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EXHIBIT - 10.21
SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
ESCALADE, INCORPORATED, an Indiana corporation (the "Company"), and
BANK ONE, INDIANA, National Association, a national banking association
(formerly known as "Bank One, Indianapolis, National Association") (the "Bank")
being parties to that certain Amended and Restated Credit Agreement dated as of
May 31, 1996 as amended by a First Amendment dated as of September 19, 1996 (the
"Agreement"), hereby agree to amend the Agreement by this Second Amendment to
Amended and Restated Credit Agreement (the "Second Amendment"), on the terms and
subject to the conditions set forth as follows:
1. DEFINITIONS
a. Terms used in this Second 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 this Second
Amendment and until the date of funding and refinancing of the Term
Loan, the Applicable Rate shall be determined by reference to the
following table:
Applicable Rate
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Applicable Spread*
----------------------------- Applicable Applicable Applicable
Prime-based LIBOR-based Unused Fee Commission Issuance
Rate Rate Rate Rate Fee Rate
--------------- ----------- ---------- ----------- ------------
0% RL 1.00% RL .25% 1.00% .25%
0% TL 1.25% TL
* Where "RL" means Revolving Loan and "TL" means Term Loan.
Thereafter, and until receipt by the Bank of the Company's 1997 fiscal
year end financial statements furnished to the Bank pursuant to the
requirements of Section 5.b(i), the Applicable Rate shall be
determined by reference to the following table:
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Applicable Rate
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Applicable Spread*
----------------------------- Applicable Applicable Applicable
Prime-based LIBOR-based Unused Fee Commission Issuance
Rate Rate Rate Rate Fee Rate
--------------- ----------- ---------- ----------- ------------
0% RL 1.40% RL
0% TL 1.65% TL .25% 1.125% .3125%
* Where "RL" means Revolving Loan and "TL" means Term Loan.
On the first day of the month which follows receipt by the Bank of the
Company's 1997 fiscal year end financial statements furnished to the
Bank pursuant to the requirements of Section 5.b(i), the Applicable
Rate shall be determined by reference to the Company's Leverage Ratio
in accordance with the following table:
Applicable Rate
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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 0.25% RL 2.00% RL .375% 1.50% .50%
3.00:1.0 0.25% TL 2.25% TL
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less than or
equal to
2.99:1.00, but
greater than or
equal to 0.00% RL 1.75% RL .375% 1.375% .4375%
2.50:1.00 0.25% 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% .375%
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% .3125%
1.50:1.00 0.00% TL 1.50% TL
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less than 0.00% RL 1.00% RL .25% 1.00% .25%
1.50:1.00 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 year furnished to
the Bank pursuant to the requirements of Section 5.b(i), 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 annually 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.
o "REVOLVING LOAN MATURITY DATE" means May 31, 1998, and
hereafter any subsequent date to which the Commitment may be
extended by the Bank pursuant to the terms of Section 2.a(iv).
c. The definition of "Tangible Net Worth" in the Agreement is
hereby deleted and the following definition is added in its entirety
as follows:
o "NET WORTH" means the shareholders' equity of the Company.
2. REVOLVING LOAN. Section 2.a(i) is hereby amended to change the amount of
Advances which can be made under the Revolving Loan to amounts not exceeding
Twelve Million and no/100 Dollars ($12,000,000.00) in the aggregate at any time
outstanding. The
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obligation to repay the Revolving Loan shall be evidenced by a promissory note
in the form of EXHIBIT A.
3. LETTERS OF CREDIT. Section 2.b is hereby deleted and the following new
Section 2.b is added to read in its entirety as follows:
b. STANDBY AND COMMERCIAL LETTERS OF CREDIT. At any time that the
Company is entitled to an Advance under the Revolving Loan, the Bank
shall, upon the application of the Company or any Subsidiary, issue for
the account of the Company or any Subsidiary, a standby or commercial
letter of credit (each a "Letter of Credit") in an amount not in excess
of the maximum Advance that the Company would then be entitled to
obtain under the Revolving Loan, provided that (A) the total amount of
Letters of Credit which are outstanding at any time shall not exceed
$4,000,000.00, (B) the issuance of any Letter of Credit with a maturity
date beyond the Revolving Loan Maturity Date shall be entirely at the
discretion of the Bank, (C) the form of the requested Letter of Credit
shall be satisfactory to the Bank in the reasonable exercise of the
Bank's discretion, and (D) the Company or any Subsidiary, shall have
executed an application and reimbursement agreement for the Letter of
Credit (a "Reimbursement Agreement") in the Bank's standard form. While
any Letter of Credit is outstanding, the maximum amount of Advances
which may be outstanding under the Revolving Loan shall be reduced by
the maximum amount available to be drawn under the Letter of Credit.
The issuance of each Commercial Letter of Credit shall be subject to
the payment by the applicant (the "Account Party") to the Bank of a fee
(an "Issuance Fee") which shall be equal to the Applicable Issuance Fee
Rate multiplied by the amount thereof, which Issuance Fee shall be due
and payable within ten (10) days following the issuance of any
Commercial Letter of Credit. Upon presentation of each draft drawn
under a Commercial Letter of Credit to the Bank by the beneficiary
thereof, the Account Party shall also pay the Bank a fee (a
"Negotiation Fee"), which shall be an amount equal to the greater of
(i) one-eighth percent (1/8%) multiplied by the amount drawn under such
commercial Letter of Credit, or (ii) $75.00. The issuance and each
renewal of each Standby Letter of Credit shall be subject to the
payment by the Account Party to the Bank of a fee (a "Commission"),
which shall be equal to the Applicable Commission Rate per annum
(calculated on the basis that an entire year's Commission is earned in
360 days) multiplied by the amount thereof, which Commission shall be
due and payable within ten (10) days following the issuance or renewal
of any Standby Letter of Credit. The Company shall pay the Bank's
standard transaction fees with respect to any transactions occurring on
account of any Letter of Credit. Transaction fees shall be payable upon
completion of the transaction as to which they are charged. All such
Commissions, Issuance Fees, Negotiation Fees and transaction fees may
be
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debited by the Bank to any deposit account of the Company carried with
the Bank without further authority.
4. TERM LOAN. Section 2.c. of the Agreement is hereby amended to restate
subsections 2.c(i) and (v) in their entirety to read as follows:
(i) AMOUNT. The principal amount of the Term Loan shall be
Thirteen Million Five Hundred Thousand and No/100 Dollars
($13,500,000). The obligation of the Company to repay the Term shall be
evidenced by a promissory note in the form of Exhibit B.
(v) USE OF PROCEEDS OF THE TERM LOAN. The proceeds of the Term
Loan shall be used to finance the purchase by the Company of all of the
common stock of Master Products Manufacturing Co., Inc. ("Master
Products") a new indirect subsidiary, in an aggregate amount not to
exceed Ten Million Dollars ($10,000,000) which new subsidiary will be a
direct subsidiary of Marin Yale Industries, Inc.; and to refinance the
Company's existing Term Loan in the amount of Three Million Five
Hundred Thousand Dollars ($3,500,000).
5. COLLATERAL FOR THE OBLIGATIONS. In addition to all of the Collateral required
under the Agreement, the Obligations shall be supported and secured by a first
and prior lien on and security interest in all of the personal property of
Master Products. Such lien and security interest shall be evidenced by a
Security Agreement in the form of Exhibit C and by the filing of Uniform
Commercial Code ("UCC") Financing Statements in all offices deemed appropriate
by the Bank. In addition, Master Products shall execute and deliver an
Unconditional Limited Guaranty of all of the obligations of the Company and
Xxxxxx Yale Industries for in the form of EXHIBIT D. Further, Xxxxxx Yale
Industries, Inc. shall execute and deliver a Pledge Agreement, to pledge all of
its ownership interest in the common stock of Master Products, which Pledge
Agreement shall be in the form of EXHIBIT X. Xxxxxx Yale Industries, Inc. shall
deliver the stock certificates of Master Products to the Bank together with
stock powers executed in blank.
6. AFFIRMATIVE COVENANTS. Sections 5.g(i) and (ii) of the Agreement are hereby
amended and restated in their entirety to read as follows:
(i) MINIMUM NET WORTH. The Company shall maintain its Minimum
Net Worth, determined on a consolidated basis, at not less
than $18,500,000 as of the date of funding of the Term Loan
and at the last day of each fiscal year thereafter, the
Minimum Net Worth to be maintained by the Company on that date
and at all times thereafter until the last day of the next
year shall be increased by an amount equal to fifty percent
(50%) of the Company's consolidated net income, exclusive of
losses, for the fiscal year then ended.
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(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
------ -----
from the date of this Second Amendment
and until December 30, 1998 3.00 to 1.0
at December 30, 1998 and
at all times thereafter 2.50 to 1.0
7. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank to enter into
this Second Amendment, the Company represents and warrants to the Bank that:
a. The execution and delivery of this Second 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 Second 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 Second 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 Second Amendment.
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8. CONDITIONS PRECEDENT. This Second Amendment shall become effective upon the
Bank's receipt of the following, contemporaneously with the execution of this
Second Amendment, each duly executed, dated and in form and substance
satisfactory to the Bank:
a. This Second Amendment;
b. The replacement Revolving Loan Note;
c. The replacement Term Loan Note;
d. Master Product's Security Agreement, together with
appropriate UCC financing statements;
x. Xxxxxx Yale Industries, Inc. Pledge Agreement, together with
executed Stock Powers and the original stock certificates of
Master Products Manufacturing Co., Inc.;
f. The Unconditional Limited Guaranties of Master Products for
the obligations of each of the Company and Xxxxxx Yale
Industries, Inc.
g. Certified copies of Resolutions of the Boards of Directors of
the Company, Xxxxxx Yale Industries, Inc. and Master Products
authorizing the execution, delivery and performance,
respectively of this Second Amendment, the Revolving Loan
Note, the Term Loan Note, the Security Agreement, the Pledge
Agreement, the Guaranties, and the other Loan Documents to
which each such entity is a party;
h. Certificates of the Secretaries of each of the Company,
Xxxxxx Yale Industries, Inc. and Master Products certifying
the name of the officer or officers authorized to sign each
document to which the Company or any Subsidiary is a party,
together with a sample of the true signature of each such
officer;
i. Copies of the Articles of Incorporation and Bylaws of each of
the Company, Xxxxxx Yale Industries, Inc. and Master Products,
certified by the Secretary of each such entity or a
Certificate of No Change to such documents if previously
delivered to the Bank;
j. An opinion of counsel for the Company, Xxxxxx Yale
Industries, Inc. and Master Products, in form and substance
acceptable to the Bank and its counsel;
k. 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.
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l. Payment of $25,000 to be applied to the Commitment Fee in an
amount equal to 1/2% of the total amount of new funds advanced
under the Term Loan. The remaining balance of the Commitment
Fee will be due and payable on the date of funding of the Term
Loan.
m. Such other documents as the Bank may reasonably request.
9. PRIOR AGREEMENTS. The Agreement, as amended by this Second 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 Second
Amendment, and any oral or written proposals or commitments made or issued by
the Bank.
10. AFFIRMATION. Except as expressly amended by this Second Amendment, all of
the terms and conditions of the Agreement and each of the Loan Documents remains
in full force and effect.
Executed on _______________, 1997 and effective as of May 31, 1997.
ESCALADE, INCORPORATED
By
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Xxxxxx X. Xxxxxxx, Chairman and
Chief Executive Officer
BANK ONE, INDIANA, NATIONAL
ASSOCIATION
By
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D. Xxxxx Xxxxxxxx, Vice President and
Senior Relationship Manager
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