EXHIBIT 4.1
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SECOND AMENDED AND
RESTATED CREDIT AGREEMENT
XXXX INDUSTRIES, INC.
DATED AS OF
OCTOBER 31, 1997
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SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, made as of the 31st day
of October, 1997, by and between Xxxx Industries, Inc., a Wisconsin corporation,
of Lansing, Michigan ("Company"), and COMERICA Bank, a Michigan banking
corporation, of Detroit, Michigan (herein called "Bank");
RECITALS:
A. Company and Bank entered into an Amended and Restated Revolving Credit
and Term Loan Agreement dated as of January 30, 1995 (the "Existing Agreement").
B. Company and Bank desire to amend and restate the Existing Agreement in
its entirety.
NOW, THEREFORE, Company and Bank agree that the Existing Agreement is
amended and restated in its entirety as follows:
WITNESSETH:
1.A THE INDEBTEDNESS: LINE OF CREDIT
1.A.1 Bank may lend to Company at any time and from time to time from the
effective date hereof until April 1, 1999 sums not to exceed Nine Million
Dollars ($9,000,000) in aggregate principal amount at any one time outstanding.
The borrowings hereunder shall be evidenced by a Line of Credit Note (herein
called "Line Note") in form similar to that annexed hereto as Exhibit "A" under
which advances, repayments and readvances may be made, subject to the terms and
conditions of this Agreement; provided, however, the Bank shall have no
obligation to make any advances with respect to the line of credit.
1.A.2 The principal indebtedness represented by the Line Note and all
interest thereon shall be payable in accordance with the terms of the Line Note.
1.A.3 Bank shall not lend under the Line Note unless Company shall have
first filed with Bank a Request for Advance (as of the
date of the borrowing) in form similar to that annexed hereto as Exhibit "B",
executed by an authorized officer of the Company. Bank may, at its option, lend
under the Line Note upon the telephone request of an authorized employee of the
Company and, in the event Bank makes any such advance upon a telephone request,
the requesting employee shall, if requested by Bank, mail to Bank, on the same
day as such telephone request, a Request for Advance in the form attached as
Exhibit "B".
1.A.4 In addition to advances under the Line Note to be provided to
Company by Bank under and pursuant to Section 1.A.1 of this Agreement, Bank may
issue, or commit to issue, from time to time, standby and trade letters of
credit for the account of Company (herein individually called a "Letter of
Credit" and collectively "Letters of Credit") and enter into foreign exchange
contracts where the total exposure of Bank (as calculated by Bank) does not
exceed Two Million Five Hundred Thousand Dollars ($2,500,000) at any one time in
the aggregate for a Letter of Credit and One Million Dollars ($1,000,000);
provided, however that the sum of the aggregate amount of advances outstanding
under the Line Note plus the undrawn amount of the Letters of Credit (and
unreimbursed drawings thereunder) and foreign exchange exposure shall not exceed
Nine Million Dollars ($9,000,000.00) at any one time; and provided further that
no Letter of Credit shall, by its terms, have an expiration date which extends
beyond April 1,1999. In addition to the terms and conditions of this Agreement,
the issuance of any Letters of Credit shall also be subject to the terms and
conditions of any letter of credit applications and agreements executed and
delivered by Company unto Bank with respect thereto.
1.A.5 Company may prepay the Line Note in accordance with the terms of the
Line Note.
2. TERM CREDIT-A
2.1 Bank agrees to loan to Company and Company agrees to borrow, on the
date of execution of this Agreement, the sum of Three Million Five Hundred
Seventy One Thousand Four Hundred Twenty Eight and 56/100 Dollars
($3,571,428.56). At the time of borrowing, Company agrees to execute a term note
in form similar to that annexed hereto as Exhibit "C" as evidence of the
indebtedness hereunder (herein called "Term Note-A"). The loan under this
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Section 2 shall be subject to the terms and conditions of this Agreement.
2.2 The indebtedness represented by the Term Note-A shall be repaid in
quarterly principal installments of One Hundred Seventy Eight Thousand Five
Hundred Seventy One and 43/100 Dollars ($178,571.43) each, plus interest as set
forth below, commencing on January 1, 1998, and on the 1st day of each
succeeding calendar quarter, until November 1, 2002, when the entire unpaid
balance of principal and interest thereon shall be due and payable. Company
agrees to pay interest on the unpaid principal balance of the Term Note-A from
time to time outstanding at a per annum rate of eight and nineteen one
hundredths percent (8.19%). Upon the occurrence of any default or event of
default hereunder, interest shall accrue on the unpaid principal balance at a
per annum rate equal to the greater of (i) eleven and nineteen one hundredths
percent (11.19%) and three percent (3%) above Bank's Prime Rate. Interest shall
be computed on a daily basis using a year of 360 days and assessed 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. "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.
A late installment charge equal to five percent (5%) of each late
installment may be charged on any installment payment not received by Bank
within ten (10) calendar days after the installment due date but acceptance of
this charge shall not waive any default or event of default under this
Agreement.
2.3 All partial prepayments with respect to the Term Note-A shall be
applied to the Term Note-A in the inverse order of their respective maturities.
The Term Note-A may be prepaid on any principal installment payment date upon
five (5) days written notice to Bank, in whole or in part (in amounts of at
least $100,000) upon payment of a premium equal to the sum of the discounted net
present values of the interest payments that would otherwise be payable on the
principal amount being prepaid, after reducing each such interest payment by the
amount of the interest that would be payable on each interest payment due date
if the principal amount being prepaid were re-invested at the Current Market
Rate therefor plus $500. For these purposes, "Current Market
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Rate" shall mean a per annum interest rate equal to one half percent (1/2%)
above the rate reasonably determined by Bank (based on quotations from
established dealers) to be in effect approximately two days prior to the
repayment date in the secondary market for United States Treasury securities of
a comparable amount and with a comparable term to maturity as the principal
amount being prepaid. For the purposes of computation, the discount rate for
each computation will be the Current Market Rate for the relevant principal
installment. Upon any involuntary prepayment of the Term Note-A, Company shall
pay to Bank a prepayment premium equal to the prepayment premium which would be
due and payable hereunder if Company had voluntarily elected to prepay the Term
Note-A (in an amount equal to such involuntary prepayment) on such date of
involuntary prepayment.
2.4 The proceeds of the Term Note-A shall be used solely to fund a portion
of the purchase price payable by Company under the terms of the Stock Purchase
Agreement dated as of October 31, 1997 by and among Company and the shareholders
of Central Engineering Company ("Stock Purchase Agreement") and to refinance
Company's existing term debt with Bank.
3. TERM CREDIT-B
3.1 Bank agrees to loan to Company and Company agrees to borrow, on the
date of execution of this Agreement, the sum of Four Million Dollars
($4,000,000). At the time of borrowing, Company agrees to execute a term note in
form similar to that annexed hereto as Exhibit "D" as evidence of the
indebtedness hereunder (herein called "Term Note-B"). The loan under this
Section 3 shall be subject to the terms and conditions of this Agreement.
3.2 The indebtedness represented by the Term Note-B shall be repaid in
quarterly principal and interest installments of One Hundred Eighteen Thousand
Six Hundred Twenty Four and 08/100 Dollars ($118,624.08) each, commencing on
January 1, 1998, and on the 1st day of each succeeding calendar quarter, until
November 1, 2002, when the entire unpaid balance of principal and interest
thereon shall be due and payable. Company agrees to pay interest on the unpaid
principal balance of the Term Note-B from time to time outstanding at a per
annum rate of one half percent (1/2%) below Bank's Prime Rate. Interest shall be
payable quarterly on the 1st day of each calendar quarter commencing January 1,
1998. Upon the
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occurrence of any default or event of default hereunder, interest shall accrue
on the unpaid principal balance at a per annum rate equal to two and one half
percent (2-1/2%) above the Prime Rate. Interest shall be computed on a daily
basis using a year of 360 days and assessed 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.
The installment payments are calculated at an assumed fixed interest rate
and an assumed fifteen year amortization term. In the event the Bank's prime
rate changes, the Bank, at its sole option, may from time to time recalculate
the period 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 Term Note-B.
COMPANY AGREES 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 TERM NOTE-B.
A late installment charge equal to five percent (5%) of each late
installment may be charged on any installment payment not received by Bank
within ten (10) calendar days after the installment due date but acceptance of
this charge shall not waive any default or event of default under this
Agreement.
3.3 Company may prepay the Term Note-B in whole or in part without premium
or penalty.
3.4 The proceeds of the Term Note-B shall be used solely to fund a portion
of the purchase price payable by Company under the terms of the Stock Purchase
Agreement.
4. TERM CREDIT-C
4.1 Bank agrees to loan to Company and Company agrees to borrow, on the
date of execution of this Agreement, the sum of Three Million Two Hundred Fifty
Thousand Dollars ($3,250,000). At the time of borrowing, Company agrees to
execute a term note in form similar to that annexed hereto as Exhibit "E" as
evidence of the indebtedness hereunder (herein called "Term Note-C and together
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with the Line Note, Term Note-A and Term Note-B, the "Notes"). The loan under
this Section 4 shall be subject to the terms and conditions of this Agreement.
4.2 The indebtedness represented by the Term Note-C shall be repaid in
quarterly principal installments of Two Hundred Seventy Thousand Eight Hundred
Thirty Three and 33/100 Dollars ($270,833.33) each, plus interest as set forth
below, commencing on January 1, 1998, and on the 1st day of each succeeding
calendar quarter, until November 1, 2000, when the entire unpaid balance of
principal and interest thereon shall be due and payable. Company agrees to pay
interest on the unpaid principal balance of the Term Note-C from time to time
outstanding at a per annum rate of eight and six one hundredths percent (8.06%)
until November 1, 1999 when the interest rate shall be a per annum rate equal to
one half of one percent (1/2%) below Bank's Prime Rate. Upon the occurrence of
any default or event of default hereunder, interest shall accrue on the unpaid
principal balance at a per annum rate equal to the greater of (i) eleven and six
one hundredths percent (11.06%) and three percent (3%) above Bank's Prime Rate.
Interest shall be computed on a daily basis using a year of 360 days and
assessed 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.
A late installment charge equal to five percent (5%) of each late
installment may be charged on any installment payment not received by Bank
within ten (10) calendar days after the installment due date but acceptance of
this charge shall not waive any default or event of default under this
Agreement.
4.3 All partial prepayments with respect to the Term Note-C shall be
applied to the Term Note-A in the inverse order of their respective maturities.
While the interest rate is a fixed rate, the Term Note-C may be prepaid on any
principal installment payment date upon five (5) days written notice to Bank, in
whole or in part (in amounts of at least $100,000) upon payment of a premium
equal to the sum of the discounted net present values of the interest payments
that would otherwise be payable on the principal amount being prepaid, after
reducing each such interest payment by the amount of the interest that would be
payable on each interest payment due date if the principal amount being prepaid
were re-
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invested at the Current Market Rate therefor plus $500. For these purposes,
"Current Market Rate" shall mean a per annum interest rate equal to one half
percent (1/2/0) above the rate reasonably determined by Bank (based on
quotations from established dealers) to be in effect approximately two days
prior to the repayment date in the secondary market for United States Treasury
securities of a comparable amount and with a comparable term to maturity as the
principal amount being prepaid. For the purposes of computation, the discount
rate for each computation will be the Current Market Rate for the relevant
principal installment. Upon any involuntary prepayment of the Term Note-C,
Company shall pay to Bank a prepayment premium equal to the prepayment premium
which would be due and payable hereunder if Company had voluntarily elected to
prepay the Term Note-C (in an amount equal to such involuntary prepayment) on
such date of involuntary prepayment. At all times when the interest rate is a
floating rate, the Term Note-C may be prepaid in the manner set forth in Section
3.3.
4.4 The proceeds of the Term Note-C shall be used solely to fund a portion
of the purchase price payable by Company under the terms of the Stock Purchase
Agreement.
5. INTEREST RATE REDUCTION.
5.1 The interest rates with respect to the Line Note and any other Note
which bears interest at a floating rate shall be reduced by one quarter of one
percent (1/4%) per annum at all times while the following conditions shall have
been satisfied by Company:
(a) The ratio of Debt to Tangible Net Worth is equal to or less than
1.5 to 1.0;
(b) The Leverage Ratio is equal to or less than 2.5 to 1.0 and
(c) The after tax profit for Company and its consolidated subsidiaries
for two consecutive years (beginning with the year ending December
31, 1997) are $2,000,000 or more per year.
5.2 The determination of whether the conditions for reduction have been
satisfied shall be determined based on Company's
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quarterly and year end financial statements and shall be adjusted as of the
first day of the first month following the delivery of such financial statements
indicating that an adjustment to the interest rates is applicable.
6. CONDITIONS
6.1 Company agrees to furnish Bank, prior to the borrowing under this
Agreement, in form and substance satisfactory to Bank, with (i) an opinion of
counsel for Company and the Guarantors (as defined below); (ii) certified copies
of resolutions of the Board of Directors of Company evidencing approval of the
borrowings hereunder; (iii) certified copies of Company's Articles of
Incorporation and Bylaws; and (iv) a certificate of good standing from Company's
state of incorporation and from each state in which its business or operations
requires it to be qualified to do business.
6.2 As security for all indebtedness of Company to Bank hereunder, Company
agrees to furnish, execute and deliver to Bank, or cause to be furnished,
executed and delivered to Bank, prior to or simultaneously with the borrowing
hereunder, in form and substance to be satisfactory to Bank and supported by
appropriate corporate resolutions in certified form authorizing same, the
following:
(a) Guaranty Agreements from Xxxx Composites, Inc., Auto-Air
Composites, Inc., Pollux Acquisition Corporation, H.A.C.
Corporation Xxxx, International, Inc. and Xxxx Commercial
Composites, Inc., Central Engineering Company, Central Engineering
International Co. and Cenco Europe, Inc. (collectively, the
"Guarantors" and individually, a "Guarantor") (collectively, the
"Guaranty Agreements" and individually, a "Guaranty Agreement").
(b) The collateral documents listed in attached Schedule 6.2(b).
6.3 The Company and certain of the Guarantors have executed and delivered
to Bank Security Agreements granting to the Bank a security interest in all of
their respective assets. The Security
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Agreements do not presently secure Company's obligations to Bank under Section
l.A of this Agreement or certain of the obligations of the Guarantors under the
Guaranty Agreements. Company agrees that upon the occurrence of a Collateral
Trigger Event (as defined below) the Security Agreement from Company to Bank
shall automatically and without further action by Company or Bank be deemed to
secure Company's obligations to Bank under Section 1 .A. of this Agreement and
the Line Note.
To the extent that any of the Guarantors has heretofore given a security
interest to Bank in 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.
In addition, following the occurrence of a Collateral Trigger Event, the
Mortgage dated as of September 1, 1990 by Auto-Air Composites, Inc. in favor of
Bank shall be deemed to secure Company's indebtedness to Bank under Section 1.A.
of this Agreement and Auto-Air's obligations to Bank under its Guaranty with
respect to Company's indebtedness to Bank under Section I .A. of this Agreement.
For purposes of this Section 6.3, "Collateral Trigger Event" shall mean
either of the following events (i) if as of any date of determination the ratio
of Debt to Tangible Net Worth (each as defined herein) shall exceed 2.0 to 1.0
or (ii) the occurrence of an event of default under Section 11.1, 11.2 or 11.3
of this Agreement.
6.4 Prior to the borrowing hereunder, Company shall have provided to Bank
evidence satisfactory to Bank of the consummation of the transactions described
in the Stock Purchase Agreement on terms satisfactory to Bank ("Acquisition")
and evidence of satisfaction of the terms set forth in Bank's commitment letter
dated October 24, 1997.
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7. REPRESENTATIONS AND WARRANTIES
Company represents and warrants, and such representations and warranties
shall be deemed to be continuing representations and warranties during the
entire life of this Agreement:
7.1 Company and the Guarantors are corporations duly organized and
existing and in good standing under the laws of their respective states of
incorporation; Company and the Guarantors are duly qualified and authorized to
do business as foreign corporations in each jurisdiction where the character of
their assets or the nature of their activities makes such qualification
necessary; execution, delivery and performance of this Agreement, and any other
documents and instruments required under this Agreement, and the issuance of the
Note by Company are within its corporate powers, have been duly authorized, are
not in contravention of law or the terms of either 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 any other
documents and instruments required under this Agreement, when issued and
delivered under this Agreement, 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 Company, are not in contravention of the unwaived terms of any
indenture, agreement or undertaking to which Company is a party or by which
Company is bound.
7.3 No litigation or other proceeding before any court or administrative
agency is pending, or to the knowledge of the officers of Company is threatened
against Company or any of its subsidiaries, the outcome of which could
materially impair Company's or any of its subsidiaries' financial condition or
ability to carry on its business.
7.4 Company has good and marketable title to all of the properties and
assets reflected on the balance sheets referred to in Section 7.7 hereof and
there are no security interests in, liens, mortgages, or other encumbrances on
any of the Company's assets, except to Bank or as otherwise permitted by this
Agreement.
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7.5 There are no subsidiaries of Company except the Guarantors.
7.6 Company does not maintain or contribute to any employee pension
benefit plan subject to title IV of the "Employee Retirement Income Security Act
of 1974" (herein called "ERISA").
7.7 The financial statements of Company and its consolidated subsidiaries
dated June 30, 1997, previously furnished Bank, are complete and correct and
fairly present the financial condition of Company and its consolidated
subsidiaries, and the results of its and their operations; since said dates
there have been no material adverse changes in the financial condition of
Company and its consolidated subsidiaries; to the knowledge of Company's
officers, neither Company nor any of its subsidiaries has any contingent
obligations (including any liability for taxes) not disclosed by or reserved
against in said balance sheets, and at the present time there are no material
unrealized or anticipated losses from any present commitment of Company or any
of its subsidiaries. The pro forma financial statements of Company and the
Guarantors as of June 30, 1997, previously furnished to Bank, are complete and
correct and fairly present the financial condition of Company and the
Guarantors, and the results of its and their operations; since said date there
have been no material adverse changes in the financial condition of Company and
the Guarantors; to the knowledge of Company's officers, neither Company nor any
of the Guarantors has any contingent obligations (including any liability for
taxes) not disclosed by or reserved against in said balance sheets, and at the
present time there are not material unrealized or anticipated losses from any
present commitment of Company or any of the Guarantors.
7.8 All tax returns and tax reports of Company and its subsidiaries,
required by law to be 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 Company or any of
its subsidiaries (or any of its or their properties) which are due and payable
have been paid. The charges, accruals and reserves on the books of Company and
its subsidiaries in respect of the Federal income tax for all periods are
adequate in the opinion of Company.
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7.9 Company and its subsidiaries are, in the conduct of their businesses,
in compliance with all federal, state or local laws, statutes, ordinances and
regulations applicable to them, the enforcement of which, if they were not in
compliance, would materially adversely affect their business or the value of
their property or assets. 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 businesses as presently conducted, except such approvals,
authorizations, consents, licenses, orders and other permits with respect to
which the failure to have can be cured without having an adverse effect on the
operation of such businesses.
7.10 No representation or warranty by Company in this Agreement, nor any
statement or certificate (including financial statements) furnished or to be
furnished to Bank pursuant hereto contains or will contain any untrue statement
of any fact or omits or will omit to state a fact necessary to make such
representation, warranty, statement or certificate not misleading.
7.11 Bank, upon proper filing of the financing statements described
herein, will have a first priority perfected security interest in the collateral
described in Section 6.2 above, subject only to Permitted Liens and such
perfected security interest will secure all indebtedness of Company to Bank and
the covenants contained herein.
7.12 Neither Company nor any of its subsidiaries is a party to any
litigation or administrative proceeding, nor so far as is known by Company is
any litigation or administrative proceeding threatened against Company or any of
its subsidiaries, which in either case (A) asserts or alleges that Company or
any of its subsidiaries violated Environmental Laws (as defined herein), (B)
asserts or alleges that Company or any of its subsidiaries 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, (C) asserts or alleges that Company or any of its subsidiaries is
required to pay all or a portion of the cost of any past, present, or future
cleanup, removal or remedial or other response action which arises out of or is
related to the disposal, depositing, discharge,
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leaking or other release of any hazardous substances or materials by Company or
any of its subsidiaries.
7.13 To the best knowledge of Company, after due inquiry, there are no
conditions existing currently which would subject Company or any of its
subsidiaries to damages, penalties, injunction relief or cleanup costs under any
applicable Environmental Laws or which require or are likely to require cleanup,
removal, remedial action or other response pursuant to applicable Environmental
Laws by Company or any of its subsidiaries.
7.14 Neither Company nor any of its subsidiaries is subject to any
judgment, decree, order or citation related to or arising out of applicable
Environmental Laws and to the best knowledge of Company, after due inquiry,
neither Company nor any of its subsidiaries 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.
7.15 Company and its subsidiaries have all permits, licenses and approvals
required under applicable Environmental Laws.
8. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that it will, so long as any indebtedness
remains or could become outstanding under this Agreement:
8.1 Furnish Bank:
(a) as soon as available and in any event within one hundred twenty
(120) days after the end of each of Company's fiscal years, a
copy of its consolidated and consolidating financial statements
for each fiscal year including balance sheets as of the end of
such fiscal year and the related statements of income and
retained earnings for such fiscal year, each prepared in
accordance with generally accepted accounting principles and
practices consistently applied and, with respect to such
consolidated statements only, audited by Deloitte & Touche or
other independent certified public accountants reasonably
acceptable to Bank;
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(b) as soon as available and in any event within forty five (45) days
after the end of each of Company's fiscal quarters, a copy of its
consolidating balance sheets and related consolidating statements
of income for such fiscal quarter, each prepared in accordance
with generally accepted accounting principles and practices
consistently applied and certified (subject to year-end audit
adjustments) by an officer of Company; together with a
certification by an officer of Company to the effect that there
has been no event of default under this Agreement and that the
representations and warranties set forth in this Agreement are
true as of the date of such certification;
(c) as soon as available, Company's 10-Q and 10-K Reports filed with
the Federal Securities and Exchange Commission, and as soon as
available, copies of all other documents filed by Company with
the Securities and Exchange Commission or other federal
regulatory or taxing agencies or authorities;
(d) promptly as issued, all press releases, notices to shareholders
and all other material written communications transmitted to the
general public or to the trade or industry in which Company is
engaged;
(e) within forty five (45) days after the end of each fiscal quarter,
an order backlog report, a deferred program cost and tooling
report, each in form satisfactory to Bank;
(f) within forty five (45) days after and as of the end of each
fiscal quarter, an accounts receivable aging report in form
satisfactory to Bank;
(g) from time to time, such further information regarding the
business affairs and financial condition of Company or any of its
subsidiaries as the Bank may reasonably request;
(h) not later than fifteen (15) days prior to the first day of each
fiscal year of Company, an annual budget with respect to such
fiscal year in form satisfactory to Bank
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and specifying all material assumptions on which such budget is
based.
8.2 Preserve and maintain, and cause each of its subsidiaries to preserve
and maintain, corporate existence and such of their rights, licenses and
privileges as are material to their business and operations; and will 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.
8.3 Comply, and cause each of its subsidiaries to 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 the Company or any subsidiary,
except to the extent that compliance with any of the foregoing is then being
contested in good faith and by appropriate legal proceedings and with respect to
which adequate financial reserves have been established.
8.4 Maintain, and cause each of its subsidiaries to maintain, insurance
coverage on their physical assets and against other business risks, in such
amounts and of such types as are customarily carried by companies similar in
size and nature, and in the event of acquisition of additional property, real or
personal, or of the incurrence of additional risks of any nature, increase such
insurance coverage in such manner and to such extent as prudent business
judgment and present practice would dictate. 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 Company (or
Company's subsidiary, as applicable) and the Bank as their respective interests
may appear, all said policies or copies thereof, including all endorsements, to
be deposited with the Bank.
8.5 At any reasonable time and from time to time, upon reasonable notice,
permit, and cause its subsidiaries to permit, the Bank or any agents or
representatives thereof to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of Company and
the subsidiaries, and to discuss the affairs, finances and accounts of the
Company and
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its subsidiaries with any of their officers and key management personnel.
8.6 Keep, and cause its subsidiaries to 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 the Company and its subsidiaries so
as to permit the Company and its subsidiaries to present financial statements
prepared in accordance with generally accepted accounting principles
consistently applied.
8.7 Pay or cause to be paid, and cause its subsidiaries to pay or cause to
be paid, promptly and within the time that they can be paid without interest or
penalty, all taxes, assessments and similar imposts and charges of every kind
and nature lawfully levied, assessed or imposed upon the Company or its
subsidiaries or its or their property except to the extent being contested in
good faith.
8.8 Comply, and cause its subsidiaries to comply, with all requirements
imposed by ERISA as presently in effect or hereafter promulgated including, but
not limited to, the minimum funding requirements of any pension plan adopted by
Company or a subsidiary, as applicable, which is subject to Title IV of ERISA (a
"Pension Plan").
8.9 Promptly notify the Bank upon the occurrence thereof of any of the
following events:
(i) the termination of any Pension Plan pursuant to Subtitle C of
Title IV of ERISA or otherwise;
(ii) the appointment of a trustee by a United States District Court
to administer any Pension Plan;
(iii) the commencement by the Pension Benefit Guaranty Corporation,
or any successor thereto of any proceeding to terminate any
Pension Plan;
(iv) the failure of any Pension Plan to satisfy the minimum funding
requirements for any plan year as established in the Internal
Revenue Code of 1986, as amended;
17
(v) the withdrawal of the Company or any of its subsidiaries from
any Pension Plan; or
(vi) a reportable event, within the meaning of Title IV of ERISA.
8.10 Beginning December 31, 1997, maintain at all times a Tangible Net
Worth of not less than $17,000,000.
"Tangible Net Worth" shall mean total shareholders' equity of Company
and its consolidated subsidiaries as determined in accordance with generally
accepted accounting principles consistently applied ("GAAP") less the amount of
all assets classified as intangible assets (including, without limitation,
covenants not to compete, receivables from affiliates, deferred bond issuance
costs, customer lists, goodwill, trade names, patents, copyrights and
franchises).
8.11 Maintain a ratio of Debt to Tangible Net Worth of not more than 2.0
to 1.0.
"Debt" shall mean all liabilities of Company and its consolidated
subsidiaries as determined in accordance with GAAP.
8.12 On a consolidated statement basis maintain, at all times, a ratio of
current assets to current liabilities, determined in accordance with GAAP, of
not less than 1.4 to 1.0.
8.13 Maintain at all times a Leverage Ratio of not more than 3.0 to 1.0.
"Leverage Ratio" shall mean as of any date of determination a ratio
the numerator of which is all interest bearing debt obligations, letter of
credit liabilities, contingent liabilities not otherwise recorded as a liability
in the Company's financial statements (Including guaranties), capital lease
obligations and obligations secured by liens on assets of Company or any
subsidiary and the denominator of which is EBITDA for the four preceding fiscal
quarters ending on such date of determination.
"EBITDA" shall mean for any period of determination Net Income for
such period plus, to the extent deducted in determining
18
Net Income, interest expense, income taxes and depreciation and amortization
expense for such period.
"Net Income" shall mean the net income (or loss) of Company and its
consolidated subsidiaries for any period determined in accordance with GAAP but
excluding in any event any extraordinary gains or losses and any taxes on the
excluded gains and any tax deductions or credits on account of any excluded
losses.
8.14 Maintain all of its principal bank accounts with Bank.
8.15 On or before March 1, 1998 provide to Bank satisfactory written
environmental assessment reports for all real estate mortgaged to Bank prepared
by a consultant acceptable to the Bank, the contents of which may be disclosed
to governmental agencies and authorities when the Bank believes this to be
required by law. The environmental assessment reports and other information
provided by the Company to the Bank as required in this Section must demonstrate
to the Bank's sole and absolute satisfaction that each Mortgagor is in
compliance with all of the provisions regarding Environmental Laws (as defined
herein) set forth in this Agreement and the applicable mortgage to which it is a
party.
9. NEGATIVE COVENANTS
Company covenants and agrees that so long as any indebtedness remains or
could become outstanding under this Agreement, it will not, and will not allow
any of its subsidiaries to, without the prior written consent of Bank:
9.1 Enter into any merger or consolidation or sell, lease, transfer, or
dispose of all, substantially all, or any material part of its assets. For
purposes of this Section 9.1, with respect to any person, sales or other
dispositions of assets shall not be deemed to be a material disposition of
assets unless such sales or other dispositions, in the aggregate during any
fiscal year of such person, exceed ten percent (10%) of such person's tangible
net worth (determined for such person alone in the manner set worth in Section
8.10).
9.2 Purchase, acquire or redeem any of its capital stock, except to the
extent that the purchase or redemption price does not
19
exceed in the aggregate Two Hundred Fifty Thousand Dollars ($250,000) during any
single fiscal year; make any material change in its capital structure, except
reverse stock splits and the issuance of preferred stock; cease having as its
primary business the design, development and manufacture of composites and other
synthetic materials for the transportation and aerospace industries and other
specialized applications.
9.3 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:
(i) indebtedness to the Bank;
(ii) current unsecured trade, utility or non-extraordinary accounts
payable arising in the ordinary course of the Company's or any
subsidiary's business;
(iii) indebtedness set forth in attached Exhibit "F";
(iv) existing indebtedness to the holders of the Company's 6%
subordinated nonconvertible debentures ("Subordinated Debt"),
excluding any extension or renewal thereof
9.4 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 present
business by acquisition, except for the Acquisition and acquisitions and
purchases for which the purchase price does not exceed Two Hundred Thousand
Dollars ($200,000) in aggregate during any single fiscal year and to the extent
that immediately after such transaction and after giving effect thereto, no
event of default hereunder has occurred or exists.
9.5 Create, incur, assume or suffer to exist any mortgage, pledge,
encumbrance, security interest, lien or charge of any kind (including any charge
upon property purchased under a conditional sales or other title retaining
agreement) upon any of its property
20
or assets whether now owned or hereafter acquired other than in favor of the
Bank and liens and encumbrances set forth in attached Exhibit "G" (collectively,
"Permitted Liens").
9.6 Guarantee or otherwise in any way become or be responsible for
obligations of any other person, whether by agreement to purchase the
indebtedness of any other person through the purchase of goods, supplies, or
services (or by way of stock purchase, capital contribution, advance or loan)
for the purpose of paying or discharging the indebtedness of any other person,
or otherwise, except for (i) the endorsement of negotiable instruments by the
Company or its subsidiaries in the ordinary course of business for collection,
(ii) guaranties to Bank, (iii) unsecured guaranties by Company or any of its
subsidiaries of indebtedness of Company or any of its subsidiaries, as
applicable, to a person other than Bank which is permitted under Section 9.3,
and (iv) guaranties of indebtedness of suppliers in an aggregate amount not
succeeding One Hundred Thousand Dollars ($100,000) at any time outstanding.
9.7 Purchase or hold beneficially any stock or other securities of, or
make any investment or acquire any interest whatsoever in, any other person
except for certificates of deposit with maturities of one year or less of United
States commercial banks and direct obligations of the United States Government
maturing within one year from the date of acquisition thereof and the
investments described in attached Exhibit "H".
9.8 Make loans, advances of credit or extensions of credit to any of its
officer, director or shareholder of the Company or any member of their immediate
families or entity controlled by any of the foregoing or to any other person,
except for (i) sales on open account or in the ordinary course of business, (ii)
loans from Company to the Guarantors and from any Guarantor to Company or
another Guarantor, (iii) advances to suppliers in the ordinary course of
business consistent with past practices, and (iv) loans and advances to officers
and directors of Company and its subsidiaries in an aggregate amount not
exceeding One Hundred Thousand Dollars ($100,000) at any time outstanding.
9.9 Enter into, maintain, or make contribution to, directly or
indirectly, any employee pension plan that is subject to Title IV of ERISA.
21
9.10 Modify or amend any of the documents or instruments evidencing the
Subordinated Debt, purchase any of the Subordinated Debt or make any payment
with respect to the Subordinated Debt following the occurrence of any of the
events of default described in Sections 11.1 through 11.3 hereof or the
occurrence of any event which with the giving of notice or the passage of time
or both would constitute such an event of default.
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 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 Company and each of its subsidiaries shall timely comply with all
applicable Environmental Laws.
10.3 Company shall provide to 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 Company
or any of its subsidiaries or a cleanup, removal, remedial action, or other
similar response by or on the part of Company or any of its subsidiaries under
applicable Environmental Laws or which seeks damages or civil, criminal or
punitive penalties from the Company
22
or any of its subsidiaries for an alleged violation of Environmental Laws.
10.4 Company shall promptly notify Bank in writing as soon as Company
becomes aware of any condition or circumstance which makes the environmental
warranties contained in this Agreement incomplete or inaccurate 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, Company shall, at its sole expense,
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 Bank upon completion.
10.6 At any time Company or any of its subsidiaries, directly or
indirectly through any professional consultant or other representative,
determines to undertake an environmental audit, assessment or investigation,
Company shall promptly provide Bank with written notice of the initiation of the
environmental audit, fully describing the purpose and intended scope of the
environmental audit. Upon receipt, Company will promptly provide to 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 Bank within 60 days following completion of the
preliminary findings and conclusions.
10.7 Company hereby indemnifies, saves and holds 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, due to any acts of Company or any of its
subsidiaries, or any of its or their officers, directors, shareholders,
employees, consultants and/or
23
representatives. In no event shall Company be liable hereunder for any loss,
damages, suits, penalties, costs, liabilities or expenses arising from any act
of negligence of Bank, or its agents or employees.
It is expressly understood and agreed that the indemnifications granted
herein are intended to protect 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 Bank, or under any other document or agreement given to secure
repayment of any indebtedness from Company, whether or not such claims arise
before or after 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 security agreements and mortgage referred to in Section 2 hereof.
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 Company to Bank.
10.8 Company shall maintain all permits, licenses and approvals required
under applicable Environmental Laws.
11. DEFAULTS
11.1 Upon non-payment of the principal or interest due under the terms of
this Agreement or on any of the Notes or other instrument or evidence of
indebtedness outstanding under this Agreement when due in accordance with the
terms thereof and continuance thereof for ten (10) days, the Notes shall
automatically become immediately due and payable and Bank's obligation to make
further advances hereunder shall automatically terminate.
11.2 Upon occurrence of any of the following events of default:
(a) default in the observance or performance of any of the conditions,
covenants or agreements of Company set forth in Sections 6.3, 8.1,
8.4, 8.5, 8.10 through 8.13, 8.14, 8.15 or Section 9 hereof;
24
(b) default in the observance or performance of any of the other
conditions, covenants or agreements of Company herein set forth and
continuance thereof for thirty (30) days after written notice to
Company by Bank;
(c) any representation or warranty made by Company herein or in any
instrument submitted pursuant hereto proves to have been untrue in
any material respect when made;
(d) default in the observance or performance of any of the conditions,
covenants or agreements of Company or any Guarantor set forth in any
collateral document of security which may be given to secure the
indebtedness hereunder or in any other collateral document related to
or connected with this Agreement or the indebtedness hereunder, and
continuation of such default beyond any period of grace specified in
any such document;
(e) default in the payment of any other obligation of Company or any
Guarantor for borrowed money in an amount in excess of One Hundred
Thousand Dollars ($100,000), or in the observance or performance of
any conditions, covenants or agreements related or given with respect
thereto and, in each such case, continuance beyond any applicable
cure period;
(f) judgments for the payment of money in excess of the sum of One
Hundred Thousand Dollars ($100,000) in the aggregate shall be
rendered against Company or any Guarantor, and such judgments shall
remain unpaid, unvacated, unbonded or unstayed by appeal or otherwise
for a period of sixty (60) consecutive days from the date of its
entry;
(g) the occurrence of any "reportable event", as defined in the Employee
Retirement Income Security Act of 1974 and any amendments thereto,
which is determined to constitute grounds for termination by the
Pension Benefit Guaranty Corporation of any employee pension benefit
plan maintained by or on behalf of Company for the benefit of any of
its employees or for the appointment by the appropriate United States
District Court of a trustee to administer such plan and such
25
reportable event is not corrected and such determination is not
revoked within 30 days after notice thereof has been given to the
plan administrator or Company; or the institution of proceeding by
the Pension Benefit Guaranty Corporation to terminate any such
employee benefit pension plan or to appoint a trustee to administer
such plan; or the appointment of a trustee by the appropriate United
States District Court to administer any such employee benefit pension
plan;
(h) the revocation of any Guaranty or any guaranty by Company in favor of
Bank of the obligations of any of its subsidiaries;
(i) default by Company in payment under any guaranty by Company in favor
of Bank of the obligations of any of its subsidiaries;
then, or at any time thereafter, unless such default is first remedied, Bank may
give notice to Company 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 and Bank's commitment, if any, to make advances hereunder shall
automatically terminate.
11.3 If a creditors' committee shall have been appointed for the business
of Company or any Guarantor; or if Company or any Guarantor 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
reorganization; or shall have applied for or permitted the appointment of a
receiver or trustee or custodian for any of its property or 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 Company or any
Guarantor, as applicable) and such receiver, trustee, or custodian so appointed
shall not have been discharged within sixty (60) days after the date of his
appointment; or if an order shall
26
be entered and shall not be dismissed or stayed within sixty (60) days from its
entry, approving any petition for reorganization of Company or any Guarantor;
then the Notes and all indebtedness then outstanding hereunder shall
automatically become immediately due and payable and Bank's commitment, if any,
to make advances hereunder shall automatically terminate.
11.4 Upon the occurrence and during the continuance of any Event of
Default, Company 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 This Agreement shall be binding upon and shall inure to the benefit
of Company and Bank and their respective successors and assigns, except that the
credit provided for under this Agreement and no part thereof and no obligation
of Bank hereunder shall be assignable or otherwise transferable by Company
without the prior written consent of Bank.
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 registered or certified mail, return receipt
requested, to the following:
To Company:
Xxxx Industries, Inc.
0000 Xxxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Treasurer
27
With a copy to:
Xxxxxxx & Xxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
To Bank:
COMERICA Bank
000 X. Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx
Failure of Bank for any reason whatsoever to deliver to Xxxxxxx & Xxxxx a copy
of any notice required hereunder shall in no event affect the validity or
sufficiency for any purpose of any notice given hereunder by Bank to Company.
12.4 Upon 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 except as otherwise provided herein, declare the Notes due
forthwith, take all action, remedial and otherwise, as provided herein or in the
Security Agreement 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.
12.5 This Agreement and the Note shall be governed by, and construed and
enforced in accordance with, Michigan law.
12.6 Company shall pay all closing costs and expenses, including, by way
of description and not limitation, reasonable 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 Company
may, at Bank's option, be charged by Bank as an advance against the proceeds of
the Notes. All costs, including attorney fees, incurred by Bank in reviewing,
revising, protecting or enforcing any of its or any of the Bank's rights against
Company or defending Bank from
28
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 any court or bankruptcy proceedings or arising out of any claim or
action by any person against Bank which would not have been asserted were it not
for Bank's relationship with Company hereunder or otherwise, shall also be paid
by Company.
12.7 No amendments or waiver of any provision of this Agreement nor
consent to any departure by the Company 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 For purposes of this Agreement, "subsidiary" or "subsidiaries" shall
mean all corporations a majority of the voting stock of which is owned by
Company directly, or indirectly, through one or more intermediaries.
12.9 This Agreement shall become effective upon the execution hereof by
Bank and Company.
12.10 COMPANY 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, THE NOTES AND ANY OF THE OTHER DOCUMENTS AND
INSTRUMENTS RELATED THERETO.
29
WITNESS the due execution hereof as of the day and year first above
written.
BANK XXXX INDUSTRIES, INC.
By:_________________________ By:__________________________________
Its:________________________ Its:_________________________________
Attest:______________________________
Its:_________________________________
30
EXHIBIT "A"
-----------
TAX X.X.XX.______________
LINE OF CREDIT NOTE
(Eurodollar Rate)
$9,000,000 Detroit, Michigan
October 31, 1997
On or before April 1, 1999 (herein called the "Maturity Date"), FOR VALUE
RECEIVED, the undersigned, Xxxx Industries, Inc., a Wisconsin corporation
(herein called "Borrower"), promises to pay to the order of COMERICA BANK, a
Michigan banking corporation (herein called "Bank"), in lawful currency of the
United States of America, the principal sum of NINE MILLION DOLLARS
($9,000,000), or so much of said sum as has been advanced and is then
outstanding under this Note, together with interest thereon as hereinafter set
forth.
This Note is a note under which Advances, repayments and re-Advances may be
made from time to time, subject to the terms and conditions of this Note;
provided, however, in no event shall Bank be obligated to make any Advances or
re-Advances hereunder (notwithstanding anything expressed or implied herein or
elsewhere to the contrary).
Each of the Advances made hereunder shall bear interest at the Eurodollar-
based Rate or the Prime-based Rate, as elected by Borrower or as otherwise
determined under this Note.
Accrued and unpaid interest on the unpaid balance of each outstanding
Prime-based Advance shall be payable quarterly, in arrears, commencing on
January 1, 1998, and on the first Business Day of each succeeding quarter
thereafter, until maturity (whether as stated herein, by acceleration, or
otherwise). Interest accruing at the Prime-based Rate shall be computed on the
basis of a year of
360 days, and shall be assessed for the actual number of days elapsed, and in
such computation, effect shall be given to any change in the Applicable Interest
Rate as a result of any change in the Prime-based Rate on the date of each such
change in the Prime-based Rate.
Accrued and unpaid interest on each Eurodollar-based Advance shall be
payable on the last day of the Interest Period applicable thereto (unless sooner
accelerated in accordance with the terms of this Note). Interest accruing at the
Eurodollar-based Rate shall be computed on the basis of a 360 day year and shall
be assessed for the actual number of days elapsed from the first day of the
Interest Period applicable thereto but not including the last day thereof.
From and after the occurrence of any Default hereunder, and so long as any
such Default remains unremedied or uncured thereafter, the Indebtedness
outstanding under this Note shall bear interest at a per annum rate of three
percent (3%) above the otherwise Applicable Interest Rate, which interest shall
be payable upon demand.
The amount and date of each Advance, its Applicable Interest Rate, its
Interest Period, if any, and the amount and date of any repayment shall be noted
on Bank's records, which records shall be conclusive evidence thereof, absent
manifest error; provided, however, any failure by Bank to make any such
notation, or any error in any such notation, shall not relieve Borrower of its
obligations to repay Bank all amounts payable by Borrower to Bank under or
pursuant to this Note, when due in accordance with the terms hereof.
Borrower may request an Advance hereunder, including the refunding of an
outstanding Advance as the same type of Advance or the conversion of an
outstanding Advance as the same type of Advance, upon the delivery to Bank of a
Request for Advance executed by an authorized officer of Borrower, subject to
the following:
(a) no Default, and no condition or event which, with the giving of notice
or the running of time, or both, would constitute a Default, shall have
occurred and be continuing or exist under this Note;
2
(b) each such Request for Advance shall set forth the information required
on the Request for Advance form annexed hereto as Exhibit "A";
(c) each such Request for Advance shall be delivered to Bank by 11:00 a.m.
(Detroit, Michigan time) one (l) Business Day prior to the proposed
date of Advance in the case of Eurodollar-based Advances, and by 11:00
a.m. (Detroit, Michigan time) on the proposed date of Advance in the
case of Prime-based Advances;
(d) the principal amount of each Eurodollar-based Advance shall be at least
Five Hundred Thousand Dollars ($500,000);
(e) the proposed date of any refunding of any outstanding Eurodollar-based
Advance as another Eurodollar-based Advance or the conversion of any
outstanding Eurodollar-based Advance to a Prime-based Advance shall
only be on the last day of the Interest Period applicable to such
outstanding Eurodollar-based Advance; and
(f) a Request for Advance, once delivered to Bank, shall not be revocable
by Borrower; provided, however, as aforesaid, Bank shall not be
obligated to make any Advance under this Note.
If, as to any outstanding Eurodollar-based Advance, Bank shall not receive
a timely Request for Advance in accordance with the foregoing requesting the
refunding of such Advance as a Eurodollar-based Advance, the principal amount of
such Advance which is not then repaid shall be automatically converted to a
Prime-based Advance on the last day of the Interest Period applicable thereto,
subject in all respects to the terms and conditions of this Note. The foregoing
shall not in any way whatsoever limit or otherwise affect any of Bank's rights
or remedies under this Note upon the occurrence of any Default hereunder, or any
condition or event which, with the giving of notice or the running of time, or
both, would constitute a Default.
Borrower may prepay all or part of the outstanding balance of any Prime-
based Advance under this Note at any time. Borrower may prepay all or part of
any Eurodollar-based Advance on the last day
3
of the Interest Period applicable thereto, provided that the aggregate balance
of Eurodollar-based Advances outstanding after such prepayment shall be at least
Five Hundred Thousand Dollars ($500,000), and the unpaid portion of such
Eurodollar-based Advance which is then refunded or converted shall be subject to
the limitations set forth in this Note. Any prepayment made in accordance with
this paragraph shall be without premium or penalty. Any other prepayment shall
be otherwise restricted by and subject to the terms of this Note.
Subject to the definition of an "Interest Period" hereunder, in the event
that any payment under this Note becomes due and payable on any day which is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day, and, to the extent applicable, interest shall continue to accrue
and be payable thereon during such extension at the rates set forth in this
Note.
All payments to be made by Borrower to Bank under or pursuant to this Note
shall be in immediately available funds, without setoff or counterclaim, and in
the event that any payments submitted hereunder are in funds not available until
collected, said payments shall continue to bear interest until collected.
Borrower hereby authorizes Bank to charge any account of Borrower with Bank for
all sums due hereunder when due in accordance with the terms hereof.
If Borrower makes any payment of principal with respect to any Eurodollar-
based Advance on any day other than the last day of the Interest Period
applicable thereto (whether voluntarily, by acceleration, or otherwise), or if
Borrower fails to borrow any Eurodollar-based Advance after notice has been
given by Borrower to Bank in accordance with the terms of this Note requesting
such Advance, or if Borrower fails to make any payment of principal or interest
in respect of a Eurodollar-based Advance when due, Borrower shall reimburse
Bank, on demand, for any resulting loss, cost or expense incurred by Bank as a
result thereof, including, without limitation, any such loss, cost or expense
incurred in obtaining, liquidating, employing or redeploying deposits from third
parties, whether or not Bank shall have funded or committed to fund such
Advance. Such amount payable by Borrower to Bank may include, without
limitation, an amount equal to the excess, if any, of (a) the amount of interest
which would have accrued on the
4
amount so prepaid, or not so borrowed, refunded or converted, for the period
from the date of such prepayment or of such failure to borrow, refund or
convert, through the last day of the relevant Interest Period, at the applicable
rate of interest for said Advance(s) provided under this Note, over (b) the
amount of interest (as reasonably determined by Bank) which would have accrued
to Bank on such amount by placing such amount on deposit for a comparable period
with leading banks in the interbank eurodollar market. Calculation of any
amounts payable to Bank under this paragraph shall be made as though Bank shall
have actually funded or committed to fund the relevant Eurodollar-based Advance
through the purchase of an underlying deposit in an amount equal to the amount
of such Advance and having a maturity comparable to the relevant
Interest Period; provided, however, that Bank may fund any Eurodollar-based
Advance in any manner it deems fit and the foregoing assumptions shall be
utilized only for the purpose of the calculation of amounts payable under this
paragraph. Upon the written request of Borrower, Bank shall deliver to Borrower
a certificate setting forth the basis for determining such losses, costs and
expenses, which certificate shall be conclusively presumed correct, absent
manifest error.
For any Eurodollar-based Advance, if Bank shall designate a Eurodollar
Lending Office which maintains books separate from those of the rest of Bank,
Bank shall have the option of maintaining and carrying such Advance on the books
of such Eurodollar Lending Office.
If, with respect to any Interest Period, Bank determines that, (a) by
reason of circumstances affecting the foreign exchange and interbank markets
generally, deposits in Eurodollars in the applicable amounts or for the relative
maturities are not being offered to Bank for such Interest Period, or (b) if the
rate of interest referred to in the definition of "Eurodollar based Rate" upon
the basis of which the rate of interest for a Eurodollar-based Advance is to be
determined does not accurately or fairly cover or reflect the cost to Bank of
making or maintaining a Eurodollar-based Advance hereunder, then Bank shall
forthwith give notice thereof to the Borrower. Thereafter, until Bank notifies
Borrower that such conditions or circumstances no longer exist, the right of
Borrower to request a Eurodollar-based Advance and to convert an
5
Advance to or refund an Advance as a Eurodollar-based Advance shall be
suspended.
If, after the date hereof, the introduction of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by Bank (or its Eurodollar Lending Office)
with any request or directive (whether or not having the force of law) of any
such authority, shall make it unlawful or impossible for the Bank (or its
Eurodollar Lending Office) to make or maintain any Advance with interest at the
Eurodollar-based Rate, Bank shall forthwith give notice thereof to Borrower.
Thereafter, (a) until Bank notifies Borrower that such conditions or
circumstances no longer exist, the right of Borrower to request a Eurodollar-
based Advance and to convert an Advance to or refund an Advance as a Eurodollar-
based Advance shall be suspended, and thereafter, Borrower may select only the
Prime-based Rate as the Applicable Interest Rate hereunder, and (b) if Bank may
not lawfully continue to maintain an outstanding Advance to the end of the then
current Interest Period applicable thereto, the Prime based Rate shall be the
Applicable Interest Rate for the remainder of such Interest Period with respect
to such outstanding Advance.
If the adoption after the date hereof, or any change after the date hereof
in, any applicable law, rule or regulation of any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Bank (or its Eurodollar Lending Office)
with any request or directive (whether or not having the force of law) made by
any such authority, central bank or comparable agency after the date hereof:
(a) shall subject Bank (or its Eurodollar Lending Office) to any tax, duty
or other charge with respect to this Note or any Advance hereunder or
shall change the basis of taxation of payments to Bank (or its
Eurodollar Lending Office) of the principal of or interest on any
Advance or any other amounts due under this Note in respect thereof
(except for changes in the rate of tax on the overall net income of
Bank or its Eurodollar Lending Office imposed by the jurisdiction in
which Bank's principal executive office or Eurodollar Lending Office is
located); or
6
(b) shall impose, modify or deem applicable any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by Bank (or
its Eurodollar Lending Office) or shall impose on Bank (or its
Eurodollar Lending Office) or the foreign exchange and interbank
markets any other condition affecting any Advance under this Note;
and the result of any of the foregoing is to increase the cost to Bank of
maintaining any part of the indebtedness hereunder or to reduce the amount of
any sum received or receivable by Bank under this Note by an amount deemed by
the Bank to be material, then Borrower shall pay to Bank, within fifteen (15)
days of Borrower's receipt of written notice from Bank demanding such
compensation, such additional amount or amounts as will compensate Bank for such
increased cost or reduction. A certificate of Bank, prepared in good faith and
in reasonable detail by Bank and submitted by Bank to Borrower, setting forth
the basis for determining such additional amount or amounts necessary to
compensate Bank shall be conclusive and binding for all purposes, absent
manifest error in computation.
In the event that any applicable law, treaty, rule or regulation (whether
domestic or foreign) now or hereafter in effect and whether or not presently
applicable to Bank, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by Bank with any guideline, request or directive of any
such authority (whether or not having the force of law), including any risk-
based capital guidelines, affects or would affect the amount of capital required
or expected to be maintained by Bank (or any corporation controlling Bank), and
Bank determines that the amount of such capital is increased by or based upon
the existence of any obligations of Bank hereunder or the making or maintaining
any Advances hereunder, and such increase has the effect of reducing the rate of
return on Bank's (or such controlling corporation's) capital as a consequence of
such obligations or the making or maintaining of such Advances hereunder to a
level below that which Bank (or such controlling corporation) could have
achieved but for such circumstances (taking into consideration its policies with
respect to capital adequacy), then
7
Borrower shall pay to Bank, within fifteen (15) days of Borrower's receipt of
written notice from Bank demanding such compensation, additional amounts as are
sufficient to compensate Bank (or such controlling corporation) for any increase
in the amount of capital and reduced rate of return which Bank reasonably
determines to be allocable to the existence of any obligations of the Bank
hereunder or to the making or maintaining any Advances hereunder. A certificate
of Bank as to the amount of such compensation, prepared in good faith and in
reasonable detail by the Bank and submitted by Bank to Borrower, shall be
conclusive and binding for all purposes absent manifest error in computation.
This Note and any other indebtedness and liabilities of any kind of
Borrower to Bank, and any and all modifications, renewals or extensions thereof,
whether joint or several, contingent or absolute, direct or indirect, now
existing or later arising, and however evidenced (collectively the
"Indebtedness"), are secured by and Bank is granted a security interest in all
items at any time deposited in any account of Borrower with Bank and by all
proceeds of these items (cash or otherwise), all account balances of Borrower
from time to time with Bank, by all property of Borrower from time to time in
the possession of Bank, and by any other collateral, rights and properties
described in each and every mortgage, security agreement, pledge, assignment and
other security or collateral agreement which has been, or will at any time(s)
later be, executed by Borrower or others to or for the benefit of Bank
(collectively the "Collateral").
If Borrower or any guarantor under a guaranty of all or part of the
Indebtedness ("guarantor") (a) fail(s) to pay this Note, or any part thereof, or
any of the Indebtedness when due, by maturity, acceleration or otherwise, or
fail(s) to pay any Indebtedness owing on a demand basis upon demand; or (b)
fail(s) to comply with any of the terms or provisions of any agreement between
Borrower or any guarantor and Bank; or (c) become(s) insolvent or the subject of
a voluntary or involuntary proceeding in bankruptcy, or a reorganization,
arrangement or creditor composition proceeding, (if a business entity) cease(s)
doing business as a going concern, (if a natural person) die(s) or become(s)
incompetent, (if a partnership) dissolve(s) or any general partner of it dies,
becomes incompetent or becomes the subject of a bankruptcy proceeding, or (if a
corporation) is the subject of a dissolution, merger or consolidation; or (d) if
any warranty or representation made by
8
Borrower or any guarantor in connection with this Note or any of the
Indebtedness shall be discovered to be untrue or incomplete in any material
respect; (e) or if there is any termination, notice of termination, or breach of
any guaranty, pledge, collateral assignment or subordination agreement relating
to all or any part of the Indebtedness; or (f) if there is any failure by
Borrower or any guarantor to pay, when due, any of its indebtedness (other than
to the Bank) or in the observance or performance of any term, covenant or
condition in any document evidencing, securing or relating to such indebtedness;
or (g) if Bank deems itself insecure, believing in good faith that the prospect
of payment or performance of this Note or any of the Indebtedness is materially
impaired or shall fear deterioration, removal or waste of any of the Collateral;
or (h) if there is filed or issued a levy or writ of attachment or garnishment
or other like judicial process upon Borrower or any guarantor or any of the
Collateral, including, without limit, any accounts of Borrower or any guarantor
with Bank, then Bank, upon the occurrence and at any time during the continuance
or existence of any of these conditions or events (each a "Default"), may at its
option and without prior notice to Borrower, declare any or all of the
Indebtedness to be immediately due and payable (notwithstanding any provisions
contained in the evidence of it to the contrary), sell or liquidate all or any
portion of the Collateral, set off against the Indebtedness any amounts owing by
Bank to Borrower, and exercise any one or more of the rights and remedies
granted to Bank by any agreement with Borrower given to it under applicable law,
or otherwise.
Borrower waives presentment, demand, protest, notice of dishonor, notice of
demand or intent to demand, notice of acceleration or intent to accelerate, and
all other notices, and agrees that no extension or indulgence to Borrower, or
release, substitution or nonenforcement of any security, or release or
substitution of any guarantor or any other party, whether with or without
notice, shall affect the obligations of Borrower. Borrower waives all defenses
or right to discharge available under Section 3-605 of the Uniform Commercial
Code and waives all other suretyship defenses or right to discharge. Borrower
agrees that Bank has the right to sell, assign, or grant participations, or any
interest, in any or all of the Indebtedness, and that, in connection with such
right, but without limiting its ability to make other disclosures to the full
extent allowable, Bank may
9
disclose all documents and information which the Bank now or later has relating
to Borrower and the Indebtedness.
Borrower agrees to reimburse Bank, or any other holder or owner of this
Note, for any and all costs and expenses (including, without limit, court costs,
legal expenses and reasonable attorneys' fees, whether inside or outside counsel
is used, whether or not suit is instituted, and, if suit is instituted, whether
at the trial court level, appellate level, in a bankruptcy, probate or
administrative proceeding or otherwise) incurred in collecting or attempting to
collect this Note or the Indebtedness or incurred in any other matter or
proceeding relating to this Note or the Indebtedness.
Borrower acknowledges and agrees that there are no contrary agreements,
oral or written, establishing a term of this Note and agrees that the terms and
conditions of this Note may not be amended, waived or modified except in a
writing signed by a duly authorized officer of Bank expressly stating that the
writing constitutes an amendment, waiver or modification of the terms of this
Note. If any provision of this Note is unenforceable in whole or part for any
reason, the remaining provisions shall continue to be effective. THIS NOTE SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MICHIGAN.
This Note shall bind Borrower and Borrower's respective successors and
assigns.
For the purposes of this Note, the following terms have the following
meanings:
"Advance" means a borrowing requested by Borrower and made by Bank under
this Note, including any refunding of an outstanding Advance as the same type of
Advance or the conversion of any such outstanding Advance to another type of
Advance, and shall include a Eurodollar-based Advance and a Prime-based Advance.
"Applicable Interest Rate" means the Eurodollar-based Rate or the Prime-
based Rate, as selected by Borrower from time to time or as otherwise determined
in accordance with the terms and conditions of this Note.
10
"Business Day" means any day, other than a Saturday, Sunday or holiday, on
which Bank is open for all or substantially all of its domestic and
international business (including dealings in foreign exchange) in Detroit,
Michigan.
"Eurodollar-based Advance" means an Advance which bears interest at the
Eurodollar based Rate.
"Eurodollar-based Rate" means a per annum interest rate which is equal to
the sum of two and ten-hundredths percent (2.10%), plus the quotient of:
(a) the per annum interest rate at which Bank's Eurodollar Lending Office
offers deposits to prime banks in the eurodollar market in an amount
comparable to the relevant Eurodollar-based Advance and for a period
equal to the relevant Interest Period at or about 11:00 a.m. (Detroit,
Michigan time) (or as soon thereafter as practical) one (l) Business
Day prior to the first day of such Interest Period;
divided by
(b) a percentage equal to 100% minus the maximum rate during such Interest
Period at which Bank is required to maintain reserves on "Euro-currency
Liabilities" as defined in and pursuant to Regulation D of the Board of
Governors of the Federal Reserve System or, if such regulation or
definition is modified, and as long as Bank is required to maintain
reserves against a category of liabilities which includes eurodollar
deposits or includes a category of assets which includes eurodollar
loans, the rate at which such reserves are required to be maintained on
such category.
"Eurodollar Lending Office" means Bank's office located in the Cayman
Islands, British West Indies, or such other branch of Bank, domestic or foreign,
as it may hereafter designate as its Eurodollar Lending Office by notice to
Borrower.
11
"Interest Period" means a period of one (1) to ninety (90) days, as
selected by Borrower pursuant to the terms of this Note, commencing on the day a
Eurodollar-based Advance is made, provided that:
(a) any Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day,
except that if the next succeeding Business Day falls in another
calendar month, the Interest Period shall end on the next preceding
Business Day, and when an Interest Period begins on a day which has no
numerically corresponding day in the calendar month during which such
Interest Period is to end, it shall end on the last Business Day of
such calendar month, and
(b) no Interest Period shall extend beyond the Maturity Date.
"Prime-based Advance" shall mean an Advance which bears interest at the
Prime-based Rate.
"Prime Rate" means 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.
"Prime-based Rate" shall mean a per annum interest rate which is equal to
the Prime Rate minus one-half of one percent (l/2%).
"Request for Advance" means a Request for Advance issued by Borrower under
this Note in the form annexed to this Note as Exhibit "A".
Borrower agrees to make all payments to Bank of any and all amounts due and
owing by Borrower to Bank hereunder, including, without limitation, the payment
of principal and interest on any Advance, on the date provided for such payment,
in United States Dollars in immediately available funds, at the office of Bank
located at Tower at Detroit Center, 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000, or such other address as Bank may notify Borrower in writing.
12
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, whether by other instruments or by law.
BORROWER 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 NOTE OR THE INDEBTEDNESS HEREUNDER.
This Note replaces a Note dated September 29, 1995, as amended, by Borrower
payable to Bank.
XXXX INDUSTRIES, INC.
By:__________________________________
Its:_________________________________
13
EXHIBIT "B"
-----------
REQUEST FOR ADVANCE
TO: BANK (the "Bank")
The undersigned hereby request(s) an advance in the amount of
_____________________________ DOLLARS ($________________) against the Promissory
Note dated October 31, 1997, of undersigned to the Bank in the face amount of
Nine Million Dollars ($9,000,000).
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 Second Amended and Restated Credit Agreement dated as of October 31,
1997, by and between undersigned and the Bank.
Dated this _____ day of __________________, 19__.
XXXX INDUSTRIES, INC.
By:__________________________________
Its:_________________________________
EXHIBIT "C"
-----------
TERM NOTE-A
-----------
$3,571,428.56 Detroit, Michigan
Dated: October 31, 1997
FOR VALUE RECEIVED, Xxxx Industries, Inc., a Wisconsin corporation (herein
called "Company") promises to pay to the order of Bank, a Michigan banking
corporation, (herein called "Bank"), at its Main Office at 000 Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, the principal sum of Three Million Five Hundred Seventy
One Thousand Four Hundred Twenty Eight and 56/100 Dollars ($3,571,428.56) in
lawful money of the United States of America payable in quarterly installments
of principal of One Hundred Seventy Eight Thousand Five Hundred Seventy One and
43/100 Dollars ($178,571.43) each, commencing on January 1,1998, and on the
first day of each calendar quarter thereafter until November 1, 2002, when the
entire unpaid balance of principal and interest thereon shall be due and
payable, together with interest thereon as hereinafter set forth.
Company shall pay interest on the indebtedness outstanding under this Note
from time to time at the per annum rate equal to eight and nineteen one
hundredths percent (8.19%). Upon the occurrence of any event of default
described in the Loan Agreement (as defined below) and maturity of the
indebtedness hereunder (whether at stated maturity or by acceleration), interest
shall accrue on the unpaid principal balance at a per annum rate as provided in
the Loan Agreement referred to below. Interest shall be payable quarterly
commencing on the 1st day of January, 1998 and on the first day of each calendar
quarter thereafter. Interest shall be computed on a daily basis using a year of
360 days and assessed 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.
"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 evidences indebtedness incurred by Company under, is secured
pursuant to, may be matured as set forth in, and shall be prepaid in accordance
with, the Second Amended and Restated Credit Agreement entered by and between
Company and Bank dated as of October 31, 1997 ("Loan Agreement"), the terms and
conditions of which are hereby incorporated herein. Upon an event of default, as
described 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.
As additional security, Bank is granted a lien on all property and assets
(including deposits and other credits) of Company at any time in possession or
control (or owing by) Bank for any purpose.
If the interest and principal hereof are not fully paid at maturity hereof
(whether by demand or otherwise), Company 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 Company and 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 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 Company to Bank, (whether or not then due and payable) and not to the
payment of interest.
2
This Note replaces a Term Note dated September 29, 1995 in the original
principal amount of $3,600,000 by Company payable to Bank.
Company hereby waives 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.
Notwithstanding anything herein to the contrary, nothing shall limit any rights
granted Bank by other instruments or by law.
XXXX INDUSTRIES, INC.
By:__________________________________
Its:_________________________________
Attest:______________________________
Its:_________________________________
3
EXHIBIT "D"
-----------
TERM NOTE-B
-----------
$4,000,000 Detroit, Michigan
Dated: October 31 , 1997
FOR VALUE RECEIVED, Xxxx Industries, Inc., a Wisconsin corporation (herein
called "Company") promises to pay to the order of Bank, a Michigan banking
corporation, (herein called "Bank"), at its Main Office at 000 Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, the principal sum of Four Million Dollars ($4,000,000)
in lawful money of the United States of America payable in quarterly
installments of principal and interest of One Hundred Eighteen Thousand Six
Hundred Twenty Four and 08/100 Dollars ($118,624.08) each, commencing on January
1, 1998, and on the first day of each calendar quarter thereafter until November
1, 2002, when the entire unpaid balance of principal and interest thereon shall
be due and payable, together with interest thereon as hereinafter set forth.
Company shall pay interest on the indebtedness outstanding under this Note
from time to time at the per annum rate equal to one half of one percent (1/2%)
below Bank's Prime Rate. Upon the occurrence of any event of default described
in the Loan Agreement (as defined below) and maturity of the indebtedness
hereunder (whether at stated maturity or by acceleration), interest shall accrue
on the unpaid principal balance at a per annum rate of three percent (3%) above
Bank's Prime Rate. Interest shall be payable quarterly commencing on the 1st day
of January, 1998 and on the first day of each calendar quarter thereafter.
Interest shall be computed on a daily basis using a year of 360 days and
assessed 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. "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 evidences indebtedness incurred by Company under, is secured
pursuant to, may be matured as set forth in, and shall be prepaid in accordance
with, the Second Amended and Restated Credit Agreement entered by and between
Company and Bank dated as of October 31, 1997 ("Loan Agreement"), the terms and
conditions of which are hereby incorporated herein. Upon an event of default, as
described 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.
As additional security, Bank is granted a lien on all property and assets
(including deposits and other credits) of Company at any time in possession or
control (or owing by) Bank for any purpose.
If the interest and principal hereof are not fully paid at maturity
hereof(whether by demand or otherwise), Company 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 Company and 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 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 Company to Bank, (whether or not then due and payable) and not to the
payment of interest.
Company hereby waives 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
2
guarantor or other person or by the release or non-enforcement of any security
or guaranty given in connection herewith. Notwithstanding anything herein to the
contrary, nothing shall limit any rights granted Bank by other instruments or by
law.
XXXX INDUSTRIES, INC.
By:__________________________________
Its:_________________________________
Attest:______________________________
Its:_________________________________
3
EXHIBIT "E"
-----------
TERM NOTE-C
-----------
$3,250,000 Detroit, Michigan
Dated: October 31, 1997
FOR VALUE RECEIVED, Xxxx Industries, Inc., a Wisconsin corporation (herein
called "Company") promises to pay to the order of Bank, a Michigan banking
corporation, (herein called "Bank"), at its Main Office at 000 Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, the principal sum of Three Million Two Hundred Fifty
Thousand Dollars ($3,250,000) in lawful money of the United States of America
payable in quarterly installments of principal of Two Hundred Seventy Thousand
Eight Hundred Thirty Three and 33/100 Dollars ($270,833.33) each, commencing on
January 1, 1998, and on the first day of each calendar quarter thereafter until
November 1, 2000, when the entire unpaid balance of principal and interest
thereon shall be due and payable, together with interest thereon as hereinafter
set forth.
Company shall pay interest on the indebtedness outstanding under this Note
from time to time at the per annum rate equal to eight and six one hundredths
percent (8.06%) until November 1, 1999 when the interest rate shall be a per
annum rate equal to one half of one percent (1/2%) below Bank's Prime Rate. Upon
the occurrence of any event of default described in the Loan Agreement (as
defined below) and maturity of the indebtedness hereunder (whether at stated
maturity or by acceleration), interest shall accrue on the unpaid principal
balance at a per annum rate as provided in the Loan Agreement referred to below.
Interest shall be payable quarterly thereafter. Interest shall be computed on a
daily basis using a year of 360 days and assessed 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. "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 evidences indebtedness incurred by Company under, is secured
pursuant to, may be matured as set forth in, and shall be prepaid in accordance
with, the Second Amended and Restated Credit Agreement entered by and between
Company and Bank dated as of October 31, 1997 ("Loan Agreement"), the terms and
conditions of which are hereby incorporated herein. Upon an event of default, as
described 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.
As additional security, Bank is granted a lien on all property and assets
(including deposits and other credits) of Company at any time in possession or
control (or owing by) Bank for any purpose.
If the interest and principal hereof are not fully paid at maturity hereof
(whether by demand or otherwise), Company 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 Company and 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 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 Company to Bank, (whether or not then due and payable) and not to the
payment of interest.
2
Company hereby waives 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.
Notwithstanding anything herein to the contrary, nothing shall limit any rights
granted Bank by other instruments or by law.
XXXX INDUSTRIES, INC.
By: _________________________________
Its: ________________________________
Attest: _____________________________
Its: ________________________________
3
EXHIBIT "F"
-----------
PERMITTED DEBT
--------------
(a) Purchase money indebtedness for the acquisition of fixed assets in an
aggregate amount not exceeding One Hundred Thousand Dollars ($100,000) for each
such transaction;
(b) Other purchase money indebtedness for the acquisition of fixed assets and
indebtedness for the construction of new facilities incurred by Company or its
subsidiaries; provided, however, such indebtedness shall not be permitted unless
Bank shall have been given the first option to extend such credit facilities to
Company or the subsidiaries, as applicable, on substantially the same or better
terms as offered by another lender;
(c) Indebtedness of Company to any of the Guarantors and indebtedness of any
Guarantor to Company or the other Guarantor;
(d) (i) Indebtedness of H.A.C. Corporation to Bank Of The West to finance
building construction in the amount of $547,579.
(ii) Indebtedness of H.A.C. Corporation to Business Credit Leasing for a
capitalized lease of a Torrit Dust Collector totaling $31,078.
(iii) Indebtedness of H.A.C. Corporation to Border State Leasing for a
capitalized lease of a Canon NP 780 reader/printer totaling $3,696.
(iv) Indebtedness of H.A.C. Corporation to Ikon Capital for a capitalized
lease of a Sharp 9800 copy machine totaling $9,863.
(e) An unsecured line of credit to Company in an amount not to exceed Nine
Million Dollars ($9,000,000.00); provided, however, such indebtedness shall not
be permitted unless while no default under this Agreement exists, Bank declines
to renew or extend
Company's line of credit under Section 1A of this Agreement at the stated
maturity thereof on substantially similar terms as now existing or terms more
favorable to Company.
(f) Indebtedness of Auto-Air Composites, Inc. to Fifth Third Bank for a
capitalized lease of a Remanufactured 2 axis 56" Xxxxxxx VTL Series 18TB CNC
system totaling $159,865.
(g) Indebtedness of Auto-Air Composites, Inc. to Fifth Third Bank for a
capitalized lease of a Manufacturing Resource Planning System, Visual
Manufacturing totaling $80,294.
(h) Indebtedness of Xxxx Composites, Inc. to Leasetec Corporation for a
capitalized lease of a Catia Engineering Computer Station and 174-F Advance
Designer software totaling $35,042.
(i) Indebtedness of Central Engineering Company to American Express for various
business credit card line of credit.
2
EXHIBIT "G"
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PERMITTED LIENS
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(a) Liens for taxes, assessments, or governmental charges, or the unpaid
installments thereof and liens incident to construction, which are either not
delinquent or are being contested in good faith; and
(b) Easements, restrictions, minor title irregularities and similar
matters which have no material adverse effect as a practical matter upon the
ownership and use of the affected property; and
(c) Liens or deposits in connection with workmen's compensation or other
insurance or to secure customs' duties, public or statutory obligations in lieu
of surety, stay or appeal bonds, or to secure performance of contracts or bids
(other than contracts for the payment of borrowed money) or deposits required by
law as a condition to the transaction of business or other liens or deposits of
a like nature made in the ordinary course of business; and
(d) Purchase money security interests in fixed assets to secure the
purchase money indebtedness permitted under this Agreement, provided that each
such security interest is created substantially contemporaneously with the
acquisition of such fixed assets and does not extend to any property other than
the fixed asset so financed; and
(e) Liens in existence as of September 1, 1990; and
(f) Liens to secure construction indebtedness or debt used to finance
acquisition of new facilities, provided that each such security interest or lien
is created substantially contemporaneously with the acquisition of such fixed
assets or construction of facilities and does not extend to any property other
than the fixed asset so financed or the property being constructed.
EXHIBIT "H"
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PERMITTED INVESTMENTS
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(a) Investments in obligations of a governmental body, rated "A" or
better, maturing within one year of the date of acquisition; and
(b) Investments in prime commercial paper; and
(c) Money market funds; and
(d) Purchases of insurance on lives of officers or employees of the
Company, provided the Company is named the beneficiary on any such policy; and
(e) Obligations which are guaranteed by the United States Government; and
(f) Repurchase agreements; and
(g) Acquisitions permitted pursuant to the provisions of Section 9.4.
(h) $900,000 life insurance policy in the name of Xxxx Xxxxx with spouse
as beneficiary.
SCHEDULE 6.2(B)
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1. Security Agreements from the Company and each of the Guarantors
2. Mortgage from Auto-Air Composites dated September 1, 1990
3. Continuing Collateral Mortgage dated October 31, 1997 from Central
Engineering Company in favor of the Bank
