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EXHIBIT 10.46
SF100000.MCC
AMENDED AND RESTATED LOAN AGREEMENT
BETWEEN
STANDARD FEDERAL BANK
AND
XXXXXXX INDUSTRIES, INC., XXXXXXX OF GEORGIA, INC.,
SHELBY STEEL PROCESSING COMPANY,
XXXXXXX TUBE COMPANY D/B/A QUALITY TUBE,
XXXXXXX INDUSTRIES OF OHIO, INC. AND
XXXXXXX EPCO, INC.
THIS AMENDED AND RESTATED LOAN AGREEMENT is made and delivered this
17th day of July, 1996, by and between XxXxxxx Industries, Inc., a Michigan
corporation, XxXxxxx of Georgia, Inc., a Georgia corporation, Shelby Steel
Processing Company, a Michigan corporation, XxXxxxx Tube Company d/b/a Quality
Tube, a Michigan corporation, XxXxxxx Industries of Ohio, Inc., a Michigan
corporation, and XxXxxxx Epco, Inc., a New York corporation (collectively,
"Borrower"), whose address/principal office is 6200 Elmridge, Xxxxxxxx Xxxxxxx,
Xxxxxxxx 00000, and Standard Federal Bank, a federal savings bank ("Standard
Federal"), whose address is 0000 Xxxx Xxx Xxxxxx Xxxx, Xxxx, Xxxxxxxx 00000.
RECITALS:
A. On September 15, 1994, the Borrower and Standard Federal
entered into a Loan Agreement, as amended by a First Amendment to Loan
Agreement, dated February 16, 1995, and a Second Amendment to Loan Agreement,
dated June 22, 1995 (the "1994 Loan Agreement"), pursuant to which the Borrower
opened a revolving line of credit facility with Standard Federal, Loan No.
0250006199, with a credit limit of up to $11,000,000.00 (the "Line of Credit"),
as evidenced by a Second Amended and Restated Promissory Note (Line of Credit),
dated June 22, 1995, in the principal amount of $11,000,000.00, and Standard
Federal made to the Borrower a term loan, Loan No. 02500016768, as evidenced by
a Promissory Note (Term Loan), dated September 15, 1994, in the principal
amount of $3,148,575.60 ("Term Loan No. 16768"); a term loan, Loan No.
025000193855, as evidenced by a Promissory Note (Term Loan), dated July 18,
1995, in the principal amount of $240,000.00 ("Term Loan No. 193855"); a line
of credit with term provisions, Loan No. 025000193863, as evidenced by a
Promissory Note (Line of Credit with Term Provisions) (First Line of Credit),
dated July 18, 1995, in the principal amount of $426,000.00 ("Term Loan No.
193863"), and a line of credit with term provisions, Loan No. 0250193871, as
evidenced by a Promissory Note (Line of Credit with Term Provisions) (Second
Line of Credit), dated July 18, 1995, in the principal amount of $426,000.00
("Term Loan No. 193871").
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B. On February 6, 1994, the Borrower and Standard Federal entered into a
Loan Agreement, pursuant to which Standard Federal made to the Borrower a term
loan, Loan No. 0250017724, as evidenced by a Promissory Note (Term Loan), dated
February 6, 1995, in the principal amount of $2,000,000.00 ("Term Loan No.
17724"); a line of credit with term provisions, Loan No. 02500017740, as
evidenced by a Promissory Note (Line of Credit with Term Provisions) (First
Line of Credit), dated February 6, 1995, in the principal amount of $950,000.00
("Term Loan No. 17740"); and a line of credit with term provisions, Loan No.
0250017675, as evidenced by a Promissory Note (Line of Credit with Term
Provisions) (Second Line of Credit), dated February 6, in the principal amount
of $950,000.00 ("Term Loan No. 17675").
C. The loans described in paragraphs A and B above are secured by a
Security Agreement dated September 15, 1994 (the "Security Agreement").
D. The Borrower has requested a renewal of the Line of Credit, a new
term loan in the principal amount of $3,465,888.23, the proceeds of which will
be used to refinance Term Loan No. 17740, Term Loan Xx. 00000, Xxxx Xxxx
Xx. 00000, Term Loan Xx. 000000, Xxxx Xxxx Xx. 000000, and Term Loan No.
193871, and a new equipment line of credit in the principal amount of
$1,000,000.00, and Standard Federal is willing to supply such financing subject
to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in reliance upon the representations herein provided and
in consideration of the premises and the mutual promises herein contained, the
Borrower and Standard Federal hereby agree as follows:
SECTION 1. LINE OF CREDIT
1.1 Standard Federal hereby renews the Line of Credit to the Borrower,
which shall not exceed at any one time outstanding the Credit Limit as
hereafter defined. The term "Credit Limit" shall mean the lesser of: (a)
Eleven Million and 00/100 Dollars ($11,000,000.00), or (b) an amount equal to
the sum of: (i) an amount equal to 80% of Eligible Accounts Receivable, plus
(ii) an amount equal to the lesser of: (1) Seven Million Five Hundred Thousand
and 00/100 Dollars ($7,500,000.00), or (2) an amount equal to 50% of Qualified
Inventory. As used herein, the term "Eligible Accounts Receivable" shall mean
accounts receivable of the Borrower less than 90 days old, not doubtful as to
collectibility or disputed as to existence or amount or subject to offset,
contra-indebtedness or return and not intra-company or owing from any
affiliated or related company or other entity, exclusive of any account
receivable arising under a government contract, the assignment of which is
subject to the Assignment of Claims Act of 1940, as amended, or any other
similar federal or state statute or regulation governing the assignment of
contracts with a
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governmental agency. The term "Qualified Inventory" shall mean the inventory
of Borrower in which Standard Federal holds a perfected first security interest
exclusive of any returned or damaged items and work-in-process.
1.2 The Line of Credit herein extended shall be subject to the terms and
conditions of a renewal Promissory Note (Line of Credit) of even date herewith
and all renewals and amendments thereof (the "Line of Credit Note"). The Line
of Credit shall be payable and shall bear interest as set forth in the Line of
Credit Note. This Loan Agreement and the Line of Credit Note are of equal
materiality and shall each be construed in such manner as to give full force
and effect to all provisions of both documents.
1.3 Standard Federal shall, from time to time during the term hereof,
make advances to Borrower under the Line of Credit upon request therefor by
Borrower, provided that upon giving effect to such advance no Event of Default
(as defined in the Line of Credit Note or this Agreement) and no event which
with notice and/or the passage of time would become an Event of Default shall
exist at the time the advance is to be made; and provided further that upon
giving effect to such advance and at the time the advance is to be made all of
the representations and warranties of Borrower contained in this Agreement and
all other documents executed in connection with the Line of Credit are true and
correct in all material respects; and provided further that at the time the
advance is to be made Standard Federal shall not have previously or
concurrently declared all amounts owing under the Line of Credit Note to be
immediately due and payable; and provided further the amount requested shall
not cause the total amount outstanding under the Line of Credit to exceed the
Credit Limit.
1.4 If at any time the amount outstanding under the Line of Credit shall
exceed the Credit Limit, Borrower shall, on demand, forthwith pay to Standard
Federal such sums as are necessary to reduce the amount outstanding to an
amount not greater than the Credit Limit.
1.5 Borrower shall pay to Standard Federal, on the first day of each
month, commencing on the first payment date after the date hereof, and
continuing on the same day of each consecutive month thereafter until the
termination of the Line of Credit and all sums owing for principal and interest
with respect to the Line of Credit are paid in full, an Unused Line Fee in the
amount of 0.25% per annum of the amount available for draw but not advanced
from time to time on the Line of Credit ("Unused Line"). The amount of the
Unused Line Fee payable on the first day of each month will be determined by
multiplying the average daily balance of the Unused Line for the calendar month
which ends one month prior to the due date of such Unused Line Fee by .020833%.
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1.6 In all events, unless earlier terminated, the Line of Credit shall
terminate March 1, 1998. Upon termination, Borrower shall forthwith pay to
Standard Federal all sums owing for principal and interest with respect to the
Line of Credit.
SECTION 1A. TERM LOAN
1A.1 Standard Federal hereby extends to the Borrower a term loan (the
"Term Loan") in the principal amount of Three Million Four Hundred Sixty Five
Thousand Eight Hundred Eighty Eight and 00/100 Dollars ($3,465,888.23).
1A.2 The Term Loan herein extended shall be subject to the terms and
conditions of a Promissory Note (Term Loan) of even date herewith and all
renewals and amendments thereof (the "Term Note"). The Term Loan shall be
payable and shall bear interest as set forth in the Term Note. This Loan
Agreement and the Term Note are of equal materiality and shall each be
construed in such manner as to give full force and effect to all provisions of
both documents.
SECTION 1B. EQUIPMENT PURCHASE LINE OF CREDIT
1B.1 Standard Federal hereby extends to the Borrower a revolving line of
credit (the "Equipment Line of Credit") which shall not exceed at any one time
outstanding the principal amount of One Million and 00/100 Dollars
($1,000,000.00) (the "Equipment Credit Limit").
1B.2 The Equipment Line of Credit herein extended shall be subject to the
terms and conditions of a Promissory Note (Line of Credit with Term Provisions)
(Equipment Line of Credit), in the principal amount of One Million and 00/100
Dollars ($1,000,000.00), of even date herewith and all renewals and amendments
thereof (the "Equipment Line of Credit Note"). The Equipment Line of Credit
shall be payable and shall bear interest as set forth in the Equipment Line of
Credit Note. This Loan Agreement and the Equipment Line of Credit Note are of
equal materiality and shall each be construed in such manner as to give full
force and effect to all provisions of both documents.
1B.3 If at any time the amount outstanding under the Equipment Line of
Credit shall exceed the Equipment Credit Limit, Borrower shall, on demand,
forthwith pay to Standard Federal such sums as are necessary to reduce the
amount outstanding to an amount not greater than the Equipment Credit Limit.
1B.4 Each advance under the Equipment Line of Credit shall be used solely
for the purchase of equipment. Each advance shall be in an amount not in
excess of Eighty Five percent (85.0%) of the cost to the Borrower of the
equipment to be purchased with such advance. Standard Federal shall make
advances under the Equipment Line of Credit only upon receipt by it in a form
satisfactory to it
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of a true and authentic copy of the dealer invoice for the equipment purchased
or to be purchased with the advance.
SECTION 1C. CONDITIONS TO MAKING LOANS
1C.1 The following are conditions precedent to the obligation of
Standard to make the Line of Credit, the Term Loan and the Equipment Line of
Credit and hereunder:
1C.1(a) The Borrower shall have delivered or shall have had delivered to
Standard Federal, in form and substance satisfactory to Standard Federal and
its counsel, each of the following:
a. A duly executed copy of this Loan Agreement;
b. A duly executed copy of the Line of Credit Note, the Term
Note, the Equipment Line of Credit Note and such other loan
documents as Standard Federal shall require to evidence and
document the Line of Credit, the Term Loan and the Equipment
Line of Credit (the "Loan Documents");
c. Such credit applications, financial statements,
authorizations, and such information concerning the Borrower
and its business, operations, and condition (financial and
otherwise) as Standard Federal may reasonably request;
d. Certified copies of resolutions of the Boards of Directors of
the Borrower approving the execution and delivery of the Loan
Documents required hereunder;
e. A certificate of the Secretary or an Assistant Secretary of
the Borrower certifying the names and true signatures of the
officers of the Borrower authorized to sign the Loan Documents
required hereunder;
f. Copies of each of the Articles of Incorporation of the
Borrower, certified by the Secretary of State of Michigan as
of a recent date;
g. Copies of each of the Articles of Incorporation and Bylaws of
the Borrower, certified by the Secretary or an Assistant
Secretary of the Borrower as of the date of this Agreement as
being accurate and complete;
h. Certificate of good standing of the Borrower from the
Secretary of State of Michigan as of a recent date;
i. Certificates of authority and good standing of the Borrower
for each state in which the Borrower is qualified to do
business;
j. A certificate of compliance of the chief financial officer or
treasurer of the Borrower in form satisfactory to Standard
Federal dated as of the date of this Agreement;
k. Such certificates, binders or other evidence of all insurance
required of the Borrower under this Loan Agreement as Standard
Federal may reasonably require; and
l. Acknowledgement copies of all UCC-1 financing statements filed
with respect to the Collateral accompanied by a
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search report showing such financing statements as duly filed
and evidencing that the security interest of Standard Federal
in the Collateral is prior to all other security interests of
record.
1C.1(b) All acts and conditions (including, without limitation, the obtaining
of any necessary regulatory approvals and the making of any required filings,
recordings, or registrations) required to be done and performed and to have
happened precedent to the execution, delivery, and performance of the Loan
Documents required hereunder and to constitute the same legal, valid, and
binding obligations, enforceable in accordance with their respective terms,
shall have been done and performed and shall have happened in due and strict
compliance with all applicable laws.
1C.1(c) All documentation, including, without limitation, documentation for
corporate and legal proceedings in connection with the transactions
contemplated by the Loan Documents shall be satisfactory in form and substance
to Standard Federal and its counsel and all fees and charges, including
recording and filing fees, shall have been paid as required hereunder.
1C.2 As conditions precedent to Standard Federal's obligation to make the
Term Loan and to fund any request for an advance under the Line of Credit or
the Equipment Line of Credit, at and as of the date of the funding thereof;
a. The representations and warranties of the Borrower contained
in the Loan Documents shall be accurate and complete in all
respects as if made on and as of such date;
b. The Borrower shall have paid all fees and expenses, including
any recording fees and charges, required hereunder;
c. There shall not have occurred an Event of Default or any event
which with the passage of time of the giving of notice or both
would constitute an Event of Default; and
d. Following the making of such loan or advance, the aggregate
principal amount outstanding will not exceed the limitations
described in Sections 1 and 1A.
SECTION 2. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to Standard Federal that as of
the date of acceptance of this Agreement, as of the time any advance is to be
made hereunder and, unless expressly provided otherwise herein or agreed to by
a writing signed by Standard Federal, at all times any amounts are outstanding
hereunder:
2.1 The Borrower and each of its subsidiaries, if any, are corporations
duly organized, validly existing and in good standing under the laws of the
state of their incorporation; the Borrower
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and each of its subsidiaries (if any) have the legal power and authority to own
their properties and assets and to carry out their business as now being
conducted and each is qualified to do business in the state of its
incorporation and in every jurisdiction where the nature of its business or the
property owned or operated by it makes such qualification necessary and is
otherwise in compliance with all applicable laws, statutes, regulations, rules
and requirements of any federal, state, judicial, regulatory or administrative
body having jurisdiction of the Borrower or any of its assets; the Borrower has
the legal power and authority to execute and perform this Agreement, to borrow
money in accordance with its terms, to execute and deliver the Line of Credit
Note, the Term Note, the Equipment Line of Credit Note and other documents
contemplated hereby, to grant to Standard Federal mortgages and security
interests in the Collateral, as hereby contemplated, and to do any and all
other things required of it hereunder; and this Agreement, the Line of Credit
Note, the Term Note, the Equipment Line of Credit Note and all other documents
contemplated hereby, when executed by the Borrower's duly authorized officers
will constitute its valid and binding legal obligations enforceable in
accordance with their terms.
2.2 The execution, delivery and performance of this Agreement, the
borrowings hereunder and the execution and delivery of the Line of Credit Note,
the Term Note, the Equipment Line of Credit Note and other documents
contemplated hereby (a) have been duly authorized by all requisite corporate
action, (b) do not require governmental approval or the approval of any person
not a party to this Agreement, (c) will not result (with or without notice
and/or the passage of time) in any conflict with or breach or violation of or
default under, any provision of law, the Articles of Incorporation or Bylaws of
the Borrower or any indenture, agreement or other instrument to which the
Borrower is a party, or by which it or any of its properties or assets are
bound, and (d) will not result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the properties or
assets of the Borrower other than in favor of Standard Federal and as
contemplated hereby.
2.3 There is not pending or, to the best of the knowledge of the
Borrower, threatened, any litigation, proceeding or governmental investigation
which could materially and adversely affect the business of the Borrower or its
subsidiaries, if any, or its ability to perform its covenants hereunder.
2.4 Borrower has good and marketable title to its properties given as
security as herein described, and, except for liens in favor of Standard
Federal, liens for taxes not delinquent or being contested in good faith and
liens created in connection with worker's compensation, unemployment insurance
and social security, or to secure the performance of bids, tenders or contracts
(other than for the repayment of borrowed money), leases, statutory
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obligations, surety and appeal bonds, and other obligations of like nature made
in the ordinary course of business, none of the Borrower's or any of its
subsidiaries' (if any) assets are subject to any mortgage, pledge, lien,
security interest, or other encumbrance of any kind or character except as have
been disclosed to Standard Federal in writing. The Borrower owns all material
patents, trademarks, service marks, trade names, copyrights, licenses and other
rights, free from any material restrictions, that are necessary for the
operation of its business as presently conducted.
2.5 All financial data which has been or shall hereafter be furnished to
Standard Federal for the purposes of, or in connection with, this Agreement,
including particularly, but without limitation, the audited consolidated
financial statements of XxXxxxx Industries, Inc. and the Form 10-Q's filed
with the Securities and Exchange Commission by XxXxxxx Industries, Inc.
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, and the
transactions contemplated hereby has been and/or shall be prepared in
accordance with generally accepted accounting principles consistently applied,
and does or will fairly present the financial condition of the Borrower as of
the dates, and the results of its operations for the periods, for which the
same is furnished to Standard Federal.
2.6 There has been no material adverse change in the business, properties
or condition (financial or otherwise) of the Borrower or its subsidiaries (if
any) since the date of the latest financial statements provided to Standard
Federal and there are no material debts, liabilities or obligations (absolute
or contingent) of the Borrower except as reflected in such financial statements
(or in the notes thereto).
2.7 The Borrower is not in default in the repayment of any indebtedness
for money borrowed by it nor has there occurred any event which, with or
without notice or the passage of time or both, would constitute a default by
the Borrower under any agreement or instrument pertaining to any indebtedness
for money borrowed by it.
2.8 Borrower has filed all reports and tax returns required by
governmental authority to be filed by it prior to the date hereof and Borrower
has received no notice that such reports or returns have been rejected,
declared insufficient, or otherwise challenged by such governmental authority.
2.9 The principal officers of the Borrower ("Principal Officers") are as
follows:
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XxXxxxx Industries, Inc.:
Chairman of the Board Xxxxxxx X. XxXxxxx
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Senior Vice President Xxxxxx X. XxXxxxx
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Secretary Xxxx X. Xxxxxxxx
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XxXxxxx of Georgia, Inc.:
President Xxxxxxx X. XxXxxxx
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Senior Vice President Xxxxxx X. XxXxxxx
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Secretary Xxxx X. Xxxxxxxx
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Shelby Steel Processing Company:
President Xxxxxx X. XxXxxxx
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Vice President Xxxxxxx X. XxXxxxx
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Secretary Xxxx X. Xxxxxxxx
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XxXxxxx Tube Company d/b/a Quality Tube:
President Xxxxxxx X. XxXxxxx
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Secretary Xxxx X. Xxxxxxxx
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XxXxxxx Industries of Ohio, Inc.:
President Xxxxxxx X. XxXxxxx
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Vice President Xxxxxx X. XxXxxxx
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Secretary Xxxxxxxx Xxxxx
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XxXxxxx Epco, Inc.:
President Xxxxxxx X. XxXxxxx
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Vice President Xxxxxx X. XxXxxxx
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Secretary Xxxxxxxx Xxxxx
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2.10 XxXxxxx of Georgia, Inc., a Georgia corporation, Shelby Steel
Processing Company, a Michigan corporation, XxXxxxx Tube Company d/b/a Quality
Tube, a Michigan corporation, XxXxxxx Industries of Ohio, Inc., a Michigan
corporation, XxXxxxx Epco, Inc., a New York corporation, and Southfield Quality
Leasing Company, a Michigan corporation, are each wholly-owned subsidiaries of
XxXxxxx Industries, Inc., a Michigan corporation, and have no subsidiaries.
XxXxxxx Group Leasing Corporation, a Michigan corporation, and Galion Holding
Company, a Michigan corporation, are also wholly-owned subsidiaries
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of XxXxxxx Industries, Inc. XxXxxxx Industries, Inc. also holds one-third of
the outstanding capital stock of M.E.G. Equipment Sales, Inc., Michigan
corporation, of which M.E.G. Equipment Sales of Florida, Inc., a Florida
corporation, is a wholly-owned subsidiary. XxXxxxx Industries, Inc., as of the
date of this Loan Agreement, owns no other subsidiaries.
2.11 None of the proceeds of the Line of Credit, the Term Loan or the
Equipment Line of Credit will be used for the purpose of purchasing or carrying
any "margin stock" as defined in Regulation U or G of the Board of Governors of
the Federal Reserve System (12 C.F.R. Part 221 and 207), or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry a margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such Regulation U or G.
Borrower is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stocks. Neither Borrower nor any person acting
on behalf of Borrower has taken or will take any action which might cause the
Line of Credit Note, the Term Note, the Equipment Line of Credit Note or any
of the other documents executed in conjunction therewith, including this
Agreement, to violate Regulations U or G or any other regulations of the Board
of Governors of the Federal Reserve System or to violate Section 7 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder, in each
case as now in effect or as the same may hereinafter be in effect. Borrower
and its subsidiaries, if any, own no "margin stock" except for that described
in the financial statements provided to Standard Federal and, as of the date
hereof, the aggregate value of all "margin stock" owned by Borrower and its
subsidiaries, if any, does not exceed 25% of all of the value of all of
Borrower's and its subsidiaries', if any, assets.
2.12 Except as disclosed in the environmental reports listed in attached
Schedule 2.12, copies of which the Borrower has furnished to Standard Federal,
neither the Borrower nor, to the best of Borrower's knowledge after due
inquiry, any other person or entity, has caused or permitted any waste, oil,
pesticides, or any substance or material of any kind which is currently known
or suspected to be toxic or hazardous, including but not limited to any
substance defined as a "Hazardous Waste" in Title 40, Part 261 of the Code of
Federal Regulations, (hereinafter referred to as "Hazardous Material") to be
discharged, dispersed, released, disposed of, or allowed to escape on, under or
at any property owned, occupied or operated by any Borrower in violation of any
Hazardous Materials Laws (as hereinafter defined), nor has any property owned,
occupied or operated by any Borrower, or any part thereof, ever been used by
the Borrower or, to the best of Bor-
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rower's knowledge after due inquiry, any prior owner or any other person, as a
dump, storage or disposal site for any Hazardous Material, nor has there
occurred any other violation of the federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et
seq., or any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to or imposing liability or
standards of conduct concerning, any Hazardous Material ("Hazardous Materials
Laws") with respect to any property owned, occupied or operated by any
Borrower. No asbestos or asbestos-containing materials have been installed,
used, incorporated into, or disposed of on any property owned, occupied or
operated by any Borrower. No polychlorinated biphenyls ("PCBs") are located on
or in any property owned, occupied or operated by any Borrower, in the form of
electrical transformers, fluorescent light fixtures with ballasts, cooling
oils, or any other device or form. All underground storage tanks located on
any property owned, occupied or operated by any Borrower have been installed
and are being operated in full compliance with all applicable Hazardous
Materials Laws. The Borrower: (a) has not received any notice of any release,
threatened release, escape, seepage, leakage, spillage, discharge or emission
of any Hazardous Materials in, under or upon any property owned, occupied or
operated by any Borrower or of any violation of any Hazardous Materials Law,
and (b) does not know of any basis for any such notice or violation.
2.13 No "reportable event," as defined in the Employee Retirement Income
Security Act of 1974 and any amendments thereto ("ERISA"), has occurred and is
continuing with respect to any employee pension and/or profit sharing benefit
plan maintained by or on behalf of the Borrower for the benefit of any of its
employees. The Pension Benefit Guaranty Corporation ("PBGC") has not
instituted proceedings to terminate any such employee pension and/or profit
sharing plan or to appoint a trustee to administer such plan. The Borrower
has maintained and funded and caused each of its subsidiaries, if any, to
maintain and fund all employee pension and/or profit sharing plans in
accordance with their terms and with all applicable provisions of ERISA.
Neither the Borrower nor any duly appointed administrator of any employee
pension and/or profit sharing plan: (a) has incurred any liability to PBGC with
respect to any such plan other than for premiums not yet due or payable, (b)
has instituted or intends to institute proceedings to terminate any such plan
under Section 4042 or 4041A of Erisa, or (c) has withdrawn from any
Multi-Employer Pension Plan (as that term is defined in Section 3(37) of
ERISA).
2.14 There is no material fact that the Borrower has not disclosed
to Standard Federal which could have a material adverse effect on the
properties, business, prospects or condition (financial or otherwise) of the
Borrower or any of its subsidiaries. For purposes of this Section 2.14, a
"material adverse effect" means any circumstance or event which (a) could
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have any adverse effect whatsoever upon the validity, performance or
enforceability of any material provision of the Loan Documents, (b) is or might
be material and adverse to the financial condition or business operations of
the Borrower or any subsidiary, (c) could impair the ability of the Borrower to
fulfill its obligations under the Loan Documents, or (d) causes an Event of
Default or any event which, with notice or lapse of time or both, could become
an Event of Default. Neither the financial statements referred to in Section
2.5 hereof, nor any certificate or statement delivered herewith or heretofore
by Borrower in connection with the negotiations of this Loan Agreement,
contains any untrue statement of a material fact or omits to state any material
fact necessary to keep the statements contained herein or therein, under the
circumstances in which they were made, from being misleading.
2.15 Each request for an advance under the Line of Credit shall
constitute, without the necessity of specifically containing a written
statement, a representation and warranty by Borrower that no Event of Default
exists and that all representations and warranties contained in this Section 2
or in any mortgage, guaranty, security agreement or other document given to
secure or relating to the Line of Credit Note, the Term Note, the Equipment
Line of Credit Note or this Agreement are true and correct at and as of the
time the advance is to be made.
SECTION 3. AFFIRMATIVE COVENANTS OF BORROWER
3.1 Prior to Standard Federal's disbursement of any advances under the
Line of Credit or the Equipment Line of Credit, or closing of the Term Loan,
the Borrower shall; (a) furnish to Standard Federal, if Standard Federal so
requires, certified copies of its Articles of Incorporation, Bylaws and
Certificate of Good Standing, which Articles of Incorporation and Good Standing
Certificate are to be certified by the appropriate official of the Borrower's
state of incorporation; (b) furnish to Standard Federal if Standard Federal so
requires a statement of the Borrower and the chief financial officer of
Borrower certifying that they are unaware of the occurrence of an Event of
Default or of any event which with notice and/or the passage of time could
become an Event of Default; and (c) furnish Standard Federal such other
instruments, documents, opinions or certificates as Standard Federal or its
counsel shall reasonably require. All actions, proceedings, instruments and
documents required or requested hereunder shall be satisfactory to and approved
by Standard Federal and/or its counsel prior to the disbursement of advances
under the Line of Credit or the Equipment Line of Credit or closing of the Term
Loan.
3.2 From the date hereof until all amounts owing under the Line of
Credit, the Term Loan and the Equipment Line of Credit are paid in full and all
obligations under the Line of Credit Note, the Term Note, the Equipment Line of
Credit Note, this Agreement and
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all other documents executed in connection with the Line of Credit, the Term
Loan and the Equipment Line of Credit are fully paid, performed and satisfied
and so long as Standard Federal has any commitment to make advances hereunder,
the Borrower covenants and agrees it will:
3.2(a) Furnish to Standard Federal as soon as available and, in any event,
within 120 days after the close of each fiscal year of the Borrower, or, in the
event the Borrower obtains an extension of the filing date from the Securities
Exchange Commission, by such extended date, detailed financial statements of
the Borrower as of the close of such fiscal year, containing a consolidated
balance sheet of the Borrower and its subsidiaries, if any, and statements of
income and cash flows of the Borrower and its subsidiaries, if any, for such
fiscal year prepared in accordance with generally accepted accounting
principles and in a manner consistent with prior such statements containing an
analysis of sources and uses of funds and such other comments and financial
details as are usually included in similar reports. Such statements shall be
accompanied by an opinion thereon (which shall not be qualified by reason of
any limitation imposed by Borrower) of independent certified public accountants
selected by Borrower and acceptable to Standard Federal as to the fairness of
the statements included in the report and to the effect that the examination of
such accounts in connection with such financial statements has been made in
accordance with generally accepted auditing standards and, accordingly,
includes such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances.
3.2(b) Furnish to Standard Federal as soon as available and, in any event,
within 90 days after the close of each quarter of each fiscal year, or, in the
event the Borrower obtains an extension of the filing date from the Securities
Exchange Commission, by such extended date, detailed financial statements of
the Borrower as of the close of such fiscal period containing a consolidated
balance sheet of the Borrower and its subsidiaries, if any, and statements of
income and cash flows of the Borrower and its subsidiaries, if any, for such
fiscal period and for the portion of the fiscal year ending with such period in
reasonable detail and form acceptable to Standard Federal and certified by the
chief financial officer of the Borrower as being true and correct and as having
been prepared in accordance with generally accepted accounting principles
consistently applied, subject to year-end adjustments, if any.
3.2(c) Furnish to Standard Federal, within a reasonable time not to exceed 20
days after the end of each calendar month, a statement of accounts receivable,
in a form acceptable to Standard Federal, certified as correct by Borrower or a
principal officer of Borrower showing the agings thereof and the payment,
write-off or other disposition of former accounts receivable the disposition of
which has not previously been reported to Standard Federal, and such other
information and data as Standard Federal may reasonably
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require. Borrower will further specifically disclose any facts known to
Borrower which facts would tend to render doubtful the collectibility of any
account receivable disclosed in such statements or which would indicate that
the existence or amount of such account is disputed by the debtor thereon.
3.2(d) Furnish to Standard Federal, within a reasonable time not to exceed 20
days after the end of each calendar month, a statement of accounts payable, in
a form acceptable to Standard Federal, certified as correct by Borrower or a
principal officer of Borrower, showing the agings thereof and such other
information and data as Standard Federal may reasonably require.
3.2(e) Furnish to Standard Federal, within a reasonable time not to exceed 20
days after the end of each calendar month, a statement of inventory of the
Borrower, in a form acceptable to Standard Federal, certified as correct by
Borrower or a principal officer of Borrower showing the method of reporting and
all additions to and dispositions of inventory since the previous inventory
report and such other information and data as Standard Federal may reasonably
require.
3.2(f) Furnish to Standard Federal, promptly after sending, filing or
publishing the same, copies of all proxy statements, financial statements and
reports that the Borrower sends to its public shareholders and copies of all
regular, periodic and special reports and all registration statements and
amendments thereto that the Borrower files with the Securities and Exchange
Commission or any other governmental authority and any Exchange, and copies of
all press releases issued by Borrower.
3.2(g) Promptly inform Standard Federal of the occurrence of any Event of
Default or of any event (including without limitation any pending or threatened
litigation or other proceedings before any governmental body or agency) which
could have a materially adverse effect upon the Borrower's business,
properties, financial condition or ability to comply with its obligations
hereunder or under the Line of Credit Note, the Term Note or the Equipment Line
of Credit Note.
3.2(h) Furnish such other information as Standard Federal may reasonably
request and permit Standard Federal and its agents, attorneys and employees to
inspect all of the books, records and properties of the Borrower at any
reasonable time.
3.2(i) Maintain adequate insurance with responsible companies in such amounts
and against such risks and hazards as are normally insured against by similar
businesses, and provide Standard Federal evidence of such insurance upon
request; policies of casualty insurance shall contain a customary mortgagee
clause requiring payment of proceeds to Borrower and to Standard Federal as
their interests may appear and all other insurance shall contain a
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customary loss payable clause requiring payment of proceeds to Borrower and to
Standard Federal as their interests may appear and all insurance policies shall
provide that no cancellation, reduction in amount, change in coverage or
expiration thereof shall be effective until at least 30 days prior written
notice has been given by the insurer to Standard Federal; and pay when due all
taxes, assessments, fees and similar charges of every kind and nature lawfully
assessed upon the Borrower and/or its property, except to the extent being
contested in good faith; and in the event the Borrower fails to maintain such
insurance or to pay promptly any taxes or charges when due, then and in such
event Standard Federal, in its sole discretion, may, but shall not be required
to, pay the same and any amounts expended by Standard Federal for such purpose
shall become a part of the Line of Credit and shall bear interest at the rate
applicable to the outstanding principal balance owing under the Line of Credit
Note.
3.2(j) Preserve and keep in full force and effect its own and its material,
operating subsidiaries' (if any) corporate existence in good standing and
maintain voting control in its present controlling shareholder(s); keep current
all filings of assumed name certificates for each name under which and each
county in which the Borrower does business and promptly inform Standard Federal
of any assumed names under which it does business which were not used by the
Borrower on the date of this Agreement; continue to conduct and operate its
business substantially as presently conducted and operated in accordance with
all applicable laws and regulations; maintain and protect all franchises and
trade names and preserve all the remainder of its property used or useful in
the conduct of its business and keep the same in good repair and condition; pay
its indebtedness and obligations when due under normal terms and maintain
proper books of record and account, and; otherwise remain in compliance with
all applicable laws, statutes, regulations, rules and requirements of any
federal, state, judicial, regulatory or administrative body having jurisdiction
of the Borrower or any of its assets, except to the extent noncompliance is
immaterial and would not have a material adverse effect on Borrower.
3.2(k) Maintain on a consolidated statement basis "Tangible Net Worth" of not
less than the amounts specified below as of the end of each fiscal quarter
during the fiscal years ending on the dates specified below:
Minimum
"Tangible
Fiscal Year-End Net Worth"
--------------- -----------
09/30/96 $21,000,000
09/30/97 $23,000,000
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"Tangible Net Worth" shall mean total assets less trademarks, franchises,
copyrights, licenses, goodwill, similar intangible assets and all liabilities
(excluding debt subordinated to Standard Federal upon terms and conditions
acceptable to Standard Federal) of the Borrower.
3.2(l) Maintain on a consolidated statement basis the ratio of "Current
Assets" to "Current Liabilities" of not less than the ratios specified below as
of the end of each fiscal quarter during the fiscal years ending on the dates
specified below:
Fiscal Year-End Minimum Current Ratio
--------------- ---------------------
09/30/96 2.35 to 1.00
09/30/97 2.40 to 1.00
"Current Assets" shall include all assets considered current in
accordance with generally accepted accounting principles as in effect as of the
date of this Agreement, consistently applied, less all amounts due Borrower
from any of its directors, officers, employees, its shareholders, or any
company controlled by any of its shareholders. "Current Liabilities" shall
include all liabilities considered current in accordance with generally
accepted accounting principles as in effect as of the date of this Agreement,
consistently applied.
3.2(m) On a consolidated statement basis maintain the ratio of "Liabilities"
to "Tangible Net Worth" of not more than the ratios specified below as of the
end of each fiscal quarter during the fiscal years ending on the dates
specified below:
Fiscal Year-End Maximum Liabilities-to-Worth Ratio
--------------- ----------------------------------
09/30/96 2.55 to 1.00
09/30/97 2.45 to 1.00
"Liabilities" shall mean all liabilities of the Borrower and its
consolidated subsidiaries, if any, as defined in accordance with generally
accepted accounting principles as in effect as of the date of this Agreement,
consistently applied.
"Tangible Net Worth" shall mean total assets less trademarks,
franchises, copyrights, licenses, goodwill, similar intangible assets and all
liabilities (excluding debt subordinated to Standard Federal upon terms and
conditions acceptable to Standard Federal) of the Borrower.
3.2(n) On a consolidated statement basis, maintain an Interest Coverage Ratio
of not less than 2.00 to 1.00 as of the end of each quarter of each fiscal
year. The "Interest Coverage Ratio" shall be
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defined as the ratio of the Borrower's net income, plus interest charges,
income and other taxes and amortization and depreciation for the period of four
consecutive quarters ending with the quarter at the end of which the Interest
Coverage Ratio is being measured to all interest expense of the Borrower for
such period, as determined in accordance with generally accepted accounting
principles.
3.2(o) On a consolidated statement basis, maintain a Fixed Charge Coverage
Ratio of not less than 1.75 to 1.00 as of the end of each quarter of each
fiscal year. The "Fixed Charge Coverage Ratio" shall be defined as the ratio
of the Borrower's net income, plus amortization and depreciation for the period
of four consecutive quarters ending with the quarter at the end of which the
Fixed Charge Coverage Ratio is being measured to current maturities of long
term debt, as determined in accordance with generally accepted accounting
principles.
3.2(p) At all times meet and cause each of its subsidiaries, if any, to meet
the minimum funding requirements of ERISA with respect to all employee pension
and/or profit sharing plans subject to ERISA and, with respect to any such
employee benefit plan, promptly notify Standard Federal in writing of any
reportable event, as defined in ERISA, or any proposed termination (voluntary
or otherwise) which could give rise to material termination liability within
the meaning of ERISA Section 4062.
3.3 The Borrower will not make any change in its accounting policies or
financial reporting practices and procedures, except changes in accounting
policies which are required or permitted by generally accepted accounting
principles and changes in financial reporting practices and procedures which
are required or permitted by generally accepted accounting principles.
3.4 The Borrower shall use the monies loaned hereunder only for the
purpose(s) set forth in the preamble hereto.
3.5 The Borrower shall allow Standard Federal's participant in the Line
of Credit, the Term Loan and the Equipment Line of Credit and staff or
independent accountants or auditors selected by Standard Federal's participant
to conduct a full audit of the Borrower's financial statements and its books
and records twice during the first year of the term of the Line of Credit, the
Term Loan and the Equipment Line of Credit and once in each of the second and
third years of the term of the Line of Credit, the Term Loan and the Equipment
Line of Credit. Standard Federal's participant shall schedule such audits
during normal business hours of the Borrower and shall provide Borrower not
less than two (2) business days notice of the commencement of each audit. The
Borrower shall make adequate facilities available on its premises at Borrower's
expense to enable Standard Federal's participant to conduct the audits herein
described and shall make available all of
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its books, records and other documents and information as may be reasonably
requested to facilitate the audits. The Borrower agrees to pay to Standard
Federal's participant an audit fee of $3,000.00 plus travel expenses for each
audit so conducted by the participant.
SECTION 4. NEGATIVE COVENANTS
4.1 From the date hereof until all amounts owing under the Line of
Credit, the Term Loan and the Equipment Line of Credit are paid in full and all
obligations under the Line of Credit Note, the Term Note and the Equipment Line
of Credit Note, this Agreement and all other documents executed in connection
with the Line of Credit, the Term Loan and the Equipment Line of Credit are
fully paid, performed and satisfied and so long as Standard Federal has any
commitment to make advances hereunder, the Borrower covenants and agrees that
it will not do and will not permit any subsidiary, if any, to do any of the
following without the prior written approval of Standard Federal:
4.1(a) Create, incur, assume or permit to exist (a) any mortgage, pledge,
security interest, lien or charge of any kind upon any of its property or
assets whether now owned or hereafter acquired other than in favor of Standard
Federal, except as required or permitted by Standard Federal, or (b) any
indebtedness or liability for borrowed money, except indebtedness to Standard
Federal or indebtedness subordinated to the prior payment in full of the
Borrower's indebtedness to Standard Federal which is approved in writing by
Standard Federal, except as otherwise required or permitted in writing by
Standard Federal.
4.1(b) Make loans, advances or extensions of credit to any Entity (which in
this Agreement means any individual, partnership, corporation or other legal
entity), other than a parent or subsidiary of the Borrower, in excess of
$100,000.00 in principal amount, except for sales on open account and in
ordinary course of business; or guarantee or in any way become responsible for
obligations of any other Entity except by endorsement of negotiable instruments
for deposit or collection in the ordinary course of business; or subordinate
any indebtedness due it from an Entity to indebtedness of any other creditor of
such Entity.
4.1(c) Sell, lease or transfer, during any fiscal year, except inventory in
the ordinary course of business, any substantial portion of its assets; or
consolidate with or merge into any other Entity, or permit another to merge
into it; or acquire by lease or purchase all or substantially all the business
or assets of any Entity; or enter into any lease-back arrangement with any
Entity.
4.1(d) Acquire or expend for, by lease, purchase or otherwise, during any
fiscal year, fixed assets in excess of $4,500,000.
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SECTION 5. SECURITY
5.1 In order to secure: (1) the full and timely performance of the
Borrower's covenants set forth herein and in the Line of Credit Note, the Term
Note and the Equipment Line of Credit Note, (2) the repayment of any and all
indebtedness of the Borrower to Standard Federal arising pursuant to the Line
of Credit Note, the Term Note, the Equipment Line of Credit Note (including any
renewals or substitutions thereof), this Agreement and any mortgage, guaranty,
security agreement or other document given to secure or relating to the Line of
Credit Note, the Term Note, the Equipment Line of Credit Note or this
Agreement, and (3) all other indebtedness and liabilities of the Borrower to
Standard Federal arising under this Agreement, the Line of Credit Note, the
Term Note or the Equipment Line of Credit Note, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising:
5.1(a) The Borrower hereby grants unto Standard Federal a security interest
in the following property and the proceeds thereof: (i) any and all securities
or other property received by the Borrower with respect to, on account of or in
exchange for any item of Collateral; (ii) all stock and/or liquidating
dividends (whether the same be in the form of cash or other property) paid
upon, on account of or with respect to any item of Collateral; and (iii) all
bank deposits, instruments, negotiable documents, chattel paper and any and all
other property of the Borrower of any kind whatsoever which shall at any time
be in the possession or under the control of Standard Federal; and
5.1(b) The Borrower has granted to Standard Federal a security interest of
first priority in all personal property of the Borrower as provided in a
certain Security Agreement dated September 15, 1994 from the Borrower to
Standard Federal, the provisions of which are hereby incorporated herein by
reference; and
5.1(c) The Borrower will cause XxXxxxx Industries, Inc. to assign to Standard
Federal as collateral security a life insurance policy on the life of Xxxxxxx
X. XxXxxxx in the face amount of $2,000,000.00 (herein, together with the
property described in Sections 5.1(a) (i), (ii) and (iii) and 5.1(b) above,
referred to as the "Collateral" or "item(s) of Collateral").
5.2 The Borrower shall execute and deliver to Standard Federal any
and all documents (including financing statements) as Standard Federal may
require to insure the perfection and priority of its liens and security
interests in the Collateral and furnish, if Standard Federal so requires, proof
of hazard insurance policies, in accordance with Section 3.2(g) above, relating
to the Collateral.
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SECTION 6. EVENTS OF DEFAULT
The occurrence of any of the events enumerated in Sections 6.1 to
6.11 below shall constitute an Event of Default for purposes of this
Agreement:
6.1 FAILURE TO PAY MONIES DUE. If any indebtedness of the Borrower to
Standard Federal on the Line of Credit, the Term Loan and the Equipment Line of
Credit is not paid when due, regardless of whether such indebtedness has arisen
pursuant to the terms of the Line of Credit Note, the Term Note, the Equipment
Line of Credit Note, this Agreement or any mortgage, security agreement,
guaranty, instrument or other agreement executed in conjunction herewith.
6.2 MISREPRESENTATION. If any warranty or representation made by or for
the Borrower and/or any endorser or guarantor of the Line of Credit Note, the
Term Note or the Equipment Line of Credit Note in connection with the loan(s)
evidenced thereby, or if any financial data or any other information now or
hereafter furnished to Standard Federal by or on behalf of the Borrower and/or
any endorser or guarantor of the Line of Credit Note, the Term Note or the
Equipment Line of Credit Note shall prove to be false, inaccurate or misleading
in any material respect.
6.3 NONCOMPLIANCE WITH AFFIRMATIVE COVENANTS AND OTHER AGREEMENTS. If
the Borrower shall fail to perform any of its obligations and covenants under
Section 3 of this Agreement, or shall fail to comply with any of the other
provisions of this Agreement, other than under Section 4 hereof, or the Line of
Credit Note, the Term Note, the Equipment Line of Credit Note, or any other
agreement with Standard Federal to which it may be a party, other than the
payment of principal and interest.
6.4 NONCOMPLIANCE WITH NEGATIVE COVENANTS. If the Borrower shall fail to
perform any of its obligations and covenants described in Section 4 of this
Agreement.
6.5 BUSINESS SUSPENSION. If the Borrower and/or any endorser or
guarantor of the Line of Credit Note, the Term Note or the Equipment Line of
Credit Note shall voluntarily suspend transaction of its business.
6.6 BANKRUPTCY, ETC. If the Borrower and/or any endorser or guarantor of
the Line of Credit Note, the Term Note or the Equipment Line of Credit Note:
(a) makes a general assignment for the benefit of creditors; (b) shall file a
voluntary petition in bankruptcy or for a reorganization to effect a plan or
other arrangement with creditors; or shall file an answer to a creditor's
petition or other petition against Borrower and/or any endorser or guarantor of
the Line of Credit Note, the Term Note or the Equipment Line of Credit Note for
relief in bankruptcy or for a
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reorganization which answer admits the material allegations thereof; or if any
order for relief shall be entered by any court of bankruptcy jurisdiction with
respect to the Borrower and/or any endorser or guarantor of the Line of Credit
Note, the Term Note or the Equipment Line of Credit Note, or if bankruptcy,
reorganization or liquidation proceedings are instituted against Borrower
and/or any endorser or guarantor of the Line of Credit Note, the Term Note or
the Equipment Line of Credit Note and remain undismissed for 60 days; (c) has
entered against it any order by any court approving a plan for the
reorganization of the Borrower or any endorser or guarantor of the Line of
Credit Note, the Term Note or the Equipment Line of Credit Note or any other
plan or arrangement with creditors of the Borrower or any endorser or guarantor
of the Line of Credit Note, the Term Note or the Equipment Line of Credit Note;
(d) shall apply for or permit the appointment of a receiver, trustee or
custodian for any substantial portion of the Borrower's and/or any endorser's
or guarantor's properties or assets; or (e) becomes unable to meet its debts as
they mature or becomes insolvent.
6.7 JUDGMENTS AND WRITS. If there shall be entered against the Borrower
and/or any endorser or guarantor of the Line of Credit Note, the Term Note or
the Equipment Line of Credit Note one or more judgments or decrees which are
not insured against or satisfied or appealed from and bonded within the time
or times limited by applicable rules of procedure for appeal as of right or if
a writ of attachment or garnishment against the Borrower and/or any endorser or
guarantor of the Line of Credit Note, the Term Note or the Equipment Line of
Credit Note shall be issued and levied in an action claiming $100,000.00 or
more and not released, bonded or appealed from within 30 days after the levy
thereof.
6.8 MERGER. If the Borrower shall merge or consolidate with another
entity.
6.9 CHANGE OF CONTROL OR MANAGEMENT. If the Borrower or a controlling
portion of its voting stock or a substantial portion of its assets comes under
the practical, beneficial or effective control of any person or persons other
than those having such control as of the date of execution of the Line of
Credit Note, the Term Note and the Equipment Line of Credit Note, whether by
reason of merger, consolidation, sale or purchase of stock or assets or
otherwise, if any such change of control, in the sole and absolute discretion
of Standard Federal, adversely impacts upon the ability of the Borrower to
carry on its business as theretofore conducted.
6.10 OTHER DEFAULTS. If the Borrower and/or any endorser or guarantor of
the Line of Credit Note, the Term Note or the Equipment Line of Credit Note
shall default in the due payment of any material indebtedness to whomsoever
owed, or shall default in the observance or performance of any material term,
covenant or condition in any mortgage, security agreement, guaranty,
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instrument, lease or agreement to which the Borrower and/or any endorser or
guarantor of the Line of Credit Note, the Term Note or the Equipment Line of
Credit Note is a party.
6.11 REPORTABLE EVENT. If there shall occur any "reportable event", as
defined in the Employee Retirement Income Security Act of 1974 and any
amendments thereto, which is determined to constitute grounds for termination
by the Pension Benefit Guaranty Corporation of any employee pension benefit
plan maintained by or on behalf of the Borrower for the benefit of any of its
employees or for the appointment by the appropriate United States District
Court of a trustee to administer such plan and such reportable event is not
corrected and such determination is not revoked within 30 days after notice
thereof has been given to the plan administrator or the Borrower; or the
institution of proceedings by the Pension Benefit Guaranty Corporation to
terminate any such employee benefit pension plan or to appoint a trustee to
administer such plan; or the appointment of a trustee by the appropriate United
States District Court to administer any such employee benefit pension plan.
SECTION 7. REMEDIES UPON EVENT OF DEFAULT
7.1 Upon the occurrence of any Event of Default described in Sections
6.2, 6.3 or 6.10 hereof which is not cured or waived in writing by Standard
Federal within 15 days after written notice to the Borrower of such default; or
upon the occurrence of any Event of Default described in Section 6.1 which
continues unremedied for 10 days, or upon the occurrence of any Event of
Default described in Sections 6.4, 6.5, 6.6, 6.7, 6.8, 6.9 or 6.11, Standard
Federal's commitment to lend hereunder, if any, shall terminate and Standard
Federal may, without notice, declare the entire unpaid and outstanding
principal balance of the Line of Credit, the Term Loan and the Equipment Line
of Credit and all accrued interest to be due and payable in full forthwith,
without presentment, demand or notice of any kind, all of which are hereby
expressly waived by Borrower, and thereupon Standard Federal shall have and may
exercise any one or more of the rights and remedies provided herein or in the
Line of Credit Note, the Term Note or the Equipment Line of Credit Note or in
any mortgage, guaranty, security agreement or other document relating hereto or
granted secured parties under the Michigan Uniform Commercial Code, including
the right to take possession of and dispose of the Collateral, or otherwise
provided by applicable law, and to offset against the Line of Credit, the Term
Loan and the Equipment Line of Credit any amount owing by Standard Federal to
the Borrower.
SECTION 8. MISCELLANEOUS.
8.1 No default shall be waived by Standard Federal except in writing and
a waiver of any default shall not be a waiver of any other default or of the
same default on a future occasion. No
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single or partial exercise of any right, power or privilege hereunder, or any
delay in the exercise hereof, shall preclude other or further exercise of the
rights of the parties to this Agreement.
8.2 No forbearance on the part of Standard Federal in enforcing any of
its rights under this Agreement, nor any renewal, extension or rearrangement of
any payment or covenant to be made or performed by the Borrower hereunder
shall constitute a waiver of any of the terms of this Agreement or of any such
right.
8.3 This Agreement shall be construed in accordance with the law of the
State of Michigan.
8.4 All covenants, agreements, representations and warranties made in
connection with this Agreement and any document contemplated hereby shall
survive the borrowing hereunder and shall be deemed to have been relied upon by
Standard Federal. All statements contained in any certificate or other
document delivered to Standard Federal at any time by or on behalf of the
Borrower pursuant hereto shall constitute representations and warranties by the
Borrower.
8.5 The Borrower agrees that it will pay all costs and expenses incurred
by Standard Federal in enforcing Standard Federal's rights under this Agreement
and the documents contemplated hereby, including without limitation any and all
reasonable fees and disbursements of legal counsel to Standard Federal.
8.6 This Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, personal representatives,
successors and assigns; provided, however, that the Borrower shall not assign
or transfer its rights or obligations hereunder without the prior written
consent of Standard Federal.
8.7 If any provision of this Agreement shall be held or deemed to be or
shall, in fact, be inoperative or unenforceable as applied in any particular
case in any or all jurisdictions, or in all cases because it conflicts with any
other provision or provisions hereof or any constitution or statute or rule of
public policy, or for any other reason, such circumstances shall not have the
effect of rendering the provision in question inoperative or unenforceable in
any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any
extent whatever. The invalidity of any one or more phrases, sentences, clauses
or sections contained in this Agreement, shall not affect the remaining
portions of this Agreement, or any part thereof.
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SECTION 9. ADDITIONAL PROVISIONS
9.1 In addition to the terms, covenants and conditions set forth above,
the parties hereto hereby agree as follows:
9.1(a) Borrower shall cause Galion Holding Company, a Michigan corporation,
to execute and deliver to Standard Federal an unlimited payment guaranty of the
obligations of Borrower under the Line of Credit, the Term Loan and the
Equipment Line of Credit in form and substance acceptable to Standard Federal.
IN WITNESS WHEREOF, the Borrower and Standard Federal have caused this
Loan Agreement to be executed as of the day and year first written above.
BORROWER:
XXXXXXX INDUSTRIES, INC., a Michigan
corporation
By: Xxxx X. Xxxxxxxx
------------------------- ---------------------------
Xxxx X. Xxxxxxxx
Its: Secretary
--------------------
00-0000000
------------------------------
Taxpayer Identification Number
XXXXXXX OF GEORGIA, INC., a Georgia
corporation
By: Xxxx X. Xxxxxxxx
------------------------- ---------------------------
Xxxx X. Xxxxxxxx
Its: Secretary
--------------------
00-0000000
------------------------------
Taxpayer Identification Number
SHELBY STEEL PROCESSING COMPANY, a
Michigan corporation
By: Xxxx X. Xxxxxxxx
------------------------- ---------------------------
Xxxx X. Xxxxxxxx
Its: Secretary
--------------------
00-0000000
------------------------------
Taxpayer Identification Number
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XXXXXXX TUBE COMPANY d/b/a QUALITY
TUBE, a Michigan corporation
By: Xxxx X. Xxxxxxxx
------------------------- ---------------------------
Xxxx X. Xxxxxxxx
Its: Secretary
--------------------
------------------------------
Taxpayer Identification Number
XXXXXXX INDUSTRIES OF OHIO, INC., a
Michigan corporation
By: Xxxx X. Xxxxxxxx
------------------------- --------------------------
Xxxx X. Xxxxxxxx
Its: Treasurer
--------------------
------------------------------
Taxpayer Identification Number
XXXXXXX EPCO, INC., a New York
corporation
By: Xxxx X. Xxxxxxxx
------------------------- ---------------------------
Xxxx X. Xxxxxxxx
Its: Treasurer
--------------------
38-
------------------------------
Taxpayer Identification Number
STANDARD FEDERAL BANK, a
federal savings bank
By: Xxxxx X. Xxxxxxxx
---------------------------
Xxxxx X. Xxxxxxxx
Its: Vice President
--------------------
25
