EXHIBIT 4.2
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of August 6, 1999 is by and between WSI
Industries, Inc., a corporation organized under the laws of the State of
Minnesota (the "Borrower"), and U.S. Bank National Association, a national
banking association (the "Lender").
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 DEFINED TERMS. As used in this Agreement the following
terms shall have the following respective meanings:
"BUSINESS DAY": Any day (other than a Saturday, Sunday or legal
holiday in the State of Minnesota) on which national banks are permitted to be
open for business in Minneapolis, Minnesota.
"CLOSING DATE": The date on which the conditions set forth in Section
3.1 have been satisfied and the Loan is closed.
"DEFAULT": Any event which, with the giving of notice (whether
such notice is required under Section 6.1, or under some other provision of
this Agreement, or otherwise) or lapse of time, or both, would constitute an
Event of Default.
"DEFAULT RATE": As defined in the Note.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT": Any event described in Section 6.1.
"FINANCING STATEMENT": The Financing Statement(s) executed by the
Borrower, as Debtor, in favor of the Lender, as Secured Party.
"GAAP": Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of any date of
determination.
"GOVERNMENTAL REQUIREMENTS": All laws, statutes, codes, ordinances,
and governmental rules, regulations and requirements applicable to the Borrower,
the Lender and the Project.
"IMPROVEMENTS": The buildings and improvements located upon the Land.
"INDEMNIFICATION AGREEMENT": The Environmental and ADA
Indemnification Agreement dated of even date herewith, executed by the Borrower
in favor of Lender.
"LAND": The land legally described on Exhibit A attached hereto and
hereby made a part hereof.
"LEASE": Any lease or other document or agreement, written or oral,
permitting any Person to use or occupy any part of the Project.
"LIEN": With respect to any Person, any security interest, mortgage,
pledge, lien, charge, encumbrance, title retention agreement or analogous
instrument or device (including the interest of each lessor under any
capitalized lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law.
"LOAN": As defined in Section 2.1.
"LOAN DOCUMENTS": This Agreement, the Note, the Mortgage, the
Indemnification Agreement, the Financing Statement and any other document
collateral to or as security for the Loan.
"LOAN FEE": As defined in Section 2.3.
"MATURITY DATE": August 6, 2004.
"MORTGAGE": The Mortgage, Security Agreement, Assignment of Leases
and Rents and Fixture Financing Statement dated of even date herewith, executed
by the Borrower in favor of the Lender.
"NOTE": The Note dated of even date herewith, in the amount of the
Loan, executed by the Borrower and payable to the order of the Lender.
"OBLIGATIONS": The Borrower's obligations in respect of the due and
punctual payment of principal and interest on the Note when and as due, whether
by acceleration or otherwise and all fees, expenses, indemnities, reimbursements
and other obligations of the Borrower under this Agreement or any other Loan
Document, in all cases whether now existing or hereafter arising or incurred.
"PERMITTED ENCUMBRANCES": The liens, charges and encumbrances on
title to the Project listed on Exhibit B attached hereto and hereby made a part
hereof.
"PERSON": Any natural person, corporation, partnership, limited
partnership, joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political subdivision or any
other entity, whether acting in an individual, fiduciary or other capacity.
"PROJECT": The Land, the Improvements and all fixtures, equipment and
personal property now or hereafter owned by the Borrower and located or to be
located in or on, and used in connection with the management, maintenance or
operation of, the Land and the Improvements.
"REGULATORY CHANGE": Any change after the date of this Agreement in
federal, state or foreign laws or regulations or the adoption or making after
such date of any interpretations, directives or requests applying to a class of
banks including the Lender under any federal, state or foreign laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"SUBSIDIARY": Any corporation or other entity of which securities or
other ownership interests having ordinary voting power for the election of a
majority of the board of directors or other Persons performing similar functions
are owned by the Borrower either directly or through one or more Subsidiaries.
"TENANT": Any Person using or occupying any part of the Project
pursuant to a Lease.
"TITLE COMPANY": Chicago Title Insurance Company.
"TITLE POLICY": A current ALTA form loan title insurance policy,
dated as of the date of recording of the Mortgage, containing such endorsements
and assurances as the Lender may require, and containing only those exceptions
approved by the Lender.
Section 1.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be made
in accordance with GAAP.
Section 1.3 OTHER DEFINITIONAL TERMS, TERMS OF CONSTRUCTION. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to Sections, Exhibits,
Schedules and like references are to Sections, Exhibits, Schedules and the like
of this Agreement unless otherwise expressly provided. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". Unless the context in which used herein otherwise clearly
requires, "or" has the inclusive meaning represented by the phrase "and/or".
All incorporations by reference of covenants, terms, definitions or other
provisions from other agreements are incorporated into this Agreement as if such
provisions were fully set forth herein, and include all necessary definitions
and related provisions from such other agreements. All covenants, terms,
definitions and other provisions from other agreements incorporated into this
Agreement by reference shall survive any termination of such other agreements
until the obligations of the Borrower under this Agreement and the Note are
irrevocably paid in full.
ARTICLE II
TERMS OF LENDING
Section 2.1 LOAN. Upon the terms and subject to the conditions
hereof, the Lender agrees to make a loan (the "Loan") to the Borrower of
$2,500,000 on the Closing Date.
Section 2.2 THE NOTE; INTEREST AND REPAYMENT. The Loan shall be
evidenced by the Note. The Lender shall enter in its ledgers and records the
payments made on the Loan, and the Lender is authorized by the Borrower to enter
on a schedule attached to the Note a record of such payments. The Note shall
accrue interest and shall be payable, together with interest thereon, and may be
prepaid, if at all, and is subject to mandatory prepayment, as provided in the
Note. If not sooner paid, the Note, together with all accrued and unpaid
interest thereon, shall be due and payable in full on the Maturity Date.
Section 2.3 LOAN FEE. In consideration of the Lender's agreement to
make the Loan, the Borrower shall pay the Lender, at or prior to the closing of
the Loan, a loan fee in the amount of $25,000 .
Section 2.4 CAPITAL ADEQUACY. In the event that any Regulatory Change
reduces or shall have the effect of reducing the rate of return on the Lender's
capital or the capital of its parent corporation (by an amount the Lender deems
material) as a consequence of the Loan to a level below that which the Lender or
its parent corporation could have achieved but for such Regulatory Change
(taking into account the Lender's policies and the policies of its parent
corporation with respect to capital adequacy), then the Borrower shall, within
five days after written notice and demand from the Lender, pay to the Lender
additional amounts sufficient to compensate the Lender or its parent corporation
for such reduction. Any determination by the Lender under this Section and any
certificate as to the amount of such reduction given to the Borrower by the
Lender shall be final, conclusive and binding for all purposes, absent error.
Section 2.5 USE OF PROCEEDS. The proceeds of the Loan shall be used
for the acquisition of the stock of Xxxxxx Tool and Machining, Inc., and
transaction costs associated with such acquisition and the financing thereof.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 CONDITIONS OF THE LOAN. The obligation of the Lender to
make the Loan hereunder shall be subject to the prior or simultaneous
fulfillment of each of the following conditions:
3.1(a) DOCUMENTS. The Lender shall have received the documents
and other materials as set forth on Schedule 3.1(a) attached hereto and hereby
made a part hereof.
3.1(b) OTHER MATTERS. All organizational and legal proceedings
relating to the Borrower and all instruments and agreements in connection with
the transactions contemplated by this Agreement shall be satisfactory in scope,
form and substance to the Lender and its counsel, and the Lender shall have
received all information and copies of all documents, including records of
corporate proceedings, which it may reasonably have requested in connection
therewith, such documents where appropriate to be certified by Borrower or
governmental authorities.
3.1(c) FEES AND EXPENSES. The Lender shall have received the
Loan Fee and all other fees and amounts due and payable by the Borrower on or
prior to the Closing Date, including the reasonable fees and expenses of counsel
to the Lender payable pursuant to Section 7.2.
3.1(d) PERFECTION. The Mortgage and the Financing Statement, and
any other Loan Document creating or evidencing a lien or security interest which
Lender requires to be filed of record, shall have been appropriately filed to
the satisfaction of the Lender and the priority and perfection of the Lien
created thereby shall have been established to the satisfaction of the Lender.
3.1(e) NO DEFAULT. All representations and warranties of the
Borrower made in this Agreement shall remain true and correct and no Default or
Event of Default shall exist.
3.1(f) STOCK ACQUISITION. The Borrower shall have provided the
Lender with evidence reasonably acceptable to the Lender that the Borrower has
completed its acquisition of all of the stock of Xxxxxx Tool and Machining, Inc.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender:
Section 4.1 ORGANIZATION, STANDING, ETC. The Borrower is a
corporation duly organized and validly existing and in good standing under the
laws of the jurisdiction of its organization, and, if different, the
jurisdiction in which the Project is located, and has all requisite corporate
power and authority to own its properties and to carry on its business as now
conducted, to enter into this Agreement and the other Loan Documents to which it
is a party and to issue the Note and to perform its obligations hereunder and
thereunder. This Agreement, the Note and the other Loan Documents to which it
is a party have been duly authorized by all necessary corporate action and when
executed and delivered will be the legal and binding obligations of the
Borrower. The execution, delivery and performance of this Agreement, the Note
and the other Loan Documents to which it is a party will not violate the
Borrower's Articles of Incorporation or bylaws or any law applicable to the
Borrower, and will not violate or cause a default under or permit acceleration
of any agreement to which Borrower is a party or by which it or the Project is
bound. Except for consents, approvals and exemptions previously obtained
(copies of which have been delivered to the Lender), no approval of or exemption
by any Person is required in connection with the Borrower's execution, delivery
and performance of this Agreement, the Note and the other Loan Documents to
which it is a party. To the Borrower's knowledge, it is not in default (beyond
any applicable grace period) in the performance of any agreement, order, writ,
injunction, decree or demand to which it is a party or by which it is bound.
Section 4.2 FINANCIAL STATEMENTS AND NO MATERIAL ADVERSE CHANGE. The
Borrower's audited financial statements as at August 31, 1998 and its unaudited
financial statements as at June 30, 1999, as heretofore furnished to the Lender,
have been prepared in accordance with GAAP. The Borrower has no material
obligation, liability or asset not disclosed in such financial statements, and
there has been no material adverse change in the condition of the Borrower since
the dates of such financial statements.
Section 4.3 LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or the Project which, if determined adversely to the Borrower,
would have a Material Adverse Effect on the condition of the Borrower or on the
ability of the Borrower to perform its obligations under the Loan Documents.
Neither the Borrower nor the Project is in violation of any Governmental
Requirement where such violation could reasonably be expected to impose a
material liability on the Borrower.
Section 4.4 TAXES. The Borrower has filed all federal, state and
local tax returns required to be filed and has paid or made provision for the
payment of all taxes due and payable
pursuant to such returns and pursuant to any assessments made against
it or any of its property (other than taxes, fees or charges the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP have
been provided on the books of the Borrower).
Section 4.5 SUBSIDIARIES. The Borrower has the Subsidiaries listed on
Schedule 4.5 attached hereto and hereby made a part hereof.
Section 4.6 EMPLOYEE BENEFIT PLANS. Except as disclosed in writing
to the Lender: (a) the Borrower is not an employee benefit plan as defined
in Section 3(1) of ERISA, whether or not subject to ERISA; (b) no assets of
the Borrower constitute assets of any such plan under ERISA regulations or
rulings; (c) with respect to any such plan that the Borrower sponsors,
participates in or has fiduciary duties with respect to, the Borrower has
materially complied with all federal and state laws, plan documents and
funding requirements; (d) the Borrower does not sponsor, participate in, or
have fiduciary duties with respect to any defined benefit pension plan
subject to Title IV of ERISA or any multi-employer pension plan as defined in
Section 3(37)(A) of ERISA or any plan providing medical or other welfare
benefits to retirees or other former employees (except as required by federal
or state law); and (e) the Borrower is not (and has not ever been) a member
of a group of trades or businesses (whether or not incorporated) that is
treated as a single employer under Section 414 of the Internal Revenue Code.
Section 4.7 YEAR 2000. The Borrower has reviewed and assessed its
business operations and computer systems and applications and those of its
Subsidiaries to address the "year 2000 problem" (that is, that computer
applications and equipment used by the Borrower and its Subsidiaries
directly, or indirectly through third parties, may be unable to properly
perform date-sensitive functions before, during and after January 1, 2000).
The Borrower reasonably believes that the year 2000 problem will not result
in a material adverse change in the business condition (financial or
otherwise), operations, properties or prospects of the Borrower or any of its
Subsidiaries or the ability of the Borrower to repay the Lender. The
Borrower agrees that this representation will be true and correct on and
shall be deemed made by the Borrower on each date the Borrower requests any
advance under this Agreement or the Note or delivers any information to the
Lender. The Borrower will promptly deliver to the Lender such information
relating to this representation as the Lender requests from time to time.
ARTICLE V
COVENANTS
Until the Note and all of the Borrower's other Obligations shall have
been paid and performed in full, unless the Lender shall otherwise consent in
writing:
Section 5.1 FINANCIAL STATEMENTS AND REPORTS. The Borrower will
furnish to the Lender:
5.1(a) As soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, the Borrower's financial statements
consisting of at least statements of income, cash flow and changes in
stockholder's equity, a balance sheet as at the end of such year, and a
statement of contingent liabilities as at the end of such year, setting forth in
each case in comparative form corresponding figures from the previous annual
statement, certified without qualification by Ernst & Young, L.L.P. or other
independent certified public accountants of recognized national standing
selected by the Borrower and acceptable to the Lender.
5.1(b) As soon as available and in any event within 20 days after
the end of each fiscal month of the Borrower, the Borrower's interim financial
statements for such month and for the period from the beginning of such fiscal
year to the end of such month, substantially similar to the annual audited
statements.
5.1(c) Immediately upon any officer of the Borrower becoming
aware of any Default or Event of Default, a notice describing the nature thereof
and what action the Borrower proposes to take with respect thereto.
5.1(d) From time to time, such other information regarding the
business, operation and financial condition of the Borrower and the Project as
the Lender may reasonably request.
Section 5.2 BOOKS AND RECORDS. The Borrower will keep adequate and
proper records and books of account in which full and correct entries will be
made of its dealings, business and affairs, including its use and operation of
the Project.
Section 5.3 INSPECTION. Upon reasonable prior notice, the Borrower
will permit any Person designated by the Lender to visit and inspect any of the
properties (including the Project), books and financial records of the Borrower,
to examine and to make copies of the books of accounts and other financial
records of the Borrower, and to discuss the affairs, finances and accounts of
the Borrower with its officers at such reasonable times and intervals as the
Lender may designate.
Section 5.4 EXISTENCE. The Borrower will maintain its existence in
good standing under the laws of its jurisdiction of incorporation or formation,
and, if different, the jurisdiction where the Project is located, and its
qualification to transact business in each jurisdiction (including the
jurisdiction where the Project is located) where failure so to qualify would
permanently preclude the Borrower from enforcing its rights with respect to any
material asset or would expose the Borrower to any material liability.
Section 5.5 NOTICE OF LITIGATION. The Borrower will give prompt
written notice to the Lender of the commencement of any action, suit or
proceeding affecting the Borrower.
Section 5.6 EMPLOYEE BENEFIT PLANS. The Borrower shall neither take
any action, nor omit to take any action, if such action or omission would result
in any of the statements set forth in Section 4.6 (including any written
disclosures made by the Borrower to the Lender under Section 4.6) becoming
inaccurate or misleading at any time while the Note remains outstanding.
Section 5.7 INSURANCE. The Borrower will maintain with financially
sound and reputable insurance companies such insurance as may be required by law
and such other insurance in such amounts and against such hazards as is
customary in the case of reputable companies engaged in the same or similar
business and similarly situated, including, without limitation, the insurance
which the Borrower is required to maintain pursuant to Section 1.4 of the
Mortgage.
Section 5.8 PAYMENT OF TAXES AND CLAIMS. The Borrower will file all
tax returns and reports which are required by law to be filed by it and will pay
before they become delinquent, all taxes, assessments and governmental charges
and levies imposed upon it or its property and all claims or demands of any kind
(including those of suppliers, mechanics, carriers, warehousemen, landlords and
other like Persons) which, if unpaid, might result in the creation of a Lien
upon its property.
Section 5.9 MAINTENANCE OF PROPERTIES, COMPLIANCE. The Borrower will
maintain its properties in good condition, repair and working order, and
supplied with all necessary equipment, and make all necessary repairs, renewals,
replacements, betterments and improvements thereto, all as may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times. The Borrower will comply in all material
respects with all laws, rules and regulations to which it may be subject.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events shall constitute an Event of Default:
6.1(a) The Borrower shall fail to make when due, whether by
acceleration or otherwise, any payment of principal of or interest on the Note
or any other obligations of the Borrower to the Lender pursuant to this
Agreement or any of the other Loan Documents, and such failure shall continue
for a period of five (5) days after the due date thereof.
6.1(b) Any representation or warranty made by or on behalf of the
Borrower in this Agreement or any of the other Loan Documents or by or on behalf
of the Borrower in any certificate, statement, report or document herewith or
hereafter furnished to the Lender pursuant to this Agreement or any of the other
Loan Documents shall prove to have been
false or misleading in any material respect on the date as of which the facts
set forth are stated or certified.
6.1(c) The Borrower shall fail to comply with Sections 5.1 or
5.7.
6.1(d) A sale, transfer, conveyance or encumbrance of the Project
or any part thereof or of all or any part of the Borrower's interest therein in
violation of Section 1.3 of the Mortgage shall occur.
6.1(e) The Borrower shall fail to comply with any other
agreement, covenant, condition, provision or term contained in this Agreement or
any of the other Loan Documents (other than those hereinabove set forth in this
Section 6.1) and such failure to comply shall continue for thirty (30) calendar
days after whichever of the following dates is the earliest: (i) the date the
Borrower gives notice of such failure to the Lender, (ii) the date the Borrower
should have given notice of such failure to the Lender pursuant to Section 5.1,
or (iii) the date the Lender gives notice of such failure to the Borrower.
6.1(f) The Borrower shall become insolvent or shall generally not
pay its debts as they mature or shall apply for, shall consent to, or shall
acquiesce in the appointment of a custodian, trustee or receiver of itself or
for a substantial part of its property, or, in the absence of such application,
consent or acquiescence, a custodian, trustee or receiver shall be appointed for
the Borrower or for a substantial part of the property thereof and shall not be
discharged within forty-five (45) days, or the Borrower shall make an assignment
for the benefit of creditors.
6.1(g) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by or
against the Borrower and, if instituted against the Borrower, shall have been
consented to or acquiesced in by the Borrower or shall remain undismissed for
sixty (60) days, or an order for relief shall have been entered against the
Borrower.
6.1(h) Any dissolution or liquidation proceeding shall be
instituted by or against the Borrower and, if instituted against the Borrower,
shall be consented to or acquiesced in by the Borrower or shall remain for
forty-five (45) days undismissed.
6.1(i) A judgment or judgments for the payment of money in excess
of the sum of $100,000 in the aggregate shall be rendered against the Borrower
and either (i) the judgment creditor executes on such judgment or (ii) such
judgment remains unpaid or undischarged for more than sixty (60) days from the
date of entry thereof or such longer period during which execution of such
judgment shall be stayed during an appeal from such judgment.
6.1(j) A default shall occur, and continue beyond any applicable
grace or cure period, under any note or other evidence of indebtedness or credit
or loan agreement, or other document or instruments executed in connection
therewith, now or hereafter entered into
between the Lender and the Borrower, as any of the same may be amended,
modified, supplemented, extended, renewed or replaced, and if any such note
or other evidence of indebtedness or credit or loan agreement or other
document is terminated, as the same existed immediately prior to such
termination.
6.1(k) The maturity of any material indebtedness of the Borrower
(other than the Loan and any indebtedness referred to in the immediately
preceding subsection) shall be accelerated, or the Borrower shall fail to pay
any such material indebtedness when due (after the lapse of any applicable grace
period) or any event shall occur or condition shall exist and shall continue for
more than the period of grace, if any, applicable thereto and shall have the
effect of causing, or permitting the holder of any such indebtedness to cause,
such material indebtedness to become due prior to its stated maturity or to
realize upon any collateral given as security therefor. For purposes of this
Section, indebtedness shall be deemed "material" if it exceeds $100,000 as to
any item of indebtedness or in the aggregate for all items of indebtedness with
respect to which any of the events described in this Section has occurred.
6.1(l) Any execution or attachment shall be issued whereby any
substantial part of the property of the Borrower shall be taken or attempted to
be taken and the same shall not have been vacated or stayed within thirty (30)
days after the issuance thereof.
6.1(m) Any default shall occur under any other Loan Document, and
shall continue beyond any grace or cure period provided therein with respect to
such default.
Section 6.2 REMEDIES. If (a) any Event of Default described in
Sections 6.1 (f), (g) or (h) shall occur with respect to the Borrower, the Note
and all other obligations of the Borrower to the Lender under this Agreement and
the other Loan Documents shall automatically become immediately due and payable,
or (b) any other Event of Default shall occur and be continuing, then the Lender
may declare the Note and all other obligations of the Borrower to the Lender
under this Agreement and the other Loan Documents to be forthwith due and
payable, whereupon the same shall immediately become due and payable, in each
case without presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived, anything in this Agreement or in the Note or
in any of the other Loan Documents to the contrary notwithstanding. Upon the
occurrence of any of the events described in clauses (a) or (b) of the preceding
sentence the Lender may exercise all rights and remedies under this Agreement,
the Note and any of the other Loan Documents and under any applicable law. In
addition, the Lender may cure the Event of Default on behalf of the Borrower,
and, in doing so, may enter upon the Project, and may expend such sums as it may
deem desirable, including attorneys' fees, all of which shall be deemed to be
advances hereunder and under the Note, even though causing the Loan to exceed
the face amount of the Note, shall bear interest at the Default Rate and shall
be payable by the Borrower on demand, and shall be secured by the Mortgage and
all other Loan Documents securing the Loan.
Section 6.3 OFFSET. In addition to the remedies set forth in Section
6.2, upon the occurrence of any Event of Default and thereafter while the same
be continuing, the Borrower hereby irrevocably authorizes the Lender to set off
all sums owing by the Borrower to the Lender against all deposits and credits
of the Borrower with, and any and all claims of the Borrower against, the
Lender.
ARTICLE VII
MISCELLANEOUS
Section 7.1 MODIFICATIONS. Notwithstanding any provisions to the
contrary herein, any term of this Agreement may be amended with the written
consent of the Borrower; PROVIDED that no amendment, modification or waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such amendment, modification, waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
Section 7.2 COSTS AND EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Borrower agrees to reimburse the Lender
upon demand for all reasonable out-of-pocket expenses paid or incurred by the
Lender (including filing and recording costs and fees and expenses of Xxxxxx &
Xxxxxxx LLP, counsel to the Lender) in connection with the negotiation,
preparation, approval, review, execution, delivery, amendment, modification,
interpretation, collection and enforcement of this Agreement, the Note and the
other Loan Documents. The obligations of the Borrower under this Section shall
survive any termination of this Agreement.
Section 7.3 WAIVERS, ETC. No failure on the part of the Lender or the
holder of the Note to exercise and no delay in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right preclude any other or further exercise thereof or
the exercise of any other power or right. The rights and remedies of the Lender
hereunder are cumulative and not exclusive of any right or remedy the Lender
otherwise has.
Section 7.4 NOTICES. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed. Either party may
change its address for notices by a notice given not less than five (5)
Business Days prior to the effective date of the change.
Section 7.5 SUCCESSORS AND ASSIGNS; DISPOSITION OF LOANS. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, legal representatives, successors and assigns,
except that the Borrower may not assign its rights or delegate its obligations
hereunder without the prior written consent of the Lender. The Lender may at
any time sell, assign, transfer, grant participations in, or otherwise dispose
of any portion of the Loan to banks or other financial institutions. The Lender
may disclose any information regarding the Borrower in the Lender's possession
to any prospective buyer or participant.
Section 7.6 GOVERNING LAW AND CONSTRUCTION. THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS OR PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS. WHENEVER POSSIBLE, EACH PROVISION
OF THIS AGREEMENT AND ANY OTHER STATEMENT, INSTRUMENT OR TRANSACTION
CONTEMPLATED HEREBY OR RELATING HERETO, SHALL BE INTERPRETED IN SUCH MANNER AS
TO BE EFFECTIVE AND VALID UNDER SUCH APPLICABLE LAW, BUT, IF ANY PROVISION OF
THIS AGREEMENT OR ANY OTHER STATEMENT, INSTRUMENT OR TRANSACTION CONTEMPLATED
HEREBY OR RELATING HERETO SHALL BE HELD TO BE PROHIBITED OR INVALID UNDER SUCH
APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE ONLY TO THE EXTENT OF SUCH
PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION
OR THE REMAINING PROVISIONS OF THIS AGREEMENT OR ANY OTHER STATEMENT, INSTRUMENT
OR TRANSACTION CONTEMPLATED HEREBY OR RELATING HERETO.
Section 7.7 CONSENT TO JURISDICTION. AT THE OPTION OF THE LENDER,
THIS AGREEMENT AND THE NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA
STATE COURT SITTING IN MINNEAPOLIS OR ST. XXXX, MINNESOTA; AND THE BORROWER
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER
COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS
AGREEMENT, THE LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.
Section 7.8 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE AND ANY OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 7.9 CAPTIONS. The captions or headings herein and any table
of contents hereto are for convenience only and in no way define, limit or
describe the scope or intent of any provision of this Agreement.
Section 7.10 NUMBER; GENDER. The singular of all terms used herein
shall include the plural and the plural shall include the singular, and the use
of any gender herein shall include all other genders, where the context so
requires or permits.
Section 7.11 ENTIRE AGREEMENT. This Agreement and the other Loan
Documents embody the entire agreement and understanding between the Borrower and
the Lender with respect to the subject matter hereof and thereof. This
Agreement supersedes all prior agreements and understandings relating to the
subject matter hereof.
Section 7.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
WSI INDUSTRIES, INC.
By /s/ Xxxxxxx X. Xxxxx
------------------------------------
Print Name Xxxxxxx X. Xxxxx
-----------------------------
Title President
--------------------------------
Borrower's Address:
WSI Industries, Inc.
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxx, Xxxxxxxxx 00000
Attention: President
Telecopy No. (000) 000-0000
U.S. BANK NATIONAL ASSOCIATION
By /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Print Name Xxxxxxx X. Xxxxxxx
-------------------------
Title Vice President
-----------------------------
Lender's Address:
U.S. Bank National Association
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Attn: Xx. Xxx Xxxxxxx
Telecopy No.: (000) 000-0000
EXHIBIT A
(Legal Description of Land)
Parcel 1: That part of the South half of Northeast Quarter of Section 33,
Township 118, Range 23, which lies East of the East line of the plat
of Orono Industrial Park, and its extensions and West of the West line
of the plat of Long Lake West Industrial Park and its extensions,
Hennepin County, Minnesota.
Parcel 2: Lots 1 through 12, inclusive, Block 1, Orono Industrial Park, and all
of Lincoln Drive, vacated, as shown on the plat of said Orono
Industrial Park, Hennepin County, Minnesota.
(Torrens Property, evidenced by Certificate of Title No. 819735)
EXHIBIT B
(Permitted Encumbrances)
Real estate taxes not yet due and installments of special assessments payable
therewith.
1. Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture
Filing dated December 10, 1993, filed December 30, 1993, as Document No. 6210390
(abstract) and filed January 7, 1994, as Document No. 2463274 (Torrens),
executed by Washington Scientific Industries, Inc., a Minnesota corporation, to
FBS Business Finance Corporation, a national banking association, to secure
$1,254,000.00.
Amended by Amendment to Mortgage and Extension Agreement dated April 1,
1994, filed September 28, 1994, as Document No. 6345512 (abstract) and 2554631
(Torrens).
Amended by Amendment to Mortgage and Extension Agreement dated February 28,
1995, filed February 28, 1995, as Document No. 6402162 (abstract) and 2592164
(Torrens).
Amended by Amendment to Mortgage and Extension Agreement dated March 31,
1995, filed May 15, 1995, as Document No. 6427082 (abstract) and 2608260
(Torrens).
Amended by Fourth Amendment to Mortgage and Extension Agreement dated April
30, 1997, filed August 29, 1997, as Document No. 2840001.
Assigned to U.S. Bank National Association, a national banking association,
by Assignment of Mortgage dated January 2, 1998, filed January 7, 1998, as
Document No. 3016787.
2. Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture
Financing Statement dated December 10, 1993, filed January 19, 1994, as Document
No. 6220671 (abstract), and filed January 24, 1994, as Document No. 2470147
(Torrens), executed by Washington Scientific Industries, Inc., a Minnesota
corporation, to Northwestern National Life Insurance Company, a Minnesota
corporation, Farm Bureau Life Insurance Company of Michigan, a Michigan
corporation, and FB Annuity Company, a Michigan corporation, to secure
$580,288.00.
Assigned to FBS Business Finance Corporation, a Delaware corporation, by
Assignment of Mortgage dated March 31, 1995, filed May 1, 1995, as Document No.
2605592.
Amended by Consolidation of and Amendment to Mortgages dated March 31,
1995, filed May 1, 1995, as Document No. 2605594.
Assignment to U.S. Bank National Association, a national banking
association, by Assignment of Consolidated Mortgages dated January 2, 1998,
filed March 30, 1998, as Document No. 2902741, and filed September 30, 1998, as
Document No. 3065225.
Amended by Amendment to Mortgage and Extension Agreement dated April 8,
1998, filed April 14, 1998, as Document No. 3003909.
3. Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture
Financing Statement dated December 10, 1993, filed January 19, 1994, as Document
No. 6220672 (abstract), and filed January 24, 1994, as Document No. 2470148
(Torrens), executed by Washington Scientific Industries, Inc., a Minnesota
corporation, to Northwestern National Life Insurance Company, a Minnesota
corporation, and Northern Life Insurance Company, a Washington corporation, in
the amount of $1,300,712.00.
Assigned to FBS Business Finance Corporation, a Delaware corporation, by
Assignment of Mortgage dated March 31, 1995, filed May 1, 1995, as Document No.
2605593.
Amended by Consolidation of and Amendment to Mortgages dated March 31,
1995, filed May 1, 1995, as Document No. 2605594.
Assigned to U.S. Bank National Association, a national banking association,
by Assignment of Consolidated Mortgages dated January 2, 1998, filed March 30,
1998, as Document No. 2902741, and filed September 30, 1998, as Document No.
3065225.
Amended by Amendment to Mortgage and Extension Agreement dated April 8,
1998, filed April 14, 1998, as Document No. 3003909.
4. Real Property Waiver dated October 28, 1994, filed January 13, 1995, as
Document No. 2582652, executed by FBS Business Finance, to CLC Equipment
Company.
5. Real Property Waiver dated November 3, 1994, filed January 13, 1995, as
Document No. 2582653, executed by Northwestern National Life Insurance Company
and Northern Life Insurance Company to CLC Equipment Company.
6. Easements for utilities and drainage as shown on the recorded plat.
7. Terms and conditions of Conditional Use Permit filed December 27, 1988, as
Document No. 5491246.
8. Easement for ingress, egress and utility in favor of U.S. West
Communications, Inc. as created in document dated April 26, 1994, filed May 9,
1994, as Document No. 2512678.
9. Easement for utilities and drainage in favor of City of Orono as created in
document dated December 31, 1994, filed January 18, 1995, as Document No.
2583345.
10. Easement for highway purposes for US Highway 12 over part of the
above-described land lying within Minnesota Department of Transportation
Right of Way Plat No. 27-55 filed August 23, 1994, as Document No. 6329982
(abstract), provided, however, that the right to erect and maintain snow
fences has been released as evidenced by Quit Claim Deed recorded as Document
No. 6311743 (abstract) as to Parcel 1 hereinbefore described.
11. Easement in favor of City of Orono for underground utility purposes, over
the East 20 feet of the above-described land as created by easement filed as
Document No. 3736406 (abstract) as to Parcel 1 hereinbefore described.
12. Easement rights to use the drainage ditch along the Easterly boundary of
property in favor of the owners, encumbrancers and occupants of Xxxx 0, 0 xxx 0
xx Xxxx Xxxx Xxxx Xxxxxxxxxx Xxxx as determined in Torrens Case No. 19977. (See
Court Order Document No. 2571925) as to Parcel 1 hereinbefore described.
SCHEDULE 3.1(a)
This Agreement, the Note, the Mortgage, the Indemnification Agreement and the
Financing Statement, each duly executed by the Borrower and dated the Closing
Date.
A copy of the corporate resolutions of the Borrower authorizing the execution,
delivery and performance of this Agreement, the Note and the other Loan
Documents to which the Borrower is a party, and containing an incumbency
certificate showing the names and titles, and bearing the signatures of, the
officers of the Borrower authorized to execute this Agreement, the Note and the
other Loan Documents to which the Borrower is a party, certified as of the
Closing Date by the Secretary or an Assistant Secretary of the Borrower.
A copy of the Articles of Incorporation of the Borrower with all amendments
thereto, certified by the appropriate governmental official of the jurisdiction
of its incorporation as of a date not more than 15 days prior to the Closing
Date.
A certificate of good standing for the Borrower in the jurisdiction of its
incorporation, and, if different that the jurisdiction of its incorporation, the
jurisdiction in which the Project is located, certified by the appropriate
governmental officials as of a date not more than 15 days prior to the Closing
Date.
A copy of the bylaws of the Borrower, certified as of the Closing Date by the
Secretary or an Assistant Secretary of the Borrower.
The opinion of counsel to the Borrower covering such matters as the Lender may
request.
An appraisal of the Project, addressed to the Lender, prepared in conformance
with the Lender's real estate appraisal and evaluation policy, and signed by an
appraiser acceptable to the Lender.
The Title Policy, or a suitably marked up title insurance commitment issued by
Title Company unconditionally agreeing to issue the Title Policy upon
recordation of the Mortgage.
UCC chattel lien searches from the appropriate office in Hennepin County,
Minnesota, and from the office of the Secretary of State of Minnesota, covering
the name of the Borrower.
A written environmental assessment addressed to the Lender, conducted by an
environmental engineer or consultant acceptable to the Lender, setting forth the
results of an investigation of the Project, containing an analysis and
evaluation of any and all environmental risks associated with the Project, and
concluding that there is no significant risk of any hazardous materials
contamination of any portion of the Project.
Insurance policies or certificates thereof in form satisfactory to the Lender,
satisfying the requirements of Section 1.4 of the Mortgage.
A flood check satisfactory to the Lender and satisfying the requirements of 42
U.S.C. Section 4104b and any rules and regulations promulgated pursuant thereto.
A Uniform Land Use Confirmation Form in form and substance satisfactory to the
Lender.
Such other documents as the Lender may reasonably require to assure compliance
with the requirements of this Agreement.
SCHEDULE 4.5
Subsidiaries of the Borrower:
1. WSI South, Inc.
2. Taurus Numeric Tool, Inc.
3. Xxxxxx Tool and Machining, Inc.
