EXHIBIT 10.10
LOAN AGREEMENT
between
THE DIRECTOR OF DEVELOPMENT
OF THE STATE OF OHIO
and
REPUBLIC ENGINEERED PRODUCTS LLC
Dated
as of
March 20, 2003
TABLE OF CONTENTS
(This Table of Contents is not a part of this Loan Agreement
and is only for convenience of reference.)
Preambles......................................................................... 1
ARTICLE I
DEFINITIONS
Section 1.1 Use of Defined Terms ........................................... 2
Section 1.2 Definitions .................................................... 2
Section 1.3 Certain Words and References ................................... 5
ARTICLE II
DETERMINATIONS AND REPRESENTATIONS
Section 2.1 Determinations of the Director.................................. 6
Section 2.2 Representations, Warranties and Covenants of the Company........ 6
ARTICLE III
LOAN, PROVISION OF PROJECT AND CONDITIONS TO DISBURSEMENT
Section 3.1 Loan and Repayment.............................................. 10
Section 3.2 Provision of Protect............................................ 10
Section 3.3 [Reserved]...................................................... 10
Section 3.4 Company Required to Pay Costs in Event Proceeds Insufficient.... 10
Section 3.5 [Reserved]...................................................... 11
Section 3.6 Conditions to Disbursement...................................... 11
Section 3.7 Postponement of the Disbursement Date........................... 13
Section 3.8 Disbursement of Loan............................................ 14
Section 3.9 Payment of Costs: Indemnification............................... 14
ARTICLE IV
ADDITIONAL COVENANTS AND AGREEMENTS
Section 4.1 Affirmative Covenants of the Company............................ 15
Section 4.2 Negative Covenants of the Company............................... 18
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ARTICLE V
EVENTS OF DEFAULT, REMEDIES AND TERMINATION
Section 5.1 Events of Default............................................... 21
Section 5.2 Remedies on Default............................................. 22
Section 5.3 No Remedy Exclusive............................................. 23
Section 5.4 Agreement to Pay Expenses and Attorneys' Fees................... 23
Section 5.5 No Waiver....................................................... 23
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 Term of Loan Agreement.......................................... 24
Section 6.2 Notices......................................................... 24
Section 6.3 Extent of Covenants of the Director; No Personal Liability...... 24
Section 6.4 Binding Effect.................................................. 24
Section 6.5 Amendments and Supplements...................................... 24
Section 6.6 Execution Counterparts.......................................... 24
Section 6.7 Severability.................................................... 24
Section 6.8 Captions; Entire Agreement...................................... 25
Section 6.9 Interpretation.................................................. 25
Section 6.10 Mutual Waiver of Jury Trial..................................... 25
Section 6.11 Consent to Jurisdiction/Service of Process...................... 25
Section 6.12 Governing Law................................................... 26
Section 6.13 Attorney Review................................................. 26
Section 6.14 Time is of the Essence.......................................... 26
Signatures........................................................................ 27
Exhibit A - Form of Cognovit Promissory Note
Exhibit B - Project Equipment
Exhibit C - Legal Description of Project Site
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LOAN AGREEMENT
THIS LOAN AGREEMENT made and entered into as of March 20, 2003, by
and between THE DIRECTOR OF DEVELOPMENT OF THE STATE OF OHIO, acting on behalf
of the State of Ohio (the "Director"), and REPUBLIC ENGINEERED PRODUCTS LLC, a
Delaware limited liability company (the "Company"), under the circumstances
summarized in the following recitals (the capitalized terms not defined in the
recitals are being used therein as defined in Article I hereof):
A. Pursuant to the Act, the Director is authorized, among other things, to
make loans to assist in the financing of an Eligible Project.
B. The Company has requested that the Director provide the financial
assistance for the Project hereinafter described.
C. The Director has determined that the Project constitutes an Eligible
Project and that the financial assistance to be provided pursuant to this Loan
Agreement is appropriate under the Act and will be in furtherance and in
implementation of the public policy set forth in the Act.
D. The financial assistance to be provided pursuant to this Loan Agreement
has been reviewed and approved by the a Development Financing Advisory Council
and the Controlling Board pursuant to the Act.
NOW, THEREFORE, in consideration of the premises and the representations
and agreements herein contained, the Director and the Company agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1 Use of Defined Terms. In addition to the words and terms
elsewhere defined in this Loan Agreement or by reference to the Security
Documents or other instruments, the words and terms set forth in Section 1.2
hereof shall have the meanings therein set forth unless the context or use
expressly indicates a different meaning or intent. Such definitions shall be
equally applicable to both the singular and plural forms of any of the words and
terms therein defined.
Section 1.2 Definitions. As used herein:
"Act" means Chapter 166, Ohio Revised Code, as from time to time amended
and supplemented.
"Allowable Costs" means "allowable costs" of the Project within the
meaning of the Act.
"Application" means the Application of the Company submitted to the
Director requesting assistance under the Act.
"Closing Date" means March 20, 2003, the date of execution and delivery of
the Loan Documents.
"Commitment" means the Commitment Letter between the Director and the
Company dated October 28, 2002.
"Controlling Board" means the Controlling Board of the State.
"Cost Certification" means a certification of the Company, as of a
specified date, setting forth in reasonable detail the costs incurred and, if
appropriate, to be incurred, by the Company in completing the Provision of the
Project, including a detail by category of all Allowable Costs.
"Development Financing Advisory Council" means the Development Financing
Advisory Council of the State.
"Disbursement Date" means the date upon which the proceeds of the Loan are
disbursed to, or for the benefit of, the Company, which shall be on or before
June 30,2003, or such subsequent date as may be established by the Director in
writing in accordance with Section 3.7 hereof for the disbursement of the Loan.
"Eligible Project" means an "eligible project" within the meaning of the
Act and, with respect to the Loan, means the Project Equipment.
"Environmental Law" means any federal, state or local law, regulation,
ordinance, order or directive pertaining to the protection of the environment.
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"ERISA" means the Employee Retirement Income Security Act of 1974, and any
successor statute of similar import, together with all rules and regulations
thereunder, as amended, reformed or otherwise modified from time to time.
References to sections or titles of ERISA shall be construed to also refer to
successor sections or titles.
"Event of Default" means any of the events described as an event of
default in Section 5.1 hereof.
"Final Cost Certification" means the Cost Certification dated as of the
Closing Date or Disbursement Date, as applicable.
"Governing Instruments" means the Certificate of Formation and Operating
Agreement of the Company.
"Governmental Authority" means, collectively, the United States of America
the State, any political subdivision thereof, any municipality, and any agency,
department, commission, board or bureau of any of the foregoing having
jurisdiction over the Project.
"Hazardous Substance" means a hazardous substance as defined under the
Comprehensive Emergency Response Compensation and Liability Act of 1980, 42
U.S.C. Section.9601, as from time to time amended.
"Hazardous Waste" means a hazardous waste as defined under the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section. 6901, as from time to
time amended.
"Indenture" means that certain Indenture dated as of August 16, 2002,
among the Indenture Trustee, the Collateral Agent, the Company, Blue Bar, L.P.,
Blue Steel Capital Corp. and N & T Railway Company, LLC, pursuant to which the
Company and Blue Steel issued the Senior Notes.
"Indenture Trustee" and/or "Collateral Agent" means LaSalle Bank National
Association in its capacity as indenture trustee and/or collateral agent under
the Indenture.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
March 20, 2003, between the Director and the Indenture Trustee relating to the
Project Equipment, as the same may be amended, modified, supplemented, restated
or replaced from time to time.
"Interest Rate for Advances" means the rate per annum equal to the lesser
of: (i) eighteen percent (18%), or (ii) the maximum rate permitted by law.
"Loan" means the loan by the Director to the Company in the total sum of
the Loan Amount, to be disbursed pursuant to Section 3.8 hereof.
"Loan Agreement" means this Loan Agreement, as the same may be amended,
modified, supplemented, restated or replaced from time to time.
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"Loan Amount" means the lesser of (i) Five Million Dollars ($5,000,000) or
(ii) thirty and thirty-four hundredths percent (30.34%) of the total Allowable
Costs of the Project, as determined by the Director in the Director's sole
discretion pursuant to this Loan Agreement.
"Loan Approval Documents" means, with respect to the Loan, the
Recommendation of the Director to the Development Financing Advisory Council
dated September 30, 2002, the Resolution of the Development Financing Advisory
Council dated September 30, 2002, the Approval of the Controlling Board dated
October 28, 2002, and the Commitment.
"Loan Documents" means this Loan Agreement, the Note, the Security
Agreement and all other documents or instruments delivered to or required by the
Director to evidence or secure the Loan as required by the Commitment and this
Loan Agreement, as the same may be amended, modified, supplemented, restated or
replaced from time to time.
"Note" means the Cognovit Promissory Note of even date herewith, in the
form attached hereto as EXHIBIT A, evidencing the unconditional obligation of
the Company to repay the Loan, as the same may be amended, modified,
supplemented, restated or replaced from time to time.
"Notice Address" means:
(a) As to the Director:
Department of Development
Economic Development Finance Division, 28th Floor
00 Xxxxx Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxx 00000-0000
Attention: Loan Servicing
(b) As to the Company:
Republic Engineered Products LLC
0000 Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
or such additional or different address, notice of which is given under Section
6.2 hereof
"Petroleum" means petroleum as defined under the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section.6901, as from time to time amended.
"Project" means the Project Equipment constituting an Eligible Project.
"Project Equipment" means the machinery, equipment and personal property
described in EXHIBIT B attached hereto, as from time to time amended or
supplemented.
"Project Purposes" means the acquisition of the Project Equipment for use
by the Company in connection with its manufacturing operations at the Project
Site.
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"Project Site" means the real property described in EXHIBIT C attached
hereto, together with all appurtenances thereto.
"Provision" means, as applicable, the acquiring, constructing,
reconstructing, rehabilitating, renovation, enlarging, installing, improving, or
furnishing of the Project
"Required Equity Funding" means One Million Six Hundred Forty-Eight
Thousand Dollars ($1,648,000) to be provided by the Company in cash to pay a
portion of the Allowable Costs of the Project
"Senior Notes" means the $80,000,000 10% Senior Secured Notes Due 2009
issued by the Company and Blue Steel Capital Corp. pursuant to the Indenture.
"Senior Note Documents" means the Indenture together with all other
documents or instruments evidencing or securing the Senior Notes.
"Security Agreement" means the Security Agreement between the Company and
the Director of even date herewith securing the Loan, as the same may be
amended, modified, supplemented, restated or replaced from time to time.
"Security Documents" means, collectively, the Security Agreement, UCC
Financing Statements and any ancillary documents, as the same may be amended,
modified, supplemented, restated or replaced from time to time.
"State" means the State of Ohio.
"Toxic Chemicals" means toxic chemicals as defined under Title III of The
Superfund Amendments and Reauthorization Act of 1986 (also cited as the
Emergency Planning and Community Right-to-Know Act) 00 X.X.X. Xxxxxxx.00000, as
from time to time amended.
"UCC Financing Statements" means the financing statements evidencing the
Director's security interest in the collateral described in the Security
Agreement.
Section 1.3 Certain Words and References. Any reference herein to the
Director shall include those succeeding to the Director's functions, duties or
responsibilities pursuant to or by operation of law or lawfully performing such
functions. Any reference to a section or provision of the Constitution of the
State or to a section or provision of the Act or to a section, provision or
chapter of the Ohio Revised Code shall include such section, provision or
chapter as from time to time amended.
The terms "hereof" "hereby" "herein" "hereto" "hereunder" and similar
terms refer to this Loan Agreement; and the term "heretofore" means before, and
the term "hereafter" means after, the Closing Date. Words of the masculine
gender include the feminine and the neuter, and when the sense so indicates,
words of the neuter gender may refer to any gender.
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ARTICLE II
DETERMINATIONS AND REPRESENTATIONS
Section 2.1 Determinations of the Director. Pursuant to the Act and on the
basis of the representations and other information provided by the Company, the
Director has heretofore made certain determinations, as set forth in the Loan
Approval Documents, which are hereby confirmed, and the Director hereby
determines that the financial assistance to be provided by the State pursuant to
this Loan Agreement will conform to the requirements of the Act, including
Section 166.07 thereof, and will further implement the purposes of the Act by
creating new jobs or preserving existing jobs and employment opportunities and
improving the economic welfare of the people of the State.
Section 2.2 Representations, Warranties and Covenants of the Company. The
Company hereby represents, warrants and covenants that:
(a) The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of
Delaware, and has all requisite power, corporate or otherwise, to
conduct its business and to own, or hold under lease, its assets and
properties.
(b) The Company is qualified to do business as a foreign limited
liability company in the State, and in each other jurisdiction
wherein the character of the properties owned or held under lease by
the Company or the nature of the business conducted or proposed to
be conducted by the Company makes such qualification necessary,
except in such jurisdiction where the failure to be so qualified,
licensed, admitted or approved will not have a material adverse
effect on the business, operations or financial condition of the
Company. The Company is in full force and effect under the laws of
the State.
(c) The Company has full power and authority to execute, deliver and
perform the Loan Documents and Senior Note Documents and to enter
into and carry out the transactions contemplated thereby. Such
execution, delivery and performance do not, and will not, violate
any provision of law applicable to the Company or the Governing
Instruments of the Company and do not, and will not, conflict with
or result in a default under any material agreement or instrument to
which the Company is a party or by which the Company or any property
or assets of the Company is or may be bound. The Loan Documents and
Senior Note Documents have, by proper action, been duly authorized,
executed and delivered and all necessary actions have been taken to
constitute the Loan Documents and Senior Note Documents as legal,
valid and binding obligations of the Company, except as such
enforceability may be limited by (1) bankruptcy, insolvency,
reorganization, or other laws relating to or affecting the
enforcement of creditor's rights, and (2) general principles of
equity.
(d) The provision of financial assistance pursuant to the Loan Approval
Documents and this Loan Agreement induced the Company to provide the
Project, thereby
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creating new jobs or preserving existing jobs and employment
opportunities and improving the economic welfare of the people of
the State.
(e) The Provision of the Project will be completed by the Company and
the Project will be operated and maintained by the Company in such
manner as to conform with all applicable laws, including without
limitation, all Environmental Laws and zoning, planning, building
and other governmental regulations imposed by any Governmental
Authority and as to be consistent with the purposes of the Act.
(f) The Company presently intends that the Project will be used and
operated in a manner consistent with the Project Purposes in Lorain,
Lorain County, Ohio until the date on which the Loan has been fully
repaid, and the Company knows of no reason why the Project will not
be so operated.
(g) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the
Company or the Project which, if adversely determined, would
individually or in the aggregate materially impair the ability of
the Company to perform any of the Company's obligations under the
Loan Documents or Senior Note Documents, or materially and adversely
affect the financial condition of the Company.
(h) The Company is not in default under any of the Loan Documents or
Senior Note Documents, or in the payment of any indebtedness for
borrowed money or under any agreement or instrument evidencing any
such indebtedness, and no event has occurred which by notice, the
passage of time or otherwise would constitute any such event of
default.
(i) The Project Site is zoned by the City of Lorain, Lorain County, Ohio
under zoning ordinances which permit the Provision of the Project
thereon and the operation of the Company's business; and all
utilities, including water, storm and sanitary sewer, gas, electric
and telephone, and rights of access to public ways are currently
available or will be provided to the Project Site in sufficient
locations and capacities to meet the requirements of operating the
Project and of any applicable Governmental Authority.
(j) The Company has made no contract or arrangement of any kind, other
than the Loan Documents and Senior Note Documents, which has given
rise to, or the performance of which by the other party thereto
would give rise to, a lien or claim of lien on the Project or other
collateral covered by the Loan Documents, other than liens as set
forth in Section 4.2(f) hereof
(k) No representation or warranty of the Company contained in any of the
Loan Approval Documents, Loan Documents or Senior Note Documents,
and no statement contained in any certificate, schedule, list,
financial statement or other instrument furnished to the Director by
or on behalf of the Company, including, without limitation, the
Application, contains any untrue statement of a material fact, or
omits to state a material
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fact necessary to make the statements contained herein or therein
not misleading.
(l) All proceeds of the Loan shall be used for the payment of Allowable
Costs relating to Provision of the Project. No part of any such
proceeds shall be knowingly paid to or retained by the Company or
any partner, officer, shareholder, director or employee of the
Company as a fee, kick-back or consideration of any type. The
Company has no identity of interest with any supplier, contractor,
architect, subcontractor, laborer or materialman performing work or
services or supplying materials m connection with the Provision of
the Project
(m) The Company shall provide the Required Equity Funding by the
Disbursement Date.
(n) The financial statements of the Company heretofore delivered to the
Director are true and correct m all material respects, have been
prepared in accordance with generally accepted accounting principles
consistently applied, and fairly present in all material respects
the financial condition and the results of operations of the Company
as of the dates thereof. No materially adverse change has occurred
in the financial condition of the Company reflected therein since
the respective dates thereof, except as disclosed in the SEC Form
10-K (enclosed) and correspondence dated 3-31-03 (enclosed).
(o) To the best of the Company's knowledge after due inquiry, no
Hazardous Substance, Hazardous Waste, Toxic Chemical or Petroleum
has been or shall be discharged, dispersed, released, stored or
treated at the Project Site in violation of any applicable laws or
Environmental Laws. No asbestos or asbestos-containing materials
have been installed, used, incorporated into any buildings,
structures, additions, improvements, facilities, fixtures or
installations at the Project Site, or disposed of on or otherwise
released at or from the Project Site. To the best of the Company's
knowledge after due inquiry, no underground storage tanks are
located at the Project Site. No investigation, administrative order,
consent order and agreement, litigation, or settlement under any
Environmental Law with respect to any Hazardous Substance, Hazardous
Waste, Toxic Chemical, Petroleum, asbestos or asbestos-containing
material is proposed, in existence, or, to the best of the knowledge
of the Company, threatened or anticipated with respect to the
Eligible Project and/or Project Site. To the best of the Company's
knowledge after due inquiry, the Eligible Project and Project Site
are in compliance with all applicable Environmental Laws and the
Company has received no notice from any entity, governmental body,
or individual claiming any violation of, or requiring compliance
with any Environmental Law. The Company has received no request for
information, notice of claim, demand or other notification that the
Company may be responsible for a threatened or actual release of any
Toxic Chemical, Hazardous Substance, Hazardous Waste, Petroleum,
asbestos or asbestos-containing material or for any damage to the
environment or to natural resources.
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(p) The Company is the owner of the Project Site, and is, or will be
upon its acquisition, the owner of the Project Equipment
(q) All representations and warranties contained in, or made in
connection with, this Loan Agreement and the other Loan Documents
shall survive the Closing Date and the disbursement of the Loan by
the Director, and shall not be limited or otherwise affected by any
and all inspections, investigations, reviews or other inquiries made
or other actions taken by the Director or any of the Director's
agents, representatives and designees or any other person or board
assisting any of the foregoing or acting for or on behalf of the
State in connection with the Application, the Loan Approval
Documents, the Loan Documents or the consummation of the Loan.
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ARTICLE III
LOAN, PROVISION OF PROJECT AND CONDITIONS TO DISBURSEMENT
Section 3.1 Loan and Repayment. On the terms and conditions of this Loan
Agreement and the Commitment, the Director shall lend to the Company the Loan
Amount to assist in the Provision of the Project. The Loan shall be evidenced by
this Loan Agreement and the Note and secured by the Security Documents and other
Loan Documents, as applicable. Those instruments shall be executed and delivered
by the Company to the Director on the Closing Date, concurrently with the
execution and delivery of this Loan Agreement and the delivery of all other
documents and the satisfaction of all other closing conditions required by this
Loan Agreement and the Commitment. The Loan shall be disbursed pursuant to
Section 3.8 hereof upon the satisfaction of the conditions set forth in Section
3.6 hereof. The Loan shall be disbursed only from, and only to the extent that
on the Disbursement Date, funds not heretofore committed are available to make
the Loan from moneys in, the "Facilities Establishment Fund" created by the Act
and as defined in such Act.
The terms of repayment of the Loan shall be as set forth in the Note and
the Company shall make all payments required to be made under the Note as and
when due.
Section 3.2 Provision of Protect. The Company (a) has commenced or shall
promptly hereafter commence the Provision of the Project, (b) shall pay all
expenses incurred in such Provision from funds made available therefor in
accordance with this Loan Agreement, the Senior Note Documents or otherwise, and
(c) shall, where commercially reasonable, demand, xxx for, levy and recover all
sums of money and debts which may be due and payable under the terms of any
contract, order, receipt, guaranty, warranty, writing or instruction in
connection with the Provision of the Project and will enforce the material terms
of any contract, agreement, obligation, and or other performance security with
respect thereto. The Company confirms its agreement in the Commitment that all
wages paid to laborers and mechanics employed on the Provision of the Project
shall be paid, as required by Chapter 4115, Ohio Revised Code, at not less than
the prevailing rates of wages for laborers and mechanics for the class of work
called for by the Project, which wages shall be determined in accordance with
the requirements of Chapter 4115, Ohio Revised Code, for determination of
prevailing wage rates; provided, that if the Company undertakes, as part of the
Project, work to be performed by the Company's regular bargaining unit employees
who are covered wider collective bargaining agreements which were in existence
prior to the date of the Commitment, the rate of pay provided under the
applicable collective bargaining agreement may be paid to such employees.
Section 3.3 [Reserved]
Section 3.4 Company Required to Pay Costs in Event Proceeds Insufficient.
In the event that the proceeds of the Loan, the Senior Notes and the Required
Equity Contribution are not sufficient to pay all costs of the Project, the
Company shall, nonetheless and irrespective of the cause of such deficiency,
complete the Project and pay all costs of such completion in full from the
Company's own funds.
Section 3.5 [Reserved]
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Section 3.6 Conditions to Disbursement. The disbursement of the Loan shall
be made on the Disbursement Date, provided the Director shall have received the
following on or before the Disbursement Date:
(a) this Loan Agreement, duly executed;
(b) the duly executed Note;
(c) the duly executed Security Agreement;
(d) the duly executed UCC Financing Statements;
(e) the duly executed Intercreditor Agreement;
(f) certification by the Company that (i) the Company's representations
and warranties made in the Loan Approval Documents, Loan Documents
and Senior Note Documents remain true, accurate and complete as of
the Disbursement Date in all material respects, (ii) no default or
event which, by notice, the passage of time or otherwise, would
constitute a default, exists under the Loan Documents or Senior Note
Documents, (iii) that the value of the Project is, or upon
completion will be, equal to or greater than the total amount of
money expended in the Provision of the Project, and (iv) the amount
of the Loan will not exceed thirty and thirty-four hundredths
percent (30.34%) of the total Allowable Costs of the Project;
(g) a Certificate of Compliance from the Ohio Department of Development,
certifying as to full compliance with Chapter 4115, Ohio Revised
Code;
(h) evidence of the liability and property insurance required by the
Loan Documents;
(i) Cost Certifications or a Final Cost Certification, as the case may
be;
(j) evidence of ownership of the Project Equipment and copies of
executed purchase agreements therefor, together with a complete list
of all costs and expenses incurred in connection with the Provision
of the Project, including invoices and receipts (or cancelled checks
or other evidence of payment and/or supporting documentation for all
such costs and expenses incurred by the Company), which items shall
constitute evidence of the Required Equity Contribution;
(k) the Company's Certificates of Good Standing issued by the Secretary
of State of the States of Delaware and Ohio, dated not more than
twenty (20) days prior to the Disbursement Date;
(l) certified copies of the resolutions of the Company authorizing
execution and delivery of all documents with respect to the Loan,
the Senior Notes and performance thereunder;
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(m) a certificate of incumbency as to the officers executing the Loan
Documents on behalf of the Company;
(n) copies, certified by the Company to be true, correct and complete,
of the Governing Instruments of the Company;
(o) copy of the Indenture, certified by the Company as being true,
accurate and complete;
(p) an opinion of the Company's counsel, which sets forth the following:
(i) the Company has been duly organized and is validly existing as
a limited liability company in good standing under the laws of
the State of Delaware is qualified to do business as a foreign
limited liability company in good standing in the State and
has all requisite power and authority to conduct the Company's
business and to own, or hold under lease, the Company's
properties;
(ii) the Company has full power and authority to execute and
deliver the Loan Documents and Senior Note Documents;
(iii) the Company has duly authorized the taking of any and all
actions necessary to carry out and give effect to the
transactions contemplated to be performed on the Company's
part under the Loan Documents and Senior Note Documents;
(iv) each Loan Document and Senior Note Document has been duly and
validly authorized, executed and delivered by the Company, is
in full force and effect and is a legal, valid and binding
obligation of the Company, enforceable in accordance with its
terms, except as such enforcement may be limited by the
application of bankruptcy, insolvency, reorganization,
moratorium and other similar laws or equitable principles
affecting creditors' rights generally;
(v) the execution and delivery of each of the Loan Documents and
Senior Note Documents and the performance by the Company of
the actions required of the Company thereby and the
consummation of the transactions contemplated therein do not
and will not (A) conflict with or violate any provisions of
the Company's Governing Instruments, or (B) constitute a
default under or conflict with or violate any resolution of
the board of directors of the Company, or (C) conflict with or
violate any provisions of any applicable law, or (D) to the
best knowledge of such counsel, any judgment, decree,
indenture, mortgage, deed of trust, guaranty, lease, agreement
or other instrument to which the Company is a party or by
which the Company or any of the property of the Company is
bound;
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(vi) there is no action, temporary restraining order, injunction,
suit, proceeding, inquiry or investigation at law or in
equity, before or by any judicial or administrative court or
agency, pending or to the best knowledge of such counsel
threatened against, affecting or involving the Company or the,
Project which, if adversely determined, would individually or
in the aggregate materially impair the ability of the Company
to perform any of its obligations under the Loan Documents or
Senior Note Documents, or would materially adversely affect
the financial condition of the Company; and
(vii) the Company has obtained any and all requisite governmental
consents, permits, licenses and approvals necessary for it to
operate the Eligible Project, as defined in the Loan
Agreement, and to enter into, execute and deliver the Loan
Documents and Senior Note Documents and to perform the
Company's obligations thereunder.
(q) evidence satisfactory to the Director that the Project is not
located in a "Flood Hazard Area" as defined by the United States
Department of Housing and Urban Development in the Flood Disaster
Protection Act of 1973, as amended, or if the Project is located in
a such flood-prone are that appropriate flood insurance or other
satisfactory measures have been taken to protect the Project from
flood damage;
(r) UCC record searches of the financing statements in the Office of the
Lorain County Recorder and the Office of the Secretary of State of
Delaware showing no liens, pledges, mortgages or security interests
in the Collateral (as defined in the Security Agreement);
(s) a duly executed disbursement request pursuant to Section 3.8;
(t) a duly executed Power of Attorney to authorize wire transfers, if
any;
(u) an Authorization Agreement for Preauthorized Payment; and
(v) such other certifications, documents or opinions as the Director may
reasonably request.
Section 3.7 Postponement of the Disbursement Date. At the written request
of the Company setting forth the reasons therefor and received at least (20)
days prior to the Disbursement Date, the Director may, but shall be under no
obligation to, postpone the Disbursement Date to a later date. No such
postponement shall be deemed to have been granted unless stated in a writing
signed by the Director specifying the length of the extension given. If for any
reason the Loan shall not have been disbursed on or before the Disbursement
Date, or such subsequent date as the Director shall have specified in writing
pursuant to the preceding sentence, this Loan Agreement and the Commitment shall
automatically terminate and, subject to the provisions of Section 3.9 hereof, be
of no further force and effect. For purposes of this Section, time is of the
essence.
13
Section 3.8 Disbursement of Loan. At the request of the Company for
disbursement of the Loan Amount hereunder, the Director shall disburse the Loan
by delivering funds in the Loan Amount, as determined by the Director in the
Director's sole discretion based on the Final Cost Certification to the order
of, or at the direction of, the Company on the Disbursement Date.
Section 3.9 Payment of Costs: Indemnification. The Company shall pay all
costs incident to the Loan, including recording fees, insurance fees, escrow
fees, filing fees, and all other costs and expenses incurred by the Director,
other than the initial fees (but including all of the expenses) of the counsel
assisting the Director in connection with the closing and disbursement of the
Loan. The Company shall defend, indemnify and hold the Director and any
officers, employees, agents or representatives of the Director or the State
harmless from and against any and all loss, cost, expense, claims or actions
arising out of or connected with the execution and delivery of this Loan
Agreement or any of the other Loan Documents and the transactions contemplated
thereby, and the preparation of documents relating to the disbursement of the
Loan, including all aforementioned costs and expenses, regardless of whether or
not the disbursement of the Loan shall actually occur. The provisions of this
Section will survive the termination of this Loan Agreement.
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14
ARTICLE IV
ADDITIONAL COVENANTS AND AGREEMENTS
Section 4.1 Affirmative Covenants of the Company. Throughout the term of
this Loan Agreement, the Company shall:
(a) Taxes and Assessments. Pay and discharge promptly, or cause to be
paid and discharged promptly, when due and payable, all taxes,
assessments and governmental charges or levies imposed upon the
Company, the Company's income or any of the Company's property, or
upon any part thereof, as well as all claims of any kind (including
claims for labor, materials and supplies) which, if unpaid, might by
law become a lien or charge upon the Company's property.
Notwithstanding the preceding paragraph, the Company may, at the
Company's expense and after prior notice to the Director, by
appropriate proceedings diligently prosecuted, contest in good faith
the validity or amount of any such taxes, assessments, governmental
charges, levies and claims and during the period of contest, and
after notice to the Director, may permit the items so contested to
remain unpaid However, if at any time the Director shall notify the
Company that, in the opinion of legal counsel satisfactory to the
Director, by nonpayment of any such items, the lien or security
interest created by the Security Documents as to any part of the
Project will be materially affected or that the Project or any part
thereof will be subject to imminent loss or forfeiture, the Company
shall promptly pay such taxes, assessments, charges, levies or
claims.
(b) Maintain Existence. Do or cause to be done all things necessary to
preserve and keep in full force and effect the Company's existence
and the Company's material rights and franchises.
(c) Maintain Property. Maintain and keep the Company's property in good
repair, working order and condition and from time to time make all
repairs, renewals and replacements which, in the opinion of the
Company, are necessary and proper so that the business carried on in
connection therewith may be properly conducted at all times;
provided, however, that nothing in this subsection shall prevent the
Company from selling or otherwise disposing of any property
whenever, in the good faith judgment of the Company, such property
is obsolete, worn out, without economic value or unnecessary for the
conduct of the business of the Company; provided, further, that with
respect to the Collateral (as defined in the Security Agreement),
the Company shall comply with the terms of the Security Agreement.
(d) Maintain Insurance. Keep the Project Equipment insured against loss
or damage by fire and other risks, maintain public liability
insurance against claims for personal injury, death, or property
damage suffered by others upon, in or about the Project Site; and
maintain all such worker's compensation or similar insurance as may
be required under the laws of any state or jurisdiction in which the
15
Company may be engaged in business. All insurance for which
provision has been made in this subsection (d) shall be maintained
against such risks and in at least such amounts as required by the
Security Agreement, except that the Company may effect worker's
compensation or similar insurance in respect of operations in any
state or other jurisdiction either through an insurance fund
operated by such state or other jurisdiction or by causing to be
maintained a system or systems of self-insurance which is in
accordance with applicable law.
(e) Furnish Information. Furnish or cause to be furnished to the
Director:
(i) Quarterly Reports. Within forty-five (45) days after the end
of each of the first three quarterly periods of each fiscal
year of the Company, the compiled financial statements of the
Company, including the balance sheets, as at the end of such
quarterly period, together with related statements of income
and retained earnings (or accumulated deficit) and changes in
financial position for such quarterly period, setting forth in
comparative form the corresponding figures as at the end of or
for the corresponding quarter of the previous fiscal year, all
in reasonable detail, prepared in accordance with generally
accepted accounting principles applied on a consistent basis,
subject to usual year-end audit adjustments.
(ii) Annual Reports. Within ninety (90) days after the last day of
each fiscal year of the Company, a copy of the Company's
reviewed annual financial statements containing a balance
sheet of the Company as at the end of such fiscal year,
together with related statements of income and retained
earnings (or accumulated deficit) and changes in financial
position for such fiscal year, setting forth in comparative
form the corresponding figures as at the end of or for the
previous fiscal year, all in reasonable detail and all
examined by, and accompanied by a certificate of, the
Company's chief financial officer or accountant to the effect
that such financial statements were prepared in accordance
with generally accepted accounting principles consistently
applied, and present fairly the Company's financial position
at the close of the period covered by such financial
statements and the results of the Company's operations for
such period.
(iii) Employment Statement. The Company shall furnish to the
Director upon request, but in any event not less frequently
than concurrently with the annual financial statements to be
furnished pursuant to this Section throughout the term of the
Loan, a statement certifying: (a) the number of employees of
the Company employed on the Eligible Project as of the Closing
Date; (b) the number of employees of the Company currently
employed on the Eligible Project; (c) the number of any and
all employees of the Company laid off or terminated from the
Eligible Project since the Closing Date; (d) the current
number of women and minority employees of the Company employed
on the Eligible Project; and (e) such other
16
employment, economic and statistical data concerning the
Project as may be reasonably requested by the Director.
(iv) Certificate; No Default. With each of the financial statements
required to be furnished pursuant to this Section, a
certificate of the Company's chief executive officer, chief
financial officer, treasurer, assistant treasurer or other
authorized officer stating that (a) no Event of Default has
occurred and is continuing and no event or circumstance which
would constitute an Event of Default, but for the requirement
that notice be given or time elapse or both, has occurred and
is continuing, or, if such an Event of Default or such event
or circumstance has occurred and is continuing, a statement as
to the nature thereof and the action which the Company
proposes to take with respect thereto, and (b) no action, suit
or proceeding by the Company or against the Company at law or
in equity, or before any governmental instrumentality or
agency, is pending or, to the best of the Company's knowledge,
threatened, which, if adversely determined, would materially
impair the right or ability of the Company to carry on the
business which is contemplated in connection with the Project
or would materially impair the right or ability of the Company
to perform the transactions contemplated by the Loan Documents
or Senior Note Documents, or would materially and adversely
affect the Company's business, operations, properties, assets
or condition, all as of the date of such certificate, except
as disclosed in such certificate.
(v) Other Information. Such other information respecting the
business, properties or the condition or operations, financial
or otherwise, of the Company as the Director may reasonably
request.
(f) Deliver Notice. Promptly upon learning of any of the following,
deliver written notice thereof to the Director, describing the same
and the steps being taken by the Company with respect thereto:
(i) the occurrence of an Event of Default or an event or
circumstance which would constitute an Event of Default, but
for the requirement that notice be given or time elapse or
both; or
(ii) any action, suit or proceeding by or against the Company at
law or in equity, or before any governmental instrumentality
or agency, instituted or to the knowledge of the Company
threatened which, if adversely determined, would materially
impair the right or ability of the Company to carry on the
business which is contemplated in connection with the Project
or would materially impair the right or ability of the Company
to perform the transactions contemplated by the Loan Documents
or Senior Note Documents, or would materially and adversely
affect the Company's business, operations, properties, assets
or condition; or
17
(iii) the occurrence of a Reportable Event, as defined in ERISA,
under, or the institution of steps by the Company to withdraw
from, or the institution of any steps to terminate, any Plan,
as defined in Section 4.2(d) hereof, as to which the Company
may have liability; or
(iv) any material communication affecting the Project, the Project
Site or the Senior Note Documents, and the Company will
promptly respond fully to any inquiry of the Director made
with respect thereto.
(g) Inspection Rights. At any reasonable time and from time to time
during normal business hours, and with prior notice, permit the
Director, or any agents or representatives thereof, to visit the
location of the Project and discuss the general business affairs of
the Company with any of the Company's officers.
(h) Preference for Ohio Goods and Services. The Company will use its
best efforts to purchase goods and services relating to the Project
from persons, partnerships and corporations located in Ohio.
Section 4.2 Negative Covenants of the Company. Throughout the term of this
Loan Agreement, the Company shall not:
(a) Maintain Existence. Sell, transfer or otherwise dispose of all, or
substantially all, of the Company's assets, consolidate with or
merge into any other entity, or permit one or more entities to
consolidate with or merge into the Company; provided, however, that
the Company may, without violating the agreement contained in this
subsection (a), consolidate with or merge into another corporation,
or permit one or more other corporations to consolidate with or
merge into the Company, or sell, transfer, or otherwise dispose of
all, or substantially all, of its assets and thereafter dissolve,
if: (i) the prior written consent of the Director is obtained, which
consent shall not be unreasonably withheld; (ii) the surviving,
resulting or transferee entity, as the case may be, assumes in
writing all of the respective obligations of the Company hereunder
(if such surviving, resulting or transferee entity is other than the
Company); and (iii) the surviving, resulting or transferee entity,
as the case may be, is an entity duly organized and validly existing
under the laws of the State or duly qualified to do business
therein, and has a net worth of not less than that of the Company
immediately prior to such disposition, consolidation or merger,
transfer or change of form.
(b) Agreements. Enter into any agreement containing any provision which
would be violated or breached by the performance of the Company's
obligations hereunder or under any instrument or document delivered
or to be delivered by the Company hereunder or in connection
herewith.
(c) Assignment, Sale or Lease. In whole or in part, assign this Loan
Agreement or sell, lease or grant the right to occupy or use any
portion of the Project to others,
18
without the prior written consent of the Director, which consent
shall not be unreasonably withheld.
(d) ERISA. Voluntarily terminate any employee benefit plan or other plan
(a "Plan") maintained for employees of the Company and covered by
Title IV of ERISA, so as to result in any material liability of the
Company to the Pension Benefit Guaranty Corporation ("PBGC"), enter
into any Prohibited Transaction (as defined in Section 4975 of the
Internal Revenue Code of 1986, as amended, and in ERISA) involving
any Plan which results in any material liability of the Company to
the PBGC, cause any occurrence of any Reportable Event (as defined
in Title IV of ERISA) which results in any material liability of it
to the PBGC, or allow or suffer to exist any other event or
condition which results in any material liability of the Company to
the PBGC.
(e) Suspension of Operation. Suspend or discontinue operation of the
Project (other than for routine repairs and/or maintenance) without
the prior written consent of the Director.
(f) Encumbered Assets. Without the prior written consent of the
Director, pledge, assign, sell, leaseback, hypothecate or in any
manner encumber the Project Equipment except as follows:
(i) Mortgages, liens, pledges, and security interests in favor of
the Director and the Indenture Trustee and/or Collateral Agent
covering all of the Project Equipment, which mortgages, liens,
pledges, and security interests shall be subject to the terms
and conditions of the Intercreditor Agreement;
(ii) Liens, charges, conditions, or restrictions arising from any
personal property tax abatement agreements; and
(iii) (1) Liens arising from judgments or awards in respect of which
the Company shall in good faith be prosecuting an appeal or
proceedings for review and in respect of which the Company
shall have secured a subsisting stay of execution pending such
appeal or proceedings for review, provided the Company shall
have set aside on the Company's books adequate reserves with
respect to such judgment or award; (2) liens for taxes,
assessments, or governmental charges or levies, provided the
Director shall not have notified the Company in accordance
with Section 4.1(a) hereof with respect to such liens; (3)
deposits, liens or pledges to secure payments of workmen's
compensation, unemployment insurance, pensions or other social
security obligations, public or statutory obligations, surety,
stay or appeal bonds, or other similar obligations arising in
the ordinary course of business; and (4) mechanic's,
workmen's, repairmen's, warehousemen's, vendor's or carriers'
liens, or other similar liens arising in the ordinary course
of business and securing sums which are not past due, or
deposits or pledges to obtain the release of any such
19
liens, provided that the Company shall have complied with
Section 3.2 of the Security Agreement.
(g) Leasebacks. Enter into any arrangements, directly or indirectly,
with any person, whereby the Company shall sell or transfer any
property, whether now owned or hereafter acquired, used or useful in
the Company's business, in connection with the rental or lease of
the property so sold or transferred or of other property which the
Company intends to use for substantially the same purpose or
purposes as the property so sold or transferred.
(h) Change of Business. Enter into any business which is substantially
different from that presently conducted by the Company without the
written consent of the Director, which consent shall not be
unreasonably withheld.
(i) Modification of Senior Note Documents. Enter into any modification,
amendment or alteration of the Senior Note Documents which changes
the outstanding amount of the Senior Notes or which changes the
payment schedule for the Senior Notes without the prior written
consent of the Director.
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20
ARTICLE V
EVENTS OF DEFAULT, REMEDIES AND TERMINATION
Section 5.1 .Events of Default.Each of the following shall be an "Event of
Default":
(a) The Company shall fail to pay any amount payable pursuant to this
Loan Agreement, the Note, any Security Document or any other Loan
Document on the date on which such payment is due and payable, or
within five (5) business days thereafter; or
(b) The Company shall fail to observe and perform any agreement, term or
condition contained in this Loan Agreement or any other Loan
Document, other than as required pursuant to subsection (a) above,
and such failure shall continue for a period of thirty (30) days
after the Company has knowledge thereof; provided, however, that if
the nature of the Company's failure is such that more than thirty
(30) days are reasonably required for its cure, then the Company
shall not be deemed to be in default if the Company commences such
cure as soon as possible within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion; provided,
further that such cure period will not apply to (i) any failure
which in the Director's good faith determination is incapable of
cure, (ii) any failure which has previously occurred, (iii) any
failure to maintain and keep in effect any insurance required by the
Loan Documents, or (iv) any failure to permit the Director to
inspect the Project and/or Project Site, or the books and records of
the Company; or
(c) Any representation or warranty made by the Company, or any of the
Company's officers, herein or in any other Loan Documents, the Loan
Approval Documents or in connection herewith or therewith shall
prove to have been incorrect in any material respect when made; or
(d) The Company shall fail to pay any indebtedness of the Company, or
any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, by acceleration, on demand or
otherwise) and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument
relating to such indebtedness; or any other default under any
agreement or instrument relating to any such indebtedness, or any
other event, shall occur and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit
the acceleration of, the maturity of such indebtedness; or any such
indebtedness shall be declared to be due and payable, or required to
be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; provided that,
the foregoing shall not be deemed to be an Event of Default if, at
the Company's expense and after prior notice to the Director, by
appropriate proceedings diligently prosecuted, the Company contests
in good faith the validity or amount of any of the foregoing items
and during the period of contest, and after notice to the Director,
may permit the items so
21
contested to remain unpaid; provided further that, if at any time
the Director, in the Director's reasonable discretion, shall
instruct the Company to pay any such items and such items are not
paid within three (3) days after notice from the Director, such
failure to pay shall be an Event of Default hereunder; or
(e) The Company commences a voluntary case concerning it under Title 11
of the United States Code entitled "Bankruptcy" as now or hereafter
in effect, or any successor thereto (the "Bankruptcy Code"); or an
involuntary case is commenced against the Company under the
Bankruptcy Code and relief is ordered against the Company, or the
petition is controverted but is not dismissed within sixty (60) days
after the commencement of the case; or the Company is not generally
paying its debts as such debts become due; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of the Company; or the
Company commences any other proceeding under any reorganization,
arrangement, readjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether
now or hereafter in effect; or there is commenced against the
Company any such proceeding which remains undismissed for a period
of sixty (60) days; or the Company is adjudicated insolvent or
bankrupt; or the Company fails to controvert in a timely manner any
such case under the Bankruptcy Code or any such proceeding or any
order of relief or other order approving any such case or proceeding
or in the appointment of any custodian or the like of or for it or
any substantial part of its property or suffers any such appointment
to continue undischarged or unstayed for a period of sixty (60)
days; or the Company makes a general assignment of for the benefit
of creditors; or any action is taken by the Company for the purpose
of effecting any of the foregoing; or a receiver or trustee or arty
other officer or representative of the court or of creditors, or any
court, governmental officer or agency, shall under color of legal
authority, take and hold possession of any substantial part of the
property or assets of the Company for a period in excess of sixty
(60) days; or
(f) A judgment or order for the payment of money in excess of Fifty
Thousand Dollars ($50,000) shall be rendered against the Company and
either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order, or (ii) there shall be any
period of thirty (30) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect; or
(g) The Company fails to meet the Company's minimum funding requirements
under Section 301 et seq. of ERISA, with respect to any of the
Company's Plans; or
(h) Any event of default under the Senior Note Documents shall have
occurred and be continuing.
Section 5.2 Remedies on Default. If any Event of Default shall have
occurred and be continuing, the Director, at any time, at the Director's
election, may exercise any or all or any combination of the remedies conferred
upon or reserved to the Director under this Loan
22
Agreement, the Security Documents, the Note, any other Loan Document or any
instrument or document collateral thereto, or now or hereafter existing at law,
or in equity or by statute. Subject to the foregoing, anyone or more of the
following remedies may be exercised:
(a) If the Loan has not been disbursed, the Director may terminate any
and all of the Director's obligations under this Loan Agreement and
the Commitment;
(b) The Director may declare all payments under the Note to be
immediately due and payable, whereupon the same shall become
immediately due and payable;
(c) The Director may exercise any or all or any combination of the
remedies provided to the Director under this Loan Agreement or any
of the other Loan Documents or any instrument or document collateral
thereto;
(d) The Director may have access to, inspect, examine and make copies of
the books, records, accounts and financial data of the Company;
and/or
(e) The Director may pursue all remedies now or hereafter existing at
law or in equity to collect all amounts then due and thereafter to
become due under this Loan Agreement, the Note, the Security
Documents or any other Loan Document, or to enforce the performance
and observance of any other obligation or agreement of the Company
under the wan Documents, including without limitation, as a secured
party under the Commercial Code (as defined in the Security
Agreement) or other similar laws in effect.
Section 5.3 No Remedy Exclusive. No remedy conferred upon or reserved to
the Director by this Loan Agreement is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Loan Agreement,
the Note, the Security Documents, each other Loan Document, the Intercreditor
Agreement, or now or hereafter existing at law, in equity or by statute. No
delay or omission to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle the Director to exercise any remedy
reserved to it in this Article, it shall not be necessary to give any notice,
other than such notice as may be expressly provided herein or required by law.
Section 5.4 Agreement to Pay Expenses and Attorneys' Fees. If an Event of
Default shall occur and the Director shall incur expenses, including attorney's
fees, in connection with the enforcement of this Loan Agreement, the Note, the
Security Documents, the Intercreditor Agreement, any other Loan Document or the
collection of sums due thereunder, the Company shall reimburse the Director for
the expenses so incurred upon demand. If any such expenses are not so
reimbursed, the amount thereof, together with interest thereon from the date of
demand for payment at the Interest Rate for Advances, shall constitute
additional indebtedness secured by the Security Documents, and in any action
brought to collect such indebtedness or to enforce the Security Documents, the
Director shall be entitled to seek the recovery of such expenses in such action.
23
Section 5.5 No Waiver. No failure by the Director to insist upon the
strict performance by the Company of any provision hereof shall constitute a
waiver of the Director's right to strict performance, and no express waiver
shall be deemed to apply to any other existing or subsequent right to remedy the
failure by the Company to observe or comply with any provision hereof.
24
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 Term of Loan Agreement. This Loan Agreement shall be and
remain in full force and effect from the date of its delivery until (a) the
termination of this Loan Agreement pursuant to Section 5.2(a) hereof, or (b)
such time as the Loan shall have been fully repaid and all other sums payable by
the Company under this Loan Agreement, the Security Documents, the Note and any
other Loan Documents shall have been indefeasibly paid in full.
Section 6.2 Notices. All notices, certificates, requests or other
communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by registered or certified mail, postage prepaid,
or sent by nationally recognized overnight courier service, or sent by facsimile
and confirmed by telephone and in each case addressed to the appropriate Notice
Address. The Company or the Director may, by notice given hereunder, designate
any further or different addresses to which subsequent notices, certificates,
requests or communications shall be sent.
Section 6.3 Extent of Covenants of the Director, No Personal Liability.
All covenants, obligations and agreements of the Director contained in this Loan
Agreement or any other Loan Document shall be effective to the extent authorized
and permitted by applicable law. No such covenant, obligation or agreement shall
be deemed to be a covenant, obligation or agreement of any former, present or
future Director in other than such Director's official capacity acting pursuant
to the Act, an no such Director shall be personally liable or in any way
personally obligated by reason hereof or any responsibility under the Act.
Section 6.4 Binding Effect. This Loan Agreement shall inure to the benefit
of and shall be binding in accordance with its terms upon the Director, the
Company and their respective successors and assigns, provided, however, the
Company may not assign this Loan Agreement or any of the Loan Documents without
the prior written consent of the Director.
Section 6.5 Amendments and Supplements. This Loan Agreement may not be
amended or supplemented except by an instrument in writing executed by the
Director and the Company.
Section 6.6 Execution Counterparts. This Loan Agreement may be executed in
any number of counterparts, each of which shall be regarded as an original and
all of which shall constitute but one and the same instrument.
Section 6.7 Severability. If any provision of this Loan Agreement, or any
covenant, obligation or agreement contained herein is determined by a court to
be invalid or unenforceable, such determination shall not affect any other
provision, covenant, obligation or agreement, each of which shall be construed
and enforced as if such invalid or unenforceable provision were not contained
herein. Such invalidity or unenforceability shall not affect any valid and
enforceable application thereof, and each such provision, covenant, obligation
or agreement, shall be deemed to be effective, operative, made, entered into or
taken in the manner and to the full extent permitted by law.
25
Section 6.8 Captions; Entire Agreement. The captions and headings in this
Loan Agreement shall be solely for convenience of reference and shall in no way
define, limit or describe the scope or intent of any provisions or Sections of
this Loan Agreement. All exhibits and schedules to this Loan Agreement shall be
annexed hereto and shall be deemed to be part of this Loan Agreement. This Loan
Agreement and the other Loan Documents embody the entire agreement and
understanding between the Director and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.
Section 6.9 Interpretation. This Agreement shall be deemed to have been
prepared jointly by the parties hereto and any uncertainty or ambiguity existing
herein shall not be interpreted against any party but shall be interpreted
according to the rules for the interpretation of arm's-length agreements.
Section 6.10 Mutual Waiver of Jury Trial. THE COMPANY AND THE DIRECTOR,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS LOAN
AGREEMENT, THE NOTE, THE SECURITY DOCUMENTS OR ANY RELATED INSTRUMENT OR
AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF
CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER OF
THEM. THIS WAIVER SHALL NOT IN ANY WAY AFFECT THE DIRECTOR'S ABILITY TO PURSUE
REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED
IN THE NOTE, IN THE SECURITY DOCUMENTS OR ANY RELATED INSTRUMENT OR AGREEMENT.
NEITHER THE COMPANY NOR THE DIRECTOR SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM
OR OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS
SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE
COMPANY OR THE DIRECTOR EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY BOTH OF THEM.
Section 6.11 Consent to Jurisdiction/Service of Process. The Company
hereby irrevocably agrees and submits to the exclusive jurisdiction of any state
or federal court located within Franklin County, Ohio, or, at the option of the
Director in its sole discretion, of any state or federal court(s) located within
any other county, state or jurisdiction in which the Director at any time or
from time to time chooses in its sole discretion to bring an action or otherwise
exercise a right or remedy, and the Company irrevocably waives any and all
objections based on forum non conveniens and/or objection to venue of any such
action or proceeding. The Company hereby irrevocably consents that all service
of process be made by certified mail directed to the Company at its address set
forth herein for notice purposes and service so made will be deemed completed
upon the earlier of the Company's actual receipt thereof or three (3) business
days after the same has been deposited in the U.S. Mail, postage prepaid.
Nothing contained herein will prevent the Director from servicing process in any
other manner permitted by law.
26
Section 6.12 Governing Law. This Loan Agreement shall be deemed to be a
contract made under the laws of the State and for all purposes shall be governed
by and construed in accordance with the laws of the State.
Section 6.13 Attorney Review. The terms and conditions of this Loan
Agreement (including all Exhibits) were reviewed by an attorney for the Company,
and said terms and conditions were explained to the appropriate
officers/representatives of the Company who, by their execution hereof, hereby
acknowledged that they fully understand the terms hereof
Section 6.14 Time is of the Essence. Time is of the essence in all
respects hereunder.
[Balance of page intentionally left blank.]
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IN WITNESS WHEREOF, this Loan Agreement has been executed and delivered
all as of the date first hereinbefore written.
THE DIRECTOR OF DEVELOPMENT OF THE STATE
OF OHIO, acting on behalf of the State of Ohio
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chef Legal Counsel
REPUBLIC ENGINEERED PRODUCTS LLC, a
Delaware limited liability company
By: /s/Xxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxxxx, President and CEO
By: /s/Xxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxx, Vice President of Finance and
Controller
28
EXHIBIT A
EXHIBIT A
COGNOVIT
PROMISSORY NOTE
$5,000,000.00 March 20, 2003
FOR VALUE RECEIVED, REPUBLIC ENGINEERED PRODUCTS LLC, a Delaware
limited liability company (the "Company"), 0000 Xxxxxxx Xxxxxxx, Xxxxxxxx, Xxxx
00000, promises to pay to the order of THE DIRECTOR OF DEVELOPMENT OF THE STATE
OF OHIO (the "Director") at 00 Xxxxx Xxxx Xxxxxx, X.X. Xxx 0000, Xxxxxxxx, Xxxx
00000-0000 or at such other address as may be designated in Writing by the
holder, the principal sum of Five Million Dollars ($5,000,000.00), or such
lesser amount as is the Loan Amount as specified under and defined in the Loan
Agreement (the "Loan Agreement") of even date herewith between the Director and
the Company, with interest on the amount of principal from time to time
outstanding from the Disbursement Date, as specified under and defined in the
Loan Agreement, at the rate of three percent (3%) per annum until paid, plus a
service fee equal to one-quarter of one percent (0.25%) per annum on the amount
of principal from time to time outstanding from the Disbursement Date until
paid. Principal payments (but not interest and service fee payments) shall be
deferred from the Disbursement Date up to the second (2nd) anniversary of the
Disbursement Date. The principal of, interest and monthly service fee on this
Note shall be paid in monthly installments as set forth on Exhibit A attached
hereto and made a part hereof, which shall be due and payable on the first day
of each calendar month commencing on the first day of the first calendar month
immediately following the first full calendar month after the Disbursement Date
(the "First Installment Date") and ending on the first day of the calendar month
immediately preceding the fifth (5th) anniversary of the First Installment Date
(the "Last Installment Date"); provided, however, that the amount of the
installment payable on the First Installment Date shall include interest accrued
hereon from the Disbursement Date to the First Installment Date, and that the
amount of the installment payable on the Last Installment Date shall be equal to
the balance of the principal sum then outstanding, together with all interest
accrued thereon.
1. INTEREST RATE. The annual rate of interest stated herein shall
apply to a three hundred sixty (360) day period, and amounts of interest due
hereunder shall be computed upon the basis of thirty (30) day months.
2. PREPAYMENT RIGHT. The Company may prepay all or any portion of
the principal sum hereof at any time without penalty. All such prepayments shall
be applied to the payment of the principal installments due hereon in the
inverse order of their maturity, and shall be accompanied by the payment of
accrued interest on the amount of the prepayment to the date thereof.
3. APPLICATION OF PAYMENTS. Unless the Director elects otherwise,
all payments and other amounts received by the Director shall be credited first
to any charges, costs, expenses and fees due hereunder or payable by the Company
under the Loan Agreement or any other Loan Documents (as defined below); second,
to the monthly service fee(s); third, to accrued but unpaid interest on this
Note; fourth, to the principal amount outstanding; and the balance, if any, to
the Company.
4. NO COMMITMENT FOR DISBURSEMENT. This Note does not constitute
a commitment by the Director to make any disbursement(s) of the Loan (as defined
in the Loan Agreement) to the Company. The conditions for making such
disbursement are set forth in the Loan Agreement. The disbursements made by the
Director to the Company, if any, shall not exceed the face amount of this Note
and the total amount of such disbursements is limited by and subject to the
conditions for making disbursements of the Loan as set forth in the Loan
Agreement.
5. SECURITY AND AGREEMENT. The payment of this Note and all
interest and monthly service fees hereon is secured by the Loan Agreement and a
Security Agreement and Financing Statement (the "Security Agreement") of even
date herewith from the Company to the Director granting the Director a valid,
shared first priority security interest in certain equipment located in Lorain
County, Ohio. The covenants, conditions and agreements contained in the Loan
Agreement and Security Agreement and any and all other documents or instruments
evidencing or securing the Loan (collectively, the "Loan Documents") are hereby
made a part of this Note.
6. DEFAULT. (a) If default be made in the payment of any
installment of principal, interest and monthly service fee under this Note when
any such payment shall have become due and payable, or within five (5) days
thereafter, or if an Event of Default (as defined in any of the Loan Documents)
shall have occurred and be continuing, then, at the option of the Director, the
entire principal sum and all interest accrued hereon shall become due and
payable at once, without demand or notice.
(b) For the period during which a default shall exist in the
payment of any installment of principal, interest and/or monthly service fee due
and payable under this Note, whether by acceleration or otherwise, a late charge
equal to five percent (5%) of each such installment shall be assessed, in
addition to all other sums due hereunder, for each and every month or part
thereof during which such default shall exist.
7. WAIVERS. None of the following shall be a course of dealing,
estoppel, waiver or the like on which any party to this Note or any Loan
Documents may rely: (a) the Director's acceptance of one or more late or partial
payments; (b) the Director's forbearance from exercising any right or remedy
under this Note or any Loan Document; or (c) the Director's forbearance from
exercising any right or remedy under this Note or any Loan Document on anyone or
more occasions. The Director's exercise of any rights or remedies or apart of a
right or remedy on one or more occasions shall not preclude the Director from
exercising the right or remedy at any other time. The Director's rights and
remedies under this Note, the Loan Documents, and at law and in equity are
cumulative to, but independent of, each other.
8. NO RELEASE OF LIABILITY. No obligations of any party to this
Note shall be affected by (a) any default in this Note or any Loan Document when
accepted by the Director or arising any time thereafter; (b) the
unenforceability of or defect in this Note or in any Loan Document or any
interest conveyed by any Loan Document; (c) any decline in the value of any
interest in any property conveyed as security by any Loan Document; or (d) the
insolvency, dissolution, liquidation or winding up of affairs of any party to
this Note or any other Loan Document or the start of insolvency proceedings by
or against any such party. No party to this
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Note or any Loan Document may enforce any right of subrogation or contribution
unless and until this Note is paid in full and waives all rights of subrogation
against my party that is subject to insolvency proceedings.
9. GOVERNING LAW. This Note is made at Columbus, Franklin County,
Ohio and shall be construed under the laws of the State of Ohio.
10. TIME IS OF THE ESSENCE. Time is of the essence in the payment
of this Note. All grace periods in the Loan Agreement and any other Loan
Documents, if any, that apply to a default shall run concurrently.
11. HOLIDAYS. If any installment of this Note becomes due on a day
on which the Department of Development of the State of Ohio is required or
authorized to close, the Company may pay the installment on the next succeeding
day on which the Department of Development of the State of Ohio is open.
12. INDULGENCES. With notice, the Director may do or refrain from
doing anything affecting this Note or any Loan Document, as many times as the
Director desires, including the following (a) granting or not granting any
indulgences to anyone liable for payment of this Note or to anyone liable under
any Loan Document; (b) releasing any security or anyone or any property from
liability on this Note or any Loan Document; and (c) amending this Note or any
Loan Document, including extending the time for payment of this Note.
13. NOTICES. All notices, demands, requests or other
communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by registered or certified mail, postage prepaid,
or sent by nationally recognized overnight courier service, or sent by facsimile
and confirmed by telephone and addressed to the appropriate address set forth in
the introductory paragraph hereof. The Company or the Director may, by notice
given hereunder, designate any further or different addresses to which
subsequent notices, demands, requests or communication shall be sent.
14. REPRESENTATION AND WARRANTY REGARDING BUSINESS PURPOSE. The
Company represents and warrants that the loan evidenced by this Note is for
business purposes and constitutes a business loan as that term is used in
Section 1343.01 of the Ohio Revised Code and is not primarily for personal,
family, household, or agricultural purposes and does not constitute a "consumer
loan" or a "consumer transaction."
15. WAIVER OF DEMANDS. AS TO THIS NOTE, THE SECURITY AGREEMENT AND
ANY OTHER LOAN DOCUMENTS WHICH MAY SECURE THIS NOTE, THE COMPANY IRREVOCABLY
WAIVES TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW ALL APPLICABLE EXEMPTION
RIGHTS, WHETHER UNDER THE STATE CONSTITUTION, HOMESTEAD LAWS OR OTHERWISE, AND
ALSO IRREVOCABLY WAIVES VALUATION AND APPRAISEMENT, PROTEST, PRESENTMENT AND
DEMAND, NOTICE OF PROTEST, DEMAND AND DISHONOR AND NONPAYMENT OF THIS NOTE, AND
EXPRESSLY AGREES THAT THE MATURITY DATE OF THIS NOTE, OR ANY PAYMENT DUE
HEREUNDER, MAY BE EXTENDED FROM TIME TO TIME AND THAT ANY SECURITY HELD FOR
PAYMENT
3
HEREOF MAY BE SUBSTITUTED OR RELEASED AT ANY TIME AND FROM TIME TO TIME WITHOUT
IN ANY WAY AFFECTING THE LIABILITY OF THE COMPANY.
16. ATTORNEYS' FEES AND EXPENSES. The Company shall pay to the
Director all reasonable costs and expenses incurred by the Director in enforcing
or preserving the Director's rights under this Note, the Loan Agreement or any
Loan Document, whether or not an Event of Default has actually occurred or has
been declared and thereafter cured, including but not limited to, (a) attorneys'
and paralegals' fees and disbursements; (b) the fees and expenses of any
litigation, administrative, bankruptcy, insolvency, receivership and any other
similar proceeding; (c) court costs; (d) the expenses of the Director, its
employees, agents, attorneys and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency and other proceedings and for lodging,
travel, and attendance at meetings, hearings, depositions, and trials; and (e)
consulting and witness fees incurred by the Director in connection with any
litigation or other proceeding.
17. ATTORNEY REVIEW. The terms and conditions of this Note were
reviewed by an attorney for the Company, and said terms and conditions were
explained to the appropriate officers/representatives of the Company, who by the
execution hereof, hereby acknowledge that they fully understand the terms
hereof.
18. SEVERABILITY. If any clause, provision, section or article of
this Note is ruled invalid by any court of competent jurisdiction, the
invalidity of such clause, provision, section, or article shall not affect any
of the remaining provisions hereof.
19. ASSIGNMENT. The Company shall not assign its rights nor
delegate its obligations under this Note.
20. MUTUAL WAIVER OF JURY TRIAL. THE COMPANY AND THE DIRECTOR,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WANE ANY RIGHT EITHER OF THEM MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS NOTE, THE
LOAN AGREEMENT, SECURITY AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT, OR
ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER OF THEM. THIS WAIVER
SHALL NOT IN ANY WAY AFFECT THE DIRECTOR'S ABILITY TO PURSUE REMEDIES PURSUANT
TO ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED HEREIN, IN THE
LOAN AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT. NEITHER THE COMPANY NOR
THE DIRECTOR SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION
IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO
HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE COMPANY OR THE DIRECTOR
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY BOTH OF THEM.
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21. CONSENT TO JURISDICTION/SERVICE OF PROCESS. The Company hereby
irrevocably agrees and submits to the exclusive jurisdiction of any state or
federal court located within Franklin County, Ohio, or, at the option of the
Director in its sole discretion, of any state or federal court(s) located within
any other county, state or jurisdiction in which the Director at any time or
from time to time chooses in its sole discretion to bring an action or otherwise
exercise a right or remedy, and the Company irrevocably waives any and all
objections based on forum non conveniens and/or objection to venue of any such
action or proceeding. The Company hereby irrevocably consents that all service
of process be made by certified mail directed to the Company at its address set
forth herein for notice purposes and service so made will be deemed completed
upon the earlier of the Company's actual receipt thereof or three (3) business
days after the same has been deposited in the U.S. Mail, postage prepaid.
Nothing contained herein will prevent the Director from servicing process in any
other manner permitted by law.
22. WARRANT OF ATTORNEY. With full knowledge of all constitutional
rights under the Constitutions of the State of Ohio and the United States of
America, the Company hereby irrevocably authorizes any attorney at law,
including without limitation, any attorney representing the Director, to appear
on the Company's behalf in any court of record in the State of Ohio, or in any
other state or territory of the United States, or in any court of the United
States, after this Note becomes due and payable; to waive the issuing and
service of process and all other constitutional rights to due process of law; to
confess judgment against the Company in favor of the Director for the amount
then appearing due together with the costs of suit; to release all errors; and
to waive all rights of appeal and stays of execution. The Company hereby
consents to the confessing attorney receiving a legal fee from the Director or
any other holder of this Note. The Company voluntarily and knowingly irrevocably
waives (i) any conflict of interest with respect to the attorney confessing
judgment against the Company, and (ii) all rights to notice and hearing prior to
judgment being so confessed against the Company.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
REPUBLIC ENGINEERED PRODUCTS LLC, a
Delaware limited liability company
By: /s/Xxxxxx X. Xxxxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxxxx, President and CEO
By: /s/Xxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxx, Vice President of Finance and
Controller
5
