FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997 Commission File Number 0-3922
PATRICK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1057796
(State or other jurisdiction of (I.R.S. Employer
incorporated or organization) Identification No.)
1800 South 14th Street, Elkhart, IN 46516
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (219) 294-7511
NONE
Former name, former address and former fiscal year, if changed since last
report.
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
Shares of Common Stock Outstanding as of April 30, 1997: 5,965,266
PATRICK INDUSTRIES, INC.
INDEX
Page No.
PART I: Financial Information
Unaudited Condensed Balance Sheets
March 31, 1997 & December 31, 1996 3
Unaudited Condensed Statements of Income
Three Months Ended March 31, 1997 & 1996, 4
Unaudited Condensed Statements of Cash Flows
Three Months Ended March 31, 1997 & 1996 5
Notes to Unaudited Condensed Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II: Other Information 10
Signatures 11
PART I: FINANCIAL INFORMATION
PATRICK INDUSTRIES, INC. CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Note)
MARCH 31 DECEMBER 31
1997 1996
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 798,897 $ 6,441,482
Investment in Marketable Securities 5,000,000 ---
Accounts Receivable, Net 27,602,693 15,208,671
Inventories 38,345,279 39,342,506
Other 466,799 393,520
Total Current Assets $ 72,213,668 $ 61,386,179
PROPERTY AND EQUIPMENT, at cost $ 68,980,268 $ 65,630,289
Less Accumulated Depreciation 27,058,814 25,870,995
$ 41,921,454 $ 39,759,294
INTANGIBLE AND OTHER ASSETS $ 5,402,646 $ 5,460,793
Total Assets $ 119,537,768 $ 106,606,266
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Maturities of Long-term Debt $ 1,138,517 $ 1,138,517
Accounts Payable 21,330,905 10,545,175
Accrued Expenses and Taxes Payable 4,441,322 4,056,031
Total Current Liabilities $ 26,910,744 $ 15,739,723
LONG-TERM DEBT, NET of CURRENT MATURITIES $ 26,044,106 $ 26,151,527
DEFERRED COMPENSATION OBLIGATIONS $ 1,116,607 $ 1,069,357
DEFERRED INCOME TAX CREDITS $ 1,306,339 $ 1,350,000
SHAREHOLDERS' EQUITY
Common Stock $ 22,154,619 $ 22,138,494
Retained Earnings 42,005,353 40,157,165
Total Stockholders' Equity $ 64,159,972 $ 62,295,659
Total Liabilities and Stockholders' Equity $ 119,537,768 $ 106,606,266
NOTE: The balance sheet at December 31, 1996 has been taken from the audited
financial statements at that date and condensed.
See accompanying notes to Unaudited Condensed Financial Statements.
</TABLE>
PATRICK INDUSTRIES, INC.
UNAUDITED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1996
<S> <C> <C>
NET SALES $96,935,710 $93,767,541
COST AND EXPENSES
Cost of Goods Sold $84,979,168 $82,014,145
Warehouse and Delivery Expenses 3,395,562 3,364,653
Selling and Administrative Expenses 4,853,227 4,924,656
Financial Expenses, Net 287,909 296,881
$93,515,866 $90,600,335
INCOME BEFORE INCOME TAXES $ 3,419,844 $ 3,167,206
INCOME TAXES 1,333,700 1,222,500
NET INCOME $ 2,086,144 $ 1,944,706
EARNINGS PER COMMON SHARE $ .35 $ .33
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,964,594 5,967,157
See accompanying notes to Unaudited Condensed Financial Statements.
</TABLE>
PATRICK INDUSTRIES, INC.
UNAUDITED CONDENSED STATEMENTS OF
CASH FLOW
<TABLE>
<CAPTION> THREE MONTHS ENDED
MARCH 31
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,086,144 $ 1,944,706
Adjustment to Reconcile Net Income to Net Cash:
Depreciation and Amortization 1,397,612 1,061,881
Other (28,353) (378)
Change in Assets and Liabilities:
Decrease (Increase) in:
Accounts Receivable (12,394,022) (5,868,551)
Inventories 997,227 1,601,926
Other (73,279) 167,706
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 9,836,649 3,756,025
Income Taxes Payable and Deferred Taxes 1,313,700 1,008,568
Deferred Compensation 47,250 35,749
Net Cash Provided by (Used in) Operating Activities $ 3,182,928 $ 3,707,632
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures $ (3,494,664) $ (1,458,961)
Investment in Marketable Securities (600,000) - - -
Other 15,139 23,273
Net Cash (Used in) Investing Activities $ (4,079,525) $ (1,435,688)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Dividend $ (237,954) $ (238,439)
Proceeds from Options 16,125 23,978
Principal Payments on Debt (107,421) - - -
Reacquisition of Common Stock - - - (356,250)
Other (16,738) 80,549
Net Cash Provided by (Used In) Financing Activities $ (345,988) $ (490,162)
Increase (Decrease) in Cash and Cash Equivalents $ (1,242,585) $ 1,781,782
CASH and CASH EQUIVALENTS, BEGINNING $ 2,041,482 $ 1,349,709
CASH and CASH EQUIVALENTS, ENDING $ 798,897 $ 3,131,491
See accompanying notes to Unaudited Condensed Financial Statements.
</TABLE>
PATRICK INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Registrant, the accompanying unaudited condensed
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly financial position as of
March 31, 1997, and December 31, 1996, and the results of operations and
cash flows for the three months ended March 31, 1997 and 1996.
2. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in Registrant's December 31, 1996
audited financial statements. The results of operations for the three
months periods ended March 31, 1997 and 1996 are not necessarily indicative
of the results to be expected for the full year.
3. The inventories on March 31, 1997 and December 31, 1996 consist of the
following classes:
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
<S> <C> <C>
Raw Materials $22,861,972 $24,204,345
Work in Process 1,602,117 1,029,127
Finished 3,444,790 5,311,075
Total Manufactured Goods $27,908,879 $30,544,547
Distribution Products 10,436,400 8,797,959
TOTAL INVENTORIES $38,345,279 $39,342,506
</TABLE>
The inventories are stated at the lower of cost, First-In, First-Out (FIFO)
method, or market.
4. The earnings per common share for the three months ended March 31, 1997 and
1996 have been computed based on the weighted average number of shares of
common stock outstanding of 5,964,594 and 5,967,157 respectively.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share."
SFAS No. 128 requires the presentation of both basic earnings per share and
diluted earnings per share. Basic earnings per share will be computed by
dividing net income by the weighted-average number of common shares
outstanding. SFAS No. 128 will be effective for the Company's 1997 annual
report. If SFAS No. 128 had been in effect during the first quarter of
1997, there would have been no change in basic earnings per share.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
GENERAL
The Registrant's business has shown significant revenue growth since 1991,
with annual sales increasing from $143 million to $403 million in five years.
This revenue growth showed lower increases in the fourth quarter of 1996 and the
first quarter of 1997 than had been recorded in prior years.
The following table sets forth the percentage relationship to net sales of
certain items in the Registrant's Statements of Operations:
<TABLE>
<CAPTION>
Quarterly Ended
March 31,
1997 1996 1995
<S> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0%
Cost of Sales 87.7 87.5 86.3
Gross Profit 12.3 12.5 13.7
Warehouse and Delivery 3.5 3.6 3.7
Selling, General & Administrative 5.0 5.2 5.3
Operating Income 3.8 3.7 4.7
Net Income 2.2 2.1 2.7
</TABLE>
RESULTS OF OPERATIONS
Quarter Ended March 31, 1997 Compared to Quarter Ended March 31, 1996
Net Sales. Net sales increased by $3.1 million, or 3.4%, from $93.8
million in the quarter ended March 31, 1996 to $96.9 million in the quarter
ended March 31, 1997. This sales increase was attributable to higher sales
penetration in the Industrial and Recreational Vehicle industries. The
Registrant's sales are 66% to Manufactured Housing, 16% to Recreational
Vehicles, and 18% to other industrial industries.
Gross Profit. Gross Profit increased by approximately $200,000, or 1.7%,
from $11.7 million in the first quarter of 1996, to $11.9 million in the same
1997 quarter. As a percentage of net sales, gross profit decreased from 12.5%
in the first quarter of 1996 to 12.3% in 1997. This decrease in gross profit
was due to highly competitive market pricing of most of Registrant's products in
the first quarter of 1997.
Warehouse and Delivery Expenses. Warehouse and delivery expenses increased
approximately $31,000 or 0.9%, remaining at $3.4 million for both first
quarters. As a percentage of net sales, warehouse and delivery expenses
decreased from 3.6% in the 1996 first quarter to 3.5% in 1997.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by approximately $71,000, or 1.5%, from $4.9
million in 1996, to $4.8 million in 1997. As a percentage of net sales,
selling, general and administrative expenses decreased from 5.2% in 1996 to 5.0%
in 1997.
Operating Income. Operating income increased by approximately $243,000
because of the increased gross profit and the overall reduction of operating
expenses remaining about the same as in 1996. As a percentage of net sales,
operating income increased from 3.7% in 1996 to 3.8% in the 1997 first quarter.
Financial Expense, Net. Interest expense decreased by approximately $9,000
in 1997 from 297,000 in 1996 to $288,000 in 1997. The Registrant's borrowing
level was slightly lower in the 1997 first quarter and more funds were invested
than in 1996.
Net Income. Net income increased by approximately $141,000 from $1.9
million in the 1996 first quarter to $2.0 million in 1997. This increase is
primarily attributable to the factors described above.
Quarter Ended March 31, 1996 Compared to Quarter Ended March 31, 1995
Net Sales. Net sales increased by $6.7 million, or 7.7%, from $87.0
million for the quarter ended March 31, 1995, to $93.8 million in the quarter
ended March 31, 1996. This sales increase was attributable to 7% increases in
units shipped by the Manufactured Housing industry, which represents
approximately 68% of the Registrant's sales. The Registrant's sales to the
Recreational Vehicle industry were down as a percent of total company sales as a
result of a slight decline in units produced in that industry, which represents
approximately 16% of Registrant's sales.
Gross Profit. Gross profit decreased by approximately $217,000, or 1.8%,
from $11.9 million in the first quarter of 1995, to $11.7 million in the same
1996 quarter. As a percentage of net sales, gross profit decreased from 13.7%
in first quarter 1995 to 12.5% in 1996. This decrease in gross profit was the
result of lower volume and higher inventory costs in the Registrant's aluminum
extrusion division and lower volume, moving, and start-up costs at the new
Oregon facility. The Registrant also experienced competitive market pricing of
certain products in the first quarter of 1996.
Warehouse and Delivery Expenses. Warehouse and delivery expenses increased
approximately $114,000, or 3.5%, from $3.3 million in 1995, to $3.4 million in
the first quarter of 1996. As a percentage of net sales, warehouse and delivery
expenses decreased from 3.7% in 1995 to 3.6% in the 1996 first quarter.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by approximately $348,000, or 7.6%, from $4.5
million in 1995, to $4.9 million in 1996. As a percentage of net sales,
selling, general and administrative expenses decreased from 5.3% in 1995 to 5.2%
in 1996.
Operating Income. Operating income decreased by approximately $680,000
because of the reduced gross profit and increases in warehouse and delivery, and
selling, general and administrative expenses. As a percentage of sales,
operating income decreased from 4.7% in 1995 to 3.7% in the 1996 first quarter.
Financial Expense, Net. Interest expense decreased by approximately
$51,000 from $348,000 in 1995 to $297,000 in the first quarter of 1996. The
Registrant's borrowing levels in the 1996 period were slightly higher but at
lower rates.
Net Income. Net income decreased by approximately $371,000 from $2.3
million in 1995 to $1.9 million in 1996 for the first quarter ended March 31.
This decrease is attributable to the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
The Registrant's primary capital requirements are to meet working capital
needs, support its capital expenditure plans and meet debt service requirements.
The Registrant, in September, 1995, issued to an insurance company in a
private placement $18,000,000 of senior unsecured notes. The ten year notes
bear interest at 6.82%, with semi-annual interest payments beginning in 1996 and
seven annual principal repayments beginning September 15, 1999. These funds
were used to reduce existing bank debt and for working capital needs.
The Registrant had a bank financing agreement (the Credit Agreement) with
NBD Bank, N.A. for a term loan and a revolver loan. In September, 1995 with
funds from the insurance company private placement, the Registrant prepaid the
term loan in full and paid the revolver outstanding balance. The Revolving
Credit Agreement was amended on February 13, 1997 and provides revolver loan
availability of $10,000,000 with maturity in three years. Pursuant to the
Credit Agreement, the Registrant is required to maintain certain financial
ratios, all of which are currently complied with.
The Registrant believes that cash generated from operations and borrowings
under its credit agreements will be sufficient to fund its working capital
requirements and capital expenditures as currently contemplated.
SEASONALITY
Manufacturing operations in the Manufactured Housing and Recreational
Vehicle industries historically have been seasonal and are generally at the
highest levels when the climate is temperate. Accordingly, the Registrant's
sales and profits are generally highest in the second and third quarters.
INFLATION
The Registrant does not believe that inflation had a material effect on
results of operations for the periods presented.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10 Credit Agreement dated as of February 2, 1997 among the
Registrant and NBD Bank
27 Financial Data Schedule
(b) There were no Reports filed on Form 8-K
SIGNATURES
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.
PATRICK INDUSTRIES, INC.
(Registrant)
Date May 12, 1997 /S/Mervin D. Lung
Mervin D. Lung
(Chairman of the Board)
Date May 12, 1997 /S/David D. Lung
David D. Lung
(President)
Date May 12, 1997 /S/Keith V. Kankel
Keith V. Kankel
(Vice President Finance)
(Principal Accounting Officer)
EXHIBIT 10
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of February 2, 1997 (this "Agreement"), is
by and between PATRICK INDUSTRIES, INC., an Indiana corporation (the "Company"),
and NBD BANK, an Indiana banking corporation of Elkhart, Indiana (the "Bank").
WITNESSETH:
WHEREAS, the Company, the Bank and NBD Bank, a Michigan banking corporation
formerly known as NBD Bank, N.A. have heretofore entered into a Credit Agreement
dated as of February 2, 1994, as amended by a First Amendment to Credit
Agreement dated as of October 27, 1994, by a Second Amendment to Credit
Agreement dated as of June 28, 1995, by a Request for Reduction of Commitment
dated October 31, 1995, and by a Letter Agreement dated as of November 30, 1995
(such Credit Agreement, as amended, referred to herein as the "Original Credit
Agreement"), which provides for revolving credit loans to the Company for its
general corporate purposes; and
WHEREAS, the Company desires to amend and restate the Original Credit
Agreement, as evidenced by this Agreement; and
WHEREAS, the Company desires to obtain a revolving credit facility in the
amount of $10,000,000, in order to provide funds for its corporate purposes, and
the Bank is willing to establish such revolving credit facility in favor of the
Company on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree that the Original Credit
Agreement is hereby amended and restated as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. As used herein the following terms shall have
the following respective meanings:
"Affiliate", when used with respect to any person shall mean any other
person which, directly or indirectly, controls or is controlled by or is under
common control with such person. For purposes of this definition "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), with respect to any person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract or otherwise.
"Bonds" shall mean (i) the Six Million Dollars ($6,000,000) principal
amount State of Oregon Economic Development Revenue Bonds, Series CLI (Patrick
Industries, Inc. Project), dated December 22, 1994, (ii) the Three Million Nine
Hundred Thousand Dollars ($3,900,000) principal amount The Indiana Development
Finance Authority Limited Obligation Refunding Revenue Bonds (Patrick
Industries, Inc. Project), Series 1991, dated December 5, 1991, and (iii) all
other obligations of the Company or any of its Subsidiaries to the Bank under or
in connection with any future bond issuance for the benefit of the Company or
any of its Subsidiaries.
"Bond Documents" shall mean all documents and instruments governing,
evidencing or securing the Bonds.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which the Bank is not open to the public for carrying on substantially all of
its banking functions.
"Capital Lease" of any person shall mean any lease which, in accordance
with generally accepted accounting principles, is or should be capitalized on
the books of such person.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations thereunder.
"Commitment" shall mean the commitment of the Bank to make Loans pursuant
to Section 2.1, in amounts not exceeding in aggregate principal amount
outstanding at any time the Revolving Credit Commitment as such amount may be
reduced from time to time pursuant to Section 2.2.
"consolidated" shall mean, when used with reference to any financial term
in this Agreement, the aggregate for two or more persons of the amounts
signified by such term for all such persons determined on a consolidated basis
in accordance with generally accepted accounting principles.
"Contingent Liabilities" of any person shall mean, as of any date, all
obligations of such person or of others for which such person is contingently
liable, as obligor, guarantor, surety or in any other capacity, or in respect of
which obligations such person assures a creditor against loss or agrees to take
any action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including
without limitation all reimbursement obligations of such person in respect of
any letters of credit, surety bonds or similar obligations and all obligations
of such person to advance funds to, or to purchase assets, property or services
from, any other person in order to maintain the financial condition of such
other person.
"Cumulative Net Income" of any person shall mean, as of any date, the net
income (after deduction for income and other taxes of such person determined by
reference to income or profits of such person) for the period commencing on the
specified date through the end of the most recently completed fiscal year of
such person (but without reduction for any net loss incurred for any fiscal year
during such period), taken as one accounting period, all as determined in
accordance with generally accepted accounting principles.
"Current Assets" and "Current Liabilities" of any person shall mean, as of
any date, all assets or liabilities, respectively, of such person which, in
accordance with generally accepted accounting principles, should be classified
as current assets or current liabilities, respectively, on a balance sheet of
such person.
"Default" shall mean any of the events or conditions described in Section
6.1 which might become an Event of Default with notice or lapse of time or both.
"Dollars" and "$" shall mean the lawful money of the United States of
America.
"Effective Date" shall mean the effective date specified in the final
paragraph of this Agreement.
"Environmental Laws" shall mean all applicable provisions of law, statute,
ordinances, rules, regulations, judgments, writs, injunctions, decrees, orders,
awards and standards promulgated by the government of the United States of
America or any foreign government or by any state, province, municipality or
other political subdivision thereof or therein or by any court, agency or
instrumentality, regulatory authority or commission of any of the foregoing
concerning the protection of, or regulating the discharge of substances into,
the environment.
"ERISA " shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations thereunder.
"ERISA Affiliate" shall mean, with respect to any person, any trade or
business (whether or not incorporated) which, together with such person or any
Subsidiary of such person, would be treated as a single employer under Section
414 of the Code.
"Eurodollar Business Day" shall mean, with respect to any Eurodollar Rate
Loan, a day which is both a Business Day and a day on which dealings in Dollar
deposits are carried out in the London interbank market with respect to such
Eurodollar Rate Loan.
"Eurodollar Interest Period" shall mean, with respect to any Eurodollar
Rate Loan, the period commencing on the day such Eurodollar Rate Loan is made or
converted to a Eurodollar Rate Loan and ending on the date one, two, three or
six months thereafter, as the Company may elect under Section 2.4 or Section
2.7, and each subsequent period commencing on the last day of the immediately
preceding Eurodollar Interest Period and ending on the date one, two, three or
six months thereafter, as the Company may elect under Section 2.4 or Section
2.7, provided, however, that (a) any Eurodollar Interest Period which commences
on the last Eurodollar Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Eurodollar Business Day of the appropriate
subsequent calendar month, (b) each Eurodollar Interest Period which would
otherwise end on a day which is not a Eurodollar Business Day shall end on the
next succeeding Eurodollar Business Day or, if such next succeeding Eurodollar
Business Day falls in the next succeeding calendar month, on the next preceding
Eurodollar Business Day, and (c) no Eurodollar Interest Period for any Revolving
Credit Loan which would end after the Revolving Credit Termination Date shall be
permitted.
"Eurodollar Margin" shall mean the Revolving Credit Loan Eurodollar Margin.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Rate Loan and
the related Eurodollar Interest Period, the per annum rate that is equal to the
sum of:
1. the Eurodollar Margin, plus
2. the rate per annum obtained by dividing (i) the per annum rate of
interest at which deposits in Dollars for such Eurodollar Interest Period and in
an aggregate amount comparable to the amount of such Eurodollar Rate Loan are
offered to the Bank by other prime banks in the London interbank market at
approximately 11:00 a.m. London time on the second Eurodollar Business Day prior
to the first day of such Eurodollar Interest Period by (ii) an amount equal to
one minus the stated maximum rate (expressed as a decimal) of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) that is specified on the first day of
such Eurodollar Interest Period by the Board of Governors of the Federal Reserve
System (or any successor agency thereto) for determining the maximum reserve
requirement with respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) maintained by a member
bank of such System;
all as conclusively determined by the Bank, such sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%).
"Eurodollar Rate Loan" shall mean any Loan which bears interest at the
Eurodollar Rate.
"Event of Default" shall mean any of the events or conditions described in
Section 6.1.
"Floating Rate" shall mean the per annum rate equal to the Prime Rate in
effect from time to time, which Floating Rate shall change simultaneously with
any change in such Prime Rate.
"Floating Rate Loan" shall mean any Loan which bears interest at the
Floating Rate.
"generally accepted accounting principles" shall mean generally accepted
accounting principles applied on a basis consistent with that reflected in the
financial statements referred to in Section 4.6.
"Hazardous Materials" shall mean any flammable explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous or toxic substances
or related materials defined in the comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et
seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, et seq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Sections 6901, et seq.) and in the regulations adopted and
publications promulgated pursuant thereto, or any other applicable federal,
state or local government law, ordinance, rule or regulation.
"Indebtedness" of any person shall mean, as of any date, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person as lessee under any Capital Lease, (c) all obligations which are secured
by any Lien existing on any asset or property of such person whether or not the
obligation secured thereby shall have been assumed by such person, (d) the
unpaid purchase price for goods, property or services acquired by such person,
except for trade accounts payable arising in the ordinary course of business
that are not past due, (e) all obligations of such person to purchase goods,
property or services where payment therefor is required regardless of whether
delivery of such goods or property or the performance of such services is ever
made or tendered (generally referred to as "take or pay contracts"), (f) all
liabilities of such person in respect of Unfunded Benefit Liabilities under any
plan of such person or of any of its ERISA Affiliates, (g) all obligations of
such person in respect of any interest rate or currency swap, rate cap or other
similar transaction (valued in an amount equal to the highest termination
payment, if any, that would be payable by such person upon termination for any
reason on the date of determination), and (h) all obligations of others similar
in character to those described in clauses (a) through (g) of this definition
for which such person is contingently liable, as obligor, guarantor, surety or
in any other capacity, or in respect of which obligations such person assures a
creditor against loss or agrees to take any action to prevent any such loss
(other than endorsements of negotiable instruments for collection in the
ordinary course of business), including without limitation all reimbursement
obligations of such person in respect of letters of credit, surety bonds or
similar obligations and all obligations of such person to advance funds to, or
to purchase assets, property or services from, any other person in order to
maintain the financial condition of such other person.
"Interest Payment Date" shall mean (a) with respect to any Eurodollar Rate
Loan, the last day of each Eurodollar Interest Period with respect to such
Eurodollar Rate Loan and, in the case of any Eurodollar Interest Period
exceeding three months, those days that occur during such Eurodollar Interest
Period at intervals of three months, after the first day of such Eurodollar
Interest Period, and (b) in all other cases, the last Business Day of each
March, June, September and December occurring after the Effective Date,
commencing with the first such Business Day occurring after the Effective Date.
"Lien" shall mean any pledge, assignment, hypothecation, mortgage, security
interest, deposit arrangement, option, conditional sale or title retaining
contract, sale and leaseback transaction, financing statement filing, lessor's
or lessee's interest under any lease, subordination of any claim or right, or
any other type of lien, charge, encumbrance, preferential arrangement or other
claim or right.
"Loans" shall mean the Revolving Credit Loans, and "Loan" shall mean any
Revolving Credit Loan.
"London Banking Day" shall mean any day on which dealings and deposits in
Dollars are transacted in the London interbank market.
"Multiemployer Plan" shall mean any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"New York Banking Day" shall mean any day other than a Saturday, a Sunday
or a day on which commercial banks in New York City are required or authorized
to be closed.
"Notes" shall mean the Revolving Credit Note, and "Note" shall mean the
Revolving Credit Note.
"Overdue Rate" shall mean (a) in respect of principal of Floating Rate
Loans, a rate per annum that is equal to the sum of three percent (3%) per annum
plus the Floating Rate, (b) in respect of principal of Eurodollar Rate Loans, a
rate per annum that is equal to the sum of three percent (3%) per annum plus the
per annum rate in effect thereon until the end of the then current Eurodollar
Interest Period for such Loan and, thereafter, a rate per annum that is equal to
the sum of three percent (3%) per annum plus the Floating Rate, and (c) in
respect of other amounts payable by the Company hereunder, a per annum rate that
is equal to the sum of three percent (3%) per annum plus the Floating Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean Liens permitted by Section 5.2(f) hereof.
"person" shall include an individual, a corporation, an association, a
partnership, a trust or estate, a joint stock company, an unincorporated
organization, a joint venture, a trade or business (whether or not
incorporated), a government (foreign or domestic) and any agency or political
subdivision thereof, or any other entity.
"Plan" shall mean, with respect to any person, any pension plan (other than
a Multiemployer Plan) subject to Title IV of ERISA or to the minimum funding
standards of Section 412 of the Code which has been established or maintained by
such person, any Subsidiary of such person or any ERISA Affiliate, or by any
other person if such person, any Subsidiary of such person or any ERISA
Affiliate could have liability with respect to such pension plan.
"Prime Rate" shall mean the per annum rate announced by the Bank from time
to time as its "prime rate" (it being acknowledged that such announced rate may
not necessarily be the lowest rate charged by the Bank to any of its customers),
which Prime Rate shall change simultaneously with any change in such announced
rate.
"Prohibited Transaction" shall mean any transaction involving any Plan
which is proscribed by Section 406 of ERISA or Section 4975 of the Code.
"Reportable Event" shall mean a reportable event as described in Section
4043(b) of ERISA including those events as to which the thirty (30) day notice
period is waived under Part 2615 of the regulations promulgated by the PBGC
under ERISA.
"Revolving Credit Commitment" shall mean, with respect to the Bank, the
commitment of the Bank to make Revolving Credit Loans pursuant to Section 2.1(a)
in amounts not exceeding in aggregate principal amount outstanding at any time
of $10,000,000.
"Revolving Credit Loan Eurodollar Margin" shall mean, with respect to any
Revolving Credit Loan that is also a Eurodollar Rate Loan, (i) three-quarters of
one percent (0.75%) per annum if the ratio of consolidated Total Liabilities to
consolidated Tangible Net Worth of the Company and its Subsidiaries as of the
end of the most recent fiscal quarter of the Company for which financial
statements of the Company have been delivered pursuant to Section 5.1(d)(ii) is
less than 1.25 to 1.00; (ii) one percent (1.00%) per annum if the ratio of
consolidated Total Liabilities to consolidated Tangible Net Worth of the Company
and its Subsidiaries as of the end of the most recent fiscal quarter of the
Company for which financial statements of the Company have been delivered
pursuant to Section 5.1(d)(ii) is equal to or greater than 1.25 to 1.00, but
less than 1.50 to 1.00; and (iii) one and one-quarter percent (1.25%) per annum
if the ratio of consolidated Total Liabilities to consolidated Tangible Net
Worth of the Company and its Subsidiaries as of the end of the most recent
fiscal quarter of the Company for which financial statements of the Company have
been delivered pursuant to Section 5.1(d)(ii) is equal to or greater than 1.50
to 1.00, but less than 1.75 to 1.00. Such Revolving Credit Loan Eurodollar
Margin shall be adjusted on the first Business Day of the month following
receipt of the financial statements of the Company pursuant to Section
5.1(d)(ii). The Company shall not be entitled to request a Eurodollar Rate Loan
or continue a Eurodollar Rate Loan as a Eurodollar Rate Loan if the ratio of
consolidated Total Liabilities to consolidated Tangible Net Worth of the Company
and its Subsidiaries as of the end of the most recent fiscal quarter of the
Company for which financial statements of the Company have been delivered
pursuant to Section 5.1(d)(ii) is greater than or equal to 1.75 to 1.00.
"Revolving Credit Loans" shall mean the Loans under Section 2.4 evidenced
by the Revolving Credit Note and made pursuant to Section 2.1(a) and "Revolving
Credit Loan" shall mean any of the Revolving Credit Loans.
"Revolving Credit Note" shall mean the promissory note of the Company
evidencing the Revolving Credit Loans, in substantially the form of Exhibit A
hereto, as amended or modified from time to time and together with any
promissory note or notes issued in exchange or replacement therefor.
"Revolving Credit Termination Date" shall mean the earlier to occur of (a)
February 2, 2000 and (b) the date on which the Commitment shall be terminated
pursuant to Section 2.2 or Section 6.2.
"Senior Notes Documents" shall mean all documents relating to the issuance
by the Company in September of 1995 to Nationwide Life Insurance Company of
$18,000,000 in senior unsecured notes for 10 years at a fixed rate of 6.82%.
"Subsidiary" of any person shall mean any other person (whether now
existing or hereafter organized or acquired) in which (other than directors
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and of
record, by such person or by one or more of the other Subsidiaries of such
person or by any combination thereof. Unless otherwise specified, reference to
"Subsidiary" shall mean a Subsidiary of the Company.
"Tangible Net Worth" of any person shall mean, as of any date, (a) the
amount of any capital stock, paid in capital and similar equity accounts plus
(or minus in the case of a deficit) the capital surplus and retained earnings of
such person and the amount of any foreign currency translation adjustment
account shown as a capital account of such person, less (b) the net book value
of all items of the following character which are included in the assets of such
person: (i) goodwill, including without limitation, the excess of cost over
book value of any asset, (ii) organization or experimental expenses, (iii)
unamortized debt discount and expense, (iv) patents, trademarks, trade names and
copyrights, (v) treasury stock, (vi) deferred taxes and deferred charges, (vii)
franchises, licenses and permits, and (viii) other assets which are deemed
intangible assets under generally accepted accounting principles.
"Total Liabilities" of any person shall mean, as of any date, all
obligations which, in accordance with generally accepted accounting principles,
are or should be classified as liabilities on a balance sheet of such person and
all Contingent Liabilities of such person.
"Unfunded Benefit Liabilities" shall mean, with respect to any Plan as of
any date, the amount of the unfunded benefit liabilities determined in
accordance with Section 4001(a)(18) of ERISA.
"Working Capital" of any person shall mean, as of any date, the amount, if
any, by which the Current Assets of such person exceeds the Current Liabilities
of such person.
1.2 Other Definitions; Rules of Construction. As used herein, the terms
"Bank", "Company", "this Agreement", and the "Original Credit Agreement" shall
have the respective meanings ascribed thereto in the introductory paragraphs of
this Agreement. Such terms, together with the other terms defined in Section
1.1, shall include both the singular and the plural forms thereof and shall be
construed accordingly. All computations required hereunder and all financial
terms used herein shall be made or construed in accordance with generally
accepted accounting principles unless such principles are inconsistent with the
express requirements of this Agreement. Use of the terms "herein", "hereof",
and "hereunder" shall be deemed references to this Agreement in its entirety and
not to the Section or clause in which such term appears. References to
"Sections" and "subsections" shall be to Sections and subsections, respectively,
of this Agreement unless otherwise specifically provided.
ARTICLE II
THE COMMITMENT AND THE LOANS
2.1 Commitment of the Bank.
(a) Revolving Credit Loans. The Bank agrees, subject to the terms
and conditions of this Agreement, to make Revolving Credit Loans to the Company
pursuant to Section 2.4, from time to time from and including the Effective Date
to but excluding the Revolving Credit Termination Date, not to exceed in
aggregate principal amount at any time outstanding the Revolving Credit
Commitment.
2.2 Termination and Reduction of Revolving Credit Commitment. The Company
shall have the right to terminate or reduce the Revolving Credit Commitment at
any time and from time to time, provided that (a) the Company shall give notice
of such termination or reduction to the Bank in substantially the form of
Exhibit B attached hereto, specifying the amount and effective date thereof, (b)
each partial reduction of the Revolving Credit Commitment shall be in a minimum
amount of $500,000 and in integral multiples thereof, (c) no such termination or
reduction shall be permitted with respect to any portion of the Revolving Credit
Commitment as to which a request for a Revolving Credit Loan pursuant to Section
2.4 or Section 2.7 is then pending, and (d) the Revolving Credit Commitment may
not be terminated if any Revolving Credit Loans are then outstanding and may not
be reduced below the principal amount of Revolving Credit Loans then
outstanding. The Revolving Credit Commitment or any portion thereof terminated
or reduced pursuant to this Section 2.2 may not be reinstated.
2.3 Fees. (a) The Company agrees to pay to the Bank a commitment fee on
the daily average unused amount of the Revolving Credit Commitment for the
period from and including the Effective Date to but excluding the Revolving
Credit Termination Date, at a rate equal to one-quarter of one percent (0.25%)
per annum. Accrued commitment fees shall be payable quarterly in arrears on the
last Business Day of each March, June, September and December, commencing on the
first such Business Day occurring after the Effective Date, and on the Revolving
Credit Termination Date.
(b) In addition to the commitment fees payable pursuant to Section
2.3(a), the Company agrees to pay to the Bank on the Effective Date a facility
fee in the amount of $12,500.
2.4 Disbursement of Loans. (a) The Company shall give the Bank notice of
its request for each Loan in substantially the form of Exhibit C hereto not
later than 10:00 a.m. Elkhart, Indiana time (i) three Eurodollar Business Days
prior to the date such Loan is requested to be made if such Loan is to be made
as a Eurodollar Rate Loan, and (ii) one Business Day prior to the date such Loan
is requested to be made in all other cases, which notice shall specify whether a
Eurodollar Rate Loan or Floating Rate Loan is requested and, in the case of each
requested Eurodollar Rate Loan, the Eurodollar Interest Period to be initially
applicable to such Loan. Subject to the terms and conditions of this Agreement,
the proceeds of each such requested Loan shall be made available to the Company
by depositing the proceeds thereof, in immediately available funds, in an
account maintained and designated by the Company at the principal office of the
Bank.
(b) All Revolving Credit Loans made under this Section 2.4 shall be
evidenced by the Revolving Credit Note, and all such Loans shall be due and
payable and bear interest as provided in Article III. The Bank is hereby
authorized by the Company to record on the schedule attached to the Revolving
Credit Note, or on its books and records, the date, amount and type of each Loan
and the duration of the related Eurodollar Interest Period (if applicable), the
amount of each payment or prepayment of principal thereon, and the other
information provided for on such schedule, which schedule or books or records,
as the case may be, shall constitute prima facie evidence of the information so
recorded, provided, however, that the failure of the Bank to record, or any
error in recording, any such information shall not relieve the Company of its
obligation to repay the outstanding principal amount of the Loans, all accrued
interest thereon and other amounts payable with respect thereto in accordance
with the terms of the Notes and this Agreement. Subject to the terms and
conditions of this Agreement, the Company may borrow Revolving Credit Loans
under this Section 2.4, prepay Revolving Credit Loans pursuant to Section 3.1
and reborrow Revolving Credit Loans under this Section 2.4 and Section 2.7.
2.5 Conditions for First Loan. The obligation of the Bank to make the
first Loan hereunder is subject to receive by the Bank of the following
documents and completion of the following matters, in form and substance
satisfactory to the Bank:
(a) Charter Documents. A certificate of a duly authorized officer of
the Company certifying that the Articles of Incorporation and By-Laws of the
Company provided to the Bank in connection with the Original Credit Agreement
remain in full force and effect without modification or amendment in any respect
as of the Effective Date except as set forth in such certificate;
(b) Corporate Authorizations. Copies of all authorizing resolutions
and evidence of other corporate action taken by the Company to authorize the
execution, delivery and performance by the Company of this Agreement and the
Notes and the consummation by the Company of the transactions contemplated
hereby, certified as true and correct as of the Effective Date by a duly
authorized officer of the Company;
(c) Good Standing Certificates. Certificates of recent date of the
appropriate authority or official of the State of Indiana certifying as to the
good standing of the Company;
(d) Notes. The Revolving Credit Note, duly executed on behalf of the
Company;
(e) Legal Opinion. The favorable written opinion of Warrick & Boyn,
counsel for the Company, as to such matters as the Bank may reasonably request;
(f) Lien Searches. UCC and other Lien searches in form and substance
satisfactory to the Bank;
(g) Fee. The facility fee described in Section 2.3(b); and
(h) Senior Notes Documents. Certified copies of the Senior Notes
Documents.
(i) Other Documents. Such other documents as the Bank may reasonably
request.
2.6 Further Conditions for Loans. The obligation of the Bank to make any
Loan (including the first Loan) or any continuation or conversion under Section
2.7, is further subject to the satisfaction of the following conditions
precedent:
(a) The representations and warranties contained in Article IV hereof
shall be true and correct on and as of the date such Loan is made (both before
and after such Loan is made), as if such representations and warranties were
made on and as of such date; and
(b) No Default or Event of Default shall have occurred and be
continuing on the date such Loan is made (whether before or after such Loan is
made).
The Company shall be deemed to have made a representation and warranty the Bank
at the time of the making of, and the continuation or conversion of, each Loan
to the effect set forth in clauses (a) and (b) of this Section 2.6. For
purposes of this Section 2.6, the representations and warranties contained in
Section 4.6 hereof shall be deemed made with respect to both the financial
statements referred to therein and the most recent financial statements
delivered pursuant to Sections 5.1(d)(ii) and (iii).
2.7 Subsequent Elections as to Loans. The Company may elect (a) to
continue a Eurodollar Rate Loan, or a portion thereof, as a Eurodollar Rate
Loan, (b) may elect to convert a Eurodollar Rate Loan, or a portion thereof, to
a Floating Rate Loan, or (c) may elect to convert a Floating Rate Loan, or a
portion thereof, to a Eurodollar Rate Loan, in each case by giving notice
thereof to the Bank in substantially the form of Exhibit D hereto not later than
10:00 a.m. Elkhart, Indiana time three Eurodollar Business Days prior to the
date any such continuation of or conversion to a Eurodollar Rate Loan is to be
effective and not later than 10:00 a.m. Elkhart, Indiana time the same Business
Day prior to the date such continuation or conversion is to be effective in all
other cases, provided that an outstanding Eurodollar Rate Loan may only be
converted on the last day of the then current Eurodollar Interest Period with
respect to such Loan, and provided, further, if a continuation of a Loan as, or
a conversion of a Loan to, a Eurodollar Rate Loan is requested, such notice
shall also specify the Eurodollar Interest Period to be applicable thereto upon
such continuation or conversion. If the Company shall not timely deliver such a
notice with respect to any outstanding Eurodollar Rate Loan, the Company shall
be deemed to have elected to convert such Eurodollar Rate Loan to a Floating
Rate Loan on the last day of the then current Eurodollar Interest Period with
respect to such Loan.
2.8 Limitation of Requests and Elections. Notwithstanding any other
provision of this Agreement to the contrary, if, upon receiving a request for a
Eurodollar Rate Loan pursuant to Section 2.4, or a request for a continuation of
a Eurodollar Rate Loan as a Eurodollar Rate Loan, or a request for a conversion
of a Floating Rate Loan to a Eurodollar Rate Loan pursuant to Section 2.7, (a)
deposits in Dollars for periods comparable to the Eurodollar Interest Period
elected by the Company are not available to the Bank in the London interbank
market, (b) the Bank reasonably and in good faith determines that the Eurodollar
Rate will not adequately and fairly reflect the cost to the Bank of making,
funding or maintaining the related Eurodollar Rate Loan, such that the Bank
would suffer an economic loss on such Eurodollar Rate Loan, or (c) by reason of
national or international financial, political or economic conditions or by
reason of any applicable law, treaty, rule or regulation (whether domestic or
foreign) now or hereafter in effect, or the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline, request or
directive of such authority (whether or not having the force of law), including
without limitation exchange controls, it is impracticable (such that the Bank
would suffer an economic loss on such Eurodollar Rate Loan) unlawful or
impossible for the Bank (i) to make or fund the relevant Eurodollar Rate Loan,
(ii) to continue such Eurodollar Rate Loan as a Eurodollar Rate Loan, or (iii)
to convert a Loan to a Eurodollar Rate Loan, then the Company shall not be
entitled, so long as such circumstances continue, to request a Eurodollar Rate
Loan pursuant to Section 2.4 or a continuation of or conversion to a Eurodollar
Rate Loan pursuant to Section 2.7. In the event that such circumstances no
longer exist, the Bank shall again accept (subject to the provisions of this
Agreement) requests for Eurodollar Rate Loans pursuant to Section 2.4, and
requests for continuations of and conversions to Eurodollar Rate Loans pursuant
to Section 2.7.
2.9 Minimum Amounts; Limitation on Number of Loans. Except for (a) Loans
and conversions thereof which exhaust the entire remaining amount of the
Commitment, and (b) conversions or payments required pursuant to Section 3.7,
each Floating Rate Loan and each conversion to a Floating Rate Loan pursuant to
Section 2.7 shall be in a minimum amount of $100,000 and in an integral multiple
of $100,000, and each Eurodollar Rate Loan and each continuation of or
conversion to a Eurodollar Rate Loan pursuant to Section 2.7 shall be in a
minimum amount of $500,000 and in an integral multiple of $250,000. The
aggregate number of Eurodollar Rate Loans outstanding at any one time under this
Agreement may not exceed five.
ARTICLE III
PAYMENTS AND PREPAYMENTS OF LOANS
3.1 Principal Payments.
(a) Unless earlier payment is required under this Agreement, the
Company shall pay to the Bank on the Revolving Credit Termination Date the
entire outstanding principal amount of the Revolving Credit Loans.
(b) The Company may not pay any portion of any Loan as to which an
election for a continuation of or a conversion to a Eurodollar Rate Loan is
pending pursuant to Section 2.7, and unless earlier payment is required under
this Agreement, any Eurodollar Rate Loan may only be paid on the last day of the
then current Eurodollar Interest Period with respect to such Loan.
3.2 Interest Payments. The Company shall pay interest to the Bank on the
unpaid principal amount of each Loan, for the period commencing on the date such
Loan is made until such Loan is paid in full, on each Interest Payment Date and
at maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, at the following rates per annum:
(a) During such periods that such Loan is a Floating Rate Loan, at
the Floating Rate.
(b) During such periods that such Loan is a Eurodollar Rate Loan, at
the Eurodollar Rate applicable to such Loan for each related Eurodollar Interest
Period.
(c) Notwithstanding the foregoing, during any period that the ratio
of consolidated Total Liabilities of the Company and its Subsidiaries to
consolidated Tangible Net Worth of the Company and its Subsidiaries exceeds 1.75
to 1.00, and in such other circumstances as expressly set forth in this
Agreement, at the Overdue Rate.
Notwithstanding the foregoing paragraphs (a) through (c), the Company shall pay
interest on demand at the Overdue Rate on the outstanding principal amount of
any Loan which is not paid in full when due and any other amount payable by the
Company hereunder which is not paid in full when due (whether at stated
maturity, by acceleration or otherwise) for the period commencing on the due
date thereof until the same is paid in full.
3.4 Payment Method. (a) All payments to be made by the Company hereunder
will be made in Dollars and in immediately available funds to the Bank at its
address set forth in Section 7.2 not later than 1:00 p.m. Elkhart, Indiana time
on the date on which such payment shall become due. Payments received after
1:00 p.m. Elkhart, Indiana time shall be deemed to be payments made prior to
1:00 p.m. Elkhart, Indiana time on the next succeeding Business Day. The
Company hereby authorizes the Bank to charge its account with the Bank in order
to cause timely payment of amounts due hereunder to be made (subject to
sufficient funds being available in such account for that purpose).
(b) At the time of making each such payment, the Company shall,
subject to the other terms and conditions of this Agreement, specify to the Bank
that Loan or other obligation of the Company hereunder to which such payment is
to be applied. In the event that the Company fails to so specify the relevant
obligation or if an Event of Default shall have occurred and be continuing, the
Bank may apply such payments as it may determine in its sole discretion to
obligations of the Company to the Bank arising under this Agreement.
3.5 No Setoff or Deduction. All payments of principal of and interest on
the Loans and other amounts payable by the Company hereunder shall be made by
the Company without setoff or counterclaim, and free and clear of, and without
deduction or withholding for, or on account of, any present or future taxes,
levies, imposts, duties, fees, assessments, or other charges of whatever nature,
imposed by any governmental authority, or by any department, agency or other
political subdivision or taxing authority.
3.6 Payment on Non-Business Day; Payment Computations. Except as
otherwise provided in this Agreement to the contrary, whenever any installment
of principal of, or interest on, any Loan or any other amount due hereunder
becomes due and payable on a day which is not a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day and, in the case
of any installment of principal, interest shall be payable thereon at the rate
per annum determined in accordance with this Agreement during such extension.
Computations of interest and other amounts due under this Agreement shall be
made on the basis of a year of 360 days for the actual number of days elapsed,
including the first day but excluding the last day of the relevant period.
3.7 Additional Costs. (a) In the event that any applicable law, treaty,
rule or regulation (whether domestic or foreign) now in effect but not presently
applicable or hereafter in effect, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline, request or
directive of any such authority, shall (a) affect the basis of taxation of
payments to the Bank of any amounts payable by the Company under this Agreement
(other than taxes imposed on the net income of the Bank, by the jurisdiction, or
by any political subdivision or taxing authority of any such jurisdiction, in
which the Bank has its principal office), or (b) shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by the Bank, or (c)
shall impose any other condition with respect to this Agreement, the Commitment,
the Notes or the Loans, and the result of any of the foregoing is to increase
the cost to the Bank of making, funding or maintaining any Eurodollar Rate Loan
or to reduce the amount of any sum receivable by the Bank thereon, then the
Company shall pay to the Bank, from time to time, upon request by the Bank,
additional amounts sufficient to compensate the Bank for such increased cost or
reduced sum receivable to the extent, in the case of any Eurodollar Rate Loan,
the Bank is not compensated therefor in the computation of the interest rate
applicable to such Eurodollar Rate Loan. A statement as to the amount of such
increased cost or reduced sum receivable, prepared in good faith and in
reasonable detail by the Bank, and submitted by the Bank to the Company, shall
be conclusive and binding for all purposes absent manifest error in computation.
(b) In the event that any applicable law, treaty, rule or regulation
(whether domestic or foreign) now in effect but not presently applicable or
hereafter in effect, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any guideline, request or directive of
any such authority, including any risk-based capital guidelines, affects or
would affect the amount of capital required or expected to be maintained by the
Bank (or any corporation controlling the Bank) and the Bank determines that the
amount of such capital is increased by or based upon the existence of the Bank's
obligations hereunder and such increase has the effect of reducing the rate of
return on such bank's (or such controlling corporation's) capital as a
consequence of such obligations hereunder to a level below that which the Bank
(or such controlling corporation) could have achieved but for such circumstances
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by the Bank to be material, then the Company shall pay to the Bank
from time to time, upon request by the Bank additional amounts sufficient to
compensate the Bank (or such controlling corporation) for any increase in the
amount of capital and reduced rate of return which the Bank reasonably
determines to be allocable to the existence of the Bank's obligations hereunder.
A statement as to the amount of such compensation, prepared in good faith and in
reasonable detail by the Bank and submitted by the Bank to the Company, shall be
conclusive and binding for all purposes absent manifest error in computation.
3.8 Illegality and Impossibility. In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to the Bank, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by the Bank
with any guideline, request or directive of such authority (whether or not
having the force of law), including without limitation exchange controls, shall
make it unlawful or impossible for the Bank to maintain any Eurodollar Rate Loan
under this Agreement, the Company shall upon receipt of notice thereof from the
Bank repay in full the then outstanding principal amount of each Eurodollar Rate
Loan so affected, together with all accrued interest thereon to the date of
payment and all amounts owing to the Bank under Section 3.9 on the last day of
the then current Eurodollar Interest Period applicable to such Loan if the Bank
may lawfully continue to maintain such Loan to such day, or (b) immediately if
the Bank may not continue to maintain such Loan to such day. Subject to the
other terms and conditions of this Agreement, such prepaid Eurodollar Rate Loan
may be immediately reborrowed as a Floating Rate Loan hereunder.
3.9 Eurodollar Prepayment Indemnification. If the Company makes any
payment of principal with respect to any Eurodollar Rate Loan on any other date
than the last day of an Eurodollar Interest Period applicable thereto (whether
pursuant to Section 3.8, Section 6.2 or otherwise), or if the Company fails to
borrow any Eurodollar Rate Loan after notice has been given to the Bank in
accordance with Section 2.4 or Section 2.7, or if the Company fails to make any
payment of principal or interest in respect of a Eurodollar Rate Loan when due,
the Company shall reimburse the Bank on demand for any resulting loss or expense
incurred by the Bank, including without limitation any loss incurred in
obtaining, liquidating or employing deposits from third parties, whether or not
the Bank shall have funded or committed to fund such Loan. A statement as to
the amount of such loss or expense, prepared in good faith and in reasonable
detail by the Bank and submitted by the Bank to the Company, shall be conclusive
and binding for all purposes absent manifest error in computation. Calculation
of all amounts payable to the Bank under this Section 3.9 shall be made as
though the Bank shall have actually funded or committed to fund the relevant
Eurodollar Rate Loan through the purchase of an underlying deposit in an amount
equal to the amount of such Loan and having a maturity comparable to the related
Eurodollar Interest Period; provided, however, that the Bank may fund any
Eurodollar Rate Loan in any manner it sees fit and the foregoing assumption
shall be utilized only for the purpose of calculation of amounts payable under
this Section 3.9.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
4.1 Corporate Existence and Power. The Company is a corporation duly
organized and validly existing under the laws of the State of Indiana, and is
duly qualified to do business, and is in good standing, in all additional
jurisdictions where such qualification is necessary under applicable law. The
Company has all requisite corporate power to own or lease the properties used in
its business and to carry on its business as now being conducted and as proposed
to be conducted, and to execute and deliver this Agreement and the Notes and to
engage in the transactions contemplated by this Agreement.
4.2 Corporate Authority. The execution, delivery and performance by the
Company of this Agreement and the Notes have been duly authorized by all
necessary corporate action and are not in contravention of any law, rule or
regulation, or any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of the terms of the Company's
charter or by-laws, or of any contract or undertaking to which the Company is a
party or by which the Company or its property may be bound or affected or result
in the imposition of any Lien except for Permitted Liens.
4.3 Binding Effect. This Agreement is, and the Notes when delivered
hereunder will be, legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms.
4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the corporate
name, jurisdiction of incorporation and ownership of each Subsidiary of the
Company. Each such Subsidiary and each corporation becoming a Subsidiary of the
Company after the date hereof is and will be a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and is and will be duly qualified to do business in each
additional jurisdiction where such qualification is or may be necessary under
applicable law. Each Subsidiary of the Company has and will have all requisite
corporate power to own or lease the properties used in its business and to carry
on its business as now being conducted and as proposed to be conducted. All
outstanding shares of capital stock of each class of each Subsidiary of the
Company have been and will be validly issued and are and will be fully paid and
nonassessable and, except as otherwise indicated in Schedule 4.4 hereto or
disclosed in writing to the Bank from time to time, are and will be owned,
beneficially and of record, by the Company or another Subsidiary of the Company
free and clear of any Liens.
4.5 Litigation. Except as set forth in Schedule 4.5 hereto, there is no
action, suit or proceeding pending or, to the best of the Company's knowledge,
threatened against or affecting the Company or any of its Subsidiaries before or
by any court, governmental authority or arbitrator, which if adversely decided
might result, either individually or collectively, in any material adverse
change in the business, properties, operations or condition, financial or
otherwise, of the Company or any of its Subsidiaries or in any material adverse
effect on the legality, validity or enforceability of this Agreement or the
Notes and, to the best of the Company's knowledge, there is no basis for any
such action, suit or proceeding.
4.6 Financial Condition. The consolidated balance sheet of the Company
and its Subsidiaries and the consolidated statements of income, retained
earnings and changes in cash flows of the Company and its Subsidiaries for the
fiscal year ended December 31, 1995 and reported on by McGladrey & Pullen, LLP,
independent certified public accountants, and the interim consolidated balance
sheet and interim consolidated statements of income, retained earnings and cash
flows of the Company and its Subsidiaries, as of or for the nine-month period
ended on September 30, 1996, copies of which have been furnished to the Bank,
fairly present, and the financial statements of the Company and its Subsidiaries
delivered pursuant to Section 5.1(d) will fairly present, the consolidated
financial position of the Company and its Subsidiaries as at the respective
dates thereof, and the consolidated results of operations of the Company and its
Subsidiaries for the respective periods indicated, all in accordance with
generally accepted accounting principles consistently applied (subject, in the
case of said interim statements, to year-end audit adjustments). There has been
no material adverse change in the business, properties, operations or condition,
financial or otherwise, of the Company or any of its Subsidiaries since December
31, 1995. There is no material Contingent Liability of the Company that is not
reflected in such financial statements or in the notes thereto.
4.7 Use of Loans. The Company will use the proceeds of the Loans for
refinancing existing revolving credit indebtedness of the Company and its other
corporate purposes. Neither the Company nor any of its Subsidiaries extends or
maintains, in the ordinary course of business, credit for the purpose, whether
immediate, incidental, or ultimate, of buying or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loan will be used for the purpose,
whether immediate, incidental, or ultimate, of buying or carrying any such
margin stock or maintaining or extending credit to others for such purpose.
After applying the proceeds of each Loan, such margin stock will not constitute
more than 25% of the value of the assets (either of the Company alone or of the
Company and its Subsidiaries on a consolidated basis) that are subject to any
provisions of this Agreement that may cause the Loans to be deemed secured,
directly or indirectly, by margin stock.
4.8 Consents, Etc. No consent, approval or authorization of or
declaration, registration or filing with any governmental authority or any
nongovernmental person or entity, including without limitation any creditor,
lessor or stockholder of the Company or any of its Subsidiaries, is required on
the part of the Company in connection with the execution, delivery and
performance of this Agreement, the Notes or the transactions contemplated hereby
or as a condition to the legality, validity or enforceability of this Agreement
or the Notes.
4.9 Taxes. The Company and its Subsidiaries have filed all tax returns
(federal, state and local) required to be filed and have paid all taxes shown
thereon to be due, including interest and penalties, or have established
adequate financial reserves on their respective books and records for payment
thereof. Neither the Company nor any of its Subsidiaries knows of any actual or
proposed tax assessment or any basis therefor, and no extension of time for the
assessment of deficiencies in any federal or state tax has been granted by the
Company or any Subsidiary.
4.10 Title to Properties. Except as otherwise disclosed in the latest
balance sheet delivered pursuant to Section 4.6 or Section 5.1(d) of this
Agreement, the Company or one or more of its Subsidiaries have good and
marketable fee simple title to all of the real property, and a valid and
indefeasible ownership interest in all of the other properties and assets
reflected in said balance sheet or subsequently acquired by the Company or any
Subsidiary. All of such properties and assets are free and clear of any Lien,
except for Permitted Liens.
4.11 ERISA. The Company, its Subsidiaries, their ERISA Affiliates and
their respective Plans are in compliance in all material respects with those
provisions of ERISA and of the Code which are applicable with respect to any
Plan. No Prohibited Transaction and no Reportable Event has occurred with
respect to any such Plan. None of the Company, any of its Subsidiaries or any
of their ERISA Affiliates is an employer with respect to any multiemployer Plan.
The Company, its Subsidiaries and their ERISA Affiliates have met the minimum
funding requirements under ERISA and the Code with respect to each of their
respective Plans, if any, and have not incurred any liability to the PBGC or any
Plan. The execution, delivery and performance of this Agreement and the Notes
do not constitute a Prohibited Transaction. There is no material unfunded
benefit liability, determined in accordance with Section 4001(a)(18) of ERISA,
with respect to any Plan of the Company, its Subsidiaries or their ERISA
Affiliates.
4.12 Disclosure. No report or other information furnished in writing or
on behalf of the Company to the Bank in connection with the negotiation or
administration of this Agreement contains any material misstatement of fact or
omits to state any material fact or any fact necessary to make the statements
contained therein not misleading. Neither this Agreement, the Notes nor any
other document, certificate, or report or statement or other information
furnished to the Bank by or on behalf of the Company in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact in order to make the statements contained
herein and therein not misleading. There is no fact known to the Company which
materially and adversely affects, or which in the future may (so far as the
Company can now foresee) materially and adversely affect, the business,
properties, operations or condition, financial or otherwise, of the Company or
any Subsidiary, which has not been set forth in this Agreement or in the other
documents, certificates, statements, reports and other information furnished in
writing to the Bank by or on behalf of the Company in connection with the
transactions contemplated hereby.
4.13 Environmental and Safety Matters. The Company and each Subsidiary is
in substantial compliance with all applicable federal, state and local laws,
ordinances and regulations relating to safety and industrial hygiene or to the
environmental condition, including without limitation all Environmental Laws in
jurisdictions in which the Company or any Subsidiary owns or operates, or has
owned or operated, a facility or site, or arranges or has arranged for disposal
or treatment of Hazardous Materials, accepts or has accepted for transport any
Hazardous Materials, or holds or has held any interest in real property or
otherwise. No demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether brought by any
governmental authority, private person or entity or otherwise, arising under,
relating to or in connection with any Environmental Laws is pending or
threatened against the Company or any of its Subsidiaries, any real property in
which the Company or any such Subsidiary holds or has held an interest or any
past or present operation of the Company or any Subsidiary except as set forth
in Schedule 4.13 hereto. Neither the Company nor any of its Subsidiaries (a) is
the subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any Hazardous Materials
into the environment, (b) has received any notice of any Hazardous Materials in,
or upon any of its properties in violation of any Environmental Laws, or (c)
knows of any basis for any such investigation, notice or violation, except as
disclosed on Schedule 4.13 hereto, and as to such matters disclosed on such
Schedule, none will have an adverse material affect on the financial condition
or business of the Company or any of its Subsidiaries. Except as set forth in
Schedule 4.13 hereto, no release, threatened release or disposal of Hazardous
Materials is occurring or has occurred on, under or to any property in violation
of any Environmental Laws.
ARTICLE V
COVENANTS
5.1 Affirmative Covenants. The Company covenants and agrees that, until
the Revolving Credit Termination Date and thereafter until payment in full of
the principal of and accrued interest on the Notes and the performance of all
other obligations of the Company under this Agreement, unless the Bank shall
otherwise consent in writing, it shall, and shall cause each of its Subsidiaries
to:
(a) Preservation of Corporate Existence, Etc. Do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
legal existence, except to the extent permitted by Section 5.2(g), and its
qualification as a foreign corporation in good standing in each jurisdiction in
which such qualification is necessary under applicable law, and the rights,
licenses, permits (including those required under Environmental Laws),
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its businesses; and defend all of the foregoing against all claims,
actions, demands, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority.
(b) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders of any governmental
authority, whether federal, state, local or foreign (including without
limitation ERISA, the Code and Environmental Laws), in effect from time to time;
and pay and discharge promptly when due all taxes, assessments and governmental
charges or levies imposed upon it or upon its income, revenues or property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise, which, if unpaid, might
give rise to Liens upon such properties or any portion thereof, except to the
extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the Company
or such Subsidiary.
(c) Maintenance of Properties; Insurance. Maintain, preserve and
protect all property that is material to the conduct of the business of the
Company or any of its Subsidiaries and keep such property in good repair,
working order and condition and from time to time make, or cause to be made all
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times in accordance with customary and prudent
business practices for similar businesses; and maintain in full force and effect
insurance with responsible and reputable insurance companies or associations in
such amounts, on such terms and covering such risks, including fire and other
risks insured against by extended coverage, as is usually carried by companies
engaged in similar businesses and owning similar properties similarly situated
and maintain in full force and effect public liability insurance, insurance
against claims for personal injury or death or property damage occurring in
connection with any of its activities or any of any properties owned, occupied
or controlled by it, in such amount as it shall reasonably deem necessary, and
maintain such other insurance as may be required by law or as may be reasonably
requested by the Bank for purposes of assuring compliance with this Section
5.1(c).
(d) Reporting Requirements. Furnish to the Bank the following:
(i) Promptly and in any event within three Business Days after
becoming aware of the occurrence of (A) any Default or Event of Default, (B) the
commencement of any material litigation against, by or affecting the Company or
any of its Subsidiaries, and any material developments therein, (C) entering
into any material contract or undertaking that is not entered into in the
ordinary course of business or (D) any development in the business or affairs of
the Company or any of its Subsidiaries which has resulted in or which is likely
in the reasonable judgment of the Company, to result in a material adverse
change in the business, properties, operations or condition, financial or
otherwise, of the Company or any of its Subsidiaries, a statement of the chief
financial officer of the Company setting forth details of such Default or Event
of Default or such event or condition or such litigation and the action which
the Company or such Subsidiary, as the case may be, has taken and proposes to
take with respect thereto;
(ii) As soon as available and in any event within 45 days after
the end of each fiscal quarter of the Company, the consolidated balance sheet of
the Company and its Subsidiaries as of the end of such quarter, and the related
consolidated statements of income, retained earnings and cash flows for the
period commencing at the end of the previous fiscal year and ending with the end
of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding date or period of the preceding
fiscal year, all in reasonable detail and duly certified (subject to year-end
audit adjustments) by the chief financial officer of the Company as having been
prepared in accordance with generally accepted accounting principles, together
with a certificate of the chief financial officer of the Company stating (A)
that no Default or Event of Default has occurred and is continuing or, if a
Default or an Event of Default has occurred and is continuing, a statement
setting forth the details thereof and the action which the Company has taken and
proposes to take with respect thereto, and (B) that a computation (which
computation shall accompany such certificate and shall be in reasonable detail)
showing compliance with Section 5.2(a), (b), (c) and (d) hereof is in conformity
with the terms of this Agreement;
(iii) As soon as available and in any event within 90 days after
the end of each fiscal year of the Company, a copy of the consolidated balance
sheet of the Company and its Subsidiaries as of the end of such fiscal year and
the related consolidated statements of income, retained earnings and cash flows
of the Company and its Subsidiaries for such fiscal year, with a customary audit
report of McGladrey & Pullen, LLP, or other independent certified public
accountants selected by the Company and acceptable to the Bank, without
qualifications unacceptable to the Bank, together with a certificate of such
accountants stating (A) that they have reviewed this Agreement and stating
further whether, in the course of their review of such financial statements,
they have become aware of any Default or Event of Default and, if such a Default
or an Event of Default then exists and is continuing, a statement setting forth
the nature and status thereof, and (B) that a computation by the Company (which
computation shall accompany such certificate and shall be in reasonable detail)
showing compliance with Section 5.2(a), (b), (c) and (d) hereof is in conformity
with the terms of this Agreement;
(iv) Promptly after the sending or filing thereof, copies of all
reports, proxy statements, registration statements, prospectuses and financial
statements which the Company or any of its Subsidiaries sends to or files with
any of their respective security holders or any securities exchange or the
Securities and Exchange Commission or any successor agency thereof, including
without limitation such reports as annual shareholder reports, and Forms 10-K,
10-Q and 8-K;
(v) Promptly and in any event within 10 calendar days after
receiving or becoming aware thereof (A) a copy of any notice of intent to
terminate any Plan of the Company, its Subsidiaries or any ERISA Affiliate filed
with the PBGC, (B) a statement of the chief financial officer of the Company
setting forth the details of the occurrence of any Reportable Event with respect
to any such Plan, (C) a copy of any notice that the Company, any of its
Subsidiaries or any ERISA Affiliate may receive from the PBGC relating to the
intention of the PBGC to terminate any such Plan or to appoint a trustee to
administer any such Plan, or (D) a copy of any notice of failure to make a
required installment or other payment within the meaning of Section 412(n) of
the Code or Section 302(f) of ERISA with respect to any such Plan; and
(vi) Promptly, such other information respecting the business,
properties, operations or condition, financial or otherwise, of the Company or
any of it Subsidiaries as the Bank may from time to time reasonably request.
(e) Accounting; Access to Records, Books, Etc. Maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in accordance with
generally accepted accounting principles and to comply with the requirements of
this Agreement and, at any reasonable time and from time to time, (i) permit the
Bank or any agents or representatives thereof to examine and make copies of and
abstracts from the records and books of account of, and visit the properties of,
the Company and its Subsidiaries, and to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with their respective directors,
officers, employees and independent auditors, and by this provision the Company
does hereby authorize such persons to discuss such affairs, finances and
accounts with the Bank, and (ii) permit the Bank or any of its agents or
representatives to conduct a comprehensive field audit of its books, records,
properties and assets.
(f) Further Assurances. Execute and deliver within 30 days after
request therefor by the Bank, all further instruments and documents and take all
further action that may be necessary or desirable, or that the Bank may request,
in order to give effect to, and to aid in the exercise and enforcement of the
rights and remedies of the Bank under this Agreement and the Notes.
(g) Environmental Indemnification. Subject to the limitations set
forth below, defend, indemnify and hold harmless the Bank and its employees,
agents, officers and directors, from and against any claims, demands, penalties,
fines, liabilities, settlements, damages, costs or expenses, including, without
limitation, attorneys' and consultant's fees, investigation and laboratory fees,
court costs and litigation expenses, known or unknown, contingent or otherwise,
arising out of or in any way related to (a) the presence, disposal, release or
threatened release of any Hazardous Materials on, over, under, from or affecting
any real estate owned, leased or operated by the Company or any of its
Subsidiaries or the soil, water, vegetation, buildings, personal property,
persons or animals; (b) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to such Hazardous
Materials on such real estate, (c) any lawsuit brought or threatened, settlement
reached or government order relating to such Hazardous Materials with respect to
such real estate, and/or (d) any violation of laws, orders, regulations,
requirements or demands of government authorities, or any policies or
requirements of the Bank, which are based upon or in any way related to such
Hazardous Materials used in such real estate. The provisions of this Section
5.1(g) shall be in addition to any and all other obligations and liabilities the
Company may have under any other agreement with the Bank and under law, and
shall survive the repayment of all sums due hereunder.
(h) Bond Documents. Comply in all respects with the provisions of
the Bond Documents.
(i) Senior Notes Documents. Comply in all respects with the
provisions of the Senior Notes Documents.
5.2 Negative Covenants. Until the Revolving Credit Termination Date and
thereafter until payment in full of the principal of and accrued interest on the
Notes and the performance of all other obligations of the Company under this
Agreement, the Company agrees that, unless the Bank shall otherwise consent in
writing it shall not, and shall not permit any of its Subsidiaries to:
(a) Current Ratio. Permit or suffer the ratio of consolidated
Current Assets of the Company and its Subsidiaries to consolidated Current
Liabilities of the Company and its Subsidiaries to be less than 2.00 to 1.00 at
any time.
(b) Working Capital. Permit or suffer the consolidated Working
Capital of the Company and its Subsidiaries to be less than $25,000,000 at any
time.
(c) Tangible Net Worth. Permit or suffer the consolidated Tangible
Net Worth of the Company and its Subsidiaries to be less than $42,000,000 at any
time, which amount shall be increased by an amount equal to (i) 50% of the
Cumulative Net Income of the Company and its Subsidiaries on and after January
1, 1996, and (ii) 100% of the net cash proceeds of any stock issuance by the
Company after the Effective Date.
(d) Total Liabilities to Tangible Net Worth. Permit or suffer the
ratio of consolidated Total Liabilities of the Company and its Subsidiaries to
consolidated Tangible Net Worth of the Company and its Subsidiaries to be
greater than 1.75 to 1.00 at any time.
(e) Indebtedness. Create, incur, assume or in any manner become
liable in respect of, or suffer to exist, any Indebtedness other than:
(i) The Loans;
(ii) The Indebtedness described in Schedule 5.2(e) hereto,
having the same terms as those existing on the date of this Agreement, but no
extension or renewal thereof shall be permitted;
(iii) Indebtedness incurred in connection with the issuance of
any Bonds;
(iv) Letters of credit issued by the Bank; and
(v) Indebtedness in aggregate outstanding principal amount not
exceeding $1,000,000 which is secured by one or more liens permitted by Section
5.2(f)(v) hereof.
(f) Liens. Create, incur or suffer to exist any Lien on any of the
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether now owned or hereafter acquired, of the Company or any of
its Subsidiaries, other than:
(i) Liens for taxes not delinquent or for taxes being contested
in good faith by appropriate proceedings and as to which adequate financial
reserves have been established on its books and records;
(ii) Liens (other than any Lien imposed by ERISA) created and
maintained in the ordinary course of business which secure obligations not
exceeding $1,000,000 in the aggregate and which would not have a material
adverse effect on the business or operations of the Company or any of its
Subsidiaries and which constitute (A) pledges or deposits under worker's
compensation laws, unemployment insurance laws or similar legislation, (B) good
faith deposits in connection with bids, tenders, contracts or leases to which
the Company or any of its Subsidiaries is a party for a purpose other than
borrowing money or obtaining credit, including rent security deposits, (C) Liens
imposed by law, such as those of carriers, warehousemen and mechanics, if
payment of the obligation secured thereby is not yet due, (D) Liens securing
taxes, assessments or other governmental charges or levies not yet subject to
penalties for nonpayment, and (E) pledges or deposits to secure public or
statutory obligations of the Company or any of its Subsidiaries;
(iii) Liens evidenced by the Bond Documents;
(iv) Each Lien described in Schedule 5.2(f) hereto may be
suffered to exist upon the same terms as those existing on the Effective Date,
but no extension or renewal thereof shall be permitted (other than Liens
associated with the extension of leases disclosed therein in the ordinary course
of business); and
(v) Any Lien created to secure payment of a portion of the
purchase price of, or existing at the time of acquisition of, any tangible fixed
asset acquired by the Company or any of its Subsidiaries may be created or
suffered to exist upon such fixed asset if the outstanding principal amount of
the Indebtedness secured by such Lien does not at any time exceed 100% of the
purchase price paid by the Company or such Subsidiary for such fixed asset and
the aggregate principal amount of all Indebtedness secured by such Liens does
not exceed $1,000,000, provided that such Lien does not encumber any other asset
at any time owned by the Company or such Subsidiary, and provided, further, that
not more than one such Lien shall encumber such fixed asset at any one time.
(g) Merger; Purchase of Assets; Acquisitions; Etc. Purchase or
otherwise acquire, whether in one or a series of transactions, all or a
substantial portion of the business assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, of any person, or all or a
substantial portion of the capital stock of or other ownership interest in any
other person; nor merge or consolidate or amalgamate with any other person or
take any other action having a similar effect, nor enter into any joint venture
or similar arrangement with any other person, provided, however, that this
Section 5.2(g) shall not prohibit any merger or acquisition if the Company shall
be the surviving or continuing corporation thereof and, immediately after such
merger or acquisition, no Default or Event of Default shall exist or shall have
occurred and be continuing.
(h) Disposition of Assets; Etc. Sell, lease, license, transfer,
assign or otherwise dispose of all or a substantial portion of its business,
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether in one or a series of transactions, other than inventory
sold in the ordinary course of business upon customary credit terms and sales of
scrap or obsolete material or equipment, provided, however, that this Section
5.2(h) shall not prohibit any such sale, lease, license, transfer, assignment or
other disposition if the aggregate book value (disregarding any write-downs of
such book value other than ordinary depreciation and amortization) of all of the
business, assets, rights, revenues and property disposed of after the date of
this Agreement shall be less than 20% percent of such aggregate book value of
the total assets of the Company or such Subsidiary, as the case may be, and if,
immediately after such transaction, no Default or Event of Default shall exist
or shall have occurred and be continuing.
(i) Negative Pledge Limitation. Enter into any agreement with any
person other than the Bank which prohibits or limits the ability of the Company
or any Subsidiary to create, incur, assume or suffer to exist any Lien upon any
of its assets, rights, revenues or property, real, personal or mixed, tangible
or intangible, whether now owned or hereafter acquired.
ARTICLE VI
DEFAULT
6.1 Events of Default. The occurrence of any one of the following events
or conditions shall be deemed an "Event of Default" hereunder unless waived by
the Bank pursuant to Section 7.1:
(a) Nonpayment. The Company shall fail to pay when due any principal
of or interest on any Note or any fees or any other amount payable hereunder; or
(b) Misrepresentation. Any representation or warranty made by the
Company in Article IV hereof or any other certificate, report, financial
statement or other document furnished by or on behalf of the Company in
connection with this Agreement, shall prove to have been incorrect in any
material respect when made or deemed made; or
(c) Certain Covenants. The Company shall fail to perform or observe
any term, covenant or agreement contained in Sections 5.1(a), 5.1(d)(i), 5.2(e),
5.2(f), 5.2(g), 5.2(h), or 5.2(i), in the Bond Documents or in the Senior Notes
Documents, without any right of cure, or any other term, covenant or agreement
contained in Article V and such failure shall remain unremedied for twenty (20)
days after notice thereof from the Bank to the Company as provided in Section
7.2; or
(d) Other Defaults. The Company shall fail to perform or observe any
other term, covenant or agreement contained in this Agreement and such failure
shall remain unremedied for thirty (30) days after notice thereof from the Bank
to the Company as provided in Section 7.2; or
(e) Cross Default. The Company or any of its Subsidiaries shall fail
to pay any part of the principal of, the premium, if any, or the interest on, or
any other payment of money due under any of its Indebtedness (other than
Indebtedness hereunder), beyond any period of grace provided with respect
thereto, which individually or together with other such Indebtedness as to which
any such failure exists has an aggregate outstanding principal amount in excess
of $250,000 (other than any Indebtedness of the Company or any of its
Subsidiaries to the Bank, which shall be cross-defaulted to this Agreement and
the Notes regardless of the principal amount thereof); or if the Company or any
of its Subsidiaries fails to perform or observe any other term, covenant or
agreement contained in any agreement, document or instrument evidencing or
securing any such Indebtedness having such aggregate outstanding principal
amount, or under which any such Indebtedness was issued or created, beyond any
period of grace, if any, provided with respect thereto if the effect of such
failure is to cause, or permit the holders of such Indebtedness (or a trustee on
behalf of such holders) to cause, any payment in respect of such Indebtedness to
become due prior to its due date; or
(f) Judgments. One or more judgments or orders for the payment of
money in an aggregate amount of $1,000,000 shall be rendered against the Company
or any of its Subsidiaries, or any other judgment or order (whether or not for
the payment of money) shall be rendered against or shall affect the Company or
any of its Subsidiaries which causes or could cause a material adverse change in
the business, properties, operations or condition, financial or otherwise, of
the Company or any of its Subsidiaries or which does or could have a material
adverse effect on the legality, validity or enforceability of this Agreement or
any Note, and either (i) such judgment or order shall have remained unsatisfied
and the Company or such Subsidiary shall not have taken action necessary to stay
enforcement thereof by reason of pending appeal or otherwise, prior to the
expiration of the applicable period of limitations for taking such action or, if
such action shall have been taken, a final order denying such stay shall have
been rendered, or (ii) enforcement proceedings shall have been commenced by any
creditor upon any such judgment or order; or
(g) ERISA. The occurrence of a Reportable Event that results in or
could result in liability of the Company, any Subsidiary of the Company or their
ERISA Affiliates to the PBGC or to any Plan and such Reportable Event is not
corrected within thirty (30) days after the occurrence thereof; or the
occurrence of any Reportable Event which could constitute grounds for
termination of any Plan of the Company, its Subsidiaries or their ERISA
Affiliates by the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer any such Plan and such Reportable
Event is not corrected within thirty (30) days after the occurrence thereof; or
the filing by the Company, any Subsidiary of the Company or any of their ERISA
Affiliates of a notice of intent to terminate a Plan or the institution of other
proceedings to terminate a Plan; or the Company, any Subsidiary of the Company
or any of their ERISA Affiliates shall fail to pay when due any liability to the
PBGC or to a Plan; or the PBGC shall have instituted proceedings to terminate,
or to cause a trustee to be appointed to administer, any Plan of the Company,
its Subsidiaries or their ERISA Affiliates; or any person engages in a
Prohibited Transaction with respect to any Plan which results in or could result
in liability of the Company, any Subsidiary of the Company, any of their ERISA
Affiliates, any Plan of the Company, its Subsidiaries or their ERISA Affiliates
or fiduciary of any such Plan; or failure by the Company, any Subsidiary of the
Company or any of their ERISA Affiliates to make a required installment or other
payment to any Plan within the meaning of Section 302(f) of ERISA or Section
412(n) of the Code that results in or could result in liability of the Company,
any Subsidiary of the Company or any of their ERISA Affiliates to the PBGC or
any Plan; or the withdrawal of the Company, any of its Subsidiaries or any of
their ERISA Affiliates from a Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; or the
Company, any of its Subsidiaries or any of their ERISA Affiliates becomes an
employer with respect to any Multiemployer Plan without the prior written
consent of the Bank; or
(h) Insolvency, Etc. The Company or any of its Subsidiaries shall be
dissolved or liquidated, except when a Subsidiary of the Company is dissolved or
liquidated by being merged with, or upon dissolution its assets are distributed
in proportion with the Company's ownership interests to, the Company or another
Subsidiary of the Company (or any judgment, order or decree therefor shall be
entered), or shall generally not pay its debts as they become due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors, or shall institute, or there
shall be instituted against the Company or any of its Subsidiaries, any
proceeding or case seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief or protection of debtors or seeking the
entry of an order for relief, or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
assets, rights, revenues or property, and, if such proceeding is instituted
against the Company or such Subsidiary and is being contested by the Company or
such Subsidiary, as the case may be, in good faith by appropriate proceedings,
such contested proceeding shall remain undismissed or unstayed for a period of
60 days. The Company or such Subsidiary shall take any action (corporate or
other) to authorize or further any of the actions described above in this
subsection.
6.2 Remedies.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Bank may, by notice to the Company, take any one or more of the
following actions: (i) terminate the Commitment, or (ii) declare the
outstanding principal of, and accrued interest on, the Notes and all other
amounts due under this Agreement to be immediately due and payable, whereupon
the Commitment shall terminate forthwith and all such amounts, shall become
immediately due and payable, provided that in the case of any event or condition
described in Section 6.1(h) with respect to the Company, the Commitment shall
automatically terminate forthwith and all such amounts shall automatically
become immediately due and payable without notice; in all cases without demand,
presentment, protest, diligence, notice of dishonor or other formality, all of
which are hereby expressly waived.
(b) The Bank may, in addition to the remedies provided in Section
6.2(a), exercise and enforce any and all other rights and remedies available to
it, whether arising under this Agreement or any Note or under applicable law, in
any manner deemed appropriate by the Bank, including suit in equity, action at
law, or other appropriate proceedings, whether for the specific performance (to
the extent permitted by law) of any covenant or agreement contained in this
Agreement or any Note or in aid of the exercise of any power granted in this
Agreement or any Note.
(c) Upon the occurrence and during the continuance of any Event of
Default, the Bank may at any time and from time to time, without notice to the
Company (any requirement for such notice being expressly waived by the Company)
set off and apply against any and all of the obligations of the Company now or
hereafter existing under this Agreement, whether owing to the Bank, any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Bank to or for the credit
or the account of the Company and any property of the Company from time to time
in possession of the Bank, irrespective of whether or not the Bank shall have
made any demand hereunder and although such obligations may be contingent and
unmatured. The Company hereby grants to the Bank a lien on and security
interest in all such deposits, indebtedness and property as collateral security
for the payment and performance of the obligations of the Company under this
Agreement and the Notes. The rights of the Bank under this Section 6.2(c) are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Bank may have.
ARTICLE VII
MISCELLANEOUS
7.1 Amendments, Etc. No amendment, modification, termination or waiver of
any provision of this Agreement nor any consent to any departure therefrom shall
be effective unless the same shall be in writing and signed by the Bank. Any
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
7.2 Notices. (a) Except as otherwise provided in Section 7.2(c) hereof,
all notices and other communications hereunder shall be in writing and shall be
delivered or sent to the Company at 1800 South 14th Street, P.O. Box 638,
Elkhart, Indiana 46515, Attention: Keith V. Kankel, Vice President, Finance,
Facsimile No. (219) 522-5213, and to the Bank at the address and numbers for
notices set forth on the signature pages hereof, or to such other address as may
be designated by the Company or the Bank by notice to the other party hereto.
All notices and other communications shall be deemed to have been given at the
time of actual delivery thereof to such address, or if sent by certified or
registered mail, postage prepaid, to such address, on the third Business Day
after the date of mailing, or, if sent by federal express or other recognized
overnight delivery service, prepaid, to such address, on the Business Day
following the date of deposit with such delivery service prior to such service's
next day delivery deadline, provided, however, that notices to the Bank shall
not be effective until received.
(b) Notices by the Company to the Bank with respect to terminations
or reductions of the Revolving Credit Commitment pursuant to Section 2.2,
requests for Loans pursuant to Section 2.4, and requests for continuations or
conversions of Loans pursuant to Section 2.7 shall be irrevocable and binding on
the Company.
(c) Any notice to be given by the Company to the Bank pursuant to
Section 2.4 or Section 2.7 and any notice to be given by the Bank hereunder, may
be given by telephone, and all such notices given by the Company must be
immediately confirmed in writing in the manner provided in Section 7.2(a). Any
such notice given by telephone shall be deemed effective upon receipt thereof by
the party to whom such notice is to be given.
7.3 No Waiver By Conduct; Remedies Cumulative. No course of dealing on
the part of the Bank, nor any delay or failure on the part of the Bank in
exercising any right, power or privilege hereunder shall operate as a waiver of
such right, power or privilege or otherwise prejudice the Bank's rights and
remedies hereunder; nor shall any single or partial exercise thereof preclude
any further exercise thereof or the exercise of any other right, power or
privilege. No right or remedy conferred upon or reserved to the Bank under this
Agreement or any Note is intended to be exclusive of any other right or remedy,
and every right and remedy shall be cumulative and in addition to every other
right or remedy granted thereunder or now or hereafter existing under any
applicable law. Every right and remedy granted by this Agreement or any Note or
by applicable law to the Bank may be exercised from time to time and as often as
may be deemed expedient by the Bank and, unless contrary to the express
provisions of this Agreement or any Note, irrespective of the occurrence or
continuance of any Default or Event of Default.
7.4 Reliance on and Survival of Various Provisions. All terms, covenants,
agreements, representations and warranties of the Company made herein or in any
certificate, report, financial statement or other document furnished by or on
behalf of the Company in connection with this Agreement shall be deemed to be
material and to have been relied upon by the Bank, notwithstanding any
investigation heretofore or hereafter made by the Bank or on the Bank's behalf,
and those covenants and agreements of the Company set forth in Sections 3.7, 3.9
and 7.5 hereof shall survive the repayment in full of the Loans and the
termination of the Commitment for a period of six months.
7.5 Expenses; Indemnification. The Company agrees to pay, or reimburse
the Bank for the payment of, on demand, (i) the reasonable fees and expenses of
counsel to the Bank, including without limitation the reasonable fees and
expenses of Messrs. Dickinson, Wright, Moon, Van Dusen & Freeman in connection
with the preparation, execution, delivery and administration of this Agreement
and the Notes and the consummation of the transactions contemplated hereby, and
in connection with advising the Bank as to its rights and responsibilities with
respect thereto, and in connection with any amendments, waivers or consents in
connection therewith, (ii) all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing or
recording of this Agreement and the Notes and the consummation of the
transactions contemplated hereby, and any and all liabilities with respect to or
resulting from any delay in paying or omitting to pay such taxes or fees, if
timely notice was given to the Company with respect to such taxes or fees, and
(iii) all reasonable costs and expenses of the Bank (including reasonable fees
and expenses of counsel and whether incurred through negotiations, legal
proceedings or otherwise) in connection with any Default or Event of Default or
the enforcement of, or the exercise or preservation of any rights under, this
Agreement or any Note or in connection with any refinancing or restructuring of
the credit arrangements provided under this Agreement.
7.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, provided that the Company may not, without the prior consent of the
Bank, assign its rights or obligations hereunder or under any Note and the Bank
shall not be obligated to make any Loan hereunder to any entity other than the
Company. The Bank may sell or assign to any financial institution or
institutions, and such financial institution or institutions may further sell
all or any part of, or any interest (undivided or divided) in, the Loans and the
Bank's rights and benefits under this Agreement and the Notes, and to the extent
of that sale or assignment such transferee or transferees or assignee or
assignees shall have the same rights and benefits against the Company under
Section 6.2(c) as it or they would have had if such assignee or assignees were
the Bank making the Loans to the Company hereunder. The Bank from time to time
in its sole discretion may appoint agents for the purpose of servicing and
administering this Agreement and the transactions contemplated hereby and
enforcing or exercising any rights or remedies of the Bank provided under this
Agreement, any Note or otherwise. In furtherance of such agency, the Bank may
from time to time direct that the Company provide notices, reports and other
documents contemplated by this Agreement (or duplicates thereof) to such agent.
The Company hereby consents to the appointment of such agent and agrees to
provide all such notices, reports and other documents and to otherwise deal with
such agent acting on behalf of the Bank in the same manner as would be required
if dealing with the Bank.
7.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
7.8 Governing Law. This Agreement is a contract made under, and shall be
governed by and construed in accordance with, the law of the State of Indiana
applicable to contracts made and to be performed entirely within such State and
without giving effect to the choice of law principles of such State. The
Company further agrees that any legal action or proceeding with respect to this
Agreement any Note or the transactions contemplated hereby may be brought in any
court of the State of Indiana, or in any court of the United States of America
sitting in Indiana, and the Company hereby submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect to its person and
property, and irrevocably appoints the Bank as its agent for service of process
and irrevocably consents to the service of process in connection with any such
action or proceeding by personal delivery to such agents or to the Company or by
the mailing thereof by registered or certified mail, postage prepaid to the
Company at its address set forth in Section 7.2(a). Nothing in this paragraph
shall affect the right of the Bank to serve process in any other manner
permitted by law or limit the right of the Bank to bring any such action or
proceeding against the Company or property in the courts of any other
jurisdiction. The Company hereby irrevocably waives any objection to the laying
of venue of any such suit or proceeding in the above described courts.
7.9 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for the convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
7.10 Construction of Certain Provisions. If any provision of this
Agreement refers to any action to be taken by any person, or which such person
is prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such person, whether or not expressly
specified in such provision.
7.11 Integration and Severability. This Agreement embodies the entire
agreement and understanding between the Company and the Bank, and supersedes all
prior agreements and understandings, relating to the subject matter hereof. In
case any one or more of the obligations of the Company under this Agreement or
any Note shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining obligations of the
Company shall not in any way be affected or impaired thereby, and such
invalidity, illegality or unenforceability in one jurisdiction shall not affect
the validity, legality or enforceability of the obligations of the Company under
this Agreement or any Note in any other jurisdiction.
7.12 Independence of Covenants. All covenants hereunder shall 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 an exception to, or
would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default.
7.13 Interest Rate Limitation. Notwithstanding any provisions of this
Agreement or any Note, in no event shall the amount of interest paid or agreed
to be paid by the Company exceed an amount computed at the highest rate of
interest permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Agreement or any Note at the
time performance of such provision shall be due, shall involve exceeding the
interest rate limitation validly prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be
fulfilled shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever the Bank
shall ever receive as interest an amount which would be deemed unlawful under
such applicable law such interest shall be automatically applied to the payment
of principal of the Loans outstanding hereunder (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the Company
if such principal and all other obligations of the Company to the Bank have been
paid in full.
7.14 Waiver of Jury Trial. The Bank and the Company, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this Agreement or any related instrument
or agreement or any of the transactions contemplated by this Agreement or any
course of conduct, dealing, statements (whether oral or written) or actions of
either of them. Neither the Bank nor the Company shall seek to consolidate, by
counterclaim or otherwise, any such action in which a jury trial has been waived
with any other action in which a jury trial cannot be or has not been waived.
These provisions shall not be deemed to have been modified in any respect or
relinquished by the Bank or the Company except by a written instrument executed
by both of them.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written, effective as of February 2,
1997.
PATRICK INDUSTRIES, INC.
By: /s/ David D. Lung
David D. Lung
Its: President
And: /s/ Keith V. Kankel
Keith V. Kankel
Its: Vice President - Finance
Address for Notices: NBD BANK
121 West Franklin Street
Elkhart, Indiana 46515 By: /s/ Donald E. Hobik
Attention: Donald E. Hobik Donald E. Hobik
Facsimile No.: (219) 524-3033 Its: Vice President
Telephone No.: (219) 524-3011
EXHIBIT A
REVOLVING CREDIT NOTE
$10,000,000 February 2, 1997
Elkhart, Indiana
FOR VALUE RECEIVED, PATRICK INDUSTRIES, INC., an Indiana corporation (the
"Company"), hereby promises to pay to the order of NBD Bank, an Indiana banking
corporation of Elkhart, Indiana (the "Bank"), at the principal banking office of
the Bank in lawful money of the United States of America and in immediately
available funds, the principal sum of Ten Million Dollars ($10,000,000), or such
lesser amount as is recorded on the schedule attached hereto, or in the books
and records of the Bank, on the Revolving Credit Termination Date; and to pay
interest on the unpaid principal balance hereof from time to time outstanding,
in like money and funds, for the period from the date hereof until the Revolving
Credit Loans evidenced hereby shall be paid in full, at the rates per annum and
on the dates provided in the Credit Agreement referred to below.
The Bank is hereby authorized by the Company to record on the schedule
attached to this Revolving Credit Note, or on its books and records, the date
and amount of each Revolving Credit Loan, the duration of the related Eurodollar
Interest Period (if applicable), the amount of each payment or prepayment of
principal thereon and the other information provided for on such schedule, which
schedule or such books and records, as the case may be, shall constitute prima
facie evidence of the information so recorded, provided, however, that any
failure by the Bank to record any such information shall not relieve the Company
of its obligation to repay the outstanding principal amount of such Revolving
Credit Loans, all accrued interest thereon and any amount payable with respect
thereto in accordance with the terms of this Revolving Credit Note and the
Credit Agreement, as defined below.
The Company and each endorser or guarantor hereof waives demand,
presentment, protest, diligence, notice of dishonor and any other formality in
connection with this Revolving Credit Note. Should the indebtedness evidenced
by this Revolving Credit Note or any part thereof be collected in any proceeding
or be placed in the hands of attorneys for collection, the Company agrees to
pay, in addition to the principal, interest and other sums due and payable
hereon, all costs of collecting this Revolving Credit Note, including attorneys'
fees and expenses.
This Revolving Credit Note evidences one or more Revolving Credit Loans
made under that certain Credit Agreement dated as of February 2, 1997 (as
amended from time to time, the "Credit Agreement"), by and between the Company
and the Bank, to which reference is hereby made for a statement of the
circumstances under which this Revolving Credit Note is subject to prepayment
and under which its due date may be accelerated and for a description of the
collateral and security securing this Revolving Credit Note. Capitalized terms
used but not defined in this Revolving Credit Note shall have the respective
meanings assigned to them in the Credit Agreement.
This Revolving Credit Note is issued in replacement of, but not in
repayment of, that certain Revolving Credit Note dated June 28, 1995 in the
stated principal amount of $13,000,000 payable by the Company to the Bank and
NBD Bank, a Michigan banking corporation.
This Revolving Credit Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Indiana applicable to
contracts made and to be performed entirely within such State and without giving
effect to the choice of law principles of such State.
PATRICK INDUSTRIES, INC.
By:
David D. Lung
Its: President
And:
Keith V. Kankel
Its: Vice President - Finance
Schedule to Revolving Credit Note dated February 2, 1997
made by Patrick Industries, Inc.
in favor of NBD Bank, an Indiana banking corporation
Eurodollar
Interest
Principal Period Principal Principal
Trans- Amount Type (If Ap- Amount Balance
action of of Interest plicable) Paid or Outstand- Notation
Date Loan Loan* Rate Prepaid ing Made by
* E - Eurodollar Rate
F - Floating Rate
EXHIBIT B
REQUEST FOR TERMINATION
OR REDUCTION OF COMMITMENT
__________, 19__
NBD Bank
121 West Franklin Street
Elkhart, Indiana 46515
Attention: Donald E. Hobik
Vice President
Patrick Industries, Inc., an Indiana corporation (the "Company"), hereby
requests that the Revolving Credit Commitment [be terminated] [be reduced by the
aggregate principal amount of $__________], effective on __________, 19__,
pursuant to Section 2.2 of the Credit Agreement, dated as of February 2, 1997,
between Company and NBD Bank, an Indiana banking corporation (as amended or
modified from time to time, the "Credit Agreement").
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Credit Agreement.
PATRICK INDUSTRIES, INC.
By:
Its:
And:
Its:
EXHIBIT C
REQUEST FOR LOAN
__________, 19__
NBD Bank
121 West Franklin Street
Elkhart, Indiana 46515
Attention: Donald E. Hobik
Vice President
Patrick Industries, Inc., an Indiana corporation (the "Company"), hereby
requests a Revolving Credit Loan pursuant to Section 2.4 of the Credit Agreement
dated as of February 2, 1997 (as amended or modified from time to time, the
"Credit Agreement"), between the Company and NBD Bank, an Indiana banking
corporation, in the amount of $__________, to be made on __________, 19__ and to
be evidenced by the Company's Revolving Credit Note. Capitalized terms used but
not defined herein shall have the respective meanings assigned to them in the
Credit Agreement.
Such Revolving Credit Loan shall be made as a [insert either Eurodollar
Rate Loan or Floating Rate Loan] and the initial Eurodollar Interest Period, if
such requested Revolving Credit Loan is a Eurodollar Rate Loan, shall be [insert
permitted Eurodollar Interest Period].
In support of this request, the Company hereby represents and warrants to
the Bank that:
1. The representations and warranties contained in Article IV of the
Credit Agreement are true and correct on and as of the date hereof, and will be
true and correct on the date such Loan is made (both before and after such Loan
is made), as if such representations and warranties were made on and as of such
dates.
2. No Default or Event of Default has occurred and is continuing or will
exist on the date such Loan is made (whether before or after such Loan is made).
Acceptance of the proceeds of such Loan by the Company shall be deemed to
be a further representation and warranty that the representations and warranties
set forth in Article IV of the Credit Agreement are true and correct on and as
of the date of such acceptance, as if such representations and warranties were
made on and as of such date.
PATRICK INDUSTRIES, INC.
By:
Its:
And:
Its:
EXHIBIT D
REQUEST FOR CONTINUATION OR CONVERSION OF LOAN
__________, 19__
NBD Bank
121 West Franklin Street
Elkhart, Indiana 46515
Attention: Donald E. Hobik
Vice President
Patrick Industries, Inc., an Indiana corporation (the "Company"), hereby
requests that $__________ of the principal amount of the Revolving Credit Loan
originally made on __________, 19__, which Revolving Credit Loan is currently a
[insert type of Loan], be continued as or converted to, as the case may be, a
[insert type of Loan requested] on __________, 19__. If such Revolving Credit
Loan is requested to be converted to a Eurodollar Rate Loan, the Company elects
a Eurodollar Interest Period for such Revolving Credit Loan of [insert permitted
Eurodollar Interest Period].
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Credit Agreement, dated as of February 2, 1997,
between the Company and NBD Bank, an Indiana banking corporation, as amended or
modified from time to time.
PATRICK INDUSTRIES, INC.
By:
Its:
And:
Its:
Schedule 4.4
Subsidiaries
Machinery, Inc. Delaware Corporation
100% owned by Patrick
Industries, Inc.
Harlan Machinery Company, Inc. Nevada Corporation
100% owned by Machinery, Inc.
Patrick Door, Inc. Arizona Corporation
100% owned by Machinery, Inc.
Patrick Mouldings, L.L.C. Arizona Limited Liability
Company
60% owned by Machinery, Inc.
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 798,897
<SECURITIES> 5,000,000
<RECEIVABLES> 27,692,693
<ALLOWANCES> 90,000
<INVENTORY> 38,345,279
<CURRENT-ASSETS> 72,213,668
<PP&E> 68,980,268
<DEPRECIATION> 27,058,814
<TOTAL-ASSETS> 119,537,768
<CURRENT-LIABILITIES> 26,910,744
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22,154,619
0
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<TOTAL-LIABILITY-AND-EQUITY> 119,537,768
<SALES> 96,935,710
<TOTAL-REVENUES> 96,935,710
<CGS> 84,979,168
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