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EXHIBIT 10.8
REVOLVING CREDIT NOTE
$1,000,000.00 Date: as of January 7, 1997
Chicago, Illinois Due: June 30, 1997
On or before the Maturity Date, HouTex Metals Company, Inc., a Texas
corporation ("Borrower"), whose address is 00 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx
00000, for value received, promises to pay to the order of Metal Management,
Inc., a Delaware corporation (hereinafter, together with any holder hereof,
called "Lender"), whose address is 000 Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxx 00000, the principal sum of ONE MILLION AND NO/100 DOLLARS
($1,000,000.00) or if less, the aggregate unpaid principal amount of all
Advances under this Revolving Credit Note (this "Note") made available to
Borrower by Lender pursuant hereto. The unpaid principal amount hereof shall
bear interest at the rate of the Prime Rate plus one percent (1.0%) per annum;
provided, however, that after the occurrence and during the continuance of an
Event of Default, the unpaid principal amount hereof shall bear interest at the
rate of the Prime Rate plus four percent (4.0%) per annum.
This Note evidences a revolving loan (the "Loan") which shall be made
available to Borrower by Xxxxxx from time to time on and after the date hereof
through the day immediately preceding the Maturity Date in the maximum principal
amount outstanding at any one time equal to $1,000,000.00 from the date hereof
through the day immediately preceding the Maturity Date. Borrower may reborrow
all or any portion of the Loan that is repaid or prepaid. This Loan may be
prepaid or repaid in whole or in part at any time without premium or penalty.
The "Maturity Date" means the earliest of: (i) June 30, 1997 (or September 30,
1997, if the "Extended Maturity Date" is in effect under the "Loan Agreement"
defined below); (ii) the date on which the Maximum Revolving Loan Amount under
the Loan Agreement is increased to or exceeding $5,500,000.00; or (iii) the date
ninety (90) days after Metal Management, Inc. ceases to own all of the issued
and outstanding capital stock of Borrower.
Each request for an Advance hereunder shall be irrevocable and shall be
made by Borrower in writing or by telephone. If a request for an Advance is made
prior to 1:00 p.m. Chicago time on a Business Day, then such Advance shall be
made by Lender on the date of such request. If such request is made at or after
1:00 p.m. Chicago time, then such Advance shall be made by Lender on the next
Business Day. Each request for an Advance shall be deemed a certification by
Borrower that no Event of Default exists or will be created if the requested
Advance is made. Lender shall not be obligated to make any Advance if: (i) an
Event of Default exists or will be created if the requested Advance is made; or
(ii) after making such Advance, the outstanding aggregate principal amount of
the Loan will exceed $1,000,000.00. "Business Day" means any day other than a
Saturday, Sunday or other day on which commercial banks in Chicago, Illinois are
required or permitted to be closed.
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Interest shall be payable monthly in arrears from the date the proceeds
of any Advance under the Loan are made available to Borrower by Lender
hereunder, on the aggregate unpaid principal amount of the outstanding balance
outstanding from time to time, on the first Business Day of each month occurring
after the date of the first Advance under the Loan and continuing until the
Maturity Date of the Loan, whether by acceleration or otherwise. Principal owing
under the Loan shall be paid upon maturity of the Loan, whether by acceleration
or otherwise. Principal and interest shall be paid to Lender at its address set
forth above or at such other place as the holder of this Note shall designate in
writing to Borrower.
As used herein, the term "Prime Rate" means the rate which LaSalle
National Bank, a national banking association ("LaSalle"), announces, publishes
or designates from time to time as its prime lending rate in effect at its
principal office in Chicago, Illinois. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged by
LaSalle to any customer. Any change in the Prime Rate shall be effective for
purposes of this Note on the date of such change without notice to Borrower.
Interest shall be computed on the basis of a year consisting of 360 days and
shall be paid for the actual number of days elapsed.
This Note is secured by a Security Agreement of even date herewith, and
all obligations of Borrower under this Note are subject to the terms and
conditions of a Subordination Agreement of even date herewith.
It is understood and agreed that if any of the following events (herein
called an "Event of Default") shall occur:
1. Xxxxxxxx fails to make any payment due and owing hereunder;
2. A "HouTex Event of Default" has occurred and is continuing
under the Loan Agreement dated as of January 7, 1997, by and
among Borrower, Lender and LaSalle (the "Loan Agreement")
beyond any applicable cure periods; or a default or event of
default has occurred or is continuing under any other
agreement of Borrower: (a) in respect of money borrowed, (b)
evidenced by a note, debenture or other like written
obligation to pay money, (c) in respect of rent or hire of
property (real, personal or mixed, whether tangible or
intangible) under capitalized leases or for the deferred
purchase price of any such property or (d) in respect of
obligations under conditional sales or other title retention
agreements, and all guaranties of any and all of the
foregoing;
3. Borrower applies for, consents to, or acquiesces in the
appointment of a trustee, receiver or other custodian for
Xxxxxxxx, or in the absence of such application, a trustee,
receiver or other custodian is appointed for Xxxxxxxx, or any
bankruptcy, reorganization, dissolution or liquidation
proceeding is instituted by or against Borrower;
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then Lender is hereby authorized and empowered, at its option, to declare,
without notice or demand of any kind, this Note to be immediately due and
payable, whether or not such default be thereafter remedied by the undersigned,
and Lender may, but is not obligated to, immediately proceed to exercise any
right, power or remedy provided in this Note or by law or in equity conferred.
BORROWER WAIVES THE BENEFIT OF ANY LAW THAT WOULD OTHERWISE RESTRICT OR
LIMIT XXXXXX'S EXERCISE OF ITS RIGHT, WHICH BORROWER HEREBY ACKNOWLEDGES, FROM
TIME TO TIME FOLLOWING THE OCCURRENCE OF AN EVENT OF DEFAULT, WITHOUT DEMAND OR
NOTICE OF ANY KIND, TO SET OFF AND TO APPROPRIATE AND APPLY ANY AND ALL
BALANCES, CREDITS, DEPOSITS, ACCOUNTS, MONEYS, CASH EQUIVALENTS AND ANY OTHER
INDEBTEDNESS AT ANY TIME HELD OR OWING BY LENDER TO OR FOR THE CREDIT OR THE
ACCOUNT OF BORROWER AGAINST AND ON THE ACCOUNT OF THE OBLIGATIONS AND
LIABILITIES OF BORROWER TO LENDER HEREUNDER. AFTER THE OCCURRENCE AND DURING THE
CONTINUANCE OF ANY EVENT OF DEFAULT, BORROWER HEREBY ASSIGNS AND TRANSFERS TO
LENDER ANY AND ALL CASH, NEGOTIABLE INSTRUMENTS, DOCUMENTS OF TITLE, CHATTEL
PAPER, SECURITIES, CERTIFICATES OF DEPOSIT, DEPOSIT ACCOUNTS, OTHER CASH
EQUIVALENTS AND OTHER ASSETS OF BORROWER IN THE POSSESSION OR CONTROL OF LENDER
FOR ANY PURPOSE.
BORROWER RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO WITH RESPECT TO
THE COLLATERAL AND AGREES THAT LENDER SHALL NOT BE LIABLE FOR ANY ERROR OF
JUDGMENT OR MISTAKES OF FACT OR LAW EXCEPT FOR ANY ERROR OR MISTAKE ARISING
EXCLUSIVELY FROM XXXXXX'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. XXXXXXXX
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES IRREVOCABLY ANY RIGHT IT MAY
HAVE TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, ANY LOAN INSTRUMENT, ANY
OBLIGATION OR THE COLLATERAL, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN
WHICH LENDER AND BORROWER ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR LENDER TO GRANT ANY FINANCIAL ACCOMMODATION TO BORROWER.
Borrower waives any and all presentment, demand, notice of dishonor,
protest, and all other notices and demands in connection with the enforcement of
Xxxxxx's rights hereunder and under any Loan Instrument, and hereby consents to
and waives notice of release, with or without consideration, of Borrower or of
any "Collateral" defined in the Security Agreement of even date herewith.
Lender may at any time transfer this Note and Xxxxxx's rights hereunder
and in any or all of the Collateral, and Lender thereafter shall be relieved
from all liability with respect to such Collateral.
TO INDUCE LENDER TO MAKE THE LOAN EVIDENCED BY THIS NOTE, XXXXXXXX
IRREVOCABLY AGREES THAT ALL ACTIONS ARISING DIRECTLY OR INDIRECTLY AS A RESULT
OF OR IN CONSEQUENCE OF THIS NOTE, ANY LOAN INSTRUMENT OR ANY OTHER AGREEMENT
WITH LENDER, OR THE COLLATERAL,
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SHALL BE INSTITUTED AND LITIGATED ONLY IN COURTS HAVING SITUS IN THE CITY OF
CHICAGO, ILLINOIS, AND BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION
AND VENUE OF ANY STATE OR FEDERAL COURT LOCATED AND HAVING ITS SITUS IN SAID
CITY, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.
The Loan evidenced hereby has been made and this Note has been
delivered at Xxxxxx's main office in Chicago, Illinois. This Note shall be
governed and construed in accordance with the laws of the State of Illinois, in
which state it shall be performed, and shall be binding upon Borrower and its
legal representatives, successors and assigns. If this Note contains any blanks
when executed by Xxxxxxxx, Xxxxxx is hereby authorized, without notice to
Borrower, to complete any such blanks according to the terms upon which the Loan
was granted. Wherever possible, each provision of this Note shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited by or be invalid under such law, such
provision shall be severable, and be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of this
Note.
As used herein, all provisions shall include the masculine, feminine,
neuter, singular and plural thereof, wherever the context and facts require such
construction.
IN WITNESS WHEREOF, Xxxxxxxx has executed this Note as of the date set
forth above.
HOUTEX METALS COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: XXXXXX X. XXXXXX
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Its: Vice President
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