Execution Copy
LOAN AGREEMENT
THIS LOAN AGREEMENT, made as of the 30th day of April, 1996, by and among
Noble International, Ltd., a Michigan corporation of 00 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000 ("Noble"), Monroe
Engineering Products, Inc., a Michigan corporation of 00 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000 ("Monroe"), Prestolock
International, Ltd., a Michigan corporation of 00 Xxxxxxxxxx Xxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000 ("Prestolock") and Cass River
Coatings, Inc., a Michigan corporation of 00 Xxxxxxxxxx Xxxxx Xxxxxxx, Xxxxx
000, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000 ("CRC") (Noble, Monroe, Prestolock and CRC
collectively identified as "Companies" and individually as a "Company") and
COMERICA BANK, a Michigan banking corporation of Detroit, Michigan (herein
called "Bank");
RECITALS
A. Companies desire to obtain certain credit facilities from Bank.
B. Bank is willing to extend such credit facilities on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, Companies and Bank agree as follows:
WITNESSETH:
1. DEFINITIONS
For the purposes of this Agreement the following terms will have the
following meanings:
"Account" shall mean any right of Companies to payment for goods sold or
leased or for services rendered, whether or not such right to payment has been
earned by performance, excluding all interest and service charges thereon.
"Account Debtor" shall mean the party who is obligated on or under any
Account.
"Acquisition" shall mean the acquisition by Noble of all of the issued and
outstanding shares of capital stock of Monroe, in accordance with the terms of
the Purchase Agreement.
"Acquisition Documents" means the Purchase Agreement and all agreements,
documents and instruments executed and delivered
pursuant thereto or in connection with the foregoing, each as amended from time
to time.
"Adjusted Net Worth" shall mean as of any date of determination, Net Worth
as of such date plus the outstanding principal amount as of such date of Noble's
indebtedness to Xxxxxx X. Xxxxxxxxxxx under the Note dated April 30, 1996, in
the principal amount of $1,000,000 to the extent such indebtedness is
subordinated to Noble's indebtedness to Bank pursuant to the Subordination
Agreement.
"Affiliate" shall mean, with respect to any person, any other person
directly or indirectly controlling (including but not limited to all directors
and executive officers of such person), controlled by, or under direct or
indirect common control with such person. A person shall be deemed to control a
corporation for the purposes of this definition if such person possesses,
directly or indirectly, the power (i) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such corporation
or (ii) to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.
"Bonus" shall mean the $960,000 bonus payable by Monroe to Xxxxxxx X.
Reason prior to December 31, 1996.
"Capital Expenditure" shall mean, without duplication, any payment made
directly or indirectly for the purpose of acquiring or constructing fixed
assets, real property or equipment which in accordance with generally accepted
accounting principles would be added as a debit to the fixed asset account of
the person making such expenditure, including, without limitation, amounts paid
or payable under any conditional sale or other title retention agreement or
under any lease or other periodic payment arrangement which is of such a nature
that payment obligations of the lessee or obligor thereunder would be required
by generally accepted accounting principles to be capitalized and shown as
liabilities on the balance sheet of such lessee or obligor.
"Capital Lease" of any person shall mean any lease of any property (whether
real, personal or mixed) by that person as lessee which, in conformity with
GAAP, is, or is required to be accounted for as a capital lease on the balance
sheet of that person, together with any renewals of such leases (or entry into
new leases) on substantially similar terms.
"Debt" shall mean all liabilities of any or all of the companies and their
consolidated Subsidiaries, all as determined in accordance with generally
accepted accounting principles consistently applied.
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"Debt Service Coverage Ratio" shall mean a ratio, the numerator of which is
net income of Companies and their consolidated Subsidiaries for the four
preceding fiscal quarters, plus, to the extent deducted in determining net
income, depreciation, amortization and interest expense during such period,
plus, the Bonus to the extent deducted in determining net income for such period
less Capital Expenditures made by Companies during such period and the
denominator of which is all payments of principal and interest with respect to
indebtedness of Companies and Capital Leases due during such period, all as
determined in accordance with generally accepted accounting principles
consistently applied.
"Eligible Accounts" shall mean trade Accounts arising in the ordinary
course of the business of Companies which meet the following requirements:
(a) it is not owing more than ninety (90) days after the date of the
original invoice or other writing evidencing such Account;
(b) it arises from the sale or lease of goods and such goods have been
shipped or delivered to the Account Debtor under such Account, or it
arises from services rendered and such services have been performed;
(c) it is evidenced by an invoice, dated not later than the date of
shipment or performance, rendered to such Account Debtor or some other
evidence of billing acceptable to Bank;
(d) it is not evidenced by any note, trade acceptance, draft or other
negotiable instrument or by any chattel paper, unless such note or
other document or instrument previously has been endorsed and
delivered by the applicable Company to Bank;
(e) it is a valid, legally enforceable obligation of the Account Debtor
thereunder and is not subject to any counterclaim or other defense on
the part of such Account Debtor or to any claim on the part of such
Account Debtor denying liability thereunder in whole or in part;
(f) it is not subject to any sale of accounts, any rights of offset,
assignment, lien or security interest whatsoever other than to Bank;
(g) it is not owing by a subsidiary or affiliate of any of the Companies,
nor by an Account Debtor which (i) does not maintain its chief
executive office in the United States of America, (ii) is not
organized under the laws of Canada or the United States of America, or
any state
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or province thereof unless the Account Debtor is a Canadian subsidiary
of General Motors, Ford or Chrysler or is Textron of Canada, or (iii)
is the government of any foreign country or sovereign state, or of any
state, province, municipality or other instrumentality thereof;
(h) it is not an account owing by the United States of America or any
state or political subdivision thereof, or by any department, agency,
public body corporate or other instrumentality of any of the
foregoing, unless all necessary steps are taken to comply with the
Federal Assignment of Claims Act of 1940, as amended, or with any
comparable state law, if applicable, and all other necessary steps are
taken to perfect Bank's security interest in such account;
(i) it is not owing by an Account Debtor for which any of the Companies
has received a notice of (i) the death of the Account Debtor or any
partner of the Account Debtor, (ii) the dissolution, liquidation,
termination of existence, insolvency or business failure of the
Account Debtor, (iii) the appointment of a receiver for any part of
the property of the Account Debtor, or (iv) an assignment for the
benefit of creditors, the filing of a petition in bankruptcy, or the
commencement of any proceeding under any bankruptcy or insolvency laws
by or against the Account Debtor;
(j) it is not an account billed in advance, payable on delivery, for
consigned goods, for guaranteed sales, for unbilled sales, for
progress xxxxxxxx, payable at a future date in accordance with its
terms, subject to a retainage or holdback by the Account Debtor or
insured by a surety company: and
(k) it is not owing by any Account Debtor whose obligations Bank, acting
in its sole discretion, shall have notified Companies are not deemed
to constitute Eligible Accounts.
"Eligible Inventory" shall be valued at the lesser of cost or present
market value in accordance with generally accepted accounting principles,
consistently applied, and shall mean all of the Inventory of each of the
Companies which is in good and merchantable condition, is not obsolete or
discontinued, and which would properly be classified as "raw materials",
"work-in-process" or as "finished goods inventory" under generally accepted
accounting principles, consistently applied, excluding (a) consigned goods and
inventory located outside the United States of America, (b) inventory covered by
or subject to a seller's right to repurchase, or any consensual or nonconsensual
lien or security interest (including without limitation purchase money security
interests) other than in favor of Bank, whether senior or junior to
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Bank's security interest, and (c) inventory that Bank, acting in its reasonable
discretion, after having notified Companies, excludes. Inventory which is at any
time Eligible Inventory, but which subsequently fails to meet any of the
foregoing requirements, shall forthwith cease to be Eligible Inventory.
"Excess Cash Flow" shall mean for any applicable calendar year, Companies
net income (after tax) for such fiscal year, plus depreciation and amortization
expense for such year, plus the cash portion of the Bonus paid to Xxxxxxx X.
Reason during such period, less the amount of required principal payments
(including the principal component of Capital Leasing obligations) with respect
to Companies indebtedness for borrowed money during such period, and less the
amount of Companies' Capital Expenditures during such period (but not exceeding
$700,000).
"Event of Default" shall mean any of the Events of Default specified in
Section 11 hereof.
"Indebtedness" shall mean all loans, advances, indebtedness, obligations
and liabilities of Companies (or any of them) to Bank under this Agreement,
together with all other indebtedness, obligations and liabilities whatsoever of
Companies (or any of them) to Bank arising under or in connection with this
Agreement, whether matured or unmatured, liquidated or unliquidated, direct or
indirect, absolute or contingent, joint or several, due or to become due, now
existing or hereafter arising.
"Inventory" shall mean all goods wherever located, now owned or later
acquired by a Company, which are held for sale or lease or furnished to be
furnished under any contract of service (including, without limit, any such
goods which are returned to or repossessed by a Company) or which are raw
materials, work in process or materials used or consumed in a Company's business
and any other property constituting "inventory" under the Michigan Uniform
Commercial Code, being Act No. 174 of the Michigan Public Acts of 1962, as
amended.
"Line of Credit Maturity Date" shall mean April 30, 1997.
"Line of Credit Note" shall mean the Note described in Section 2.1 hereof
made by Companies to Bank in the form annexed to this Agreement as Exhibit "A".
"Line/Term Note" shall mean the Note described in Section 5.1 hereof made
by Companies to Bank in the form annexed to the Agreement as Exhibit "B".
"Line/Term Loan Maturity Date" shall mean December 1, 2000.
"Net Worth" shall mean as of any date of determination, all amounts that
would be included under stockholder's equity on a
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balance sheet of Companies and their consolidated subsidiaries determined in
accordance with generally accepted accounting principles consistently applied,
less loans and advances to directors, officers and employees of any of the
Companies.
"Note" shall mean the Line of Credit Note or the Line/Term Note, as the
case may be, and "Notes" shall refer to all of them.
"Prime Rate" shall mean the per annum interest rate established by Bank as
its prime rate for its borrowers as such rate may vary from time to time, which
rate is not necessarily the lowest rate on loans made by Bank at any such time.
"Purchase Agreement" shall mean the Stock Purchase Agreement by and among
Xxxxx, Xxxxxxx X. Reason, Individually And As Trustee Of His Revocable Living
Trust Dated April 9, 1979, And The Xxxxxxx X. Reason Irrevocable Trust For The
Benefit Of Xxxxxxxx Xxxxxxx And Xxxxx Xxxxxx Dated October 12, 1992.
"Reserve" shall initially mean $560,000. Upon payment in full of the
$2,500,000 payment to the Seller due June 15, 1996, the Reserve shall be reduced
to zero.
"Seller" shall mean Xxxxxxx X. Reason, individually and as Trustee of the
Xxxxxxx X. Reason Revocable Living Trust dated April 9, 1979.
"Stock Option Agreement" shall mean that certain Stock Option Agreement
dated as of January 31, 1996 among Noble, Xxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxxx
Xxxxxxxx, Xxx Xxxxxxxxxxxxx, Xxx Xxxxxxxxx and Xxx Xxxx, without taking into
account any amendments or modifications thereof.
"Subsidiary" shall mean a corporation of which more than fifty percent
(50%) of the outstanding voting stock is owned by Companies, or either of them,
either directly or indirectly through one or more intermediaries.
2. THE INDEBTEDNESS: Line of Credit
2.1 Bank may make advances to Companies and Companies jointly and severally
may borrow at any time and from time to time from the effective date hereof
until the Line of Credit Maturity Date, not to exceed Three Million Dollars
($3,000,000) ("Commitment Amount") in aggregate principal amount at any one time
outstanding. All of the advances under this Section 2 shall be evidenced by a
note in the form annexed hereto as Exhibit "A" ("Line of Credit Note") under
which advances, repayments and readvances may be made, subject to the terms and
conditions of this Agreement; provided, however, Bank shall not be obligated to
make any advances to Companies.
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2.2 The principal indebtedness represented by the Line of Credit Note and
all interest thereon shall be payable on or before the Line of Credit Maturity
Date. Companies agree to pay interest on the unpaid principal balance of the
Line of Credit Note from time to time outstanding at a per annum rate equal to
one percent (1%) above Bank's Prime Rate. Upon the occurrence of any Event of
Default hereunder, interest shall accrue on the unpaid principal balance at the
per annum rate of four percent (4%) above Bank's Prime Rate. Interest shall be
payable monthly commencing on May 1, 1996 and on the first day of each month
thereafter. Interest shall be computed on a daily basis using a year of 360 days
for the actual number of days elapsed, and in such computation effect shall be
given to any change in the interest rate resulting from a change in the Prime
Rate on the date of such change in the Prime Rate.
2.3 Companies may request advances by filing with Bank a Request for Draw
and Certificate of Compliance (as of the date of the borrowing) in form similar
to that annexed hereto as Exhibit "C", executed by an authorized officer of each
of the Companies. Bank may, at its option, lend under the Line of Credit Note
upon the telephone request of an authorized officer of each of the Companies
and, in the event Bank makes any such advance upon a telephone request, the
requesting officers shall mail to Bank, on the same day as such telephone
request, a Request for Draw and Certificate of Compliance in the form attached
as Exhibit "C".
2.4 Bank shall not be obligated to make any advance if at the time of such
request for advance, the sum of the advances outstanding under this Section 2
plus the amount of the Reserve added to the amount requested should exceed the
sum of (A) eighty five percent (85%) of the sum of the companies' Eligible
Accounts and (B) fifty percent (50%) of Eligible Inventory; provided, however,
the amount available to be advanced under this subclause (B) shall not exceed
$1,000,000,
2.5 The companies, or any of them, may prepay the Line of Credit Note in
whole or in part without premium or penalty.
2.6 The sum of the aggregate principal amount at any one time outstanding
under the Line of Credit Note plus the amount of the Reserve shall never exceed
the formula set forth in Section 2.4 hereof. Companies shall immediately make
all payments necessary to comply with this provision.
3. [Reserved]
4. [Reserved]
5. LINE/TERM LOAN
5.1 Bank agrees to lend to Companies at any time and from time to time from
the date hereof until December 31, 1996 sums not
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to exceed Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000) in
aggregate principal amount at any one time outstanding. Borrowings hereunder
shall be evidenced by a Line of Credit/Term Note in form similar to that annexed
hereto as Exhibit "B" under which advances and repayments but not readvances may
be made, subject to the terms and conditions of this Agreement.
5.2 The indebtedness represented by the Line/Term Note shall be repaid in
monthly principal and interest installments each equal to the amount necessary
to fully amortize the principal outstanding under this Section 5 on December 31,
1996 over the remaining term of the Line/Term Note (assuming an interest rate
equal to the rate applicable under this Section 5 on December 15, 1996),
commencing on January 1, 1997 until December 1, 2000, when the entire unpaid
balance of principal and interest thereon shall be due and payable. Companies
agree to pay interest on the unpaid principal balance of the Line/Term Note from
time to time outstanding at a per annum rate equal to one and one half percent
(1 1/2%) above Bank's Prime Rate, provided, however, upon the occurrence of any
Event of Default payable at a per annum rate of four and one half percent (4
1/2%) above the rate otherwise then in effect. Interest payments shall be made
monthly, commencing on the first day of the month immediately following the
month in which the initial advance under the Line/Term Note is made and on the
first day of each calendar month thereafter. Interest shall be computed on a
daily basis using a year of 360 days, and in such computation effect shall be
given to any change in the interest rate resulting from a change in the Prime
Rate on the date of such change in the Prime Rate. All payments shall be applied
first to accrued interest and the remainder to principal. The installments set
forth above are calculated at an assumed fixed interest rate and an assumed
amortization term. In the event the Bank's prime rate changes, the Bank, at its
sole option, may from time to time recalculate the periodic installment amount
so that the remaining periodic installments will fully amortize the remaining
loan balance within the remaining amortization term in equal installments at the
interest rate then being charged under this Agreement for the Line/Term Note.
COMPANIES AGREE TO PAY THE PERIODIC INSTALLMENTS AS THEY MAY BE RECALCULATED BY
THE BANK, AT THE BANK'S SOLE OPTION, FROM TIME TO TIME AND ACKNOWLEDGES THAT A
RECALCULATION SHALL NOT AFFECT THE MATURITY DATE OR THE OTHER TERMS AND
PROVISIONS OF THIS AGREEMENT OR THE LINE/TERM NOTE.
5.3 Bank shall not be obligated to lend under this Agreement unless
Companies shall have first filed with Bank a Request for Draw and a Certificate
of Compliance (as of the date of the borrowing) in form similar to that annexed
hereto as Exhibit "C", executed by an authorized officer of each of the
Companies.
5.4 Disbursements under the Line/Term Note shall be used only to repay
Companies' obligations to the Seller incurred in connection with the
Acquisition. The initial advance under the
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Line/Term Note shall not exceed $1,940,000. The second and final advance under
the Line/Term Note shall be not more than $1,810,000 and shall not be disbursed
unless Bank's Letter of Credit No. 532700 has been returned to Bank undrawn for
cancellation.
5.5 The Line of Credit Note may be prepaid in whole or in part without
premium or penalty. All partial prepayments shall be applied to principal
installments due under the Line/Term Note in the inverse order of their
maturities.
5.6 At the request of Companies, Bank has issued its Letter of Credit No.
532700 in favor of Seller as beneficiary to secure a portion of the purchase
price payable in connection with the Acquisition. In connection with such Letter
of Credit, Companies shall pay to Bank a letter of credit commission fee in the
amount of two percent (2%) per annum, payable semi-annually in advance. Such
Letter of Credit shall be subject to the terms of this Agreement and the Standby
Letter of Credit Application and Agreement executed in connection therewith.
5.7 On or before April 30 of each year, Companies shall make a mandatory
prepayment of the Line/Term Note in an amount equal to seventy five percent
(75%) of Excess Cash Flow for the fiscal year next preceding such April 30. Such
mandatory prepayments shall be applied to the principal payments due under the
Line/Term Note (in the inverse order of their maturities).
6. CONDITIONS AND SECURITY
6.1 Companies agree to furnish Bank, prior to the initial borrowing
hereunder, in form to be satisfactory to Bank, with (i) an opinion of Companies'
counsel with respect to the legal matters referred to in Sections 6.1 through
6.3 hereof and such other matters reasonably requested by Bank; (ii) certified
copies of resolutions of the Board of Directors of each of the Companies
evidencing approval of the borrowings hereunder, (iii) certified copies of each
of the Companies' Articles of Incorporation and Bylaws, and (iv) a certificate
of good standing from each jurisdiction in which any Company conducts business
or in which any Company's activities require it to be qualified to do business.
6.2 As security for all Indebtedness of Companies to Bank hereunder and
under the Notes as herein provided, Companies agree to furnish, execute and
deliver to Bank or cause to be furnished, executed and delivered to Bank prior
to or simultaneously with the initial borrowing hereunder, in form to be
satisfactory to Bank and supported by appropriate resolution in certified form,
authorizing same, the following:
(a) Security Agreements granting to Bank security interests in all of each
of the Companies' tangible and intangible
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personal property, whether now owned or hereafter acquired;
(b) Security Agreement from Noble granting to Bank a security interest in
all of the issued and outstanding shares of the capital stock of
Monroe (subject to liens in favor of the Seller until June 15, 1996),
CRC (subject to the rights of the Option Holders under and as defined
in the Stock Option Agreement) and Prestolock;
(c) Security Agreements granting to Bank first priority security interests
in all of the issued and outstanding shares of the capital stock of
Noble;
(d) A Subordination Agreement from Xxxxxx X. Xxxxxxxxxxx subordinating
Noble's indebtedness to him to Noble's indebtedness to Bank
("Subordination Agreement").
(e) Financing Statements required or requested by Bank to perfect all
security interests to be conferred upon Bank under this Agreement and
to accord Bank a perfected security position under the Uniform
Commercial Code.
To the extent that any of the Companies has heretofore given a security interest
to Bank to certain of the foregoing and such documents and agreements comply
with the requirements of this Agreement, it is hereby agreed that such documents
and agreements shall remain in full force and effect for the purposes of this
Agreement, but Bank may, if it deems it necessary or desirable, require
execution of a new agreement or agreements or amendments to such agreements.
6.3 Prior to the initial Advance under this Agreement, companies shall have
provided to the Bank evidence satisfactory to the Bank of (a) the consummation
of the Acquisition on terms and conditions acceptable to Bank and (b) a
$1,000,000 loan by Xxxxxx X. Xxxxxxxxxxx to Xxxxx which is subordinated to
Noble's indebtedness to Bank pursuant to the Subordination Agreement.
6.4 Upon execution of this Agreement, Company shall pay to Bank a
non-refundable closing fee in the amount of $30,000, which fee shall be deemed
fully earned upon execution of this Agreement. The Bank acknowledges the prior
receipt of $10,000 of such fee.
7. REPRESENTATIONS AND WARRANTIES
Each of the Companies represents and warrants and such representations and
warranties shall be deemed to be continuing representations and warranties
during the entire life of this Agreement:
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7.1 It is a corporation duly organized and existing in good standing under
the laws of the jurisdiction of its incorporation and is duly qualified to do
business and in good standing in every jurisdiction in which such qualification
is material to its business and operation or the ownership or lease of its
properties; execution, delivery and performance of this Agreement and other
documents and instruments required under this Agreement, and the issuance of the
Notes by Companies are within its corporate powers, have been duly authorized,
are not in contravention of law or the terms of its Articles of Incorporation or
Bylaws, and do not require the consent or approval of any governmental body,
agency or authority; and this Agreement and the other documents and instruments
required under this Agreement and the Notes, when issued and delivered, will be
valid and binding in accordance with their terms.
7.2 The execution, delivery and performance of this Agreement and any other
documents and instruments required under this Agreement, and the issuance of the
Notes by Companies are not in contravention of the unwaived terms of any
indenture, agreement or undertaking to which either Company is a party or by
which any Company is bound.
7.3 No litigation or other proceeding before any court or administrative
agency is pending, or to the knowledge of its officers is threatened against
Companies or any Subsidiary of any of the Companies, the outcome of which could
materially impair any of the Companies' or any Subsidiary's financial condition
or their ability to carry on their businesses taken as a whole.
7.4 There are no security interests in, liens, mortgages, or other
encumbrances on any of companies' or any Subsidiary's assets, except to Bank, or
as permitted in this Agreement.
7.5 None of the Companies nor any Subsidiary maintains or contributes to
any employee pension benefit plan subject to title IV of the "Employee
Retirement Income Security Act of 1974" (herein called "ERISA"), except those
set forth in attached Exhibit "D". There is no unfunded past service liability
of the pension plan and there is no accumulated funding deficiency within the
meaning of ERISA, or any existing material liability with respect to any pension
plan owed to the Pension Benefit Guaranty Corporation ("PBGC") or any successor
thereto, except any funding deficiency for which an application to the PBGC for
waiver is pending or for which a waiver has been granted by the PBGC.
7.6 The financial statements of Companies dated December 31, 1995,
previously furnished Bank, are complete and correct in all material respects and
fairly present the financial condition of Companies and their consolidated
Subsidiaries; since said date there has been no material adverse change in the
financial condition of either of the Companies or any of the Subsidiaries; to
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the knowledge of its officers, none of the Companies nor any of the Subsidiaries
have any contingent obligations (including any liability for taxes) not
disclosed by or reserved against in said financial statements and at the present
time there are no material unrealized or anticipated losses from any present
commitment of any of the Companies or Subsidiaries.
7.7 All tax returns and tax reports of Companies and each Subsidiary
required by law to have been filed have been duly filed or extensions obtained,
and all taxes, assessments and other governmental charges or levies (other than
those presently payable without penalty and those currently being contested in
good faith for which adequate reserves have been established) upon Companies or
any Subsidiary (or any of its properties) which are due and payable have been
paid for which the failure to pay would materially adversely affect its business
or the value of its property or assets (taken as a whole). The charges, accruals
and reserves on the books of Companies and the Subsidiaries in respect of the
Federal income tax for all periods are adequate in the opinion of Companies.
7.8 There are no subsidiaries of any Company.
7.9 Each Company and its Subsidiaries are, in the conduct of their
business, in compliance in all material respects with all federal, state or
local laws, statutes, ordinances and regulations applicable to any of them, the
enforcement of which, if such Company or any Subsidiary were not in compliance,
would reasonably be expected to materially adversely affect its business or the
value of its property or assets (taken as a whole). Each Company and its
Subsidiaries have all approvals, authorizations, consents, licenses, orders and
other permits of all governmental agencies and authorities, whether federal,
state or local, required to permit the operation of their business as presently
conducted, except such approvals, authorizations, consents, licenses, orders and
other permits with respect to which the failure to have would reasonably be
expected to materially adversely affect its business or the value of its
property or assets (taken as a whole).
7.10 Except as otherwise previously disclosed in writing by Companies to
Bank none of the Companies nor any Subsidiary is party to any litigation or
administrative proceeding, nor so far as is known by it is any litigation or
administrative proceeding threatened against it or any other Company or
Subsidiary, which in either case (A) asserts or alleges that any of the
Companies or any Subsidiary violated Environmental Laws (as defined herein), (B)
asserts or alleges that any of the Companies or any Subsidiary is required to
clean up, remove, or take remedial or other response action due to the disposal,
depositing, discharge, leaking or other release of any hazardous substances or
materials, or (C) asserts or alleges that any of the Companies or any Subsidiary
is required to pay all or a portion of the cost of any past, present, or future
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cleanup, removal or remedial or other response action which arises out of or is
related to the disposal, depositing, discharge, leaking or other release of any
hazardous substances or materials by any of the Companies or any Subsidiary.
7.11 To the best of its knowledge, after due inquiry, except as otherwise
previously disclosed in writing by Companies to Bank, there are no conditions
existing currently or likely to exist during the term of this Agreement which
would subject any of the Companies or any Subsidiary to material damages,
penalties, injunctive relief or cleanup costs under any applicable Environmental
Laws or which require or are likely to require material cleanup, removal,
remedial action or other response pursuant to applicable Environmental Laws by
any of the Companies or any Subsidiary.
7.12 Except as otherwise previously disclosed in writing by companies to
Bank, none of the Companies nor any Subsidiary is subject to any judgment,
decree, order or citation related to or arising out of applicable Environmental
Laws and to the best of its knowledge, after due inquiry, except as otherwise
previously disclosed in writing to the Bank, neither of the Companies nor any
Subsidiary has been named or listed as a potentially responsible party by any
governmental body or agency in a matter arising under any applicable
Environmental Laws.
7.13 Each of the Companies and the Subsidiaries have all material permits,
licenses and approvals required under applicable Environmental Laws.
7.14 None of the Companies is an "investment company" within the meaning of
the Investment company Act of 1940, as amended. None of the Companies is engaged
principally, or as one of its important activities, directly or indirectly, in
the business of extending credit for the purpose of purchasing or carrying
margin stock, and none of the proceeds of any of the loans hereunder will be
used, directly or indirectly, for any purpose which would violate the provisions
of Regulation U or X of the Board of Governors of the Federal Reserve System.
Terms for which meanings are provided in Regulation U of the Board of Governors
of the Federal Reserve System or any regulations substituted therefor, as from
time to time in effect, are used in this paragraph with such meanings.
7.15 Each Company has good and valid title to the property pledged,
mortgaged or otherwise encumbered or to be encumbered by it under the loan
documents to which such Company is a party.
8. AFFIRMATIVE COVENANTS
Each of the Companies covenants and agrees that it will, and will cause
each of its Subsidiaries to, so long as any indebtedness remains outstanding
under this Agreement:
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8.1 Preserve and maintain their corporate existence and such of their
rights, licenses and privileges as are material to their business and
operations; and qualify and remain qualified to do business in each jurisdiction
in which such qualification is material to their business and operations or the
ownership of their properties.
8.2 Comply in all material respects with all applicable laws, rules,
regulations and orders of any governmental authority, noncompliance with which
could materially and adversely affect the financial condition or operations of
any of the Companies or any Subsidiary.
8.3 Maintain adequate insurance (and increase such insurance coverage in
such manner and to such extent as prudent business judgment and present practice
would dictate) with responsible insurance companies or associations in such
amounts and covering such risks as is customary with companies engaged in
similar businesses and having similar properties similarly situated. In the case
of all insurance policies covering property mortgaged or pledged to the Bank or
property in which the Bank shall have a security interest, other than those
policies protecting against casualty liability to strangers, all such insurance
policies shall provide that the loss payable thereunder shall be payable to the
applicable company or Subsidiary and the Bank as their respective interests may
appear; all said policies or copies thereof, including all endorsements, to be
deposited with the Bank. If either of the Companies or any Subsidiary shall fail
to maintain such insurance, the Bank shall have the option to do so, and if it
so does Companies agree to repay the Bank, with interest at the Default Interest
Rate.
8.4 Permit the Bank, through its authorized attorneys, accountants, and
representatives, to examine each of the Companies' and Subsidiaries' books,
accounts, records, ledgers and assets of every kind and description at all
reasonable times upon oral or written request of the Bank, including collateral
audits, in each case at the expense of the Companies.
8.5 Keep proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and business
of each of the Companies and Subsidiaries so as to permit each of the Companies
to present financial statements prepared in accordance with generally accepted
accounting principles consistently applied.
8.6 Furnish to the Bank the following:
(a) prompt notification of any condition or event which constitutes or
with the running of time and/or the giving of notice would constitute
an Event of Default under this Agreement, and promptly inform
14
the Bank of any material adverse change in any of the Companies' or
any Subsidiary's financial condition;
(b) as soon as available and in any event within 30 days after the end of
each month, excluding the last month of each fiscal year, the combined
and individual balance sheets and statements of profit and loss and
surplus of the Companies and their consolidated Subsidiaries at the
end of such month, duly certified (subject to year-end review
adjustments) by the chief financial officer of each of the Companies
as having been prepared in accordance with generally accepted
accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 7.6;
(c) as soon as available and in any event within 90 days after the end of
each fiscal year of the Companies, combined and individual audited
financial statements of Companies and their consolidated Subsidiaries
for such year, including a balance sheet as of the close of such
fiscal year, statements of income and retained earnings and changes in
financial position for such year, prepared in accordance with
generally accepted accounting principles consistently applied and
certified by independent certified public accountants acceptable to
the Bank;
(d) within fifteen (15) days after and as of the end of each month, a
report showing each of the Companies' accounts receivable and
inventory, in substantially the form attached as Exhibit "H",
certified by an officer of each of the Companies; and
(e) promptly, and in form to be satisfactory to Bank, such other
information as Bank may request from time to time.
8.7 Furnish to the Bank concurrently with the delivery of each of the
financial statements required by Section 8.6(c) and, within 45 days after the
end of each of Companies' fiscal quarters, a statement prepared and certified by
the chief financial officer of each of the companies (or in such officer's
absence, a responsible senior officer of each of the Companies) (a) setting
forth all computations necessary to show compliance by Companies with each of
the financial covenants contained in Sections 8.10, 8.12 and 8.13 of this
Agreement, (b) stating that to the best of such officer's knowledge as of the
date thereof, no condition or event which constitutes an Event of Default
hereunder or which with
15
the running of time and/or the giving of notice would constitute an Event of
Default hereunder has occurred and is continuing or exists, or if such exists,
specifying in detail the nature and period of existence thereof and any action
taken with respect thereto or contemplated to be taken by Companies, and (c)
stating that the signers have personally reviewed this Agreement and that such
certificate is based on an examination sufficient to assure that such
certificate is accurate.
8.8 Pay and discharge all taxes and other governmental charges and all
contractual obligations calling for the payment of money, before the same shall
become overdue, unless and to the extent only that such payment is being
contested in good faith.
8.9 At all times meet the minimum funding requirements of ERISA with
respect to its and its Subsidiaries' employee benefit plans subject to such Act;
as soon as possible and in any event within thirty (30) days after it knows or
has reason to know:
(a) of the occurrence of any event which would constitute a reportable
event under Section 4043(b) of Title IV of ERISA;
(b) that the PBGC or such Company (or any Subsidiary) has instituted or
will institute proceedings under such Title to terminate an employee
pension plan;
(c) of the appointment of a trustee by a United States District Court to
administer an employee pension plan;
(d) of the withdrawal of such Company or any Subsidiary from any employee
pension plan; or
(e} of the failure of such Company's or any Subsidiary's pension plans to
satisfy the minimum funding requirements for any plan year as
established in the Internal Revenue Code of 1986, as amended;
deliver to the Bank a certificate of the chief financial officer of such Company
setting forth details as to such reportable event or events and the action it
(or any Subsidiary) proposes to take with respect thereto, together with a copy
of any notice of such reportable event or events which may be required to be
filed with the PBGC, or any intent to institute such proceedings, or any notice
to the PBGC that the plan is to be terminated, as the case may be. (For all
purposes of this Section, each of Companies (and each Subsidiary) shall be
deemed to have knowledge of all facts attributable to the plan administrator
under such Title); and furnish to the Bank (or cause the plan administrator to
furnish the Bank) a copy of the annual return (including all schedules and
16
attachments) for each plan covered by Title IV, and filed with the Internal
Revenue service by either of the Companies (or any Subsidiary), not later than
ten (10) days after such report has been so filed.
8.10 On a combined statement basis, maintain at all times Adjusted Net
Worth of not less than the following amounts for the periods set forth below:
From the date hereof through December 31, 1996 ............... $1,500,000
From January 1, 1997 through December 31, 1997 ............... $2,400,000
From January 1, 1998 through December 31, 1998 ............... $3,300,000
From January 1, 1999 and thereafter .......................... $4,200,000
8.11 Promptly notify the Bank of and permit the Bank, at the Bank's option,
to remedy any default in connection with any security documents which might
impair the Bank's security; and reimburse the Bank for any monies advanced and
any reasonable cost or expense incurred in connection with remedying any such
default together with interest from the date that any such advance is made or
cost or expense is incurred at the Default Interest Rate.
8.12 On a combined statement basis, maintain at all times a ratio of Debt
to Adjusted Net Worth of not more than the following ratios for the periods set
forth below:
From the date hereof through December 31, 1996 .............. 10.0 to 1.0
From January 1, 1997 through December 31, 1997 .............. 9.0 to 1.0
From January 1, 1998 through December 31, 1998 .............. 8.0 to 1.0
From January 1, 1999 and thereafter ......................... 7.0 to 1.0
8.13 On a combined statement basis maintain a Debt Service Coverage Ratio
of not less than 1.4 to 1.0.
9. NEGATIVE COVENANTS
Each of the Companies covenants and agrees that, so long as any
indebtedness remains outstanding under this Agreement, it will not, and will
cause its Subsidiaries not to, without the prior written consent of Bank:
9.1 Affirmatively pledge or mortgage any of its assets, whether now owned
or hereafter acquired, or create, suffer or permit to exist any lien, security
interest in, or encumbrance thereon, except:
(a) to the Bank; and
(b) Permitted Encumbrances as set forth in Exhibit "E" annexed hereto.
17
9.2 Purchase, acquire, issue or redeem any of its capital stock or make any
material change in its capital structure or general business objects or purpose.
9.3 Enter into any merger or consolidation or sell, lease, transfer, or
dispose of all, substantially all, or any material part of its assets, except in
the ordinary course of its business.
9.4 Guarantee, endorse, or otherwise become secondarily liable for or upon
the obligations of others, except for the following;
(a) by endorsement for deposit in the ordinary course of business; and
(b) guaranties to the Bank.
9.5 Become or remain obligated for any indebtedness for borrowed money, or
for any indebtedness incurred in connection with the acquisition of any
property, real or personal, tangible or intangible, except:
(a) current unsecured trade, utility or nonextraordinary accounts payable
arising in the ordinary course of either Company's or its
Subsidiaries' business;
(b) to Bank;
(c) existing indebtedness described in Exhibit "F" attached hereto.
9.6 Purchase or otherwise acquire or become obligated for the purchase of
all or substantially all of the assets or business interests of any person, firm
or corporation or any shares of stock of any corporation, trusteeship or
association or in any other manner effectuate or attempt to effectuate an
expansion of the present business by acquisition, except the Acquisition.
9.7 Declare or pay any dividend on, or make any other distribution with
respect to (whether by reduction of capital or otherwise) any shares of its
capital stock, except dividend" payable in capital stock of the Companies.
9.8 Make or allow to remain outstanding any investment (whether such
investment shall be of the character of investment in shares of stock, evidences
of indebtedness or other securities or otherwise) in, or any loans or advances
to, any person, firm, corporation or other entity or association, except:
(a) advances made for expenses or purchases in the ordinary course of
business; and
18
(b) loans or advances made to officers, directors, or employees of either
of the Companies or any Subsidiary, not to exceed in the aggregate One
Million Four Hundred Thousand Dollars ($1,400,000) at any one time
outstanding (determined on a combined basis for Companies);
9.9 Allow any fact, condition or event to occur or exist with respect to
any employee pension and/or profit sharing plan of any of the Companies or any
Subsidiaries, which shall constitute grounds for termination of such plan by the
PBGC or for the appointment by a United States District Court of a trustee to
administer any such plan.
9.10 Sell, assign or confer a security interest in any account, contract,
note, trade acceptance or other receivable, except to Bank.
9.11 Make any Capital Expenditure during any calendar year if, after giving
effect thereto, the aggregate amount of all Capital Expenditures made by
Companies on a combined basis) during such period would exceed $700,000.
9.12 Enter into any transaction or series of transactions with any
Affiliate other than on terms and conditions as favorable to Companies or the
Subsidiary (as applicable) as would be obtainable in a comparable arm's-length
transaction with a person other than an Affiliate.
9.13 Pay compensation to Noble's officers (consisting of the Chairman, the
President and two Vice Presidents) and directors (on a combined basis for all
Companies) in excess of $600,000 during 1996 and $800,000 in any year
thereafter, including, salary, bonus and deferred payments.
10. ENVIRONMENTAL PROVISIONS
10.1 For the purposes of this Agreement the term "Environmental Laws" shall
mean all federal, state and local laws including statutes, regulations,
ordinances, codes, rules, and other governmental restrictions and requirements,
relating to environmental pollution, contamination or other impairment of any
nature, any hazardous or other toxic substances of any nature, whether liquid,
solid and/or gaseous, including smoke, vapor, fumes, soot, acids, alkalis,
chemicals, wastes, by-products, and recycled materials. These Environmental Laws
shall include but not be limited to the Federal Solid Waste Disposal Act, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Federal Superfund
Amendments and Reauthorization Act of 1986, regulations of the Environmental
Protection Agency, regulations of
19
the Nuclear Regulatory Agency, regulations of any state department of natural
resources or state environmental protection agency now or at any time hereafter
in effect and local health department ordinances.
10.2 Each of the Companies shall timely comply in all material respects
with all applicable Environmental Laws.
10.3 Each of the Companies shall provide to the Bank, immediately upon
receipt, copies of any correspondence, notice, pleading, citation, indictment,
complaint, order, decree, or other document from any source asserting or
alleging a circumstance or condition which requires or may require a financial
contribution by any of the Companies or any Subsidiary or a cleanup, removal,
remedial action, or other response by or on the part of any of the Companies or
any Subsidiary under applicable Environmental Laws or which seeks damages or
civil, criminal or punitive penalties from any Company or any Subsidiary for an
alleged violation of Environmental Laws.
10.4 Each of the Companies shall promptly notify the Bank in writing as
soon as it becomes aware of any condition or circumstance which makes the
environmental warranties contained in this Agreement incomplete or inaccurate in
any material respect as of any date.
10.5 In the event of any condition or circumstance that makes any
environmental warranty, representation and/or agreement incomplete or inaccurate
in any material respect as of any date, Companies shall, at their sole expense,
if reasonably requested by Bank, retain an environmental professional
consultant, reasonably acceptable to Bank, to conduct a thorough and complete
environmental audit regarding the changed condition and/or circumstance and any
environmental concerns arising from that changed condition and/or circumstance.
A copy of the environmental consultant's report will be promptly delivered to
both Bank and Companies upon completion.
10.6 At any time any of the Companies, directly or indirectly through any
professional consultant or other representative, determines to undertake an
environmental audit, assessment or investigation, it shall promptly provide the
Bank with written notice of the initiation of the environmental audit, fully
describing the purpose and intended scope of the environmental audit. Upon
receipt, Companies will promptly provide to the Bank copies of all final
findings and conclusions of any such environmental investigation. Preliminary
findings and conclusions shall be provided if final reports have not been
completed and delivered to the Bank within 60 days following completion of the
preliminary findings and conclusions.
20
10.7 Each of the Companies hereby indemnifies, saves and holds the Bank and
any of its past, present and future officers, directors, shareholders,
employees, representatives and consultants harmless from any and all loss,
damages, suits, penalties, costs, liabilities and expenses (including but not
limited to reasonable investigation, environmental audit(s), and legal expenses)
arising out of any claim, loss or damage of any property, injuries to or death
of persons, contamination of or adverse affects on the environment, or any
violation of any applicable Environmental Laws, caused by or in any way related
to any real property owned, leased or operated by Companies, or due to any acts
of either of the Companies, its officers, directors, shareholders, employees,
consultants and/or representatives. In no event shall the Companies be liable
hereunder for any loss, damages, suits, penalties, costs, liabilities or
expenses (i) arising from any act of gross negligence of the Bank, or its agents
or employees or (ii) arising from any action taken by Bank while it is in
possession of any such real property.
It is expressly understood and agreed that the indemnifications granted
herein are intended to protect the Bank, its past, present and future officers,
directors, shareholders, employees, consultants and representatives from any
claims that may arise by reason of the security interest, liens and/or mortgages
granted to the Bank, or under any other document or agreement given to secure
repayment of any indebtedness from either of the Companies, whether or not such
claims arise before or after the Bank has foreclosed upon and/or otherwise
become the owner of any such property. All obligations of indemnity as provided
hereunder shall be secured by the collateral documents.
It is expressly agreed and understood that the provisions hereof shall and
are intended to be continuing and shall survive the repayment of any
indebtedness from Companies to the Bank.
10.8 Each of the Companies and its Subsidiaries have and shall maintain all
permits, licenses and approvals required under applicable Environmental Laws.
11. DEFAULTS
11.1 Upon non-payment of any installment of the principal or interest on
any of the Notes when due in accordance with the terms thereof and continuance
thereof for ten (10) days, the Notes shall automatically become immediately due
and payable.
11.2 upon occurrence of any of the following events (said events together
with any event described in Sections 11.1 and 11.3, herein called "Events of
Default" ):
(a) default in the observance or performance of any of the covenants or
agreements of any of the Companies
21
herein set forth, and continuance thereof for thirty (30) days after
notice to Companies by Bank;
(b) any representation or warranty made by any of the Companies herein, or
in any instrument submitted pursuant hereto shall prove to be
incorrect in any material respect when made;
(c) default by any of the Companies or any Subsidiary in the due payment,
after expiration of any applicable period of notice and cure, of any
other amounts owing to Bank from time to time;
(d) default by any of the Companies or any Subsidiary in the due payment
of any of its indebtedness in the principal amount of $100,000.00 or
more except for obligations being contested in good faith, or in the
observance or performance of any term, covenant or condition in any
agreement or instrument evidencing, securing or relating to such
indebtedness, and such default shall be continued for a period
sufficient to permit acceleration of the indebtedness;
(e) default in the observance or performance of any of the covenants or
agreements of any of the Companies or any other person set forth in
any collateral document of security given to secure the indebtedness
hereunder, and continuation of such default beyond any period of
notice and cure, specified in any such document;
(f) the entry against any of the Companies or any Subsidiary of one or
more judgments or decrees involving an aggregate liability of
$100,000.00 or more, which has or have become non-appealable and shall
remain undischarged, unsatisfied by insurance and unstayed for more
than 30 days, whether or not consecutive; or the issuance and levy of
a writ of attachment or garnishment against the property of either of
the companies or any Subsidiary in an action claiming $100,000.00 or
more, and which is not released or appealed and bonded in a manner
satisfactory to Bank;
(g) if any of the Companies or Subsidiary shall fail to meet its minimum
funding requirements under ERISA with respect to any employee benefit
plan established or maintained by such Company (or any Subsidiary) or
if any such plan shall be the subject of termination proceedings
(whether voluntary or involuntary) and there shall result
22
from such termination proceedings a material liability of any of the
Companies (or any Subsidiary) to the PBGC upon the consolidated
operations, business, property, assets, financial condition or credit
of Companies and Subsidiaries taken as a whole;
(h) if there shall occur, with respect to any pension plan maintained by
any of the Companies or any Subsidiary, any reportable event (within
the meaning of Section 4043(b) of ERISA) which Bank shall determine in
good faith constitutes a ground for the termination of any such plan,
and if such event continues for thirty (30) days after Bank has given
written notice to Companies, provided that termination of such plan or
appointment of such trustee would, in the reasonable opinion of Bank,
have a material adverse effect upon the consolidated operations,
business, property, assets, financial condition or credit of Companies
and Subsidiaries taken as a whole;
(i) if there shall be any change for any reason whatsoever in the
management, ownership or control of any of the Companies which shall
in the sole judgment of Bank adversely affect future prospects for the
successful operation of any Company or any Subsidiary;
(j) if Bank shall for any reason deem itself to be insecure; or
(k) the revocation of the Subordination Agreement;
then, or at any time thereafter, unless such Event of Default is remedied, Bank
may give notice to Companies declaring all outstanding indebtedness hereunder to
be due and payable, whereupon all indebtedness then outstanding hereunder shall
immediately become due and payable without further notice and demand, as the
case may be.
11.3 If a creditors' committee shall have been appointed for the business
of any of the Companies or any Subsidiary; or if Companies or any Subsidiary
shall have made a general assignment for the benefit of creditors or shall have
been adjudicated bankrupt, or shall have filed a voluntary petition in
bankruptcy or for reorganization or to effect a plan or arrangement with
creditors; or shall file an answer to a creditor's petition or other petition
filed against it, admitting the material allegations thereof for an adjudication
in bankruptcy or for a reorganization; or shall have applied for or permitted
the appointment of a receiver, or trustee or custodian for any of its property
or
23
assets; or such receiver, trustee or custodian shall have been appointed for any
of its property or assets (otherwise than upon application or consent of any of
the Companies or any Subsidiary) and such receiver, trustee or custodian so
appointed shall not have been discharged within forty five (45) days after the
date of his appointment, or if an order shall be entered, and shall not be
dismissed or stayed within forty five (45) days from its entry, approving any
petition for reorganization of any of the Companies or any Subsidiary; then the
Notes and all indebtedness then outstanding hereunder shall automatically become
immediately due and payable.
11.4 Upon the occurrence and during the continuance of an Event of Default,
unless all of the Indebtedness is then immediately fully paid, Bank shall have
and may exercise any one or more of the rights and remedies for which provision
is made for a secured party under the UCC, under the Security Agreements or
under any other document contemplated hereby or for which provision is provided
by law or in equity, including, without limitation, the right to take possession
and sell, lease or otherwise dispose of any or all of the collateral and to set
off against the Indebtedness any amount owing by Bank to Companies (or any of
them) and/or any property of Companies (or any of them) in possession of Bank.
Companies agree, upon request of Bank, to assemble the collateral and make it
available to Bank at any place designated by Bank which is reasonably convenient
to Bank and Companies.
11.5 All of the Indebtedness shall constitute one loan secured by Bank's
security interest in the collateral and by all other security interests,
mortgages, liens, claims, and encumbrances now and from time to time hereafter
granted from Companies to Bank. Upon the occurrence and during the continuance
of an Event of Default which is not cured within the cure period, if any,
provided hereunder, Bank may in its sole discretion apply the collateral to any
portion of the Indebtedness. The proceeds of any sale or other disposition of
the collateral authorized by this Agreement shall be applied by Bank, first upon
all expenses authorized by the Michigan Uniform Commercial Code (or other
applicable law) or otherwise in connection with the sale and all reasonable
attorneys' fees and legal expenses incurred by Bank; the balance of the proceeds
of such sale or other disposition shall be applied in the payment of the
Indebtedness, first to interest, then to principal, then to other Indebtedness
and the surplus, if any, shall be paid over to Companies or to such other Person
or Persons as may be entitled thereto under applicable law. Companies shall
remain liable for any deficiency, which Companies shall pay to Bank immediately
upon demand.
11.6 The remedies provided for herein are cumulative to the remedies for
collection of the Indebtedness as provided by law, in equity or by any mortgage,
security agreement or other document contemplated hereby. Nothing herein
contained is intended, nor
24
shall it be construed, to preclude Bank from pursuing any other remedy for the
recovery of any other sum to which Bank may be or become entitled for the breach
of this Agreement by Companies.
11.7 Upon the occurrence and during the continuance of any Event of
Default, Companies shall immediately upon demand by Bank deposit with Bank cash
collateral in the amount equal to the maximum amount available to be drawn at
any time under any Letter of Credit then outstanding.
12. MISCELLANEOUS
12.1 The obligations and liabilities of Companies under this Agreement are
joint and several. This Agreement shall be binding upon and shall inure to the
benefit of Companies and Bank and their respective successors and assigns.
12.2 No delay or failure of Bank in exercising any right, power or
privilege hereunder shall affect such right, power or privilege, nor shall any
single or partial exercise thereof preclude any further exercise thereof, or the
exercise of any other power, right or privilege. The rights of Bank under this
Agreement are cumulative and not exclusive of any right or remedies which Bank
would otherwise have.
12.3 All notices with respect to this Agreement shall be deemed to be
completed upon mailing by certified mail as follows;
To Companies:
00 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxxxx
To Bank:
One Detroit Center
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Metropolitan Banking D
12.4 Companies shall pay all reasonable closing costs and expenses,
including, by way of description and not limitation, outside attorney fees, and
lien search fees incurred by Bank in connection with the commitment,
consummation and closing of this Agreement. All of said amounts required to be
paid by Companies may, at Bank's option, be charged by Bank as an advance
against the proceeds of the Notes. All reasonable costs, including attorney
fees, incurred by Bank in reviewing, revising, protecting or enforcing any of
its or any of the Bank's rights against Companies or defending Bank from any
claims or liabilities by any party or otherwise incurred by Bank in connection
with an Event of Default or the enforcement of this Agreement or the related
documents, including by way of description and not limitation, such charges in
25
any court or bankruptcy proceedings or arising out of any or action by any
person against Bank which would not have been asserted were it not for Bank's
relationship with Companies hereunder or otherwise, shall also be paid by
Companies.
12.5 This Agreement shall become effective upon the execution hereof by
Bank and both of the Companies.
12.6 On any event of default or default as described in this Agreement or
any default in payment of any liability above mentioned, Bank may, without
notice to anyone, declare the Notes due forthwith, take all action, remedial and
otherwise, as provided herein or in the Security Agreements or other document,
instrument, or agreement of security or of collateral, and collect, deal with
and dispose of all or any part of any security without notice in any manner
permitted or authorized by the Michigan Uniform Commercial Code or other
applicable law. Bank may apply the proceeds and any deposits or credits in part
or full payment of any of said liabilities (including reasonable attorneys' fees
and expenses), whether due or not, in any manner or other Bank elects.
12.7 No amendments or waiver of any provision of this Agreement nor consent
to any departure by either of the Companies therefrom shall in any event be
effective unless the same shall be in writing and signed by the Bank, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No amendment, waiver or
consent with respect to any provision of this Agreement shall affect any other
provision of this Agreement.
12.8 Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP.
12.9 All sums payable by Companies to Bank under this Agreement or the
other documents contemplated hereby shall be paid directly to Bank at its
principal office set forth in Section 11.3 hereof in immediately available
United States funds, without set off, deduction or counterclaim. In its sole
discretion, Bank may charge any and all deposit or other accounts (including
without limit an account evidenced by a certificate of deposit) of Companies (or
any of them) with Bank for all or a part of any Indebtedness then due; provided,
however, that this authorization shall not affect Companies' obligation to pay,
when due, any Indebtedness whether or not account balances are sufficient to pay
amounts due.
12.10 Any payment of the Indebtedness made by mail will be deemed tendered
and received only upon actual receipt by Bank at the address designated for such
payment, whether or not Bank has
26
authorized payment by mail or any other manner, and shall not be deemed to have
been made in a timely manner unless received on the date due for such payment,
time being of the essence. Companies expressly assume all risks of loss or
liability resulting from non-delivery or delay of delivery of any item of
payment transmitted by mail or in any other manner. Acceptance by Bank of any
payment in an amount less than the amount then due shall be deemed an acceptance
on account only, and the failure to pay the entire amount then due shall be and
continue to be an Event of Default, and at any time thereafter and until the
entire amount then due has been paid, Bank shall be entitled to exercise any and
all rights conferred upon it herein upon the occurrence of an Event of Default.
Upon the occurrence and during the continuance of an Event of Default, Companies
waive the right to direct the application of any and all payments at any time or
times hereafter received by Bank from or on behalf of Companies. Upon the
occurrence and during the continuance of an Event of Default, Companies agree
that Bank shall have the continuing exclusive right to apply and to reapply any
and all payments received at any time or times hereafter against the
Indebtedness in such manner as Bank may deem advisable, notwithstanding any
entry by Bank upon any of its books and records. Companies expressly agree that
to the extent that Bank receives any payment or benefit and such payment or
benefit, or any part thereof, is subsequently invalidated, declared to be
fraudulent or preferential, set aside or is required to be repaid to a trustee,
receiver, or any other party under any bankruptcy act, state or federal law,
common law or equitable cause, then to the extent of such payment or benefit,
the Indebtedness or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if such payment or benefit had not been
made and, further, any such repayment by Bank, to the extent that Bank did not
directly receive a corresponding cash payment, shall be added to and be
additional Indebtedness payable upon demand by Bank.
12.11 THE UNDERSIGNED AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY
IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE NOTES.
12.12 This Agreement and the Notes shall be governed by and construed in
accordance with Michigan law, and Companies submit, in any legal proceeding
related to this Agreement or the Notes, to the nonexclusive in personam
jurisdiction of any court of competent jurisdiction sitting the State of
Michigan and agree to a suit being brought in any such court; waive any
objection that it may now have or hereafter have to the venue of such proceeding
in any such court or that such proceeding was brought in an inconvenient court;
agree that service of process and any such legal proceeding
27
may be made, and shall be conclusively deemed sufficient and adequate, by
mailing of copies thereof (by registered or certified mail, if practicable)
postage prepaid, or by teletransmission to each Company at its address set forth
herein or such other address of which the Bank shall be notified in writing, in
which event, service shall be deemed complete upon the filing with the court of
a copy of the process mailed or sent and an affidavit attesting the mailing or
sending. Companies agree that nothing herein shall affect the Bank's right to
affect service or process in any other manner permitted by law.
WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK NOBLE INTERNATIONAL, LTD.
By: /s/ XXXXXXX X. XXXXXX By: /s/ XXXXXX X. XXXXXXXXXXX
------------------------------ ----------------------------
Its: Vice President Its: Chairman
PRESTOLOCK INTERNATIONAL, LTD.
By: /s/ XXXXXX X. XXXXXXXXXXX
----------------------------
Its: Chairman
CASS RIVER COATINGS, INC.
By: /s/ XXXXXX X. XXXXXXXXXXX
----------------------------
Its: Chairman
28
MONROE ENGINEERING PRODUCTS, INC.
By: /s/ XXXXXX X. XXXXXXXXXXX
----------------------------
Its: Chairman
29
EXHIBIT "A"
LINE OF CREDIT NOTE
Detroit, Michigan
$3,000,000 April 30, 1996
On or before April 30, 1997, Noble International, Ltd., Monroe Engineering
Products, Inc., Cass River Coatings, Inc., and Prestolock International, Ltd.,
each a Michigan corporation (individually a "Company" and collectively referred
to as "Companies"), jointly and severally hereby promise to pay to the order of
COMERICA BANK, a Michigan banking corporation, at 000 Xxxxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000 ("Bank"), or at such other place as the holder of this
Note may designate in writing from time to time, in legal tender of the United
States, the indebtedness or so much of the sum of Three Million Dollars
($3,000,000) as may from time to time have been advanced and then be outstanding
hereunder pursuant to the Loan Agreement dated as of April 30, 1996, as may be
amended from time to time, made by and between companies and Bank (herein called
"Agreement"), together with interest thereon as hereinafter set forth.
The indebtedness outstanding under this Note from time to time shall bear
interest at a per annum rate equal to one percent (1%) above Bank's Prime Rate.
Upon the occurrence of any event of default hereunder or under the Loan
Agreement, interest shall accrue on the unpaid balance hereunder at a per annum
rate equal to four percent (4%) above the Prime Rate. Interest shall be payable
monthly on the unpaid principal balance from time to time outstanding commencing
on May 1, 1996 and on the first day of each month thereafter until April 30,
1997, when the entire unpaid balance of principal and interest shall be due and
payable. Interest shall be computed on a daily basis using a year of 360 days,
and, in such computation, effect shall be given to any change in the interest
rate resulting from a change in the Prime Rate on the date of such change in the
Prime Rate. "Prime Rate" shall mean the rate of interest established by Bank as
its prime rate as the same may be changed from time to time, which may not
necessarily be Bank's lowest rate for loans.
This Note is a note under which advances, repayments and readvances may be
made from time to time, subject to the terms and conditions of the Agreement.
This Note evidences borrowing under, is subject to, is secured in accordance
with, and may be matured under, the terms of the Agreement, to which reference
is hereby made. As additional security for this Note, Companies grant Bank a
lien on all property and assets including deposits and other credits of the
Companies, at any time in possession or control of or owing by Bank for any
purpose.
Companies hereby waive presentment for payment, demand, protest and notice
of dishonor and nonpayment of this Note and
agree that no obligation hereunder shall be discharged by reason of any
extension, indulgence, release, or forbearance granted by any holder of this
Note to any party now or hereafter liable hereon or any present or subsequent
owner of any property, real or personal, which is now or hereafter security for
this Note. Any transferees of, or endorser, guarantor or surety paying this Note
in full shall succeed to all rights of Bank, and Bank shall be under no further
responsibility for the exercise thereof or the loan evidenced hereby. Nothing
herein shall limit any right granted Bank by other instrument or by law.
If the interest and principal hereof are not fully paid at maturity hereof
(whether by demand or otherwise), Companies shall pay the holder hereof all its
reasonable costs of collection of said principal and interest including, but not
limited to, reasonable attorney fees.
All agreements between Companies and the Bank pertaining to the
indebtedness described herein are expressly limited so that in no event
whatsoever shall the amount of interest paid or agreed to be paid to the Bank
exceed the highest rate of interest permissible under applicable law. If, from
any circumstances whatsoever, fulfillment of any provision of the Loan
Agreement, this Note or any other instrument securing this Note or all or any
part of the indebtedness secured thereby, at the time performance of such
provision shall be due, shall involve exceeding the interest limitation validly
prescribed by law which a court of competent jurisdiction may deem applicable
hereto, then, the obligation to be fulfilled shall be reduced to an amount
computed at the highest rate of interest permissible under such applicable law,
and if, for any reason whatsoever, the Bank shall ever receive as interest an
amount which would be deemed unlawful under such applicable law, such interest
shall be automatically applied to the payment of the principal amount described
herein or otherwise owed by Companies to Bank (whether or not then due and
payable), and not to the payment of interest.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS
A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO THIS NOTE.
2
All capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.
NOBLE INTERNATIONAL, LTD.
By: _______________________________
Its: ______________________________
PRESTOLOCK INTERNATIONAL, LTD.
By: _______________________________
Its: ______________________________
CASS RIVER COATINGS, INC.
By: _______________________________
Its: ______________________________
MONROE ENGINEERING PRODUCTS, INC.
By: _______________________________
Its: ______________________________
3
EXHIBIT "B"
LINE OF CREDIT/TERM NOTE
$3,750,000 Detroit, Michigan
Dated: April 30, 1996
FOR VALUE RECEIVED, Noble International, Ltd., Monroe Engineering Products,
Inc., Cass River Coatings, Inc., and Prestolock International, Ltd., each a
Michigan corporation (herein collectively called "Companies") hereby jointly and
severally promise to pay to the order of COMERICA BANK, a Michigan banking
corporation, at 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 ("Bank"), or at
such other place as the holder of this Note may designate in writing from time
to time, in legal tender of the United States, the principal sum of Three
Million Seven Hundred Fifty Thousand Dollars (53,750,000), or so much thereof as
may be advanced under the terms of the Loan Agreement between Companies and Bank
of even date herewith, together with interest thereon from the date hereof at a
per annum rate of one and one half percent (1 1/2%) above Bank's Prime Rate
thereafter. Upon the occurrence of any Event of Default, as defined in the Loan
Agreement, interest shall accrue on the unpaid principal balance of the Note at
a per annum rate of four and one half percent (4 l/2%) above the rate otherwise
then in effect. Interest shall be computed on a daily basis using a year of 360
days, assessed for the actual number of days elapsed, and, in such computation,
immediate effect shall be given to any change in the interest rate resulting
from a change in such Prime Rate on the date of such change in said Prime Rate.
"Prime Rate" shall mean that rate of interest established by Bank as its prime
rate for its borrowers as the same may be changed from time to time which may
not necessarily be the Bank's lowest rate for loans.
Companies agree to pay interest at the above-described rate on the unpaid
principal balance of this Note from time to time outstanding monthly commencing
on the first day of the month immediately following the month in which the
initial advance under this Note is made and on the first day of each month
thereafter.
The principal indebtedness outstanding under this Note shall be repaid in
forty eight (48) successive monthly installments of principal and interest each
equal to the amount necessary to fully amortize the principal outstanding under
this Note over the remaining term of this Note, commencing on January 1, 1997
and continuing on the first day of each month thereafter until December l, 2000
when the entire unpaid balance of principal and interest thereon shall be due
and payable. The amount of the installment payments may be adjusted from time to
time as provided in the Loan Agreement.
This Note evidences indebtedness incurred by Companies under the Loan
Agreement, the terms and conditions of which are hereby incorporated herein.
Upon an Event of Default, as defined in the Loan Agreement, Bank shall be
entitled to all of the rights and remedies described therein or to which it is
entitled under applicable law.
If the interest and principal hereof are not fully paid at maturity hereof
(whether by demand or otherwise), Companies shall pay the holder hereof all its
reasonable costs of collection of said principal and interest including, but not
limited to, reasonable attorney fees.
All agreements between the Companies and the Bank pertaining to the
indebtedness described herein are expressly limited so that in no event
whatsoever shall the amount of interest paid or agreed to be paid to the Bank
exceed the highest rate of interest permissible under applicable law. If, from
any circumstances whatsoever, fulfillment of any provision of the Loan
Agreement, this Note or any other instrument securing this Note or all or any
part of the indebtedness secured thereby, at the time performance of such
provision shall be due, shall involve exceeding the interest limitation validly
prescribed by law which a court of competent jurisdiction may deem applicable
hereto, then, the obligation to be fulfilled shall be reduced to an amount
computed at the highest rate of interest permissible under such applicable law,
and if, for any reason whatsoever, the Bank shall ever receive as interest an
amount which would be deemed unlawful under such applicable law, such interest
shall be automatically applied to the payment of the principal amount described
herein or otherwise owed by Companies to Bank, (whether or not then due and
payable) and not to the payment of interest.
Companies hereby waive presentment, demand, protest and notice of dishonor
and agree that no obligation hereunder shall be discharged by any extension,
indulgence or release given to any guarantor or other person or by the release
or non-enforcement of any security or guaranty given in connection herewith.
Nothing herein shall limit any right granted Bank by other instrument or by law.
This Note may be prepaid in whole or in part at any time without penalty or
premium.
NOBLE INTERNATIONAL, LTD.
By: _______________________________
Its: ______________________________
2
PRESTOLOCK INTERNATIONAL, LTD.
By: _______________________________
Its: ______________________________
CASS RIVER COATINGS, INC.
By: _______________________________
Its: ______________________________
MONROE ENGINEERING PRODUCTS, INC.
By: _______________________________
Its: ______________________________
3
EXHIBIT "C"
REQUEST FOR ADVANCE
TO: COMERICA BANK (the "Bank")
The undersigned hereby request(s) an advance in the amount of
________________________________________________________________________________
_________________ DOLLARS ($____________________) against the __________________
dated April 30, 1996, of undersigned to the Bank in the face amount of _________
_______________________________________________________________Dollars
($_____________________).
The proceeds of this advance shall be deposited to the Account No.
____________________________________ of the undersigned with the Bank or as
follows: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_________________.
Undersigned warrant(s) that no condition exists or event has occurred which
constitutes or, with the running of time would constitute a default under that
certain Loan Agreement dated April 30, 1996, by and between undersigned and the
Bank.
Dated this ____________________ day of _______________, l9 __ .
NOBLE INTERNATIONAL, LTD.
By: _______________________________
Its: ______________________________
PRESTOLOCK INTERNATIONAL, LTD.
By: _______________________________
Its: ______________________________
CASS RIVER COATINGS, INC.
By: _______________________________
Its: ______________________________
MONROE ENGINEERING PRODUCTS, INC.
By: _______________________________
Its: ______________________________
2
EXHIBIT "D"
ERISA
None.
EXHIBIT "E"
"Permitted Encumbrances" means
(a) liens for taxes or assessments or governmental charges or levies not
yet due or delinquent, or which can thereafter be paid without penalty, or which
are being contested in good faith by proceedings diligently pursued:
(b) unfilled inchoate mechanics' and materialmen's liens for construction
work in progress;
(c) workmen's, repairmen's, warehousemen's and carriers' liens and other
similar liens, if any, arising in the ordinary course of business;
(d) all of the following, if they do not in the opinion of Bank, upon
advice of its legal counsel or professional engineer, individually or in the
aggregate materially impair the use of any of company's material properties by
Company via: any easements, restrictions, mineral, oil, gas and mining rights
and reservations, zoning laws and defects in title;
(e) any lien for the satisfaction and discharge of which a sum of money
deemed adequate by Bank is on deposit with Bank or an institution acceptable to
Bank;
(f) liens created by or resulting from any litigation or other proceeding
(including liens arising out of judgments or awards against a Company) with
respect to which such Company is in good faith prosecuting an appeal or
proceeding for review, if such liens do not in the opinion of counsel for Bank
individually or in the aggregate materially impair the use of any of such
Company's material properties by such Company;
(g) other liens of a nature comparable to those described in clauses (a)
through (f) above which do not in the opinion of Bank, upon advice of its legal
counsel or professional engineer, individually or in the aggregate materially
impair the use of any of a Company's material properties by such Company;
(h) security interest in favor of Messrs. Frampton, Oldford, Redding,
Wojciechowski, Xxxxxxxxx and Xxxx in machinery and equipment of Cass River
Coatings' Inc. evidenced by Michigan Secretary of State filing D060853.
(i) security interest in favor of CRA, Inc. in specified computer system
leased by Prestolock International, Ltd. as evidenced by filing no, 1616822.
(j) existing mortgages on Companies' real property located in Petosky and
Vassar, Michigan.
(k) any other lien, encumbrance or charge acceptable to and approved in
writing by Bank.
5
EXHIBIT "F"
Indebtedness
Indebtedness described in the financial statements dated December 31, 1995
previously delivered by Companies to Bank.
6
AMENDMENT NO. 3 TO LOAN AGREEMENT
Amendment dated as of the 30th day of April, 1997, by and between Noble
International, Ltd., Monroe Engineering Products, Inc., Prestolock
International, Ltd. and Cass River Coatings, Inc., each a Michigan corporation
(individually a "Company" and collectively, "Companies") and Comerica Bank, a
Michigan banking corporation ("Bank").
RECITALS:
A. Companies and Bank entered into a Loan Agreement dated April 30, 1996,
as amended by an Amendment dated September 26, 1996 and an Amendment dated March
_ , 1997 ("Agreement"). Pursuant to the Agreement, Companies executed and
delivered to Bank a Line of Credit Note dated April 30, 1996 ("Note").
B. Companies and Bank desire further to amend the Agreement and to amend
the Note.
NOW, THEREFORE, Companies and Bank agree as follows;
1. The definition of Line of Credit Maturity Date is amended to read in its
entirety as follows;
"'Line of Credit Maturity Date' shall mean July 31, 1997."
2. Section 8.10 of the Agreement is amended to read in its entirety as
follows:
"8.10 On a combined statement basis, maintain at all times Adjusted Net
Worth of not less than the following amounts for the periods set forth below:
From the date hereof through December 31, 1996 $1,500,000
From January 1, 1997 through March 30, 1997 $1,870,000
From March 31, 1997 through June 29, 1997 $2,120,000
From June 30, 1997 through September 29, 1997 $2,370,000
From September 30, 1997 through December 30, 1997 $3,120,000
December 31, 1997 and thereafter $3,870,000"
3. The Note is amended to change the maturity date from April 30, 1997 to
July 31, 1997.
4. Companies hereby represent and warrant that, after giving effect to the
amendments contained herein, (a) the execution, delivery and performance of this
Amendment and any other documents and instruments required under this Amendment
or the Agreement are within each Company's corporate powers, have been duly
authorized, are not in contravention of law or the terms of any Company's
Articles of Incorporation or Bylaws, and do not require the consent
or approval of any governmental body, agency, or authority; and this Amendment
and any other documents and instruments required under this Amendment or the
Agreement will be valid and binding in accordance with their terms; (b) the
continuing representations and warranties of Companies set forth in Sections 7.1
through 7.5 and 7.7 through 7.15 of the Agreement are true and correct on and as
of the date hereof with the same force and effect as made on and as of the date
hereof; (c) the continuing representations and warranties of Companies set forth
in Section 7.6 of the Agreement are true and correct as of the date hereof with
respect to the most recent financial statements furnished to the Bank by
Companies in accordance with Section 8.6 of the Agreement; and (d) no event of
default, or condition or event which, with the giving of notice or the running
of time, or both, would constitute an event of default under the Agreement, has
occurred and is continuing as of the date hereof.
5. This Amendment shall be deemed effective upon execution hereof by
Companies and Bank.
6. Except as modified or waived hereby, all of the terms and conditions of
the Agreement and the Note shall remain in full force and effect.
WITNESS the due execution hereof as of the day and year first written
above.
COMERICA BANK NOBLE INTERNATIONAL, LTD.
By: /s/ XXXXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXXXXXXX
------------------------------ ------------------------------
Its: Vice President Its: Chief Financial Officer
------------------------------ ------------------------------
PRESTOLOCK INTERNATIONAL, LTD.
By: /s/ XXXXXX X. XXXXXXXXXXX
------------------------------
Its: President
------------------------------
2
CASS RIVER COATINGS, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX
------------------------------
Its: Chairman
------------------------------
MONROE ENGINEERING PRODUCTS, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX
------------------------------
Its: Treasurer
------------------------------
3
