SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 1999
Commission File Number 0-14798
AMERICAN WOODMARK CORPORATION
(Exact name of the registrant as specified in its charter)
VIRGINIA 54-1138147
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3102 Shawnee Drive, Winchester, Virginia 22601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (540) 665-9100
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
None None
Securities registered pursuant to section 12(g) of the Act:
Common Stock (no par value)
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the registrant's Common Stock, no par
value, held by non-affiliates of the registrant at June 28, 1999 was
$281,272,393 based on the closing price on that date on the Nasdaq
National Market.
As of June 28, 1999, 7,923,166 shares of the Registrant's Common Stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's the Annual Report to Shareholders for the
fiscal year ended April 30, 1999 ("1999 Annual Report") are
incorporated by reference into Parts I and II of this Form 10-K.
Portions of the Registrant's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on August 24, 1999 (Proxy
Statement) are incorporated by reference into Part III of this Form 10-K.
<PAGE>
PART I
Item 1. BUSINESS
The Company manufactures and distributes kitchen
cabinets and vanities for the remodeling and new home
construction markets. The Company was formed in 1980
by the four principal managers of the Boise Cascade
Cabinet Division through a leveraged buyout of that
division. The Company was operated privately until
1986 when it became a public company through a common
stock offering.
The Company currently offers custom cabinetry and
framed stock cabinets. The Company's framed stock
cabinets are available in approximately 130 different
cabinet lines, ranging in price from relatively
inexpensive to medium-priced styles. Styles vary by
design and color from natural wood finishes to low-
pressure laminate surfaces. The Company's entire
product offering of stock cabinets includes 40 door
designs and seven colors. Stock cabinets consist of a
common box with standard interior components and an
oak, cherry, maple or hickory front frame. The
Company's custom cabinetry is available in
approximately 50 door styles with 20 basic colors, 8
glazes and two sheens to choose from, although we offer
to match any color. The Company has approximately
6,000 sku's but will make almost any product a kitchen
designer can create.
The Company sells the Company's products under the
brand names of American Woodmarkr, Crestwoodr,
Timberlaker, Scots Prider, Coventry and Caser cabinets
and Knappr.
The Company's products are sold on a national
basis through three market channels: independent
dealer/distributors, home centers and major builders.
The Company distributes its products to each market
channel directly from the Company's four assembly
plants and through a logistics network consisting of
five service centers located in key areas throughout
the United States.
The primary raw materials the Company uses include
oak, maple, cherry and hickory lumber. Additional raw
materials include paint, particleboard, manufactured
components and hardware. The Company currently
purchases paint from one supplier; however, other
sources are available. The Company's other raw
materials are purchased from more than one source and
are readily available.
The Company operates in a highly fragmented
industry that is composed of several thousand local,
regional and national manufacturers. The Company
believes that no other company in the industry has more
than a 15% share of the market. The Company also
believes that American Woodmark is one of the five
largest manufacturers of kitchen cabinets in the United
States.
2
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The Company's business has historically been
subjected to seasonal influences, with higher sales
typically realized in the second and fourth fiscal
quarters. General economic forces and changes in the
Company's customer mix have reduced seasonal
fluctuations in the Company's revenue over the past few
years.
During the last fiscal year, the Company had two
customers, The Home Depot and Lowe's Companies, Inc.,
which each accounted for more than 10% of The Company's
sales.
As of April 30, 1999, the Company had 3,087
employees. Approximately 29% of the Company's
employees are represented by labor unions. The Company
believes that the Company's employee relations are
good.
Item 2. PROPERTIES
The Company leases its Corporate Office that is located
in Winchester, Virginia. In addition, the Company
leases one and owns eight manufacturing facilities
located primarily in the eastern United States. The
Company also leases eleven office centers located
throughout the United States that support the
distribution of products to each market channel.
Item 3. LEGAL PROCEEDINGS
In response to this Item, the information under "Legal
Matters" under Note I to the Financial Statements in
the 1999 Annual Report is incorporated herein by
reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders
during the fourth quarter of fiscal 1999.
3
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EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Registrant as of April 30,
1999 are as follows:
Name Age Position(s) Held During Past Five Years
William F. Brandt, Jr. 53 Chairman of the Board from August
1996 to present;
Chairman and Chief Executive
Officer from 1995 to 1996;
Chairman and President from 1980
to 1995
James J. Gosa 51 President and Chief Executive
Officer from August 1996 to
present;
President and Chief Operating
Officer from 1995 to 1996;
Executive Vice President from 1993
to 1995
David L. Blount 51 Senior Vice President, Manufacturing
from May 1999 to Present;
Vice President, Manufacturing from
May 1995 to April 1999;
Vice President, Component
Manufacturing from 1994 to 1995
Kent B. Guichard 43 Senior Vice President, Finance and Chief
Financial Officer from May 1999 to
present;
Vice President, Finance and Chief
Financial Officer from November
1995 to April 1999;
Vice President, Finance from 1993
to 1995
Philip S. Walter 48 Senior Vice President and General Manager,
New Business Development from May
1999 to present;
Vice President and General Manager,
New Business Development from
August 1997 to April 1999;
President, Professional Turf
Products, Inc. and Managing
Director,
National Support Network, Inc.
(subsidiaries of The Toro Company)
from January 1996 to December 1996;
Director, Marketing and Sales, The
Toro Company, Irrigation Division,
from 1990 to 1996
4
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Name Age Position(s) Held During Past Five Years
Ian J. Sole 43 Senior Vice President, Sales and
Marketing from May 1999 to present;
Vice President, Sales and Marketing
from October 1997 to April 1999;
Vice President, International,
Hamilton Beach Proctor-Silex from
1996 to 1997;
Vice President, Marketing, Hamilton
Beach Proctor-Silex from 1991 to
1995
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDERS MATTERS
In response to this Item, the information under "Market
Information" in the 1999 Annual Report is incorporated
herein by reference.
Item 6. SELECTED FINANCIAL DATA
In response to this Item, the information under "Five
Year Selected Financial Information" in the 1999 Annual
Report is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
In response to this Item, the information under
"Management's Discussion and Analysis" in the 1999
Annual Report is incorporated herein by reference.
Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:
In respect to this item, the information under the
caption "Other Comments" in "Management's Discussion
and Analysis" in the 1999 Annual Report is incorporated
herein by reference in Item 7.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
In response to this Item, the Consolidated Financial
Statements, Notes to the Consolidated Financial
Statements, the information under "Quarterly Results of
Operations," and the Report of Ernst & Young LLP,
Independent Auditors, in the 1999 Annual Report are
incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
5
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PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
In accordance with general instruction G(3) of Form 10-K,
the information called for by Item 10 of Part III is
incorporated by reference to the Proxy Statement,
except for information concerning the executive
officers of the Registrant which is included in Part I
of this report under the caption "Executive Officers of
the Registrant."
Item 11. EXECUTIVE COMPENSATION
In response to this Item, and in accordance with
Instruction G(3) of Form 10-K, the information under
"Compensation of Executive Officers" in the Proxy
Statement is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
In response to this Item, and in accordance with
Instruction G(3) of Form 10-K, the information under
"Principal Shareholders of the Company" in the Proxy
Statement is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In response to this Item, and in accordance with
Instruction G(3) of Form 10-K, the information under
"Certain Transactions" in the Proxy Statement is
incorporated herein by reference.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
The following financial statements of American
Woodmark Corporation are incorporated in this
form 10-K by reference in Item 8:
Consolidated Balance Sheets as of April
30, 1999 and 1998
Consolidated Statement of Income and
Retained Earnings - for each year of the
three-year period ended April 30, 1999
Consolidated Statement of Cash Flows -
for each year of the three-year period
ended April 30, 1999
Notes to Consolidated Financial Statements
Report of Independent Auditors
6
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(a) 2. Financial Statement Schedules
The following financial statement schedule is
filed as a part of this Form 10-K:
Schedule II - Valuation of Qualifying
Accounts for each year of the three-year period
ended April 30, 1999
(a) 3. Exhibits
Exhibit No. Description
- ------------ ------------
3.1 - Articles of Incorporation as amended effective August 12,
1987 (3)
3.2 (a) - Bylaws (1)
3.2 (b) - Amendment to Bylaws on June 22, 1994 (7)
3.2 (c) - Amendment to Bylaws on June 17, 1999
The Articles of Incorporation and Bylaws of
the [Registrant] as currently in effect
(incorporated by reference to Exhibits 3.1,
3.2(a), 3.2(b) and 3.2(c) hereto)
4.2 - Amended and Restated Stockholders' Agreement (1)
Pursuant to Regulation S-K, Item 601(b)(4)(iii),
instruments that define the rights of holders of
the Registrant's long-term debt securities, where
the long-term debt securities authorized under
each such instrument do not exceed 10% of the
Registrant's total assets, have been omitted and
will be furnished to the Securities and Exchange
Commission upon request.
10.1 (a) - Amended and Restated Loan Agreement
between the Company and NationsBank of North
Carolina as of March 23, 1992 (5)
10.1 (b) - Amendment to Amended and Restated Loan
Agreement and to Reimbursement Agreements as of
September 8, 1992 (6)
10.1 (c) - Amendment to Amended and Restated Loan
Agreement and to Reimbursement Agreements as of
June 25, 1993 (6)
10.1 (d) - Amendment to Amended and Restated Loan
Agreement and to Reimbursement Agreements as of
March 15, 1993 (6)
10.1 (e) - Amendment to Amended and Restated Loan
Agreement and to Reimbursement Agreements as of
August 31, 1993 (7)
10.1 (f) - Amendment to Amended and Restated Loan
Agreement and to Reimbursement Agreements as of
March 15, 1994 (7)
7
<PAGE>
10.1 (g) - Amendment to Amended and Restated Loan Agreement
and to Reimbursement Agreements as of July 27,
1994 (8)
10.1 (h) - Amendment to Amended and Restated Loan Agreement
and to Reimbursement Agreements as of July 8, 1996 (12)
10.1 (i) - Amendment to Amended and Restated Loan Agreement
as of August 31, 1996 (12)
10.2 (a) - Security Agreement between the Company and
NationsBank of North Carolina as of March 23, 1992(5)
10.2 (b) - Amendment to Security Agreement as of
August 31, 1993 (7)
10.2 (c) - Second Amendment to Security Agreement as of
August 31, 1996 (12)
10.3 (a) - Bond Purchase Agreement and Agreement of
Sale - The Industrial Development Authority of the
County of Mohave, Arizona (2)
10.3 (b) - Bond Purchase Agreement and Agreement of
Sales - Stephens County Development Authority (3)
10.3 (c) - Loan Agreement between the Company and the
County Commission of Hardy County, West Virginia
as of December 1, 1991, relating to bond financing (5)
10.3 (d) - Promissory Note between the Company and
County Commission of Hardy County, West Virginia
as of December 18, 1991 (5)
10.3 (e) - Reimbursement Agreement between the
Company and NationsBank as of December 1, 1991 (5)
10.3 (f) - Amendment to Reimbursement Agreements as
of June 15, 1992 (5)
10.4 (a) - Deed of Trust and Security Agreement -
Hardy County, West Virginia, as amended (1)
10.5 (a) - Security Agreement between the Company and
the West Virginia Economic Development Authority (1)
10.5 (b) - Deed of Trust - Hardy County, West Virginia (1)
10.6 (a) - Lease between the Company and Amwood Associates (1)
10.6 (b) - Lease between the Company and the West
Virginia Industrial and Trade Jobs Development
Corporation (3)
10.6 (c) - Lease between the Company and the West
Virginia Industrial and Trade Jobs Development
Corporation (3)
8
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10.7 (a) - 1986 Employee Stock Option Plan (1)
10.7 (b) - Form of Option Agreement and Stock
Purchase Agreement (1)
10.7 (c) - 1995 Non-Employee Directors Stock Option Plan (9)
10.7 (d) - 1996 Stock Option Plan (10)
10.8 (a) - 1999 Annual Incentive Plan for Chairman and
President/CEO
10.8 (b) - 1999 Annual Incentive Plan for Vice Presidents
10.9 - ISDA Master Agreement between NationsBank, N.A.
and American Woodmark Corporation as of May 29, 1998 (13)
10.10 (a) - Loan Agreement between the Company and the West Virginia
Economic Development Authority as of November 20, 1998
Relating to equipment financing.
10.10 (b) - Promissory Note between the Company and the West Virginia
Economic Development Authority as of November 20, 1998.
10.10 (c) - Security Agreement between the Company and the West Virginia
Economic Development Authority as of November 20, 1998.
10.10 (d) - Amendment of Deed of Lease between the Company and the West
Virginia Economic Development Authority as of November 20,
1998.
10.10 (e) - Promissory Note between the Company and the Wayne County EZ
Industrial Development Authority of Kentucky as of
July 22, 1998.
10.10 (f) - Promissory Note between the Company and Amende Cabinet
Corporation, a wholly owned subsidiary of the Company,
as of July 30, 1998.
10.10 (g) - Credit Agreement between the Company and NationsBank, N. A.
as of September 1, 1998.
10.10 (h) - Loan Agreement between the Company and Wells Fargo Bank,
N. A. as of March 23, 1999.
10.10 (i) - Promissory Note between the Company and NationsBank, N. A.
as of July 31, 1989
13 - 1999 Annual Report to Shareholders
23 - Consent of Ernst & Young LLP, Independent Auditors
27 - Financial Data Schedule
9
<PAGE>
(b) Reports on Form 8-K
None.
_________________________________________________________________________
(1) - Incorporated by reference to exhibits filed with
Form S-1, No. 33-6245.
(2) - Incorporated by reference to exhibits filed with
the 1987 Form 10-K.
(3) - Incorporated by reference to exhibits filed with
the 1988 Form 10-K.
(4) - Incorporated by reference to exhibits filed with
the 1989 Form 10-K.
(5) - Incorporated by reference to exhibits filed with
the 1992 Form 10-K.
(6) - Incorporated by reference to exhibits filed with
the 1993 Form 10-K.
(7) - Incorporated by reference to exhibits filed with
the 1994 Form 10-K.
(8) - Incorporated by reference to exhibits filed with
the 1995 Form 10-K.
(9) - Incorporated by reference to exhibits filed with
Form S-8, No. 333-12631.
(10) - Incorporated by reference to exhibits filed with
Form S-8, No. 333-12623.
(11) - Incorporated by reference to exhibits filed with
the 1996 Form 10-K.
(12) - Incorporated by reference to exhibits filed with
the 1997 Form 10-K.
(13) - Incorporated by reference to exhibits filed with
the 1998 Form 10-K.
10
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Schedule II - Valuation and Qualifying Accounts
AMERICAN WOODMARK CORPORATION
(In Thousands)
Additions
Balance at Charged to Balance
Beginning Cost and Deduc- at End
Description(a) of Period Expenses Other tions of Period
---------- ---------- -------- --------- ---------
Year ended April 30, 1999:
Allowance for doubtful
accounts $ 123 $ 185 $ 320(e) $ (206)(b) $ 422
------ ------ ------ ------- ------
Reserve for cash
discounts $ 365 $5,415(c) $ -- $(5,235)(d) $ 545
------ ------ ------ ------- ------
Reserve for sales returns
and allowances $1,269 $7,303(c) $ -- $(6,976) $1,596
------ ------ ------ ------- ------
Year ended April 30, 1998:
Allowance for doubtful
accounts $ 210 $ -- $ -- $ (87)(b) $ 123
------ ------ ----- ------- ------
Reserve for cash discounts $ 303 $3,883(c) $ -- $(3,821)(d) $ 365
------ ------ ----- ------- ------
Reserve for sales returns
and allowances $ 868 $5,051(c) $ -- $(4,650) $1,269
------ ------ ----- ------- ------
Year ended April 30, 1997:
Allowance for doubtful
accounts $ 629 $ 830 $ -- $(1,249)(b) $ 210
------ ------ ----- ------- ------
Reserve for cash discounts $ 250 $3,236(c) $ -- $(3,183)(d) $ 303
------ ------ ----- ------- ------
Reserve for sales returns
and allowances $ 627 $4,492(c) $ -- $(4,251) $ 868
------ ------ ------ ------- ------
(a) All reserves relate to accounts receivable.
(b) Principally write-offs, net of collections.
(c) Reduction of gross sales.
(d) Cash discounts granted.
(e) Adjustments resulting from the acquisition of Knapp
Woodworking, Inc.
11
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
American Woodmark Corporation
(Registrant)
July 15, 1999 /s/ JAMES J. GOSA
-----------------
James J. Gosa
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
July 15, 1999 /s/ JAMES J. GOSA
-----------------
James J. Gosa
President and
Chief Executive Officer
(Principal Executive Officer)
Director
July 15, 1999 /s/ KENT B. GUICHARD
--------------------
Kent B. Guichard
Senior Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer)
Director
July 15, 1999 /S/ WILLIAM A. ARMSTRONG
------------------------
William A. Armstrong
Corporate Controller
(Principal Accounting Officer)
July 15, 1999 /s/ WILLIAM F. BRANDT, JR.
--------------------------
William F. Brandt, Jr.
Chairman of the Board
Director
July 15, 1999 /s/ DANIEL T. CARROLL
---------------------
Daniel T. Carroll
Director
July 15, 1999 /s/ C. ANTHONY WAINWRIGHT
-------------------------
C. Anthony Wainwright
Director
12
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July 15, 1999 /s/ MARTHA M. DALLY
-------------------
Martha M. Dally
Director
July 15, 1999 /s/ FRED S. GRUNEWALD
---------------------
Fred S. Grunewald
Director
13
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In accordance with Securities and Exchange Commission
requirements, the Company will furnish copies of all exhibits to
its Form 10-K not contained herein upon receipt of a written
request and payment of $.10 (10 cents) per page to:
Mr. Kent Guichard
Senior Vice President, Finance and
Chief Financial Officer
American Woodmark Corporation
P.O. Box 1980
Winchester, Virginia 22604-8090
14
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Exhibit 3.2(c)
American Woodmark Corporation
Resolution of the Board of Directors
On June 17, 1999, the Board of Directors of American Woodmark
Corporation approved the following resolution by unanimous
consent.
RESOLVED, that Article III, paragraph 1 of the Bylaws of the
Corporation is hereby amended to read as follows:
There shall be a Board of Directors consisting of nine
persons.
/s/Kent B. Guichard
__________________
Kent B. Guichard
Corporate Secretary
Corporate Seal
<PAGE>
Exhibit 10.8 (a)
American Woodmark Corporation
Fiscal Year 1999
Annual Incentive Plan for the Chairman of the Board
and the President/CEO
I. The objectives of the Annual Incentive Plan are
threefold:
A. Provide an incentive which will encourage and reward
outstanding individual performance;
B. Help align the personal goals of the individual with
the overall goals of and objectives of American Woodmark and
the stockholders of American Woodmark; and
C. Together with base pay and long term incentive
programs, provide a compensation package, in both form and
total value, which is equal to or better than opportunities
offered in the competitive marketplace for similar
performance in similar positions.
II. Eligibility for Participation in the Annual Incentive
Program
A. The Chairman and President/CEO of the Company.
Eligible participants must be employed by the Company on
April 30, 1999. All calculations will be reduced on a pro-
rated basis for eligible participants not employed as of May
1, 1998.
III. Determination of Annual Incentive Payout
A. Determination of the payout will be based on one
component:
1. Zero to 110% of base salary on April 30, 1999 as
determined by the attached schedule for net income. No
payment will be made on net income below $7.0 million. Net
income will be the audited amount as listed in the Company's
annual report for Fiscal 1998.
<PAGE>
Exhibit 10.8(b)
American Woodmark Corporation
Fiscal Year 1999
Annual Incentive Plan for Vice Presidents
I. The objectives of the Annual Incentive Plan are
threefold:
A. Provide an incentive which will encourage and reward
outstanding individual performance;
B. Help align the personal goals of the individual with
the overall goals of and objectives of American Woodmark and
the stockholders of American Woodmark; and
C. Together with base pay and long term incentive
programs, provide a compensation package, in both form and
total value, which is equal to or better than opportunities
offered in the competitive marketplace for similar
performance in similar positions.
II. Eligibility for Participation in the Annual Incentive
Program
A. All Vice Presidents of the Company. Eligible
participants must be employed by the Company on April 30,
1999. All calculations will be reduced on a pro-rated basis
for eligible participants not employed as of May 1, 1998.
III. Determination of Annual Incentive Payout
A. Determination of the payout will be based two
components:
1. Zero to 70% of base salary on April 30, 1999 as
determined by the attached schedule for net income. No
payment will be made on net income below $7.0 million. Net
income will be the audited amount as listed in the Company's
annual report for Fiscal 1998.
2. Zero to 30% of base salary on April 30, 1998 based on
the individual evaluation of the employee through the
Company's performance review process.
B. No payments will be made on the annual incentive plan
unless the Company reports a net profit for the fiscal year.
<PAGE>
Exhibit 10.10 (a)
LOAN AGREEMENT
THIS LOAN AGREEMENT, made and entered into this 20th day of
November, 1998, by and between the West Virginia Economic
Development Authority ("WVEDA"), 1018 Kanawha Boulevard, East,
Suite 501, Charleston, West Virginia 25301, and American
Woodmark Corporation, 3102 Shawnee Drive, P. 0. Box 1980,
Winchester, Virginia 22601.
WITNESSETH:
WHEREAS, American Woodmark Corporation, a West
Virginia corporation (the "Company"), has purchased, acquired
and installed certain equipment, machinery and fixtures in its
facility, located at Moorefield, West Virginia, described in
Exhibit A (the "Equipment Project");
WHEREAS, the total estimated cost of the Equipment
Project is $1,050,000-00;
WHEREAS, WVEDA has agreed to make a loan to the
Company in the amount of $500,000 for a term of ten (10) years
with interest at the Wall Street Journal Prime Rate as of
November 23, 1998 less four percent (4%) (subject to a floor of
five percent (5%)) to be used to permanently finance a portion
of the cost of the Equipment Project (the "WVEDA Loan");
WHEREAS, the balance of the cost of the Equipment
Project is to be paid by the Company;
WHEREAS, the collateral for said WVEDA Loan shall be a
first lien on the Equipment Project and replacements thereto of
the Company, which is to be located at the Company's facility at
Route 220 South, Industrial Park, Moorefield, West Virginia (the
"Moorefield Facility"); and
WHEREAS, the Company has represented to WVEDA that the
WVEDA Loan shall ultimately be applied toward the permanent
financing of said equipment, machinery and fixtures which
comprise the Equipment Project as outlined in the loan
application submitted to WVEDA.
NOW, THEREFORE, In consideration of the premises and
of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree to and with each other as
follows:
A. The Loan and Collateral:
1. The WVEDA Loan shall be made and disbursed, as set
out in the loan application from the Company to WVEDA.
<PAGE>
2. WVEDA agrees to loan to the Company the sum of
$500,000 for a term of ten (10) years at an annual fixed rate of
interest which is the Wall Street Journal Prime Rate less four
percent (4%), provided, however, that the interest rate will be a
minimum of five percent (5%), which WVEDA Loan shall represent
not more than seventy-five percent (75%) of the total cost of the
Equipment Project.
3. The note evidencing the WVEDA Loan and the
collateral and security which shall secure the repayment of the
WVEDA Loan shall be as follows:
(a) The Company agrees to execute and deliver to WVEDA
a negotiable Promissory Note (the "Promissory
Note") payable to the order of WVEDA in the
principal sum of $500,000 for a term of years and
bearing interest at the rate set out above payable
in 120 consecutive monthly payments of principal
and interest commencing one month from the date of
the Promissory Note, said Promissory Note to be
substantially in the form set forth in Exhibit B
attached hereto.
(b) The Company shall grant to WVEDA a first lien
security interest, pursuant to the Uniform
Commercial Code, on the Equipment Project
described in Exhibit A and all replacements
thereto and proceeds therefrom, to secure WVEDA in
the payment of the WVEDA Loan mentioned in
paragraph A.2. above. The Company further agrees
to execute and deliver to WVEDA a Security
Agreement (the "Security Agreement") in a form
acceptable to WVEDA and UCC-1 financing statements
for filing in all jurisdictions necessary to
provide WVEDA with a perfected first lien on the
Equipment Project.
B. The Disbursement of the WVEDA Loan Proceeds:
1. The total loan proceeds of the WVEDA Loan to the
Company hereunder shall be used only for the purposes set forth
in the loan application submitted by the Company to WVEDA.
2. Disbursement of the proceeds of said WVEDA Loan
shall be made at closing.
C. Representations, Covenants and Warranties of the
Company:
1. The Company is a duly organized and existing
corporation under the laws of the State of Virginia, and is
qualified to do business in, and is in good standing under the
laws of, the State of West Virginia.
2. The execution, delivery and performance of this
Loan Agreement and other documents and writings referred to
herein or otherwise relating hereto are all within the Company's
<PAGE>
corporate powers, have been duly authorized and are not in
contravention of law, or the terms of the charters, bylaws, or
other corporate papers, or of any indenture, agreement or
undertaking to which the Company is a party or by which the,
Company is bound. This Loan Agreement, the Promissory Note, the
Security Agreement and the other loan documents to which the
Company is a party, when executed by the Company are and will be
legal, valid and binding obligations of the Company (subject to
bankruptcy and equitable principles) and the Security Agreement
shall create a first priority security interest in the Equipment
Project.
3. Prior to the disbursement of any proceeds of the
WVEDA Loan by WVEDA to the Company, the Company shall provide
WVEDA with certified copies of the Company's corporate
resolutions authorizing the Company's officers to execute this
Loan Agreement, the Promissory Note, the Security Agreement and
other documents described above, as well as other documents
necessary to consummate the WVEDA Loan being made hereunder.
All such documents shall be in the usual and customary form, and
shall be satisfactory to counsel for WVEDA.
4. Prior to the disbursement of any proceeds of the WVEDA Loan
by WVEDA to the Company, the Company shall provide WVEDA with a
list of specific equipment installed or placed at the Moorefield
Facility being the Equipment Project, shall provide documentary
evidence of the cost of said equipment, and shall certify to
WVEDA that such equipment (which comprises the Equipment Project
and is to be pledged as collateral for the WVEDA Loan) has a
value equal to or greater than $1,000,000 and has an average
useful life of no less than ten (10) years.
5. Prior to the disbursement of any proceeds of the WVEDA
Loan by WVEDA to the Company, the Company will furnish to WVEDA
an opinion of its counsel, with current date, covering such
matters incident to the transaction herein contemplated as may be
requested in form and substance satisfactory to counsel for
WVEDA.
6. Prior to the disbursement of any proceeds of the WVEDA
Loan, WVEDA shall have filed financing statements in all
jurisdictions necessary to provide WVEDA a first priority,
security interest in the Equipment Project evidenced by a
certified UCC lien search of the West Virginia Secretary of State
and such other evidence acceptable to WVEDA as to the perfection
of said interest by filing and recordation.
7. All information at any time or times furnished to
WVEDA by the Company concerning the Company's financial condition
or otherwise, for the purpose of obtaining the WVEDA Loan being
made hereunder by WVEDA to the Company and any other credit or
extension or renewal of such WVEDA Loan or other credit, and so
long as any part of such WVEDA Loan or extensions or renewals
thereof remain outstanding is and will be at the time the same is
furnished, accurate and correct in all material respects and
complete insofar as completion may be necessary to give WVEDA
true and accurate knowledge with respect thereto.
8. At the time. the proceeds of the WVEDA Loan are
disbursed, as provided herein, the Company shall be in material
compliance with and shall thereafter remain in material
<PAGE>
compliance with all Federal and State of West Virginia laws, including
regulations applicable to its business for so long as any part of
the WVEDA Loan referred to in this Loan Agreement is outstanding;
subject, however, to the Company's right to contest the same in
good faith.
9. Neither the execution and delivery by the Company
of this Loan Agreement, the Promissory Note, the Security
Agreement or other documents referred to herein nor consummation
of the transactions contemplated thereby, nor compliance with the
terms, conditions and provisions thereof will (i) conflict with
or result in a breach of any of the terms, conditions or
provisions of any agreement or instrument to which the Company is
a party, or constitute a default thereunder, or (ii) violate any
law or any rule, regulation, order, writ, injunction or decree of
any court or governmental instrumentality or agency.
10. So long as any part of the WVEDA Loan being made
hereunder by WVEDA to the Company is outstanding:
a. The Company shall promptly give WVEDA notice
of any unusual problems or developments affecting
its business operations which may adversely
affect: (i) its ability to repay such WVEDA Loan;
and (ii) the collateral securing such WVEDA Loan.
b. The Company shall pay and discharge or cause to be
paid or discharged all tax claims relating to the
collateral securing the WVEDA Loan being made
hereunder, when due, except such as to which a
bona fide dispute exists, and which are being
contested in good faith.
c. The Company shall maintain proper books of records
and accounts in accordance with generally accepted
accounting principles consistently applied, in
which full, true and correct entries shall be made
of all of its dealings and business affairs, and
the Company shall permit WVEDA or its authorized
representatives, to inspect and audit its books of
record and account at any reasonable time or times
upon receiving a request with respect thereto.
WVEDA personnel and all agents of WVEDA shall be
authorized to enter upon the premises of the
Company and into any building thereon, whether
permanent or temporary, jointly or separately, to
carry out inspections. These inspections may be
scheduled or unscheduled.
d. The Company shall:
(i) Promptly furnish WVEDA annual financial
statements within 90 days of the end of the
Company's fiscal year, all in reasonable detail
and prepared by an independent certified public
<PAGE>
accountant of recognized standing acceptable to
WVEDA and whose certificate or opinion
accompanying such financial statements is in form
and substance acceptable to WVEDA;
(ii) Not declare, or make, or incur any liability
to make, any payment in cash or other assets
either as dividends or other distributions upon
any shares of any class of capital stock of the
Company, or purchase, retire, redeem or otherwise
acquire for value any shares of any class of
capital stock of the Company, if any of the
following circumstances are in existence at that
time: (a) the Company is in default of any
financial covenant relating to the WVEDA Loan; (b)
the Company is in default or is unable to pay its
current financial obligations under any financing
documents with any of its lenders; or (c) the
Company has failed to pay when due any
governmental tax, charge, fee or assessment
(subject to the absolute right of the Company to
in good faith challenge such tax, charge, fee or
assessment). Any change in this requirement for
dividends must be approved by WVEDA.
(iii) Not increase salaries or compensations
of officers or owners unless all of the Company's
debts are paid to a current status;
(iv) Not make any loans or advances to any
officer, shareholder, director or employee, except
for temporary advances in the ordinary course of
business; and
(v) Cause loans to the Company from
shareholders, directors or officers to be
subordinated, both for collateral and repayment,
to the WVEDA Loan, and payments thereon shall be
deferred until the WVEDA Loan is paid in full.
11. So long as the WVEDA Loan described hereunder from
WVEDA to the Company or any renewal or extension thereof, remains
unpaid in whole or in part, or so long as any other liability or
indebtedness of the Company to WVEDA shall exist:
a. The Company shall conduct its business in a
normal manner in the ordinary course of business
and remain in business and employ persons from the
general vicinity of Hardy County, West Virginia to
the extent possible. The WVEDA Loan shall be
callable at the option of WVEDA should the Company
cease operations of the Moorefield Facility or if
there is a Significant Curtailment of Operations
at the Moorefield Facility. "Significant
Curtailment of Operations" shall mean a condition
at the Moorefield Facility where employment (as
measured in terms of man hours) for any calendar
quarter is less than 50% of the average quarterly
employment for the previous four quarters, unless
such reduction is the result of strikes or other
labor unrest, casualty or causes beyond the
reasonable control of the Company.
b. At all times during the term of this Loan
Agreement, the Company shall, at its own expense,
<PAGE>
maintain adequate liability insurance and keep or
cause to be kept the property described in Exhibit
A, fully insured (subject to a deductible not to
exceed $25,000) against fire with extended
coverage in an amount and with an insurance
company or companies satisfactory to WVEDA and
against other hazards, casualties and
contingencies in such amounts and for such periods
as may be required by WVEDA. All casualty
insurance relating to the collateral for the WVEDA
Loan shall name WVEDA as an additional insured and
as loss payee, as its interest may appear, and
providing for not less than thirty (30) days
written notice to WVEDA of the cancellation of
such policy or policies. The proceeds of any such
loss may be applied to repair or replacement of
the damaged equipment, or shall be paid to the
Company to reimburse it for any such costs
incurred by the Company prior to receipt of the
insurance proceeds. In the event of a failure or
refusal of the Company to agree with the insurance
companies issuing such policies as to the amount
and terms of any loss within sixty (60) days from
such loss, WVEDA may negotiate with and settle
said loss with such insurance company or
companies, and neither WVEDA nor the insurance
companies so involved shall, upon such settlement
being made, be liable in any manner to the
Company. The Company shall carry Workers'
Compensation insurance and other insurance against
other risks as are commonly insured against by
companies in similar types of business, all in a
manner satisfactory to WVEDA. The Company shall
purchase Federal Flood Insurance in amounts and
coverage satisfactory to WVEDA if the Company's
county is designated as a flood prone area and the
FIA map shows that the Moorefield Facility's
property is located within a special flood hazard
area, which Federal Flood Insurance, if so
required, shall name WVEDA as an additional
insured and as loss payee, as its interest may
appear.
12. The Company covenants and warrants that the real
estate on which the equipment, machinery and fixtures used as
collateral for the WVEDA Loan is to be installed or located is
not contaminated by the disposal of hazardous substances and the
Company hereby agrees to indemnify and hold WVEDA and its assigns
harmless from any loss or damage to the Equipment Project,
including costs or expenses connected therewith, resulting from
hazardous substances and waste being located on said real estate
by reason of the "Comprehensive Environmental Response
Compensation and Liability Act of 1980" or other similar acts
under the laws of the United States or of any state.
13. The Company shall perform and observe all
covenants, agreements, terms and conditions contained in this
Loan Agreement, the Promissory Note, the Security Agreement and
other documents required to be executed and delivered hereunder.
14. Except as provided herein or with the prior
consent in writing of WVEDA, the Company shall not participate in
any merger, consolidation or other reorganization, or sell or
otherwise transfer all or any part of its business or assets
which are encumbered to secure the WVEDA Loan described herein.
<PAGE>
The WVEDA Loan shall, at the option of WVEDA, be due upon the
sale or other transfer of the Equipment Project, or any portion
thereof, in any manner whatsoever by the Company to any person,
firm or corporation without the consent in writing of WVEDA
except for sale or transfer of damaged, worn or obsolete
equipment replaced by the Company.
15. The Company shall from time to time execute such
further writings, instruments and documents and do such further
acts as WVEDA may reasonably require to effect the purposes of
this Loan Agreement.
16. All of the Company's representations, covenants
and warranties contained in this Loan Agreement shall survive the
execution and delivery of this Loan Agreement, as well as the
Promissory Note, Security Agreement and other documents described
above, and the disbursement of the WVEDA Loan proceeds hereunder
and any breach thereof by the Company shall be considered an
event of default under the Promissory Note, Security Agreement
and other documents.
17. Whenever any approvals may be required hereby by
the parties or their respective counsel with respect to the form
and sufficiency of any documents or writings, the condition of
the title to any collateral securing the loans being made
hereunder, or on any other matter, such approval shall not be
unreasonably withheld.
18. The Company shall be responsible for all WVEDA
Loan closing costs and expenses, including, but not limited to,
reasonable attorney's fees, incurred by WVEDA in connection with
this WVEDA Loan.
19. The Equipment Project shall be completed for a
cost approximating $1,050,000, as set forth above. Should at any
time said costs exceed $ 1,000,000, then WVEDA shall not be
obligated to close and disburse the WVEDA Loan, until the Company
shall have certified to WVEDA the amount expended for the
Equipment Project and the amount of equity paid in by the Company
for the same. If the overall cost of the completed Equipment
Project is less than $ 1,000,000, WVEDA participation shall be in
the same proportion to $1,000,000, as the original commitment.
20. The Company shall provide WVEDA annually, by
November 1, of each year, during the term of the WVEDA Loan, a
report showing the total number of permanent and part-time
employees of the Company working at the facility of the Company
financed in part with the proceeds of the WVEDA Loan as of
September 30 of that year and the aggregate total of gross wages
paid to these employees during the twelve (12) month period
ending September 30 of that same year.
<PAGE>
D. Events of Default and.Remedies.-
1. The occurrence of any one of the following
shall constitute an Event of Default:
(a) Failure by the Company to pay any amounts required
to be paid under the Promissory Note or under this
Loan Agreement at the times specified therein and
herein and such failure shall continue for a
period of thirty (30) days after the same has
become due;
(b) Failure by the Company to observe and perform any
covenant, condition or agreement on its part to be
observed or performed in this Loan Agreement,
other than as referred to in (a) above and (c)
below, for a period of 30 days after written
notice, specifying such failure, requesting that
it be remedied and stating that it is a notice of
default, has been given to the Company by WVEDA,
unless WVEDA shall agree in writing to an
extension of such time prior to its expiration;
(c) The dissolution or liquidation of the Company or
the commencement by the Company or by any
guarantor of the WVEDA Loan of a voluntary case
under the United States Credit Bankruptcy Code, as
amended, or its failure promptly to lift or
suspend any execution, garnishment or attachment
of such consequence as will impair its ability to
perform its obligations under this Loan Agreement,
or the entry of an order for relief in respect of
the Company of the WVEDA Loan under the United
States Bankruptcy Code, as amended, or the
appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee,
sequestrator, or similar official of the Company
or of any substantial part of its property of the
WVEDA Loan, or an assignment by it or by any such
guarantor for the benefit of creditors, or the
entry by it into an agreement of composition with
its creditors, or the filing of a petition
applicable to the Company of the WVEDA Loan in any
proceeding seeking its reorganization,
liquidation, adjustment, composition or other
arrangement instituted pursuant to any federal or
state law; provided, however, that any such
petition filed against the Company or not filed by
the Company that is dismissed or stayed within
thirty (30) days of such filing shall not
constitute an Event of Default so long as the
Company gives written notice of such filing to
WVEDA; or
(d) Any warranty, representation or other statement by
or on behalf of the Company contained in this Loan
Agreement or in any instrument or certificate
furnished in compliance with or in reference to
this Loan Agreement is false or misleading in any
material respect, or failure by the Company to
perform or observe any condition or covenant
contained in any such document for a period of 30
days after compliance with the notice and request
provisions of paragraph D.1.(b) above.
2. Whenever any Event of Default shall have
happened and is continuing, WVEDA may, to the extent permitted by
applicable law, take any one or more of the following remedial
steps:
<PAGE>
(a) (i) WVEDA may exercise any right, power or remedy
permitted to it by law, and shall have in
particular, without limiting the generality of the
foregoing, the right to declare the entire amount
of the WVEDA Loan (if not then due and payable) to
be due and payable immediately, and upon any such
declaration the entire amount of the WVEDA Loan
shall become and be immediately due and payable,
anything in this Loan Agreement contained to the
contrary notwithstanding. The Company shall
forthwith pay to WVEDA such amounts.
(ii) WVEDA may waive, rescind and annul such
declaration and the consequences thereof.
(b) WVEDA may take any action or remedy specified in
the Security Agreement dated as of the date hereof
between the Company and WVEDA.
(c) WVEDA may take whatever action at law or in equity
may appear necessary or desirable to collect the
payments and other amounts then due and thereafter
to become due or to enforce performance and
observance of any obligation, agreement or
covenant of the Company under this Loan Agreement.
In case WVEDA shall have proceeded to enforce its
rights under this Loan Agreement and such proceedings shall have
been discontinued or abandoned for any reason or shall have been
determined adversely to WVEDA, then and in every such case the
Company and WVEDA shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies
and powers of the Company and WVEDA shall continue as though no
such proceeding had been taken.
The Company covenants that, without limiting any
remedies of WVEDA hereunder, in case an Event of Default shall
occur with respect to the payment of any installment payable
under WVEDA Loan then, upon demand of WVEDA, the Company will
pay to WVEDA the whole amount that then shall have become due
and payable under the WVEDA Loan, with interest on overdue
principal (and interest to the extent permitted by law) at the
rate payable on the WVEDA Loan.
In case the Company shall fail to pay such amounts
within the time provided in Section D. 1.(a), WVEDA shall be
entitled and empowered to institute any action or proceeding at
law or in equity without demand for the collection of the sums
so due and unpaid, and may prosecute any such action or
proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company and collect, in the
manner provided by law, out of the property of the Company, the
moneys adjudged or decreed to be payable.
<PAGE>
3. In the event the Company should default under any
of the provisions of this Loan Agreement and WVEDA should employ
attorneys or incur other expenses for the collection of the
payments due under this Loan Agreement or the enforcement of
performance or observance of any obligation or agreement on the
part of the Company herein contained, the Company agrees that it
will on demand therefor pay to WVEDA, the reasonable fees of
such attorneys and such other reasonable expenses so incurred by
WVEDA.
4. To the extent permitted by law, the Company will
not during the continuance of any Event of Default hereunder
insist upon, or plead, or in any manner whatever claim or take
any benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect
the covenants and terms of performance of this Loan Agreement.
The Company hereby expressly waives all benefits or advantage of
any such law or laws and covenants not to hinder, delay or
impede the execution of any power herein granted or delegated to
WVEDA, but to suffer and permit the execution of every power as
though no such law or laws had been made or enacted.
5. No remedy herein conferred upon or reserved to
WVEDA is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this
Loan Agreement or now or hereafter existing at law or in equity
or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver thereof, but any such
right and power may be exercised from time to time and as often
as may be deemed expedient. In order to entitle WVEDA to
exercise any remedy reserved to it in this Article, it shall not
be necessary to give any notice, other than such notice as may
be herein expressly required.
6. In the event any agreement contained in this Loan
Agreement should be breached by the Company and thereafter waived
by WVEDA, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach
hereunder.
7. The Events of Default and remedies set forth in
this Section D shall be in addition to all other defaults and
remedies set forth in this Loan Agreement.
E. General Provisions:
1. This Loan Agreement shall be binding upon and
inure to the benefit of all of the parties hereto, and their
respective successors and assigns. This Loan Agreement and the
agreements and documents relating thereto may be assigned by
WVEDA without the consent of the Company. The Company may not
assign this Loan Agreement or any of its rights and obligations
hereunder or under the other documents and agreements relating
thereto without the written consent of WVEDA, and any attempted
assignment without such consent shall be null and void.
2. The parties hereto shall not be deemed to have
waived or agreed to the modification of any of the provisions
hereof, except by instrument in writing duly signed by them.
<PAGE>
3. If any provision of this Loan Agreement shall be
held or deemed to be or shall, in fact, be illegal, inoperative
or unenforceable, the same shall not affect any other provision
or provisions herein contained or render the same invalid,
inoperative or unenforceable to any extent whatsoever.
4. This Loan Agreement and all other agreements
related hereto shall be governed and construed in accordance with
the laws of the State of West Virginia. Headings and titles
herein and therein are for convenience only and shall not
influence such construction or interpretation.
5. All notices required or desired to be given
hereunder shall be served by certified mail on the party intended
at its address shown below, which notice shall be deemed given at
the time deposited in the U.S. Mail, postage prepaid:
West Virginia Economic Development Authority
1018 Kanawha Boulevard, East
Suite 501
Charleston, West Virginia 25301
American Woodmark Corporation
P. 0. Box 1980
Winchester, Virginia 22604
IN WITNESS WHEREOF, WVEDA and the Company have caused
their corporate names to be signed hereto by their respective
officers duly authorized, all as of the day and year first above
written.
WEST VIRGINIA ECONOMIC DEVELOPMENT
AUTHORITY
By: DAVID G. WARNER
Its: Executive Director
AMERICAN WOODMARK CORPORATION
By: GLENN EANES
Its: Treasurer
<PAGE>
EXIIIBIT A
List of Equipment
Useful
Description Vendor Cost Life
------ ---- -----
Misc. Parts Wrapper Resourcement $43,103 10
Printer for Wrapper Boehm Inc. 23,270 10
Boiler Hurst Boiler 273,000
Dillon Supply 1,939
Grainger 1,815
-------
Total Cost 276,754 15
Colashi DET Danchaert Woodworking 122,822 10
Moulder Mineral Fab. 23,541 10
Michael Weinig Inc. 82,135
-------
Total Cost 105,676 10
Spindle Shaper Mineral Fab. 4,050
3K Machinery 7,900
-------
Total Cost 11,950 10
Bumper Machine Mineral Fab. 35,000 10
Dust Collection System Flemex Inc. 10,355
HC Wade Sheet Metal 168,812
-------
Total Cost 179,167 15
Automatic Door Clamp Giben America Inc. 216,000 10
Rye Shaper Fab-Tex Fixtures 2,510
3K Machinery 18,500
-------
Total Cost 21,010 10
Grand Total $1,034,753 12
<PAGE>
EXHIBIT B
Promissory Note
<PAGE>
Exhibit 10.10 (b)
PROMISSORY NOTE
$500,000.00 Charleston, West Virginia
November 20, 1998
FOR VALUE RECEIVED, the undersigned American Woodmark
Corporation (the "Company") hereby promises to pay to the order
of the West Virginia Economic Development Authority (the
"WVEDA") the sum of Five Hundred Thousand and no/100th Dollars
($500,000.00), with interest fixed at five percent (5%) per
annum, on the unpaid principal, in lawful money of the United
States, at the offices of the WVEDA, 1018 Kanawha Boulevard,
East, Suite 501, Charleston, West Virginia 25301, or at such
other place as the owner of this Note shall designate, as
follows:
1. On the 25 day of each calendar month for one
hundred twenty (120) successive calendar months beginning on
the 25 day of December, 1998, the Company shall pay the sum of
$5,289.24 until November 25, 2008 when the entire unpaid
principal balance, together with the interest accrued thereon
at the rate aforesaid, shall be paid in full. Said payments
shall be applied first to the payment of said interest on the
unpaid balance and the balance to the payment of said
principal.
2. This Note is the one described in that certain
Loan Agreement and that certain Security Agreement each of even
date herewith by and between the WVEDA and the Company. If
default shall be made in the payment of any installments of
this Note or any part thereof, when due, and if such default
shall continue for a period of thirty (30) days after the same
has become due, or if there shall be a breach at any time of
any covenant, condition, provision, warranty, stipulation or
agreement contained in the Loan Agreement or the Security
Agreement and such breach shall continue for a period of thirty
(30) days after notice thereof has been given to the Company,
or upon the occurrence of any of the events described in D1.(c)
and (3) of the Loan Agreement, then in any such event the
entire principal balance hereof, with interest thereon then
accrued, shall at once be and become due, payable and
demandable, without notice, at the option of the holder hereof.
Failure at any time on the part of the holder hereof to
exercise such option shall not constitute a waiver of the right
to exercise the same in the event of a subsequent similar
default.
3. The undersigned shall have the right at any time,
without notice, premium or penalty, to make payment of all or
any part of this Note, but any such partial payment shall not
operate to postpone payment as and when due of the regular
installments due on this Note.
4. The undersigned expressly waives presentment for
and demand of payment and notice of the nonpayment of any
installment of principal or interest falling due under this
Note, and also waives of same upon default in the payment of
such installment.
AMERICAN WOODMARK CORPORATION
By: Glenn Eanes
Its: Treasurer
<PAGE>
Exhibit 10.10 (c)
SECURITY AGREEMENT
American Woodmark Corporation, with operations located at Route
220 South, Industrial Park, Moorefield, West Virginia 26836, herein called
"Debtor," and the West Virginia Economic Development Authority, herein
called "Secured Party," agree as follows:
1. Debtor hereby grants to Secured Party a first lien security
interest in all equipment, machinery and fixtures of Debtor located at Route
220 South, Industrial Park, Moorefield, West Virginia, whether now owned or
hereafter acquired, including without limitation the equipment, machinery
and fixtures described in Exhibit A hereto, and all replacements and
additions thereto and proceeds thereof.
2. Debtor warrants and agrees that:
a. Debtor shall pay Secured Party the sum of $500,000 evidenced
by a Promissory Note of even date herewith and referred to
in the Loan Agreement of even date herewith between the
parties hereto, together with the interest and other
obligations described in said Promissory Note and the Loan
Agreement.
This Security Agreement shall, in addition to securing said sums
due to Secured Party, secure all future advances made by Secured
Party, to, or for the account of Debtor, including advances for
loans, repairs to or maintenance of the collateral, and all
reasonable costs and expenses incurred in the collection of any
such indebtedness.
b. The collateral covered hereby will be used primarily in
Debtor's business located at the address mentioned above,
unless Secured Party consents in writing to another use and
will not be misused or abused, wasted or allowed to
deteriorate, except for the ordinary wear and tear from its
intended primary use.
c. Until this Security Agreement is terminated, the collateral
will be insured against fire, theft, vandalism, malicious
mischief, and other hazard in an amount and with policy or
policies of insurance acceptable to Secured Party and
payable to both Secured Party and Debtor, as their interest
appear, and with the policies, or copies thereof, deposited
with Secured Party, and such policy or policies shall
provide for not less than thirty (30) days written notice
to Secured Party of the cancellation of such policy or
policies.
d. The collateral will not be sold, transferred or disposed of
or be subjected to any unpaid charges, including taxes, or
to any subsequent interest of a third person created or
suffered by Debtor voluntarily or involuntarily, unless
Secured Party consents in advance in writing to such
charge, transfer, disposition or subsequent interest.
e. Debtor will sign and execute alone or with Secured Party
any Financing Statements or documents or procure any
documents and pay all costs necessary to protect the
security interests under this Security Agreement against
the rights or interests of a third party.
<PAGE>
f. Debtor will reimburse Secured Party for any action to
remedy a default which Secured Party elects pursuant to the
terms hereof or under said Loan Agreement.
3. Until default hereunder, Debtor shall be entitled to the
possession of the collateral and to use and enjoy the same.
4. Debtor shall be in default hereunder upon an Event of
Default as set forth in said Loan Agreement or failure to pay any amount
ayable hereunder or under said Promissory Note within the time provided in
said Promissory Note or upon failure to observe or perform any of Debtor's
other agreements contained herein.
5. Upon Debtor's default, Secured Party may exercise its rights
of enforcement under the Uniform Commercial Code in force in West Virginia,
at the date of this Security Agreement and, in conjunction with, in
addition to or in substitution for those rights, at the discretion of
Secured Party, may enter upon Debtor's premises to take possession of,
assemble, and collect the collateral or render it unusable, and may require
Debtor to assemble the collateral and make it available at a place
designated by Secured Party which is mutually convenient to allow Secured
Party to take possession of or dispose of the collateral. Secured Party
may waive any default or remedy any default in any reasonable manner
without waiving the default remedy and without waiving any other prior or
subsequent defaults. In the event of default by Debtor in his obligations
to Secured Party and the repossession of the collateral by Secured Party,
such Secured Party may sell and transfer the entire interest in and full
and complete title to the collateral.
6. Debtor warrants that it has good title to the collateral
described herein; that the same is free and clear from all liens and
encumbrances.
7. All the collateral described herein is located in Hardy
County, West Virginia, and will remain in said County until said Promissory
Note is paid in full.
8. The only office of the Debtor in West Virginia is at Route
220 South, Industrial Park, Moorefield, West Virginia 26836.
Dated this 20th day of November, 1998.
AMERICAN WOODMARK CORPORATION
By: Glenn Eanes
Its: Treasurer
WEST VIRGINIA ECONOMIC DEVELOPMENT
AUTHORITY
By: David A. Warner
Its: Executive Director
<PAGE>
EXHIBIT A
List of Equipment
Useful
Description Vendor Cost Life
Misc. Parts Resourcement $43,103 10
Wrapper
Printer For Boehm Inc. 23,270 10
Wrapper
Boiler Hurst Boiler 273,000
Dillon Supply 1,939
Grainger 1,815
-------
276,754 15
Total Cost
Colashi DET Danckaert 122,822 10
Woodworking
Moulder Mineral Fab. 23,541
Michael Weinig 82,135
-------
Inc. 105,676 10
Total Cost
Spindle Shaper Mineral Fab. 4,050
3K Machinery 7,900
-------
11,950 10
Total Cost
Dust Collection Flemex Inc. 10,355
System HC Wade Sheet 168,812
-------
Metal 179,167 15
Total Cost
Automatic Door Giben America 216,000 10
Clamp Inc.
Rye Shaper Fab-Tex Fixtures 2,510
3K Machinery 18,500
-------
21,010 10
Total Cost
Grand Total 12
$1,034,753
<PAGE>
STATE OF WEST VIRGINIA
UNIFORM COMMERCIAL CODE-FINANCING STATEMENT-FORM UCC-1
INSTRUCTIONS
69642
1. PLEASE TYPE this form. Fold only along perforation for mailing.
2. Remove Secured Party and Debtor copies (last two sheets) and send
other 3 copies with interleaved carbon paper to the filing officer.
3. When filing is to be with more than one office, Form UCC-2 may be
placed over this set to avoid double typing. Type on last line all
offices in which statement is filed.
4. If the space provided for any item's) on the form is inadequate
the item(s) should be continued on additional sheets, preferably
5" x 8" or 8" x 10". Only one copy of such additional sheets need
be presented to the filing office with a set of three copies of
the financing statement. Long schedules of collateral,
indentures, etc., may be on any size paper that is convenient for
the secured party.
5. If collateral is crops or goods which are or are to become fixtures,
describe generally the real estate and give name of record owner.
6. When a copy of the security agreement is used as a financing
statement, it is requested that it be accompanied by a completed but
unsigned set of these forms, without extra fee.
7. At the time of original filing, filing office should return third
copy as an acknowledgment. At a later time, secured party may
date and sign Termination Legend and use third copy as a
Termination Statement .
_____________________________________________________________________
This FINANCING STATEMENT is presented to a filing officer for filing
pursuant to the Uniform Commercial Code: 3 Maturity date (if any):
_____________________________________________________________________
1 Debtor(s) (Last Name 2 Secured Party(ies) For filing Office (Date,
First) and address(es) and address(es) Time, Number, and
American Woodmark West Virginia Filing Office)
Corporation Economic
Route 220 South, Development
Industrial Park Authority
Moorefield, WV 26836 1018 Kanawha Blvd.,
East
Suite 501
Charleston, WV
25301
4 This financing statement covers the following types (or items) of
property:
See Exhibit A
Check if covered Proceeds of Collateral are also covered Products
of Collateral are also covered No. of additional sheets presented:
Filed with West Virginia Secretary of State
AMERICAN WOODMARK CORPORATION WEST VIRGINIA ECONOMIC
DEVELOPMENT CORPORATION
By: Glenn Eanes By: David Warner Exec. Director
------------------------ ---------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
FILING OFFICE COPY-ALPHABETICAL
(Form approved by Secretary of State of West Virginia)
Registre, Inc.
514 PIERCE ST.
P.O. BOX 218
ANOKA, MN. 55303
(612) 421-1713
<PAGE>
Exhibit 10.10(d)
SECOND AMENDMENT TO
DEED OF LEASE
THIS SECOND AMENDMENT TO DEED OF LEASE ("Second Amendment")
is dated as of November 20, 1998, between the WEST VIRGINIA ECONOMIC
DEVELOPMENT AUTHORITY, a West Virginia statutory corporation
(statutory successor to the West Virginia Industrial and Trade Jobs
Development Corporation pursuant to West Virginia code & 5C-3-3(c) and
then & 31-15-3(a)), as "Lessor," and AMERICAN WOODMARK CORPORATION, a
Virginia corporation, as "Lessee," and recites:
RECITALS
A. Lessor and Lessee are parties to a certain Deed of
Lease dated July 9,1987 covering certain "Property" located in South
Fork District, Hardy County, West Virginia, recorded in the office of
the Clerk of the County Commission of Hardy County, West Virginia, in
Deed Book 195, at page 208, and amended by the Amendment to Deed of
Lease dated March 30,1992, recorded in the office of the Clerk of the
County Commission of Hardy County, West Virginia, in Deed Book 217, at
page 484 (as amended, the "Lease").
B. The undersigned desire and intend hereby to make a
Second Amendment to the Lease as hereinafter set forth:
AMENDMENT:
NOW, THEREFORE, in consideration of those promises and other
good and valuable consideration, the receipt of which is hereby
acknowledged, the undersigned agree as follows:
1. Schedules B (BASIC RENT AND BASIC RENT PAYMENT DATES)
and C (Applicable Purchase Price) to the Lease are deleted
in their entirety and new Schedules B and C attached hereto
arc substituted therefor.
2. Section 24, (a) of the Lease is amended and restated
to read as
follows:
24. Security Deposit.
(a) Lessee shall maintain throughout the term of
the
Lease, as security for its performance under the Lease, an
irrevocable letter of credit issued by a bank acceptable to
Lessor in an amount equal to the lesser of (i) $1,164,175.25
or (ii) an amount equal to 20% of the value of the Lease as
evidences by Schedule B as of the first day of August each
year. The Letter of Credit shall provide that it is
available by draft at sight on the issuer when accompanied
by the signed statement of Lessor, in the form provided by
the Letter of Credit, certifying that either (i) the Lessee
has defaulted in payment under the Lease (specifying the
default and the amount owing, making demand for same and
specifying deposit or wire transfer information applicable
to Lessor) or (ii) the Lessee has failed to cause the Letter
of Credit to be extended or replaced (making demand for the
full amount of the Letter of Credit and specifying the
deposit or wire transfer information applicable to Lessor).
<PAGE>
3. Lessee confirms all representations and warranties
made by
Lessee in the Lease.
4. Except as hereinafter set forth, the Lease shall
remain in full force and
effect and is hereby ratified and confirmed.
WITNESS the following duly authorized signatures and seats.
LESSOR:
WEST VIRGINIA ECONONUC
DEVELOPMENT AUTHORITY
By: David A. Warner
Its: Executive Director
LESSEE:
AMERICAN WOODMARK CORPORATION
By: Glenn Eanes
Its: Treasurer
<PAGE>
STATE OF WEST VIRGINIA,
COUNTY OF KANAWHA, to-wit:
The foregoing instrument was acknowledged before me this
20th day of November, 1998 by David A. Warner, Executive Director of
the West Virginia Economic Development Authority, a West Virginia
statutory corporation, on behalf of the corporation.
My commission expires: July 26, 1999 .
Sharon P. Gartner
NOTARY PUBLIC
STATE OF Virginia ,
COUNTY OF Frederick , to-wit:
The foregoing instrument was acknowledged before me this
23rd day of November, 1998, by Glenn Eanes, Treasurer of American
Woodmark Corporation, a Virginia corporation, on behalf of the
corporation.
My commission expires: April 30, 1999
Brenda Lee Clark
NOTARY PUBLIC
[SEAL]
BRENDA LEE CLARK
NOTARY PUBLIC, STATE OF VIRGINIA
My Commission Expires April 30,
1999
<PAGE>
SCHEDULE B
BASIC RENT AND BASIC RENT PAYMENT DATES
The Basic Rent Payment Dates shall be on the 1st day of each
February and August. After November 25, 1998, the Basic Rent shall be
payable, in seventeen (17) equal semi-annual payments of principal and
interest payable in advance on the first day of each six-month period
commencing February 1, 1999. Tenant shall pay Basic Rent in an
amount equal to the amount necessary to fully amortize a loan in the
principal amount of $5,275,599.41 (the "Investment") together with
(i) interest calculated on the principal amount of $3,775,599.41
("Primary Investment") at the rate of 5.0% per annum (the "Variable
Rate") and (ii) interest calculated on the principal amount of
$1,500,000.00 at the fixed rate of 6.18% per annum for the period
from (and including) November 25, 1998 over the remaining term of the
Lease. Thus, before any adjustment occurs as described below, each
installment of Basic Rent shall equal $390,102.02; provided however,
on November 25, 1998. Tenant shall pay Basic Rent in an amount equal
to $17,016.16 adjusting the Basic Rent Payment applicable to the
$1,500,000.00 investment at the rate of 6.18% per annum for the
period from (and including) November 25, 1998 to (and including)
January 31, 1999.
Either Lessor or Lessee may elect to adjust the Basic Rent as of
each successive fifth (5th) anniversary date of the first day of the
first full calendar month following the Commencement Date (an
"Adjustment Date," and the first possible Adjustment Date being August
1, 1992) by giving notice of election to adjust the Variable Rate
applied to the Primary Investment to the other within thirty (30) days
following each such Adjustment Date. If notice of election to adjust
is given by either Lessor or Lessee, the Basic Rent due on and after
the Adjustment Date (and until and unless further adjustment occurs on
a subsequent Adjustment Date) shall be that amount necessary to fully
amortize the purchase price applicable an the date before the
Adjustment Date as determined by reference to Schedule C (and
recognizing that Schedule C will be revised after each adjustment in
Basic Rent) together with (i) interest calculated on the outstanding
principal amount of the Primary investment at the "Adjusted Rate" (as
hereafter defined) per annum eye the then remaining Term
and (ii) interest calculated on the outsmarting principal amount of
the $1,500,000.00 investment continuing at the fixed rate of 6.18% per
annum over the remaining Term, all payable in advance on the first day
of each six-month period commending with the then current Adjustment
Date.
The Adjusted Rate shall equal the sum of (i) the product of
75% multiplied by the "Prime Rate" announced as such (or any
equivalent term hereafter utilized by such publications) by The Wall
Street Journal to be the Prime Rate (i.e. the base rate on corporate
loans at large U.S. money center commercial banks) as of the
Adjustment Date (or as of the first day following the Adjustment Date
on which The Wall Street Journal shall be published if not published
as of the Adjustment Date) plus (ii) 0.5% per annum. If the Prime Rate
is expressed as a "spread" or range of rates, the Prime Rate shall be
deemed to be the higher of the two interest rates quoted. Thus, for
examples if the Prime Rate shall be deemed to be the higher of the two
interest rates quoted. Thus, for example if the Prime Rate were 9% as
of the first Adjustment Date and either party elected to adjust the
Basic Rent, the Adjusted Rate would be 6.5% and the adjusted Basic
Rent as of the thirty-first Adjustment Date and thereafter until the
next adjustment would be $400,879.66 per six-month.
In no event shall the Adjusted Rate ever increase or
decrease, by more than 2% per annum from the Adjusted Rate theretofore
in effect (it being understood that until the first adjustment occurs,
the Adjustment Rate on the Primary Investment for purposes of this
sentence and the following sentence only shall be 6.875% per annum.
Thus, if the Basic Rent was adjusted as of each Adjustment Date and if
a maximum 2% per annum increase in the Adjusted Rate were to result as
of each Adjustment Date, the Adjusted Rate on the Primary Investment
would equal 12.875% per annum as of the last five years of the Term;
and if the Basic Rent was adjusted as of each Adjustment Date, the
Adjusted Rate on the Primary Investment would equal 0.875% per annum
as of the last five years of the Term.
<PAGE>
SCHEDULE B
(continued)
If The Wall Street Journal ceases to be published or ceases
to be a source of quotation of the Prime Rate, then there shall be
substituted such other nationally published source as Lessor and
Lessee shall agree, or if they cannot agree, the matter may be
submitted by either party to binding arbitration in accordance with
the rules of the American Arbitration Association. Inasmuch as the
Adjusted Rate will be determined (if at all) after the relevant
Adjustment Rate when the adjusted level of Basic Rent takes effect,
until the adjusted amount of Basic Rent is finally determined, Lessee
shall pay Basic Rent on the Adjustment Date in the amount in effect
before the Adjustment Date. If, as a consequence of the adjustment,
the amount of Basic Rent increases, Lessee shall pay the amount of the
increase within thirty (30) days after notice from Lessor as to the
new amount. If, as a consequence at the adjustment, the amount of
Basic Rent decreases, the excess in Basic Rent paid by Lessee on the
Adjustment Date shall be reimbursed by Lessor to Lessee within thirty
(30) days after notice from Lessee as to the new amount.
<PAGE>
SCHEDULE C
After Basic March 30, 1992
Rent Payment Amended Applicable November 20, 1998 Amended Applicable
Number Purchase Price Amendment Purchase Price
------ -------------- ------------ --------------
Prior to Closing $3,775,599.41
After Closing $3,775,599.41 1,500,000.00 5,275,509.41
24 3,594,643.39 1,431,693.99 5,026,237.38
25 3,409,163.46 1,361,074.23 4,770,217.69
26 3,219,046.64 1,288,375.42 4,507,421.95
27 3,024,176.69 1,213,430.21 4,237,606.90
28 2,824,435.10 1,136,169.19 3,960,604.29
29 2,610,699.96 1,056,520.81 3,676,220.77
30 2,409,848.45 974,411.29 3,384,257.75
*31 2,194,746.60 889,764.59 3,084,511.20
32 1,974,269.26 802,502.31 2,776,771.57
33 1,748,279.98 712,543.62 2,460,823.60
34 1,516,640.97 619,806.21 2,136,446.18
35 1,279,210.99 524,201.18 1,803,412.16
36 1,035,845.25 425,642.98 1,461,488.23
37 786,395.37 324,039.34 1,110,434.71
38 530,709.25 219,296.15 750,005.39
39 268,630.97 111,316.39 379,947.36
40 1.00 0.00 1.00
*The 31st Basic Rent due date is the final Adjustment Date and the
March 30, 992 Amended Applicable Purchase Prices set forth above
assume (as to the purchase prices applicable after Basic Rent Payment
Number 31) that no adjustment in Basic Rent has occurred.
If there is an adjustment in Basic Rent as described in Schedule B,
this Schedule C shall be likewise adjusted as to the purchase prices
applicable on and after the Adjustment Date relative to the March
30,1992 Amended Applicable Purchase Price so that the purchase price
schedule resulting will equal the unpaid principal balance from time
to time of a loan made on the relevant Adjustment Date in the amount
of the purchase price applicable to the day before such Adjustment
Date and amortized by level semi-annual payments of principal and
interest in the amount of the adjusted Basic Rent and first paid on
the Adjustment Date. Thus, in continuation of the example described
in Schedule B, if the adjusted Basic Rent as of the 31st Adjustment
Date were $400,879.66 the revised Schedule C would appear as follows:
Hypothetical Example of Revised Schedule C:
After Basic March 30, 1992
Rent Payment Amended Applicable November 20, 1998 Amended Applicable
Number Purchase Price Amendment Purchase Price
------ -------------- --------- --------------
*31 $ 2,202,042.81 $ 889,764.59 $ 3,091,807.41
32 1,987,485.65 802,502.31 2,789,987.86
33 1,766,955.19 712,543.62 2,478,498.80
34 1,537,225.08 619,805.21 2,157,030.29
35 1,301,061.24 524,201.18 1,825,262.42
36 1,057,222.08 425,642.96 1,482,865.07
37 805,458.15 324,038.34 1,129,497.49
38 545,511.89 219,296.15 764,808.04
39 277,117.38 111,316.39 388,433.77
40 1.00 0.00 1.00
<PAGE>
Exhibit 10.10 (e)
$ 250,000 Date: July 22, 1998
PROMISSORY NOTE
MONTICELLO, WAYNE COUNTY, KENTUCKY
FOR VALUE RECEIVED, American, Woodmark Corporation ("Maker") of
3102 Shawnee Drive, Winchester, Virginia 22601 promises to pay to the
order of the Wayne County EZ Industrial Development Authority
("Payee") of P.O. Box 817, Monticello, Kentucky 42633, the principal
sum of Two Hundred Fifty Thousand Dollars and 00/100 Cents ($
250,000). The term of this note shall be for three (3) years. The
interest rate shall be Zero Percent (0%) interest.
The "Maker" and "Payee" agree that this note formalizes a three
(3) year forgivable loan. For each EZ resident employed and trained
by "Maker," "Payee" will credit the sum of Two Thousand Five Hundred
Dollars ($2,500) toward the principal, up to and including the
principal amount of Two Hundred Fifty Thousand Dollars ($250,000).
In the event that 100 Empowerment Zone Residents are not employed and
trained by the "Maker" within a three ('3) year period. "Maker" will
pay the outstanding balance of the loan in full at the end of the
three (3) year period.
The "Maker" shall have the privilege, without premium or
penalty, at any time and from time to time, to prepay this note in
whole or in part.
Executed this 22nd day of July, 1998.
AMERICANWOODMARK CORPORATION
By: Glenn Eanes
Its: Treasurer
Attest: Brenda Dupont
<PAGE>
LOAN AGREEMENT
THIS AGREEMENT, made and entered into this 22nd day of July, 1998, by
and between the Wayne County EZ Industrial Development Authority,
1480 North Main Street, Suite B, P. 0. Box 817, Monticello, Kentucky
42633, hereinafter referred to as the AUTHORITY, and American
Woodmark Corporation, 3102 Shawnee Drive, Winchester, Virginia
22601, hereinafter called AMERICAN WOODMARK.
WITNESSETH:
WHEREAS, the Wayne.County EZ Industrial Development Authority will
dispense the sum of TWO HUNDRED FIFTY THOUSAND DOLLAR ($ 250,000) to
American Woodmark upon execution of this loan agreement, and pursuant
to this loan a(7reenient, on behalf of the Authority; and
WHEREAS, American Woodmark shall make repayment of said funds to the
Authority pursuant to the provisions of this loan agreement;
THEREFORE, in consideration of the mutual obligations and benefits to
be derived by the parties to this Loan Agreement, they do hereby
contract, covenant and agree as follows:
1. The repayment proceeds of this loan, including principal and
interest, shall be transmitted to the Wayne County EZ Industrial
Development Authority to be used for economic development
training activities. Such activities which would be eligible
for assistance under Title XX of the Omnibus Budget
Reconciliation Act of 1993, as it relates to Empowerment Zone
projects.
2. American Woodmark shall keep and maintain books, records and
other documents directly relating to the number of EZ residents
it employs and any duly authorized representative of the Wayne
County EZ Industrial Development Authority, at all times
reasonable times shall have access to and the right to inspect,
copy audit and examine all such books, records and other
documents of American Woodmark until the completion of all close-
out procedures concerning this loan and the final settlement and
conclusion of all issues arising out of this loan.
3. All Federal and State laws and regulations pertinent to this
project shall be applicable.
4. The Authority shall have assurance that American Woodmark will
use its best efforts to create/retain or cause to be
created/retained, within three (3) years One Hundred (100)
permanent job opportunities.
<PAGE>
5. The Authority agrees that this loan is for the purpose of
training EZ residents to become permanent employees within the
Empowerment Zone. The Authority further agrees that it will
credit to the principal amount of the loan, Two Thousand Five
Hundred Dollars ($ 2,500) per EZ resident employed and trained
up to and including 100 Empowerment Zone residents. American
Woodmark agrees to employ and train at least 100 EZ residents
within three years from the date of this agreement and receive
credit of Two Thousand Five hundred Dollars ($ 2,500) for each
EZ resident employed and trained up to the principal amount of
Two Hundred Fifty Thousand Dollars ($ 250,000).
6. American Woodmark agrees that in the event it does not employ and
train at least 100 EZ residents within three (3) years from the
date of this agreement, it will repay to the Authority the
outstanding balance of the loan plus interest at the rate of
ZERO.PERCENT (O %) upon the expiration of the three (3) year
period.
7. Both parties herein agree and acknowledge that nothing in this
agreement, nor any act of the Authority or American Woodmark,
shall be deemed or construed by either party to create any
relationship of third party beneficiaries, principal and agent,
limited or general partnership, or joint venture, or of any
association or relationship involving the Empowerment Zone.
8. The Authority shall not be liable to American Woodmark for
completion of or failure to complete any activities, which are a
part of the project except those hereinafter specified duties.
9. Except for approved eligible administrative and personnel costs,
none of the Authority's designees, agents, members, officers,
employees, consultants or officials who exercises or has
exercised any functions or responsibilities with respect to the
Project during his or her tenure, or who is in a position to
participate in a decision-making process or gain inside
information with regard to the project, has or shall have any
interest, direct or indirect, in any contract or subcontract or
proceeds thereof, for work to be performed in connection with
the project or in any activity, or benefit therefrom, which is a
part of this project at any time during, or after such person's
tenure.
The Authority agrees to perform the following duties:
1. The Authority shall lend the sum of TWO HUNDRED FIFTY THOUSAND
DOLLARS ($ 250,000), to be dispensed by the Wayne County EZ
Industrial Development authority, of Empowerment Zone Funds
to American Woodmark as partial financing toward the
hiring and training of EZ residents at its new facility to be
located near Monticello in Wayne County Kentucky. The funds
shall be lent at the rate of Zero Percent (0%)interest for a
period of Three Years.
2. Repayment of the funds shall be as follows: For each EZ Resident
hired and trained, Two Thousand Five Hundred Dollars ($2,500)
shall be credited to the principal during the initial two year
<PAGE>
period, for up to 100 employees hired and trained. In the event
that 100 employees are hired and trained, during the three (3)
year period, credit will be given for the full amount of
principal, and the note shall he canceled and marked paid in
full.
3. The definition of an employee for the purposes of receiving the
Two Thousand Five Hundred Dollar ($2,500) credit is the hiring
and continued employment and/or training of an individual for a
period of at least thirty (30) days.
4. In the event that 100 EZ residents are not hired and trained
within the three year period, the full amount of the outstanding
balance on the loan, will be repaid to the Authority by American
Woodmark.
5. American Woodmark assures the Authority that funds and/or
financing for the project are in place for the purchase/lease of
land, buildings, equipment and working capital needs.
6. Funds recaptured by the Authority, if any, shall be used by the
Authority for activities set forth in Title XX of the Omnibus
Budget and reconciliation Act of 1993, as they relate to
Empowerment Zones.
American Woodmark agrees to perform the following duties:
1 . American Woodmark will purchase/lease and develop and/or cause
to be developed the property of approximately 30 acres and
60,000 Square Foot facility on which the project will be
located.
2. American Woodmark will make a best reasonable effort to hire a
minimum of one hundred (100) employees as a result of this
project. At least 35% of all jobs created shall be for EZ
residents.
3. American Woodmark shall repay to the Authority the outstanding
balance of the loan described herein, pursuant to the terms and
conditions specified herein, in the event American Woodmark
fails to employ and train at least 100 EZ residents.
4. American Woodmark shall provide to the Authority a projected
number of employees, their classification and a job description
for each classification.
<PAGE>
IN WITNESS WHEREOF, the parties by their duly authorized
officials/officers have executed this Agreement on this 22nd day of
July, 1998.
WAYNE COUNTY EZ
INDUSTRIAL DEVLOPMENT AUTHORITY
BY:
Title: Executive Director
Attest: Peggy L. Edwards
AMERICAN WOODMARK CORPORATION
BY: Glenn Eanes
Title: Treasurer
Attest: Brenda Dupont
<PAGE>
AMERICAN WOODMARK CORPORATION
RESOLUTION OF THE BOARD OF DIRECTORS
WHEREAS, American Woodmark Corporation, (the Company), has purchased certain
real estate located in Wayne County, Kentucky for the purpose of constructing a
lumber processing plant as provided for in the Company's Authorization For
Expenditure # 98-071, Lumber Processing Facility, and approved on October
23,1997.
WHEREAS, Wayne County EZ Industrial Development Authority and the Kentucky
Economic Development Finance Authority desire to induce the Company to locate
its lumber processing plant in Wayne County, Kentucky and to staff the plant
with Wayne County residents by offering the Company certain training funds, tax
credits and job incentives.
WHEREAS, the training funds, tax credits and job incentives require the
Company to execute certain loans to receive these incentives and the loans will
be repaid and or serviced by achieving the various credits and incentives as
certain guidelines are met. The loans will not increase the operating or
interest cost of the Company beyond the amount of credits and incentives not
earned or realized by the Company as a result of the failure of the Company to
meet the various guidelines necessary to achieve the credits and incentives.
THEREFORE, be it resolved that any one or more of the officers of the
Company, including the Chief Executive Officer, the Chief Financial Officer, the
Corporate Secretary, the Vice President, Manufacturing, the Treasurer and the
Corporate Controller have the power and authority to execute any and all
documents necessary to secure training loans, tax credits and job incentives as
management of the Company deems prudent and appropriate.
Certified this 17th day of July 1998 by,
Kent Guichard, Secretary
Corporate Seal
<PAGE>
CERTIFICATION OF NON-RELOCATION
This form is to be executed by companies for financial participation
under provisions of the Kentucky Highlands Empowerment Zone.
1. Name of Company: 1a. Employer ID No.
AMERICAN WOODMARK CORPORATION 54-1138147
2. Name of Benefited Business or Industry: 2a. Employer ID No.
SAME AS ABOVE
3. Location of Proposed Project:
Wayne County, Kentucky
4. This Project is:
A new business venture Refinance of existing loan
A new branch of facility A transfer of ownership
An expansion of an existing facility Other (explain)
5. Affiliate or Subsidiary of:
6. Amount of Loan/Grant: $ 250,000.00
7. Purpose of Loan of Grant: (Specify)
ECONOMIC DEVELOPMENT TRAINING ACTIVITIES FOR EMPOWERMENT ZONE RESIDENTS.
8. Company must check one of A or B below: (Note: "Related Company" as used
in this
form means any affiliate, subsidiary, or other business entity under direct,
indirect or
common control with company.)
___ A. New Business Venture. This project is a new business venture unrelated
to existing
business facilities, and that the company is not a company related to an
existing business
facility.
_X_ B. Expansion of Company's Business Facility. This project is an expansion
of an existing
business facility located at:
281 KENTUCKY ROAD, ORANGE, VIRGINIA
Which carries on the following operations: LUMBER PROCESSING INCUDING
DRYING & PRODUCTION OF DIMENSION STOCK.
<PAGE>
9. Company must checks
X It is not the intention of the company or any related company to
relocate any present operation as result of the proposed Project:
that to the extent said Project is undertaken to through the
establishment of a new assist in the expansion of the operations of
company, such expansion will not result in an increase of branch,
affiliate or subsidiary of company, such expansion will not result
in an increase of unemployment in the area of original location or
in any area where company or any related company now conducts
related business operations: that any such expansion is not being
undertaken with the intention of closing down or curtailing any
existing operations of company or of any related company: and that
such project is not being undertaken with the intention of
performing as contractor or subcontractor work heretofore performed
by company or related company, the transfer of which work would
result in the transfer of employment opportunities from one location
to another and an increase in unemployment at the previous location
of such work.
10. Please give below name, address, telephone number and title of person to be
contacted if any questions arise concerning this form:
GLENN EANES, TREASURER
AMERICAN WOODMARK) CORPORATION
3102 SHAWNEE DRIVE
WINCHESTER, VA 22601
PHONE# (540) 665-9112
11. CERTIFICATION: I, the undersigned, hereby certify that the information
reported on this form, and any attachments thereto, are to the best of my
belief and knowledge, truly representative of the facts and reflect the
future intentions of the company as they are as of this date:
July 22, 1999 Glenn Eanes
Date Signature of Authorized Official
Treasurer
Title
<PAGE>
Exhibit 10.10 (f)
PROMISSORY NOTE
$4,500,000 July 30, 1998
For value received AMERICAN WOODMARK CORPORATION, a Virginia
corporation ("Payor"), promises to pay to the order of AMENDE' CABINET
CORPORATION, a Virginia corporation, at 3 102 Shawnee Drive,
Winchester, VA 22601, (or at such other address as the holder of this
note may designate in writing), the principal sum of Four Million
Five Hundred Thousand Dollars ($4,500,000), together with interest
thereon at the rate of seven percent (7%) per annum from the date
hereof until fully paid.
1. Maturity. January 1, 2015 is the maturity date of this
note when the entire balance, including accrued but unpaid interest,
shall be immediately due and payable.
2. Payment of Principal. Principal shall be paid at
maturity, January 1, 2015.
3. Payment of Interest. Accrued interest shall be paid on
the first day of February, 1999, and on the same day every year
thereafter prior to maturity, and at maturity.
4. Prepayment. All or any portion of principal may be
prepaid at any time without penalty. All payments should be applied
first to interest accrued to the date of payment and then to
principal.
5. No Waiver of Holder's Rights. The failure of the
holder of this note promptly to exercise the holder's rights
hereunder in the event of any default shall not constitute a waiver
of such rights while such default continues nor a waiver of such
rights in connection with any future default.
6. Waiver of Payor. Payor hereby waives notice of
acceptance, presentment, demand, dishonor, notice of dishonor, and
protest.
7. Attorney Fees. In the event this note is placed in the
hands of an attorney for collection, Payor agrees to pay holder's
reasonable attorney fees and collection costs, even though no civil
action is filed on this note. If an action is filed, Payor agrees to
pay such additional sum as the trial judge and any appellate court may
adjudge reasonable as attorney fees in the action, including any
appeal, along with statutory costs and disbursements and together with
interest on said sums at the above-stated rate from the date of such
judgement.
<PAGE>
"Payor"
AMERICAN WOODMARK
CORPORATION, a Virginia corporation
By:/s/ Kent Guichard
------------------
Printed Name: Kent Guichard
-------------
<PAGE>
LOAN AGREEMENT
BETWEEN: AMERICAN WOODMARK CORPORATION, a Virginia corporation
("Borrower"), whose principal place of business and
address is 3102 Shawnee Drive, Winchester, VA 22601.
AND: AMENDE' CABINET CORPORATION, a Virginia corporation
("Lender"), whose principal place of business and
address is 3102 Shawnee Drive, Winchester, VA 2260 1.
DATED: July 30, 1998
RECITALS
A. Borrower has or intends to acquire, rehabilitate, and
expand an industrial facility located in Monticello, Wayne County,
Kentucky, for the purpose of manufacturing component parts for
kitchen cabinets and other uses (the "Project") at a cost in excess
of $6,400,000.
B. The Project constitutes an "economic development
project" under Kentucky law and, as such, the Project will enable
Borrower to receive certain tax credits (the "Incentives"), if
certain conditions are met. These conditions include (i) execution
of this Agreement and (ii) execution of a financing agreement (the
"Financing Agreement") among Borrower, Lender, and the Kentucky
Economic Development Finance Authority ("KEDFA").
C. Borrower has asked Lender and Lender has agreed (i) to
loan Borrower the sum of Four Million Five Hundred Thousand Dollars
($4,500,000.00) to finance a portion of the Project and (ii) to enter
into the Financing Agreement to enable the Borrower to receive the
Incentives so that Borrower will be better able to repay such loan,
subject to the terms and conditions set forth herein.
NOW, THEREFORE, FOR VALUABLE CONSIDERATION, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender
hereby agree as follows:
1 . Terms of Loan.
1.1 Amount; Use of Proceeds. Lender shall loan Four
Million Five Hundred
Thousand Dollars ($4,500,000) (the "Loan") to Borrower upon execution
and delivery of a promissory note by Borrower in favor of Lender in
<PAGE>
the form of the attached Exhibit A (the "Promissory Note").
Borrower shall use the Loan to pay for, or reimburse Borrower
for, costs incurred in connection with the Project.
1.2 Repayment. Borrower shall repay the Loan, together
with interest thereon, in accordance with the terms set forth in the
Promissory Note.
2. Representations and Warranties.
Borrower makes the following representations and warranties
to induce Lender to enter into this Agreement:
2.1 Authorization. Borrower has the power and authority to
enter into and perform this Agreement and the Promissory Note and has
taken all action necessary to authorize the execution, delivery, and
performance of the Agreement and the Promissory Note.
2.2 Enforceability. This Agreement and the Promissory Note
when executed and delivered will be the valid and binding obligations
of Borrower enforceable in accordance with their respective terms.
2.3 Consent. No consent or approval of any trustee or
holder of any debt or obligation of Borrower, and no consent,
permission, authorization, order or license of any governmental
authority is necessary in connection with the execution, delivery, and
performance of this Agreement or the Promissory Note.
2.4 Conflicts. The consummation of the transactions herein
provided for, and compliance by Borrower with the provisions of this
Agreement and the Promissory Note, will not result in breach of the
terms of, or constitute a default under any indenture, agreement or
other instrument to which Borrower is a party or by which Borrower may
be bound.
2.5 Payment Default. Borrower is not now in default in the
payment of the principal or interest of any debt for borrowed money.
2.6 Violations of Law. Borrower is not in default under or
in violation of or with respect to any law, rule, regulation, order,
writ, injunction, or decree of any court, arbitrator, governmental
commission, bureau, or other regulatory authority.
2.7 Absence of Litigation. There is no litigation pending
which could materially adversely affect Borrower, its properties or
assets, or entry into or performance of the terms of this Agreement or
the Promissory Note.
3. KEDFA Financing Agreement.
Lender agrees to enter into the Financing Agreement
with KEDFA to enable
<PAGE>
Borrower to receive the Incentives so that Borrower
is better able to repay the Loan.
4. Conditions Precedent.
The execution and performance of this Agreement by Lender is
subject to the following conditions precedent:
4.1 Agreement. Authorization, execution and delivery
by Borrower of this Agreement and the Promissory Note.
4.2 No Default. The non-existence of an Event of Default
under the terms of this Agreement.
5. Affirmative Covenants.
Borrower hereby covenants and agrees to:
5.1 Notice of Liens, Etc. Give prompt notice to Lender of
any liens, judgments, regulatory proceedings, or litigation arising
after the date hereof affecting Borrower or Borrower's properties.
5.2 Additional Instruments. Execute promptly, upon Lender's
request, all additional instruments deemed by Lender necessary or
desirable to carry out the purposes of this Agreement.
5.3 Compliance with Law. Comply with all statutes, laws
and governmental rules, regulations and orders applicable to the
business and property of Borrower, provided that nothing herein shall
require compliance with any statute or governmental rule, regulation
or order if the administering governmental authority has granted
formal extension of time for compliance therewith, or if the validity
of such statute, rule, regulation or order, as applied to Borrower, is
being contested in good faith and by appropriate means.
5.4 Notice of Default or Material Change. Promptly notify
Lender of the violation by Borrower of any term, promise, covenant or
agreement of Borrower to or with Lender, any material change in the
property, business or affairs of Borrower and any other event or
matter which may have a material effect on the debts, liabilities or
obligations of Borrower to Lender.
5.5 Environmental Laws. Borrower shall conduct its
business so as to comply in all material respects with all
environmental laws and regulations in effect in all jurisdictions in
which it may at any time be doing business, including, without
limitation, the federal Resource Conservation and Recovery Act, the
federal Comprehensive Environmental Response, Compensation and
Liability Act, the federal Clean Water Act, the federal Clean Air Act,
and the federal Occupational Safety and Health Act. If Borrower shall
(a) receive notice that any violation of any federal, state, or local
environmental law or regulation may have been committed or is about to
<PAGE>
be committed by Borrower, (b) receive notice that any administrative
or judicial complaint or order has been filed or is about to be filed
against Borrower alleging violations of any federal, state, or local
environmental law or regulation or requiring Borrower to take any
action in connection with the release of toxic or hazardous substances
into the environment, (c) receive any notice from a federal, state, or
local governmental agency or private party alleging that Borrower may
be liable or responsible for costs associated with a response to or
cleanup of a release of a toxic or hazardous substance into the
environment or any damages caused thereby, or (d) receive notice that
Borrower's properties, or any site which includes Borrower's
properties, has been listed as a "Superfund" site and placed on the
National Properties List for cleanup, then Borrower shall provide
Lender with a copy of such notice within three days of Borrower's
receipt thereof. Within ten days of Borrower having learned of the
enactment or promulgation of any federal, state, or local
environmental law or regulation which may result in a material adverse
change in the condition, financial or otherwise, of Borrower, Borrower
shall provide Lender with notice thereof.
5.6 Authorization. Borrower will take all action necessary
to authorize the performance of its obligations under this Agreement
and the Promissory Note.
6. Negative Covenants.
Borrower will not, directly or indirectly, unless approved
in writing by Lender in advance:
6.1 Liquidation. Cease business operations, dissolve, or
liquidate.
6.2 Sale of Assets. Sell, transfer, lease, or otherwise
dispose of all or substantially all of Borrower's assets to any other
person or entity (or take or permit to be taken any other action which
would have substantially the same effect as any of the foregoing).
6.3 Untrue Documents. Furnish any document to Lender that
contains any untrue statement of material fact or that omits to state
a material fact necessary to make it not misleading in light of the
circumstances under which it was furnished.
7. Events of Default.
Time being of the essence, any of the following events shall
constitute an Event of Default by Borrower:
7.1 Failure to Pay. Failure of borrower to pay when due
any debt to Lender arising under this Agreement or any notes given
pursuant to this Agreement, or any installment thereof.
7.2 Failure to Perform. Failure of Borrower to perform
when due any other obligation of Borrower to Lender under this
Agreement or any note given pursuant hereto; or to timely comply with
any other covenant, term or condition stated in any other instrument
given by Borrower to Lender.
<PAGE>
7.3 Misrepresentations and Breach of Warranty. Any
representation or warranty made by or on behalf of Borrower herein or
otherwise in connection with the transactions contemplated hereby
shall prove to have been false or incorrect in any material respect on
the date made.
8. Remedies.
8.1 Acceleration and Other Rights. Upon the occurrence of
an Event of Default as above described, Lender may provide notice
thereof to Borrower. If Borrower fails to cure any Event of Default
under Section 7.1 within I 0 days after the giving of notice or fails
to cure any other default within 30 days after the giving of notice,
then Borrower shall be in default under this Agreement and Lender may
declare the entire amount owed by Borrower to Lender hereunder and
under any notes given pursuant to this agreement immediately due and
payable, and Lender may thereafter proceed to exercise all rights
conferred upon it by this agreement or any other instrument, or
otherwise available at law or in equity.
9. Miscellaneous.
9.1 Notices. Any notice required or permitted hereunder
shall be in writing and shall be effective when actually delivered or,
if mailed, when deposited as registered or certified mail directed to
the other party at the address stated at the start of the Agreement.
Either party may change the address for notices to that party by
written notice thereof to the other party.
9.2 Survival. All covenants, representations and
warranties made by Borrower herein shall survive the execution and
delivery of this Agreement.
9.3 Applicable Law. This Agreement has been executed and
delivered to Lender in the Commonwealth of Virginia but the facilities
to be improved with the proceeds of the Loan are located in the
Commonwealth of Kentucky. Borrower agrees that the law of the
Commonwealth of Kentucky shall be applicable for the purpose of
construing this Agreement and determining the validity hereof.
9.4 Payments. All payments of principal and interest and
any other amounts due hereunder shall be made in U.S. Dollars and
shall be deemed made only when received by Lender in immediately
available funds in the form of a check or wire transfer.
9.5 No Waiver. No delay or omission to exercise any right,
power or remedy accruing to Lender upon any breach or default of
Borrower shall impair such rights, powers or remedies of Lender, nor
shall it be construed to be a waiver of any such breach or default,
or any acquiescence therein, or of any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of Lender of any breach or default
must be in writing and shall be effective only to the extent in such
<PAGE>
writing specifically set forth. All remedies shall be cumulative and
not in the alternative.
9.6 Captions. Captions applied to the sections of this
Agreement are for convenience only and shall not control or affect
the meaning or construction of any of the provisions of this
Agreement.
9.7 Severability. If any term, condition or provision of
this Agreement, or any other document required hereunder, shall be
held invalid for any reason, such offending term, condition or
provision shall be stricken therefrom, and the remainder thereof
shall not be affected thereby.
9.8 No Assignment. Borrower may not assign any right nor
delegate any duty under this agreement without the consent of Lender.
9.9 Entire Agreement. This Agreement and the additional
documents referred to and provided for herein constitute the entire
agreement between the parties pertaining to the subject matter hereof
and supersede all prior and contemporaneous agreements and
understandings between the parties. This Agreement may be amended
only by a written instrument signed by both of the parties hereto.
9.10 Counterparts. This Agreement may be executed in
any number of counterparts with the same effect as if the signatures
thereto and hereto were upon the same instrument.
9.11 No Third Party Beneficiaries. Each party hereto intends
that this Agreement shall not benefit or create any right or cause
of action in or on behalf of any person or entity other than the parties
hereto and their respective successors and permitted assigns.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties as of the date first hereinabove written.
"Borrower" "Lender"
AMERICAN WOODMARK CORPORATION, AMENDE' CABINET CORPORATION,
a Virginia corporation a Virginia corporation
By: /s/ Kent Guichard By: /s/ Glenn Eanes
----------------- -------------------
Printed Name: Kent Guichard Printed Name: Glenn Eanes
Title: V. P. - Finance & CFO Title: Secretary/Treasurer
<PAGE>
AMERICAN WOODMARK CORPORATION
RESOLUTION OF THE BOARD OF DIRECTORS
WHEREAS, American Woodmark Corporation, (the Company), has
purchased certain real estate located in Wayne County, Kentucky for
the purpose of constructing a lumber processing plant as provided
for in the Company's Authorization For Expenditure # 98-071, Lumber
Processing Facility, and approved on October 23,1997.
WHEREAS, Wayne County EZ Industrial Development Authority
and the Kentucky Economic Development Finance
Authority desire to induce the Company to locate its
lumber processing plant in Wayne County, Kentucky
and to staff the plant with Wayne County residents
by offering the Company certain training funds, tax
credits and job incentives.
WHEREAS, the training funds, tax credits and job
incentives require the Company to execute certain loans to receive
these incentives and the loans will be repaid and or serviced by
achieving the various credits and incentives as certain guidelines
are met. The loans will not increase the operating or interest cost
of the Company beyond the amount of credits and incentives not
earned or realized by the Company as a result of the failure of the
Company to meet the various guidelines necessary to achieve the
credits and incentives.
THEREFORE, be it resolved that any one or more of the officers
of the Company, including the Chief Executive Officer, the Chief
Financial Officer, the Corporate Secretary, the Vice President,
Manufacturing, the Treasurer and the Corporate Controller have the
power and authority to execute any and all documents necessary to
secure training loans, tax credits and job incentives as management
of the Company deems prudent and appropriate.
Certified this 17th day of July 1998
by,
Kent Guichard, Secretary
Corporate Seal
<PAGE>
Exhibit 10.10 (g)
NationsBank Tel 804 788-3214
Mid-Atlantic Group Fax 804 788-3669
1111 East Main Street
4th Floor, Pavilion Building
Richmond, VA 23277
NationsBank
September 28, 1998
Mr. Glenn Eanes
Treasurer
American Woodmark Corporation
3102 Shawnee Drive
Winchester, VA 22601-4208
Dear Glenn:
NationsBank, N. A. is pleased to extend American Woodmark Corporation a
revolving line of credit for up to $12,000,000 available for the
company's use from time to time for general corporate purposes. The
terms and conditions of this arrangement are spelled out in the attached
Credit Agreement dated as of September 1, 1998 and the Promissory Note
of even date. Please indicate your acceptance of this facility by
signing and returning this letter along with the executed Credit
Agreement and Promissory Note.
We are very pleased to be able to offer this revised commitment to your
fine company, and look forward to a continuation of our long
relationship,
Very truly yours,
Hugh S. Miles, III
Executive Vice President
The terms and conditions of this credit agreement are hereby
acknowledged and accepted on this 29th day of September, 1998.
American Woodmark Corporation
By: /s/Glenn Eanes
---------------
Title: Treasurer
Member FDIC
<PAGE>
CREDIT AGREEMENT
Dated as of September 1, 1998
Between
American Woodmark Corporation
as
Borrower
and
NATIONSBANK, N.A.
as Lender
U.S.$12,000,000
<PAGE>
CREDIT AGREEMENT
Between
American Woodmark Corporation
and
Wells Fargo Bank, National Association
Dated: March 23, 1999
$2,500,000 Term Loan
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is for convenience of reference.
ARTICLE I
DEFINITIONS
SECTION 1.01: Basic Definitions 1
SECTION 1.02. Additional Definitions 1
ARTICLE II
LOANS
SECTION 2.01. Committed Loans 5
SECTION 2.02. Money Market Loans 5
SECTION 2.03. Note 5
SECTION 2.04. Repayment of Loans 6
SECTION 2.05. Interest 6
SECTION 2.06. Borrowing Procedure 6
SECTION 2.07. Prepayments, Conversions, and Continuations of Loans 6
SECTION 2.08. Minimum Amounts 6
SECTION 2.09. Certain Notices 7
SECTION 2.10. Use of Proceeds 7
SECTION 2.11. Fees 8
SECTION 2.12. Computations 8
SECTION 2.13. Reduction or Termination of Commitment 8
SECTION 2.14. Payments 8
SECTION 2.15. Mandatory Prepayment 8
ARTICLE III
CHANGE IN CIRCUMSTANCES
SECTION 3.01. Increased Cost and Reduced Return 8
SECTION 3.02. Limitation on Types of Loans 9
SECTION 3.03. Illegality 10
SECTION 3.04. Compensation 10
SECTION 3.05. Taxes 10
ARTICLE IV
CONDITIONS
SECTION 4.01. Initial Loan 11
SECTION 4.02. Each Loan 11
i
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Existence 11
SECTION 5.02. Financial Statements 12
SECTION 5.03. Authorization; No Breach 12
SECTION 5.04. Litigation 12
SECTION 5.05. Enforceability 12
SECTION 5.06. Approvals 12
SECTION 5.07. Disclosure 12
SECTION 5.08. Year 2000 12
ARTICLE VI
COVENANTS
SECTION 6.01. Information 13
SECTION 6.02. Obligations 13
SECTION 6.03. Financial 14
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default 14
SECTION 7.02. Remedies 15
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Expenses 16
SECTION 8.02. Indemnification 16
SECTION 8.03. Right of Set-off 16
SECTION 8.04. No Waiver; Cumulative Remedies 16
SECTION 8.05. Successors and Assigns 17
SECTION 8.06. Amendments 17
SECTION 8.07. Notices 17
SECTION 8.08. Counterparts 17
SECTION 8.09. Severability 17
SECTION 8.10. Controlling Agreement 17
SECTION 8.11. Survival 17
SECTION 8.12. Governing Law 18
SECTION 8.13. WAIVER OF JURY TRIAL 18
SECTION 8.14. ENTIRE AGREEMENT 18
Exhibit A - Note
ii
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT (the "Agreement ") dated as of September 1, 1998,
between
American Woodmark Corporation, (the "Borrower"), and NATIONSBANK, N.A.,
a national banking association (the "Bank").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Basic Definitions. As used in this Agreement,
the following terms
have the following meanings:
"Applicable Margin" means:
(i) with respect to Base Rate Loans, zero percent (0%); and
(ii) with respect to Eurodollar Loans, 75/100 percent (.75
%).
"Commitment" means the obligation of the Bank to make
Committed Loans in an aggregate principal amount at any time
outstanding up to but not exceeding $12,000,000, as the same may be
reduced or terminated pursuant to this Agreement.
"Fees" means a commitment fee on the daily average unused
amount of the Commitment from and including the date of this
Agreement to but excluding the Termination Date, at the rate
of 30/100 percent (.30%) per annum, payable on each Quarterly
Date. For purposes of this clause (ii), outstanding Money
Market Loans shall constitute a utilization of the Commitment.
"Principal Office" means the office of the Bank located at
Charlotte, NC, USA.
"Termination Date" means August 31, 1999.
SECTION 1.02. Additional Definitions. As used in this Agreement,
the following
terms have the following meanings.
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for
any Interest Period therefor, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) determined by the Bank to
be equal to the quotient obtained by dividing (a) the Eurodollar
Rate for such Eurodollar Loan for such Interest Period by (b) 1
minus the Reserve Requirement for such Eurodollar Loan for such
Interest Period.
"Base Rate" means, for any day, the rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus one-half
of one percent (.5%) and (b) the Prime Rate for such day. Any
change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or Federal Funds Rate.
<PAGE
"Base Rate Loans" means Loans that bear interest at rates
based upon the Base Rate.
"Business Day" means any day except a Saturday, Sunday, or
other day on which banks in the State where the Principal Office is
located are authorized by law to close and, if the applicable
Business Day relates to Eurodollar Loans, on which commercial banks
in London are open for international business (including dealings
in Dollar deposits in the London interbank market).
"Committed Loans" has the meaning specified in Section 2.01.
"Consolidated Funded Debt" means all indebtedness for borrowed
money, all indebtedness which has been incurred in connection with
the acquisition of assets, and all capital lease obligations, on a
consolidated basis determined in accordance with GAAP.
"Consolidated Total Capitalization" means the sum of
Consolidated Funded Debt plus total stockholders' equity for the
company and its subsidiaries in accordance with GAAP.
"Continue", "Continuation", and "Continued" shall refer to a
continuation pursuant to Section 2.07 of a Fixed Rate Loan as a
Loan of the same Type from one Interest Period to the next Interest
Period.
"Convert", "Conversion", and "Converted" shall refer to the
conversion pursuant to Section 2.07 or Article III of one Type of
Loan into another Type of Loan.
"Debtor Relief Laws" means the Bankruptcy Code of the United
States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments,
or similar debtor relief laws from time to time in effect affecting
the rights of creditors generally.
"Default" means an Event of Default or the occurrence of an
event or condition that with notice or lapse of time or both would
become an Event of Default.
"Default Rate" means, with respect to any principal of any
Loan or any other amount payable by the Borrower under this
Agreement or any other Loan Document that is not paid when due
(whether at stated maturity, by acceleration, or otherwise), a rate
per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to
two percent (2%) plus the Base Rate as in effect from time to time
plus the Applicable Margin for Base Rate Loans (provided that, if
the amount in default is principal of a Fixed Rate Loan and the due
date thereof is a day other than the last day of the Interest
Period therefor, the "Default Rate" for such principal shall be,
for the period from and including the due date and to but excluding
the last day of the Interest Period therefor, two percent (2%) plus
the interest rate for such Loan as provided in Section 2.05(b),
(c), or (d), as the case may be, and, thereafter, the rate provided
for above in this definition).
<PAGE>
"Dollars" and "$" mean lawful money of the United States of
America.
"Eurodollar Loans" means Loans that bear interest at rates
based upon the Adjusted Eurodollar Rate.
"Event of Default" has the meaning specified in Section 7.01.
"Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum appearing on Telerate
Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any
reason such rate is not available, the term "Eurodollar Rate" shall
mean, for any Eurodollar Loan for any Interest Period therefor, the
rate per annum appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such
day; provided, that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds
Rate for such day shall be the average rate charged to the Bank on
such day on such transactions as determined by the Bank.
"Financial Statements" means the financial statements of the
Borrower and the Subsidiaries most recently furnished to the Bank
prior to the date of this Agreement.
"Fixed Rate Loans" means Eurodollar Loans, and Money Market
Loans.
"Governmental Authority" means any nation or government, any
state or political
subdivision thereof, any central bank (or similar monetary or
regulatory authority), and
any entity exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government.
"Interest Period" means:
(i) with respect to any Eurodollar Loan, each period
commencing on the date such Loan is made or Converted from a Loan
of another Type or the last day of the next preceding Interest
Period with respect to such Loan, and ending on the numerically
corresponding day in the first, second, third, or sixth calendar
month thereafter, as the Borrower may select as provided in Section
2.09, except that each such Interest Period which commences on the
last 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 Business Day of
the appropriate subsequent calendar month; and
<PAGE>
(ii) with respect to any Money Market Loan, each period
commencing on the date such Loan is made or Converted
from a Loan of another Type or the last day of the
preceding Interest Period with respect to such Loan, and
ending on the number of days thereafter (but not more
than 180 days) as may be agreed to by the Borrower and
the Bank pursuant to Section 2.02.
Notwithstanding the foregoing: (a) each Interest Period which
would otherwise end on a day which is not a Business Day shall end on
the next succeeding Business Day (or, in the case of an Interest Period
for Eurodollar Loans, if such succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day); (b) any
Interest Period which would otherwise extend beyond the Termination Date
shall end on the Termination Date; (c) no more than 3 Interest periods
for each Type of Fixed Rate Loan shall be in effect at the same time;
and (d) no Interest Period for any Eurodollar Loan shall have a duration
of less than 1 month and, if the Interest Period for any Eurodollar Loan
would otherwise be a shorter period, such Loan shall not be available
hereunder.
"Loan Documents" means this Agreement, the Note, and all other
documents, instruments, and agreements executed or delivered
pursuant to or in connection with this Agreement, as the same may
be amended, modified, renewed, extended, or supplemented.
"Loan Party" means the Borrower or any Person that guaranties
or secures any or all of the Borrower's obligations under the Loan
Documents.
"Loan" means Committed Loans and Money Market Loans.
"Material Adverse Effect" means a material adverse effect on
(a) the properties, prospects, business, operations, financial
condition, liabilities, or capitalization of the Borrower and the
Subsidiaries taken as a whole, (b) the ability of any Loan Party to
pay and perform its obligations under any Loan Document, or (c) the
validity or enforceability of any Loan Document or the rights and
remedies of the Bank thereunder.
"Money Market Loan" has the meaning specified in Section 2.02.
"Money Market Rate" has the meaning specified in Section 2.02.
"Note" has the meaning specified in Section 2.03.
"Person" means any individual, corporation, company, joint
venture, association, partnership, trust, unincorporated
organization, Governmental Authority, or other entity.
"Prime Rate" means the per annum rate of interest established
from time to time by the Bank as its prime rate, which rate may not
be the lowest rate of interest charged by the Bank to its
customers.
"Quarterly Date" means the last day of each March, June,
September, and December of each year, the first of which shall be
the first such day after the date of this Agreement.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
<PAGE>
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations
issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion
Dollars against (a) in the case of Eurodollar Loans, "Eurocurrency
liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member
banks with respect to (i) any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar
Rate (as the case may be) is to be determined, or (ii) any category
of extensions of credit or other assets which include Eurodollar
Loans. The Adjusted Eurodollar Rate shall be adjusted automatically
on and as of the effective date of any change in the Reserve
Requirement.
"Subsidiary" means, any corporation or other entity of which
securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other
Persons performing similar functions are at the time directly or
indirectly owned by the Borrower.
"Type" means any type of Loan (i.e., Base Rate Loan,
Eurodollar Loan, or Money Market Loan).
ARTICLE II
LOANS
SECTION 2.01. Committed Loans. Subject to the terms and
conditions of this Agreement, the Bank agrees to make one or more loans
("Committed Loans") to the Borrower from time to time from and including
the date hereof to but excluding the Termination Date, provided that the
aggregate principal amount of the Loans at any time outstanding shall
not exceed the amount of the Commitment. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement, the
Borrower may borrow, repay, and reborrow hereunder the amount of the
Commitment by means of Base Rate Loans and Eurodollar Loans.
SECTION 2.02. Money Market Loans. In addition to Committed
Loans pursuant to Section 2.01, the Borrower in accordance with the
terms hereof may from time to time to but excluding the Termination Date
request offers from the Bank for loans (each a "Money Market Loan") on a
specific date, at a fixed rate of interest (the "Money Market Rate"),
and for an Interest Period quoted by the Bank. Upon receipt of each
such request for a Money Market Loan offer, the Bank may, but shall have
no obligation to, offer to make such Money market Loan on such terms and
conditions as the Bank may determine at such time. The Borrower may
accept each such offer for a Money Market Loan by submitting to the Bank
a notice of borrowing pursuant to Section 2.09.
SECTION 2.03. Note. The Loans made by the Bank shall be
evidenced by a single promissory note of the Borrower in substantially
the form of Exhibit A, dated the date hereof, payable to the order of
the Bank in a principal amount equal to the Commitment as originally in
effect and otherwise duly completed (as from time to time amended,
modified, renewed, or extended, the "Note").
<PAGE>
SECTION 2.04. Repayment of Loans. The Borrower shall pay to
the Bank the outstanding principal amount of the Loans on the
Termination Date.
SECTION 2.05. Interest. The Borrower shall pay to the Bank
interest on the unpaid principal amount of each Loan for the period
commencing on the date of such Loan to but excluding the date such Loan
shall be paid in full, at the following rates per annum:
(a) during the periods such Loan is a Base Rate Loan, the Base Rate
plus the Applicable Margin;
(b) during the periods such Loan is a Eurodollar Loan, the Adjusted
Eurodollar Rate plus the Applicable Margin; and
(c) during the periods such Loan is a Money Market Loan, the Money
market Rate for such Loan.
Notwithstanding the foregoing, the Borrower shall pay to the
Bank interest at the Default Rate on any principal of any Loan and (to
the fullest extent permitted by law) on any other amount payable by the
Borrower under this Agreement or any other Loan Document which is not
paid in full when due (whether at stated maturity, by acceleration, or
otherwise), for the period from and including the due date thereof to
but excluding the date the same is paid in full. Accrued interest on
the Loans shall be due and payable as follows: (i) in the case of Base
Rate Loans, on each Quarterly Date; (ii) in the case of each Eurodollar
Loan, on the last day of the Interest Period with respect thereto and,
in the case of an Interest Period greater than three months, at three-
month intervals after the first day of such Interest Period; (iii) upon
the payment or prepayment of any Loan or the Conversion of any Loan to
a Loan of another Type (but only on the principal amount so paid,
prepaid, or Converted); and (iv) on the Termination Date; provided that
interest payable at the Default Rate shall be payable from time to time
on demand.
SECTION 2.06. Borrowing Procedure. The Borrower shall give
the Bank notice of each borrowing hereunder in accordance with Section
2.09. Not later than 2:00 p.m. (at the Principal Office) on the date
specified for each borrowing hereunder, the Bank will make available the
amount of the Loan to be made by it on such date to the Borrower by
depositing the same, in immediately available funds, in an account of
the Borrower (designated by the Borrower) maintained with the Bank at
the Principal Office or as otherwise directed by the Borrower.
SECTION 2.07. Prepayments, Conversions, and Continuations of
Loans. Subject to Section 2.08, the Borrower shall have the right from
time to time to prepay the Loans, or to Convert all or part of a Loan of
one Type into a Loan of another Type or to Continue Fixed Rate Loans of
one Type as Fixed Rate Loans of the same Type, provided that: (a) the
Borrower shall give the Bank notice of each such prepayment, Conversion,
or Continuation as provided in Section 2.09, (b) Fixed Rate Loans may
only be Converted on the last day of the Interest Period, (c) the
Borrower may not Continue a Money Market Loan or Convert a Loan into a
Money Market Loan unless the Borrower and the Bank shall have agreed
upon the rate of interest and the Interest Period for such Loan in
accordance with Section 2.02, and (d) except for Conversions into Base
Rate Loans, no Conversions or Continuations shall be made while a
Default has occurred and is continuing.
<PAGE>
SECTION 2.08. Minimum Amounts. Except for Conversions and
prepayments pursuant to Section 2.15 and Article III, each borrowing,
each Conversion, and each prepayment of principal of the Loans shall be
in an amount at least equal to $100,000. Anything ill this Agreement to
the contrary notwithstanding, the aggregate principal amount of Fixed
Rate Loans of the same Type having the same Interest Period shall be at
least equal to $100,000.
SECTION 2.09. Certain Notices. Notices by the Borrower to the
Bank of a termination or reduction of the Commitment, of borrowings,
Conversions, Continuations and optional prepayments of Loans and of the
duration of Interest Periods shall be irrevocable and shall be effective
only if received by the Bank not later than 11:00 a.m. (local time at
the Principal Office) on the number of Business Days prior to the date
of the relevant termination, reduction, borrowing, Conversion,
Continuation, or prepayment or the first day of such Interest Period
specified below:
Number of Business
Notice Days Prior
Termination or reduction of
Commitment 3
Borrowing or prepayment of,
or Conversions into, Base same day
Rate Loans
Borrowing or prepayment of,
Conversions into,
Continuations as, or
Duration of Interest Periods
for, Eurodollar Loans 3
Borrowing or prepayment of, or
Conversions into, Continuations as, or
duration of Interest Periods for,
Money Market Loans same day
Each such notice of termination or reduction shall specify the amount of
the Commitment to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation, or optional prepayment shall
specify (a) the amount and Type of the Loan to be borrowed, Converted,
Continued, or prepaid (and, in the case of a Conversion, the Type of
Loan to result from such Conversion), (b) the date of borrowing,
Conversion, Continuation, or prepayment (which shall be a Business Day),
and (c) in the case of a borrowing of a Fixed Rate Loan, Conversion, or
Continuation, the duration of the Interest Period. In the event the
Borrower fails to select the Type of Loan, or the duration of any
Interest Period for any Fixed Rate Loan, within the time period and
otherwise as provided in this Section 2.09, such Loan (if outstanding as
a Fixed Rate Loan) will be automatically Converted into a Base Rate Loan
on the last day of the preceding Interest Period for such Loan or (if
outstanding as a Base Rate Loan) will remain as, or (if not then
outstanding) will be made as, a Base Rate Loan.
<PAGE>
SECTION 2.10. Use of Proceeds. The proceeds of the Loans
shall be used by the Borrower for working capital in the ordinary course
of business. The Borrower will not, directly or indirectly, use any part
of such proceeds for the purpose of purchasing or carrying any margin
stock within the meaning of Regulations G, U, T, or X of the Board of
Governors of the Federal Reserve System.
SECTION 2.11. Fees. The Borrower agrees to pay to the Bank
the Fees as specified herein.
SECTION 2.12. Computations. Interest and Fees payable by the
Borrower hereunder and under the other Loan documents shall be computed
on the basis of a year of 360 days and the actual number of days elapsed
(including the first day but excluding the last day) occurring in the
period for which payable.
SECTION 2.13. Reduction or Termination of Commitment. The
Borrower shall have the right to irrevocably terminate or reduce in part
the unused portion of the Commitment at any time and from time to time,
provided that: (a) the Borrower shall give notice, of each such
termination or reduction as provided in Section 2.09; and (b) each
partial reduction shall be in an aggregate amount at least equal to
$1,000,000.
SECTION 2.14. Payments. All payments of principal, interest,
and other amounts to be made by the Borrower under this Agreement and
other Loan Documents shall be made to the Bank at the Principal Office
in Dollars and in immediately available funds, without setoff,
deduction, or counterclaim. Whenever any payment under this Agreement or
any other Loan Document shall be stated to be due on a day that is not a
Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time in such case shall be included in the
computation of interest and Fees, as applicable and as the case may be.
SECTION 2.15. Mandatory Prepayment. If at any time the
outstanding principal amount of the Loans exceeds the Commitment, the
Borrower shall immediately make a prepayment of the Loans in an amount
equal to the excess.
ARTICLE III
CHANGE IN CIRCUMSTANCES
SECTION 3.01. Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance by the Bank with any request or
directive (whether or not having the force of law) of any such
Governmental Authority:
(i) shall subject the Bank to any tax, duty, or other charge
with respect to any Fixed Rate Loans, the Note, or its obligation
to make Fixed Rate Loans, or change the basis of taxation of any
amounts payable to the Bank under this Agreement or the Note in
respect of any Fixed Rate Loans (other than taxes imposed on the
overall net income of the Bank by the jurisdiction in which the
Bank has its Principal Office);
<PAGE>
(ii) shall impose or modify any reserve, special deposit, or
similar requirement (other than the Reserve Requirement Utilized in
the determination of the Adjusted Eurodollar Rate) relating to any
extensions of credit or other assets of, or any deposits with or
other liabilities or commitments of, the Bank (including the
Commitment); or
(iii) shall impose on the Bank or on the United States market
for certificates of deposit or the London interbank market any
other condition affecting this Agreement or the Note or any of such
extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to the
Bank of making, Converting into, Continuing, or maintaining any Fixed
Rate Loans or to reduce any sum received or receivable by the Bank under
this Agreement or the Note with respect to any Fixed Rate Loans, then
the Borrower shall pay to the Bank on demand such amount or amounts as
will compensate the Bank for such increased cost or reduction.
(b) If the Bank shall have determined that the adoption of any
applicable law, rule, or regulation regarding capital adequacy or any
change therein or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether
or not having the force of law) of any such Governmental Authority, has
or would have the effect of reducing the rate of return on the capital
of the Bank or any corporation controlling the Bank as a consequence of
the Bank's obligations hereunder to a level below that which the Bank or
such corporation could have achieved but for such adoption, change,
request, or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by the Bank to be
material, then from time to time upon demand the Borrower shall pay to
the Bank such additional amount or amounts as will compensate the Bank
for such reduction.
(c) A certificate of the Bank claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to
it hereunder shall be conclusive in the absence of clearly demonstrable
error. In determining such amount, the Bank may use any reasonable
averaging and attribution methods.
SECTION 3.02. Limitation on Types of Loans. If on or prior to
the first day of any Interest Period for any Eurodollar Loan:
(a) the Bank determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate, as the case may be, for such Interest Period;
or
(b) the Bank determines (which determination shall be
conclusive) that the Adjusted Eurodollar Rate will not adequately
and fairly reflect the cost to the Bank of funding Eurodollar
Loans, as the case may be, for such Interest Period;
then the Bank shall give the Borrower prompt notice thereof specifying
the, relevant Type of Loans and the relevant amounts or periods, and so
long as such condition remains in effect, the Bank shall be under no
obligation to make additional Loans of such Type, Continue Loans of such
Type, or to Convert Loans of any other Type into Loans of such Type and
the Borrower shall, on the last day(s) of the then current Interest
Period(s) for the outstanding Loans of the affected Type, either prepay
<PAGE>
such Loans or Convert such Loans into another Type of Loan in accordance
with the terms of this Agreement.
SECTION 3.03. Illegality. Notwithstanding any other
provision of this Agreement, in the event that it becomes unlawful for
the Bank to make, maintain, or fund Eurodollar Loans hereunder, then the
Bank shall promptly notify the Borrower thereof and the Bank's
obligation to make or Continue Eurodollar Loans and to Convert other
Types of Loans into Eurodollar Loan shall be suspended until such time
as the Bank may again make, maintain, and fund Eurodollar Loans and the
Borrower shall, on the last day of the Interest Period for each
outstanding Eurodollar Loan (or earlier, if required by law), either
prepay such Loans or Convert such Loans into Base Rate Loans in
accordance with the terms of this Agreement.
SECTION 3.04. Compensation. Upon the request of the Bank,
the Borrower shall pay to the Bank such amount or amounts as shall be
sufficient (in the reasonable opinion of the Bank) to compensate it for
any loss, cost, or expense incurred by it as a result of:
(a) any payment, prepayment or Conversion of a Fixed Rate
Loan for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 7.02) on a date other
than the last day of an Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any conditions precedent
specified in Article IV to be satisfied) to borrow, Convert,
Continue, or prepay a Fixed Rate Loan on the date for such
borrowing, Conversion, Continuation, or prepayment specified in the
relevant notice of borrowing, prepayment, Continuation, or
Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation
shall include any loss, cost, or expense incurred in obtaining,
liquidating, or employing deposits from third parties (including loss of
margin).
SECTION 3.05 Taxes. (a) Any and all payments by the Borrower
to or for the account of the Bank hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of the Bank, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of
which the Bank is organized or any political subdivision thereof (all
such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in
respect o any sum payable hereunder or under any Loan Document to the
Bank, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 3.05) the Bank receives an
amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law, and (iv)
the Borrower shall furnish to the Bank, at its address referred to in
Section 8.06, the original or a certified copy of a receipt evidencing
payment thereof.
(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise
or property taxes or charges or Similar levies which arise from any
payment made hereunder or under any other Loan Document or from the
<PAGE>
execution or delivery of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as
"Other Taxes").
ARTICLE IV
CONDITIONS
SECTION 4.01. Initial Loan. The obligation of the Bank to
make the initial Loan hereunder is subject to the satisfaction of the
following conditions:
(a) receipt by the Bank of the duly executed Note, complying
with the provisions of Section 2.03, and such other Loan Documents
as the Bank may reasonably request; and
(b) receipt by the Bank of all documents that the Bank may
request relating to the existence of the Loan Parties, the
authorization for and the validity of the Loan Documents, and any
other matters relevant thereto, all in form and substance
satisfactory to the Bank.
SECTION 4.02. Each Loan. The obligation of the Bank to make
any Loan (including the initial Loan) is subject to the satisfaction of
the following conditions precedent:
(a) receipt by the Bank of all a notice of borrowing in
accordance with Section 2.06;
(b) the fact that immediately after the making of such Loan, the
aggregate outstanding principal amount-of the Loans will not exceed the
amount of the Commitment;
(c) the fact that, immediately before and after such loan, no Default
shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the Borrower
contined in this Agreement and the other Loan Documents shall be true
and correct on and as of the date of such Loan.
Each borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such borrowing that the
conditions precedent specified in clauses (b), (c), and (d) of this
Section have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement, the Borrower
represents and warrants to the Bank that:
SECTION 5.01. Existence. The Borrower and each Subsidiary
(a) is duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its organization; and (b) has the requisite
<PAGE>
power and authority and legal right to own its assets and carry on its
business as now being or as proposed to be conducted. The Borrower has
the power, authority, and legal right to execute, deliver, and perform
its obligations under the Loan Documents.
SECTION 5.02. Financial Statements. The Financial Statements
are complete and correct, have been prepared in accordance with
generally accepted accounting principles, and fairly and accurately
present the financial condition of the Borrower and the Subsidiaries as
of the respective dates indicated therein and the results of operations
for the respective periods indicated therein. Since the effective date
of the Financial Statements, no event or condition has occurred that
could have a Material Adverse Effect.
SECTION 5.03. Authorization; No Breach. The execution,
delivery, and performance by the Borrower of the Loan Documents to which
it is a party and compliance with the terms and provisions thereof have
been duly authorized by all requisite action on the part of the Borrower
and do not and will not (a) violate or conflict with, or result in a
breach of, or require any consent under (i) the articles of
incorporation, bylaws, or other organizational documents of the Borrower
or any of the Subsidiaries, (ii) any applicable law, rule, or regulation
or any order, writ, injunction, or decree of any Governmental Authority
or arbitrator, or (iii) any agreement or instrument to which the
Borrower or any of the Subsidiaries is a party or by which any of them
or any of their property is bound or subject, or (b) constitute a
default under any such agreement or instrument.
SECTION 5.04. Litigation. There is no action, suit,
investigation, or proceeding before or by any Governmental Authority or
arbitrator pending, or to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Subsidiary, that could, if
adversely determined, have a Material Adverse Effect.
SECTION 5.05 Enforceability. This Agreement constitutes, and
the other Loan Documents when executed and delivered by the Borrower
shall constitute, the legal, valid, and binding obligations of the
borrower, enforceable against the Borrower in accordance with their
respective terms, except as limited by applicable Debtor Relief Laws and
general principles of equity.
SECTION 5.06. Approvals. No authorization, approval, or
consent of; and no filing or registration with, any Governmental
Authority or third party is or will be necessary for the execution,
delivery, or performance by the Borrower of any of the Loan Documents to
which it is a party or for the validity or enforceability thereof.
SECTION 5.07. Disclosure. No statement, information, report,
representation, or warranty made by the Borrower in any Loan Document or
furnished to the Bank in connection with any Loan Document contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading.
<PAGE>
SECTION 5.08. Year 2000Q. The Borrower has (i) initiated a
review and assessment of all areas within its and each of the
Subsidiaries' business and operations (including those affected by
customers and vendors) that could be adversely affected by the "Year
2000 Problem" (that is, the risk that computer applications used by the
Borrower or any of the Subsidiaries (or their respective customers and
vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December
31, 1999), (ii) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis, and (iii) to date, implemented that plan
in accordance with that timetable. Based on the foregoing, the Borrower
believes that all computer applications (including those of its and the
Subsidiaries' customers and vendors) that axe material to its or any of
the Subsidiaries' business and operations are reasonably expected on a
timely basis to be able to perform properly date-sensitive functions for
all dates before and after January 1, 2000 (that is, be "Year 2000
compliant"), except to the extent that a failure to do so could not
reasonably be expected to have Material Adverse Effect.
ARTICLE VI
COVENANTS
The Borrower agrees that, so long as the Bank has any Commitment
hereunder or any amount payable under the Note remains unpaid:
SECTION 6.01. Information. The Borrower shall deliver to the
Bank:
(a) as soon as available and in any event within 90 days
after the end of each fiscal year of the Borrower a consolidated
balance sheet of the Borrower and the Subsidiaries as of the end of
such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year and the related
consolidated statements of income and cash flows for such fiscal
year, all prepared in accordance with generally accepted accounting
principles and certified by independent public accountants of
nationally recognized standing;
(b) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal
year of the Borrower a consolidated balance sheet of the Borrower
and the Subsidiaries as of the end of such quarter and the related
consolidated statements of income and cash flows for such quarter
and for the portion of the Borrower's fiscal year ended at the end
of such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion
of the Borrower's previous fiscal year, all in reasonable detail
and duly certified (subject to normal year-end adjustments) by the
chief financial officer of the Borrower as having been prepared in
accordance with generally accepted accounting principles,
(c) within three (3) days after, any officer of the Borrower
obtains knowledge of any Default, a certificate of the
chief financial officer of the Borrower setting forth
the details thereof and any action that the Borrower is
taking or proposes to take with respect thereto; and
(d) from time to time such additional information regarding
the financial condition or business of the Borrower and the
Subsidiaries as the Bank may reasonably request.
SECTION 6.02. Obligations. The Borrower shall, and shall
cause each of the
Subsidiaries to:
(a) preserve and maintain all of its rights, privileges, and
franchises necessary or desirable in the normal conduct of its
business;
(b) comply with the requirements of all applicable laws,
rules, regulations, and orders of Governmental Authorities;
<PAGE
(c) pay and discharge when due all taxes, assessments, and
governmental charges or levies imposed on it or on its
income or profits or any of its property, except for any
such tax, assessment, charge, or levy the payment of
which is being contested in good faith and by proper
proceedings and against which adequate reserves are
being maintained;
(d) maintain all of its properties owned or used in its business in
good working order and condition ordinary wear and tear excepted;
(e) permit representatives of the Bank, during normal business hours,
to examine, copy, and make extracts from its books and records, to
inspect its properties, and to discuss its business and affairs with its
officers, directors, and accountants; and
(f) maintain insurance in such amounts, with such
deductibles; and against such risks as is customary for similarly
situated businesses.
SECTION 6.03. Financial. The Borrower shall, and shall cause each
of the Subsidiaries to:
(a) maintain a ratio Consolidated Funded Debt to
Consolidated Total Capitalization
of no more than .40.
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default. Each of the following shall
constitute an "Event of Default":
(a) the Borrower shall fail to pay when due any principal of
or interest on any Loan, or any Loan party shall fail to pay when
due any other amount payable under any Loan Document.
(b) any representation, warranty, certification, or statement
made or deemed made by any Loan Party (or any of its officers) in
any Loan Document or in any certificate, financial statement, or
other document delivered pursuant thereto shall be false,
misleading, or incorrect in any material respect when made or
deemed made.
(c) the Borrower shall fail to perform, observe, or comply
with any covenant, agreement, or term contained in Section 6.01 Of
this Agreement.
(d) any Loan Party shall fail to perform, observe, or comply
with any other covenant, agreement, or term contained in any Loan
Document (other than a failure covered elsewhere in this Section
7.01) and such failure shall continue for a period of thirty (30)
days after notice thereof to such Loan Party by the Bank.
<PAGE>
(e) any Loan Party or any Subsidiary shall admit in writing
its inability to, or be generally unable to, pay its debts as such
debts become due.
(f) any voluntary or involuntary proceeding under any Debtor
Relief Law shall be commenced by or against any Loan Party or any
Subsidiary or any of their respective assets, and if an involuntary
proceeding is commenced, such proceeding shall not be dismissed
within thirty (30) days after the commencement thereof.
(g) any Loan Party or any Subsidiary shall fail to pay when
due any principal of or interest on any indebtedness for
borrowed money (other than the Note) having an
outstanding principal amount greater than $100,000,
whether as principal obligor, guarantor, or otherwise,
or the maturity of any such indebtedness shall have been
accelerated, or any event shall have occurred that
permits (or, with the giving of notice or lapse of time
or both, would permit) any holder or holders of such
indebtedness or any Person acting on behalf of such
holder or holders to accelerate the maturity thereof.
(h) any judgment or order for the payment of money in excess
of $100,000
shall be rendered against any Loan Party or any Subsidiary where
either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be any
period of 10 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect.
(i) any Loan Party shall dissolve, liquidate, or terminate
its legal existence or shall convey, transfer, lease, or
dispose of (whether in one transaction or a series of
transactions) all or substantially all of its assets to
any Person.
(j) any event or condition shall occur that could reasonably
be expected to have a Material Adverse Effect.
SECTION 7.02. Remedies. If any Event of Default shall occur
and be continuing, the Bank may do any one or more of the following:
(a) Acceleration. Declare all outstanding principal of and
accrued and unpaid interest on the Note and all other amounts
payable by the Borrower under the Loan Documents immediately due
and payable, and the same shall thereupon become immediately due
and payable, without presentment, demand, protest, notice of
acceleration, notice of intent to accelerate, or other notices or
formalities of any kind, all of which are hereby expressly waived
by the Borrower.
(b) Termination of Commitment. Terminate the Commitment
without notice to the Borrower.
<PAGE>
(c) Rights. Exercise any and all rights and remedies
afforded by applicable law or otherwise.
Notwithstanding the foregoing, upon the occurrence of an Event of
Default under Section 7.01(f), the Commitment shall automatically
terminate, and the outstanding principal of and accrued and unpaid
interest on the Note and all other amounts payable by the Borrower under
the Loan Documents shall thereupon become immediately due and payable
without presentment, demand, protest, notice of acceleration, notice of
intent to accelerate, or other notices or formalities of any kind, all
of which are hereby expressly waived by the Borrower.
ARTICLE VIII
MISCELLANOUS
SECTION 8.01. Expenses. The Borrower shall on demand
pay or reimburse the Bank for paying (a) all reasonable costs and
expenses of the Bank, including the fees and disbursements of counsel
for the Bank (including the allocated cost of internal counsel), in
connection with the administration of the Loan Documents, the
preparation of any waiver or consent thereunder or any amendment thereof
or an Default or alleged Default and (b) if an Event of Default occurs,
all costs and expenses incurred by the Bank, including the fees and
disbursements of counsel (including the allocated cost of internal
counsel), in connection with such Event of Default and any collection,
bankruptcy, insolvency, and other enforcement proceedings resulting
therefrom.
SECTION 8.02. Indemnification. The Borrower agrees to
indemnify the Bank and each affiliate thereof and their respective
officers, directors, employees, attorneys, and agents (each an
"Indemnified Person") from, and hold each of them harmless against, any
and all losses, liabilities, claims, damages, penalties, judgments,
disbursements, costs, and expenses, including all fees and disbursements
of counsel. (including the allocated cost of internal counsel)
(collectively the "Indemnified Liabilities"), which directly or
indirectly arise from or relate to any Loan Document or any of the
transactions contemplated thereby, but excluding any of the foregoing to
the extent caused by the gross negligence or willful misconduct of the
Indemnified Person. Without limiting any provision of any Loan Document,
it is the express intention of the parties hereto that each Indemnified
Person shall be indemnified from and held harmless against any and all
Indemnified Liabilities arising out of or resulting from the sole or
contributory negligence of the Indemnified Person.
SECTION 8.03. Right of Set-off. Upon the occurrence and
during the continuance of any Event of Default, the Bank is hereby
authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply 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 (or any of its
affiliates) to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter existing
under the Loan Documents, irrespective of whether the Bank shall have
made any demand under the Loan Documents and although such obligations
may be unmatured. The Bank agrees promptly to notify the Borrower after
any such set-off and application made by the Bank; provided, however,
that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Bank under this Section
are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that the Bank may have.
<PAGE>
SECTION 8.04. No Waiver; Cumulative Remedies. No failure on the
part of the Bank to exercise and no delay in exercising, and no course
of dealing with respect to, any right, power, or privilege under any
Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power, or privilege under any Loan
Document preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege. The rights and remedies
provided for n the Loan Documents are cumulative and not exclusive of
any rights and remedies provided by law.
SECTION 8.05. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations hereunder without
the prior written consent of the Bank. The Bank may at any time and from
time to time (a) grant participating interests in the Commitment and the
Loans to any Person(s), and (b) assign all or any portion of its rights
and/or obligations under the Loan Documents to any Person(s); provided,
that the Bank may not assign its commitment to any Person (other than an
affiliate of the Bank) without the prior written consent of the
Borrower. All information provided by the Borrower to the Bank may be.
furnished by the Bank to its affiliates and to any actual or proposed
assignee or participant.
SECTION 8.06. Amendments. No amendment or waiver of any
provision of any Loan Document to which the Borrower is a party, nor any
consent to any departure by the Borrower therefrom, shall be effective
unless the same shall be agreed or consented to in writing by the Bank
and the Borrower, and each such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which
given.
SECTION 8.07. Notices. All notices, requests, and other
communications to either party hereunder shall be in writing (including
facsimile transmission) and shall be given to such party at its address
or facsimile number set forth on the signature pages hereof. Each such
notice, request, or other communication shall be effective (i) if given
by facsimile transmission, when transmitted to the facsimile number
referred to in this Section and confirmation of receipt is received,
(ii) if given by mail, three (3) Business Days after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered at the
address referred to in this Section; provide that notices to the Bank
shall not be effective until received.
SECTION 8.08. Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
SECTION 8.09. Severability. Any provision of this Agreement
held by a court of competent jurisdiction to be invalid or unenforceable
shall not impair or invalidate the remainder of this Agreement and the
effect thereof shall be confined to the provision held to be invalid or
illegal.
SECTION 8.10. Controlling Agreement. Notwithstanding
anything to the contrary contained in any Loan Document, the interest
paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by applicable law (the
"Maximum Rate"). If the Bank shall receive interest in an amount that
exceeds the Maximum Rate, the excessive interest shall be applied to the
principal of the Loans or, if it exceeds the unpaid principal, refunded
to the Borrower. In determining whether the interest contracted for,
charged, or received by the Bank exceeds the Maximum Rate, the Bank may,
to the extent permitted by applicable law, (a) characterize any payment
that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, (c)
amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Loans.
<PAGE>
SECTION 8.11. Survival. All representations and warranties
made or deemed made by the Borrower in the Loan Documents shall survive
the execution and delivery thereof and the making of the Loans, and no
investigation by the Bank or any closing shall affect the
representations and warranties by the Borrower or the right of the Bank
to rely upon them. Without prejudice to the survival of any other
obligation of the Borrower hereunder, the obligations of the Borrower
under Article III and Sections 8.01 and 8.02 shall survive repayment of
the Note and termination of the Commitment.
SECTION 8.12. Governing Law. This Agreement and the Note
shall be governed by and construed in accordance with, the law of the
State where the Principal Office is located and the applicable laws of
the United States of America. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court and each
state court in the city where the Principal Office is located for the
purposes of all legal proceedings arising out of or relating to any of
the Loan Documents or the transactions contemplated thereby. The
Borrower irrevocably consents to the service of any and all process in
any such action or proceeding by the mailing of copies of such process
to the Borrower at its address set forth underneath its signature
hereto. The Borrower irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
SECTION 8.13. WAIVER OF JURY TRIAL. TO THE FULLEST
EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIFS HERETO HEREBY
IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT,
TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF
THE BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.
SECTION 8.14. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
<PAGE>
BORROWER:
American Woodmark Corporation
By: Glenn Eanes
Title: Treasurer
Address for Notices:
American Woodmark
Corporation
3102 Shawnee Dr.
Winchester, VA 22601
Facsimile
No.: (540) 665-9176
Attention: Glenn Eanes
BANK:
NationsBank, N.A.
By: Hugh S. Miles, III
Title: Executive Vice
President
Address for Notices:
VA2-310-04-07
1111 East Main Street
Richmond, VA 23219-2321
Facsimile
No.: (804) 788-3699
Attention: Hugh S. Miles,
III
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$12,000,000
September 1, 1998
FOR VALUE RECEIVED, the undersigned, American Woodmark
Corporation, (the "Borrower"), hereby promises to pay to the order of
NATIONSBANK, N.A. (the "Bank"), at the Principal Office, in lawful
money of the United States of America and in immediately available
funds, the principal mount of Twelve Million Dollars ($12,000,000) or
such lesser amount as shall equal the aggregate unpaid principal amount
of the Loans made by the Bank to the Borrower under the Credit
Agreement referred to below, on the dates and in the principal amounts
provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such
Loan shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.
The books and records of the Bank shall be prima facie evidence of
all amounts outstanding hereunder.
This Note is the Note referred to in the Credit Agreement of even
date herewith, between the Borrower and the Bank (such Credit Agreement,
as the same may be amended, modified, or supplemented from time to time,
being referred to herein as the "Credit Agreement"), and evidences Loans
made by the Bank thereunder. The Credit Agreement, among other things,
contains provisions for acceleration of the maturity of this Note upon
the happening of certain stated events and for prepayments of Loans
prior to the maturity of this Note upon the terms and conditions
specified in the Credit Agreement. Capitalized terms used in this Note
have the respective meanings assigned to them in the Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the State where the Principal office is located and the
applicable laws of the United States of America.
American Woodmark Corporation
By: Glenn Eanes
Title: Treasurer
<PAGE>
Exhibit 10.10 (h)
CREDIT AGREEMENT
Between
American Woodmark Corporation
and
Wells Fargo Bank, National Association
Dated: March 23, 1999
$2,500,000 Term Loan
<PAGE>
TABLE 0F CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is for convenience of reference.
ARTICLE I DEFINITIONS 1
Section 1.1 Definitions. 1
ARTICLE II THE LOAN 5
Section 2.1 Loan 5
Section 2.2 Repayment of Note 5
Section 2.3 Interest 5
Section 2.4 Prepayment 6
Section 2.5 Use of Proceeds 6
Section 2.6 Computations 7
Section 2.7 Payments 7
ARTICLE III CHANGE IN CIRCUMSTANCES 7
Section 3.1 Increased Cost and Reduced Return 7
Section 3.2 Limitation on Eurodollar Rates 8
Section 3.3 Illegality 8
Section 3.4 Compensation 9
Section 3.5 Taxes 9
ARTICLE IV CONDITIONS 10
Section 4.1 Conditions Precedent 10
ARTICLE V REPRESENTATIONS AND WARRANTIES 10
Section 5.1 Existence 10
Section 5.2 Financial Statements 10
Section 5.3 Authorization; No Breach 11
Section 5.4 Litigation 11
Section 5.5 Enforceability 11
Section 5.6 Approvals 11
Section 5.7 Disclosure 11
Section 5.8 Year 2000 11
ARTICLE VI COVENANTS 12
Section 6.1 Information 12
Section 6.2 Obligations 13
Section 6.3 Financial 13
Section 6.4 Liens 13
Section 6.5 Investments 14
Section 6.6 Dividends 15
Section 6.7 Consolidation and Merger 15
ARTICLE VII DEFAULT 15
Section 7.1 Events of Default 15
i
<PAGE>
Section 7.2 Remedies 17
ARTICLE VIII MISCELLANEOUS 17
Section 8.1 Expenses 17
Section 8.2 Indemnification 17
Section 8.3 Right of Set-off 18
Section 8.4 No Waiver, Cumulative Remedies 18
Section 8.5 Successors and Assigns 18
Section 8.6 Amendment 18
Section 8.7 Notices 19
Section 8.8 Counterparts 19
Section 8.9 Severability 19
Section 8.10 Controlling Agreement 19
Section 8.11 Survival 19
Section 8.12 Governing Law 19
Section 8.13 Consent to Jurisdiction 20
Section 8.14 WAIVER OF JURY TRIAL 20
Section 8.15 Entire Agreement 20
ii
<PAGE>
CREDIT AGREEMENT
This Agreement is entered into as of the 23rd day
of March, 1999 by and between American Woodmark Corporation,
a Virginia corporation (the "Borrower"), and Wells Fargo
Bank, National Association, a national banking association
(the "Bank").
The parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement,
the following terms have the following meanings:
"Applicable Margin" means an amount determined
pursuant to Section 2.3(c) that is added to other
amounts to determine the interest rates applicable
hereunder.
"Adjusted Eurodollar Rate" means, for any Interest
Period, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%)
equal to the sum of (i) the quotient obtained
by dividing (A) the Eurodollar Rate for such
Interest Period for an amount approximately
equivalent to the then-outstanding principal
balance of the Note, by (B) 1 minus the
Reserve Requirement for such principal
balance for such Interest Period, and (ii)
the Applicable Margin.
"Base Rate" means the rate of interest publicly
announced from time to time by the Bank as its "prime"
or "base" rate or, if the Bank ceases to announce a rate
so designated, any similar successor rate designated by
the Bank.
"Business Day" means any day except a Saturday,
Sunday, or other day on which banks in Minnesota or
California are authorized by law to close.
"Change of Control" means, with respect to any
corporation, either (i) the acquisition by any "person"
or "group" (as those terms are used in Sections 13(d)
and 14(d) of the Exchange Act) other than William Brandt
of beneficial ownership (as defined in Rules 13d-3 and
13d-5 of the Securities and Exchange Commission, except
that a Person shall be deemed to have beneficial
ownership of all securities that such Person has the
right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly
or indirectly, of 50% or more of the then-outstanding
voting capital stock of such corporation; (ii) a change
in the composition of the board of directors of such
corporation or any corporate parent of such corporation
such that continuing directors cease to constitute more
than 50% of such board of directors; or (iii) the
cessation of public trading of the stock of such
corporation. As used in this definition, "continuing
directors" means, as of any date, (i) those members of
<PAGE>
the board of directors of the applicable corporation who
assumed office prior to such date, and (ii) those
members of the board of directors of the applicable
corporation who assumed office after such date and whose
appointment or nomination for election by that
corporation's shareholders was approved by a vote of at
least 50% of the directors of such corporation in office
immediately prior to such appointment or nomination.
"Compliance Certificate" means a certificate in the
form of Exhibit B hereto or in such other form as the
Bank and the Borrower may agree, executed by the chief
financial officer of the Borrower, stating (i) that any
financial statements delivered therewith have been
prepared in accordance with generally accepted
accounting principles applied on a basis consistent with
the accounting practices reflected in the Financial
Statements, subject (if applicable) to year-end
adjustments, (ii) whether or not such officer has
knowledge of the occurrence of any Default hereunder not
theretofore reported and remedied and, if so, stating in
reasonable detail the facts with respect thereto and
(iii) all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not the
Borrower is in compliance with the covenants set forth
in Section 6.3.
"Consolidated Funded Debt" means all indebtedness
for borrowed money, all indebtedness which has been
incurred in connection with the acquisition of assets,
and all capital lease obligations, all determined with
respect to the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"Consolidated Leverage Ratio" means, as of any
date, the ratio of Consolidated Funded Debt on that date
to EBITDA as of that date, all determined with respect
to the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP.
"Consolidated Total Capitalization" means the sum
of Consolidated Funded Debt plus total stockholders'
equity for the Borrower and its Subsidiaries in
accordance with GAAP.
"Debtor Relief Laws" means the Bankruptcy Code of
the United States of America and all other applicable
liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization,
suspension of payments, or similar debtor relief laws
from time to time in effect affecting the rights of
creditors generally.
"Default" means an Event of Default or the
occurrence of an event or condition that with notice or
lapse of time or both would become an Event of Default.
"Dollars" and "$" mean lawful money of the United
States of America.
"EBITDA" means, as of any date, pre-tax net income
during the one-year period ending on that date, excluding
<PAGE>
extraordinary and non-cash items, together with all interest
expense, depreciation and amortization recognized with
respect to that period and deducted in determining net
income, all determined with respect to the Borrower and its
Subsidiaries on a consolidated basis in accordance with
generally accepted accounting principles consistently
applied.
"Eurodollar Business Day" means a Business Day on
which commercial banks in London are open for
international business (including dealings in Dollar
deposits in the London interbank market).
"Eurodollar Rate" means, for any Interest period,
the rate (rounded up to the nearest 1/8 of 1%)
determined by the Bank to be the average rate at which
U.S. dollar deposits are offered to the Bank by major
banks in the London interbank market for funds to be
made available on the first day of any Interest Period
in an amount approximately equal to the then-outstanding
principal balance of the Note and maturing on or about
the end of such Interest Period. The applicable
Eurodollar Rate for each Interest Period shall be
determined by the Bank between the opening of business
and 12:00 noon (Minneapolis time) on the second
Eurodollar Business Day prior to the beginning of such
Interest Period. Each such determination of the
applicable Eurodollar Rate shall be conclusive and
binding upon the parties hereto, in the absence of
demonstrable error.
"Event of Default" has the meaning specified in
Section 7.1.
"Federal Funds Rate" means, for any day the rate
per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding
such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding
Business Day, and (b) if no such rate is so published on
such next succeeding Business Day, the Federal Funds
Rate for such day shall be the average rate charged to
the Bank on such day on such transactions as determined
by the Bank.
"Financial Statements" means the financial
statements of the Borrower and the Subsidiaries most
recently furnished to the Bank prior to the date of this
Agreement.
"Floating Rate" means, for any day, the rate per
annum equal to the higher of (a) the Federal Funds Rate
for such day plus one percent (1.00%), and (b) the Base
Rate for such day. Any change in the Floating Rate due
to a change in the Base Rate or the Federal Funds Rate
shall be effective on the effective date of such change
in the Base Rate or Federal Funds Rate.
"GAAP" means generally accepted accounting
<PAGE>
principles applied on a basis consistent with the
accounting practices reflected in the Financial
Statements.
"Governmental Authority" means any nation or
government, any state or political subdivision thereof,
any central bank (or similar monetary or regulatory
authority), and any entity exercising executive,
legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
"Interest Period" means (i) the Period commencing
on the date on which the Loan is made and ending on the
first Quarterly Date after the date hereof; and (ii)
each subsequent period commencing on a Quarterly Date
and ending on the next succeeding Quarterly Date.
"Loan" means the advance to be made by the Bank to
the Borrower pursuant to Section 2.1.
"Loan Documents" means this Agreement, the Note,
and all other documents, instruments, and
agreements executed or delivered pursuant to
or in connection with this Agreement, as the
same may be amended, modified, renewed,
extended, or supplemented.
"Loan Party" means the Borrower or any Person that
guaranties or secures any or all of the Borrower's
obligations under the Loan Documents.
"Material Adverse Effect" means a material adverse
effect on (a) the properties, prospects,
business, operations, financial condition,
liabilities, or capitalization of the
Borrower and the Subsidiaries taken as a
whole, (b) the ability of any Loan Party to
pay and perform its obligations under any
Loan Document, or (c) the validity or
enforceability of any Loan Document or the
rights and remedies of the Bank thereunder.
"Note" means the Borrower's promissory note in the
form of Exhibit A hereto, together with all amendments,
modifications and restatements thereof and any note or
notes issued in substitution therefor or replacement
thereof.
"Person" means any individual, corporation,
company, joint venture, association, partnership, trust,
unincorporated organization, Governmental Authority, or
other entity.
"Quarterly Date" means the last day of each
March, June, September, and December of each year, the
first of which shall be the first such day after the
date of this Agreement; provided, however, that if such
day falls on a day that is not a Eurodollar Business
Day, then the applicable Quarterly Date shall be the
Eurodollar Business Day immediately preceding such day.
"Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System, as in effect
from time to time.
<PAGE>
"Reserve Requirement" means, at any time, the
maximum rate at which reserves (including any marginal,
special, supplemental; or emergency reserves) are
required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal
Reserve System (or any successor) by member banks of
the Federal Reserve System in New York City with deposits
exceeding one billion Dollars against "Eurocurrency
liabilities'' (as such term is used in Regulation
D). Without limiting the .effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required
to be maintained by such member banks with respect to
(i) any category of liabilities which includes
deposits by reference to which the Adjusted
Eurodollar Rate is to be determined, or (ii)
any category of extensions of credit or other
assets which include loans bearing interest
at a rate based on the Eurodollar Rate. The
Adjusted Eurodollar Rate shall be adjusted
automatically on and as of the effective date
of any change in the Reserve Requirement.
"Subsidiary" means, any corporation or other entity
of which securities or other ownership interests having
ordinary voting power to elect a majority of the board
of directors or other Persons performing similar
functions are at the time directly or indirectly owned
or controlled by the Borrower.
ARTICLE II
THE LOAN
Section 2.1 Loan. On or about the date hereof, the
Bank shall make a single advance to the Borrower in the
principal amount of $2,500,000. The proceeds of such advance
shall be used by the Borrower (i) first, to repay the
Borrower's promissory notes dated December 28, 1992 and April
29, 1997, payable to the order of Norwest Bank Minnesota,
National Association ("Norwest") in the original principal
amounts of $1,292,629.74 and $350,000, respectively (the
"Norwest Notes"), and (ii) second, for the Borrower's general
corporate purposes. The Bank will make such advance by
remitting to Norwest an amount equal to the principal balance
of and interest on the Norwest Notes, and by depositing the
remainder of such advance in an account of the Borrower
(designated by the Borrower) maintained with Norwest or the
Bank, or as otherwise directed by the Borrower. The
Borrower's obligation to repay such advance shall be
evidenced by the Note. The Note shall bear interest on the
unpaid principal amount thereof from the date of such advance
until paid as set forth in Section 2.3.
Section 2.2 Repayment of Note. The principal
balance of the Note shall be due and payable in 20 equal
quarterly installments of $125,000 each, due and payable on
the last day of each March, June, September and December,
commencing June 30, 1999.
<PAGE>
Section 2.3 Interest.
(a) Generally. Except as set forth in Sections 3.2
and 3.3, the Note shall bear interest from
and including the date on which the Loan is
made to but excluding the date the Note is
paid in full, at a rate that shall at all
times be equal to the Adjusted Eurodollar
Rate.
(b) Default Rate. From and after the occurrence of
any Default and continuing thereafter until such Default
has been remedied to the written satisfaction of the
Bank, the outstanding principal balance of the Note
shall bear interest, until paid in full, at an annual
rate equal to the sum of (i) the interest rate otherwise
in effect with respect thereto, and (ii) 200 basis
points (2.00%) (the "Default Rate"). Calculation of
interest at the Default Rate shall not be deemed a
waiver or excuse of any such Default.
(c) Applicable Margin. The Applicable Margin
through and including the first adjustment occurring as
specified below shall be eight tenths of one percent
(0.80%). The Applicable Margin shall be adjusted each
fiscal quarter of the Borrower on the basis of the
Consolidated Leverage Ratio of the Borrower as at the
end of the previous fiscal quarter, in accordance with
the following table:
Consolidated Leverage Ratio Applicable Margins
--------------------------- ------------------
2.00 to 1 or more 1.20%
1.00 to 1 or more, but less than 2.00 to 1 1.00%
Less than 1.00 to 1 0.80%
Reductions and increases in the Applicable Margin will
be made quarterly within five calendar days following
receipt of the Borrower's financial statements and
Compliance Certificates required under Section 6.1.
Notwithstanding the foregoing, (i) if the Borrower fails
to deliver any financial statements or Compliance
Certificates when required under Section 6.l, the Bank
may, by notice to the Borrower, increase the Applicable
Margin to the highest rate set forth above until such
time as the Bank has received all such financial
statements and Compliance Certificates, and (ii) no
reduction in the Applicable Margins will be made if a
Default or an Event of Default has occurred and is
continuing at the time that such reduction would
otherwise be made.
(d) Payment of Interest. Accrued interest on the
Note shall be due and payable on each Quarterly Date;
provided that interest payable at the Default Rate shall
be payable from time to time on demand.
Section 2.4 Prepayment. The Borrower may prepay the
Note in full (but not in part) on any Quarterly Date without
premium or penalty, provided that (i) such prepayment shall
be made only upon three Business Days' notice to the Bank,
and (ii) such prepayment shall be accompanied by all accrued
interest thereon.
<PAGE>
Section 2.5 Use of Proceeds. The proceeds of the
Loan shall be used by the Borrower for working capital in the
ordinary course of business. The Borrower will not, directly
or indirectly, use any part of such proceeds for the purpose
of purchasing or carrying any margin stock within the meaning
of Regulations G, U, T, or X of the Board of Governors of the
Federal Reserve System.
Section 2.6 Computations. Interest and fees payable
by the Borrower hereunder and under the other Loan Documents
shall be computed on the basis of a year of 360 days and the
actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which
payable.
Section 2.7 Payments. All payments of principal,
interest, and other amounts to be made by the Borrower under
this Agreement and other Loan Documents shall be made to the
Bank at such office as the Bank may designate in Dollars and
in immediately available funds, without setoff, deduction, or
counterclaim. Whenever any payment under this Agreement or
any other Loan Document shall be stated to be due on a day
that is not a Business Day, such payment may be made on the
next succeeding Business Day, and such extension of time in
such case shall be included in the computation of interest
and fees, as applicable and as the case may be. The Borrower
agrees that the amount shown on the books and records of the
Bank as being the principal balance of and interest on the
Note shall be conclusive absent demonstrable error.
ARTICLE III
CHANGE IN CIRCUMSTANCES
Section 3.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of
any applicable law, rule, or regulation, or any change
in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof
by any Governmental Authority charged with the
interpretation or administration thereof, or compliance
by the Bank with any request or directive (whether or
not having the force of law) of any such Governmental
Authority:
(i) shall subject the Bank to any tax,
duty, or other charge with respect to the Note, or
change the basis of taxation of any amounts payable
to the Bank under this Agreement or the Note (other
than taxes imposed on the overall net income of the
Bank);
(ii) shall impose or modify, any reserve,
special deposit, or similar requirement (other than
the Reserve Requirement utilized in the
determination of the Adjusted Eurodollar Rate)
relating to any extensions of credit or other
assets of, or any deposits with or other
liabilities or commitments of, the Bank; or
<PAGE>
(iii) shall impose on the Bank or on the
United States market for certificates of deposit or
the London interbank market any other condition
affecting this Agreement or the Note or any of such
extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to
increase the cost to the Bank of making or maintaining the
Note or to reduce, any sum received or receivable by the
Bank under this Agreement or the Note, then the Borrower
shall pay to the Bank on demand such amount or amounts as
will compensate the Bank for such increased cost or
reduction.
(b) If the Bank shall have determined that
the adoption of any applicable law, rule, or regulation
regarding capital adequacy or any change therein or in the
interpretation or administration thereof by any Governmental
Authority charged with the interpretation or administration
thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any
such Governmental Authority, has or would have the effect of
reducing the rate of return on the capital of the Bank or
any corporation controlling the Bank as a consequence of the
Bank's obligations hereunder to a level below that which the
Bank or such corporation could have achieved but for such
adoption, change, request, or directive (taking into
consideration its policies with respect to capital adequacy)
by an amount deemed by the Bank to be material, then from
time to time upon demand the Borrower shall pay to the Bank
such additional amount or amounts as will compensate the
Bank for such reduction.
(c) A certificate of the Bank claiming
compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of clearly
demonstrable error. In determining such amount, the Bank
may use any reasonable averaging and attribution
methods.
Section 3.2 Limitation on Eurodollar Rates. If at
any time:
(a) the Bank determines (which determination shall
be conclusive) that be reason of circumstances affecting
the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate; or
(b) the Bank determines (which determination shall
be conclusive) that the Adjusted Eurodollar Rate will
not adequately and fairly reflect the cost to the Bank
of funding or maintaining the Note;
then the Bank may, at its option, give the Borrower prompt
notice thereof, and, at the option of the Bank, so long as
such condition remains in effect, the Note shall bear
interest at the Floating Rate.
<PAGE>
Section 3.3 Illegality. Notwithstanding any other
provision of this Agreement, in the event that it becomes
unlawful of the Bank to make, maintain, or fund the Note
while collecting interest thereon based on the Adjusted
Eurodollar Rate, then the Bank may, at its option, give the
Borrower prompt notice thereof, and, at the option of the
Bank, so long as such condition remains in effect, the Note
shall bear interest at the Floating Rate.
Section 3.4 Compensation. Upon the request of the
Bank, the Borrower shall pay to the Bank such amount or
amounts as shall be sufficient (in the reasonable opinion of
the Bank) to compensate it for any loss, cost, or expense
incurred by it as a result of:
(a) any conversion of the interest rate applicable
on the Note to the Floating Rate for any reason
(including, without limitation, a conversion required by
the Bank pursuant to Section 7.2) on a date other than
the last day of an Interest Period; or
(b) any failure by the Borrower for any reason
(including, without limitation, the failure of any
conditions precedent specified in Article IV to be
satisfied) to borrow or maintain the Note as
contemplated hereunder.
Without limiting the effect of the preceding sentence, such
compensation shall include any loss, cost, or expense
incurred in obtaining, liquidating, or employing deposits
from third parties (including loss of margin).
Section 3.5 Taxes.
(a) Any and all payments by the Borrower to or for
the account of the Bank hereunder or under any other
Loan Document shall be made free and clear of and
without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto,
excluding, in the case of the Bank, taxes imposed on its
income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which the Bank is
organized or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any Loan Documents
to the Bank, (i) the sum payable shall be increased as
necessary so that after making all required deductions
(including deductions applicable to additional sums
payable under this Section 3.5) the Bank receives an
amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make
such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or
other authority in accordance with applicable law, and
(iv) the Borrower shall furnish to the Bank, at its
address referred to in Section 8.7, the original or a
certified copy of a receipt evidencing payment thereof.
<PAGE>
(b) In addition, the Borrower agrees to pay any
and all present or future stamp or documentary taxes and
any other excise or property taxes or charges or similar
levies which arise from any payment made hereunder or
under any other Loan Document or from, the execution or
delivery of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter
referred to as "Other Taxes").
ARTICLE IV
CONDITIONS
Section 4.1 Conditions Precedent. The obligation
of the Bank to make the Loan is subject to the satisfaction
of the following conditions:
(a) Receipt by the Bank of the duly executed Note
and such other Loan Documents as the Bank may reasonably
request.
(b) Receipt by the Bank of all documents that the
Bank may request relating to the existence of the Loan
Parties, the authorization for and the validity of the
Loan Documents, and any other matters relevant thereto,
all in form and substance satisfactory to the Bank.
(c) Receipt by the Bank of current searches of
appropriate filing offices showing that (i) no state or
federal tax liens have been filed and remain in effect
against the Borrower or any Subsidiary, and (ii) no
financing statements have been filed and remain in
effect, against the Borrower or any Subsidiary except
financing statements perfecting only liens permitted
under Section 6.4.
(d) The fact that, immediately before and after
the Loan, no Default shall have occurred and be
continuing.
(e) The fact that the representations and
warranties of the Borrower contained in this
Agreement and the other Loan Documents shall
be true and correct on and as of the date of
the Loan.
(f) Payment by the Borrower to the Bank of an
upfront fee in the amount of $10,000.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement,
the Borrower represents and warrants to the Bank that:
<PAGE>
Section 5.1 Existence. The Borrower and each
Subsidiary (a) is duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its
organization; and (b) has the requisite power and authority
with legal right to own its assets and carry on its business
as now being or as proposed to be conducted. The Borrower has
the power, authority, and legal right to execute, deliver,
and perform its obligations under the Loan Documents.
Section 5.2 Financial Statements. The Financial
Statements are complete and correct, have been prepared in
accordance with generally accepted accounting principles, and
fairly and accurately present the financial condition of the
Borrower and the Subsidiaries as of the respective dates
indicated therein and the results of operations for the
respective periods indicated therein. Since the effective
date of the Financial Statements, no event or condition has
occurred that could have a Materials Adverse Effect.
Section 5.3 Authorization; No Breach. The
execution, delivery, and performance by the Borrower of the
Loan Documents to which it is a party and compliance with the
terms and provisions thereof have been duly authorized by all
requisite action on the part of the Borrower and do not and
will not (a) violate or conflict with, or result in a breach
of, or require any consent under (i) the articles of
incorporation, bylaws, or other organizational documents of
the Borrower or any of the Subsidiaries, (ii) any applicable
law, rule, or regulation or any order, writ, injunction, or
decree of any Governmental Authority or arbitrator, or (iii)
any agreement or instrument to which the Borrower or any of
the Subsidiaries is a party or by which any of them or any of
their property is bound or subject, or (b) constitute a
default under any such agreement or instrument.
Section 5.4 Litigation. There is no action, suit,
investigation, or proceeding before or by any Governmental
Authority or arbitrator pending, or to the knowledge of the
Borrower, threatened against or affecting the Borrower or any
Subsidiary, that could, if adversely determined, have a
Material Adverse Effect.
Section 5.5 Enforceability. This Agreement
constitutes, and the other Loan Documents when executed and
delivered by the Borrower shall constitute, the legal, valid,
and binding obligations of the Borrower, enforceable against
the Borrower in accordance with their respective terms,
except as limited by applicable Debtor Relief Laws and
general principles of equity.
Section 5.6 Approval. No authorization, approval,
or consent of, and no filing or registration with, any
Governmental Authority or third party is or will be necessary
for the execution, delivery, or performance by the Borrower
of any of the Loan Documents to which it is a party or for
the validity or enforceability thereof.
Section 5.7 Disclosure. No statement, information,
report, representation, or warranty made by the Borrower in
any Loan Document or furnished to the Bank in connection with
any Loan Document contains any untrue statement of a material
fact or omits to state any material fact necessary to make
the statements herein or therein not misleading.
<PAGE>
Section 5.8 Year 2000. The Borrower has (i)
initiated a review and assessment of all areas within its and
each of the Subsidiaries' business and operations (including
those affected by customers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the
risk that computer applications used by the Borrower or any
of the Subsidiaries (or their respective customers and
vendors) may be unable to recognize and perform properly date-
sensitive functions involving certain dates prior to and any
date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely
basis, and (iii) to date, implemented that plan in accordance
with that timetable. Based on the foregoing, the Borrower
believes that all computer applications (including those of
its and the Subsidiaries' customers and vendors) that are
material to its or any of the Subsidiaries' business and
operations are reasonably expected on a timely basis to be
able to perform properly date-sensitive functions for all
dates before and after January 1, 2000 (that is, be "Year
2000 compliant"), except to the extent that a failure to do
so could not reasonably be expected to have Material Adverse
Effect.
ARTICLE VI
COVENANTS
The Borrower agrees that, so 1ong as the Note
remains unpaid:
Section 6.1. Information. The Borrower shall
deliver to the Bank:
(a) As soon as available and in any event within
90 days after the end of each fiscal year of the
Borrower a consolidated balance sheet of the Borrower
and the Subsidiaries as of the end of such fiscal year
and the related consolidated statements of income and
cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous
fiscal year, all prepared in accordance with generally
accepted accounting principles and certified with an
unqualified opinion by independent public accountants of
nationally recognized standing.
(b) As soon as available and in any event within
45 days after the end of each of the first three
quarters of each fiscal year of the Borrower a
consolidated balance sheet of the Borrower and the
Subsidiaries as of the end of such quarter and the
related consolidated statements of income and cash flows
for such quarter and for the portion of the Borrower's
fiscal year ended at the end of such quarter, setting
forth in each case in comparative form the figures for
the corresponding quarter and the corresponding portion
of the Borrower's previous fiscal year, all in
reasonable detail and duly certified (subject to normal
year-end adjustments) by the chief financial officer of
the Borrower as having been prepared in accordance with
generally accepted accounting principles.
(c) Concurrent with the delivery of any financial
statements under paragraph (a) or (b), a Compliance
Certificate, duly executed by the chief financial
officer of the Borrower.
<PAGE>
(d) Within three (3) days after any officer of the
Borrower obtains knowledge of any Default, a certificate
of the chief financial officer of the Borrower setting
forth the details thereof and any action that the
Borrower is taking or proposes to take with respect
thereto.
(e) From time to time such additional information
regarding the financial condition or business of the
Borrower and the Subsidiaries as the Bank may reasonably
request.
Section 6.2 Obligations. The Borrower shall, and
shall cause each of the Subsidiaries to:
(a) Preserve and maintain all of its rights,
privileges, and franchises necessary or desirable in the
normal conduct of its business.
(b) Comply with the requirements of all applicable
laws, rules, regulations, and orders of Governmental
Authorities.
(c) Pay and discharge when due all taxes,
assessments, and governmental charges or
levies imposed on it or on its income or
profits or any of its property, except for
any such tax, assessment, charge, or levy the
payment of which is being contested in good
faith and by proper proceedings and against
which adequate reserves are being maintained.
(d) Maintain all of its properties owned or used
in its business in good working order and condition
ordinary wear and tear excepted.
(e) Permit representatives of the Bank, during
normal business hours, to examine, copy, and make
extracts from its books and records, to inspect its
properties, and to discuss its business and affairs with
its officers, directors, and accountants.
(f) Maintain insurance in such amounts, with such
deductibles, and against such risks as is customary for
similarly situated businesses.
Section 6.3 Financial. The Borrower shall:
(a) Maintain a ratio of Consolidated Funded
Debt to Consolidated Total Capitalization of no more than
.40.
(b) Maintain its Consolidated Leverage Ratio at
not more than 3.00 to 1.
Section 6.4 Liens. The Borrower will not, and will
not permit any Subsidiary to, create, incur, assume or suffer
to exist any mortgage, lease, deed of trust, pledge, lien,
security interest, or other charge or encumbrance of any
nature on any of its assets, whether now owned or hereafter
acquired, except:
<PAGE>
(a) Liens on any property of the Borrower or
any Subsidiary (other than those described elsewhere in this
Section) securing any indebtedness for borrowed money in
existence on the date hereof and listed in Schedule 6.4
hereto.
(b) Liens, charges and encumbrances incurred in
the ordinary course of such party's business
as conducted in the last five years which
were not incurred in connection with the
borrowing of money and which do not in the
aggregate materially detract from the value
of its property or materially impair the use
thereof in its business.
(c) Liens granted in connection with the
acquisition of property by such party
provided that (i) such liens secure payment
of part of the purchase price of the property
subject to such liens, and (ii) no such lien
extends or shall extend to or cover any
property of the Borrower or such Subsidiary,
as the case may be, other than the property
then being acquired and fixed improvements
then or thereafter erected thereon.
(d) Liens imposed by law for taxes, assessments
or charges of any governmental authority for
claims not yet due or which are being
contested in good faith by appropriate
proceedings diligently conducted.
(e) Statutory liens of landlords and liens of
carriers, warehousemen, mechanics, materialmen and other
liens imposed by law or created in the ordinary course
of business and in existence less than ninety days from
the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate
proceedings diligently conducted and with respect to
which adequate reserves or other appropriate provisions
are being maintained in accordance with GAAP.
(f) Liens incurred or deposits made in the
ordinary course of business in connection
with workers' compensation, unemployment
insurance and other types of social security
benefits.
(g) Easements, rights-of-way, covenants,
consents, reservations, encroachments, variances and zoning
and other charges or encumbrances which do not materially
interfere with the ordinary conduct of the business of the
Borrower or any Subsidiary and which do not materially
detract from the value of the property to which they attach
or materially impair the use thereof to the Borrower or any
Subsidiary.
(h) Liens (other than those described
elsewhere in this Section), securing indebtedness in an
amount not to exceed $5,000,000 in the aggregate.
<PAGE>
Section 6.5 Investments. The Borrower will not,
and will not permit any Subsidiary to, purchase or hold
beneficially any stock or other securities or evidence of
indebtedness of, make or permit to exist any loans or
advances to, or make any investment or acquire any interest
whatsoever in, any other Person, except:
(a) Investments in direct obligations of the
United States of America or any agency or
instrumentality thereof whose obligations
constitute full faith and credit obligations
of the United States of America having a
maturity of one year or less, commercial
paper issued by U.S. corporations rated "A-1"
or "A-2" by Standard & Poors Corporation or
"P-I" or "P-2" by Moody's Investors Service
or certificates of deposit or bankers'
acceptances having a maturity of one year or
less issued by members of the Federal Reserve
System having deposits in excess of
$100,000,000.
(b) Any existing investment by the Borrower
or any other Subsidiary in the stock of any Subsidiary.
(c) Advances in the form of progress payments,
prepaid rent or security deposits.
Section 6.6 Dividends. The Borrower will not,
during any fiscal year of the Borrower, pay any dividend
(other than dividends or distributions payable solely in
stock of the Borrower) on any shares of any class of stock of
the Borrower or make any payment on account of the purchase,
redemption or other retirement of any shares of such stock or
make any distribution in respect thereof, either directly or
indirectly, if, after giving effect to such payment or
distribution, the aggregate amount of such payments and
distributions made during such fiscal year would exceed the
consolidated net income (determined in accordance with GAAP)
of the Borrower and its Subsidiaries during the fiscal year
immediately preceding the year in which such payment or
distribution is made.
Section 6.7 Consolidation and Merger. The Borrower
will not, and will not permit any Subsidiary to, consolidate
with or merge into any Person, or permit any other Person to
merge into it, or acquire (in a transaction analogous in
purpose or effect to a consolidation or merger) all or
substantially all of the assets any other Person; provided,
however, that the restrictions contained in this Section
shall not apply to or prevent the consolidation or merger of
any Person with, or a conveyance or transfer of any Person's
assets to, the Borrower so long as (i) the Borrower shall be
the continuing or surviving entity, and (ii) no Default has
occurred and is continuing or would result from such
consolidation, merger or acquisition.
ARTICLE VII
DEFAULT
Section 7.1 Events of Default. Each of the
following shall constitute an "Event of Default":
<PAGE>
(a) The Borrower shall fail to pay when due any
principal of or interest on the Loan, or any
Loan Party shall fail to pay when due any
other amount payable under any Loan Document.
(b) Any representation, warranty, certification,
or statement made or deemed made by any Loan
Party (or any of its officers) in any Loan
Document or in any certificate, financial
statement, or other document delivered
pursuant thereto shall be false, misleading,
or incorrect in any material respect when
made or deemed made.
(c) The Borrower shall fail to perform, observe,
or comply with any covenant, agreement, or
term contained in Section 6.1 or 6.3 of this
Agreement.
(d) Any Loan Party shall fail to perform,
observe, or comply with any other covenant,
agreement, or term contained in any Loan
Document (other than a failure covered
elsewhere in this Section 7.1) and such
failure shall continue for a period of thirty
(30) days after notice thereof to such Loan
Party by the Bank.
(e) Any Loan Party or any Subsidiary shall admit
in writing its inability to, or be generally unable to,
pay its debts as such debts become due.
(f) Any voluntary proceeding under any Debtor
Relief Law shall be commenced by any Loan
Party or any Subsidiary; or any involuntary
proceeding under any Debtor Relief Law shall
be commenced by or against any Loan Party or
any Subsidiary or any of their respective
assets, and such proceeding shall not be
dismissed within thirty (30) days after the
commencement thereof; or an order for relief
shall be entered against any Loan Party or
any Subsidiary in any case under the United
States Bankruptcy Code.
(g) Any Loan Party or any Subsidiary shall
fail to pay when due any principal of or interest on any
indebtedness for borrowed money (other than the Note) having
an outstanding principal amount greater than $100,000,
whether as principal obligor, guarantor, or otherwise, or
the maturity of any such indebtedness shall have been
accelerated, or any event shall have occurred that permits
(or, with the giving of notice or lapse of time or both,
would permit) any holder or holders of such indebtedness or
any Person acting on behalf of such holder or holders to
accelerate the maturity thereof.
(h) Any judgment or order for the payment of money
in excess of $100,000 shall be rendered against any Loan
Party or any Subsidiary where either (i) enforcement
proceedings shall have been commenced by any creditor upon
such judgment or order or (ii) there shall be any period of
10 consecutive days during which a stay of enforcement of
such judgment or order, by reason of pending appeal or
otherwise, shall not be in effect.
(i) Any Loan Party shall dissolve, liquidate,
or terminate its legal existence or shall convey, transfer,
lease, or dispose of (whether in one transaction or a series
of transactions) all or substantially all of its assets to
any Person.
<PAGE>
(j) Any event or condition shall occur that could
reasonably be expected to have a Material Adverse Effect.
(k) A Change of Control shall occur with respect to the
Borrower.
Section 7.2 Remedies. If any Event of Default shall
occur and be continuing, the Bank may do any one or more of
the following:
(a) Acceleration. Declare all outstanding
principal of and accrued and unpaid interest on the Note
and all other amounts payable by the Borrower under the
Loan documents immediately due and payable, and the same
shall thereupon become immediately due and payable,
without presentment, demand, protest, notice of
acceleration, notice of intent to accelerate, or other
notices or formalities of any kind, all of which are
hereby expressly waived by the Borrower.
(b) Interest Rate Adjustment. By notice to
the Borrower, declare that the Note shall bear interest at
the Floating Rate, in which case the Note shall thereafter
bear interest at the Floating Rate (or the Default Rate
based on such Floating Rate) from and after the date
specified in such notice.
(c) Rights. Exercise any and all rights and
remedies afforded by applicable law or otherwise.
Notwithstanding the foregoing, upon the occurrence of an
Event of Default under Section 7.1(f), the outstanding
principal of and accrued and unpaid interest on the Notes and
all other amounts, payable by .the Borrower under the Loan
Documents shall thereupon become immediately due and payable
without presentment, demand, protest, notice of acceleration,
notice of intent to accelerate, or other notices of
formalities of any kind, all of which are hereby expressly
waived by the Borrower.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Expenses. The Borrower shall on demand
pay or reimburse the Bank for paying (a) all reasonable costs
and expenses of the Bank, including the fees and
disbursements of counsel for the Bank (including the
allocated cost of internal counsel), in connection with the
negotiation, preparation, execution and administration of the
Load Documents, the preparation of any waiver or consent
thereunder or any amendment thereof or any Default or alleged
Default, and (b) if an Event of Default occurs, all costs and
expenses incurred by the Bank, including the fees and
disbursements of counsel (including the allocated cost of
internal counsel), in connection with such Event of Default
and any collection, bankruptcy, insolvency, and other
enforcement proceedings resulting therefrom.
<PAGE>
Section 8.2 Indemnification. The Borrower agrees
to indemnify the Bank and each affiliate thereof and their
respective officers, directors, employees, attorneys, and
agents (each an "Indemnified Person") from, and hold each of
them harmless against all losses, liabilities, claims,
damages, penalties, judgments, disbursements, costs, and
expenses, including all fees and disbursements of counsel
(including the allocated cost of internal counsel)
(collectively the "Indemnified Liabilities"), which directly
or indirectly arise from or relate to any Loan Document or
any of the transactions contemplated thereby, but excluding
any of the foregoing to the extent caused by the gross
negligence or willful misconduct of the Indemnified Person.
Without limiting any provision of any Load Document, it is
the express intention of the parties hereto that each
Indemnified Person shall be indemnified from and held
harmless against any and all Indemnified Liabilities arising
out of or resulting from the sole or contributory negligence
of the Indemnified Person.
Section 8.3 Right of Set-off. Upon the occurrence
and during the continuance of any Event of Default, the Bank
is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply 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 (or any of its affiliates) to
or for the credit or the account of the Borrower against any
and all of the obligations of the Borrower now or hereafter
existing under the Loan Documents, irrespective of whether
the Bank shall have made any demand under the Loan Documents
and although such obligations may be unmatured. The Bank
agrees promptly to notify the Borrower after any such set-off
and application made by the Bank; provided, however, that the
failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Bank under
this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that
the Bank may have.
Section 8.4 No Waiver, Cumulative Remedies. Not
failure on the part of the Bank to exercise and no delay in
exercising, and no course of dealing with respect to, any
right, power, or privilege under any Loan Document shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any Loan
Document preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege. The
rights and remedies provided for in the Loan Documents are
cumulative and not exclusive of any rights and remedies
provided by law.
Section 8.5 Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except
that the Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written
consent of the Bank. The Bank may at any time and from time
to time (a) grant participating interests in the Note and
this Agreement to any Persons, and (b) assign all or any
portion of its rights and/or obligations under the Loan
Documents to any Persons. All information provided by the
Borrower to the Bank may be furnished by the Bank to its
affiliates and to any actual or proposed assignee or
participant.
<PAGE>
Section 8.6 Amendment. No amendment or waiver of
any provision of any Loan Document to which the Borrower is a
party, nor any consent to any departure by the Borrower
therefrom, shall be effective unless the same shall be agreed
or consented to in writing by the Bank and the Borrower, and
each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which
given.
Section 8.7 Notices. All notices, requests, and
other communications to either party hereunder shall be in
writing (including facsimile transmission) and shall be given
to such party at its address or facsimile number set forth on
the signature pages hereof. Each such notice, request, or
other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile
number referred to in this Section and confirmation of
receipt is received, (ii) if given by mail, three (3)
Business Days after such communication is deposited in the
mails with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when
delivered at the address referred to in this Section;
provided that notices to the Bank shall not be effective
until received.
Section 8.8 Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall
constitute one and the same instrument.
Section 8.9 Severability. Any provision of this
Agreement held by a court of competent jurisdiction to be
invalid or unenforceable shall not impair or invalidate the
remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 8.10 Controlling Agreeement.
Notwithstanding anything to the contrary contained in any
Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate
of non-usurious interest permitted by applicable law (the
"Maximum Rate"). If the Bank shall receive interest in an
amount that exceeds the Maximum Rate, the excessive
interest shall be applied to the principal of the Note or,
if it exceeds the unpaid principal, refunded to the
Borrower. In determining whether the interest contracted
for, charged, or received by the Bank exceeds the Maximum
Rate, the Bank may, to the extent permitted by applicable
law, (a) characterize any payment that is not principal as
an expense, fee, or premium rather than interest, (b)
exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the
contemplated term of the Note.
Section 8.11 Survival. All representations and
warranties made or deemed made by the Borrower in the Loan
Documents shall survive the execution and delivery thereof
and the making of the Loan, and no investigation by the Bank
or any closing shall affect the representations and
warranties by the Borrower or the right of the Bank to rely
upon them. Without prejudice to the survival of any other
obligation of the Borrower hereunder, the obligations of the
Borrower under Article III and Sections 8.1 and 8.2 shall
survive repayment of the Note.
<PAGE>
Section 8.12 Governing Law. This Agreement and the
Note shall be governed by and construed in accordance with,
the laws of the State of Minnesota and the applicable laws of
the State of Minnesota and the applicable laws of the United
States of America.
Section 8.13 Consent to Jurisdiction. The Borrow
irrevocably (i) agrees that any suit, action or other legal
proceeding arising out of or relating to this Agreement or
any other Loan Document may be brought in a court of record
in Hennepin County in the State of Minnesota or in the Courts
of the United States located in such State, (ii) consents to
the jurisdiction of each such court in any suit, action or
proceeding, (iii) waives any objection which it may have to
the laying of venue of any such suit, action or proceeding in
any such courts and any claim that any such suit, action or
proceeding has been brought in an inconvenient forum, and
(iv) agrees that a final judgment in any such suit, action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgement or in any other manner
provided by law.
Section 8.14 WAIVER OF JURY TRAIL. TO THE FULLEST
EXTEST PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE BANK
IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
Section 8.15 Entire Agreement. This written
Agreement and the other Loan Documents represent the final
agreement between the parties and may not be contradicted by
evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral
agreements between the parties
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
Notice Address: AMERICAN
WOODMARK
3102 Shawnee Drive
CORPORATION
Winchester, Virginia 22601
Attention: Glenn Eanes
Telecopier: 540-665-9176
By Glenn Eanes
Its Treasurer
Notice Address: WELLS FARGO BANK, NATIONAL
Norwest Center, Third Floor ASSOCIATION
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0085
Attention: Ann C. Pifer
Telecopier: 612-667-2276
By Douglas A. Lindstrom
Its Assistant
Vice President
M1:464170.05
<PAGE>
Schedule 6.4
LEINS
Secured Party Covered Property Secured Amount
West Virginia Real Estate at our Hardy Original $4,656,701
Economic County Plant At 3/16/99 $5,026,237
Development As defined in Deed of Lease
Authority dated July 9, 1992 and subsequently
amended
West Virginia Specific Equipment as listed Original $500,000
Economic in loan At 3/16/99 $490,342
Development Between American Woodmark
Authority Corporation and West Virginia
Economic Development Authority dated
11/20/98
NationsBank Real Estate and Personal Original $4,000,000
Property as At 3/16/99 $ 925,000
Defined in the Industrial Revenue Bonds
Loan documents for the County
of Mohave Arizona and American Woodmark
Corporation dated 12/9/86
NationsBank Real Estate and Personal Original $8,000,000
Property as At 3/16/99 $4,000,000
Defined in the Industrial Revenue Bonds
Loan documents for Stephens
County Georgia and American Woodmark
Corporation dated 12/17/87
<PAGE>
Exhibit A
PROMISSORY NOTE
$2,500,000 March 23, 1999
For value received, American Woodmark Corporation,
a Virginia corporation, promises to pay to the order of Wells
Fargo Bank, National Association, a national banking
association (the "Bank"), at its main office in San
Francisco, California, or at such other place as the holder
hereof may hereafter from time to time designate in writing,
in lawful money of the United States of America and in
immediately available funds, the principal sum of Two Million
Five Hundred Thousand ($2,500,000), and to pay interest on
the principal balance of this Note outstanding from time to
time at the rate or rates determined pursuant to the Credit
Agreement of even date herewith between the Borrower and the
Bank (together with all amendments, modifications and
restatements thereof, the "Credit Agreement").
This Note is issued pursuant to, and is subject to,
the Credit Agreement, which provides (among other things) for
the amount and date of payments of principal and interest
required hereunder and for the acceleration of the maturity
hereof upon the occurrence of an Event of Default (as defined
therein).
The Borrower shall pay all costs of collection,
including reasonable attorneys' fees and legal expenses, if
this Note is not paid when due, whether or not legal
proceedings are commenced.
Presentment or other demand for payment, notice of
dishonor and protest are expressly waived.
AMERICAN WOODMARK
CORPORATION
By___________________
Its__________________
M1:464170.05
<PAGE>
Exhibit B
COMPLIANCE CERTIFICATE
,
Wells Fargo Bank, National Association
c/o Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota.55479-0085
Compliance Certificate
Ladies and Gentlemen:
Reference is made to the Credit Agreement (the
"Credit Agreement") dated March 23, 1999, entered into
between Wells Fargo Bank, National Association and American
Woodmark Corporation (the "Borrower").
All terms defined in the Credit Agreement and not
otherwise defined herein shall have the meanings given them
in the Credit Agreement.
This is a Compliance Certificate submitted in
connection with the Borrower's
financial statements (the "Statements") as of
, __________ (the "Effective Date").
I hereby certify to you as follows:
1. I am the chief financial office of the Borrower, and I
am familiar with the
financial statements and financial affairs of the
Borrower.
2. The Statements, and the computations below, have been
prepared in accordance with generally accepted accounting
principles applied on a basis that is consistent with the
accounting practices reflected in the annual financial
statements of the Borrower previously delivered to you.
3. The following computations set forth the Borrower's
compliance or non-compliance with the requirements set forth
in Sections 6.3 of the Credit Agreement as of the Effective
Date:
Section 6.3(b) Consolidate Funded Debt to Consolidated Total
Capitalization
Interest-bearing Funded Debt $
Capital lease obligations $
Consolidated Funded Debt $
<PAGE>
Consolidated Shareholders Equity $
Consolidate Total Capitalization $
Consolidated Debt to Total Capitalization Ratio ____ to 1
Maximum Consolidated Debt to Total Capitalization Ratio 0.40 to 1
Section 6.3(b) Consolidated Leverage Ratio
Consolidated Pretax Income $
Interest Expense $
Depreciation $
Amortization $
Extraordinary items $
Non-cash items $
EBITDA $
Consolidated Leverage Ratio
Consolidated Funded Debt to EBITDA ____ to 1
Maximum Consolidated Leverage Ratio 3.00 to 1
Attached hereto are all relevant facts in
reasonable detail to evidence,
and the computations of, the
financial covenants referred to above.
4. I have no knowledge of the occurrence of any
Default under the Credit Agreement, except as
set forth in the attachments, if any, hereto.
Very truly yours,
AMERICAN WOODMARK
CORPORATION
By _________________________
Its _____________________
M1:464170.05
<PAGE>
Exhibit 10.10 (i)
ADDITIONAL TERM
LOAN PROMISSORY NOTE
$5,000,000.00 July 31, 1989
Charlotte, North Carolina
FOR VALUE RECEIVED, AMERICAN WOODMARK CORPORATION, a
Virginia corporation (the "Borrower") hereby promises to pay
to the order of
NCNB NATIONAL BANK OF NORTH CAROLINA, a national banking
association (the "Bank") at its offices in Charlotte, North
Carolina (or at such other place or places as the Bank may
designate) the principal sum of
FIVE MILLION DOLLARS ($5,000,000.00) under the terms and
conditions of a certain Amended and Restated Loan Agreement,
dated as of December 10, 1987, by and between the Borrower
and the Bank as amended by that First Amendment to Loan
Agreement dated as of July 31, 1989 (as amended from time to
time, the "Loan Agreement"). The defined terms in the Loan
Agreement are used herein with the same meaning. All of the
terms, conditions and covenants of the Loan Agreement are
expressly made a part of this promissory note (the
"Additional Term Loan Note") by reference in the same manner
and with the same effect as if set forth herein at length and
any holder of this Additional Term Loan Note is entitled to
the benefits and remedies provided in the Loan Agreement and
any other agreements by and between the Borrower and the
Bank.
The principal amount of this Additional Term Loan Note
shall be payable in forty (40) consecutive quarterly
installments, such installments being due on the first day of
each January, April, July and October, beginning with the
installment due October 1, 1989. Installments one (1)
through thirty-nine (39), inclusive, shall each be in the
amount of $125,000.00 and the fortieth (40th) and final
installment shall be an amount equa1 to the then outstanding
balance.
This Additional Term Loan Note shall bear interest on the
outstanding balance from time to time at the rates as
provided in Article IVA of the Loan Agreement until such
principal and interest have been paid in full. Installments
of interest on the outstanding balance shall be due and
payable in arrears on Interest Payment Dates as provided in
the Loan Agreement.
If payment of all sums due hereunder is accelerated under
the terms of the Loan Agreement or under the terms of the
other Loan Documents between the Bank and the Borrower, the
<PAGE>
then remaining principal amount and accrued but unpaid
interest shall bear interest at the rate provided for in
Section 5.01 of the Loan Agreement Until such principal and
interest have been paid in full. Further, in the event of
such acceleration, this Additional Term Loan Note, and all
other indebtedness of the Borrower to the Bank, shall become
immediately due and payable, without presentation, demand,
protest or notice of any kind, all of which are hereby waived
by the Borrower.
In the event any payment of interest or principal is
delinquent more than fifteen (15) days, the Borrower will pay
to the Bank a late charge of four percent (4%) of the amount
of the overdue payment. This provision for late charges
shall not be deemed to extend the time for payment or be a
"grace period" or "cure period" that gives the Borrower a
right to cure an Event of Default or event which, but for the
giving of notice or lapse of time or both, would constitute
such an Event of Default. Imposition of late charges is not
contingent upon giving of any notice or lapse of any cure
period provided for in the Loan Agreement.
In the event this Additional Term Loan Note is not paid
when due at any stated or accelerated maturity, the Borrower
agrees to pay, in addition to the principal and interest, all
costs of collection, including reasonable attorneys' fees.
IN WITNESS WHEREOF, the Borrower has caused this
Additional Term Loan Note to be executed under seal as of the
day and year first above written.
AMERCICAN WOODMARK CORPORATION
ATTEST:
By: /s/Glenn Eanes By: /s/Gene Morphis
-------------- ---------------
Title: Assistant Treasurer Title: V. P. Finance
(Corporate Seal)
<PAGE>
Table of Contents
Company Profile 2
Market Information 2
Financial Highlights 2
Letter from the President 3
Five Year Selected Financial Information 5
Creating A Growth Company 6
Management's Discussion and Analysis 10
Consolidated Financial Statements 18
Notes to Consolidated Financial Statements 21
Management's Report 31
Report of Independent Auditors 32
Board of Directors and Executive Officers 33
Corporate Information 33
<PAGE>
M I S S I O N S T A T E M E N T
CREATING VALUE THROUGH PEOPLE
WHO WE ARE
American Woodmark is an organization of employees and
shareholders who have combined their resources to pursue a
common goal.
WHAT WE DO
Our common goal is to create value by providing kitchens and
baths "of pride" for the American family.
WHY WE DO IT
We pursue this goal to earn a profit, which allows us to
reward our shareholders and employees and to make a
contribution to our society.
HOW WE DO IT
Four principles guide our actions:
Customer Satisfaction - Providing the best possible
quality, service and value to the greatest number of
people. Doing whatever is reasonable, and sometimes
unreasonable, to make certain that each customer's
needs are met each and every day.
Integrity - Doing what is right. Caring about the
dignity and rights of each individual. Acting fairly
and responsibly with all parties. Being a good citizen
in the communities in which we operate.
Teamwork - Understanding that we must all work together
if we are to be successful. Realizing that each
individual must contribute to the team to remain a
member of the team.
Excellence - Striving to perform every job or action in
a superior way. Being innovative, seeking new and
better ways to get things done. Helping all
individuals to become the best that they can be in
their jobs and careers.
ONCE WE'VE DONE IT
When we achieve our goal good things happen: sales
increase, profits are made, shareholders and employees are
rewarded, jobs are created, our communities benefit, we have
fun, and our customers are happy and proud--with a new
kitchen or bath from American Woodmark.
[1]
<PAGE>
COMPANY PROFILE
American Woodmark Corporation manufactures and
distributes kitchen cabinets and vanities for the
remodeling and new home construction markets. The Company
operates nine manufacturing facilities located in Arizona,
Georgia, Kentucky, Virginia, and West Virginia and five
service centers across the country.
American Woodmark Corporation was formed in 1980 and
became a public company through a Common Stock offering in
July 1986.
The Company offers approximately 130 cabinet lines in
a wide variety of designs, materials and finishes. Its
products are sold on a national basis through a network of
independent distributors and directly to home centers,
major builders and home manufacturers. Approximately 75%
of its sales during fiscal year 1999 were to the
remodeling market and 25% to the new home market.
The Company is one of the five largest manufacturers
of kitchen cabinets in the United States.
MARKET INFORMATION
American Woodmark Corporation no par value Common
Stock is traded on the NASDAQ/NM Over-the-Counter market
under the AMWD symbol. Common Stock per share market
prices and cash dividends declared during the last two
fiscal years were as follows:
Market Price
------------ Dividends
(in dollars) High Low Declared
---- --- --------
FISCAL 1999
First quarter $32.75 $24.25 $ .03
Second quarter 30.44 21.19 .04
Third quarter 44.00 25.25 .04
Fourth quarter 42.00 29.00 .04
FISCAL 1998
First quarter 16.88 11.88 .02
Second quarter 22.38 12.88 .03
Third quarter 23.00 18.00 .03
Fourth quarter 30.75 20.50 .03
As of April 30, 1999, there were approximately 5,500
stockholders of the Company's Common Stock. Included were
approximately 64% of the Company's employees who are
stockholders through the American Woodmark Stock Ownership
Plan.
FINANCIAL HIGHLIGHTS
(in thousands, except share data)
Years Ended April 30
--------------------
1999 1998 1997
---- ---- ----
OPERATIONS
Net sales $327,013 $241,677 $219,402
Operating income 27,911 21,328 17,606
Income before income taxes 28,547 21,288 17,114
Net income 17,509 13,031 10,548
Earnings per share
Basic $ 2.23 $ 1.68 $ 1.37
Diluted 2.18 1.65 1.35
Average shares outstanding -- Note A
Basic 7,856 7,753 7,673
Diluted 8,047 7,908 7,797
FINANCIAL POSITION
Working capital $ 29,486 $ 31,367 $ 23,442
Total assets 140,609 106,481 87,157
Long-term debt 11,435 8,717 10,637
Stockholders' equity 78,337 59,137 46,298
Long-term debt to equity ratio 15% 15% 23%
[2]
<PAGE>
To Our Shareholders:
Fiscal 1999 was an outstanding year for American Woodmark.
For the third consecutive year, we achieved both record
sales and net income. Net income of $17.5 million or $2.18
per diluted share was 34% above the previous high set last
year. Net income performance set a new record in each of
the four fiscal quarters, extending our current streak of
consecutive year-over-year improvement to thirteen quarters.
Quarterly net income improved from the previous records set
in fiscal 1998 by 62%, 18%, 41% and 28% in the first through
fourth quarters, respectively.
The investment community continues to recognize and reward
our performance. Over this past year, the value of a share
of American Woodmark stock increased approximately 25% from
slightly over $30 to almost $40 per share. This latest
increase, combined with the improvement in our stock price
during fiscal 1997 and fiscal 1996, means that $100 invested
in American Woodmark in April 1996 is now worth $740. Our
three-year total return to shareholders placed American
Woodmark at the top of our peer group as defined by the S&P
Home Furnishings Index. Over this same period, the market
capitalization of the Company has increased from $40 million
to well over $300 million.
Net sales in fiscal 1999 increased 35% to $327.0 million
from $241.7 million the previous year. We continue to gain
market share, especially in the home center channel, based
on our strong market position, our key customer
relationships, our innovative new products and our superior
service programs. The Company continues to expand our
product line to generate top line sales growth. During
fiscal 1999, we again expanded our line with the
introduction of the Newport and Charleston lines and the
expansion of our Gettysburg series.
Year-over-year sales increased with both The Home Depot and
Lowe's. These two customers alone are now operating a
combined total of over 1,300 big-box stores throughout the
United States. Over the next three years, the total number
of outlets operated by these two customers will exceed 2,000
stores. American Woodmark remains committed to supporting
the tremendous growth of these two customers and maintaining
our current position as a preferred vendor by offering new
products and innovative service programs.
We continue to be very aggressive and gain market share
through our Timberlake brand program designed for the new
construction industry. This program has been highly
successful and has provided significant growth, especially
in the competitive business of serving both national and
regional builders. The Company continues to use this
platform to expand into both new and under-served markets by
taking advantage of our ability to deliver full kitchens
just-in-time to individual job sites.
[3]
<PAGE>
The tremendous growth experienced by our Company placed a
significant strain on our manufacturing capacity during the
year. We made a conscious decision early in the year to
service all of our customers and secure market share. The
lack of internal capacity, especially during the second and
third fiscal quarters, forced us to purchase certain
partially completed components from outside vendors at a
significant premium from our internal cost. This premium
resulted in a decline in gross margin from 30.1% in the
first quarter to 28.5% in the second and 27.2% in the third.
Gross margin improved to 28.7% in the fourth quarter as
significant elements of new capacity began to come on-line
and more of our components were again provided from internal
sources.
During fiscal 1999, we invested almost $22 million in
capital expenditure projects, more than the previous four
fiscal years combined. This investment program was almost
twice that anticipated last year at this time. Our spending
plans will continue to be flexible and will be driven by the
opportunities available to us in the market place. We will
make any and all investments that are financially sound in
support of the growth of our customer base. Based on both
the current and anticipated level of commitment from our
customers, we anticipate capital expenditures for the next
two to three years in excess of fiscal 1999 levels.
Since the end of fiscal 1996, the Company has built and
maintained significant cash reserves and borrowing capacity
precisely for this reason. In addition, our just-in-time
approach to manufacturing allows us to generate more free
cash flow per dollar of net income than many of our
competitors. As we grow, we can reinvest much of our profit
into hard capacity due to our low levels of working capital
and our high inventory turns. These investments in
additional capacity will continue to provide opportunities
to drive even further sales growth and profitability.
Over the past few years, we have worked to create a growth
company. Our accomplishments are a credit to the many men
and women that work at American Woodmark. Our high rate of
growth presented enormous challenges throughout the year. I
am proud of how our organization met each and every one of
these challenges and continued to build an even stronger
Company. I would like to personally thank each of our over
3,000 employees for their effort and dedication.
As American Woodmark looks to complete our 2001 Vision and
to setting new goals for 2002 and beyond, we still have many
challenges. Over the past decade we have introduced many
innovations that have helped to redefine our industry. As
we move forward, we will continue to push both ourselves and
our competitors to even greater levels of quality, service
and total customer satisfaction. I remain confident that
our team will successfully complete this journey in the same
manner as we achieved our past goals. We will continue to
follow the guidelines outlined in our Mission Statement as
we build our Company and provide a superior return to those
shareholders investing for the long-term.
I look forward to another exciting year ahead. Thank you
for your continuing support of American Woodmark.
/s/ JAMES J. GOSA
James J. Gosa
President and Chief Executive Officer
[4]
<PAGE>
FIVE YEAR SELECTED FINANCIAL INFORMATION
Years Ended April 30
-----------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
FINANCIAL STATEMENT DATA
(in millions, except share data)
Net sales $327.0 $241.7 $219.4 $196.2 $197.4
Income before income taxes 28.5 21.3 17.1 6.2 8.8
Net income 17.5 13.0 10.5 3.8 5.4
Earnings per share
Basic 2.23 1.68 1.37 .51 .71
Diluted 2.18 1.65 1.35 .50 .70
Depreciation and amortization
expense 9.7 7.8 7.8 7.8 7.8
Restructuring costs -- -- -- -- 0.5
Total assets 140.6 106.5 87.2 76.3 74.4
Long-term debt 11.4 8.7 10.6 12.9 15.5
Stockholders' equity 78.3 59.1 46.3 35.8 31.8
Cash dividends declared
per share .15 .11 .06 -- --
Average shares outstanding
Basic 7.9 7.8 7.7 7.6 7.5
Diluted 8.0 7.9 7.8 7.6 7.6
------------------------------------------
PERCENT OF SALES
Gross profit 28.6% 30.3% 27.8% 21.5% 23.5%
Sales, general and
administrative expenses 20.1 21.5 19.8 17.8 18.1
Income before income taxes 8.7 8.8 7.8 3.2 4.5
Net income 5.4 5.4 4.8 2.0 2.7
-----------------------------------------
RATIO ANALYSIS
Current ratio 1.7 1.9 1.9 1.7 1.6
Inventory turnover (1) 15.6 15.1 15.3 11.9 11.0
Percentage of capital:
(LTD & equity)
Debt 12.7% 12.8% 18.7% 26.4% 32.8%
Equity 87.3 87.2 81.3 73.6 67.2
Return on equity (average %) 25.5 24.7 25.7 11.4 18.4
Collection period--days (2) 39.1 37.2 36.1 36.9 34.7
(1) Based on average of beginning and ending inventory.
(2) Based on ratio of monthly average customer receivables to average
sales per day.
[5]
<PAGE>
Creating a Growth Company
Over the past few years, we have taken many steps to create
a growth company. Our accelerated growth during fiscal 1999
was the direct result of our focus on four key areas of our
business.
Customers
At American Woodmark, we realize that in partnership with
our customers anything is possible. Everything we do is
dedicated to the satisfaction of each unique customer and
their particular needs.
We are the leading supplier of stock cabinetry to the home
center industry and remain the vendor of choice with both
the industry leaders, The Home Depot and Lowe's. American
Woodmark proudly offers our products in the 1,300 combined
big box outlets operated by these two companies. By 2003,
The Home Depot and Lowe's will operate over 2,000 stores.
We are in a position to serve these two customers in all
2,000 locations.
We are also a leading supplier of fine cabinetry to the new
construction industry. In many of the large metropolitan
areas of the United States, American Woodmark has
established strong relationships with national home
builders. We currently service 7 of the Top 10 and 35 of the
Top 100 home builders on a direct basis across the country.
To serve local and regional builders, we have built
relationships through an extensive network of independent
distributors and dealers. Working with American Woodmark,
these distributors and dealers provide a level of
customization and service that help medium and small size
builders remain competitive in the marketplace.
We are a pioneer in developing cabinet supplier
relationships with the emerging original equipment or
prefabricated housing industry. New technology, materials
and housing codes have substantially
[6]
<PAGE>
improved the image and
product quality offered by off-site construction. A key
component in the development of site-built alternatives has
been the upgrading of the kitchen. American Woodmark has
been a significant player in the development of customer
relationships in support of the shift towards improved
quality and features.
Products
American Woodmark operates in an industry that is driven by
product. First and foremost, we are a product driven
Company in a product driven business. We continue to
successfully drive growth through the introduction of new
styles and colors and through innovative features and
design. One third of our total product sales in fiscal 1999
were generated by products that were not offered in our
product line three years ago.
In order to take advantage of opportunities and to meet the
needs of our customers, we have created a product
development process that can take a new product from concept
to market in less than 120 days. Significant new products
developed through this process over the past few years
include:
* The innovative Newport line which offers a clean,
modern style and can be selected in oak, maple, cherry,
hickory or white.
* A new style with our Charleston line which offers a
classic, traditional bead board look in hickory.
* The expansion of our successful shaker design to
include cherry. This full line can now be ordered in four
wood species plus white and in several finishes.
* A growing family of cabinets in hickory, a new species
for American Woodmark introduced in fiscal 1998.
* A redesigned cherry line offered in both classic
Bordeaux and contemporary Spice finishes.
* A high-end white line using thermofoil technology to
create a rich, custom look and feel at a reasonable price.
* A natural, character oak line with the timeless look of
traditional oak.
[7]
<PAGE>
* Upgraded finishes to take advantage of new technology,
equipment and processes to provide the color and protection
offered on many higher end products for the home.
* New features across both new and existing lines
including dovetail and plywood bottom drawers, upgraded
hardware, thicker shelves, stronger engineered materials in
box construction, expanded SKUs and more accessories and
mouldings.
In addition to the wide range of product styles and colors,
American Woodmark also offers customers the unique advantage
of product branding. We manufacture just-in-time, making
each individual kitchen directly to order. This system
allows us to offer our customers both specialized branding
and exclusive products within brands with a minimum of
inventory management and logistics issues. The branding and
exclusivity elements of our product line offer the
opportunity for our customers to design a line that is
tailored to their strategy and their customer base.
Customer Service and Support
American Woodmark has developed a sophisticated customer
service and support system. We start with a highly trained,
professional sales and marketing staff that is organized
around our customers. We develop partnership relationships
at the store with designers, at the home office with
[8]
<PAGE>
merchants and at the corporate office with executive
management. These relationships help establish customer
intimacy and create lines of communication that allow us to
be highly responsive to customer needs.
We support the customer and our front line sales and
marketing staff with superior customer service through a
national customer service center. Our service center staff
provides extended hour access to our customers for product
questions, order processing, status inquiry and problem
resolution. They are backed by a state-of-the-art computer
system that provides access to valuable real time
information on products and services.
Our manufacturing facilities are tied to the customer
through our service network and ship complete and on time
with over 99% efficiency. American Woodmark has established
the industry standard for delivery, with the capability to
ship any order to any shipping address in the continental
United States. For example, almost two thirds of all home
center cabinets are shipped directly to the end consumer.
Virtually all of our direct builder business is shipped
directly from the factory to the construction site.
Organization
We continue to work extremely hard on our organization. We
believe that a superior organization provides the only true,
long-term competitive advantage.
We invest heavily in our people. We invest in their working
environment and in the tools our people need. We invest in
their training and their development. We invest in programs
to attract and retain the right people. During fiscal 1999,
we substantially improved our programs and systems for
employee selection, new employee orientation, salary
administration, human resource information management,
employee goal setting and the employee appraisal process.
Every full time American Woodmark employee continues to
share in our success through participation in a cash bonus
program.
As we continue to grow, we have also invested in our
organization. During fiscal 1999, we invested almost $22
million in new facilities and equipment. We purchased Knapp
Woodworking, Inc. to gain access to additional capacity,
products, customers and human resources. We built new
infrastructure with the installation of computer systems and
business processes. We expanded our management capabilities
as an organization through the combination of internal
development and external hiring. We are focused on
successfully building an organization that can continue to
both drive and manage our growth.
For over a dozen years, our Mission Statement has defined
who we are, what we do, why we do it and how it gets done.
Our efforts to create a growth company are driven by our
desire to provide opportunity for our employees and their
families, for the communities in which we live and work, for
our vendors and for our customers. We are dedicated to
Creating Value Through People. Ultimately, we believe that
we will successfully create a growth company through the
combined efforts of dedicated individuals working in teams
and pursuing a common goal.
[9]
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The following table sets forth certain income and expense items as a
percentage of net sales.
Percentage of Net Sales
Years Ended April 30
------------------------
1999 1998 1997
---- ---- ----
Net sales 100.0% 100.0% 100.0%
Cost of sales and distribution 71.4 69.7 72.2
Gross profit 28.6 30.3 27.8
Selling and marketing expenses 15.0 15.4 14.0
General and administrative expenses 5.1 6.1 5.8
Operating income 8.5 8.8 8.0
Interest expense 0.1 0.3 0.4
Income before income taxes 8.7 8.8 7.8
Provision for income taxes 3.4 3.4 3.0
Net income 5.4 5.4 4.8
[10]
<PAGE>
FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 1998
Fiscal 1999 net sales of $327.0 million increased 35.3%
from fiscal 1998 net sales of $241.7 million. Improved
sales were the result of continued growth with the leading
national home center chains, direct shipments to national
and regional builders and sales to distributors. The
acquisition of Knapp Woodworking, Inc., in December 1998 did
not have a material impact on total reported net sales
growth. In fiscal year 1999, average price per unit
increased 2.7% over fiscal year 1998. The average unit
price increased primarily as a result of price increases
implemented in the third quarter of both fiscal 1999 and
1998 and improvement in both channel and product mix.
Overall unit volume increased approximately 29.8% from the
prior year as the Company gained overall market share,
especially in the home center channel, due largely to the
impact of new product styles introduced over the last two
fiscal years. For the second consecutive year, unit
shipments to home centers increased to record levels based
on strong overall remodeling activity and the Company's
relationships with the leading domestic home center chains.
Unit shipments to direct builders improved through both
increased volume in the Company's existing sales regions and
expansion into new markets. Unit volumes to distributors
experienced an increase when compared to fiscal year 1998.
Gross profit for fiscal year 1999 declined to 28.6% from
30.3% in fiscal year 1998. The decrease in gross profit
was due to the additional cost of using out-sourced
components as sales demand exceeded component manufacturing
capacity. In addition, the Company experienced higher
distribution cost due a combination of delivery rate
increases and changes in customer mix.
Material cost per unit increased from prior year due to
the purchase of out-sourced components and the shift towards
more material intensive, higher-end products.
Labor costs per unit in fiscal year 1999 were similar to
those experienced in fiscal year 1998, as improvements in
productivity and lower workers' compensation expenses were
offset by normal labor rate increases, the impact of the
learning curve associated with new hires and increased
health care costs.
Per unit freight costs increased over prior year due to
the cost of the Company's initiatives to maintain
competitive advantage in the market through a specialized
delivery system.
Selling and marketing expenses decreased slightly as a
percentage of net sales to 15.0% in fiscal 1999, down from
15.4% in fiscal 1998. Promotional expense to support
merchandising efforts and staffing levels to support the
Company's growing customer base increased at the same rate
as the Company's sales.
General and administrative expenses as a percent of sales
decreased from 6.1% in fiscal 1998 to 5.1% in fiscal 1999.
Increased spending associated with additional staffing and
the Company's pay-for-performance incentive plans were more
than offset by the increase in sales.
Interest expense for fiscal 1999 declined to $363,000 from
$795,000 in the prior fiscal year. The decrease resulted
from capitalized interest of $332,000 associated with the
Company's capital spending in fiscal 1999. Total debt
increased $2.7 million during fiscal 1999 due primarily to
debt assumed in the purchase of Knapp Woodworking, Inc. and
funding through the State of West Virginia for the expansion
of the Hardy County, West Virginia facility. As of April
30, 1999, long-term debt to total capital was reduced 0.1%
to 12.7%.
[11]
<PAGE>
Other income increased $244,000 for fiscal 1999 compared
to the prior year due to a combination of increased interest
income from short-term investments and lower net cost for
disposal of property, plant and equipment.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities generated $12.5 million
in net cash during fiscal 1999 as compared to $16.3 million
in the prior year. The year-over-year decrease in cash
generated from operations was primarily due to an increase
in customer receivables associated with a strong surge in
sales during the fourth quarter of fiscal 1999 and increased
inventories. Fiscal 1999 versus fiscal 1998, days sales
outstanding increased due to a change in customer mix.
Inventory increased due to higher sales volume, the
continued migration towards a richer, more material
intensive product mix and increased variety. Increased
promotional display additions were associated with the
Company's increased market share within the home center
channel. Favorable impacts on cash flow were generated from
increased accounts payable due to general growth in activity
and the increase of performance incentives and related
compensation earned but not yet paid.
Capital spending increased $14.4 million from prior year
to $21.7 million as the Company initiated several major
programs designed to increase manufacturing capacity to meet
higher demand. During fiscal 1999 the Company opened a new
wood processing facility located in Monticello, Kentucky.
The Company completed an expansion of the dimension and
finishing facility in Hardy County, West Virginia. In
addition, the Company invested in new lumber processing and
dimension equipment intended to increase capacity and
efficiency in manufacturing facilities located in Toccoa,
Georgia, Orange, Virginia and Moorefield, West Virginia. The
Company expects that to support continued sales growth, it
will be necessary to make significant investment in plant,
property and equipment. Therefore, capital spending in
fiscal 2000 is expected to meet or exceed the level of
spending in fiscal 1999.
The Company increased overall debt by $2.7 million during
fiscal 1999. Total debt on April 30, 1999 was $13.4 million
which did not include any short-term borrowings under the
Company's revolving credit facility. Long-term debt to
total equity declined from 14.7% at April 30, 1998 to 14.6%
at April 30, 1999.
Cash dividends of $1,180,000 were paid on Common Stock
during fiscal 1999.
Cash flow from operations combined with accumulated cash
on hand and available borrowing capacity is expected to be
sufficient to meet forecasted working capital requirements,
service existing debt obligations and fund capital
expenditures for fiscal 2000.
OUTLOOK FOR FISCAL 2000
The Company anticipates continued underlying strength in
the domestic economy through fiscal 2000. Under normal
conditions, this strength should result in the continued
growth and expansion of the relevant markets for the
Company. In addition, the Company expects to continue to
gain market share based on its position with major
customers, its broad product offering and its ability to
deliver quality products with superior service. During a
period of growth in the housing and remodeling sectors, the
Company expects to continue to generate higher sales.
The Company expects to maintain or increase recent
profitability performance while significantly investing
resources in future products, facilities and markets.
Additional volume and improved efficiencies should be
sufficient to offset the anticipated rise in other costs.
The Company has recently expanded overall capacity in
line with current demand. Projected growth, however, will
require additional capital projects designed to increase
both component and assembly manufacturing capacities.
Planned for fiscal year 2000 are the opening of a new
assembly facility in Gas City, Indiana and expansion of the
Monticello, Kentucky wood processing facility. Additional
capital spending will include projects planned to improve
productivity, support cost saving initiatives and the
replacement of aging equipment. The Company is also
considering investment opportunities to increase the
Company's business base, to acquire new products, and to
gain access to new markets. The Company establishes debt to
equity targets in order to maintain the financial health of
the Company and is prepared to trim investment plans to
maintain financial strength.
[12]
<PAGE>
The financial condition of Hechinger Co., the Company's
third largest Home Center customer, deteriorated
significantly with the release of the second fiscal quarter
results in May 1999 for the period ended April 3, 1999.
Subsequent to the release Hechinger Co. filed for protection
under Chapter 11 of the United States Bankruptcy Code.
Should the Company experience a substantial reduction or
even total loss of revenue from this customer, the Company
believes that the impact would be temporary. Overall
industry growth and the Company's continued increase in
market share should be sufficient to offset lost sales from
the potential reduction of business with Hechinger Co. On
the date Hechinger Co. filed for bankruptcy protection, the
Company did not have any material net asset exposure.
While the Company is not currently aware of any other
events that would result in a material decline in earnings
from fiscal 1999, we participate in an industry that is
subject to rapidly changing conditions. The preceding
forward looking statements are based on current
expectations, but there are numerous factors that could
cause the Company to experience a decline in sales and/or
earnings including: (1) overall industry demand at reduced
levels, (2) economic weakness in a specific channel of
distribution, especially the home center industry, (3) the
loss of sales from specific significant customers due to
their loss of market share, bankruptcy or switching to a
competitor, (4) a sudden and significant rise in basic raw
material costs, (5) the need to respond to price or product
initiatives launched by a competitor, and (6) a significant
investment which provides a substantial opportunity to
increase long-term performance. While the Company believes
that these risks are manageable and will not adversely
impact the long-term performance of the Company, these risks
could, under certain circumstances, have a materially
adverse impact on short-term operating results.
FISCAL YEAR 1998 COMPARED TO FISCAL YEAR 1997
Fiscal 1998 net sales of $241.7 million increased 10.2%
from fiscal 1997 net sales of $219.4 million. Improved
sales were the result of continued growth with the leading
national home center chains and increased shipments to
national and regional builders. In fiscal year 1998, the
average price per unit increased 3.8% over fiscal year 1997.
The average unit price increased primarily as a result of a
richer product mix and general price increases implemented
in the third quarter of both fiscal 1997 and 1998.
Overall unit volume increased approximately 6% from the
prior year as the Company gained overall market share,
especially in the home center channel, due largely to the
impact of new product styles introduced during the last
year. Unit shipments to home centers increased to record
levels based on strong overall remodeling activity and the
Company's relationships with the leading home center chains.
Unit shipments direct to builders improved through both
increased volume in existing sales regions and expansion
[13]
<PAGE>
into new markets. Unit volumes to distributors decreased
during a year in which the Company refocused its strategy
within this channel.
Gross profit for fiscal year 1998 improved to 30.3%, up
2.5% from 27.8% in fiscal year 1997. The increase in gross
profit was attributable to the shift towards higher-end
products, favorable channel mix and increased productivity.
Material cost per unit increased from prior year. A
significant increase in demand for hardwood lumber and the
shift towards more material intensive, higher-end products
led to increases in material cost that were only partially
offset by reduced prices for particleboard and other
miscellaneous purchased components.
Labor costs per unit decreased, as improvements in
productivity and lower health care expenses more than offset
normal labor rate increases.
Per unit freight costs increased over prior year due to
the cost of maintaining the Company's competitive advantage
in the market through development and maintenance of a
specialized delivery system. The impact of higher freight
cost was offset by the increased leverage effect of higher
volume on fixed and semi-fixed components of expense.
Sales and marketing expenses increased as a percentage of
net sales from 14.0% in fiscal 1997 to 15.4% in fiscal 1998.
The increase in sales and marketing costs was the result of
the Company's advertising and promotional initiatives, which
were designed to increase market share through the
introduction of several new products and to gain entrance
into new markets of distribution. The Company also hired
additional sales and marketing personnel to support revenue
growth.
General and administrative expenses as a percent of sales
increased from 5.8% in fiscal 1997 to 6.1% in fiscal 1998.
Increased expense was attributed to the costs associated
with pay-for-performance incentive plans and payroll expense
associated with additions to executive and senior level
management.
Interest expense for fiscal 1998 declined $120,000 to
$795,000 from the prior year. The decrease resulted from
the continued reduction of outstanding debt. Total debt
decreased $2.2 million during fiscal 1998. As of April 30,
1998, long-term debt to total capital was reduced to 12.8%.
Other income increased $332,000 for fiscal 1998 compared
to the prior year due to a combination of increased interest
income from short-term investments and lower net cost for
disposal of obsolete equipment.
YEAR 2000
The Company recognizes that the year 2000 presents many
challenges for information systems, specifically the issue
of two-digit determination of year. The Company has
performed a
self-assessment and has identified all known software and
hardware issues associated with two-character versus four-
character year codes. Business plans have been developed
and initiated which will bring about four-digit year
compliance for all internal software and hardware systems
during calendar year 1999. The Company has completed 100%
of the conversion of its order billing, accounts receivable
and financial systems, with the exception of hourly payroll,
to a client-server based architecture that is Year 2000
compliant. As of April 30, 1999 the only remaining systems
requiring conversion to client-server based Year 2000
compliant software were the hourly payroll and manufacturing
systems.
Conversion of the Company's payroll system to a year 2000
compliant client-server architecture was 80% complete at
April 30, 1999 and is expected to be 100% complete by August
31, 1999. Conversion of the Company's mainframe
manufacturing information system to a year 2000 compliant
system was 60%
complete on April 30, 1999 and is expected to be 100%
complete by September 30, 1999. The cost of updating
[14]
<PAGE>
systems to comply with four-digit dating is believed to be
incrementally immaterial as the Company's strategic business
plan had already called for upgrading
information systems technology. No significant additional
expense beyond the standard information systems operating
cost is expected. To date, 80% of the total conversion
is complete. The Company has no exposure to contingencies
related to the Year 2000 Issue for the products it has sold.
The Company further recognizes a risk from the year 2000
impact on its suppliers and customers. In response, the
Company has initiated formal communications with all of its
significant suppliers, large customers and service providers
to determine the extent to which the Company's interface
systems are vulnerable to those third parties' failures to
remediate their own year 2000 issues. The Company has
contacted all of its critical vendors and all vendors with
greater than $20,000 in activity over the last twelve
months. Of this vendor group 59% have responded, including
100% of those suppliers deemed critical. Of the vendor
respondents, all critical vendors have indicated that they
will be year 2000 compliant on or before July 31, 1999. Of
the remaining population of surveyed vendors, 74% have
responded that they will be year 2000 compliant on or before
July 31, 1999. To date 80% of the Company's key customers
have been identified as being year 2000 compliant, and the
Company is working to further confirm year 2000 compliance
among its customer base. To date, the Company is not aware
of any external agent Year 2000 Issue that would materially
impact the Company's results of operations, liquidity or
capital resources. Further, based on presently available
information, the Company does not believe that the
incremental cost associated with the year 2000 compliance
activities of third parties is material to the Company.
There can be no guarantee that the systems of suppliers
and customers will be converted by the end of calendar 1999.
In response, the Company is developing contingency plans to
address critical system interfaces with these third parties
in the event that these third parties are unable to resolve
their year 2000 compliance issues by the end of calendar
year 1999. At this point the Company has not quantified the
impact of the most reasonably likely worst case scenario.
The Company plans to complete the year 2000 modifications
are based on management's best estimates, which were derived
utilizing numerous assumptions of future events including
the continued availability of certain resources and other
factors. Estimates on the status of completion and the
expected completion dates are based on costs incurred to
date compared to total expected costs. However, there can
be no guarantee that these estimates will be achieved and
actual results could differ materially from those plans.
Specific factors that might cause such material differences
include, but are not limited to, the availability and cost
of personnel trained in this area, the ability to locate and
correct all relevant computer codes, and similar
uncertainties.
LEGAL MATTERS
The Company is involved in various suits and claims in
the normal course of business. Included therein are claims
against the Company pending before the Equal Employment
Opportunity Commission. Although management believes that
such claims are without merit and intends to vigorously
contest them, the ultimate outcome of these matters cannot
be determined at this time. In the opinion of management,
after consultation with counsel, the ultimate liabilities
and losses, if any, that may result from suits and claims
involving the Company will not have any material adverse
effect on the Company's operating results or financial
position.
[15]
<PAGE>
The Company is voluntarily participating with a group of
companies, which is cleaning up a waste facility site at the
direction of a state environmental authority.
The Company records liabilities for all probable and
reasonably estimable loss contingencies on an undiscounted
basis. For loss contingencies related to environmental
matters, liabilities are based on the Company's proportional
contamination of a site since management believes it
"probable" that the other parties, which are financially
solvent, will fulfill their proportional share of the
contamination obligation of a site. There are no probable
insurance or other indemnification receivables recorded.
The Company has accrued for all known environmental
remediation costs, which are probable and can be reasonably
estimated, and such amounts are not material. (See Note I
to the Consolidated Financial Statements.)
OTHER COMMENTS
The Company's business has historically been subjected to
seasonal influences, with higher sales typically realized in
the second and fourth fiscal quarters. General economic
forces and changes in the Company's customer mix have
reduced seasonal fluctuations in the Company's performance
over the past few years.
The costs of the Company's products are subject to
inflationary pressures and commodity price fluctuations.
Inflationary pressure and commodity price increases have
been relatively modest over the past five years, except for
lumber prices which rose significantly during fiscal 1997.
The Company has generally been able over time to recover the
effects of inflation and commodity price fluctuations
through sales price increases.
The Company is also exposed to changes in interest rates
primarily from its long-term debt arrangements and,
secondarily, its investments in securities. The Company uses
interest rate swap agreements to manage exposure to interest
rate changes on certain long-term borrowings. The Company's
exposure to interest rate changes is not considered to be
material.
During the first quarter of fiscal 1999 the Company
adopted SFAS No. 130, which establishes standards for
reporting comprehensive income and its components in
financial statements. The Company currently has no material
components of comprehensive income which would result in
comprehensive income differing from net income.
In fiscal 1999, the Company adopted the Financial
Accounting Standards Board's (FASB) Statement No. 132,
"Employers' Disclosure about Pensions and Other
Postretirement Benefits. Statement No. 132 standardizes and
improves disclosure requirements for pensions and other
postretirement benefits. (See Note G to the Consolidated
Financial Statements.)
On May 25, 1999, the Board of Directors approved a $.04
per share cash dividend on its Common Stock. The cash
dividend was paid on June 25, 1999, to shareholders of
record on June 11, 1999.
[16]
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (Unaudited)
Year Ended April 30, 1999
-----------------------------------------
(in thousands, except share amounts) 1st 2nd 3rd 4th
------- ------- ------- -------
Net sales $72,673 $79,401 $81,186 $93,753
Gross profit 21,906 22,651 22,097 26,945
Income before income taxes 7,029 7,849 5,753 7,916
Net income 4,241 4,808 3,587 4,873
Earnings per share
Basic .54 .62 .46 .62
Diluted .53 .60 .44 .60
Year Ended April 30, 1998
---------------------------------------
1st 2nd 3rd 4th
------- ------- ------- -------
Net sales $55,970 $62,738 $55,545 $67,424
Gross profit 16,331 19,362 16,202 21,330
Income before income taxes 4,255 6,601 4,152 6,280
Net income 2,621 4,066 2,549 3,795
Earnings per share
Basic .34 .53 .33 .49
Diluted .33 .52 .32 .48
[17]
<PAGE>
CONSOLIDATED BALANCE SHEET
(in thousands, except share data) April 30
------------------------------
1999 1998
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 14,165 $ 23,925
Customer receivables 38,925 27,365
Inventories 18,008 11,884
Prepaid expenses and other 1,487 1,403
Deferred income taxes 1,936 997
------------ ------------
TOTAL CURRENT ASSETS 74,521 65,574
Property, Plant and Equipment 53,739 34,522
Promotional Displays 8,824 4,921
Other Assets 1,235 683
Intangible Pension Assets 1,303 781
Goodwill 987 --
------------ ------------
$140,609 $106,481
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 18,919 $ 12,414
Accrued compensation and related expenses 17,183 13,211
Current maturities of long-term debt 1,974 2,001
Accrued marketing expenses 3,031 3,549
Other accrued expenses 3,928 3,032
------------ ------------
TOTAL CURRENT LIABILITIES 45,035 34,207
Long-Term Debt, less current maturities 11,435 8,717
Deferred Income Taxes 3,373 2,397
Long-Term Pension Liabilities 2,429 2,023
Commitments and Contingencies -- --
Stockholders' Equity
Preferred Stock, $1.00 par value; 2,000,000
shares authorized, none issued
Common Stock, no par value; 20,000,000 shares
authorized; issued and outstanding shares:
7,916,135 -- 1999; 7,800,886 -- 1998 21,575 18,704
Retained earnings 56,762 40,433
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 78,337 59,137
------------ ------------
$140,609 $106,481
------------ ------------
See notes to consolidated financial statements
[18]
<PAGE>
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Years Ended April 30
-----------------------------------
(in thousands, except share data) 1999 1998 1997
---------- --------- --------
Net sales $ 327,013 $ 241,677 $219,402
Cost of sales and distribution 233,414 168,452 158,356
---------- --------- --------
GROSS PROFIT 93,599 73,225 61,046
Selling and marketing expenses 49,122 37,189 30,678
General and administrative expenses 16,566 14,708 12,762
---------- --------- --------
OPERATING INCOME 27,911 21,328 17,606
Interest expense 363 795 915
Promotional displays and other income (999) (755) (423)
---------- --------- --------
INCOME BEFORE INCOME TAXES 28,547 21,288 17,114
Provision for income taxes 11,038 8,257 6,566
---------- --------- --------
NET INCOME 17,509 13,031 10,548
RETAINED EARNINGS, BEGINNING OF YEAR 40,433 28,255 18,168
Cash dividends (1,180) (853) (461)
---------- --------- --------
RETAINED EARNINGS, END OF YEAR $ 56,762 $ 40,433 $ 28,255
---------- --------- --------
SHARE INFORMATION
Earnings per share
Basic $ 2.23 $ 1.68 $ 1.37
Diluted $ 2.18 $ 1.65 $ 1.35
Cash dividends per share $ .15 $ .11 $ .06
---------- --------- --------
See notes to consolidated financial statements
[19]
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended April 30
--------------------------------
(in thousands) 1999 1998 1997
-------- --------- -------
OPERATING ACTIVITIES
Net income $ 17,509 $ 13,031 $10,548
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for depreciation and
amortization 9,690 7,759 7,810
Net (gain) loss on disposal of
property, plant and equipment (17) 122 220
Deferred income taxes 79 (208) (645)
Other non-cash items 1,436 568 1,432
Changes in operating assets and
liabilities:
Customer receivables (10,807) (7,340) (1,891)
Inventories (5,532) (1,653) (384)
Other assets (8,645) (4,183) (2,995)
Accounts payable 5,648 3,102 1,661
Accrued compensation and
related expenses 3,542 2,031 2,706
Other (429) 3,115 (1,058)
-------- --------- -------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 12,474 16,344 17,404
INVESTING ACTIVITIES
Payments to acquire property, plant
and equipment (21,691) (7,304) (4,537)
Proceeds from sales of property,
plant and equipment 39 67 85
-------- --------- -------
NET CASH USED BY INVESTING
ACTIVITIES (21,652) (7,237) (4,452)
FINANCING ACTIVITIES
Payment of loans (1,119) -- --
Payments of long-term debt (3,790) (2,230) (2,719)
Proceeds from long-term borrowings 5,000 -- --
Common Stock issued through stock
option plans 507 562 366
Dividends paid (1,180) (853) (461)
-------- --------- -------
NET CASH USED BY FINANCING
ACTIVITIES (582) (2,521) (2,814)
-------- --------- -------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (9,760) 6,586 10,138
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 23,925 17,339 7,201
-------- --------- -------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 14,165 $ 23,925 $ 17,339
See notes to consolidated financial statements
[20]
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
The Company manufactures and distributes kitchen cabinets
and vanities for the remodeling and new home construction
markets. The Company's products are sold on a national
basis through a network of independent distributors and
directly to home centers, major builders and home
manufacturers.
The following is a description of the more significant
accounting policies of the Company.
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include the accounts of the Company and its
wholly owned subsidiaries. Significant intercompany accounts
and transactions have been eliminated in consolidation.
REVENUE RECOGNITION: Revenue is recognized as shipments
are made to the customer. Revenue is based on invoice price
less allowances for sales returns and cash discounts.
ADVERTISING COSTS: Advertising costs are expensed in the
fiscal year incurred.
CASH AND CASH EQUIVALENTS: Cash in excess of operating
requirements is invested in short-term instruments which are
carried at fair value (approximates cost). The Company
considers all highly liquid short-term investments purchased
with an original maturity of three months or less to be cash
equivalents.
INVENTORIES: Inventories are stated at lower of cost or
market. Inventory costs were determined principally by the
last-in, first-out (LIFO) method.
The LIFO cost reserve is determined in the aggregate for
inventory and is applied as a reduction to inventories
determined on the first-in, first-out method (FIFO). FIFO
inventory cost approximates replacement cost.
PROMOTIONAL DISPLAYS: The Company's investment in
promotional displays is carried at cost less applicable
amortization. Amortization is provided by the straight-line
method on an individual display basis over the estimated
period of benefit (approximately 30 months).
[21]
<PAGE>
PROPERTY, PLANT AND EQUIPMENT: Property, plant and
equipment is stated on the basis of cost less an allowance
for depreciation. Depreciation is provided by the straight-
line method over the estimated useful lives of the related
assets, which range from fifteen to thirty years for
buildings and improvements and three to ten years for
furniture and equipment. Assets under capital lease,
buildings and leasehold improvements are amortized over the
shorter of their estimated useful lives or term of the
related lease.
FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying amounts
of the Company's cash and cash equivalents, customer
receivables, accounts payable and long-term debt approximate
fair value.
PER SHARE INFORMATION: Basic and diluted earnings per
share is calculated in accordance with SFAS No. 128,
"Earnings Per Share". All earning per share amounts for all
periods have been presented and, where appropriate, restated
to the SFAS No. 128 requirements.
STOCK_BASED COMPENSATION: As permitted by SFAS No. 123,
"Accounting for Stock-Based Compensation," the Company has
elected to continue using the intrinsic value method of
accounting for stock options and has provided the additional
required disclosures. (See Note F to the Consolidated
Financial Statements.)
NEW ACCOUNTING RULES: As of May 1, 1998, the Company
adopted the Financial Accounting Standards Board's (FASB)
Statement No. 130, "Reporting Comprehensive Income."
Statement No. 130 establishes standards for reporting
comprehensive income and its components in financial
statements. Comprehensive income generally represents all
changes in stockholders' equity except those resulting from
investments by or distributions to stockholders. The
Company currently has no material components of
comprehensive income which would result in comprehensive
income differing from net income.
In fiscal 1999, the Company adopted the Financial
Accounting Standards Board's (FASB) Statement No. 132,
"Employers' Disclosure about Pensions and Other
Postretirement Benefits. Statement No. 132 standardizes and
improves disclosure requirements for pensions and other
postretirement benefits. (See Note G to the Consolidated
Financial Statements.)
In June 1998, the AICPA issued SOP 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for
Internal Use." The SOP requires qualifying computer
software costs incurred in connection with obtaining or
developing software for internal use to be capitalized. The
Company currently capitalizes the costs of purchased
software and expenses the costs of internally developed
software. The Company plans to adopt the SOP as of May 1,
1999 on a prospective basis when it becomes effective. The
adoption of this statement is not expected to have a
material effect on the Company's financial position or
results of operations.
In June 1998, the FASB issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities."
Statement No. 133 establishes new accounting and reporting
standards for derivative instruments and hedging activities.
The Company must adopt this statement by May 1, 2001. The
adoption of SFAS No. 133 is not expected to have a material
impact on the Company's financial position or results of
operations.
USE OF ESTIMATES: The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Reclassifications: Certain prior years' amounts have been
reclassified to conform to the current year's presentation.
[22]
<PAGE>
NOTE B -- CUSTOMER RECEIVABLES
The components of customer receivables were:
April 30
-------------------
(in thousands) 1999 1998
------- --------
Gross customer receivables $41,488 $29,122
Less:
Allowance for bad debt (422) (123)
Allowance for returns
and discounts (2,141) (1,634)
------- --------
Net customer receivables $38,925 $27,365
------- --------
NOTE C -- INVENTORIES
The components of inventories were:
April 30
-------------------
(in thousands) 1999 1998
------- --------
Raw materials $ 9,433 $ 7,052
Work-in-process 14,409 10,678
Finished goods 1,069 1,138
------- --------
Total FIFO inventories 24,911 18,868
Reserve to adjust
inventories to LIFO value (6,903) (6,984)
------- -------
Total inventories $18,008 $11,884
Inventories determined using the LIFO inventory method were
$17,232 at the end of 1999 (1998 - $11,884). Inventories
determined using the FIFO inventory method were $776 at the
end of 1999 (1998 - $0).
Note D -- PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment were:
April 30
-------------------
(in thousands) 1999 1998
------- --------
Land $ 1,387 $ 876
Buildings and improvements 24,176 18,766
Buildings and improvements -
capital leases 8,050 6,550
Machinery and equipment 66,146 51,394
Machinery and equipment -
capital leases 129 136
Construction in progress 3,916 2,984
------- --------
103,804 80,706
Less allowance for depreciation (50,065) (46,184)
------- --------
Total $53,739 $34,522
------- --------
Depreciation expense amounted to $5,184, $4,845, and
$5,168 in fiscal 1999, 1998, and 1997, respectively.
NOTE E -- LOANS PAYABLE AND LONG-TERM DEBT
Maturities of long-term debt are as follows:
Years Ending April 30
----------------------------------------------------------
2005 and Total
There- Out-
(in thousands) 2000 2001 2002 2003 2004 after standing
---------------------------------------------------------
Notes payable $ 665 $ 542 $ 795 $ 547 $ 549 $ 261 $ 3,359
Industrial revenue
bonds 750 750 925 2,500 -- -- 4,925
Capital lease
obligations 559 583 598 608 640 2,137 5,125
----------------------------------------------------------
Total $1,974 $1,875 $2,318 $3,655 $1,189 $2,398 $13,409
Less current maturities (1,974)
-----
Total long-term debt $11,435
-----
[23]
<PAGE>
The Company's primary loan agreement
provides for a $12 million revolving credit facility.
Borrowings under the revolving credit facility include
various variable interest rate options including the prime
rate, LIBOR, and variable rates tied to the Federal Funds
rate and money market interest rates.
The revolving credit facility is used by the Company as a
working capital account. As such, borrowings and repayments
may routinely occur on a daily basis. There was a single
four-day, borrowing of $500,000 due to a timing issue
between the maturity date of a short-term cash investment
and larger cash demands than expected. There was no
activity through the revolving credit facility during fiscal
1998.
The Company employs straight-forward interest rate swap
agreements to assist in maintaining a balance between fixed
and variable interest rates on outstanding debt. Any
deferred gain or loss associated with the swap agreements is
accounted for over the life of the swaps at the fixed rate
stipulated in the executed agreements. On April 30, 1999,
these amounts were immaterial. The Company does not invest,
trade, or otherwise speculate in any derivatives or similar
type instruments.
At April 30, 1999, term loans of $3.4 million were
outstanding. The term loans bore a variable interest rate
of approximately 5.8% on April 30, 1999.
On April 30, 1999, the Company had $4.9 million outstanding
in industrial revenue bonds, maturing at various dates
through 2003. Due to an interest rate swap agreement, a
fixed rate of approximately 5.0% applies to $4.0 million
through December 1, 2002. The variable rate that would have
applied if the rate swap had not occurred was 4.2% on April
30, 1999. On $925,000 of outstanding bonds, the variable
interest rate was 4.2% on April 30, 1999.
Substantially all of the industrial revenue bonds are
redeemable at the option of the bondholder. The Company has
irrevocable arrangements to refinance these bonds on a long-
term basis in the event they are redeemed.
Interest rates on the Company's capital lease obligations
were approximately 5.4% on April 30, 1999, with these
obligations maturing through 2008.
The Company's loan agreements limit the amount and type of
indebtedness the Company can incur and require the Company
to maintain specified financial ratios measured on a
quarterly basis. A portion of the assets of the Company are
pledged as collateral under the industrial revenue bond
agreements and capital lease arrangements. The Company was
in compliance with all covenants contained in its loan
agreements at April 30, 1999.
Interest paid was $923,000, $810,000, and $989,000 during
fiscal 1999, 1998, and 1997, respectively. Net amounts to
be received or paid under interest rate swap agreements are
accrued as an adjustment to interest expense.
NOTE F -- STOCKHOLDERS' EQUITY
COMMON STOCK
Transactions affecting Common Stock were as follows:
Shares Amount
Outstanding (in thousands)
----------- -----------
Balance at April 30, 1996 7,608,761 $ 17,677
Stock options exercised 113,895 366
----------- -----------
Balance at April 30, 1997 7,722,656 $ 18,043
Stock options exercised 65,908 408
Stock issued to AWSOP 12,322 253
----------- -----------
Balance at April 30, 1998 7,800,886 $ 18,704
Stock options exercised 37,346 507
Stock issued to AWSOP 29,969 897
Stock issued for Knapp
Acquisition 47,934 1,467
----------- -----------
Balance at April 30, 1999 7,916,135 $ 21,575
----------- -----------
[24]
<PAGE>
EMPLOYEE STOCK OWNERSHIP PLAN
In fiscal 1990, the Company instituted the American
Woodmark Stock Ownership Plan (AWSOP). Under this plan, all
employees over the age of 18 who have been employed by the
Company for a minimum of one year are eligible to receive
Company stock through a profit sharing contribution and a
401(k) matching contribution based upon the employee's
contribution to the plan.
Profit sharing contributions are 3% of after tax earnings,
calculated on a quarterly basis and distributed equally to
all employees eligible to participate in the plan. The
Company recognized expenses for profit sharing contributions
of $526,000, $392,000 and $317,000, in fiscal 1999, 1998,
and 1997, respectively.
The Company matches 401(k) contributions in the amount of
50% of an employee's contribution to the plan up to 3% of
base salary for an effective maximum Company contribution of
1.5%. The expense for 401(k) matching contributions for
this plan was $623,000, $594,000 and $619,000 in fiscal
1999, 1998, and 1997, respectively.
STOCK OPTIONS
In August 1996, stockholders approved a stock option plan
for key employees of the Company. Under the plan, up to
750,000 shares of Common Stock may be granted as options,
with the term of options granted not exceeding ten years.
Options granted are subject to vesting conditions and other
requirements prescribed by a participant's stock option
agreement. Options vest over 3 years on a straight-line
basis.
In August 1995 stockholders approved a stock option plan
for non-employee directors. Under the new 1995 plan, up to
30,000 shares of Common Stock may be granted as options,
with each non-employee director receiving an option to
purchase 1,000 shares on the anniversary date of the plan.
Outstanding options under the plan are exercisable in annual
cumulative increments of 33.33% beginning one year after the
date of grant and must be exercised within twelve months
after cumulative increments equal 100%, at which time
options expire.
The Company has adopted the disclosure only provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation."
Accordingly, no compensation cost has been recognized for
the stock option plans.
For the years ended April 30, 1999, 1998 and 1997, pro
forma net income and earnings per share information required
by SFAS No. 123 has been determined as if the Company had
accounted for its stock options using the fair value method.
The fair value of these options was estimated at the date of
grant using a Black-Scholes option pricing model.
For purposes of pro forma disclosures, the estimated fair
value of the options is amortized to expense over the
options' vesting periods. The Company's pro forma
information follows:
(in thousands) 1999 1998 1997
------- ------- -------
Pro forma net income $16,573 $12,499 $10,435
Pro forma earnings
per share:
Basic $2.11 $1.61 $1.36
Diluted 2.04 1.59 1.35
To determine these amounts, the fair value of each stock
option has been estimated on the date of the grant using a
Black-Scholes option-pricing model. Significant assumptions
used in this model include a dividend yield of .8% and the
following:
1999 1998 1997
------- ------- -------
Expected Volatility 0.479 0.465 0.489
Risk-free interest rates 5.50% 5.50% 6.55%
Expected life in years 5.5 5.9 6.5
Weighted-average fair
value per share $14.07 $7.94 $4.08
[25]
<PAGE>
The following table summarizes stock option activity and
related information under the stock option plans for the
fiscal years ended April 30:
1999 1998 1997
------- ------- -------
Outstanding at beginning
of year 480,351 312,000 252,919
Granted 137,100 238,650 206,600
Exercised (39,050) (66,998) (113,895)
Expired or cancelled (3,150) (3,301) (33,624)
------- ------- -------
Outstanding at April 30 575,251 480,351 312,000
------- ------- -------
Exercisable at April 30 216,202 88,235 64,867
------- ------- -------
Available for future
issuance at April 30 202,429 335,875 570,734
------- ------- -------
Weighted average exercise
prices (in dollars):
Outstanding at beginning
of year $11.71 $ 6.62 $4.01
Granted 29.57 16.46 7.70
Exercised 8.29 4.97 3.22
Expired or cancelled 10.13 10.36 5.19
Outstanding at April 30 21.27 11.71 6.62
Exercisable at April 30 10.06 6.67 4.61
The following table summarizes information about stock
options outstanding at April 30, 1999 [remaining lives (in
years) and exercise prices are weighted-averages]:
Options Outstanding Options Exercisable
--------------------- -------------------
Option Price Remaining Exercise Exercise
per Share Options Life Price Options Price
- ------------- -------- ---- ------ ------- -------
$ 4.38-$ 5.50 73,967 3.7 $ 4.80 63,968 $4.72
$ 6.50-$ 7.50 87,033 7.3 $ 6.52 50,233 $6.53
$ 9.25-$14.44 66,500 7.9 $12.58 35,517 $12.26
$15.56-$18.94 210,651 8.1 $16.66 66,484 $16.67
$29.56-$29.84 137,100 9.1 $29.57 -- --
- ------------- -------- ---- ------ ------- -------
$ 4.38-$29.84 575,251 7.6 $16.20 216,202 $10.06
EARNINGS PER SHARE
The following table summarizes the computations of basic
and diluted earnings per share:
(in thousands, Years ended April 30,
---------------------------------
except per share data) 1999 1998 1997
------ ------- -------
Numerator used in basic
and diluted earnings
per common share:
Net income $17,509 $13,031 $10,548
------ ------- -------
Denominator:
Denominator for basic
earnings per common
share-weighted
average shares 7,856 7,753 7,673
Effect of dilutive
securities:
Stock options 191 155 124
------ ------- -------
Denominator for diluted
earnings per common
share--weighted average
shares and assumed
conversions 8,047 7,908 7,797
------ ------- -------
Earnings per
common share, basic $2.23 $1.68 $1.37
Earnings per
common share, diluted $2.18 $1.65 $1.35
------ ------- -------
KNAPP ACQUISITION
On December 2, 1998, the Company acquired Knapp
Woodworking, Inc. in exchange for cash and American Woodmark
Corporation stock. As part of the transaction American
Woodmark Corporation assumed the Knapp loans payable of $1.1
million and long-term debt of $1.7 million. Subsequent to
the date of acquisition, the Company paid off the loans
payable balance, repaid $487,000 of the long-term debt and
refinanced $1.2 million of the long-term debt.
[26]
<PAGE>
NOTE G - PENSION BENEFITS
The following information is disclosed in accordance with
the requirements of Statement of Financial Accounting
Standards No. 132, "Employers' Disclosures about Pensions
and Other Postretirement Benefits," which the Company
adopted in 1999.
Pension Benefits
----------------------
1999 1998
--------- ---------
(in thousands)
CHANGE IN BENEFIT
OBLIGATION
Benefit obligation at
beginning of year $21,506 $16,542
Service cost 1,137 868
Interest cost 1,544 1,309
Amendments 188 136
Actuarial losses 871 3,106
Benefits paid (512) (455)
--------- ---------
Benefit obligation at
end of year $24,734 $21,506
CHANGE IN PLAN ASSETS
Fair value of plan assets
at beginning of year $19,782 $15,067
Actual return on plan
assets 818 3,441
Company contributions 1,538 1,729
Benefits paid (512) (455)
--------- ---------
Fair value of plan assets
at end of year $21,626 $19,782
--------- ---------
Funded status of
the plans $(3,108) $(1,724)
Unamortized prior service
cost 678 579
Unrecognized net
actuarial loss (gain) 1,193 (458)
Unrecognized net transition
obligation 164 247
--------- ---------
Accrued benefit cost $(1,073) $(1,356)
AMOUNTS RECOGNIZED
IN THE CONSOLIDATED
BALANCE SHEET
Prepaid benefit cost $ 993 $ 601
Accrued benefit liability (3,369) $(2,738)
Intangible asset 1,303 781
--------- ---------
Net amount recognized $(1,073) $(1,356)
--------- ---------
ASSUMPTIONS AS OF
APRIL 30
Discount rate 7.25% 7.25%
Expected return on
plan assets 8.0% 8.0%
Rate of compensation
increase 4.0% 4.0%
Amounts applicable to the Company's pension plan with
accumulated benefit obligations in excess of plan assets are
as follows:
1999 1998
--------- ---------
Projected benefit obligation $ 8,481 $ 7,525
Accumulated benefit obligation 8,481 7,525
Fair Value of plan assets $ 8,171 $ 7,345
Pension Benefits
-------------------------------
1999 1998 1997
------- ------- -------
Components of Net
Periodic Benefit Cost
Service cost $ 1,137 $ 868 $ 767
Interest cost 1,544 1,309 1,142
Expected return
on plan assets (1,598) (1,219) (1,067)
Amortization of the
Unrecognized Transition
Obligation 82 82 82
Amortization of prior
service cost 90 78 58
Recognized net
Actuarial gain -- (37) (65)
------- ------- -------
Benefit cost $ 1,255 $ 1,081 $ 917
[27]
<PAGE>
NOTE H -- INCOME TAXES
The provision for income taxes was comprised of the
following:
Years Ended April 30
-----------------------------
(in thousands) 1999 1998 1997
------- ------- -------
Current
Federal $ 9,451 $ 7,076 $ 6,307
State 1,508 1,389 904
------- ------- -------
Total current 10,959 8,465 7,211
Deferred (Benefit)
Federal 87 (178) (546)
State (8) (30) (99)
------- ------- -------
Total deferred 79 (208) (645)
Total provision $11,038 $ 8,257 $ 6,566
The Company's effective income tax rate varied from the
federal statutory rate as follows:
Years Ended April 30
--------------------
1999 1998 1997
---- ---- ----
Federal statutory rate 35% 35% 35%
State income taxes,
net of federal tax effect 4 4 3
---- ---- ----
Effective income tax rate 39% 39% 38%
Income taxes paid were $10,944,000, $7,619,000, and
$8,199,000 for fiscal years 1999, 1998, and 1997,
respectively.
The significant components of deferred tax assets and
liabilities were as follows:
April 30
--------------
(in thousands) 1999 1998
------ ------
DEFERRED TAX ASSETS
Accounts receivable $ 922 $ 578
Employee benefits 524 696
Product liability 795 375
Net operating loss 305 --
Other 224 89
------- ------
Total 2,770 1,738
DEFERRED TAX LIABILITIES
Depreciation 3,311 2,330
Inventory 573 607
Other 323 201
------- ------
Total 4,207 3,138
Net deferred tax liability $1,437 $1,400
------ ------
[28]
<PAGE>
NOTE I -- COMMITMENTS AND CONTINGENCIES
LEGAL MATTERS
The Company is involved in various suits and claims in the
normal course of business. Included therein are claims
against the Company pending before the Equal Employment
Opportunity Commission. Although management believes that
such claims are without merit and intends to vigorously
contest them, the ultimate outcome of these matters cannot
be determined at this time. In the opinion of management,
after consultation with counsel, the ultimate liabilities
and losses, if any, that may result from suits and claims
involving the Company will not have a material adverse
effect on the Company's results of operations or financial
position.
The Company is voluntarily participating with a group of
companies which is cleaning up a waste facility site at the
direction of a state environmental authority.
The Company records liabilities for all probable and
reasonably estimable loss contingencies on an undiscounted
basis. For loss contingencies related to environmental
matters, liabilities are based on the Company's proportional
share of the contamination obligation of a site since
management believes it "probable" that the other parties,
which are financially solvent, will fulfill their
proportional contamination obligations. There are no
probable insurance or other indemnification receivables
recorded. The Company has accrued for all known
environmental remediation costs which are probable and can
be reasonably estimated, and such amounts are not material.
LEASE AGREEMENTS
The Company leases seven office buildings, a manufacturing
building, five service centers and certain equipment. Total
rental expenses amounted to approximately $4,699,000,
$3,835,000, and $3,428,000 in fiscal 1999, 1998, and 1997,
respectively.
Minimum rental commitments as of April 30, 1999, under
noncancelable leases are as follows:
(in thousands)
Fiscal Year Operating Capital
- -------------- --------- -------
2000 $2,340 $ 828
2001 1,153 821
2002 674 803
2003 145 780
2004 111 780
2005 (and thereafter) 0 2,341
------- -------
$4,423 $ 6,353
-------
Less amounts representing interest (1,228)
-------
Total obligation under capital leases 5,125
-------
RELATED PARTIES
During fiscal 1985, prior to becoming a publicly held
corporation, the Company entered into an agreement with a
partnership formed by certain executive officers of the
Company to lease an office building constructed and owned by
the partnership. The initial lease term has two remaining
years with two five-year renewal periods available at the
Company's option. Under this agreement, rental expense was
$386,000, $383,000, and $377,000 in fiscal 1999, 1998, and
1997, respectively. Rent during the remaining base term of
approximately $390,000 annually (included in the above
table) is subject to adjustment based upon changes in the
Consumer Price Index.
[29]
<PAGE>
NOTE J -- OTHER INFORMATION
Credit is extended based on an evaluation of the customer's
financial condition and generally collateral is not
required. The Company's customers operate in the
construction and remodeling markets. At April 30, 1999, the
Company's three largest customers, Customers A, B and C,
represented 5.1%, 27.6% and 9.8% of the Company's customer
receivables, respectively.
The following table summarizes the percentage of sales to
the Company's three largest customers for the last three
fiscal years:
Percent of Annual Sales
------------------------
1999 1998 1997
---- ---- ----
Customer A 5.9 8.5 9.9
Customer B 34.1 30.4 25.7
Customer C 13.5 13.0 11.9
The Company maintains an allowance for bad debt based upon
management's evaluation and judgement of potential net loss.
The allowance is estimated based upon historical experience,
the effects of current developments and economic conditions,
and anticipation of customers' financial condition.
Estimates and assumptions are periodically reviewed and
updated with any resulting adjustments to the allowance
reflected in current operating results.
[30]
<PAGE>
MANAGEMENT'S REPORT
The accompanying consolidated financial statements are
the responsibility of and have been prepared by the
management of American Woodmark. The consolidated
financial statements have been prepared in accordance
with generally accepted accounting principles and
necessarily include some amounts that are based on
management's best estimates and judgements. Financial
information throughout this annual report is consistent
with the consolidated financial statements.
The Company maintains a system of internal accounting
controls designed to provide reasonable assurance that
transactions are properly recorded, that policies and
procedures are adhered to and that assets are adequately
safeguarded. The system of internal controls is supported by
written policies and guidelines, an organizational structure
designed to ensure appropriate segregation of
responsibilities and selection and training of qualified
personnel.
To ensure that the system of internal controls operates
effectively, management and the internal audit staff review
and monitor internal controls on an ongoing basis. In
addition, as part of the audit of the consolidated financial
statements, the Company's independent auditors evaluate
selected internal accounting controls to establish a basis
for reliance thereon in determining the nature, timing and
extent of audit tests to be performed. The Company believes
its system of internal controls is adequate to accomplish
the intended objectives, and continues its efforts to
further improve those controls.
The Audit Committee of the Board of Directors, which is
composed entirely of non-management Directors, oversees the
financial reporting and internal control functions. The
Audit Committee meets periodically and separately with
Company management, the internal audit staff, and the
independent auditors to ensure these individuals are
fulfilling their obligations and to discuss auditing,
internal control and financial reporting matters. The Audit
Committee reports its findings to the Board of Directors.
The independent auditors and the internal audit staff have
unrestricted access to the Audit Committee.
/s/ JAMES J. GOSA
James J. Gosa
President and Chief Executive Officer
/s/ KENT B. GUICHARD
Kent B. Guichard
Vice President, Finance and
Chief Financial Officer
[31]
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Stockholders and Board of Directors
American Woodmark Corporation
We have audited the accompanying consolidated balance
sheets of American Woodmark Corporation as of April 30, 1999
and 1998, and the related consolidated statements of income
and retained earnings, and cash flows for each of the three
years in the period ended April 30, 1999. These financial
statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
consolidated financial position of American Woodmark
Corporation at April 30, 1999 and 1998, and the consolidated
results of its operations and its cash flows for each of the
three years in the period ended April 30, 1999, in
conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Baltimore, Maryland
June 9, 1999
[32]
<PAGE>
DIRECTORS AND
EXECUTIVE OFFICERS
James J. Gosa
Director; President and
Chief Executive Officer
David L. Blount
Senior Vice President, Manufacturing
Kent B. Guichard
Director; Senior Vice President, Finance and Chief Financial
Officer; Corporate Secretary
Philip S. Walter
Senior Vice President and General Manager,
New Business Development
Ian J. Sole
Senior Vice President, Sales and Marketing
William F. Brandt, Jr.
Chairman of the Board
Daniel T. Carroll
Director; Chairman
The Carroll Group
A Management Consulting Firm
Martha M. Dally
Director; Executive Vice President-Personal Products
Sara Lee Corporation
Fred S. Grunewald
Director; Chairman, Chief Executive Officer and President
Reliant Building Products, Inc.
C. Anthony Wainwright
Director; Vice Chairman
McKinney & Silver
An Advertising Agency
CORPORATE INFORMATION
ANNUAL MEETING
The Annual Meeting of Shareholders of American Woodmark
Corporation will be held on August 24, 1999, at 9:00 a.m. at
Piper's at Creekside in Winchester, Virginia.
FPRM ON 10-K REPORT
A copy of the Form 10-K for the year ended April 30, 1999,
may be obtained by writing:
Kent Guichard
Senior Vice President, Finance and
Chief Financial Officer
American Woodmark Corporation
PO Box 1980
Winchester, VA 22604-8090
CORPORATE HEADQUARTERS
American Woodmark Corporation
3102 Shawnee Drive
Winchester, VA 22601-4208
(540) 665-9100
MAILING ADDRESS
PO Box 1980
Winchester, VA 22604-8090
TRANSFER AGENT
American Stock Transfer & Trust Company
(800) 937-5449
American Woodmarkr
Timberlaker
Gettysburg
are trademarks of American Woodmark Corporation.
c1999 American Woodmark Corporationr
Printed in U.S.A.
[33]
<PAGE>
Appendix to Exhibit 13
Front cover Corporate Logo, Picture
Picture shows a kitchen cabinetry scene in a picture frame
Caption: Annual Shareholders Report 1999
Table of Contents, Picture
Picture shows a kitchen cabinetry scene in a picture frame
Page 3 Picture
Shows James J. Gosa (President and Chief Executive Officer)
Page 6 Picture
Picture shows a kitchen cabinetry scene in a picture frame
Page 7 Picture
Picture shows two different kitchen cabinetry scenes in
picture frames
Caption: American Woodmark brand cabinetry is sold through
the nation's leading home center outlets, including The Home
Depot and Lowe's
Page 8 Picture
Picture shows two different kitchen cabinetry scenes in
picture frames
Caption: Timberlake Cabinet Company - Introduced in 1990,
Timberlake brand cabinetry is sold through the Company's
builder direct center and through a network of distributors
and dealers throughout the United States and Canada
Page 9 Picture
Picture shows a kitchen cabinetry scene in a frame
Back cover Logo, Address, Phone Number, Fax Number
Corporate logo
American Woodmark Corporation
3102 Shawnee Drive
Winchester, VA 22601-4208
(540) 665-9100
(540) 665-9176 Fax
<PAGE>
Exhibit 23
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of American Woodmark Corporation of our
report dated June 9, 1999, included in the April 30, 1999
Annual Report to Shareholders of American Woodmark
Corporation.
Our audits also included the financial statement schedule of
American Woodmark Corporation listed in Item 14(a). This
schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule
referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly in
all material respects the
information set forth therein.
We also consent to the incorporation by reference in the
Registration Statement (Form S-8 No. 333-12631) pertaining
to the American Woodmark Corporation 1995 Non-Employee
Directors Stock Option Plan and the Registration Statement
(Form S-8 No. 333-12623) pertaining to the American Woodmark
Corporation 1996 Stock Option Plan for Employees of our
reports dated June 9, 1999 and included herein, with respect
to the consolidated financial statements and schedule of
American Woodmark Corporation incorporated by reference and
included in the annual report (Form 10-K) for the year ended
April 30, 1999.
/s/ERNST & YOUNG LLP
Baltimore, Maryland
July 12, 1999
<PAGE>
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