FIRST NBD Bank
CHICAGO 000 Xxxxxxxx Xxxxxx
XXX Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Xxxx X. XxXxxxx
Vice President
September 5, 1997
Xx. Xxxxxxx X. Xxxxxxxxxx
Chief Financial Officer
Noble International, Ltd.
00 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Dear Xxxx:
Noble International, Ltd. ("Noble" or the "Borrower") has requested that NBD
Bank ("NBD") provide a Revolving Credit Facility (the "Credit Facility") in the
aggregate principal amount of $15,000,000 to Noble. The Credit Facility will be
executed, either concurrently or shortly after, Xxxxx receives the proceeds from
its Initial Public Offering. The proceeds from the Initial Public Offering and
the Credit Facility will be used to refinance all material indebtedness of the
Borrower and its subsidiaries as well as for working capital and general
corporate purposes.
NBD Bank is pleased to provide you with a financing commitment for the Credit
Facility on the terms and conditions set forth in the Term Sheet attached hereto
("Term Sheet") and subject to the conditions set forth in this letter, including
the successful completion of Noble's Initial Public Offering and the subsequent
receipt of a minimum of $20,000,000 of proceeds from the Offering. It is our
anticipation that these proceeds will be used for corporate purposes as outlined
in Noble's Form S-1 Registration Statement.
NBD Bank has reviewed certain historical and pro forma financial statements
prepared and delivered by the Borrower to it. NBD has not had the opportunity to
complete its due diligence review and inspection of the assets and liabilities
of the Borrower and its subsidiaries. NBD's commitment is subject to its
respective satisfaction with the foregoing and with the satisfaction of other
such due diligence investigation as may be necessary.
Xxxxxxxx agrees to reimburse NBD for all out-of-pocket expenses incurred in
connection with the Credit Facility and to indemnify and hold harmless NBD
against all losses, claims, damages, and liabilities of every kind whatsoever
associated with this commitment letter.
NBD's commitment is subject to the preparation, execution, and delivery of a
mutually acceptable Credit Agreement and other loan documents incorporating,
without limitation,
FIRST
CHICAGO
NBD
Xxxxxxx X. Xxxxxxxxxx -2- September 5, 1997
substantially the terms and conditions outlined in the Term Sheet. NBS's
commitment is also subject to determination that there has been absence of a
material adverse change in the business conditions, operations, performance,
properties, and prospects of the Borrower and any of its material subsidiaries,
including acquisitions which are currently contemplated by Noble.
Please indicate your acceptance of this commitment by NBD in the space indicated
below and return a copy of this letter to NBD Bank. This commitment and
undertaking will expire at 5:00 p.m. on September 19, 1997, unless on or prior
to such time NBD shall have received a copy of this letter executed by the
Borrower. Notwithstanding the timely acceptance of the commitment pursuant to
the preceding sentence, the commitment will automatically terminate unless
definitive loan documents are executed on or before November 30, 1997.
Sincerely,
NBD Bank:
By: /s/ Xxxx X. XxXxxxx
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Xxxx X. XxXxxxx
Vice President
Its:
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Accepted and Agreed to this _____________ day of September, 1997.
NOBLE INTERNATIONAL, LTD.
By:
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Its:
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Confidential Noble International Ltd.
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SUMMARY TERM SHEET
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BORROWER: Noble International Ltd. ("Noble" or the
"Company").
LENDER: NBD Bank ("NBD" or the "BANK").
TYPE OR FACILITY:
Revolving Credit: $15,000,000 Two Year Secured Revolving Credit
to include the Issuance of Standby Letters of
Credit (S/L/Cs) up to $3,000,000.
GUARANTORS: All present and future subsidiaries of the
Company.
USE OF PROCEEDS: Working capital and general corporate
purposes.
MATURITY: Two years from date of closing.
PRICING: At the Borrower's Option:
Prime: NBD's Prime rate as it exists from time to
time, plus the Applicable Margin. Minimum
draws of $100,000 and multiples of $25,000.
LIBOR: Adjusted(1) LIBOR plus the Applicable Margin
(1, 2, 3, and 6 month options). Minimum draws
of $1,000,000 and multiples of $100,000.
Footnotes:
(1) Adjusted for maximum Federal Reserve
Board reserve requirements.
APPLICABLE MARGIN: The Applicable Margin is based upon the
following matrix:
Applicable Margin
-------------------------------
Commitment
Funded Senior Debt/EBITDA Prime LIBOR Fee
------------------------- ------- -------- ----------
Less than 1.00:1.00 0 b.p. 125 b.p. 25 b.p.
1.00:1.00 to 1.75:1.00 0 b.p. 150 b.p. 25 b.p.
1.76:1.00 to 2.50:1.00 0 b.p. 175 b.p. 37.5 b.p.
2.51:1.00 to 3.25:1.00* 25 b.p. 200 b.p. 50 b.p.
3.26 or greater 50 b.p. 225 b.p. 50 b.p.
* Initial pricing level from the date of closing through the quarter ended
September 30, 1998. The Applicable Margin will be based upon the pricing
matrix from that point forward.
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NBD Bank -1- September 5, 1997
Confidential Noble International Ltd.
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PREPAYMENT: Prepayment of LIBOR loans would be subject
to approriate prepayment indemnities.
FEES:
Closing Fee: 75 basis point fee payable to NBD at closing.
Commitment Fee: Based on the pricing matrix, calculated on a
360 day basis and payable quarterly on the
unused portion of the facility.
Legal fees and Other Expenses: All reasonable legal fees of the Bank's
counsel for the account of the Borrower in
addition to other expenses associated with
the preparation and execution of the Facility
Agreement including, but not limited to, the
cost of collateral examinations, appraisals,
and environmental reports.
CAPITAL ADEQUACY: Language will be incorporated into the
Facility Agreement requiring that the
Borrower compensate the Participants for any
change in capital requirements or laws that
would have the effect of reducing the Banks'
yields.
INTEREST PAYMENTS: At the end of each applicable Interest Period
or quarterly, if earlier, calculated on a 360
day basis.
INTEREST PERIODS: Interest Periods may be of 1, 2, 3, or 6
months.
STANDBY LETTERS Expiration of individual Standby Letters of
OF CREDIT Credit will be a maximum of 12 months from
date of issuance.
The Standby Letter of Credit commission will
be at a per annum rate equal to the
Applicable LIBOR margin at the time of
issuance plus 1/8%. Any Standby Letter of
Credit outstanding will be considered usage
for purposes of the borrowing base and in
calculating the Commitment Fee.
COLLATERAL: First security interest in substantially all
assets of the Company and its subsidiaries,
including, but not limited to, Accounts
Receivable, Inventory, Real Estate, Machinery
and Equipment, Common Stock of the Company's
subsidiaries and General Intangibles.
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NBD Bank -2- September 5, 1997
Confidential Noble International Ltd.
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BORROWING BASE: Loans will be monitored according to the
following Borrowing Base:
85% of Eligible* Accounts Receivable
50% of Eligible* Inventory
35% of Forced Sale Value of Fixed Assets, not
to exceed $4,000,000
* Appropriate adjustments for delinquent
receivables, excessive concentrations, stale
or unsaleable inventory, and other
eligibility requirements as determined by
Bank based upon a field collateral
examination to be conducted.
DOCUMENTATION: The Facility will be subject to a Facility
Agreement, acceptable to all parties and
containing terms and conditions customary for
such a Facility. These terms and conditions
will include, but are not limited to:
(1) representations and warranties.
(2) undertakings including provision of
financial information under agreed
acconting principles; negative pledge,
etc.
(3) provision for increased costs (including
capital adequacy) to Bank.
FINANCIAL COVENANTS: Customary in credit agreements of this
nature, with specific limits to be negotiated
based upon the Company's capital structure
following its Initial Public Offering.
Financial covenants will include, but are not
limited to, the following:
Tangible Capital Funds: Minimum level of consolidated Tangible
Capital Funds.
Total Debt to Limitation on the ratio of Total Debt to
Capitalization: Capitalization, measured at each quarter end.
Senior Funded Debt to Limitation on the ratio of senior debt to
EBITDA: EBITDA, as measured on a four quarter
trailing basis.
Interest Coverage Ratio: Maintenance of a minimum Interest Coverage
Ratio, measured on a four quarter trailing
basis.
Cash Flow Coverage Ratio: Maintenance of a minimum Cash Flow Coverage
Ratio, measured on a four quarter trailing
basis.
All financial covenants tested on a
consolidated basis, and calculated in
accordance with U.S. GAAP unless otherwise
noted.
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NBD Bank -3- September 5, 1997
Confidential Noble International Ltd.
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NEGATIVE PLEDGE Customary negative covenants subject to
COVENANTS: appropriate baskets, including the following:
(1) Limitation on the sale of assets, the
incurrence of additional senior debt, and
advances to unconsolidated subsidiaries.
(2) Merger and consolidation limitations
(Noble must be the surviving entity).
(3) Limitation on the payment of cash
dividends.
(4) Any individual acquisition with an
aggregate consideration in excess of
$1,500,000 requires NBD's consent.
NON-FINANCIAL Customary non-financial covenants for a
COVENANTS: senior note financing, including:
(1) Maintenance of business lines.
(2) Maintenance of property.
(3) Maintenance of insurance.
(4) Payment of taxes.
(5) Maintenance of corporate existence,
license and permits.
REPORTING Customary in credit agreements of this
REQUIREMENTS: nature, including but not limited to the
following:
(1) Annual audited financial statements, 10K,
and annual report within 90 days of each
fiscal year end.
(2) Quarterly 10Q financial statements within
45 days of each quarter end.
(3) Quarterly compliance certificates signed
by a corporate officer.
(4) Monthly borrowing base certificates
signed by a corporate officer.
(5) Monthly Accounts Receivable Agings and
Inventory Report.
(6) Copies of all required filings required
by the Securities and Exchange
Commission.
(7) Copies of all press releases or other
publicly released information.
GOVERNING LAW: The facility Agreement will be governed by
the laws of the state of Michigan.
COUNSEL TO NBD: Xxxxxxxxx, Xxxxxx, Xxxx, Xxx Xxxxx & Xxxxxxx.
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NBD Bank -4- September 5, 1997
Confidential Noble International Ltd.
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EVENTS OF DEFAULT: Customary in credit agreements of this
nature, including but not limited to the
following:
(1) Failure to pay principal when due;
failure to pay interest or fees within
five days of the due date.
(2) Failure to meet covenants (with grace
periods, where appropriate).
(3) Representations or warranties false in
any material respect when made.
(4) Cross default to other debt of the
Borrower and its Subsidiaries which is
triggered by an event which causes
acceleration thereof or permits holders
thereof to accelerate their debt.
(5) Change of ownership or control.
(6) Other usual defaults with respect to the
Borrower and Subsidiaries, including but
not limited to insolvency, bankruptcy,
ERISA, and judgement defaults.
CONDITION PRECEDENT: (1) Completion of satisfactory loan
documentation.
(2) Completion of Initial Public Offering in
which Xxxxx receives minimum net proceeds
of $20,000,000.
(3) Review of Xxxxx'x Business Plan,
including anticipated funding
requirements and financial forecasts.
(4) Completion of satisfactory field
collateral examination by NBD.
(5) Repayment of all existing senior
indebtedness accompanied by the release
of all existing liens.
(6) Satisfactory review of the terms and
conditions of all other debt.
(7) NBD Bank's customary due diligence
investigation.
(8) No material adverse change prior to
closing.
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NBD Bank -5- September 5, 1997
Confidential Noble International Ltd.
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DEFINITIONS:
Cash Flow Coverage Ratio: The ratio of Earnings before Interest and
Taxes plus Operating Lease Rentals plus
Depreciation and Amortization to Interest
Expense plus Operating Lease Rentals plus
Capital Expenditures plus Current Portion of
Funded Debt.
Current Portion-Funded Debt: That portion of Funded Debt (including
capitalized leases) which comes due within
the current year.
Funded Debt: The sum of all interest-bearing debt not
subordinated to Revolving Credit, including
Capitalized Lease Obligations.
Interest Coverage Ratio: The ratio of Earnings before Interest and
Taxes to Interest Expense.
Tangible Capital Funds: Shall mean the sum of Stockholder's Common
Equity, Preferred Stock and Minority Interest
and any debt which is specifically
subordinated to NBD, less Treasury Stock,
Goodwill and Other Intangible Assets.
Total Capitalization: The sum of Tangible Net Worth and Funded
Debt.
All other defined terms are according to
GAAP.
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NBD Bank -6- September 5, 1997
