its
Subsidiaries taken as a whole.
5.1.12. Use of Proceeds. Use the proceeds of the Facilities
solely for the purposes herein described.
5.1.13. Loan Payments. Subject to any applicable grace or
cure periods, punctually pay or cause to be paid principal and
interest on the Facilities in lawful money of the United States
at the time and places and in the manner specified herein
according to the stated terms and the true intent and meaning
hereof.
32
5.1.14. Adjusted Consolidated Tangible Net Worth.
Maintain its Adjusted Consolidated Tangible Net Worth at not less
than One Dollar ($1.00) at all times.
5.1.15. Consolidated Net Worth. At all times, maintain
its Consolidated Net Worth at not less than Seventy-Five Million
Dollars ($75,000,000) as of June 30, 2000, and increasing as of
September 30, 2000 by an amount equal to the sum of Fifty Percent
(50%) of Net Income (without reduction for any net losses) for
such fiscal quarter plus Eighty Percent (80%) of the net proceeds
received from any equity offerings (whether private or public)
which adds to Stockholder's equity as shown in the Financial
Statements in such fiscal quarter, and thereafter increasing on
the last day of each fiscal quarter by an amount equal to the sum
of Fifty Percent (50%) of Net Income (without reduction for any
net losses) for such fiscal quarter plus Eighty Percent (80%) of
net proceeds received from any equity offerings (whether private
or public) which adds to Stockholder's equity as shown in the
Financial Statements in such fiscal quarter.
5.1.16. Senior Leverage Ratio. Maintain a Senior Leverage
Ratio of not greater than 2.5 to 1.0 at each fiscal quarter end.
5.1.17. Fixed Charge Coverage Ratio. Maintain a Fixed
Charge Coverage Ratio of not less than 2.5 to 1.0 at each fiscal
quarter end.
5.1.18. Notice of Environmental Matters. In the event:
(a) any premises which have at any time been owned or occupied by
or have been under lease to Borrower or any Subsidiary are the
subject of an environmental investigation by any Governmental
Authority having jurisdiction over the regulation of hazardous
substances or Environmental Laws, the purpose of which
investigation is to quantify the levels of hazardous substances
located on such premises, or (b) Borrower or any Subsidiary have
been named or are overtly threatened in writing 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; then Borrower shall make a reasonable
determination of its or its Subsidiary's potential liability, and
if such liability for any such event or events described in (a)
or (b) above exceeds in the aggregate One Million Dollars
($1,000,000), Borrower shall then notify the Lenders immediately.
After such notification to the Lenders, Borrower shall, if
required pursuant to GAAP, establish appropriate reserves against
such potential liabilities and, upon the reasonable request of
the Required Lenders, 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 Borrower with respect thereto,
and the Lenders shall be provided with a copy of any report
prepared by such firm or by any Governmental Authority as to such
matters as soon as any such report becomes available to Borrower.
Provided, however, if Borrower determines in good faith that it
would not be in the best interest of Borrower or a Subsidiary to
cause an investigation to be made, Borrower shall report such
33
determination to the Lenders, and if the Required Lenders concur
in such determination, which concurrence shall not be
unreasonably withheld, Borrower and/or its Subsidiary shall be
excused from obtaining such investigation and report as otherwise
would be required. The selection of any engineers or
environmental consultants engaged pursuant to the requirements of
this Section shall be subject to the approval of the Required
Lenders, which approval shall not be unreasonably withheld.
5.1.19. Banking Accounts. Maintain its primary banking
accounts (consisting generally of its collection, disbursement,
concentration and depository accounts) with Bank One.
5.2. Negative Covenants. Until the Obligations are paid in full,
and so long as any Revolving Commitment or any Letter of Credit is
outstanding, unless the Required Lenders shall otherwise consent in
writing, Borrower will not and will not permit any Subsidiary to:
5.2.1. Dispose of Property. Sell, transfer, lease or
otherwise dispose of its assets or properties, or discount, with
or without recourse, any of its accounts, except (a) sales from
inventory in the ordinary course of business, (b) the sale of
obsolete equipment and machinery in the ordinary course of
business, (c) provided there exists no Default and no Default
would be occasioned thereby, non-recourse sales of receivables by
Silver Furniture Co., Inc. (and Silver Furniture Manufacturing
Co., Inc.) and by a Target acquired by Borrower (or a Subsidiary)
that was previously engaged in a factoring arrangement prior to
such acquisition, and (d) sales of assets for cash and for fair
value in any fiscal year of Borrower in an aggregate amount for
Borrower and its Subsidiaries not to exceed Ten Percent (10%) of
the book value of Borrower's consolidated total assets (as
determined in accordance with GAAP), and, provided there exists
no Default and no Default would be occasioned thereby, such
additional sales of assets above such Ten Percent (10%)
limitation provided the proceeds of such additional sales are
paid to the Lenders to permanently reduce pro rata the Lenders'
Revolving Commitments.
5.2.2. Further Encumber. Except for Permitted
Encumbrances, voluntarily create or suffer to exist any mortgage,
pledge, lien or other encumbrance upon any of its properties or
assets, real or personal, tangible or intangible, whether now
owned or hereafter acquired.
5.2.3. Dividends. Declare or pay any dividends on its
capital stock or redeem, repurchase or otherwise acquire or
retire any of its capital stock at any time outstanding if there
exists a Default or if such declaration or payment would cause
the occurrence of a Default.
5.2.4. Purchase Stock. Purchase, redeem, retire or
otherwise acquire any outstanding shares of its capital stock if
there exists a Default or if a Default would be occasioned
thereby.
34
5.2.5. Borrowings. Create, incur, assume or suffer to
exist any Indebtedness, except (a) that in existence as of the
date hereof and disclosed in the Financial Statements, (b) trade
accounts and normal business accruals payable in the ordinary
course of business, (c) Indebtedness to the Lenders pursuant to
the Loan Documents, (d) as permitted in Section 5.2.6 hereof, (e)
other Indebtedness of Borrower and its Subsidiaries not exceeding
in the aggregate Fifteen Percent (15%) of Borrower's Adjusted
Consolidated Tangible Net Worth outstanding at any time, and (f)
unsecured Indebtedness not exceeding an amount equal to the
portion of Borrower's request under Section 2.7.2 hereof to
increase the Revolving Commitments (which request shall not
exceed Twenty Million Dollars ($20,000,000)) that the Lenders
decline to provide, provided such unsecured Indebtedness has a
scheduled maturity not sooner than the expiration of the
Revolving Commitment Period, and provided such unsecured
Indebtedness is not guaranteed by any guarantors that are not
also Guarantors.
5.2.6. Loans, Etc. Make any loan, disbursement or
advance to, or investment in, any Person except (a) trade debtors
in the ordinary course of business, (b) loans and advances to a
Subsidiary that is a Guarantor, provided there exists no Default
or Unmatured Default at the time, or after giving effect to, such
loan or advance and provided the Subsidiary is not "insolvent" at
the time of such loan or advance nor rendered "insolvent" (as
such terms are used in the Federal Bankruptcy Code) by such loan
or advance, and loans and advances to Borrower by a Guarantor,
(c) Qualified Investments, and (d) with respect to a Target
acquired pursuant to Section 5.2.8 hereof, notes receivable owed
to the Target as of such acquisition.
5.2.7. Guarantees. Assume, guarantee or otherwise become
liable as a guarantor or surety for the obligations of any
Person, except for (a) the endorsements by Borrower or a
Subsidiary of negotiable instruments for deposit or collection in
the ordinary course of business, (b) guarantees in favor of the
Lenders, (c) guarantees of the Indebtedness of Affiliates not
exceeding in the aggregate for Borrower and its Subsidiaries Ten
Percent (10%) of Borrower's Adjusted Consolidated Tangible Net
Worth, and (d) as provided in Section 4.16 hereof.
5.2.8. Merger, Acquisitions, Etc. Except as provided in
Section 5.2.1 hereof and as provided below, merge or consolidate
with or into any other Person, or lease, sell or otherwise
dispose of the stock of any Subsidiary or of all or a substantial
portion of the property, assets or business of Borrower or a
Subsidiary to any other Person. Except in the ordinary course of
business, Borrower shall not acquire and shall not permit any
Subsidiary to acquire any material part of the assets of any
other business entity; provided, however, that notwithstanding
the foregoing, Borrower may, and may allow any Subsidiary to,
consummate the merger or acquisition of any material part of the
assets or the capital stock or equity of any other business
entity on the conditions that: (a) in the event of a merger,
Borrower or the Subsidiary is the legal surviving corporation;
(b) no Default or Unmatured Default has occurred and is
continuing at the time of such merger or acquisition or will
result or occur after the consummation of such merger or
acquisition; (c) the Agent receives prior notice of all material
35
details of such merger or acquisition, and the entity or business
acquired is substantially in the same field or enterprise as
presently conducted by Borrower and its Subsidiaries; (d)
Borrower provides satisfactory written evidence to the Agent that
it is in compliance with the financial covenants set forth in
Section 5 hereof both immediately before and after giving effect
to the consummation of such merger or acquisition; (e) the Agent
receives satisfactory evidence that the board of directors of the
Target have approved the subject merger or acquisition or, in the
event the Target is in bankruptcy, the applicable bankruptcy
court has approved Borrower's or its Subsidiary's acquisition of
the Target; and (f) a satisfactory pro forma Compliance
Certificate showing financial covenant compliance with Sections
5.1.14, 5.1.15, 5.1.16 and 5.1.17 hereof on a consolidated basis
for Borrower and its Subsidiaries and the Target for the
preceding 12-month period determined in accordance with GAAP.
Borrower will not, or will not permit any of its Subsidiaries to,
create or otherwise acquire any new Subsidiary except Borrower
may create Subsidiaries, having no material assets or operations,
solely for the purpose of facilitating acquisitions permitted
hereunder, and Borrower may create Subsidiaries in substantially
the same fields of enterprise as presently conducted by Borrower
and its Subsidiaries if such Subsidiary becomes a guarantor of
the Obligations as required by Section 3 hereof. Borrower will
not, and will not permit any Subsidiary, to pursue any new line
of business.
5.2.9. Change Name and Place of Business. Change its
corporate name or principal place of business, except on not less
than sixty (60) days' prior written notice to the Agent.
5.2.10. Accounting Policies. Change its fiscal year or
any of its significant accounting policies, except to the extent
necessary to comply with GAAP and, with respect to a Target
acquired pursuant to Section 5.2.8 hereof, changes with respect
to such Target to comply with Borrower's accounting policies.
5.2.11. Change of Business. Except as provided in Section
5.2.8 hereof or as otherwise provided in this Agreement, make any
material change in the nature of its business as carried on at
the date of this Agreement.
5.2.12. Benefit Plans. Permit any condition to exist in
connection with any employee benefit plan which might constitute
grounds for the PBGC to institute proceedings to have the
employee benefit plan terminated or a trustee appointed to
administer the employee benefit plan; or engage in, or permit to
exist or occur any other condition, event or transaction, with
respect to any employee benefit plan which could result in
Borrower incurring any material liability, fine or penalty.
36
SECTION 6
---------
Conditions Precedent to Loans
-----------------------------
6.1. Conditions to Initial Advance. The obligation of the
Lenders to make the initial advance under the Facilities is subject to
each of the following conditions precedent:
6.1.1. Authorization. Borrower shall have furnished to
the Lenders, and the Lenders shall have approved, certified
copies of Borrower's and each Guarantor's articles of
incorporation and by-laws, both as amended, accompanied by recent
certificates of good standing issued by the Secretary of State of
their states of incorporation and those states in which Borrower
and the Guarantors own property or maintain an office and a
certified copy of resolutions adopted by each Board of Directors
authorizing the Facilities and the Guaranty, as applicable, and
specifying the names and capacities of those Persons authorized
to execute the Loan Documents.
6.1.2. Loan Documents. Each of the Loan Documents shall
have been executed and delivered by Borrower to the Lenders.
6.1.3. Guaranty. The Guaranty shall have been executed
and delivered by the Guarantors to the Lenders.
6.1.4. Incumbency Certificates. The Lenders shall have
received Incumbency Certificates, executed by the respective
Secretary or Assistant Secretary of Borrower and each Guarantor
which shall identify the name and title and bear the signature of
the officers of Borrower and such Guarantor authorized to sign
the Loan Documents, and the Lenders shall be entitled to rely
upon such certificates until informed of any change in writing by
Borrower.
6.1.5. Opinion of Counsel. The Lenders shall have
received a favorable written opinion of counsel to Borrower and
the Guarantors, dated of even date herewith, in form and
substance acceptable to the Lenders.
6.1.6. UCC Searches. The Lenders shall have received
satisfactory return after search in accordance with the Uniform
Commercial Code or other applicable law in such governmental
offices as the Lenders shall have deemed appropriate.
6.1.7. Regulation U. The Lenders shall have received
such certificates and other documents as it shall have deemed
reasonably appropriate as to compliance with Regulations T, U and
X of the Board of Governors of the Federal Reserve System.
6.1.8. Compliance Certificate. A fully executed and
completed Compliance Certificate.
37
6.1.9. Facility Fees. The fees described in Section 2.6
shall have been paid by Borrower to the Agent for the benefit of
the Lenders.
6.1.10. Termination of Existing Credit Agreement. The
Agent shall have received evidenced satisfactory to it that the
commitments under the Existing Credit Agreement have been
terminated, all loans thereunder have been repaid in full and all
accrued fees and other amounts payable thereunder have been paid
in full.
6.1.11. Additional Documentation. The Lenders shall have
received such other documents as the Lenders may reasonably
request.
6.2. Conditions to Subsequent Advances. Prior to each subsequent
Advance under the Facilities:
6.2.1. No Default. No Default or Unmatured Default shall
have occurred and be continuing.
6.2.2. Representations and Warranties. Each representation
and warranty contained in Section 4 shall be true and correct as
of the date of such advance, except to the extent any such
representation or warranty relates solely to an earlier date and
except changes reflecting transactions permitted by this Agreement.
6.2.3. Legal Matters. All legal matters incident to the
making of such Advance shall be reasonably satisfactory to the
Lenders and its counsel.
6.2.4. Expenses. Borrower shall have reimbursed the
Lenders for all legal fees and other reasonable expenses incurred
by the Lenders after the date hereof in connection with the
Facilities for which Borrower, pursuant to this Agreement, is
responsible.
6.3. Special Conditions to Advances for Permitted Acquisitions.
Prior to any Advance to be used for the purpose of funding a permitted
acquisition or merger:
6.3.1. Written Requests. At least Five (5) Banking Days
prior to Borrower's request for an Advance to be used for the
purpose of funding a permitted acquisition or merger pursuant to
Section 5.2.8 hereof, Borrower shall submit to the Agent and the
Lenders a written request signed by an Authorized Officer setting
forth the estimated total amount of the requested Advance and the
proposed uses thereof. Borrower shall also submit with its
request (a) a written memorandum in summary form describing the
extent and material results of its due diligence with respect to
the Person to be acquired (the "Target"), (b) copies of all
annual financial statements for the last three (3) years of the
Target, or, to the extent all such annual financial statements
are not available, such other financial statements reasonably
acceptable in form to the Required Lenders, (c) a pro forma
consolidated balance sheet of Borrower giving effect to
consummation of the proposed transaction, and (d) a duly
38
completed pro forma Compliance Certificate required by Section
5.2.8 hereof and such other information and materials as required
by Section 5.2.8 hereof.
6.3.2. Acquisition Documents. As soon as practicable, but
in any event at least Five (5) Banking Days prior to Borrower's
request for an Advance to be used for the purpose of funding a
permitted acquisition or merger pursuant to Section 5.2.8 hereof,
Borrower shall provide the Agent with a copy of the letter of
intent or term sheet of the proposed acquisition or merger. As
soon as practicable, but in any event at least One (1) Banking
Day prior to the proposed date of funding of such Advance, the
Agent shall have received the definitive purchase agreement and
such other material acquisition documents governing the proposed
acquisition of the Target. The Agent shall furnish such items it
receives under this Section 6.3.2 to the Lenders as soon as
practicable.
6.3.3. Representations of Target's Financial Statements.
Borrower's submission of the items in Section 6.3.1 hereof shall
constitute a representation by Borrower, to its actual knowledge,
that (a) the information provided to the Lenders with respect to
the proposed acquisition remains true and correct in all material
respects as of the date of funding, (b) no material adverse
change in the business of the Target (including the financial
condition and/or assets to be acquired), has occurred since the
date of the last financial statements furnished to the Lenders,
and (c) the Target and Borrower (and its Subsidiaries, if
applicable) have fully and timely complied with any applicable
laws in connection with the contemplated acquisition.
6.3.4. Expenses. Subject to Section 11.8 hereof,
Borrower shall have reimbursed the Lenders for all reasonable
legal fees and other reasonable expenses incurred by the Lenders
after the date hereof in connection with the Facilities.
6.4. General. Each request for an Advance under the Facilities
shall constitute a representation and warranty by Borrower that the
applicable conditions contained in this Section 6 have been satisfied.
SECTION 7
---------
Default
-------
The occurrence of any of the following events shall be deemed a
Default hereunder:
(a) any representation or warranty made by or on behalf of
Borrower, any Guarantor or any Affiliate to the Lenders under or in
connection with any Loan Document, any Guaranty, or any subordination
agreement shall be false in any material respect as of the date on
which made;
39
(b) Borrower or any Guarantor fails to make any payment of
principal of or interest on any of the Notes, or any fee or other
payment Obligation within five (5) days after the same is due;
(c) the breach by Borrower of any of the covenants contained in
Sections 5.1.2 through 5.1.11 which breach remains uncured for a
period which is the earlier of thirty (30) days after the occurrence
thereof or twenty (20) days after written notice to Borrower from the
Lenders; or the breach by Borrower of any other covenant contained in
Section 5 hereof;
(d) the breach by Borrower or any Guarantor of any other terms
or provisions of the Loan Documents (other than a breach which
constitutes a Default under Section 7(a), (b) or (c) above) not cured
within thirty (30) days after written notice from the Agent or a
Lender to Borrower specifying such breach;
(e) the failure of Borrower or any Guarantor to pay any other
material Indebtedness when due or within any applicable grace or cure
period, or the default by Borrower or any Guarantor in the performance
of any other term, provision or condition contained in any agreement
under which any such Indebtedness was created or is governed, the
effect of which is to permit the holder or holders of such
Indebtedness to cause such Indebtedness to become due prior to its
stated maturity, unless such default is waived in writing by the
holder or holders of such Indebtedness; or any such Indebtedness shall
be validly declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the stated
maturity thereof;
(f) Borrower or any Guarantor shall (i) have an order for relief
entered with respect to it under the Federal Bankruptcy Code, (ii) not
pay, or admit in writing its inability to pay, its debts generally as
they become due, (iii) make an assignment for the benefit of
creditors, (iv) apply for, seek, consent to, or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any substantial part of its property, (v)
institute any proceeding seeking an order for relief under the Federal
Bankruptcy Code or seeking to adjudicate it a bankrupt or insolvent,
or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, or (vi)
suspend operations as presently conducted or discontinue doing
business as an ongoing concern;
(g) without the application, approval or consent of Borrower or
any Guarantor, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for Borrower or such Guarantor or any
substantial part of its property, or a proceeding described in item
(f) shall be instituted against Borrower or such Guarantor and such
appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of sixty (60) consecutive days;
(h) any Guaranty or any material provision thereof shall cease
to be in full force or effect, or any Guarantor fails to promptly
perform under its Guaranty, or any Guarantor terminates or revokes or
attempts to terminate or revoke its Guaranty;
40
(i) any Governmental Authority shall condemn, seize or otherwise
appropriate, or take custody or control of all or any substantial
portion of the property of Borrower;
(j) Borrower or any Subsidiary shall fail within thirty (30)
days to pay, bond or otherwise discharge any judgment or order for
the payment of money in an amount equal to or greater than Three
Hundred Thousand Dollars ($300,000) which is not stayed on appeal or
otherwise appropriately contested in good faith, or any attachment,
levy or garnishment is issued against any property of Borrower or any
Subsidiary;
(k) the expiration of sixty (60) days after the occurrence of a
Change in Control, without the written consent of the Required
Lenders; or
(l) there occurs a "reportable event" or a "prohibited
transaction" under, or any complete or partial withdrawal from, or any
other event which would constitute grounds for termination of or the
appointment of a trustee to administer, any "plan" maintained by
Borrower or any ERISA Affiliate for the benefit of its "employees" (as
such terms are defined in ERISA) which will have a material adverse
effect on the financial condition of Borrower or any of its Subsidiaries.
SECTION 8
---------
Remedy
------
8.1. Acceleration. If any Default described in Section 7, item
(f) or (g) occurs, the commitments of the Lenders to make, renew or
convert Advances of the Facilities, to accept drafts or to issue
Letters of Credit hereunder shall automatically terminate and the
Obligations (including, without limitation, the obligation to deposit
with the Agent a sum equal to the aggregate face amount of the
outstanding Letters of Credit pursuant to Section 8.2 hereof) shall
immediately become due and payable without any election or action on
the part of any Lender. If any other Default occurs, then upon the
declaration of the Required Lenders or the Agent at the direction of
the Required Lenders, the obligations of the Lenders to make, renew or
convert Advances of the Facilities, to accept drafts and to issue
Letters of Credit under this Agreement shall terminate and the
Obligations (including, without limitation, the obligation to deposit
with the Agent a sum equal to the aggregate face amount of the
outstanding Letters of Credit pursuant to Section 8.2 hereof) shall
immediately become due and payable. In either event, the Obligations
shall become immediately due and payable without presentment, demand,
protest or notice of any kind, all of which Borrower hereby expressly
waives. The remedies of the Lenders specified in this Agreement and
the other Loan Documents shall not be exclusive and the Lenders may
avail themselves of any of the remedies provided by law as well as any
equitable remedies available to the Lenders, and each and every remedy
shall be cumulative and concurrent and shall be in addition to every
other remedy now or hereafter existing at law or in equity.
41
8.2. Deposit to Secure Reimbursement Obligations. When any
Default under Section 7(b) hereof has occurred and is continuing, or
the Required Lenders (or the Agent at the direction of the Required
Lenders) have declared any acceleration of the Obligations after the
occurrence of any other Default, the Required Lenders or the Agent at
the direction of the Required Lenders may demand that Borrower
immediately pay to the Agent an amount equal to the aggregate
outstanding amount of the Letters of Credit and Borrower shall
immediately upon any such demand make such payment. Borrower hereby
irrevocably grants to the Agent for the benefit of the Lenders a
security interest in all funds deposited to the credit of or in
transit to any deposit account or fund established pursuant to this
Section 8.2, including, without limitation, any investment of such
fund. Borrower hereby acknowledges and agrees that the Agent and the
LC Issuer would not have an adequate remedy at law for failure by
Borrower to honor any demand made under this Section 8.2 and that the
Agent and the LC Issuer shall have the right to require Borrower
specifically to perform its undertakings in this Section 8.2 whether
or not any draws have been made under any Letter of Credit. In the
event the Agent or the LC Issuer makes a demand pursuant to this
Section 8.2, and Borrower makes the payment demanded, the Agent agrees
to invest the amount of such payment for the account of Borrower and
at Borrower's risk and direction in short-term investments acceptable
to the Agent.
8.3. Subrogation. The LC Issuer shall, to the extent of any
payments made by the LC Issuer under any Letter of Credit, be
subrogated to all rights of the beneficiary of such Letter of Credit
as to all obligations of Borrower and its Subsidiaries with respect to
which such payment shall have been made by the LC Issuer.
8.4. Preservation of Rights. No delay or omission of the Agent
or any Lender to exercise any power or right under the Loan Documents
shall impair such power or right or be construed to be a waiver of any
Default or an acquiescence therein, and any single or partial exercise
of any power or right shall not preclude other or further exercise
thereof or the exercise of any other power or right. No Advance
hereunder shall constitute a waiver of any of the conditions of any
Lender's obligation to make further Advances, nor, in the event
Borrower is unable to satisfy any such condition, shall a waiver of
such condition in any one instance have the effect of precluding any
Lender from thereafter declaring such inability to be a Default
hereunder. No course of dealings shall be binding upon the Agent or
any Lender.
8.5. Actions by the Agent/Default Rate. The Agent shall take
such action with respect to a Default or a Unmatured Default as shall
be reasonably directed in writing by the Required Lenders or all the
Lenders, as applicable, provided, however, that, unless and until the
Agent shall have received such direction, the Agent may take such
action, or refrain from taking such action with respect thereto, as it
shall deem advisable in the best interests of the Lenders. The Agent
shall have no obligation to impose or collect the Default rate of
interest as provided in Section 2.2.3 hereof unless and until
instructed in writing by the Required Lenders, which written
instruction shall include the Required Lenders' determination of the
date of Default and the amount of interest due and payable by Borrower.
42
SECTION 9
---------
The Agent
---------
9.1. Appointment; Nature of Relationship. Bank One is hereby
appointed by each of the Lenders as its contractual representative
(herein referred to as the "Agent") hereunder and under each other
Loan Document, and each of the Lenders irrevocably authorizes the
Agent to act as the contractual representative of such Lender with the
rights and duties expressly set forth herein and in the other Loan
Documents. The Agent agrees to act as such contractual representative
upon the express conditions contained in this Section 9.
Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any
other Loan Document and that the Agent is merely acting as the
contractual representative of the Lenders with only those duties as
are expressly set forth in this Agreement and the other Loan
Documents. In its capacity as the Lenders' contractual
representative, the Agent (a) does not hereby assume any fiduciary
duties to any of the Lenders, (b) is a "representative" of the Lenders
within the meaning of Section 9-105 of the Uniform Commercial Code,
and (c) is acting as an independent contractor, the rights and duties
of which are limited to those expressly set forth in this Agreement
and the other Loan Documents. Each of the Lenders hereby agrees to
assert no claim against the Agent on any agency theory or any other
theory of liability for breach of fiduciary duty, all of which claims
each Lender hereby waives.
9.2. Powers. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by
the terms of each thereof, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action
thereunder except any action specifically provided by the Loan
Documents to be taken by the Agent.
9.3. General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to Borrower,
the Lenders or any Lender for any action taken or omitted to be taken
by it or them hereunder or under any other Loan Document or in
connection herewith or therewith except to the extent such action or
inaction is determined in a final non-appealable judgment by a court
of competent jurisdiction to have arisen from the gross negligence or
willful misconduct of such Person.
9.4. No Responsibility for Loans, Recitals, etc. Neither the
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify
(a) any statement, warranty or representation made in connection with
any Loan Document or any borrowing hereunder; (b) the performance or
observance of any of the covenants or agreements of any obligor under
any Loan Document, including, without limitation, any agreement by an
obligor to furnish information directly to each Lender; (c) the
satisfaction of any condition specified in Section 6, except receipt
of items required to be delivered solely to the Agent; (d) the
existence or possible existence of any Default or Unmatured Default;
(e) the validity, enforceability, effectiveness, sufficiency or
genuineness of any Loan Document or any other instrument or writing
43
furnished in connection therewith; (f) the value, sufficiency,
creation, perfection or priority of any lien in any collateral
security; or (g) the financial condition of Borrower or any Guarantor
of any of the Obligations or of any of Borrower's or any such
Guarantor's respective Subsidiaries. The Agent shall have no duty to
disclose to the Lenders information that is not required to be
furnished by Borrower to the Agent at such time, but is voluntarily
furnished by Borrower to the Agent (either in its capacity as Agent or
in its individual capacity).
9.5. Action on Instructions of Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with written
instructions signed by the Required Lenders, and such instructions and
any action taken or failure to act pursuant thereto shall be binding
on all of the Lenders. The Lenders hereby acknowledge that the Agent
shall be under no duty to take any discretionary action permitted to
be taken by it pursuant to the provisions of this Agreement or any
other Loan Document unless it shall be requested in writing to do so
by the Required Lenders. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other
Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take
any such action.
9.6. Employment of Agents and Counsel. The Agent may execute any
of its duties as Agent hereunder and under any other Loan Document by
or through employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities received
by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care.
The Agent shall be entitled to advice of counsel concerning the
contractual arrangement between the Agent and the Lenders and all
matters pertaining to the Agent's duties hereunder and under any other
Loan Document.
9.7. Reliance on Documents; Counsel. The Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit,
letter, telegram, statement, paper or document believed by it to be
genuine and correct and to have been signed or sent by the proper
person or persons, and, in respect to legal matters, upon the opinion
of counsel selected by the Agent, which counsel may be employees of
the Agent.
9.8. Agent's Reimbursement and Indemnification. The Lenders
agree to reimburse and indemnify the Agent ratably in proportion to
their respective Revolving Commitments (or, if the Revolving
Commitments have been terminated, in proportion to their Revolving
Commitments immediately prior to such termination) (a) for any amounts
not reimbursed by Borrower for which the Agent is entitled to
reimbursement by Borrower under the Loan Documents, (b) for any other
expenses incurred by the Agent on behalf of the Lenders and not
reimbursed by Borrower in connection with the preparation, execution,
delivery, administration and enforcement of the Loan Documents
(including, without limitation, for any expenses incurred by the Agent
in connection with any dispute between the Agent and any Lender or
between two or more of the Lenders), and (c) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent and
44
not reimbursed by Borrower in any way relating to or arising out of
the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby (including, without
limitation, for any such amounts incurred by or asserted against the
Agent in connection with any dispute between the Agent and any Lender
or between two or more of the Lenders), or the enforcement of any of
the terms of the Loan Documents or of any such other documents,
provided that no Lender shall be liable for any of the foregoing to
the extent any of the foregoing is found in a final non-appealable
judgment by a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of the Agent. The
obligations of the Lenders under this Section 9.8 shall survive
payment of the Obligations and termination of this Agreement.
9.9. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Unmatured
Default hereunder unless the Agent has received written notice from a
Lender or Borrower referring to this Agreement describing such Default
or Unmatured Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, the
Agent shall give prompt notice thereof to the Lenders.
9.10. Rights as a Lender. In the event the Agent is a
Lender, the Agent shall have the same rights and powers hereunder and
under any other Loan Document with respect to its Revolving Commitment
and its Loans as any Lender and may exercise the same as though it
were not the Agent, and the term "Lender" or "Lenders" shall, at any
time when the Agent is a Lender, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent
and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or
any other Loan Document, with Borrower or any of its Subsidiaries in
which Borrower or such Subsidiary is not restricted hereby from
engaging with any other Person. The Agent, combined with its
Affiliates, intends to retain (prior to any reductions pursuant to
Section 2.7.1 hereof) a Revolving Commitment of not less than Twenty
Million Dollars ($20,000,000) or 42.1053% of the aggregate Revolving
Commitments, whichever is less.
9.11. Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other
Lender and based on the financial statements prepared by Borrower and
such other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement
and the other Loan Documents. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan
Documents.
9.12. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and Borrower, such
resignation to be effective upon the appointment of a successor Agent
or, if no successor Agent has been appointed, forty-five days after
the retiring Agent gives notice of its intention to resign. The Agent
may be removed at any time with or without cause by written notice
45
received by the Agent from the Required Lenders, such removal to be
effective on the date specified by the Required Lenders. Upon any
such resignation or removal, the Required Lenders, with the written
consent of Borrower if no Default has occurred and is continuing,
shall have the right to appoint, on behalf of Borrower and the
Lenders, a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders within thirty (30) days after the
resigning Agent's giving notice of its intention to resign, then the
resigning Agent may appoint, on behalf of Borrower and the Lenders, a
successor Agent. Notwithstanding the previous sentence, the Agent
may, with the written consent of Borrower if no Default has occurred
and is continuing, but without the consent of any Lender, appoint any
of its Affiliates which is a commercial bank as a successor Agent
hereunder. If the Agent has resigned or been removed and no successor
Agent has been appointed, the Lenders may perform all the duties of
the Agent hereunder and Borrower shall, after written notice thereof
from the Lenders, make all payments in respect of the Obligations to
the applicable Lender and for all other purposes shall deal directly
with the Lenders. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment.
Any such successor Agent shall be a commercial bank having capital and
retained earnings of at least $100,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the resigning or removed
Agent. Upon the effectiveness of the resignation or removal of the
Agent, the resigning or removed Agent shall be discharged from its
duties and obligations hereunder and under the Loan Documents. After
the effectiveness of the resignation or removal of an Agent, the
provisions of this Section 9 shall continue in effect for the benefit
of such Agent in respect of any actions taken or omitted to be taken
by it while it was acting as the Agent hereunder and under the other
Loan Documents. In the event that there is a successor to the Agent
by merger, or the Agent assigns its duties and obligations to an
Affiliate pursuant to this Section 9.12, then the term "Prime Rate" as
used in this Agreement shall mean the prime rate, base rate or other
analogous rate of the new Agent.
9.13. Delegation to Affiliates. Subject to Section 9.12 hereof,
Borrower and the Lenders agree that the Agent may delegate any of its
duties under this Agreement to any of its Affiliates. Any such Affiliate
(and such Affiliate's directors, officers, agents and employees) which
performs duties in connection with this Agreement shall be entitled to the
same benefits of the indemnification, waiver and other protective
provisions to which the Agent is entitled under Sections 9 and 11 hereof.
SECTION 10
----------
Benefit of Agreement; Assignment, Participations
------------------------------------------------
10.1. Successors and Assigns. The terms and provisions of
the Loan Documents shall be binding upon and inure to the benefit of
Borrower and the Lenders and their respective successors and assigns,
except that (a) Borrower shall not have the right to assign its rights
or obligations under the Loan Documents, and (b) any assignment by any
Lender must be made in compliance with Section 10.3 hereof.
Notwithstanding clause (b) of this Section, any Lender may at any
46
time, without the consent of Borrower or the Agent, assign all or any
portion of its rights under this Agreement and any Note to a Federal
Reserve Bank; provided, however, that no such assignment to a Federal
Reserve Bank shall release the transferor Lender from its obligations
hereunder. The Agent may treat the Person which made any Loan or
which holds any Note as the owner thereof for all purposes hereof
unless and until such Person complies with Section 10.3 hereof in the
case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with the Agent. Any assignee
or transferee of the rights to any Loan or any Note agrees by
acceptance of such transfer or assignment to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or
giving such authority or consent is the owner of the rights to any
Loan (whether or not a Note has been issued in evidence thereof),
shall be conclusive and binding on any subsequent holder, transferee
or assignee of the rights to such Loan.
10.2. Participations.
10.2.1. Permitted Participants; Effect. Any Lender may,
in the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan
owing to such Lender, any Note held by such Lender, any Revolving
Commitment of such Lender or any other interest of such Lender
under the Loan Documents. In the event of any such sale by a
Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall
remain the owner of its Loans and the holder of any Note issued
to it in evidence thereof for all purposes under the Loan
Documents, all amounts payable by Borrower under this Agreement
shall be determined as if such Lender had not sold such
participating interests, and Borrower and the Agent shall
continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under the
Loan Documents.
10.2.2. Voting Rights. Each Lender shall retain the sole
right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Loan
Documents other than any amendment, modification or waiver with
respect to any Loan or Revolving Commitment in which such
Participant has an interest which forgives principal, interest or
fees or reduces the interest rate or fees payable with respect to
any such Loan or Revolving Commitment, extends the Revolving
Commitment Period, postpones any date fixed for any
regularly-scheduled payment of principal of, or interest or fees
on, any such Loan or Revolving Commitment, releases any Guarantor
of any such Loan or releases all or substantially all of the
collateral, if any, securing any such Loan.
10.2.3. Benefit of Setoff. Borrower agrees that each
Participant shall be deemed to have the right of setoff provided
in Section 11.19 hereof in respect of its participating interest
in amounts owing under the Loan Documents to the same extent as
if the amount of its participating interest were owing directly
to it as a Lender under the Loan Documents, provided that each
47
Lender shall retain the right of setoff provided in Section 11.19
hereof with respect to the amount of participating interests sold
to each Participant. The Lenders agree to share with each
Participant, and each Participant, by exercising the right of
setoff provided in Section 11.19 hereof, agrees to share with
each Lender, any amount received pursuant to the exercise of its
right of setoff, such amounts to be shared in accordance with
Section 11.19 hereof as if each Participant were a Lender.
10.3. Assignments.
10.3.1. Permitted Assignments. Any Lender may, in the
ordinary course of its business and in accordance with applicable
law, at any time assign to one or more banks or other entities
("Purchasers") all or any part of its rights and obligations
under the Loan Documents. Such assignment shall be substantially
in the form of Exhibit E or in such other form as may be agreed
to by the parties thereto. The consent of Borrower and the Agent
shall be required prior to an assignment becoming effective with
respect to a Purchaser which is not a Lender or an Affiliate
thereof; provided, however, that if a Default has occurred and is
continuing, the consent of Borrower shall not be required. Such
consents shall not be unreasonably withheld or delayed. Each
such assignment shall (unless each of Borrower and the Agent
otherwise consents) be in an amount not less than the lesser of
(a) $5,000,000 or (b) the remaining amount of the assigning
Lender's Revolving Commitment (calculated as at the date of such
assignment).
10.3.2. Effect; Effective Date. Upon (a) delivery to the
Agent of an assignment, together with any consents required by
Section 10.3.1 hereof, and (b) payment of a $5,000 fee to the
Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such
assignment. Such assignment shall contain a representation by
the Purchaser to the effect that none of the consideration used
to make the purchase of the Revolving Commitment and Loans under
the applicable assignment agreement are "plan assets" as defined
under ERISA and that the rights and interests of the Purchaser in
and under the Loan Documents will not be "plan assets" under
ERISA. On and after the effective date of such assignment, such
Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by or on behalf of
the Lenders and shall have all the rights and obligations of a
Lender under the Loan Documents, to the same extent as if it were
an original party hereto, and no further consent or action by
Borrower, the Lenders or the Agent shall be required to release
the transferor Lender with respect to the percentage of the
aggregate Revolving Commitment and Loans assigned to such
Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 10.3.2, the transferor Lender,
the Agent and Borrower shall, if the transferor Lender or the
Purchaser desires that its Loans be evidenced by Notes, make
appropriate arrangements so that new Notes or, as appropriate,
replacement Notes are issued to such transferor Lender and new
Notes or, as appropriate, replacement Notes, are issued to such
Purchaser, in each case in principal amounts reflecting their
respective Revolving Commitments, as adjusted pursuant to such
assignment.
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10.4. Dissemination of Information. Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each
a "Transferee") and any prospective Transferee any and all information
in such Lender's possession concerning the creditworthiness of
Borrower and its Subsidiaries; provided that each Transferee and
prospective Transferee agrees to be bound by Section 11.10 of this
Agreement.
10.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the
transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section
11.24 hereof.
SECTION 11
----------
General Provisions
------------------
11.1. Waivers, Amendments and Remedies. No delay or omission
of the Lenders to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and any single or partial exercise of any such
right shall not preclude other or further exercise thereof or the
exercise of any other right. No waiver, amendment or other variation
of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the Required
Lenders, and, to the extent any rights or duties of the Agent may be
affected thereby, the Agent; provided, however, that no waiver,
amendment, modification, consent or other variation shall without
consent of the Agent and each non Defaulting Lender with Obligations
being directly affected thereby (a) authorize or permit the extension
of time for paying the principal of, or interest on, the Obligations,
or any fees payable thereunder, or any reduction in the principal
amount thereof or a reduction in the rate of interest or fees thereon
(other than as a result of waiving the applicability of any increase
in the applicable interest rate upon Default or maturity), (b) amend
(i) the respective percentages of the Lenders' Revolving Commitments
(other than a change in a Lender's percentage by virtue of an increase
in the Revolving Commitments under Section 2.7.2 that such Lender has
elected not to participate), (ii) the definition of Required Lenders
or the percentage of Lenders required to take or approve any action
hereunder, or (iii) the provisions of this Section 11.1 or Sections 7
or 8.1, (c) release all or substantially all of the collateral subject
to any Loan Document, if any, or release any Guarantor from its
Guaranty, or (d) waive, amend, or modify any other provision of the
Loan Documents which creates an obligation on the part of Borrower to
indemnify the Agent or any Lender or to pay money to the Agent or any
Lender. Any such waiver, amendment, modification or consent shall be
effective only in the specific instance and for the specific purpose
for which given. All remedies contained in the Loan Documents or by
law afforded shall be cumulative and all shall be available to the
Lenders until the Obligations have been paid in full.
49
11.2. Survival of Representations. All representations and
warranties of Borrower contained in the Loan Documents shall survive
delivery of the Notes and the making of the Facilities.
11.3. Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, the Lenders shall not be
obligated to extend credit to Borrower in violation of any limitation
or prohibition provided by any applicable statute or regulation.
11.4. Taxes. Any taxes (excluding taxation of the overall
net income of the Lenders) payable or ruled payable by any
Governmental Authority in respect of the Loan Documents shall be paid
by Borrower, together with interest and penalties, if any.
11.5. Choice of Law. The Loan Documents (other than those
containing a contrary express choice of law provision) and the rights
and obligations of the parties thereunder and hereunder shall be
governed by, and construed and interpreted in accordance with the laws
of the State of Indiana (but giving effect to federal laws applicable
to national Lenders), notwithstanding the fact that Indiana conflict
of law rules might otherwise require the substantive rules of law of
another jurisdiction to apply. Borrower hereby consents to the
jurisdiction of any state or federal court located within Marion
County, Indiana. All service of process may be made by messenger,
certified mail, return receipt requested or by registered mail
directed to Borrower at the addresses indicated aside its signature to
this Agreement, and Borrower otherwise waives personal service of any
and all process made upon Borrower. Borrower waives any objection
which Borrower may have to any proceeding commenced in a federal or
state court located within Marion County, Indiana, based upon improper
venue or forum non conveniens. Nothing contained in this Section
shall affect the right of the Lenders to serve legal process in any
other manner permitted by law or to bring any action or proceeding
against Borrower or its property in the courts of any other
jurisdiction.
11.6. Headings. Section headings in the Loan Documents are
for convenience of reference only and shall not govern the
interpretation of any of the provisions of the Loan Documents.
11.7. Entire Agreement. The Loan Documents embody the entire
agreement and understanding among Borrower, the Agent and the Lenders
and supersede all prior agreements and understandings among Borrower,
the Agent and the Lenders relating to the subject matter thereof.
11.8. Expenses. Borrower shall reimburse the Agent for any
and all reasonable out-of-pocket expenses (including attorneys' fees
for the Agent), paid or incurred by the Agent in connection with the
preparation, negotiation, review, execution, delivery, amendment,
modification and administration of the Facilities and/or the Loan
Documents. Borrower shall reimburse the Agent and the Lenders for
reasonable out-of-pocket expenses paid or incurred by the Lenders in
connection with charges incurred pursuant to Section 5.1.6 hereof
after a Default as provided therein. The Agent shall use its best
effort to provide advance notice to Borrower prior to the incurrence
of such expenses. Borrower shall reimburse the Agent and the Lenders
for any and all reasonable costs, charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Agent
and the Lenders), paid or incurred by the Agent and/or the Lenders in
50
connection with the collection and enforcement of the Facilities
and/or the Loan Documents. The Lenders may pay or deduct from the
loan proceeds any of such expenses, and any proceeds so applied shall
be deemed to be advances under this Agreement evidenced by the Notes
and secured by the Loan Documents, and shall bear interest at the rate
of interest provided in the Notes.
11.9. Indemnification. Borrower agrees to indemnify the
Lenders, and their successors and assigns (including any permitted
purchaser of a participation in the Facilities), and their directors,
officers and employees, against all losses, claims, costs, damages,
liabilities and expenses, including, without limitation, all expenses
of litigation or preparation therefor (a "Loss"), which they may pay
or incur in connection with or arising out of the direct or indirect
application of the proceeds of the Facilities hereunder, except for
any Loss caused by the Lenders' gross negligence or wilful misconduct.
The indemnity set forth herein shall be in addition to any other
Obligations of Borrower to the Lenders hereunder or at common law or
otherwise, and shall survive any termination of this Agreement, the
expiration of the obligation of the Lenders to make the Facilities and
the payment of all Obligations.
11.10. Confidentiality. The Lenders agree to treat all
information received by them in connection with the Loan Documents
(except such information which is generally available or has been made
available to the public) as confidential, provided, however, that
nothing in this Section shall prohibit the Lenders from, or subject
the Lenders to liability for, disclosing any such information to any
Governmental Authority to whose jurisdiction the Lenders may be
subject, and provided further that the Lenders may provide such
information, with Borrower's consent, to proposed purchasers of or
participants in the Facilities.
11.11. Giving Notice. Any notice required or permitted to be
given under this Agreement may be, and shall be deemed effective if
made in writing and delivered to the recipient's address, telex number
of facsimile number addressed to Borrower at the address specified
opposite its signature below, or if addressed to the Agent or the
Lenders at the addresses indicated on Schedule I hereto, by any of the
following means: (a) hand delivery, (b) United States first class
mail, postage prepaid, (c) registered or certified mail, postage
prepaid, with return receipt requested, (d) by a reputable rapid
delivery service, or (e) by telegraph or telex when delivered to the
appropriate office for transmission, charges prepaid, with request for
assurance of receipt in a manner typical with respect to communication
of that type. Notice made in accordance with this Section shall be
deemed given upon receipt if delivered by hand or wire transmission,
three (3) Banking Days after mailing if mailed by first class,
registered or certified mail, or one (1) Banking Day after deposit
with an overnight courier service if delivered by overnight courier.
Borrower, the Agent and the Lenders may each change the address for
service of notice upon it by a notice in writing to the other parties
hereto.
11.12. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute
one agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by Borrower, the Agent and the
Lenders.
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11.13. Incorporation by Reference. All Exhibits and Schedules
hereto are incorporated herein by this reference. Each of the other
Loan Documents shall be made subject to all of the terms, covenants,
conditions, obligations, stipulations and agreements contained in this
Agreement to the same extent and effect as if fully set forth therein,
and this Agreement is made subject to all of the terms, covenants,
conditions, obligations, stipulations and agreements contained in the
other Loan Documents to the same extent and effect as if fully set
forth therein. The provisions of this Agreement, including, without
limitation, provisions relating to maintenance of insurance, are in
addition to, and not a limitation upon, the requirements of any other
Loan Document, any guaranty or any subordination agreement.
11.14. Time of Essence. Time is of the essence under the Loan
Documents.
11.15. No Joint Venture. Notwithstanding anything to the
contrary herein contained or implied, the Lenders, by this Agreement,
or by any action pursuant hereto, shall not be deemed to be a partner
of, or a joint venturer with, Borrower, and Borrower hereby
indemnifies and agrees to defend and hold the Lenders harmless,
including the payment of reasonable attorneys' fees, from any Loss
resulting from any judicial construction of the parties' relationship
as such.
11.16. Severability. In the event any provision of this
Agreement or any of the Loan Documents shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding
shall not affect the validity, enforceability or legality of the
remaining provisions hereof or thereof, all of which shall continue
unaffected and unimpaired thereby.
11.17. Waiver of Setoff. Borrower agrees that it will not
exercise any right of setoff on any of the Notes or assert any claim
for reduction or credit against any of the Notes except when actual
payment has been made.
11.18. Gender. As used herein, the masculine gender shall be
deemed to include the feminine and the neuter and the singular number
shall also include the plural.
11.19. Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of a Default, each
Lender is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to Borrower
or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general
or special) and any other Indebtedness at any time held or owing by
such Lender or any affiliate of such Lender (including, without
limitation, by branches and agencies of such Lender or any affiliate
of such Lender wherever located) to or for the credit or the account
of Borrower against and on account of the Obligations and liabilities
of Borrower to such Lender under this Agreement or under any of the
other Loan Documents, including, without limitation, all interests in
Obligations of Borrower purchased by such Lender pursuant to Section
11.22 hereof, and all other claims of any nature or description
arising out of or connected with this Agreement or any other Loan,
52
irrespective of whether or not such Lender shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any
of them, shall be contingent or unmatured.
11.20. Lenders Not in Control. None of the covenants or other
provisions contained in the Loan Documents shall, or shall be deemed
to, give the Lenders the rights or power to exercise control over the
affairs and/or management of Borrower, the power of the Lenders being
limited to the right to exercise the remedies provided in the Loan
Documents, provided, however, that if the Lenders become the owner of
any stock or other equity interest in any Person, whether through
foreclosure or otherwise, the Lenders shall be entitled (subject to
requirements of law) to exercise such legal rights as they may have by
virtue of being the owner of such stock or other equity interest in
such Person.
11.21. Additional Amounts Payable. If any change or the
enactment, adoption or judicial or administrative interpretation of
any law, regulation, treaty, guideline or directive (including,
without limitation, Regulation D of the Board of Governors of the
Federal Reserve System) either (a) subjects any Lender or any
applicable Lending Installation or the LC Issuer to any additional
tax, duty, charge, deduction or withholding with respect to any of the
Facilities (other than a tax measured by the net or gross income of
such Lender), or (b) imposes or increases any reserve, special deposit
or similar requirement on account of any of the Facilities not
otherwise provided in this Agreement or (c) imposes increased minimum
capital requirements on any Lender or any applicable Lending
Installation or the LC Issuer on account of its issuing or maintaining
any of the Facilities; and if any of the foregoing (i) results in an
increase to such Lender or the applicable Lending Installation or the
LC Issuer in the cost of issuing or maintaining any of the Facilities,
or making any payment on account of any of the Facilities, (ii)
reduces the amount of any payment receivable by such Lender or the
applicable Lending Installation or the LC Issuer under this Agreement
with respect to any of the Facilities, (iii) requires such Lender or
the applicable Lending Installation or the LC Issuer to make any
payment calculated by reference to the gross amount of any sum
received or paid by such Lender or the applicable Lending Installation
or the LC Issuer pursuant to any of the Facilities, or (iv) reduces
the rate of return on such Lender's or the applicable Lending
Installation or the LC Issuer's capital to a level below that which
such Lender or the applicable Lending Installation or the LC Issuer
could otherwise have achieved (taking into consideration such party's
policies with respect to Capital Adequacy), then Borrower shall pay to
such Lender or the applicable Lending Installation or the LC Issuer,
as additional compensation for the Facilities, such amounts as will
compensate such Lender or the applicable Lending Installation or the
LC Issuer for such increased cost, payment or reduction. Within
twenty (20) days after (a) the initial demand therefor and (b)
presentation by a Lender of a certificate to Borrower containing a
statement of the cause of such increased cost, payment or reduction
and a calculation of the amount thereof (which statement and
calculation shall be presumed prima facie to be correct), Borrower
shall pay the additional amount payable measured from the date such
change, enactment, adoption or interpretation first affects such
Lender or the applicable Lending Installation or the LC Issuer.
11.22. Adjustments. If any Lender (a "Benefitted Lender")
shall at any time receive any payment (other than regularly scheduled
payments of principal and interest prior to any Default) of all or any
53
part of its Facilities hereunder, or interest thereon (whether by set-
off or otherwise) in a greater proportion than its Pro Rata Share,
such Benefitted Lender shall purchase for cash from the other Lenders
such portions of the other Lenders' Notes, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause the Benefitted Lender to share
the excess payment or benefits of such collateral or proceeds ratably
with the other Lenders; provided, however, that if all or any portion
of such excess payment or benefits is thereafter recovered from the
Benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned to the extent of such recovery, but
without interest. Borrower agrees that each Lender so purchasing a
portion of another Lender's Notes may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such
portion.
11.23. Application of Proceeds. Notwithstanding any contrary
provision of any other Loan Document, after the occurrence of a
Default and acceleration of the Obligations, including, without
limitation, any proceeds of collateral and recoveries under the
Guaranty, shall be applied by the Agent to payment of the Obligations
in the following order:
(a) First, to payment of all reasonable costs and
reasonable expenses of the Agent and the Lenders incurred in
connection with the preservation, collection and enforcement of
the Obligations;
(b) Second, to the payment of that portion of the
Obligations constituting accrued and unpaid interest and fees,
pro rata among the Lenders in accordance with their Pro Rata
Shares;
(c) Third, to the payment of the principal amount of the
Obligations, pro rata among the Lenders in accordance with their
Pro Rata Shares;
(d) Fourth, to the payment of any other Obligations not
referred to above to the Agent or any of the Lenders as may be
properly payable; and
(e) Fifth, the balance, if any, after all the Obligations
have been satisfied, shall be returned to the Borrower.
11.24. Foreign Lender Withholding Tax. Each Lender represents
and warrants to the Agent that under applicable law and treaties no
taxes are required to be withheld by the Agent with respect to any
payments to be made to such Lender under this Agreement and further
agrees to provide such required United States tax forms or comparable
statements to evidence its exemption from withholding tax in
accordance with applicable United States laws and regulations, and
agrees to comply from time to time with all applicable United States
laws and regulations with regard to such withholding tax exemptions.
54
11.25. Replacement of Lenders. (a) (i) If any Lender becomes
a Defaulting Lender or otherwise defaults in its obligations to make
Loans, (ii) if any Lender refuses to consent to certain proposed
changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Lenders as provided
in Section 11.1 hereof, or (iii) upon a Lender charging to Borrower
increased costs in excess of those being generally charged by the
other Lenders, Borrower shall have the right, in accordance with the
requirements of Section 10.3 hereof, if no Default will exist after
giving effect to such replacement, to replace such Lender (the
"Replaced Lender") with an Eligible Transferee or Eligible
Transferees, none of which shall constitute a Defaulting Lender at the
time of replacement (collectively, the "Replacement Lender"),
reasonably acceptable to the Agent and Bank One, provided that at the
time of any replacement pursuant to this Section, the Replacement
Lender shall enter into one or more assignments as provided in Section
10.3 hereof pursuant to which the Replacement Lender shall acquire all
the Revolving Commitments and outstanding Loans of, and in each case
participation in Letters of Credit by, the Replaced Lender and, in
connection therewith, shall pay to the Replaced Lender in respect
thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Loans of
the Replaced Lender and (B) an amount equal to all accrued, but
theretofore unpaid, fees owing to the Replaced Lender and (C) all
obligations of Borrower owing to the Replaced Lender (other than those
specifically described in clause (A) above in respect of which the
assignment purchase price has been, or is concurrently being, paid)
shall be paid in full to such Replaced Lender concurrently with such
replacement.
11.26. Relationship of Parties; Mutual Release of
Consequential Damages. The relationship between Borrower and the
Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary
responsibilities to Borrower. Neither the Agent nor any Lender
undertakes any responsibility to Borrower to review or inform Borrower
of any matter in connection with any phase of Borrower's business or
operations. Neither the Agent, any Lender nor Borrower shall have any
liability with respect to, and Borrower, each Lender and the Agent
hereby waives, releases and agrees not to sue for, any special or
consequential damages suffered by it in connection with, arising out
of, or in any way related to the Loan Documents or the transactions
contemplated thereby.
11.27. Waiver of Jury Trial. THE LENDERS, THE AGENT AND
BORROWER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT
WITH COUNSEL, KNOWINGLY, VOLUNTARILY, INTENTIONALLY, UNCONDITIONALLY
AND IRREVOCABLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY
JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN), OR ACTIONS OF ANY OF THEM. NEITHER THE LENDERS, THE
AGENT NOR BORROWER SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR
OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY
55
RESPECT OR RELINQUISHED BY EITHER THE LENDERS, THE AGENT OR BORROWER
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY THE LENDERS, THE AGENT AND
BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDERS TO
PROVIDE THE FINANCING GOVERNED BY THIS AGREEMENT.
[THIS SPACE INTENTIONALLY LEFT BLANK]
56
SIGNATURE PAGE OF
CHROMCRAFT REVINGTON, INC.
TO CREDIT AGREEMENT
"BORROWER"
CHROMCRAFT REVINGTON, INC.
By: /s/ Michael E. Thomas
------------------------
Its: President
------------------------
Address:
1100 North Washington Street
P.O. Box 238
Delphi, Indiana 46923-0238
Attention: Chief Financial Officer
Facsimile: 765-564-6673
57
SIGNATURE PAGE OF
BANK ONE, INDIANA, N.A.
TO CREDIT AGREEMENT
BANK ONE, INDIANA, N.A.,
individually and as Agent
By: /s/ John C. Otteson
------------------------
Its: Managing Director
------------------------
58
SIGNATURE PAGE OF
NATIONAL CITY BANK OF INDIANA
TO CREDIT AGREEMENT
NATIONAL CITY BANK OF INDIANA
By: /s/ Alexander Curry
------------------------
Its: Senior Vice President
------------------------
59
SIGNATURE PAGE OF
SUNTRUST BANK
TO CREDIT AGREEMENT
SUNTRUST BANK
By: /s/ Jeffery A. Howard
-----------------------
Its: Director
------------------------
60
SIGNATURE PAGE OF
THE NORTHERN TRUST COMPANY
TO CREDIT AGREEMENT
THE NORTHERN TRUST COMPANY
By: /s/ Candelario Martinez
------------------------
Its: Vice President
------------------------
61
EXHIBIT (21.1)
SUBSIDIARIES OF THE REGISTRANT
The Registrant owns all of the issued and outstanding shares of capital stock
of each of the following corporations:
Chromcraft Corporation, a Delaware corporation
Peters-Revington Corporation, a Delaware corporation
Silver Furniture Co., Inc., a Tennessee corporation
Silver Furniture Manufacturing Co., Inc., a Tennessee corporation (a)
Cochrane Furniture Company, Inc., a North Carolina corporation
CRI Capital Corporation, a Delaware corporation
CRI Corporation-Sumter, a Delaware corporation
Korn Industries, Incorporated, a South Carolina corporation (b)
(a) A 100% owned subsidiary of Silver Furniture Co., Inc.
(b) A 100% owned subsidiary of CRI Corporation-Sumter
EXHIBIT (23.1)
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Chromcraft Revington, Inc.:
We consent to incorporation by reference in the registration statement
(No. 33-48728) on Form S-8 of Chromcraft Revington, Inc. of our report dated
January 31, 2001, relating to the consolidated balance sheets of Chromcraft
Revington, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of earnings, stockholders' equity, and cash
flows and the consolidated financial statement schedule for each of the years
in the three-year period ended December 31, 2000, which report appears in the
December 31, 2000, annual report on Form 10-K of Chromcraft Revington, Inc.
KPMG Peat Marwick LLP
Indianapolis, Indiana
February 26, 2001
EXHIBIT (24.1)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints FRANK T. KANE and MICHAEL E. THOMAS, or either
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Chromcraft Revington, Inc. Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, and any and all
amendments thereto, to be filed with the Securities and Exchange Commission
pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, granting unto each of said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each of said attorneys-in-fact and agents,
or his substitute, may lawfully do or cause to be done by virtue hereof.
Dated: March 1, 2001 David L. Kolb, Director
EXHIBIT (24.1)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints FRANK T. KANE and MICHAEL E. THOMAS, or either
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Chromcraft Revington, Inc. Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, and any and all
amendments thereto, to be filed with the Securities and Exchange Commission
pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, granting unto each of said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each of said attorneys-in-fact and agents,
or his substitute, may lawfully do or cause to be done by virtue hereof.
Dated: March 1, 2001 Larry P. Kunz, Director
EXHIBIT (24.1)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints FRANK T. KANE and MICHAEL E. THOMAS, or either
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Chromcraft Revington, Inc. Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, and any and all
amendments thereto, to be filed with the Securities and Exchange Commission
pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, granting unto each of said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each of said attorneys-in-fact and agents,
or his substitute, may lawfully do or cause to be done by virtue hereof.
Dated: March 1, 2001 M. Saleem Muqaddam, Director
EXHIBIT (24.1)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints FRANK T. KANE and MICHAEL E. THOMAS, or either
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Chromcraft Revington, Inc. Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, and any and all
amendments thereto, to be filed with the Securities and Exchange Commission
pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, granting unto each of said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each of said attorneys-in-fact and agents,
or his substitute, may lawfully do or cause to be done by virtue hereof.
Dated: March 1, 2001 Warren G. Wintrub, Director