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EXHIBIT 10.19
[CHASE LOGO]
SIXTH AMENDMENT TO CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") dated
effective as of November 12, 1999 (the "Effective Date"), is among CRAFTMADE
INTERNATIONAL, INC., a Delaware corporation, DUROCRAFT INTERNATIONAL, INC., a
Texas corporation, TRADE SOURCE INTERNATIONAL, INC., a Delaware corporation
(jointly and severally, "Borrower"), C/D/R INCORPORATED, a Delaware corporation
("C/D/R"), CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as agent ("Agent"), and
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION and THE FROST NATIONAL BANK
(collectively, "Lenders").
PRELIMINARY STATEMENT
Agent, Lenders and Borrower are parties to a Credit Agreement dated as
of May 30, 1996, as amended by a First Amendment dated as of October 8, 1996, a
Second Amendment dated as of November 1, 1997, a Third Amendment dated as of
July 1, 1998, a Fourth Amendment dated as of April 2, 1999 and a Fifth Amendment
(in letter form) dated as of August 11, 1999 (as so amended, the "Credit
Agreement"). All capitalized terms defined in the Credit Agreement and not
otherwise defined in this Amendment shall have the same meanings herein as in
the Credit Agreement.
Agent, Lenders and Borrower have agreed to amend the Credit Agreement
to increase principal amounts available to be borrowed by Borrower, subject to
the terms and conditions of the Credit Agreement, from $14,000,000 to
$16,000,000, to extend the maturity of such indebtedness, and to effect certain
other desired changes.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, Agent, Lenders and Borrower hereby agree as
follows:
Section 1. Addition of Definition. The following definition is hereby
added to Section 1 of the Credit Agreement:
""Fixed Charge Coverage Ratio" means (a)(i) EBITDA, less (ii) cash Tax
Expense, less (iii) the dollar amount of treasury stock repurchases by Borrower,
divided by (b)(i) principal payments made on Debt (including, without
limitation, prepayments of Mortgage Debt), plus (ii) Interest Expense, plus
(iii) cash dividends. With respect to both clauses (a) and (b) above, such
amounts shall be determined for the period beginning on and including October 1,
1999 through and including the most recently completed fiscal quarter, until
such time as the four most recently completed fiscal quarters are taken into
account in such determination, at which time and thereafter only the four most
recently completed fiscal quarters."
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Section 2. Amendment of Definition. The following definitions in
Section 1 of the Credit Agreement are amended to read in their entirety as
follows:
""Applicable Rate" means:
(a) during the period that an Advance is a Prime Rate Advance,
the Prime Rate minus 1/2 of one percent (0.5%); and
(b) during the period that an Advance is a Eurodollar Advance,
the Eurodollar Rate plus (i) at all times when the most recent
compliance certificate delivered in accordance with SECTION 7.1(C)
shows that the Funded Debt to EBITDA Ratio is less than 1.0 to 1.0, one
and one-quarter percent (1.25%), and (ii) at all times when the most
recent compliance certificate delivered in accordance with SECTION
7.1(C) shows that the Funded Debt to EBITDA Ratio is greater than or
equal to 1.0 to 1.0, one and one-half percent (1.5%)."
""Borrowing Base" means, at any particular time, an amount equal to the
sum of (a) eighty percent (80%) of Eligible Accounts, plus (b)
fifty-five percent (55%) of Eligible Inventory; provided, however, that
at no time shall the Eligible Inventory component of the Borrowing Base
ever be greater than percent (50%) of the aggregate amount of
outstanding Advances."
""Commitments" means, as to either Lender, the obligation of such
Lender to make Advances thereunder in an aggregate principal amount not
to exceed $8,000,000, and "Commitments" means such obligation of all
Lenders, as such amounts may be reduced pursuant to Section 2.7 or
otherwise."
""Funded Debt to EBDITA Ratio" means, at any particular time, the ratio
of (a) Funded Debt (including Senior Bank Debt and Capital Lease
Obligations, but excluding Mortgage Debt) to (b) EBITDA."
""Termination Date" means 11:00 a.m. Dallas, Texas time on November 30,
2001, or such earlier date and time on which the Commitments terminate
as provided in this Agreement."
Section 3. Amendment of Section 8.1. The next to last paragraph of
Section 8.1 of the Credit Agreement is hereby amended to read in its entirety as
follows:
"Without limiting the foregoing, C/D/R will not incur, create,
assume or permit to exist, and will not permit any subsidiary of C/D/R
to incur, create, assume or permit to exist, any Debt, except unsecured
Debt in an aggregate amount not to exceed $100,000 at any one time
outstanding."
Section 4. Amendment of Section 8.4. The last proviso of Section 8.4 of
the Credit Agreement is hereby amended to read in its entirety as follows:
"provided, however, that Borrower may purchase treasury stock so long
as the Consolidated Debt to Consolidated Tangible Net Worth Ratio is
not greater than 2.0 to 1.0, and as a result of such purchase would not
become over 2.0 to 1.0, in each case as evidenced by a Treasury Stock
Purchase Compliance Certificate, substantially in the form of EXHIBIT
F-1 attached
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hereto, submitted to Agent showing the effect of any potential treasury
stock purchases contemplated by Borrower during a thirty (30) day
period commencing on the earlier of (i) the date such Treasury Stock
Purchase Compliance Certificate is sent to Agent or (ii) the date of
the initial treasury stock purchase covered by such certificate."
Section 5. Amendment of Section 9.3. Section 9.3 of the Credit
Agreement is hereby amended to read in its entirety as follows:
"Section 9.3 Funded Debt to EBITDA Ratio. Borrower will at all times
maintain a Funded Debt to EBITDA Ratio, determined monthly with respect
to the twelve most recently completed calendar months, of not greater
than 1.75 to 1.0."
Section 6. Replacement of Section 9.4. Section 9.4 of the Credit
Agreement (captioned "EBITDA of Trade Source") is hereby deleted in its
entirety, and replaced in its entirety by the following:
"Section 9.4 Fixed Charge Coverage Ratio. Borrower will maintain a
Fixed Charge Coverage Ratio of greater than 1.0 to 1.0 as of the end of
each fiscal quarter of Borrower."
Section 7. Amendment of Exhibits. Exhibits A, C, F and F-1 to the
Credit Agreement are hereby amended in their entireties to be in the form of
Exhibits A, C, F and F-1, respectively, to this Amendment.
Section 8. Addition of Section 7.12. A new Section 7.12 of the Credit
Agreement is hereby added, to read in its entirety as follows:
"Section 7.12. Administrative Fee. Borrower will pay Agent an
administrative fee pursuant to the terms of that certain letter between them
regarding such fee. "
Section 9. Representations; No Event of Default. Borrower hereby
represents and warrants to Agent and Lenders that:
- the execution, delivery and performance of this Amendment and any and
all other Loan Documents executed and delivered in connection with this
Amendment have been authorized by all requisite corporate action on the
part of Borrower and Guarantor and will not violate the certificate of
incorporation or articles of incorporation (or other charter
documents), as applicable, or bylaws of any of Borrower and Guarantor;
and
- neither the certificate of incorporation or articles of incorporation
(or other charter documents), as applicable, nor bylaws of any of
Borrower and Guarantor have been amended or revoked since May 30, 1996,
except as certified in writing to Agent and Lenders by Borrower or
Guarantor contemporaneously with the execution and delivery of this
Amendment; and
- the representations and warranties contained in the Credit Agreement,
as amended hereby, and any other Loan Document, are true and correct on
and as of the date hereof as though made on and as of the date hereof;
and
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- as of the date of this Amendment, no Event of Default has occurred and
is continuing and no event or condition has occurred that with the
giving of notice or lapse of time or both would be an Event of Default;
and
- each of Borrower and Guarantor is in full compliance with all covenants
and agreements contained in the Credit Agreement, as amended hereby.
Section 10. Conditions Precedent. The effectiveness of this Amendment
shall be subject to the following conditions precedent:
- Each Lender shall have received a promissory note of Borrower payable
to the order of such Lender, in substantially the form of EXHIBIT A
hereto, with appropriate completion, which promissory note shall be in
modification, increase and replacement of (but not in extinguishment
of) those certain promissory notes in the form of EXHIBIT A to the
Credit Agreement, and dated as of July 1, 1998 and in the stated
maximum principal amount of $7,000,000; and
- Lenders shall have received a Secretary's Certificate from the
secretary or assistant secretary of Borrower and Guarantor certifying
and attaching appropriate corporate resolutions regarding the
transactions contemplated hereby, and statements of incumbency; and
- Lenders shall have received such other documents incidental and
appropriate to the transactions provided for herein as Lenders or their
counsel may reasonably request, and all such documents shall be in form
and substance reasonably satisfactory to Lenders; and
- All legal matters incident to the consummation of the transactions
contemplated hereby shall be reasonably satisfactory to special counsel
for Lenders retained at the expense of Borrower.
Section 11. Guaranty. C/D/R hereby acknowledges, consents and agrees to
this Amendment and (a) acknowledges that its obligations under that certain
Guaranty Agreement executed by it effective as of May 30, 1996, in favor of
Agent and Lenders, includes a guaranty of all of the obligations, indebtedness
and liabilities of Borrower under the Credit Agreement as amended by this
Amendment (specifically including the increased principal amount of $16,000,000
potentially available under the Credit Agreement), (b) represents to Agent and
Lenders that such Guaranty remains in full force and effect and shall continue
to be its legal, valid and binding obligation, enforceable against it in
accordance with its terms, and (c) agrees that this Amendment and all documents
executed in connection herewith do not operate, and that the prior amendments to
the Credit Agreement and all documents executed in connection therewith have not
operated, to reduce or discharge its obligations under such Guaranty.
Section 12. Ratification. Borrower acknowledges that each of the Loan
Documents is in all respects ratified and confirmed, and all of the rights,
powers and privileges created by this Amendment or under the Loan Documents are
ratified, extended, carried forward and remain in full
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force and effect except as the Credit Agreement is amended by this Amendment.
Except as expressly amended by this Amendment, the Credit Agreement is and shall
be unchanged.
Section 13. Liens and Security Interests. Borrower hereby extends and
renews the Liens and security interests previously granted to Agent and Lenders
and agrees that this Amendment shall in no manner affect or impair any Liens or
security interests previously granted. Borrower hereby acknowledges that such
Liens and security interests are valid and existing.
Section 14. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed an original and all of which taken
together shall constitute but one and the same agreement.
Section 15. Joint and Several; Loan Documents. Any and all obligations
of Borrower under the Loan Documents are joint and several, whether or not
expressly so stated. This Amendment shall be included within the definition of
"Loan Documents" as used in the Agreement. The "Agreement" as used in the Credit
Agreement is a reference to the Credit Agreement as amended by this Amendment.
Section 16. Enforceability. Borrower and Guarantor hereby represent and
warrant that, as of the date of this Amendment, the Credit Agreement and all
documents and instruments executed in connection therewith are in full force and
effect and that there are no claims, counterclaims, offsets or defenses to any
of such documents or instruments.
Section 17. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND AS APPLICABLE,
THE LAWS OF THE UNITED STATES OF AMERICA.
THIS WRITTEN AMENDMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN
AGREEMENT" AS DEFINED IN SECTION 26.02(a) OF THE TEXAS BUSINESS & COMMERCE CODE,
AND REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed effective as of the Effective Date.
BORROWER: CRAFTMADE INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
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DUROCRAFT INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
TRADE SOURCE INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
GUARANTOR: C/D/R INCORPORATED
By: /s/ Xxxxxxxx Xxxxxxxxx
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Name: Xxxxxxxx Xxxxxxxxx
Title: President
LENDERS: CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Agent and as Lender
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Vice President
THE FROST NATIONAL BANK
By: /s/ D. Xxxxxxx Xxxxxxx
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Name: D. Xxxxxxx Xxxxxxx
Title: Senior Vice President
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