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Exhibit 10.21
NINTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
ESCALADE, INCORPORATED, an Indiana corporation (the "Company"), and
BANK ONE, INDIANA, National Association, a national banking association (the
"Bank") being parties to that certain Amended and Restated Credit Agreement
dated as of May 31, 1996 as amended from time to time through the date hereof
(collectively the "Agreement"), hereby agree to amend the Agreement by this
Ninth Amendment to Amended and Restated Credit Agreement (the "Ninth
Amendment"), on the terms and subject to the conditions set forth as follows:
1. DEFINITIONS
a. Terms used in this Ninth Amendment with their initial letter
capitalized which are not defined herein shall have the meanings
ascribed to them in the Agreement.
b. The following definitions set forth in Section 1 of the Agreement
are hereby amended and restated in their entirety to read as follows:
o "Applicable Rate" means that number of percentage points to be taken
into account in determining the Applicable Spread which is used in
computing the rate at which interest accrues on the Loans, the
Applicable Unused Fee Rate which is used in calculating the Unused Fee,
the Applicable Commission Rate which is used in calculating the amount
of Commission which is payable with respect to Standby Letters of
Credit, and the Applicable Issuance Fee Rate which is used in
calculating the amount of Issuance Fees payable with respect to
Commercial Letters of Credit. Initially, from the date of the Ninth
Amendment and until receipt by the Bank of the Company's first fiscal
quarter end financial statements furnished after such date to the Bank
pursuant to the requirements of Section 5.b(ii), the Applicable Rate
shall be determined by reference to the Company's Leverage Ratio in
accordance with the following table:
Applicable Rate
Applicable Spread*
------------------------------- Applicable Applicable Applicable
Prime-based LIBOR-based Unused Fee Commission Issuance
Leverage Ratio Rate Rate Rate Rate Fee Rate
-------------- ----------------- ------------------------------------------------------------
greater than or
equal to 0.00% RL 1.75% RL .375% 1.375% .625%
2.50:1.00 0.00% TL 2.00% TL
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less than or
equal to
2.49:1.00, but
greater than or
equal to 0.00% RL 1.50% RL .25% 1.25% .50%
2.00:1.00 0.00% TL 1.75% TL
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less than or
equal to
1.99:1.00, but
greater than or
equal to 0.00% RL 1.25% RL .25% 1.125% .375%
1.50:1.00 0.00% TL 1.50% TL
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less than 1.50:1.00 0.00% RL 1.00% RL .25% 1.00% .25%
0.00% TL 1.25% TL
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* Where "RL" means Revolving Loan and "TL" means Term Loan.
Such determination and resulting rate change will be effective as of
the first day of the month following the receipt of the financial
statements.
Thereafter, the Applicable Rate shall be determined on the basis of the
financial statements of the Company for each fiscal quarter end
furnished to the Bank pursuant to the requirements of Section 5.b(ii),
and shall be effective as of the first day of the month following the
receipt of the financial statements. Commissions and Issuance Fees with
respect to Letters of Credit shall be determined from the Applicable
Rate in effect when the related Letter of Credit is issued or renewed,
and will thereafter adjust quarterly after receipt of the financial
statements and determination of the Applicable Rate. It is noted that
the above table provides an Applicable Rate for a Leverage Ratio
greater than that which will be permissible under the terms of Section
5.g(ii). For the avoidance of doubt, it is agreed that it is the intent
of the parties that the Bank shall be free to exercise all remedies
otherwise provided for in this Agreement in the event of the violation
by the Company of the covenant stated in Section 5.g(ii),
notwithstanding the accrual of interest upon the Loan at a rate
determined in accordance with this definition.
2. TERM LOAN. Section 2.c. of the Agreement is hereby amended and
restated in its entirety, to read as follows:
c. The Term Loan. The Bank will make a term loan (the "Term Loan") to
the Company contemporaneously with the execution of this Agreement on
the following terms and subject to the following conditions:
(i) Amount. The principal amount of the Term Loan shall be
Twenty Million Five Hundred Thousand and No/100 Dollars
($20,500,000) or so much thereof as shall be advanced for the
purposes set forth herein.
(ii) The Term Note. The obligation of the Company to repay the
Term Loan shall be evidenced by a promissory note (the "Term
Note") in the form of Exhibit A. The principal of the Term
Loan shall be repayable in equal annual installments of
$4,100,000 each, due and payable on the last day of each
March, commencing March 31, 2001, provided that if the full
amount set forth above is not advanced at closing, the annual
installments shall be reduced proportionately. On March 31,
2005, the entire remaining principal amount of the Term Loan
shall be due and payable, together with all accrued and unpaid
interest. Subject to the contemporaneous payment of any
Prepayment Premium which would become due on account of any
proposed prepayment, the principal of the Term Loan may be
prepaid at any time in whole or in part, provided that any
partial prepayment shall be in an amount which is an integral
multiple of $250,000.00. Further, any partial prepayment up to
the amount of the next scheduled principal installment, shall
be applied to that installment but prepayments in excess of
the next scheduled installment shall be applied to the
principal installments payable on the Term Loan in the inverse
order of their maturities.
(iii) Interest on the Term Loan. The unpaid principal balance
from time to time of the Term Loan shall bear interest from
the date the Loan is made prior to the maturity of the Term
Note at a rate per annum equal to the Prime Rate plus the
Applicable Spread, except that at the option of the Company
exercised from time to time as provided in
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Section 2.d(i) of the Agreement, interest may accrue prior to
maturity on the entire outstanding balance of the Term Loan or
on any portion thereof which is in excess of $1,000,000.00 and
as to which no Optional Rate previously selected remains in
effect at a LIBOR-based Rate for a period of 30, 60, 90 or 180
days; provided that no Optional Rate may be elected for a
period extending beyond the scheduled final maturity of the
Term Loan. Those elections of a "LIBOR-based Rate" which have
been made under the "Term Loan" as outstanding prior to the
Ninth Amendment and which remain in effect on the date of the
Ninth Amendment, shall continue, under this Agreement, to be
in effect through the end of the interest period for which
elected. After maturity, whether scheduled maturity or
maturity by virtue of acceleration on account of the
occurrence of an Event of Default, interest will accrue on the
Term Loan at a rate per annum equal to the Prime Rate plus the
Applicable Spread plus two percent (2%), except that as to any
portion of the Loan for which the Company may have elected an
Optional Rate for a period of time that has not expired at
maturity, such portion shall, during the remainder of such
period, bear interest at the greater of the Prime Rate plus
the Applicable Spread plus two percent (2%) per annum or the
Optional Rate then in effect plus two percent (2%) per annum.
Prior to maturity, interest shall be due and payable on the
last Banking Day of each month in addition to any installment
of principal which may be due and payable on such date. After
maturity, interest shall be payable as accrued and without
demand.
(iv) Use of Proceeds of the Term Loan; Reduction of Principal
Amount. The proceeds of the Term Loan shall be used to finance
the repurchase of stock by the Company from existing
shareholders in a tender offer filed with and in compliance
with the applicable regulations of the Securities and Exchange
Commission, through open-market purchases and to repurchase
outstanding warrants for stock in an aggregate amount not to
exceed Thirteen Million Five Hundred Thousand and No/100
Dollars ($13,500,000) on or prior to March 31, 2000 and to
refinance the Company's existing Term Loan in the amount of
Seven Million and No/100 Dollars ($7,000,000.00). On or before
March 31, 2000, the Company shall deliver to the Bank a
Certificate of an Authorized Officer certifying that the
Company has used $13,500,000 of the Term Loan proceeds, or
such lesser amount as actually used, to repurchase the common
stock of the Company through the tender offer, open-market
purchases or through the purchase of warrants. In the event
that the Company has not fully utilized the $13,500,000 for
such purpose by March 31, 2000, the remaining unused proceeds
of the Term Loan, to the extent advanced, shall be immediately
repaid by the Company as a prepayment of the Term Loan and
shall be applied against the latest maturing installment of
principal; and if not previously advanced, shall be cancelled,
and in either event the annual principal payments shall be
adjusted proportionately to reflect the actual principal
amount outstanding.
(v) Commitment Fee. In consideration of the Bank's agreement
to advance new funds to the Company and refinance the balance
of the Company's existing term loan, the Company shall pay a
Commitment Fee equal to 1/4% of the amount of the increase in
the Term Loan with the fee not to exceed $33,750.00, which
shall be due and payable at Closing.
3. AFFIRMATIVE COVENANTS. Sections 5.g(i), (ii) and (iii) of the
Agreement are hereby amended to read in their entirety as follows:
(i) Tangible Net Worth. The Company shall maintain its
Tangible Net Worth,
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determined on a consolidated basis, of not less than an amount
equal to 95% of the Company's consolidated Tangible Net Worth
as of the date of funding of the tender offer (after giving
effect to the tender offer and its related transactional
expenses) until June 30, 2000. At June 30, 2000 and at the
last day of each fiscal quarter end thereafter, the Tangible
Net Worth to be maintained by the Company on that date and at
all times thereafter until the last day of the next quarter
shall be increased by an amount equal to seventy-five percent
(75%) of the Company's consolidated net profit for the fiscal
quarter then ended.
(ii) Leverage Ratio. For each period of four consecutive
fiscal quarters of the Company ending during the periods
indicated in the table below, the Company shall maintain a
Leverage Ratio, at levels not greater than those shown in the
following table:
Period Ratio
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from the date of this Ninth Amendment 3.00 to 1.0
and until March 31, 2001
At April 1, 2001 and at all 2.50 to 1.0
times thereafter
(iii) Debt Service Coverage. For each period of four
consecutive fiscal quarters ending during the periods
indicated in the table below, the Company shall maintain a
debt service coverage ratio (hereinafter defined), determined
on a consolidated basis, of not less than that indicated in
the table below.
Period Ratio
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from the date of this Ninth Amendment and
until December 30, 2000 1.05 to 1.0
from December 31, 2000 and until
December 29, 2001 1.10 to 1.0
at December 30 , 2001 and at all
times thereafter 1.20 to 1.0
For purposes of this covenant, the phrase "debt service
coverage ratio" means the ratio of (A) the sum of consolidated
net income before taxes plus interest expense plus
depreciation and amortization expense plus non-recurring and
extraordinary charges, all for the period for which the ratio
is being determined, over (B) the sum of scheduled Term Loan
and other debt payments plus interest expense plus cash income
taxes plus capital expenditures which were not financed plus
stock repurchased and cash dividends made, but excluding the
stock repurchase under the tender offer and related activities
referred to in Section 2(c)(iv) above, all for the period for
which such ratio is being determined.
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4. NEGATIVE COVENANT. Section 6.a. of the Agreement is hereby amended and
restated in its entirety to read as follows:
a. Restricted Payments. If an Event of Default has occurred and is
continuing or would occur as a result of any of the following, the
Company shall not purchase or redeem any shares of the capital stock of
the Company or declare or pay any dividends thereon except for
dividends payable entirely in capital stock; and the Company shall not
make any other distributions to shareholders as shareholders, or set
aside any funds for any such purpose, or prepay, purchase or redeem any
subordinated indebtedness of the Company.
5. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank to enter
into this Ninth Amendment, the Company represents and warrants to the Bank that:
a. The execution and delivery of this Ninth Amendment, the execution
and delivery of all of the other documents executed in connection
herewith, and the performance by the Company of its obligations under
this Ninth Amendment and all of the documents executed in connection
herewith are within the corporate power of the Company, have been duly
authorized by all necessary corporate action, have received any
required governmental or regulatory agency approvals and do not and
will not contravene or conflict with any provision of law or of the
Articles of Incorporation or Bylaws of the Company or of any agreement
binding upon the Company or any of its property.
b. This Ninth Amendment and all of the documents executed by the
Company in connection herewith are the legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws enacted for the relief of
debtors generally and other similar laws affecting the enforcement of
creditors' rights generally or by equitable principles which may affect
the availability of specific performance and other equitable remedies.
c. The representations and warranties contained in Section 3 of the
Agreement are true and correct as of the date hereof except that the
representations contained in Section 3.d. of the Agreement shall be
deemed to refer to the latest financial statements furnished by the
Company to the Bank.
d. No Event of Default or Unmatured Event of Default has occurred and
is continuing as of the date of this Ninth Amendment.
6. CONDITIONS PRECEDENT. This Ninth Amendment shall become effective upon
the Bank's receipt of the following, contemporaneously with the execution of
this Ninth Amendment, each duly executed, dated and in form and substance
satisfactory to the Bank:
a. This Ninth Amendment;
b. The replacement Term Loan Note;
c. Certified copies of Resolutions of the Board of Directors of the
Company, authorizing the execution, delivery and performance,
respectively of this Ninth Amendment and the Term Loan Note, and the
other Loan Documents to which such entity is a party;
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d. Certificate of the Secretary of the Company certifying the name of
the officer or officers authorized to sign each document to which the
Company is a party, together with a sample of the true signature of
each such officer;
e. Copies of the Articles of Incorporation and Bylaws of the Company
certified by the Secretary of such entity or a Certificate of No Change
to such documents if previously delivered to the Bank;
f. An opinion of counsel for the Company in form and substance
acceptable to the Bank and its counsel;
g. Receipt of payment of the reasonable legal fees and expenses of
Bank's counsel at closing or immediately upon receipt by Borrower of an
invoice therefor.
h. Payment of the Commitment Fee due at closing.
i. Such other documents as the Bank may reasonably request, including
but not limited to all documents filed with the Securities and Exchange
Commission regarding the tender offer.
7. PRIOR AGREEMENTS. The Agreement, as amended by this Ninth Amendment,
supersedes all previous agreements and commitments made or issued by the Bank,
related to all of the subjects of the Agreement, as amended by this Ninth
Amendment, and any oral or written proposals or commitments made or issued by
the Bank.
8. AFFIRMATION. Except as expressly amended by this Ninth Amendment, all
of the terms and conditions of the Agreement and each of the Loan Documents
remains in full force and effect.
Executed on March 28, 2000.
ESCALADE, INCORPORATED
By Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, Secretary
BANK ONE, INDIANA, NATIONAL ASSOCIATION
By Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, Vice President and
Senior Relationship Manager
