UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
(mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-8777
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COLOR TILE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 75-1606185
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
515 Houston Street, Fort Worth, Texas 76102
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(Address of principal executive office)
(Zip Code)
(817)870-9400
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(Registrant`s telephone number, including area code)
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
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All of the common stock of the registrant is held by Color Tile Holdings,
Inc., a Delaware corporation. The number of shares outstanding of the
registrant's common stock, $.01 par value, as of August 1, 1995 was 101.
Exhibit Index is on Page 13
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COLOR TILE, INC.
Table of Contents
PART I - FINANCIAL INFORMATION Page
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Item 1 - Financial Statements 3
Item 2 - Management's Discussion and Analysis of
Results of Operations and Financial Condition 9
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 13
2
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<TABLE>
<CAPTION>
COLOR TILE, INC.
Condensed Consolidated Balance Sheet
July 2, 1995 and January 1, 1995
(Amounts in Thousands, except share amounts)
(Unaudited)
ASSETS
July 2, January 1,
1995 1995
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<S> <C> <C>
Current Assets: $ 0 $ 630
Cash and cash equivalents
Accounts and notes receivable, net of
allowance for bad debts of $1,280 and $753 17,327 16,032
Inventories 91,226 87,394
Other current assets 10,806 6,362
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Total Current Assets 119,359 110,418
Property, plant and equipment, net 123,381 121,667
Goodwill, net 260,553 264,159
Other intangible assets, net 40,169 39,787
Deferred financing costs, net 5,339 5,757
Other assets 9,216 8,310
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Total Assets $ 558,017 $ 550,098
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Current portion of long-term debt $ 27,885 $ 5,817
Accounts payable 62,831 61,269
Employee compensation 3,965 5,089
Accrued interest 2,594 2,099
Accrued expenses 18,119 21,979
Customer deposits 9,778 6,878
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Total Current Liabilities 125,172 103,131
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Long-term debt 387,053 386,717
Other noncurrent liabilities 6,225 6,055
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Total Liabilities 518,450 495,903
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Commitments and contingencies (Note 4)
Redeemable preferred stock, $98,967
liquidation value at July 2, 1995 96,119 90,943
Common Stockholder's Deficiency:
Common stock, $.01 par value, 1,000,000 shares
authorized, 101 shares issued and outstanding
Additional paid-in capital 85,821 93,060
Accumulated deficit (142,373) (129,808)
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Total Common Stockholder's Deficiency (56,552) (36,748)
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Total Liabilities and Stockholders' Equity $ 558,017 $ 550,098
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</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
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<TABLE>
<CAPTION>
COLOR TILE, INC.
Condensed Consolidated Statement of Operations For the three
months and six months ended July 2, 1995 and July 3, 1994
(Amounts in Thousands)
(Unaudited)
Three Months Ended Six Months Ended
------------------------- --------------------------
July 2, July 3, July 2, July 3,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Systemwide Sales $ 173,933 $ 175,910 $ 346,206 $ 347,263
========== ========== ========== ==========
Net Sales $ 164,528 $ 169,388 $ 330,884 $ 335,920
Cost and expenses:
Cost of sales 99,653 98,486 198,301 195,116
Selling, general and administrative 56,501 53,641 108,068 105,709
Depreciation and amortization 7,142 7,071 14,048 13,981
---------- ---------- ---------- ----------
Total costs and expenses 163,296 159,198 320,417 314,806
---------- ---------- ---------- ----------
Operating income 1,232 10,190 10,467 21,114
Loss on disposal of a line of business (2,500) (2,500)
Interest expense, net (12,104) (8,518) (22,682) (17,273)
---------- ---------- ---------- ----------
Income (loss) before income taxes (10,872) (828) (12,215) 1,341
Provision for income taxes 183 176 350 342
---------- ---------- ---------- ----------
Net income (loss) $ (11,055) $ (1,004) $ (12,565) $ 999
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
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<TABLE>
<CAPTION>
COLOR TILE, INC.
Condensed Consolidated Statement of Common Stockholder's Deficiency
For the six months ended July 2, 1995
(Amounts in Thousands, except share amounts)
(Unaudited)
Additional Total Common
Common Stock Paid-In Accumulated Stockholder's
Shares Amount Capital Deficit Deficit
------ ------ --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995 101 $ 93,060 $ (129,808) $ (36,748)
Senior Cumulative Preferred Stock
dividends, declared and undeclared (2,572) (2,572)
Accretion of difference between
redemption value and proceeds of
Senior Cumulative Preferred Stock (41) (41)
Senior Increasing Rate Preferred
Stock dividends, declared and
undeclared (4,439) (4,439)
Accretion of difference between
redemption value and proceeds of
Senior Increasing Rate Preferred
Stock (187) (187)
Net Loss (12,565) (12,565)
------ ------ --------- ----------- -------------
Balance, July 2, 1995 101 $ 85,821 $ (142,373) $ (56,552)
====== ====== ========= =========== =============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
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<TABLE>
<CAPTION>
COLOR TILE, INC.
Condensed Consolidated Statement of Cash Flows For the six
months ended July 2, 1995 and July 3, 1994
(Amounts in Thousands)
(Unaudited)
Six Months Ended
-----------------------------
July 2, July 3,
1995 1994
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Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ (12,565) $ 999
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Adjustments to reconcile to cash provided by operating activities:
Depreciation and amortization 14,466 14,386
Loss on disposal of a line of business 2,500
Increase in accounts and notes receivable (1,295) (1,446)
Increase in inventories (3,832) (10,494)
Increase in other current assets (4,444) (4,094)
(Decrease) increase in accounts payable and accrued expenses (27) 9,711
Changes in other assets and liabilities (1,883) (331)
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Total adjustments 2,985 10,232
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Cash (used in) provided by operating activities (9,580) 11,231
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Cash flows from investing activities:
Purchases of property, plant and equipment (6,434) (11,191)
Other investing activities (1,096) (2,529)
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Cash used in investing activities (7,530) (13,720)
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Cash flows from financing activities:
Borrowings under revolving line of credit 66,000 138,700
Payments on revolving line of credit (59,550) (132,000)
Borrowings under subordinated debt 15,000
Payments on long-term debt (2,908) (2,722)
Dividends paid on Senior Increasing Rate Preferred Stock (2,062) (4,009)
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Cash provided by (used in) financing activies 16,480 (31)
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Decrease in cash and cash equivalents (630) (2,520)
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Cash and cash equivalents at beginning of period 630 4,522
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Cash and cash equivalents at end of period $ 0 $ 2,002
============== =============
Supplemental disclosure of cash flow information: Cash paid during the year for:
Interest $ 21,608 $ 16,291
Income taxes $ 586 $ 235
Non-cash investing and financing activities
Capital lease obligations incurred for property
plant and equipment $ 3,862 $ 365
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
6
<PAGE>
COLOR TILE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands)
(unaudited)
1. Basis of Presentation:
Color Tile, Inc. ("Color Tile" or the "Company") is a wholly owned
subsidiary of Color Tile Holdings, Inc. ("Holdings"). Reference is made to the
summary of significant accounting policies in the Company's Annual Report on
Form 10-K for the fiscal year ended January 1, 1995. These financial statements
and the related notes should be read in connection with such Form 10-K.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial position
of the Company as of July 2, 1995 and January 1, 1995 and its results of
operations for the three months and six months ended July 2, 1995 and July 3,
1994 and cash flows for the six months ended July 2, 1995 and July 3, 1994.
Information included in the Condensed Consolidated Balance Sheet as of January
1, 1995 has been derived from the Company's audited financial statements in its
Annual Report on Form 10-K.
The results of operations for the three months and six months ended July 2,
1995 may not be indicative of the results of operations for the full fiscal year
ending December 31, 1995.
2. Inventories:
Inventories consisted of the following:
<TABLE>
<CAPTION>
July 2, January 1,
1995 1995
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<S> <C> <C>
Finished Goods $ 88,834 $ 85,176
Work in Progress 904 563
Raw Materials 1,488 1,655
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$91,226 $ 87,394
========== ==========
</TABLE>
3. Long-Term Debt:
On May 19, 1995 and June 12, 1995, the Company entered into Credit
Agreements (the "Investcorp Credit Agreements") with an affiliate of INVESTCORP,
S.A., which indirectly has the power to vote a majority of the voting shares of
Holdings. The Investcorp Credit Agreements provide for $15,000 in unsecured
revolving credit facilities due in November 1995. Outstanding borrowings under
these facilities accrue interest at 13% per annum. On July 2, 1995, $15,000 of
borrowings were outstanding under these agreements.
At July 2, 1995, the Company was not in compliance with the trailing 12
months operating profits and interest coverage covenants in the Senior Credit
Agreement, which are measured quarterly. Such non-compliance resulted from the
decline in operating results and increased interest expense as well as covenants
that become more restrictive over time in accordance with their terms. The
lenders have waived non-compliance with these covenants and certain
non-financial covenants as of July 2, 1995. The Company does not envision
satisfying the existing covenants as of the end of the third fiscal quarter
(October 1, 1995) and anticipates that at the end of this fiscal year it will
7
<PAGE>
not be in compliance with the year end net worth covenant inthe Senior Credit
Agreement. A default (other than for the failure to pay principal or interest)
under the Senior Credit Agreement does not give rise to a default under the
Senior Notes but would give rise to a default under certain of the Company's
other financing facilities. (See "Liquidity and Capital Resources" section of
Management's Discussion and Analysis of Results of Operation and Financial
Condition.)
4. Commitments and Contingencies:
There are various claims and pending actions incident to the business
operations of the Company. In the opinion of management, the Company's potential
liability in all pending actions and claims, in the aggregate, is not material.
5. Systemwide Sales:
Systemwide sales include retail sales of all Company stores, retail sales
of all Franchise stores, sales of American Blind and Wallpaper Factory ("ABWF"),
the Company's wholly-owned subsidiary, and sales of manufactured products to
outside third parties.
6. Advertising:
ABWF adopted the AICPA's, Statement of Position 93-7 (SOP 93-7), "Reporting
on Advertising Costs", effective for the three month period ended April 2, 1995
and subsequent periods. Pursuant to the provisions of SOP 93-7, the Company
expenses the costs of advertising in the annual period in which those costs are
incurred, except for direct response advertising of ABWF (e.g. magazine,
newspaper and television advertisements containing ABWF's products), which is
capitalized and amortized over its expected period of future benefits. These
direct-response advertising costs are amortized over the period following
publication of the advertisements during which future benefits of the specific
advertising are to be recognized.
For interim (quarterly) reporting purposes, the Company allocates its
advertising costs among the interim periods on the basis of estimated future
benefits of the advertising costs recognized in each of the periods.
7. Loss on Disposal of a Line of Business
On May 20, 1994 the Company sold its wholly owned Canadian subsidiary,
Factory Carpet, which operated 37 retail stores in Canada (including 8
franchised stores). In connection with the disposition of Factory Carpet, the
Company recorded a charge to continuing operations of $8,651 in 1993 and an
additional estimated loss on sale of $2,500 in the second quarter of 1994.
8. Income Taxes:
As a result of an ownership change, within the meaning of Section 382 of
the Internal Revenue Code of 1986, as amended, that occurred with respect to the
Company on May 14, 1990, the Company's ability to utilize approximately $57,579
of its net operating loss carryforwards for tax purposes is limited to $4,977
per year. No limitation currently is required by Section 382 with respect to
$65,307 of the Company's net operating loss carryforwards.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Amounts in thousands)
Results of Operations
Three months ended July 2, 1995, compared to three months ended July 3, 1994.
Net Sales. Net sales for the three months ended July 2, 1995, which were
negatively impacted by lagging consumer confidence and weak sales of existing
homes, decreased $4,860 or 2.9% to $164,528 compared to the prior-year period.
The decrease in net sales results from (i) a 4.8% decrease in sales of Company
operated retail stores open over one year, (ii) a 4.5% reduction in the number
of Company operated retail stores and (iii) a 5.6% decrease in sales by ABWF,
the effects of which were partially offset by (i) increased franchise royalties
and sales of merchandise to franchisees and (ii) sales generated at stores open
less than one year.
At July 2, 1995, there were 823 retail stores in operation selling the
Company's products, including 146 stores operated by franchisees as compared to
814 retail stores in operation as of July 3, 1994, including 105 stores operated
by franchisees.
Cost of Sales. Cost of sales increased by $1,167 for the three months ended
July 2, 1995 compared to the prior-year period as the Company commenced a
program to eliminate underperforming merchandise from its ceramics, resilient
and wood product lines and to reduce inventory levels over the course of the
year. Reduced gross margins of approximately $700 were realized in the first
month of this program, which commenced at the end of May. As a percentage of net
sales, cost of sales increased to 60.6% for the three months ended July 2, 1995
as compared to 58.1% for the prior-year period. The increase in cost of sales as
a percentage of sales resulted primarily from a continuing sales mix shift
caused by (i) increased sales of carpet and related installation revenue and
(ii) a 36.4% increase in merchandise sales to franchisees as well as the above
mentioned inventory reduction program.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased as a percentage of net sales to 34.3% for the
three months ended July 2, 1995 as compared to 31.7% for the prior-year period.
Such expenses increased in aggregate dollar amount by $2,860 from the prior-year
period primarily due to (i) higher insurance costs resulting from increased
medical and workers compensation claim activity, (ii) increased consulting costs
incurred in conjunction with the initial costs of various strategic
repositioning projects commenced during the quarter, (iii) increased costs
incurred in closing unprofitable stores and (iv) the increased selling expenses
at ABWF resulting from the introduction of the unit's carpet program.
Interest Expense, Net. Interest expense, net, increased $3,586 for the
three months ended July 2, 1995 as compared to the prior-year period. The
increased interest expense resulted from additional borrowings of $29,000 under
the term loan portion of the Senior Credit Agreement during the fourth quarter
1994, borrowings under the Investcorp Credit Agreements, higher interest rates
on total borrowings under the Company's Senior Credit Agreement and
interest incurred in conjunction with various sales promotions.
Pre-Tax Income (Loss). Pre-tax loss was $10,872 for the three months ended
July 2, 1995 as compared to a pre-tax loss of $828 for the prior-year period.
The increased pre-tax loss resulted principally from the decrease in profit from
Company stores and ABWF due to lower sales during the period, the $2,860
increase in selling, general and administrative expenses described above and the
9
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increase in interest expense of $3,586.
Income Taxes. Income tax expense was $183 for the three months ended July
2, 1995 as compared to $176 for the prior-year period.
Net Income (Loss). Net loss for the three months ended July 2, 1995 was
$11,055 as compared to a net loss of $1,004 in the prior-year period. The net
loss resulted principally from the decrease in operating income from
Company-owned retail stores and ABWF due to lower sales during the period,
increased selling, general and administrative expenses and the increase in
interest expense.
Six months ended July 2, 1995, compared to six months ended July 3, 1994.
Net Sales. Net sales for the six months ended July 2, 1995 decreased
$5,036, or 1.5%, compared to the prior-year period. The decrease in sales
resulted from (i) a 4.8% decrease in retail sales by Company stores open over
one year, (ii) a 4.5% reduction in the number of Company-operated retail stores
and (iii) lower sales by ABWF. This sales decline was partially offset by (i)
increased sales of merchandise to Franchisees, (ii) sales from stores open less
than one year, and (iii) increased franchise royalties. The Company believes
that the U.S. floor coverings market declined throughout the first six months of
1995 as major home remodeling projects were deferred in response to weak
existing home sales and low consumer confidence.
At July 2, 1995, there were 823 retail stores in operation selling the
Company's line of products, 146 of which were operated by franchisees
("Franchise Stores").
Cost of Sales. Cost of sales increased by $3,185 for the six months ended
July 2, 1995 as compared to the prior-year period. As a percentage of Net Sales,
cost of sales increased to 59.9% for the six months ended July 2, 1995 as
compared to 58.1% for the prior-year period. The increase in cost of sales as a
percentage of sales resulted primarily from the ongoing sales mix shift caused
by (i) increased sales of merchandise to franchisees, (ii) increased sales of
carpet and related installation revenue and (iii) decreased sales of
hard-surface flooring products. Gross margins were also negatively impacted by
(i)lower retail sales activity, (ii) decreased capacity utilization at the
Company's manufacturing facilities and (iii) the inventory reduction program
which commenced at the end of May.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased as a percentage of Net Sales to 32.6% for the
six months ended July 2, 1995 as compared to 31.5% for the prior-year period.
Such expenses increased in aggregate dollar amount by $2,359 for the six months
ended July 2, 1995 as compared to the prior-year period due primarily to (i)
higher insurance costs resulting from increased medical and workers compensation
claims activity, (ii) increased consulting costs associated with the various
strategic repositioning projects which commenced during the second quarter and
(iii) costs incurred in connection with the introduction of ABWF's carpet
program.
Interest Expense, Net. Interest expense, net, increased $5,409 for the six
months ended July 2, 1995 as compared to the prior-year period. The increased
interest expense resulted from additional borrowings of $29,000 under the term
loan portion of the Senior Credit Agreement during the fourth quarter of 1994,
borrowings under the Investcorp Credit Agreements, higher interest rates on
total borrowings, and interest incurred in conjunction with various sales
promotions.
10
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Pre-Tax Income (Loss). Pre-tax loss for the six months ended July 2, 1995
was $12,215 as compared to pre-tax income of $1,341 for the prior-year period.
The increased pre-tax loss for the six months ended July 2, 1995 was due
primarily to (i) lower retail sales by Company-operated stores and ABWF, (ii)
increased cost of sales resulting from the continuing sales shift to lower
margin product lines, (iii) increased selling, general and administrative
expenses as described above and (iv) increased interest expense resulting from
increased borrowing levels and higher interest rates on variable rate
borrowings. Net Income for the six months ended July 3, 1994 included a $2,500
loss on disposal of the Company's Canadian operations.
Income Taxes. Income tax expense was $350 for the six months ended July 2,
1995 as compared to $342 in the prior-year period.
Net Income (Loss). Net loss was $12,565 for the six months ended July 2,
1995 as compared to net income of $999 in the comparable prior-year period. The
decrease in net income from the comparable prior-year period resulted primarily
from the decrease in operating income and the increase in interest expense of
$5,409.
Liquidity and Capital Resources
As of July 2, 1995, the Company had outstanding debt of approximately $415,000
(including capitalized lease obligations and the current portion of long-term
debt), preferred stock with a liquidation preference of approximately $99,000
and a common stockholder's deficiency of approximately $56,600. In order to
provide the Company with sufficient liquidity to both finance its operations and
pay its obligations with respect to borrowed money, Investcorp S.A., which
indirectly has the power to vote a majority of the outstanding shares of
Holdings (collectively, with its affiliates, "Investcorp"), has agreed to
provide an additional $30,000 of equity to the Company by funding a $15,000 cash
capital contribution by Holdings and contributing to the Company's equity the
$15,000 of outstanding borrowings under the Investcorp Credit Agreements.
Simultaneously therewith an unaffiliated party will lend $15,000 to the Company.
The obligations of Investcorp and the third party to complete these transactions
are subject to, among other things, a deferral in the commencement of mandatory
principal payments under the Senior Credit Agreement (which will require the
unanimous approval of all of the lenders under the Senior Credit Agreement), as
well as to an amendment to the financial covenants contained in the Senior
Credit Agreement for all periods through December 31, 1996 (which will require
51% approval). The Company expects these conditions to be satisfied and the cash
infusion of $30,000 to be completed by August 31, 1995. There can be no
assurance that these conditions will be satisfied. If for any reason these
transactions are not completed, the Company does not believe it would have
sufficient cash resources to both finance its operations and pay all of its
interest obligations.
At July 2, 1995, the Company had $172,050 in outstanding borrowings under the
Senior Credit Agreement and the average fluctuating interest rate on such
borrowings approximated 9.0% per annum. As of August 16, 1995, the Company had
fully drawn the $175,000 available under the Senior Credit Agreement.
At July 2, 1995, the Company was not in compliance with the trailing 12 months
operating profits and interest coverage covenants in the Senior Credit
Agreement, which are measured quarterly. Such non-compliance resulted from the
decline in operating results and increased interest expense as well as covenants
that become more restrictive over time in accordance with their terms. The
lenders have waived non-compliance with these covenants and certain
non-financial covenants as of July 2, 1995. The Company does not
envision satisfying the existing covenants as of the end of the third fiscal
quarter (October 1, 1995) and anticipates that at the end of this fiscal
year it will
11
<PAGE>
not be in compliance with the year end net worth covenant in the Senior Credit
Agreement. It is a condition to Investcorp's equity commitment and the $15,000
new loan commitment that the existing financial covenants be amended through
December 31, 1996 to levels that the Company currently believes it will satisfy.
A default (other than for the failure to pay principal or interest) under the
Senior Credit Agreement does not give rise to a default under the Senior Notes
but would give rise to a default under certain of the Company's other financing
facilities.
In May and June 1995, the Company entered into the Investcorp Credit Agreements
with an affiliate of Investcorp which provide for up to $15,000 of borrowings.
At August 16, 1995, the Company had $15,000 in outstanding borrowings under the
Investcorp Credit Agreements, which mature in November 1995 and bear interest at
the rate of 13% per annum. As part of the proposed new equity investment by
Investcorp, it will contribute to the capital of the Company the outstanding
borrowings under the Investcorp Credit Agreements. Immediately following such
contribution to capital, an unaffiliated third party will purchase from the
Company for cash at par $15,000 of senior unsecured notes that rank pari passu
with the Senior Notes and which mature on December 31, 1996, and bear interest
at 10.75% per annum, payable quarterly. At the same time, Investcorp will invest
through Holdings an additional $15,000 of cash in the equity of the Company.
During the remainder of fiscal 1995, the Company's principal payments due under
its long-term mortgage indebtedness and payments due under capialized leases
will aggregate approximately $2,937. Mandatory quarterly principal payments of
$3,526 under the Senior Credit Agreement are scheduled to begin in March 1996;
however, as a condition of Investcorp's equity commitment and the $15,000 new
loan commitment, mandatory principal payments are to be deferred until 1997.
Interest payments under the Senior Credit Agreement are generally due at the end
of each calendar quarter and are anticipated to approximate $4,000 quarterly. An
interest payment of $10,750 on the Senior Notes is payable on December 15, 1995.
Approximately $8,600 annually of cash dividends were scheduled to be paid
quarterly on the Series A Shares during 1995 of which the Company paid $2,062 in
January 1995. As of January 15, 1995, the Company's Redeemable Senior Preferred
Stock began to accrue cash dividends of approximately $5,200 annually, scheduled
to be payable quarterly. The Company did not pay the scheduled quarterly cash
dividends on the preferred stock in April and July of 1995 and does not intend
to pay dividends on its preferred stock for the foreseeable future. Failure of
the Company to pay scheduled preferred stock dividends will not cause a default
or acceleration of any financial obligations of the Company. However, although
the relevant terms of the two outstanding series of preferred stock differ
somewhat, in general if six quarterly preferred stock dividends are not paid,
the holders of the preferred stock will be entitled to elect an aggregate of up
to four directors of the Company. The Company currently has six directors and,
if the preferred stockholders were to become entitled to elect four directors
and assuming no change in the authorized number of directors, the directors
elected by the preferred stockholders would hold four of the ten director
positions.
Capital expenditures for the six months ended July 2, 1995 were $6,434 as
compared to $11,191 for the prior year period. These capital expenditures were
funded through borrowings under the revolving credit portion of the Senior
Credit Agreement and the Investcorp Credit Agreements. During the remainder of
fiscal 1995, the Company anticipates total capital expenditures of approximately
$7,100. Capital expenditures for 1995 have been reduced significantly from the
level contemplated at the beginning of the year in view of the decline in
operating results.
12
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Impact of Inflation and Changing Prices; Seasonality
Inflation and changing prices have not historically had a material effect
on the Company's overall operations. Generally, the Company has been able to
offset the effect of increases in product costs through a combination of price
increases, modifications in promotional strategies and the implementation of
operating efficiencies.
The Company's business shows some seasonal variation, with lower sales
levels generally occurring during the winter months.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10(bb) Credit Agreement between Color Tile, Inc., as borrower, and
INVIFIN, S.A., as lender, $5,000,000, dated as of May 19,
1995
10(cc) Credit Agreement between Color Tile, Inc., as borrower, and
INVIFIN, S.A., as lender, $10,000,000, dated as of June 12,
1995
(b) Reports on Form 8-K
None
13
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLOR TILE, INC. (Registrant)
Date:
August 16, 1995 /s/ WILLIAM H. PAVONY
----------------------------------
William H. Pavony, Vice President
and Chief Financial Officer
14
CREDIT AGREEMENT
Between
COLOR TILE, INC.
as Borrower
and
INVIFIN S.A.
as Lender
$5,000,000
Dated as of May 19, 1995
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of May 19, 1995 between COLOR
TILE, INC., a Delaware corporation (the "Borrower"), and INVIFIN S.A., a
Luxembourg company (the "Lender").
A G R E E M E N T
In consideration of the agreements, covenants, conditions and provisions
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND RELATED MATTERS
Section 1.01 Definitions. For purposes of this Agreement, capitalized terms
shall have the meanings set forth in this Section 1.01, in the sections of this
Agreement or the other Loan Documents referred to in this Section 1.01 or as
specified in Section 1.04:
"Agreement" means this Credit Agreement, together with all exhibits and
schedules hereto and any and all amendments, extensions or supplements hereto.
"Applicable Law" means all applicable provisions of all (a) constitutions,
treaties, statutes, laws, rules, regulations, ordinances and orders of any
Governmental Authority, (b) Governmental Approvals and (c) orders, decisions,
judgments, awards and decrees of any Governmental Authority.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. Sec.
101 et seq.), as amended from time to time, or any successor statute.
"Borrower" shall have the meaning set forth in the first paragraph of this
Agreement.
"Borrowing" means a borrowing hereunder consisting of Loans made by the
Lender to the Borrower.
"Business Day" means any day which is not a Saturday, Sunday or other day
on which banks in New York, New York are authorized or obligated to close.
"Capitalized Lease" means any lease (or other agreement conveying the right
to use) of real or personal property by a Person as lessee or guarantor which
would, in conformity with GAAP, be required to be accounted for as a capital
lease on the balance sheet of that Person.
"Capitalized Lease Obligations" means all obligations under Capitalized
Leases of a Person that would, in conformity with GAAP, appear on a balance
sheet of that Person.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor or superseding tax laws of the United States of America,
together with all regulations promulgated thereunder.
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"Commitment" means, at the time any determination thereof is to be made,
the total amount of the Lender's commitment to extend credit to the Borrower by
means of the Loans in an aggregate principal amount at any time outstanding not
to exceed Five Million Dollars ($5,000,000) or such lesser amount to which such
commitment may be reduced pursuant to this Agreement.
"Contingent Obligation" means, as to any Person, any obligation, direct or
indirect, contingent or otherwise, of such Person (a) with respect to any
Indebtedness or other obligation or liability of another Person, including
without limitation any direct or indirect guarantee of such Indebtedness,
obligation or liability, endorsement (other than for collection or deposit in
the ordinary course of business) thereof or discount or sale thereof by such
Person with recourse to such Person, or any other direct or indirect obligation,
by agreement or otherwise, to purchase or repurchase any such Indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge of any such Indebtedness, obligation or liability (whether
in the form of loans, advances, stock purchases, capital contributions or
otherwise), (b) to provide funds to maintain working capital or equity capital
of another Person or otherwise to maintain the net worth, solvency or financial
condition of the other Person, (c) to make payment for any products, property,
securities or services regardless of non-delivery thereof, if the purpose of any
agreement so to do is to provide assurance that another Person's Indebtedness,
obligation or liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of another Person's
Indebtedness, obligation or liability will be protected (in whole or in part)
against loss in respect thereof, or (d) otherwise to assure or hold harmless the
holders of Indebtedness or other obligation or liability or another Person
against loss in respect thereof. The amount of any Contingent Obligation shall
be an amount equal to the amount of the Indebtedness, obligation or liability
guaranteed or otherwise supported thereby.
"Default" means any condition or event which, with the giving of notice or
lapse of time or both, would, unless cured or waived, become an Event of
Default.
"Dollars" and "$" means lawful money of the United States of America.
"Effective Date" means the date on which all of the conditions precedent
set out in Section 3.01 hereof to the effectiveness of this Agreement have been
satisfied or waived in writing by the Lender.
"Event of Default" means any of the events specified in Section 6.01 of
this Agreement.
"GAAP" means generally accepted accounting principles as in effect in the
United States of America (as such principles may change from time to time).
"Governmental Approval" means an authorization, consent, approval, permit,
license or exemption of, registration or filing with, or report or notice to,
any Governmental Authority.
"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 limitation any government authority, agency, department,
board, commission or instrumentality of the United States, any State of the
United States or any political subdivision thereof, and any tribunal or
arbitrator(s) of competent jurisdiction.
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"Indebtedness" means, with respect to any Person, the aggregate amount of,
without duplication: (a) all obligations for borrowed money; (b) all obligations
evidenced by bonds, debentures, the Note or other similar instruments; (c) all
obligations to pay the deferred purchase price of property or services, except
trade accounts payable not overdue arising in the ordinary course of business;
(d) all Capitalized Lease Obligations; (e) all obligations or liabilities of
others secured by a Lien on any asset owned by such Person or Persons whether or
not such obligation or liability is assumed; (f) all obligations of such Person
or Persons, contingent or otherwise, in respect of any letters of credit or
bankers' acceptances, and (g) all Contingent Obligations.
"Lender" has the meaning ascribed to it in the first paragraph of this
Agreement.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale, consignment
or other title retention agreement or any lease in the nature thereof) and any
agreement to give or refrain from giving any lien, mortgage, pledge, security
interest, charge or other encumbrance of any kind.
"Loan" has the meaning ascribed to it in Section 2.01 hereof.
"Loan Documents" means, collectively, this Agreement, the Note and any
supplemental agreements, instruments or other writings executed or delivered by
the Borrower in connection herewith, and all amendments, modifications or
supplements, and appendices, exhibits and schedules to, any of the foregoing.
"Note" means the promissory note of the Borrower, in substantially the form
of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Loan
and includes any Note issued in exchange or substitution therefor.
"Notice of Borrowing" means an irrevocable notice in substantially the form
of Exhibit B hereto.
"Obligations" means all present and future advances, debts, obligations and
liabilities of the Borrower of every type and description arising under or in
connection with this Agreement or any other Loan Document, due or to become due
to the Lender or any Person entitled to indemnification pursuant to Section 7.02
hereof, or any of their respective successors, transferees or assigns, and shall
include, without limitation, (a) all liability of the Borrower for payment of
principal of and interest on the Loans and under the Note, (b) all liability of
the Borrower hereunder or under the Loan Documents for any fees, expense
reimbursements and indemnifications, and (c) any and all other debts,
obligations and liabilities of the Borrower to the Lender heretofore, now or
hereafter incurred or created (and all renewals, extensions, modifications and
rearrangements thereof), under, in connection with, in respect of, or evidenced
or created by this Agreement or any or all of the other Loan Documents, whether
voluntary or involuntary, however arising, and whether due or not due, absolute
or contingent, secured or unsecured, liquidated or unliquidated, determined or
undetermined, direct or indirect, and whether the Borrower may be liable
individually or jointly with others.
"Person" means an individual, a corporation, a partnership, a trust, an
unincorporated organization or any other entity or organization, including a
government or any agency or political subdivision thereof.
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"Post-Default Rate" means, at any time, a rate per annum equal to the rate
of interest otherwise in effect at such time pursuant to the terms hereof, plus
two percent (2%).
"Subsidiary" means any corporation or other entity of which more than fifty
percent (50%) of the total voting power of shares of stock or other securities
or other ownership interests entitled to vote in the election of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by the Borrower.
"Taxes" means any income, stamp and other taxes, charges, fees, levies,
duties, imposts, withholdings or other assessments, together with any interest
and penalties, additions to tax and additional amounts imposed by any federal,
state, local or foreign taxing authority upon any Person.
"Termination Date" means the date that is the earlier of the six (6) month
anniversary of the Effective Date or the date the Loans becomes due and payable
pursuant to Article VI hereof.
Section 1.02 Construction. Unless the context of this Agreement clearly
requires otherwise, references herein to the plural include the singular, the
singular includes the plural, the part includes the whole, and the word
"including" is not limiting. References in this Agreement to any "determination"
by the Lender include good faith estimates by the Lender, as applicable (in the
case of quantitative determinations), and good faith beliefs by the Lender, as
applicable (in the case of qualitative determinations). The words "hereof,"
"herein," "hereby," "hereunder" and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement.
Article, section, subsection, exhibit and schedule references are to this
Agreement unless otherwise specified.
Section 1.03 Exhibits. All of the exhibits and schedules attached to this
Agreement shall be deemed incorporated herein by reference.
Section 1.04 Other Definitions. Terms otherwise defined in the description
of the parties or within another definition in Section 1.01 hereof or in any
other provisions of this Agreement or any of the other Loan Documents not
defined or referenced in Section 1.01 hereof shall have their respective defined
meanings when used herein or therein.
ARTICLE II
AMOUNTS AND TERMS OF THE LOAN
Section 2.01 Loans.
(a) Agreement to Lend. Upon the terms and subject to the conditions set
forth in this Agreement (including, without limitation, the provisions of
Section 6.02 relating to termination of the Commitment), the Lender agrees to
make to the Borrower, on the Effective Date and from time to time thereafter
until and including the Termination Date (or if such date is not a Business Day,
the Business Day next preceding such date), revolving loans (each individually,
a "Loan" and collectively, the "Loans"), the aggregate unpaid principal amount
of which shall not exceed the Lender's Commitment at any time.
(b) Prepayment. Loans may be voluntarily prepaid pursuant to Section 2.08,
and, subject to the provisions of this Agreement, any amounts so prepaid may be
reborrowed on or after the Effective Date and until the Termination Date (or the
Business Day next preceding such date), up to the amount available under this
Section 2.01 at the time of such reborrowing.
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(c) Minimum Amount. Each Loan shall be in a minimum aggregate principal
amount of $250,000 and integral multiples of $50,000 in excess of that amount.
Section 2.02 Notice of Borrowing.
(a) Borrowing. When the Borrower desires to borrow Loans at any time on or
after the Effective Date and until and including the Termination Date (or if
such date is not a Business Day, the Business Day next preceding such date)
under this Section 2.02, it shall deliver to the Lender a Notice of Borrowing no
later than 9:00 a.m. (New York time) at least three (3) Business Days in advance
of the proposed funding date. The Notice of Borrowing shall specify (i) the
funding date (which shall be a Business Day) in respect of the Loan and (ii) the
amount of the proposed Borrowing.
(b) Authorized Persons. The Borrower shall notify the Lender in writing of
the names of its members authorized to request the Loan on behalf of the
Borrower and shall provide the Lender with a specimen signature of each such
officer or employee. The Lender shall be entitled to rely conclusively on such
officer's or employee's authority to request the Loan on behalf of the Borrower
until the Lender receives written notice to the contrary. The Lender shall have
no duty to verify the authenticity of the signature appearing on the Notice of
Borrowing.
(c) Notice of Borrowing Irrevocable. Any Notice of Borrowing delivered
pursuant to this Section 2.02 shall be irrevocable.
(d) Receipt of Funds by Borrower. Not later than 3:00 p.m. (New York time)
on the date of the Borrowing, unless the Lender determines that any applicable
condition specified in Article III has not been satisfied or waived by the
Lender, the Lender will make the funds so requested available on such date to
the Borrower at the account of the Borrower designated in the applicable Notice
of Borrowing.
Section 2.03 Interest. The Loans shall bear, and the applicable Borrower
agrees to pay, interest on the outstanding principal amount thereof at the
applicable rates and at the times set forth below:
(a) Loans. The Loans shall bear, and the Borrower agrees to pay, interest
on the outstanding principal amount thereof and any other outstanding amounts
payable in respect of this Agreement (and overdue interest thereon, if any, to
the extent permitted by Applicable Law) until due (whether at maturity, by
reason of prepayment or acceleration or otherwise) at a rate per annum equal to
thirteen percent (13%).
(b) Post-Default Rate. Notwithstanding Subsection (a) of this Section 2.03,
if at any time an Event of Default shall occur, and for as long thereafter as
such Event of Default shall be continuing, without further notice or demand, the
outstanding principal amount of the Loan and any other outstanding amounts
payable in respect of this Agreement (and overdue interest thereon, if any, to
the extent permitted by Applicable Law) shall bear interest at a rate per annum
equal to the applicable Post-Default Rate.
(c) Payment. Interest on each of the Loans shall be payable monthly in
arrears on the last Business Day of each month and on the date when such Loan
shall become due (whether at maturity, by reason of prepayment or acceleration
or otherwise), but only to the extent then accrued on the amount then so due.
Interest accrued at the Post-Default Rate shall be payable on demand.
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(d) Computations. Interest on the Loan shall accrue from day to day from
and including the date of the making of the Loan to and excluding the due date
or the date of any repayment thereof. Interest on the Loan and such other
amounts shall be computed on the basis of a 360-day year and paid for the actual
number of days elapsed.
(e) Maximum Lawful Rate of Interest. The rate of interest payable on the
Loan shall in no event exceed the maximum rate permissible under Applicable Law.
If the rate of interest payable on the Loan is ever reduced as a result of this
subsection and at any time thereafter the maximum rate permitted by Applicable
Law shall exceed the rate of interest provided for in this Agreement, then the
rate provided for in this Agreement shall be increased to the maximum rate
provided by Applicable Law for such period as is required so that the total
amount of interest received by the Lender is that which would have been received
by the Lender but for the operation of the first sentence of this subsection
2.03(e).
Section 2.04 Note.
(a) Note. The Loan shall be evidenced by a Note, payable to the order of
the Lender and representing the obligation of the Borrower to pay the lesser of
(i) Five Million Dollars ($5,000,000) and (ii) the aggregate unpaid principal
amount of the Loans, with interest thereon as prescribed by Section 2.03 hereof.
The Note shall be dated the Effective Date, shall set forth the amount of the
Lender's Commitment as the maximum principal amount thereof and shall have the
blanks therein appropriately completed. The Borrower shall maintain a register
of the ownership of the Note. The Note issued under this Agreement shall be
registered as to both principal and interest pursuant to Regulation Sec.5f.103-1
of the Federal Income Tax Regulations ("FIT Regulations") as specified in the
Note. If a Note is presented with a request to register a transfer, the transfer
shall be registered as requested in accordance with FIT Regulation Sec.5f.103-1.
Every note, including the Note, so presented in connection with a transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in a form satisfactory to the Borrower, duly executed by the holder of
the Note (the "Holder") or the Holder's attorney duly authorized in writing. The
Borrower may require payment of a sum sufficient to cover any tax or other
charge that may be imposed in relation to any transfer or exchange.
(b) Recordation. The Lender is hereby irrevocably authorized to record on
the Note the date, type and amount of the Loans outstanding hereunder, the
interest rate applicable thereto, and each payment or prepayment of principal
thereof on the schedules forming a part thereof and to attach to and make a part
of the Note a continuation of any such schedule as and when required. The
failure to record, or any error in recording, the Loans or repayment on such
schedule (or continuation thereof) or similar records shall not, however, affect
the obligations of the Borrower hereunder or under the Note to repay the
principal amount of the Loans together with all interest accrued thereon. All
such notations shall constitute conclusive evidence of the accuracy of the
information so recorded, in the absence of manifest error.
Section 2.05 Optional Cancellation or Reduction of Commitment. At any time
and from time to time prior to the Commitment Termination Date, the Borrower may
irrevocably cancel or from time to time reduce the Commitment by giving the
Lender not less than three (3) Business Days' prior notice thereof; provided,
however, that any partial reduction shall be in an amount equal to $500,000 or
any greater whole multiple thereof and provided further that no such voluntary
reduction shall reduce the Commitment below the aggregate unpaid principal
amount of Loans outstanding on the date of such reduction. Such termination or
partial reduction of the Commitment shall be effective on the date specified in
the Borrower's notice.
<PAGE>
Section 2.06 Optional Prepayments. The Borrower may, upon at least three
(3) Business Days' notice to the Lender, prepay the Loans in whole at any time,
or from time to time in part, in amounts aggregating at least $250,000 and
integral multiples of $50,000 by paying to the Lender the principal amount to be
prepaid together with accrued interest thereon to the date of prepayment. A
notice of prepayment pursuant to this Section shall not thereafter be revocable
by the Borrower without the prior written consent of the Lender.
Section 2.07 Termination of Commitment and Repayment of Loans. The Lender's
Commitment shall terminate, and the outstanding principal amount of the Loans,
together with accrued and unpaid interest thereon, shall be due and payable, on
the Termination Date.
Section 2.08 Manner of Payment. All payments due to the Lender pursuant to
this Agreement shall be made not later than 12:00 p.m. (New York time) on the
due date thereof, in lawful money of the United States of America in Federal or
other funds immediately available to the Lender at the Lender's office specified
pursuant to Section 7.04 or at an account of the Lender otherwise specified by
the Lender in writing from time to time to the Borrower. Whenever any payment
hereunder shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day.
Section 2.09 Increased Costs. If any Regulatory Change shall subject the
Lender to any Tax or change the basis of taxation of payments to the Lender of
principal, interest, fees or any other amount payable hereunder (except for
changes in the rate of Tax on the overall net income of the Lender), then the
Borrower shall from time to time pay to the Lender, upon demand by the Lender,
such additional amounts as may be specified by the Lender as sufficient to
compensate the Lender for such increased cost, reduction or requirement;
provided any amount so specified shall be determined reasonably and in good
faith and that the Lender shall endeavor to notify the Borrower of any such
increased cost within 60 days after such increased cost is incurred, provided
that failure by the Lender to so notify the Borrower shall not affect the
ability of the Lender to demand such compensation at any time. A statement
setting forth in reasonable detail the calculations of any additional amounts
payable pursuant to the foregoing sentence shall be submitted by the Lender to
the Borrower concurrently with any demand made by the Lender hereunder.
Section 2.10 Taxes. The Borrower agrees (a) to pay all amounts payable by
it under this Agreement or any Note free and clear of and without liability for,
and, subject to the provisions of this Section 2.10, without deduction or
withholding for, any and all Taxes; and (b) to pay when due, and reimburse the
Lender upon demand for any payment made by the Lender of, and indemnify and hold
the Lender harmless against any liability for, (i) any and all Taxes in any way
related to this Agreement, the Loans or the Commitment, other than income and
franchise taxes imposed upon the Lender by the jurisdictions (or any political
subdivision thereof) in which the Lender's principal executive office is located
in which the Lender is found, and in which the Lender's office from which the
loans are made is located, and (ii) all interest and penalties resulting from or
related to any delay in paying any such Taxes. Promptly after the date on which
payment of any Taxes is due pursuant to Applicable Law, the Borrower will
furnish to the Lender evidence, in form and substance satisfactory to the
Lender, that the Borrower has satisfied its obligations under this Section 2.10.
If any Borrower is required by Applicable Law to make any deduction or
withholding in respect of any Taxes from any amount payable under this Agreement
or any Note, the Borrower agrees to pay to the Lender, on the date such amount
is payable, such additional amounts as the Lender determines may be necessary so
that the net amounts received by the Lender, in the
<PAGE>
aggregate, after all applicable deductions or withholdings, shall equal the
amount that the Lender would have been entitled to receive if no deductions or
withholdings were made.
Section 2.11 Compensation for Funding Losses. In addition to the amounts
required to be paid by the Borrower pursuant to Sections 2.09, 2.10 and 2.11
hereof, the Borrower shall pay to the Lender, upon demand by such Lender, such
amount or amounts as the Lender reasonably and in good faith determines is or
are necessary to compensate it for any loss, cost, expense or liabilities
incurred (including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or redeployment of deposits) by it as a result of a
Loan for any reason not being made after a Notice of Borrowing has been
delivered, or any payment of principal of or interest thereon not being made, on
the date therefor determined in accordance with the applicable provisions of
this Agreement.
Section 2.12 Determinations. Any determination made as provided in Section
2.09, 2.10 or 2.11 or that is made by the Lender shall be final and conclusive
and binding upon the Borrower, in the absence of manifest error in computation.
ARTICLE III
CONDITIONS OF LENDING
Section 3.01 Conditions Precedent to Effective Date. The occurrence of the
Effective Date and shall be subject to satisfaction of all of the following
conditions precedent:
(a) Loan Documents. The Lender shall have received each of the following,
each of which shall be in form and substance satisfactory to the Lender and its
counsel:
(i) This Agreement, duly executed by the Borrower; and
(ii) The Note, executed by the Borrower and payable to the order of the
Lender.
(b) Corporate Documentation. The Lender shall have received a certificate
of good standing, certified by the Secretary of State of the jurisdiction of the
Borrower's organization, dated a recent date prior to the Effective Date.
(c) Corporate Proceedings. All corporate proceedings taken or to be taken
by the Borrower in connection herewith and with each of the other Loan
Documents, shall be reasonably satisfactory to the Lender in its sole
discretion, and it shall have received original or certified copies of such
documents as it may request.
(d) Representations and Warranties. All of the representations and
warranties of the Borrower contained in Article IV hereof and in any other Loan
Documents shall be true and correct in all material respects on and as of the
Effective Date.
(e) No Default. No Default or Event of Default shall have occurred and be
continuing or would result from the making of the Loan.
Section 3.02 Conditions Precedent to Funding. The obligation of the Lender
to make Loans on or after the Effective Date shall be subject to satisfaction of
all of the following conditions precedent:
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(a) Effective Date. The Effective Date shall have occurred.
(b) Notice of Borrowing. The applicable Borrower shall have delivered to
the Lender a Notice of Borrowing in accordance with Section 2.02 hereof. Each
submission by the Borrower to the Lender of a Notice of Borrowing with respect
to a Loan and the acceptance by the Borrower of the proceeds of each such Loan
made hereunder, shall constitute a representation and warranty by the Borrower
as of the funding date in respect of such Loan that all the conditions contained
in this Section 3.02 have been satisfied.
(c) Representations and Warranties. All of the representations and
warranties of the Borrower contained in Article IV hereof and in any other Loan
Documents shall be true and correct in all material respects on and as of the
Funding Date as though made on and as of that date (except to the extent that
such representations and warranties expressly were made only as of a specific
date).
(d) No Default. No Default or Event of Default shall have occurred and be
continuing or would result from the making of the Loan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as of the date of this
Agreement:
Section 4.01 Organization, Powers and Good Standing.
(a) Organization and Powers. The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization and has all requisite power and authority and the
legal right to own and operate its properties and to carry on its business as
heretofore conducted. The Borrower has all requisite power and authority to
enter into this Agreement and the other Loan Documents to which it is a party,
to issue the Note and to carry out the transactions contemplated hereby and
thereby. The Borrower possesses all Governmental Approvals, in full force and
effect, free from burdensome restrictions, that are necessary for the ownership,
maintenance and operation of its properties and conduct of its business as now
conducted, and is not in violation thereof, except to the extent that such
violation could not have a material adverse effect upon the business, assets,
prospects, results or operations or financial condition of the Borrower.
(b) Good Standing. The Borrower is duly qualified and in good standing in
its state of incorporation and authorized to do business in each state where the
nature of its business activities conducted or properties owned or leased
requires it to be so qualified and where the failure to be so qualified could
have a material adverse effect upon the business, assets, prospects, results of
operation or financial condition of the Borrower.
Section 4.02 Authorization, Binding Effect, No Conflict, Etc.
(a) Authorization by the Borrower. The execution, delivery and performance
by the Borrower of each Loan Document to which it is or will be a party has been
duly authorized by all necessary action on the part of the Borrower.
(b) Execution and Delivery by the Borrower. Each Loan Document to which it
is a party has been duly executed and delivered by the Borrower.
<PAGE>
(c) Binding Obligations of the Borrower. Each Loan Document to which it is
a party is the legal, valid and binding obligation of the Borrower, enforceable
in accordance with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to creditors' rights generally.
(d) No Conflict. The execution, delivery and performance by the Borrower of
each Loan Document to which it is party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) violate
any provision of the certificate of formation of the Borrower or any provision
of Applicable Law binding on the Borrower, (ii) conflict with, result in a
breach of, or constitute (or, with the giving of notice or lapse of time or
both, would constitute) a default under, or require the approval or consent of
any person pursuant to any Contractual Obligation of the Borrower, except such
conflicts, breaches or defaults, or such approvals or consents that if not
obtained, would not have a material adverse effect on the business, assets,
prospects, results of operation or financial condition of the Borrower or (iii)
result in the creation or imposition of any Lien upon any asset of the Borrower.
(e) Governmental Approvals. No Governmental Approval is or will be required
in connection with the execution, delivery and performance by the Borrower of
each Loan Document to which it is party or the transactions contemplated hereby
or thereby.
Section 4.03 Agreements; Applicable Law. The Borrower is not in violation
of any Applicable Law, or in default under any contractual obligations to which
it is a party or by which its property is bound, where such default or violation
could have a material adverse effect on the business assets, prospects, results
of operation or financial condition of the Borrower.
ARTICLE V
COVENANTS OF THE BORROWER
Section 5.01 Delivery of Information. Promptly after the occurrence of any
Default or Event of Default, the Borrower shall deliver to the Lender a
certificate of an executive officer of the Borrower setting forth the details
thereof and the action which the Borrower is taking or proposes to take with
respect thereto. The Borrower shall promptly provide to the Lender from time to
time such additional information regarding the financial position or business of
the Borrower as the Lender may reasonably request.
Section 5.02 Records and Inspection. The Borrower shall maintain adequate
books, records and accounts as may be required or necessary to permit the
preparation of financial statements in accordance with sound business practices
and GAAP. The Borrower shall permit such Persons as the Lender may designate, at
reasonable times and as often as may be reasonably requested, to (a) visit and
inspect any properties of the Borrower, (b) inspect and copy their books and
records, and (c) discuss with their officers and employees and their independent
accountants, their respective businesses, assets, liabilities, prospects,
results of operation and financial condition. The Lender will use reasonable
efforts, consistent with its normal business practices, to maintain the
confidentiality of any information so received.
Section 5.03 Preservation of Organization of the Borrower. The Borrower
will use its reasonable best efforts to preserve its business organization
intact (including the preservation of their respective properties wherever
located); continue the operations of the Borrower at their present levels;
maintain in full force and effect all insurance policies in effect on the date
hereof (or policies providing substantially the same
<PAGE>
coverage, copies of which will be made available to the Lender for inspection);
keep available to the Borrower the services of the present officers and
employees of the Borrower; and preserve the goodwill of the suppliers, customers
and others having business relations with the Borrower. The Borrower shall
continue to engage in business of the same general type as now conducted by it,
and preserve, renew and keep in full force and effect its legal existence and
take all reasonable action to maintain all material rights and privileges
necessary or desirable in the normal conduct of its business.
Section 5.04 Reports, Taxes, etc. of the Borrower. The Borrower (a) will,
use its reasonable best efforts to duly and timely to file all reports or
returns required to be filed with federal, state, local and foreign authorities,
promptly pay all federal, state, local and foreign taxes, assessments and
governmental charges levied or assessed upon them or any of their properties
(unless contesting such in good faith and adequate provision has been made
therefor), and (b) except to the extent non-compliance would not have a material
adverse effect on the Borrower, duly observe and conform to all lawful
requirements of any governmental authority relating to any of their properties
or to the operation and conduct of their business and all covenants, terms and
conditions upon or under which any of their properties are held.
Section 5.05 Further Assurances. At any time or from time to time upon the
request of the Lender, the Borrower shall execute and deliver such other acts
and things as the Lender may reasonably request in order to effect fully the
purpose of this Agreement and the other Loan Documents and to provide for
payment with respect to the Loan in accordance with the terms of this Agreement
and the other Loan Documents.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01 Events of Default. The occurrence of any one or more of the
following events, acts or occurrences shall constitute an event of default (an
"Event of Default") hereunder:
(a) Failure to Make Payments. The Borrower shall fail to pay when due any
principal (whether at stated maturity, upon acceleration, by notice of or other
requirement of prepayment, by operation of Section 2.07 or otherwise) of the
Loan, or shall default in the payment when due of any interest on the Loan or
any fee or other amount payable by it hereunder;
(b) Default in Other Agreements. (i) the Borrower or any of its
Subsidiaries shall default in the payment when due (whether at stated maturity,
by acceleration, by required prepayment, upon demand or otherwise) of any
Indebtedness (other than (x) Indebtedness hereunder and under the other Loan
Documents and (y) Indebtedness of the Borrower to any of its Subsidiaries or of
any such Subsidiary to the Borrower) aggregating $1,000,000 or more or shall
commit any breach of or default under any other term of any agreement or
indenture or instrument relating to any such Indebtedness, if the effect of such
breach or default (without regard to any period of grace or notice required) is
to accelerate, or to permit the acceleration of, the maturity of such
Indebtedness so that it shall become or be declared due and payable prior to its
stated maturity;
(c) Breach of Warranty. Any representation or warranty or certification
made or furnished by the Borrower or any guarantor under this Agreement, the
other Loan Documents or any agreement, instrument or document contemplated
hereby or thereby shall,
<PAGE>
at any time, prove to have been false or incorrect as of the time made or
furnished in any material respect;
(d) Breach of Covenant. The Borrower shall fail duly and punctually to
perform, comply with or observe any covenant or obligation to be performed,
observed or complied with by it under this Agreement and such failure shall not
have been remedied or waived within ten (10) Business Days after receipt of
notice thereof from the Lender;
(e) Involuntary Bankruptcy; Appointment of Receiver, Etc. There shall be
commenced against the Borrower or any of its Subsidiaries an involuntary case
seeking the liquidation or reorganization of the Borrower or such Subsidiary
under Chapter 7 or Chapter 11, respectively, of the federal Bankruptcy Code or
any similar proceeding under any other Applicable Law or an involuntary case or
proceeding seeking the appointment of a receiver, liquidator, sequestrator,
custodian, trustee or other officer having similar powers of the Borrower or
such Subsidiary to take possession of all or a substantial portion of the
property or to operate all or a substantial portion of the business of the
Borrower or such Subsidiary and any of the following events occur: (i) the
Borrower or any of its Subsidiaries consents to the institution of the
involuntary case or proceeding; (ii) the petition commencing the involuntary
case or proceeding is not timely controverted; (iii) the petition commencing the
involuntary case or proceeding remains undismissed and unstayed for a period of
sixty (60) days (provided, however, that, during the pendency of such period,
the Lender shall be relieved of its Commitment); or (iv) an order for relief
shall have been issued or entered therein and continue unstayed and in effect
for a period of 60 days;
(f) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Borrower or any
of its Subsidiaries shall institute a voluntary case seeking liquidation or
reorganization under Chapter 7 or Chapter 11, respectively, of the federal
Bankruptcy Code; or the Borrower or any of its Subsidiaries shall file a
petition, answer, or complaint or shall otherwise institute any similar
proceeding under any other Applicable Law, or shall consent thereto; or the
Borrower or any of its Subsidiaries shall consent to the conversion of an
involuntary case to a voluntary case; or the Borrower or any of its Subsidiaries
shall file a petition, answer a complaint or otherwise institute any proceeding
seeking, or shall consent or acquiesce to the appointment of, a receiver,
liquidator, sequestrator, custodian, trustee or other officer with similar
powers to take possession of all or a substantial portion of the property or to
operate all or a substantial portion of the business of the Borrower or such
Subsidiary; or the Borrower or any of its Subsidiaries shall make a general
assignment for the benefit of creditors; or the Borrower or any of its
Subsidiaries shall generally not pay its debts as they become due; or the Board
of Directors of the Borrower or any of its Subsidiaries (or any committee
thereof) adopts any resolution or otherwise authorizes action to approve any of
the foregoing; or
(g) Termination of Loan Documents, Etc. Any of the Loan Documents, or any
material provision in any of them, shall cease to be in full force and effect
for any reason other than a release or termination thereof (i) upon the full
payment and satisfaction of the Obligation hereunder and under the Note to the
Lender or (ii) in accordance with its terms, or the Borrower shall so claim or
assert in any writing.
Section 6.02 Remedies.
(a) Automatic Acceleration. If an Event of Default occurs and is continuing
under Section 6.01(e) or (f), then the Commitment shall automatically and
immediately terminate, and the obligation of the Lender to make Loans hereunder
thereupon shall cease, and the unpaid principal amount of and any accrued
interest on the Loans shall automatically become immediately due and payable,
without presentment, demand, protest,
<PAGE>
notice or other requirements of any kind, all of which are hereby expressly
waived by the Borrower.
(b) Acceleration by Lender. If an Event of Default occurs and is continuing
other than under Section 6.01 (e) or (f), the Lender may, by written notice to
the Borrower, declare the unpaid principal amount of the Loans, to be, and the
same shall thereupon become, due and payable together with any and all accrued
interest thereon, without presentment, demand, protest, any additional notice
whatsoever or other requirements of any kind, all of which are hereby expressly
waived by the Borrower, except as otherwise provided in this Agreement or by
Applicable Law.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses. The Borrower agrees to pay on demand:
(a) the reasonable fees, expenses and disbursements of counsel to the
Lender in connection with the negotiation, preparation, execution and delivery
and administration of this Agreement and all other Loan Documents and any
amendments, modifications and waivers hereto or thereto;
(b) all other actual and reasonable out-of-pocket expenses incurred by the
Lender in connection with the negotiation, preparation, execution, delivery and
administration of this Agreement and all other Loan Documents and any
amendments, modifications and waivers hereto or thereto, and the making of the
Loan hereunder; and
(c) all costs and expenses (including reasonable attorneys' fees and
disbursements and costs of settlement) incurred by the Lender in any workout,
restructuring or similar arrangements, in any case or proceeding under the
Bankruptcy Code, or after a Default or an Event of Default in connection with
the protection, preservation, exercise or enforcement of any of the terms hereof
or of its rights hereunder or under the Note and all other Loan Documents and
instruments contemplated hereby and thereby.
Section 7.02 Indemnity.
(a) Indemnification. In addition to the payment of expenses pursuant to
Section 7.01 hereof, the Borrower agrees to indemnify, defend and hold harmless
the Lender and any holder of any interest in the Note and the officers,
directors, employees and agents of the Lender and such holders (the
"Indemnitees") from and against (i) any and all transfer taxes, documentary
taxes or similar assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Agreement and the other Loan
Documents or the making of the Loan, and (ii) any and all liabilities, losses,
damages, penalties, judgments, suits, claims, costs and expenses of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel) in connection with any investigative, administrative
or judicial proceeding, whether or not such Indemnitee shall be designated a
party thereto, which may be imposed on, incurred by or asserted against such
Indemnitee, in any manner relating to or arising out of or in connection with
the making of the Loans, this Agreement and all other Loan Documents or the use
or intended use of the proceeds of the Loans (the "Indemnified Liabilities");
provided, however, that the Borrower shall have no obligation hereunder with
respect to any of the Indemnified Liabilities arising from the gross negligence
or willful misconduct of any Indemnitee.
<PAGE>
(b) Proceedings. Each Indemnitee will promptly notify the Borrower of each
event of which it has knowledge which may give rise to a claim under the
indemnification provisions of this Section 7.02; provided, however, that the
failure to so notify the Borrower shall in no way impair the Borrower's
obligations under this Section 7.02. If any investigative, judicial or
administrative proceeding arising from any of the foregoing is brought against
any Indemnitee indemnified or intended to be indemnified pursuant to this
Section 7.02, the Borrower, to the extent and in the manner directed by the
Indemnitee, will resist and defend such action, suit, or proceeding or cause the
same to be resisted and defended by counsel designated by the Borrower (which
counsel shall be satisfactory to the Indemnitee). Each Indemnitee will use its
best efforts to cooperate in the defense of any such action, writ, or
proceeding. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding provisions may be unenforceable because it
is violative of any law or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under Applicable Law.
(c) Survival. The obligations of the Borrower under this Section 7.02 shall
survive the termination of this Agreement and the discharge of the Borrower's
other obligations hereunder.
Section 7.03 Waivers; Modifications in Writing.
(a) Failure or Delay. No failure or delay on the part of the Lender or any
other holder of rights in the Note in exercising any right, power, or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power, or remedy preclude any other or further
exercise thereof or the exercise of any other right, power, or remedy. The
remedies provided for under this Agreement, the Note and other Loan Documents
are cumulative and are not exclusive of any remedies that may be available to
the Lender at law, in equity, or otherwise. No amendment, modification,
supplement, termination, consent, or waiver of this Agreement, the Note or any
other Loan Documents, nor consent to any departure therefrom, shall in any event
be effective unless the same shall be in writing and signed by the Lender.
(b) Limited Waiver. Any waiver of any provision of this Agreement or the
other Loan Documents shall be effective only in the specific instance and for
the specific purpose for which given. No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 7.03 shall be binding upon
each holder of the Note, each future holder of the Note and the Borrower.
Section 7.04 Notices, Etc. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and (except for financial statements, other related
informational documents and routine communications to be furnished pursuant
hereto, which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by courier, by overnight mail, by registered mail
or certified mail, postage prepaid, or by prepaid telex, telecopy or telegram
(with messenger delivery specified) and shall be deemed to be given for purposes
of this Agreement on the day that such writing is received by the intended
recipient thereof. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section 7.04, notices, demands,
instructions and other communications in writing shall be given to or made upon
the respective parties hereto at their respective addresses (or to their
respective telex or telecopier numbers) as set forth below:
<PAGE>
Color Tile, Inc.
515 Houston Street
Fort Worth, Texas 76102
Invifin S.A.
11 Rue Aldringen
L-2960 Luxembourg
Section 7.05 Successors and Assigns.
(a) Binding Upon Successors and Assigns. This Agreement and any amendments
hereto shall be binding upon and inure to the benefit of and be enforceable by
the Borrower and the Lender and their respective permitted successors and
assigns. The Borrower may not assign or transfer any interest hereunder without
the prior written consent of the Lender.
(b) Information; Right to Sell. The Lender shall have the right at any time
to do either or both of the following: (i) subject to the provisions of Section
7.06, furnish one or more purchasers or potential purchasers of all or any
portion of the Loan or the Note with any and all information concerning the
Borrower which has been supplied by the Borrower to any such purchaser, or (ii)
subject to the provisions of paragraph (c) below, sell, assign, syndicate,
transfer or negotiate all or any portion of the Lender's interests in the Loan
or the Note.
(c) Assignments. Without requiring the consent of the Borrower, the Lender
may assign to one or more other entities all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of its Commitment and the Note held by it)
to any Person that, on the date of such assignment and at all times prior to the
termination or expiration of the Commitment, directly or indirectly controls, is
controlled by or is under direct or indirect common control with the Lender. For
purposes of this Section 7.05(c) the word "control" shall mean possession,
directly or indirectly of the power (i) to vote 5% or more of the securities
having ordinary voting power for the election of directors of such Person or
(ii) to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities by contract or
otherwise.
Section 7.06 Confidentiality. The Lender agree to maintain any confidential
information that it may receive from the Borrower pursuant to this Agreement
confidential and shall not disclose such information to third parties without
the prior consent of the Borrower, except for disclosure: (a) to legal counsel,
accountants and other professional advisors to the Lender; (b) to regulatory
officials having jurisdiction over the Lender; (c) as required by law or legal
process or in connection with any legal proceeding to which the Lender is a
party or is otherwise subject; (d) to another financial institution in
connection with a disposition or proposed disposition of all or part of the
Lender's interests permitted hereunder, whether by participation, assignment or
other transfer, which financial institution shall have agreed in writing to be
subject to the confidentiality provisions of this Section 7.06. The Lender shall
undertake to return, upon request by the Borrower made within a reasonable time
after all obligations of the Borrower under this Agreement, the Note and the
other Loan Documents have been paid in full and the Agreement has been
terminated, any confidential material which the Borrower clearly and
conspicuously marked "Confidential and Subject to Return" prior to or in
connection with furnishing or making available the same to the Lender; provided,
however, that the return of such material is not inconsistent with standard
banking practice or, in the judgment of the Lender, otherwise disadvantageous to
the Lender.
<PAGE>
Section 7.07 Governing Law and Venue; Waiver of Trial By Jury. The validity
of this Agreement and each Note, the construction, interpretation and
enforcement thereof and the rights of the parties thereto shall be determined
under, governed by, and construed in accordance with the internal laws of the
State of New York. The parties agree that all actions or proceedings arising in
connection with this Agreement and the Note may be tried and litigated in State
and Federal Courts located in the City and County of New York, State of New
York. THE PARTIES HERETO WAIVE THE RIGHT TO A TRIAL BY JURY AND ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 7.07.
SERVICE OF PROCESS, SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST
THE BORROWER, MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO ITS ADDRESS INDICATED IN SECTION 7.04.
Section 7.08 Severability of Provisions. Any provision of this Agreement
which is illegal, invalid, prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such illegality,
invalidity, prohibition or unenforceability without invalidating or impairing
the remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
Section 7.9 Independence of Covenants. All covenants under this Agreement
shall each be given independent effect so that if a particular action or
condition is not permitted by any such covenant, the fact that it would be
permitted by another covenant, by an exception thereto, or be otherwise within
the limitations thereof, shall not avoid the occurrence of a Default or an Event
of Default if such action is taken or condition exists.
Section 7.10 Publicity. Any publicity release, advertisement, filing,
public statement or announcement made by or at the request of the Borrower
regarding this Agreement or the financing provided under this Agreement which
makes reference to any Lender, or describes the financing provided by the
Lender, shall be first reviewed by and must be satisfactory to the Lender.
Section 7.11 Headings. Article and section headings used in this Agreement
are for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or affect the construction of this Agreement.
Section 7.12 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
Section 7.13 Complete Agreement. This Agreement, together with the exhibits
and schedules to this Agreement, the Note and the other Loan Documents, is
intended by the parties as a final expression of their agreement and is intended
as a complete statement of the terms and conditions of their agreement, and
supersedes all prior negotiations, agreements and understandings relating to the
subject matter hereof.
Section 7.14 Time of The Essence. Time is of the essence of each and every
provision of this Agreement and the Loan Documents.
<PAGE>
Section 7.15 Third Party Beneficiaries. There are no third party
beneficiaries to this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first set forth above
COLOR TILE, INC.
By:/s/ William H. Pavony
-----------------------------
Name: William H. Pavony
Title: Vice President and
Chief Financial Officer
INVIFIN S.A.
By:/s/ J. P. Reiland
------------------------
Name: J.P. Reiland
Title: Director
2
<PAGE>
EXHIBIT A
NOTE
New York, New York
$5,000,000 May , 1995
FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to
pay to the order of Invifin S.A. (the "Lender"), at such place or places or to
such other party or parties as the Lender may from time to time designate, in
lawful money of the United States of America and in immediately available funds,
the principal amount of FIVE MILLION DOLLARS ($5,000,000), or, if less, the
aggregate unpaid principal amount of the Loans made by the Lender to the
Borrower pursuant to Section 2.01 of the Credit Agreement dated as of May , 1995
among the Borrower and Invifin S.A. (as the same may be from time to time
amended, modified or supplemented, the "Credit Agreement"; terms defined therein
being used herein as therein defined). The undersigned further agrees to pay
interest in like money at such office from the date hereof on the unpaid
principal amount hereof from time to time outstanding at the interest rates
specified, and in the manner specified, in the Credit Agreement. All payments to
be made by the Borrower hereunder and pursuant to the Credit Agreement shall be
due and payable in such amounts and on such dates as are set forth in the Credit
Agreement.
This Note is a Note referred to in the Credit Agreement and is entitled to
the benefits thereof. This Note may be optionally prepaid in part or in whole at
any time without premium or penalty.
This Note is registered as to both principal and interest, and may be
transferred only upon registering in accordance with FIT Regulation section
5f.103-1.
The undersigned agrees to pay all costs and expenses incurred by the Lender
in connection with the enforcement of its rights and remedies under the Credit
Agreement and this Note.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable as provided
therein.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
COLOR TILE, INC.
By:
------------------------
Name:
Title:
<PAGE>
EXHIBIT B
NOTICE OF BORROWING
[Date]
INVIFIN S.A.
11 Rue Aldringen
L-2960 Luxembourg
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement dated as of May , 1995 (the
"Credit Agreement"; terms defined therein being used herein as therein defined)
among Color Tile, Inc. (the "Borrower") and Invifin S.A. (the "Lender") and
hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the Credit
Agreement, that the undersigned hereby requests the Borrowing of the Loan under
the Credit Agreement, and in connection therewith sets forth below the
information relating to such Borrowing (the "Proposed Borrowing") as required by
Section 2.02(a) of the Credit Agreement:
(i) The date of the Proposed Borrowing is ________________; (ii) The amount
of the Proposed Borrowing is $_______________; (iii) The account of the
Borrower at which the Lender shall make the
Proposed Borrowing available is ________________.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the Effective Date has occurred;
(B) the representations and warranties contained in each Loan Document are
correct in all material respects, before and after giving effect to the Proposed
Borrowing and to the application of the proceeds therefrom, as though made on
and as of such date; and
(C) no event has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes a Default or an Event of Default.
Very truly yours,
COLOR TILE, INC.
By:
-------------------------------
Name:
Title:
<PAGE>
NOTICE OF BORROWING
May 19, 1995
INVIFIN S.A.
11 Rue Aldringen
L-2960 Luxembourg
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement dated as of May 19, 1995
(the "Credit Agreement"; terms defined therein being used herein as therein
defined) among Color Tile, Inc. (the "Borrower") and Invifin S.A. (the "Lender")
and hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the
Credit Agreement, that the undersigned hereby requests the Borrowing of the Loan
under the Credit Agreement, and in connection therewith sets forth below the
information relating to such Borrowing (the "Proposed Borrowing") as required by
Section 2.02(a) of the Credit Agreement:
(i) The date of the Proposed Borrowing is May 22, 1995; (ii) The amount of
the Proposed Borrowing is $5,000,000; (iii) The account of the Borrower at
which the Lender shall make the
Proposed Borrowing available is
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the Effective Date has occurred;
(B) the representations and warranties contained in each Loan Document are
correct in all material respects, before and after giving effect to the Proposed
Borrowing and to the application of the proceeds therefrom, as though made on
and as of such date; and
(C) no event has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes a Default or an Event of Default.
Very truly yours,
COLOR TILE, INC.
By:/s/ William H. Pavony
-----------------------------
Name: William H. Pavony
Title: Vice President and
Chief Financial Officer
<PAGE>
NOTE
New York, New York
$5,000,000 May 22, 1995
FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to
pay to the order of Invifin S.A. (the "Lender"), at such place or places or to
such other party or parties as the Lender may from time to time designate, in
lawful money of the United States of America and in immediately available funds,
the principal amount of FIVE MILLION DOLLARS ($5,000,000), or, if less, the
aggregate unpaid principal amount of the Loans made by the Lender to the
Borrower pursuant to Section 2.01 of the Credit Agreement dated as of May 19,
1995 among the Borrower and Invifin S.A. (as the same may be from time to time
amended, modified or supplemented, the "Credit Agreement"; terms defined therein
being used herein as therein defined). The undersigned further agrees to pay
interest in like money at such office from the date hereof on the unpaid
principal amount hereof from time to time outstanding at the interest rates
specified, and in the manner specified, in the Credit Agreement. All payments to
be made by the Borrower hereunder and pursuant to the Credit Agreement shall be
due and payable in such amounts and on such dates as are set forth in the Credit
Agreement.
This Note is a Note referred to in the Credit Agreement and is entitled to
the benefits thereof. This Note may be optionally prepaid in part or in whole at
any time without premium or penalty.
This Note is registered as to both principal and interest, and may be
transferred only upon registering in accordance with FIT Regulation section
5f.103-1.
The undersigned agrees to pay all costs and expenses incurred by the Lender
in connection with the enforcement of its rights and remedies under the Credit
Agreement and this Note.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable as provided
therein.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
COLOR TILE, INC.
By:/s/ William H. Pavony
--------------------------
Name: William H. Pavony
Title: Vice President
and Chief Financial Officer
CREDIT AGREEMENT
Between
COLOR TILE, INC.
as Borrower
and
INVIFIN S.A.
as Lender
$10,000,000
Dated as of June 12, 1995
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of June 12, 1995 between COLOR
TILE, INC., a Delaware corporation (the "Borrower"), and INVIFIN S.A., a
Luxembourg company (the "Lender").
A G R E E M E N T
In consideration of the agreements, covenants, conditions and provisions
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND RELATED MATTERS
Section 1.01 Definitions. For purposes of this Agreement, capitalized terms
shall have the meanings set forth in this Section 1.01, in the sections of this
Agreement or the other Loan Documents referred to in this Section 1.01 or as
specified in Section 1.04:
"Agreement" means this Credit Agreement, together with all exhibits and
schedules hereto and any and all amendments, extensions or supplements hereto.
"Applicable Law" means all applicable provisions of all (a) constitutions,
treaties, statutes, laws, rules, regulations, ordinances and orders of any
Governmental Authority, (b) Governmental Approvals and (c) orders, decisions,
judgments, awards and decrees of any Governmental Authority.
"Bankruptcy Code" means Title 11 of the United States Code (11U.S.C.Sec.101
et seq.), as amended from time to time, or any successor statute.
"Borrower" shall have the meaning set forth in the first paragraph of this
Agreement.
"Borrowing" means a borrowing hereunder consisting of Loans made by the
Lender to the Borrower.
"Business Day" means any day which is not a Saturday, Sunday or other day
on which banks in New York, New York are authorized or obligated to close.
"Capitalized Lease" means any lease (or other agreement conveying the right
to use) of real or personal property by a Person as lessee or guarantor which
would, in conformity with GAAP, be required to be accounted for as a capital
lease on the balance sheet of that Person.
"Capitalized Lease Obligations" means all obligations under Capitalized
Leases of a Person that would, in conformity with GAAP, appear on a balance
sheet of that Person.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor or superseding tax laws of the United States of America,
together with all regulations promulgated thereunder.
<PAGE>
"Commitment" means, at the time any determination thereof is to be made,
the total amount of the Lender's commitment to extend credit to the Borrower by
means of the Loans in an aggregate principal amount at any time outstanding not
to exceed Ten Million Dollars ($10,000,000) or such lesser amount to which such
commitment may be reduced pursuant to this Agreement.
"Contingent Obligation" means, as to any Person, any obligation, direct or
indirect, contingent or otherwise, of such Person (a) with respect to any
Indebtedness or other obligation or liability of another Person, including
without limitation any direct or indirect guarantee of such Indebtedness,
obligation or liability, endorsement (other than for collection or deposit in
the ordinary course of business) thereof or discount or sale thereof by such
Person with recourse to such Person, or any other direct or indirect obligation,
by agreement or otherwise, to purchase or repurchase any such Indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge of any such Indebtedness, obligation or liability (whether
in the form of loans, advances, stock purchases, capital contributions or
otherwise), (b) to provide funds to maintain working capital or equity capital
of another Person or otherwise to maintain the net worth, solvency or financial
condition of the other Person, (c) to make payment for any products, property,
securities or services regardless of non-delivery thereof, if the purpose of any
agreement so to do is to provide assurance that another Person's Indebtedness,
obligation or liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of another Person's
Indebtedness, obligation or liability will be protected (in whole or in part)
against loss in respect thereof, or (d) otherwise to assure or hold harmless the
holders of Indebtedness or other obligation or liability or another Person
against loss in respect thereof. The amount of any Contingent Obligation shall
be an amount equal to the amount of the Indebtedness, obligation or liability
guaranteed or otherwise supported thereby.
"Default" means any condition or event which, with the giving of notice or
lapse of time or both, would, unless cured or waived, become an Event of
Default.
"Dollars" and "$" means lawful money of the United States of America.
"Effective Date" means the date on which all of the conditions precedent
set out in Section 3.01 hereof to the effectiveness of this Agreement have been
satisfied or waived in writing by the Lender.
"Event of Default" means any of the events specified in Section 6.01 of
this Agreement.
"GAAP" means generally accepted accounting principles as in effect in the
United States of America (as such principles may change from time to time).
"Governmental Approval" means an authorization, consent, approval, permit,
license or exemption of, registration or filing with, or report or notice to,
any Governmental Authority.
"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 limitation any government authority, agency, department,
board, commission or instrumentality of the United States, any State of the
United States or any political subdivision thereof, and any tribunal or
arbitrator(s) of competent jurisdiction.
<PAGE>
"Indebtedness" means, with respect to any Person, the aggregate amount of,
without duplication: (a) all obligations for borrowed money; (b) all obligations
evidenced by bonds, debentures, the Note or other similar instruments; (c) all
obligations to pay the deferred purchase price of property or services, except
trade accounts payable not overdue arising in the ordinary course of business;
(d) all Capitalized Lease Obligations; (e) all obligations or liabilities of
others secured by a Lien on any asset owned by such Person or Persons whether or
not such obligation or liability is assumed; (f) all obligations of such Person
or Persons, contingent or otherwise, in respect of any letters of credit or
bankers' acceptances, and (g) all Contingent Obligations.
"Lender" has the meaning ascribed to it in the first paragraph of this
Agreement.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale, consignment
or other title retention agreement or any lease in the nature thereof) and any
agreement to give or refrain from giving any lien, mortgage, pledge, security
interest, charge or other encumbrance of any kind.
"Loan" has the meaning ascribed to it in Section 2.01 hereof.
"Loan Documents" means, collectively, this Agreement, the Note and any
supplemental agreements, instruments or other writings executed or delivered by
the Borrower in connection herewith, and all amendments, modifications or
supplements, and appendices, exhibits and schedules to, any of the foregoing.
"Note" means the promissory note of the Borrower, in substantially the form
of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Loan
and includes any Note issued in exchange or substitution therefor.
"Notice of Borrowing" means an irrevocable notice in substantially the form
of Exhibit B hereto.
"Obligations" means all present and future advances, debts, obligations and
liabilities of the Borrower of every type and description arising under or in
connection with this Agreement or any other Loan Document, due or to become due
to the Lender or any Person entitled to indemnification pursuant to Section 7.02
hereof, or any of their respective successors, transferees or assigns, and shall
include, without limitation, (a) all liability of the Borrower for payment of
principal of and interest on the Loans and under the Note, (b) all liability of
the Borrower hereunder or under the Loan Documents for any fees, expense
reimbursements and indemnifications, and (c) any and all other debts,
obligations and liabilities of the Borrower to the Lender heretofore, now or
hereafter incurred or created (and all renewals, extensions, modifications and
rearrangements thereof), under, in connection with, in respect of, or evidenced
or created by this Agreement or any or all of the other Loan Documents, whether
voluntary or involuntary, however arising, and whether due or not due, absolute
or contingent, secured or unsecured, liquidated or unliquidated, determined or
undetermined, direct or indirect, and whether the Borrower may be liable
individually or jointly with others.
"Person" means an individual, a corporation, a partnership, a trust, an
unincorporated organization or any other entity or organization, including a
government or any agency or political subdivision thereof.
"Post-Default Rate" means, at any time, a rate per annum equal to the rate
of interest otherwise in effect at such time pursuant to the terms hereof, plus
two percent (2%).
<PAGE>
"Subsidiary" means any corporation or other entity of which more than fifty
percent (50%) of the total voting power of shares of stock or other securities
or other ownership interests entitled to vote in the election of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by the Borrower.
"Taxes" means any income, stamp and other taxes, charges, fees, levies,
duties, imposts, withholdings or other assessments, together with any interest
and penalties, additions to tax and additional amounts imposed by any federal,
state, local or foreign taxing authority upon any Person.
"Termination Date" means the date that is the earlier of November 22, 1995
or the date the Loans becomes due and payable pursuant to Article VI hereof.
Section 1.02 Construction. Unless the context of this Agreement clearly
requires otherwise, references herein to the plural include the singular, the
singular includes the plural, the part includes the whole, and the word
"including" is not limiting. References in this Agreement to any "determination"
by the Lender include good faith estimates by the Lender, as applicable (in the
case of quantitative determinations), and good faith beliefs by the Lender, as
applicable (in the case of qualitative determinations). The words "hereof,"
"herein," "hereby," "hereunder" and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement.
Article, section, subsection, exhibit and schedule references are to this
Agreement unless otherwise specified.
Section 1.03 Exhibits. All of the exhibits and schedules attached to this
Agreement shall be deemed incorporated herein by reference.
Section 1.04 Other Definitions. Terms otherwise defined in the description
of the parties or within another definition in Section 1.01 hereof or in any
other provisions of this Agreement or any of the other Loan Documents not
defined or referenced in Section 1.01 hereof shall have their respective defined
meanings when used herein or therein.
ARTICLE II
AMOUNTS AND TERMS OF THE LOAN
Section 2.01 Loans.
(a) Agreement to Lend. Upon the terms and subject to the conditions set
forth in this Agreement (including, without limitation, the provisions of
Section 6.02 relating to termination of the Commitment), the Lender agrees to
make to the Borrower, on the Effective Date and from time to time thereafter
until and including the Termination Date (or if such date is not a Business Day,
the Business Day next preceding such date), revolving loans (each individually,
a "Loan" and collectively, the "Loans"), the aggregate unpaid principal amount
of which shall not exceed the Lender's Commitment at any time.
(b) Prepayment. Loans may be voluntarily prepaid pursuant to Section 2.08,
and, subject to the provisions of this Agreement, any amounts so prepaid may be
reborrowed on or after the Effective Date and until the Termination Date (or the
Business Day next preceding such date), up to the amount available under this
Section 2.01 at the time of such reborrowing.
(c) Minimum Amount. Each Loan shall be in a minimum aggregate principal
amount of $250,000 and integral multiples of $50,000 in excess of that amount.
<PAGE>
Section 2.02 Notice of Borrowing.
(a) Borrowing. When the Borrower desires to borrow Loans at any time on or
after the Effective Date and until and including the Termination Date (or if
such date is not a Business Day, the Business Day next preceding such date)
under this Section 2.02, it shall deliver to the Lender a Notice of Borrowing no
later than 9:00 a.m. (New York time) at least three (3) Business Days in advance
of the proposed funding date. The Notice of Borrowing shall specify (i) the
funding date (which shall be a Business Day) in respect of the Loan and (ii) the
amount of the proposed Borrowing.
(b) Authorized Persons. The Borrower shall notify the Lender in writing of
the names of its members authorized to request the Loan on behalf of the
Borrower and shall provide the Lender with a specimen signature of each such
officer or employee. The Lender shall be entitled to rely conclusively on such
officer's or employee's authority to request the Loan on behalf of the Borrower
until the Lender receives written notice to the contrary. The Lender shall have
no duty to verify the authenticity of the signature appearing on the Notice of
Borrowing.
(c) Notice of Borrowing Irrevocable. Any Notice of Borrowing delivered
pursuant to this Section 2.02 shall be irrevocable.
(d) Receipt of Funds by Borrower. Not later than 3:00 p.m. (New York time)
on the date of the Borrowing, unless the Lender determines that any applicable
condition specified in Article III has not been satisfied or waived by the
Lender, the Lender will make the funds so requested available on such date to
the Borrower at the account of the Borrower designated in the applicable Notice
of Borrowing.
Section 2.03 Interest. The Loans shall bear, and the applicable Borrower
agrees to pay, interest on the outstanding principal amount thereof at the
applicable rates and at the times set forth below:
(a) Loans. The Loans shall bear, and the Borrower agrees to pay, interest
on the outstanding principal amount thereof and any other outstanding amounts
payable in respect of this Agreement (and overdue interest thereon, if any, to
the extent permitted by Applicable Law) until due (whether at maturity, by
reason of prepayment or acceleration or otherwise) at a rate per annum equal to
thirteen percent (13%).
(b) Post-Default Rate. Notwithstanding Subsection (a) of this Section 2.03,
if at any time an Event of Default shall occur, and for as long thereafter as
such Event of Default shall be continuing, without further notice or demand, the
outstanding principal amount of the Loan and any other outstanding amounts
payable in respect of this Agreement (and overdue interest thereon, if any, to
the extent permitted by Applicable Law) shall bear interest at a rate per annum
equal to the applicable Post-Default Rate.
(c) Payment. Interest on each of the Loans shall be payable monthly in
arrears on the last Business Day of each month and on the date when such Loan
shall become due (whether at maturity, by reason of prepayment or acceleration
or otherwise), but only to the extent then accrued on the amount then so due.
Interest accrued at the Post-Default Rate shall be payable on demand.
(d) Computations. Interest on the Loan shall accrue from day to day from
and including the date of the making of the Loan to and excluding the due date
or the date of any repayment thereof. Interest on the Loan and such other
amounts shall be computed on the basis of a 360-day year and paid for the actual
number of days elapsed.
<PAGE>
(e) Maximum Lawful Rate of Interest. The rate of interest payable on the
Loan shall in no event exceed the maximum rate permissible under Applicable Law.
If the rate of interest payable on the Loan is ever reduced as a result of this
subsection and at any time thereafter the maximum rate permitted by Applicable
Law shall exceed the rate of interest provided for in this Agreement, then the
rate provided for in this Agreement shall be increased to the maximum rate
provided by Applicable Law for such period as is required so that the total
amount of interest received by the Lender is that which would have been received
by the Lender but for the operation of the first sentence of this subsection
2.03(e).
Section 2.04 Note.
(a) Note. The Loan shall be evidenced by a Note, payable to the order of
the Lender and representing the obligation of the Borrower to pay the lesser of
(i) Ten Million Dollars ($10,000,000) and (ii) the aggregate unpaid principal
amount of the Loans, with interest thereon as prescribed by Section 2.03 hereof.
The Note shall be dated the Effective Date, shall set forth the amount of the
Lender's Commitment as the maximum principal amount thereof and shall have the
blanks therein appropriately completed. The Borrower shall maintain a register
of the ownership of the Note. The Note issued under this Agreement shall be
registered as to both principal and interest pursuant to Regulation Sec.5f.103-1
of the Federal Income Tax Regulations ("FIT Regulations") as specified in the
Note. If a Note is presented with a request to register a transfer, the transfer
shall be registered as requested in accordance with FIT Regulation Sec.5f.103-1.
Every note, including the Note, so presented in connection with a transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in a form satisfactory to the Borrower, duly executed by the holder of
the Note (the "Holder") or the Holder's attorney duly authorized in writing. The
Borrower may require payment of a sum sufficient to cover any tax or other
charge that may be imposed in relation to any transfer or exchange.
(b) Recordation. The Lender is hereby irrevocably authorized to record on
the Note the date, type and amount of the Loans outstanding hereunder, the
interest rate applicable thereto, and each payment or prepayment of principal
thereof on the schedules forming a part thereof and to attach to and make a part
of the Note a continuation of any such schedule as and when required. The
failure to record, or any error in recording, the Loans or repayment on such
schedule (or continuation thereof) or similar records shall not, however, affect
the obligations of the Borrower hereunder or under the Note to repay the
principal amount of the Loans together with all interest accrued thereon. All
such notations shall constitute conclusive evidence of the accuracy of the
information so recorded, in the absence of manifest error.
Section 2.05 Optional Cancellation or Reduction of Commitment. At any time
and from time to time prior to the Commitment Termination Date, the Borrower may
irrevocably cancel or from time to time reduce the Commitment by giving the
Lender not less than three (3) Business Days' prior notice thereof; provided,
however, that any partial reduction shall be in an amount equal to $500,000 or
any greater whole multiple thereof and provided further that no such voluntary
reduction shall reduce the Commitment below the aggregate unpaid principal
amount of Loans outstanding on the date of such reduction. Such termination or
partial reduction of the Commitment shall be effective on the date specified in
the Borrower's notice.
Section 2.06 Optional Prepayments. The Borrower may, upon at least three
(3) Business Days' notice to the Lender, prepay the Loans in whole at any time,
or from time to time in part, in amounts aggregating at least $250,000 and
integral multiples of $50,000 by paying to the Lender the principal amount to be
prepaid together with accrued interest thereon
<PAGE>
to the date of prepayment. A notice of prepayment pursuant to this Section shall
not thereafter be revocable by the Borrower without the prior written consent of
the Lender.
Section 2.07 Termination of Commitment and Repayment of Loans. The Lender's
Commitment shall terminate, and the outstanding principal amount of the Loans,
together with accrued and unpaid interest thereon, shall be due and payable, on
the Termination Date.
Section 2.08 Manner of Payment. All payments due to the Lender pursuant to
this Agreement shall be made not later than 12:00 p.m. (New York time) on the
due date thereof, in lawful money of the United States of America in Federal or
other funds immediately available to the Lender at the Lender's office specified
pursuant to Section 7.04 or at an account of the Lender otherwise specified by
the Lender in writing from time to time to the Borrower. Whenever any payment
hereunder shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day.
Section 2.09 Increased Costs. If any Regulatory Change shall subject the
Lender to any Tax or change the basis of taxation of payments to the Lender of
principal, interest, fees or any other amount payable hereunder (except for
changes in the rate of Tax on the overall net income of the Lender), then the
Borrower shall from time to time pay to the Lender, upon demand by the Lender,
such additional amounts as may be specified by the Lender as sufficient to
compensate the Lender for such increased cost, reduction or requirement;
provided any amount so specified shall be determined reasonably and in good
faith and that the Lender shall endeavor to notify the Borrower of any such
increased cost within 60 days after such increased cost is incurred, provided
that failure by the Lender to so notify the Borrower shall not affect the
ability of the Lender to demand such compensation at any time. A statement
setting forth in reasonable detail the calculations of any additional amounts
payable pursuant to the foregoing sentence shall be submitted by the Lender to
the Borrower concurrently with any demand made by the Lender hereunder.
Section 2.10 Taxes. The Borrower agrees (a) to pay all amounts payable by
it under this Agreement or any Note free and clear of and without liability for,
and, subject to the provisions of this Section 2.10, without deduction or
withholding for, any and all Taxes; and (b) to pay when due, and reimburse the
Lender upon demand for any payment made by the Lender of, and indemnify and hold
the Lender harmless against any liability for, (i) any and all Taxes in any way
related to this Agreement, the Loans or the Commitment, other than income and
franchise taxes imposed upon the Lender by the jurisdictions (or any political
subdivision thereof) in which the Lender's principal executive office is located
in which the Lender is found, and in which the Lender's office from which the
loans are made is located, and (ii) all interest and penalties resulting from or
related to any delay in paying any such Taxes. Promptly after the date on which
payment of any Taxes is due pursuant to Applicable Law, the Borrower will
furnish to the Lender evidence, in form and substance satisfactory to the
Lender, that the Borrower has satisfied its obligations under this Section 2.10.
If any Borrower is required by Applicable Law to make any deduction or
withholding in respect of any Taxes from any amount payable under this Agreement
or any Note, the Borrower agrees to pay to the Lender, on the date such amount
is payable, such additional amounts as the Lender determines may be necessary so
that the net amounts received by the Lender, in the aggregate, after all
applicable deductions or withholdings, shall equal the amount that the Lender
would have been entitled to receive if no deductions or withholdings were made.
Section 2.11 Compensation for Funding Losses. In addition to the amounts
required to be paid by the Borrower pursuant to Sections 2.09, 2.10 and 2.11
hereof, the Borrower shall pay to the Lender, upon demand by such Lender, such
amount or amounts as the Lender reasonably and in good faith determines is or
are necessary to compensate it for any
<PAGE>
loss, cost, expense or liabilities incurred (including, without limitation, any
loss, cost or expense incurred by reason of the liquidation or redeployment of
deposits) by it as a result of a Loan for any reason not being made after a
Notice of Borrowing has been delivered, or any payment of principal of or
interest thereon not being made, on the date therefor determined in accordance
with the applicable provisions of this Agreement.
Section 2.12 Determinations. Any determination made as provided in Section
2.09, 2.10 or 2.11 or that is made by the Lender shall be final and conclusive
and binding upon the Borrower, in the absence of manifest error in computation.
ARTICLE III
CONDITIONS OF LENDING
Section 3.01 Conditions Precedent to Effective Date. The occurrence of the
Effective Date and shall be subject to satisfaction of all of the following
conditions precedent:
(a) Loan Documents. The Lender shall have received each of the following,
each of which shall be in form and substance satisfactory to the Lender and its
counsel:
(i) This Agreement, duly executed by the Borrower; and
(ii) The Note, executed by the Borrower and payable to the order of the
Lender.
(b) Corporate Documentation. The Lender shall have received a certificate
of good standing, certified by the Secretary of State of the jurisdiction of the
Borrower's organization, dated a recent date prior to the Effective Date.
(c) Corporate Proceedings. All corporate proceedings taken or to be taken
by the Borrower in connection herewith and with each of the other Loan
Documents, shall be reasonably satisfactory to the Lender in its sole
discretion, and it shall have received original or certified copies of such
documents as it may request.
(d) Representations and Warranties. All of the representations and
warranties of the Borrower contained in Article IV hereof and in any other Loan
Documents shall be true and correct in all material respects on and as of the
Effective Date.
(e) No Default. No Default or Event of Default shall have occurred and be
continuing or would result from the making of the Loan.
Section 3.02 Conditions Precedent to Funding. The obligation of the Lender
to make Loans on or after the Effective Date shall be subject to satisfaction of
all of the following conditions precedent:
(a) Effective Date. The Effective Date shall have occurred.
(b) Notice of Borrowing. The applicable Borrower shall have delivered to
the Lender a Notice of Borrowing in accordance with Section 2.02 hereof. Each
submission by the Borrower to the Lender of a Notice of Borrowing with respect
to a Loan and the acceptance by the Borrower of the proceeds of each such Loan
made hereunder, shall constitute a representation and warranty by the Borrower
as of the funding date in respect of such Loan that all the conditions contained
in this Section 3.02 have been satisfied.
<PAGE>
(c) Representations and Warranties. All of the representations and
warranties of the Borrower contained in Article IV hereof and in any other Loan
Documents shall be true and correct in all material respects on and as of the
Funding Date as though made on and as of that date (except to the extent that
such representations and warranties expressly were made only as of a specific
date).
(d) No Default. No Default or Event of Default shall have occurred and be
continuing or would result from the making of the Loan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as of the date of this
Agreement:
Section 4.01 Organization, Powers and Good Standing.
(a) Organization and Powers. The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization and has all requisite power and authority and the
legal right to own and operate its properties and to carry on its business as
heretofore conducted. The Borrower has all requisite power and authority to
enter into this Agreement and the other Loan Documents to which it is a party,
to issue the Note and to carry out the transactions contemplated hereby and
thereby. The Borrower possesses all Governmental Approvals, in full force and
effect, free from burdensome restrictions, that are necessary for the ownership,
maintenance and operation of its properties and conduct of its business as now
conducted, and is not in violation thereof, except to the extent that such
violation could not have a material adverse effect upon the business, assets,
prospects, results or operations or financial condition of the Borrower.
(b) Good Standing. The Borrower is duly qualified and in good standing in
its state of incorporation and authorized to do business in each state where the
nature of its business activities conducted or properties owned or leased
requires it to be so qualified and where the failure to be so qualified could
have a material adverse effect upon the business, assets, prospects, results of
operation or financial condition of the Borrower.
Section 4.02 Authorization, Binding Effect, No Conflict, Etc.
(a) Authorization by the Borrower. The execution, delivery and performance
by the Borrower of each Loan Document to which it is or will be a party has been
duly authorized by all necessary action on the part of the Borrower.
(b) Execution and Delivery by the Borrower. Each Loan Document to which it
is a party has been duly executed and delivered by the Borrower.
(c) Binding Obligations of the Borrower. Each Loan Document to which it is
a party is the legal, valid and binding obligation of the Borrower, enforceable
in accordance with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to creditors' rights generally.
(d) No Conflict. The execution, delivery and performance by the Borrower of
each Loan Document to which it is party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) violate
any provision of the certificate
<PAGE>
of formation of the Borrower or any provision of Applicable Law binding on the
Borrower, (ii) conflict with, result in a breach of, or constitute (or, with the
giving of notice or lapse of time or both, would constitute) a default under, or
require the approval or consent of any person pursuant to any Contractual
Obligation of the Borrower, except such conflicts, breaches or defaults, or such
approvals or consents that if not obtained, would not have a material adverse
effect on the business, assets, prospects, results of operation or financial
condition of the Borrower or (iii) result in the creation or imposition of any
Lien upon any asset of the Borrower.
(e) Governmental Approvals. No Governmental Approval is or will be required
in connection with the execution, delivery and performance by the Borrower of
each Loan Document to which it is party or the transactions contemplated hereby
or thereby.
Section 4.03 Agreements; Applicable Law. The Borrower is not in violation
of any Applicable Law, or in default under any contractual obligations to which
it is a party or by which its property is bound, where such default or violation
could have a material adverse effect on the business assets, prospects, results
of operation or financial condition of the Borrower.
ARTICLE V
COVENANTS OF THE BORROWER
Section 5.01 Delivery of Information. Promptly after the occurrence of any
Default or Event of Default, the Borrower shall deliver to the Lender a
certificate of an executive officer of the Borrower setting forth the details
thereof and the action which the Borrower is taking or proposes to take with
respect thereto. The Borrower shall promptly provide to the Lender from time to
time such additional information regarding the financial position or business of
the Borrower as the Lender may reasonably request.
Section 5.02 Records and Inspection. The Borrower shall maintain adequate
books, records and accounts as may be required or necessary to permit the
preparation of financial statements in accordance with sound business practices
and GAAP. The Borrower shall permit such Persons as the Lender may designate, at
reasonable times and as often as may be reasonably requested, to (a) visit and
inspect any properties of the Borrower, (b) inspect and copy their books and
records, and (c) discuss with their officers and employees and their independent
accountants, their respective businesses, assets, liabilities, prospects,
results of operation and financial condition. The Lender will use reasonable
efforts, consistent with its normal business practices, to maintain the
confidentiality of any information so received.
Section 5.03 Preservation of Organization of the Borrower. The Borrower
will use its reasonable best efforts to preserve its business organization
intact (including the preservation of their respective properties wherever
located); continue the operations of the Borrower at their present levels;
maintain in full force and effect all insurance policies in effect on the date
hereof (or policies providing substantially the same coverage, copies of which
will be made available to the Lender for inspection); keep available to the
Borrower the services of the present officers and employees of the Borrower; and
preserve the goodwill of the suppliers, customers and others having business
relations with the Borrower. The Borrower shall continue to engage in business
of the same general type as now conducted by it, and preserve, renew and keep in
full force and effect its legal existence and take all reasonable action to
maintain all material rights and privileges necessary or desirable in the normal
conduct of its business.
<PAGE>
Section 5.04 Reports, Taxes, etc. of the Borrower. The Borrower (a) will,
use its reasonable best efforts to duly and timely to file all reports or
returns required to be filed with federal, state, local and foreign authorities,
promptly pay all federal, state, local and foreign taxes, assessments and
governmental charges levied or assessed upon them or any of their properties
(unless contesting such in good faith and adequate provision has been made
therefor), and (b) except to the extent non-compliance would not have a material
adverse effect on the Borrower, duly observe and conform to all lawful
requirements of any governmental authority relating to any of their properties
or to the operation and conduct of their business and all covenants, terms and
conditions upon or under which any of their properties are held.
Section 5.05 Further Assurances. At any time or from time to time upon the
request of the Lender, the Borrower shall execute and deliver such other acts
and things as the Lender may reasonably request in order to effect fully the
purpose of this Agreement and the other Loan Documents and to provide for
payment with respect to the Loan in accordance with the terms of this Agreement
and the other Loan Documents.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01 Events of Default. The occurrence of any one or more of the
following events, acts or occurrences shall constitute an event of default (an
"Event of Default") hereunder:
(a) Failure to Make Payments. The Borrower shall fail to pay when due any
principal (whether at stated maturity, upon acceleration, by notice of or other
requirement of prepayment, by operation of Section 2.07 or otherwise) of the
Loan, or shall default in the payment when due of any interest on the Loan or
any fee or other amount payable by it hereunder;
(b) Default in Other Agreements. (i) the Borrower or any of its
Subsidiaries shall default in the payment when due (whether at stated maturity,
by acceleration, by required prepayment, upon demand or otherwise) of any
Indebtedness (other than (x) Indebtedness hereunder and under the other Loan
Documents and (y) Indebtedness of the Borrower to any of its Subsidiaries or of
any such Subsidiary to the Borrower) aggregating $1,000,000 or more or shall
commit any breach of or default under any other term of any agreement or
indenture or instrument relating to any such Indebtedness, if the effect of such
breach or default (without regard to any period of grace or notice required) is
to accelerate, or to permit the acceleration of, the maturity of such
Indebtedness so that it shall become or be declared due and payable prior to its
stated maturity;
(c) Breach of Warranty. Any representation or warranty or certification
made or furnished by the Borrower or any guarantor under this Agreement, the
other Loan Documents or any agreement, instrument or document contemplated
hereby or thereby shall, at any time, prove to have been false or incorrect as
of the time made or furnished in any material respect;
(d) Breach of Covenant. The Borrower shall fail duly and punctually to
perform, comply with or observe any covenant or obligation to be performed,
observed or complied with by it under this Agreement and such failure shall not
have been remedied or waived within ten (10) Business Days after receipt of
notice thereof from the Lender;
(e) Involuntary Bankruptcy; Appointment of Receiver, Etc. There shall be
commenced against the Borrower or any of its Subsidiaries an involuntary case
seeking the
<PAGE>
liquidation or reorganization of the Borrower or such Subsidiary under Chapter 7
or Chapter 11, respectively, of the federal Bankruptcy Code or any similar
proceeding under any other Applicable Law or an involuntary case or proceeding
seeking the appointment of a receiver, liquidator, sequestrator, custodian,
trustee or other officer having similar powers of the Borrower or such
Subsidiary to take possession of all or a substantial portion of the property or
to operate all or a substantial portion of the business of the Borrower or such
Subsidiary and any of the following events occur: (i) the Borrower or any of its
Subsidiaries consents to the institution of the involuntary case or proceeding;
(ii) the petition commencing the involuntary case or proceeding is not timely
controverted; (iii) the petition commencing the involuntary case or proceeding
remains undismissed and unstayed for a period of sixty (60) days (provided,
however, that, during the pendency of such period, the Lender shall be relieved
of its Commitment); or (iv) an order for relief shall have been issued or
entered therein and continue unstayed and in effect for a period of 60 days;
(f) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Borrower or any
of its Subsidiaries shall institute a voluntary case seeking liquidation or
reorganization under Chapter 7 or Chapter 11, respectively, of the federal
Bankruptcy Code; or the Borrower or any of its Subsidiaries shall file a
petition, answer, or complaint or shall otherwise institute any similar
proceeding under any other Applicable Law, or shall consent thereto; or the
Borrower or any of its Subsidiaries shall consent to the conversion of an
involuntary case to a voluntary case; or the Borrower or any of its Subsidiaries
shall file a petition, answer a complaint or otherwise institute any proceeding
seeking, or shall consent or acquiesce to the appointment of, a receiver,
liquidator, sequestrator, custodian, trustee or other officer with similar
powers to take possession of all or a substantial portion of the property or to
operate all or a substantial portion of the business of the Borrower or such
Subsidiary; or the Borrower or any of its Subsidiaries shall make a general
assignment for the benefit of creditors; or the Borrower or any of its
Subsidiaries shall generally not pay its debts as they become due; or the Board
of Directors of the Borrower or any of its Subsidiaries (or any committee
thereof) adopts any resolution or otherwise authorizes action to approve any of
the foregoing; or
(g) Termination of Loan Documents, Etc. Any of the Loan Documents, or any
material provision in any of them, shall cease to be in full force and effect
for any reason other than a release or termination thereof (i) upon the full
payment and satisfaction of the Obligation hereunder and under the Note to the
Lender or (ii) in accordance with its terms, or the Borrower shall so claim or
assert in any writing.
Section 6.02 Remedies.
(a) Automatic Acceleration. If an Event of Default occurs and is continuing
under Section 6.01(e) or (f), then the Commitment shall automatically and
immediately terminate, and the obligation of the Lender to make Loans hereunder
thereupon shall cease, and the unpaid principal amount of and any accrued
interest on the Loans shall automatically become immediately due and payable,
without presentment, demand, protest, notice or other requirements of any kind,
all of which are hereby expressly waived by the Borrower.
(b) Acceleration by Lender. If an Event of Default occurs and is continuing
other than under Section 6.01 (e) or (f), the Lender may, by written notice to
the Borrower, declare the unpaid principal amount of the Loans, to be, and the
same shall thereupon become, due and payable together with any and all accrued
interest thereon, without presentment, demand, protest, any additional notice
whatsoever or other requirements of any kind, all of which are hereby expressly
waived by the Borrower, except as otherwise provided in this Agreement or by
Applicable Law.
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses. The Borrower agrees to pay on demand:
(a) the reasonable fees, expenses and disbursements of counsel to the
Lender in connection with the negotiation, preparation, execution and delivery
and administration of this Agreement and all other Loan Documents and any
amendments, modifications and waivers hereto or thereto;
(b) all other actual and reasonable out-of-pocket expenses incurred by the
Lender in connection with the negotiation, preparation, execution, delivery and
administration of this Agreement and all other Loan Documents and any
amendments, modifications and waivers hereto or thereto, and the making of the
Loan hereunder; and
(c) all costs and expenses (including reasonable attorneys' fees and
disbursements and costs of settlement) incurred by the Lender in any workout,
restructuring or similar arrangements, in any case or proceeding under the
Bankruptcy Code, or after a Default or an Event of Default in connection with
the protection, preservation, exercise or enforcement of any of the terms hereof
or of its rights hereunder or under the Note and all other Loan Documents and
instruments contemplated hereby and thereby.
Section 7.02 Indemnity.
(a) Indemnification. In addition to the payment of expenses pursuant to
Section 7.01 hereof, the Borrower agrees to indemnify, defend and hold harmless
the Lender and any holder of any interest in the Note and the officers,
directors, employees and agents of the Lender and such holders (the
"Indemnitees") from and against (i) any and all transfer taxes, documentary
taxes or similar assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Agreement and the other Loan
Documents or the making of the Loan, and (ii) any and all liabilities, losses,
damages, penalties, judgments, suits, claims, costs and expenses of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel) in connection with any investigative, administrative
or judicial proceeding, whether or not such Indemnitee shall be designated a
party thereto, which may be imposed on, incurred by or asserted against such
Indemnitee, in any manner relating to or arising out of or in connection with
the making of the Loans, this Agreement and all other Loan Documents or the use
or intended use of the proceeds of the Loans (the "Indemnified Liabilities");
provided, however, that the Borrower shall have no obligation hereunder with
respect to any of the Indemnified Liabilities arising from the gross negligence
or willful misconduct of any Indemnitee.
(b) Proceedings. Each Indemnitee will promptly notify the Borrower of each
event of which it has knowledge which may give rise to a claim under the
indemnification provisions of this Section 7.02; provided, however, that the
failure to so notify the Borrower shall in no way impair the Borrower's
obligations under this Section 7.02. If any investigative, judicial or
administrative proceeding arising from any of the foregoing is brought against
any Indemnitee indemnified or intended to be indemnified pursuant to this
Section 7.02, the Borrower, to the extent and in the manner directed by the
Indemnitee, will resist and defend such action, suit, or proceeding or cause the
same to be resisted and defended by counsel designated by the Borrower (which
counsel shall be satisfactory to the Indemnitee). Each Indemnitee will use its
best efforts to cooperate in the defense of any such action, writ, or
proceeding. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding provisions may be unenforceable because it
is violative of any law or public
<PAGE>
policy, the Borrower shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
Applicable Law.
(c) Survival. The obligations of the Borrower under this Section 7.02 shall
survive the termination of this Agreement and the discharge of the Borrower's
other obligations hereunder.
Section 7.03 Waivers; Modifications in Writing.
(a) Failure or Delay. No failure or delay on the part of the Lender or any
other holder of rights in the Note in exercising any right, power, or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power, or remedy preclude any other or further
exercise thereof or the exercise of any other right, power, or remedy. The
remedies provided for under this Agreement, the Note and other Loan Documents
are cumulative and are not exclusive of any remedies that may be available to
the Lender at law, in equity, or otherwise. No amendment, modification,
supplement, termination, consent, or waiver of this Agreement, the Note or any
other Loan Documents, nor consent to any departure therefrom, shall in any event
be effective unless the same shall be in writing and signed by the Lender.
(b) Limited Waiver. Any waiver of any provision of this Agreement or the
other Loan Documents shall be effective only in the specific instance and for
the specific purpose for which given. No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 7.03 shall be binding upon
each holder of the Note, each future holder of the Note and the Borrower.
Section 7.04 Notices, Etc. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and (except for financial statements, other related
informational documents and routine communications to be furnished pursuant
hereto, which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by courier, by overnight mail, by registered mail
or certified mail, postage prepaid, or by prepaid telex, telecopy or telegram
(with messenger delivery specified) and shall be deemed to be given for purposes
of this Agreement on the day that such writing is received by the intended
recipient thereof. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section 7.04, notices, demands,
instructions and other communications in writing shall be given to or made upon
the respective parties hereto at their respective addresses (or to their
respective telex or telecopier numbers) as set forth below:
Color Tile, Inc.
515 Houston Street
Fort Worth, Texas 76012
Invifin S.A.
11 Rue Aldringen
L-2960 Luxembourg
Section 7.05 Successors and Assigns.
(a) Binding Upon Successors and Assigns. This Agreement and any amendments
hereto shall be binding upon and inure to the benefit of and be enforceable by
the
<PAGE>
Borrower and the Lender and their respective permitted successors and assigns.
The Borrower may not assign or transfer any interest hereunder without the prior
written consent of the Lender.
(b) Information; Right to Sell. The Lender shall have the right at any time
to do either or both of the following: (i) subject to the provisions of Section
7.06, furnish one or more purchasers or potential purchasers of all or any
portion of the Loan or the Note with any and all information concerning the
Borrower which has been supplied by the Borrower to any such purchaser, or (ii)
subject to the provisions of paragraph (c) below, sell, assign, syndicate,
transfer or negotiate all or any portion of the Lender's interests in the Loan
or the Note.
(c) Assignments. Without requiring the consent of the Borrower, the Lender
may assign to one or more other entities all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of its Commitment and the Note held by it)
to any Person that, on the date of such assignment and at all times prior to the
termination or expiration of the Commitment, directly or indirectly controls, is
controlled by or is under direct or indirect common control with the Lender. For
purposes of this Section 7.05(c) the word "control" shall mean possession,
directly or indirectly of the power (i) to vote 5% or more of the securities
having ordinary voting power for the election of directors of such Person or
(ii) to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities by contract or
otherwise.
Section 7.06 Confidentiality. The Lender agree to maintain any confidential
information that it may receive from the Borrower pursuant to this Agreement
confidential and shall not disclose such information to third parties without
the prior consent of the Borrower, except for disclosure: (a) to legal counsel,
accountants and other professional advisors to the Lender; (b) to regulatory
officials having jurisdiction over the Lender; (c) as required by law or legal
process or in connection with any legal proceeding to which the Lender is a
party or is otherwise subject; (d) to another financial institution in
connection with a disposition or proposed disposition of all or part of the
Lender's interests permitted hereunder, whether by participation, assignment or
other transfer, which financial institution shall have agreed in writing to be
subject to the confidentiality provisions of this Section 7.06. The Lender shall
undertake to return, upon request by the Borrower made within a reasonable time
after all obligations of the Borrower under this Agreement, the Note and the
other Loan Documents have been paid in full and the Agreement has been
terminated, any confidential material which the Borrower clearly and
conspicuously marked "Confidential and Subject to Return" prior to or in
connection with furnishing or making available the same to the Lender; provided,
however, that the return of such material is not inconsistent with standard
banking practice or, in the judgment of the Lender, otherwise disadvantageous to
the Lender.
Section 7.07 Governing Law and Venue; Waiver of Trial By Jury. The validity
of this Agreement and each Note, the construction, interpretation and
enforcement thereof and the rights of the parties thereto shall be determined
under, governed by, and construed in accordance with the internal laws of the
State of New York. The parties agree that all actions or proceedings arising in
connection with this Agreement and the Note may be tried and litigated in State
and Federal Courts located in the City and County of New York, State of New
York. THE PARTIES HERETO WAIVE THE RIGHT TO A TRIAL BY JURY AND ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 7.07.
SERVICE OF PROCESS, SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST
THE
<PAGE>
BORROWER, MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
TO ITS ADDRESS INDICATED IN SECTION 7.04.
Section 7.08 Severability of Provisions. Any provision of this Agreement
which is illegal, invalid, prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such illegality,
invalidity, prohibition or unenforceability without invalidating or impairing
the remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
Section 7.9 Independence of Covenants. All covenants under this Agreement
shall each be given independent effect so that if a particular action or
condition is not permitted by any such covenant, the fact that it would be
permitted by another covenant, by an exception thereto, or be otherwise within
the limitations thereof, shall not avoid the occurrence of a Default or an Event
of Default if such action is taken or condition exists.
Section 7.10 Publicity. Any publicity release, advertisement, filing,
public statement or announcement made by or at the request of the Borrower
regarding this Agreement or the financing provided under this Agreement which
makes reference to any Lender, or describes the financing provided by the
Lender, shall be first reviewed by and must be satisfactory to the Lender.
Section 7.11 Headings. Article and section headings used in this Agreement
are for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or affect the construction of this Agreement.
Section 7.12 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
Section 7.13 Complete Agreement. This Agreement, together with the exhibits
and schedules to this Agreement, the Note and the other Loan Documents, is
intended by the parties as a final expression of their agreement and is intended
as a complete statement of the terms and conditions of their agreement, and
supersedes all prior negotiations, agreements and understandings relating to the
subject matter hereof.
Section 7.14 Time of The Essence. Time is of the essence of each and every
provision of this Agreement and the Loan Documents.
Section 7.15 Third Party Beneficiaries. There are no third party
beneficiaries to this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first set forth above
COLOR TILE, INC.
By:/s/ William H. Pavony
----------------------------------
Name: William H. Pavony
Title: Vice President and
Chief Financial Officer
INVIFIN S.A.
By:/s/ J. P. Reiland
----------------------------------
Name: J. P. Reiland
Title: Director
<PAGE>
EXHIBIT A
NOTE
New York, New York
$10,000,000 June ___, 1995
FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to
pay to the order of Invifin S.A. (the "Lender"), at such place or places or to
such other party or parties as the Lender may from time to time designate, in
lawful money of the United States of America and in immediately available funds,
the principal amount of TEN MILLION DOLLARS ($10,000,000), or, if less, the
aggregate unpaid principal amount of the Loans made by the Lender to the
Borrower pursuant to Section 2.01 of the Credit Agreement dated as of June 12,
1995 among the Borrower and Invifin S.A. (as the same may be from time to time
amended, modified or supplemented, the "Credit Agreement"; terms defined therein
being used herein as therein defined). The undersigned further agrees to pay
interest in like money at such office from the date hereof on the unpaid
principal amount hereof from time to time outstanding at the interest rates
specified, and in the manner specified, in the Credit Agreement. All payments to
be made by the Borrower hereunder and pursuant to the Credit Agreement shall be
due and payable in such amounts and on such dates as are set forth in the Credit
Agreement.
This Note is a Note referred to in the Credit Agreement and is entitled to
the benefits thereof. This Note may be optionally prepaid in part or in whole at
any time without premium or penalty.
This Note is registered as to both principal and interest, and may be
transferred only upon registering in accordance with FIT Regulation section
5f.103-1.
The undersigned agrees to pay all costs and expenses incurred by the Lender
in connection with the enforcement of its rights and remedies under the Credit
Agreement and this Note.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable as provided
therein.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
COLOR TILE, INC.
By:
---------------------------
Name:
Title:
<PAGE>
EXHIBIT B
NOTICE OF BORROWING
[Date]
INVIFIN S.A.
11 Rue Aldringen
L-2960 Luxembourg
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement dated as of June 12, 1995
(the "Credit Agreement"; terms defined therein being used herein as therein
defined) among Color Tile, Inc. (the "Borrower") and Invifin S.A. (the "Lender")
and hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the
Credit Agreement, that the undersigned hereby requests the Borrowing of the Loan
under the Credit Agreement, and in connection therewith sets forth below the
information relating to such Borrowing (the "Proposed Borrowing") as required by
Section 2.02(a) of the Credit Agreement:
(i) The date of the Proposed Borrowing is _______________; (ii) The amount
of the Proposed Borrowing is $_______________; (iii) The account of the
Borrower at which the Lender shall make the
Proposed Borrowing available is ________________.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the Effective Date has occurred;
(B) the representations and warranties contained in each Loan Document are
correct in all material respects, before and after giving effect to the Proposed
Borrowing and to the application of the proceeds therefrom, as though made on
and as of such date; and
(C) no event has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes a Default or an Event of Default.
Very truly yours,
COLOR TILE, INC.
By:
-----------------------------
Name:
Title:
<PAGE>
NOTICE OF BORROWING
June 12, 1995
INVIFIN S.A.
11 Rue Aldringen
L-2960 Luxembourg
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement dated as of June 12, 1995
(the "Credit Agreement"; terms defined therein being used herein as therein
defined) among Color Tile, Inc. (the "Borrower") and Invifin S.A. (the "Lender")
and hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the
Credit Agreement, that the undersigned hereby requests the Borrowing of the Loan
under the Credit Agreement, and in connection therewith sets forth below the
information relating to such Borrowing (the "Proposed Borrowing") as required by
Section 2.02(a) of the Credit Agreement:
(i) The date of the Proposed Borrowing is June 14, 1995; (ii) The amount of
the Proposed Borrowing is $10,000,000; (iii) The account of the Borrower at
which the Lender shall make the
Proposed Borrowing available is
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the Effective Date has occurred;
(B) the representations and warranties contained in each Loan Document are
correct in all material respects, before and after giving effect to the Proposed
Borrowing and to the application of the proceeds therefrom, as though made on
and as of such date; and
(C) no event has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes a Default or an Event of Default.
Very truly yours,
COLOR TILE, INC.
By: /s/ William H. Pavony
----------------------------------
Name: William H. Pavony
Title: Vice President and
Chief Financial Officer
<PAGE>
NOTE
$10,000,000 New York, New York
June 14, 1995
FOR VALUE RECEIVED, the undersigned (the "Borrower"), hereby promises to
pay to the order of Invifin S.A. (the "Lender"), at such place or places or to
such other party or parties as the Lender may from time to time designate, in
lawful money of the United States of America and in immediately available funds,
the principal amount of TEN MILLION DOLLARS ($10,000,000), or, if less, the
aggregate unpaid principal amount of the Loans made by the Lender to the
Borrower pursuant to Section 2.01 of the Credit Agreement dated as of June 12,
1995 among the Borrower and Invifin S.A. (as the same may be from time to time
amended, modified or supplemented, the "Credit Agreement"; terms defined therein
being used herein as therein defined). The undersigned further agrees to pay
interest in like money at such office from the date hereof on the unpaid
principal amount hereof from time to time outstanding at the interest rates
specified, and in the manner specified, in the Credit Agreement. All payments to
be made by the Borrower hereunder and pursuant to the Credit Agreement shall be
due and payable in such amounts and on such dates as are set forth in the Credit
Agreement.
This Note is a Note referred to in the Credit Agreement and is entitled to
the benefits thereof. This Note may be optionally prepaid in part or in whole at
any time without premium or penalty.
This Note is registered as to both principal and interest, and may be
transferred only upon registering in accordance with FIT Regulation section
5f.103-1.
The undersigned agrees to pay all costs and expenses incurred by the Lender
in connection with the enforcement of its rights and remedies under the Credit
Agreement and this Note.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable as provided
therein.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
COLOR TILE, INC.
By:/s/ William H. Pavony
--------------------------------
Name: William H. Pavony
Title: Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM COLOR TILE,
INC.'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTERLY PERIOD ENDED JULY 2,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMWNTS.
</LEGEND>
<CIK> 0000276780
<NAME> COLOR TILE, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> JUL-02-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 18607
<ALLOWANCES> 1280
<INVENTORY> 91226
<CURRENT-ASSETS> 119359
<PP&E> 123381
<DEPRECIATION> 0
<TOTAL-ASSETS> 558017
<CURRENT-LIABILITIES> 125172
<BONDS> 387053
<COMMON> 0
96119
0
<OTHER-SE> (56552)
<TOTAL-LIABILITY-AND-EQUITY> 558017
<SALES> 330884
<TOTAL-REVENUES> 330884
<CGS> 198301
<TOTAL-COSTS> 320417
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22682
<INCOME-PRETAX> (12215)
<INCOME-TAX> 350
<INCOME-CONTINUING> (12565)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12565)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
