LOAN AGREEMENT
between
XXXXX & XXXX MANUFACTURING COMPANY
and
OLD KENT BANK AND TRUST COMPANY
Dated November 29, 1993
TABLE OF CONTENTS
-----------------
ARTICLE I. DEFINITIONS AND TERMS........................................ 1
1.1 Definitions.................................................... 1
1.2 Financial Terms................................................ 5
ARTICLE II. THE LOANS................................................... 5
2.1 Revolving Loans................................................ 5
2.2 Loan Options................................................... 5
2.3 Borrowing Procedures........................................... 5
2.4 Continuation and/or Conversion of Loans........................ 6
2.5 Termination and Reduction of Credit............................ 6
2.6 Conditions for Disbursement of Initial Loan.................... 6
2.7 Conditions for Disbursement of Each Loan....................... 7
2.8 Minimum Amounts; Limitation on Number of Loans................. 7
ARTICLE III. PAYMENTS, OFFSETS AND PREPAYMENTS.......................... 8
3.1 Method and Place of Payment.................................... 8
3.2 Principal Payments............................................. 8
3.3 Prepayments.................................................... 8
3.4 Interest Payments.............................................. 8
3.5 Method of Calculation Interest................................. 9
3.6 Offset......................................................... 9
3.7 Payment on Non-Banking Day; Payment Computations............... 9
3.8 HLT Classification............................................. 9
ARTICLE IV. YIELD PROTECTION AND CONTINGENCIES.......................... 10
4.1 Additional Costs............................................... 10
4.2 Limitation of Requests and Elections........................... 10
4.3 Capital Adequacy Adjustment.................................... 10
4.4 Illegality and Impossibility................................... 11
4.5 Indemnification................................................ 11
ARTICLE V. WARRANTIES AND REPRESENTATIONS............................... 12
5.1 Corporate Existence............................................ 12
5.2 Qualifications................................................. 12
5.3 Power, Authority, Licenses and Permits......................... 12
5.4 Financial Statements........................................... 12
5.5 Adverse Changes................................................ 12
5.6 No Misrepresentations.......................................... 12
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5.7 No Litigation Defaults............................................. 12
5.8 Corporate Power, Due Authorization, No Conflict and Approvals...... 13
5.9 Taxes.............................................................. 13
5.10 Margin Securities.................................................. 13
5.11 Liens.............................................................. 13
5.12 Subsidiaries....................................................... 13
5.13 Purpose............................................................ 13
5.14 Compliance......................................................... 13
5.15 Investment Company Act Representation.............................. 14
5.16 Public Utility Holding Company Act Representation.................. 14
ARTICLE VI. AFFIRMATIVE AND NEGATIVE COVENANTS.............................. 14
6.1 Financial Statements and Other Information......................... 14
6.2 Corporate Existence................................................ 15
6.3 Access............................................................. 15
6.4 Insurance.......................................................... 15
6.5 Repair............................................................. 15
6.6 Taxes and Liabilities.............................................. 15
6.7 Merger, Acquisitions, Purchase and Sale............................ 15
6.8 Compliance with ERISA.............................................. 16
6.9 Minimum Working Capital............................................ 16
6.10 Minimum Stockholders' Equity....................................... 16
6.11 Ratio of Liabilities to Stockholders' Equity....................... 16
6.12 Intangibles........................................................ 16
6.13 Liens.............................................................. 16
6.14 Rental Payments.................................................... 17
6.15 Other Agreements................................................... 17
6.16 Use of Proceeds.................................................... 17
6.17 Notice of Investigations, and Proceedings and Litigation........... 17
6.18 Dividends.......................................................... 17
6.19 Distribution of Assets............................................. 17
ARTICLE VII. EVENTS OF DEFAULT AND REMEDIES................................. 17
7.1 Events of Default.................................................. 17
7.2 Remedies........................................................... 19
ARTICLE VIII. OTHER PROVISIONS.............................................. 19
8.1 Delay.............................................................. 19
8.2 Notice............................................................. 19
8.3 Expenses........................................................... 19
8.4 Law................................................................ 20
8.5 Successors......................................................... 20
8.6 Usury.............................................................. 20
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8.7 Amendments, Etc................................................. 20
8.8 Headings........................................................ 20
8.9 Integration and Severability.................................... 20
8.10 Independence of Covenants....................................... 21
8.11 Rights Cumulative and Waivers................................... 21
8.12 Relationship of Company and Bank................................ 21
EXHIBIT A REVOLVING NOTE
EXHIBIT B FORM OF COMPANY COUNSEL OPINION
EXHIBIT C DESCRIPTION OF PENDING LITIGATION
EXHIBIT D SCHEDULE OF LIENS
EXHIBIT E SUBSIDIARIES OF THE COMPANY
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LOAN AGREEMENT
--------------
THIS LOAN AGREEMENT (the "Agreement"), dated November 29, 1993, is entered
into between XXXXX & XXXX MANUFACTURING COMPANY, a Michigan corporation (the
"Company") and OLD KENT BANK AND TRUST COMPANY, a Michigan banking corporation
(the "Bank").
The Company desires to obtain a revolving bank credit in the principal sum
not to exceed Forty-three Million Five Hundred Thousand Dollars ($43,500,000),
in order to provide funds for the acquisition of the stock of The Xxxxx Company
and for its general corporate purposes, and the Bank is willing to extend that
credit to the Company upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
ARTICLE I. DEFINITIONS AND TERMS.
----------------------------------
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the meanings indicated for purposes of
this Agreement (those meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Adjusted Federal Funds Rate" means eighty-five one hundredths of one
percent (.85%) above the Federal Funds Rate in effect from time to time.
"Affiliate" has the meaning given to such term under Section 407(d)(7)
of ERISA.
"Banking Day" means any day other than a Saturday, Sunday or other day
on which Bank is open for the transaction of substantially all of its banking
functions and, with respect to Eurodollar Loans, on which dealings in foreign
exchange and currencies may be carried on by the Bank in the interbank
Eurodollar market.
"Capitalized Lease Obligation" means any obligation of the Company to
pay future rentals under a lease which, in accordance with GAAP, is required to
be shown as a liability on the combined balance sheet of the Company.
"Credit" means the Bank's commitment to make Revolving Loans under the
term of this Agreement.
"Current Assets" and "Current Liabilities" mean, at any time, all
assets or liabilities, respectively, that, in accordance with GAAP, should be
classified as current assets or current liabilities, respectively, on a balance
sheet of the Company.
"Dollars" and the sign "$" means lawful money of the United States of
America.
"Effective Date" means November 29, 1993.
"Environmental Laws" means all applicable laws, ordinances, rules,
regulations, and orders that regulate or are intended to protect public health
or the environment, or that establish liability for the investigation, removal,
or cleanup of or damage caused by any contamination including, without
limitation, any law, ordinance, rule, regulation, or order that regulates, or
prescribes requirements for, air quality, water quality, or the disposition,
transportation, or management of waste materials or toxic substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Eurodollar Interest Period" means, with respect to any Eurodollar
Loan, the period commencing on the day that Loan is made or converted to a
Eurodollar Loan and ending on the date one (1), two (2), three (3) or six (6)
months thereafter, as the Company may elect under Sections 2.3 or 2.4 hereof,
and each subsequent period commencing on the expiration of the immediately
preceding Eurodollar Interest Period and ending on the date one (1), two (2),
three (3) or six (6) months thereafter, as the Company may elect under Sections
2.3 or 2.4 hereof, provided, however that (a) any Eurodollar Interest Period
which commences on the last Banking Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Banking Day of the appropriate subsequent
calendar month), (b) each Eurodollar Interest Period which would otherwise end
on a day which is not a Banking Day shall end on the next succeeding Banking Day
or if that next succeeding Banking Day falls in the next succeeding calendar
month, on the next preceding Banking Day, and (c) no Eurodollar Interest Period
shall be permitted which extends beyond the Termination Date.
"Eurodollar Loan" means, any Revolving Loan that bears interest at the
Eurodollar Rate.
"Eurodollar Rate" means, with respect to any Eurodollar Loan and the
related Eurodollar Interest Period, the per annum rate that is equal to the sum
of:
(a) seventy-five one hundredths of one percent (.75%) per annum,
plus
(b) the rate obtained by dividing (1) the per annum rate of
interest at which deposits in Dollars for that Eurodollar Interest Period
and in an aggregate amount comparable to the amount of such Eurodollar Loan
are offered to the Bank by other prime banks in the London interbank
market, selected in the Bank's discretion, at approximately 11:00 a.m.
London time, as the case may be, on the second Banking Day prior to the
first day of that Eurodollar Interest Period, by (h) a percentage equal to
100 percent minus the daily average during that Eurodollar Interest Period
of the percentages in effect on each day of that Interest Period of all
reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) that are prescribed by
the Board of Governors of the Federal Reserve System (or any successor
agency thereto) for determining the reserve requirements with respect to
eurocurrency funding (currently referred to as "eurocurrency liabilities"
in Regulation D of that Board maintained by a member bank of that System,
and for purposes hereof, any Eurodollar Loan
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shall be deemed to be "eurocurrency liabilities" as defined in said
Regulation D) maintained by member banks of such System;
all as conclusively determined by the Bank, that sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%), and that Eurodollar Rate to be adjusted as and when any change
occurs in the reserve requirements referred to in subparagraph (b) above.
"Event of Default" means any of the events described in Section 7.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Funds Rate" means the rate of interest announced from time to
time by the Federal Reserve Bank of New York as the "average federal funds
rate," which Federal Funds Rate shall change simultaneously with any change in
that "average federal funds rate."
"Federal Funds Loan" means any Loan that bears interest at the
Adjusted Federal Funds Rate.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Indebtedness" means indebtedness for borrowed money, indebtedness
representing the deferred purchase price of property (excluding indebtedness
under normal trade credit for property purchased in the normal course of
operations), obligations under notes payable or drafts accepted representing
extensions of credit, indebtedness (whether or not assumed) secured by
mortgages, security interests, or other liens on property owned by the Company
or any Subsidiary and any Capitalized Lease Obligation.
"Intangibles" means (a) goodwill, including any amounts, however
designated on a combined balance sheet of the Company, representing the excess
of the purchase price paid for assets or stock acquired over the value assigned
thereto on the books of the Company; (b) patents, trademarks, trade names, and
copyrights; (c) treasury stock; and (d) loans and advances to stockholders,
directors, officers or employees.
"Interest Period" means any Eurodollar Interest Period.
"Liabilities" means all Indebtedness that, in accordance with GAAP, is
required to be classified as liabilities on a consolidated balance sheet of the
Company.
"Loans" means the Revolving Loans made pursuant to Section 2.1.
"Note" means the Revolving Note referred to in Section 2.3.
"Overdue Rate" means (a) in respect of principal of any Eurodollar
Loan a rate per annum that is equal to the sum of two percent (2%) per annum
plus the per annum rate in effect thereon until the end of the then current
Interest Period of that Loan and, thereafter, a rate per annum
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that is equal to the sum of two percent (2%) per annum plus the Prime Rate, (b)
in respect of principal of any Prime Loan or Federal Funds Loan, a rate per
annum that is equal to the sum of two percent (2%) per annum plus the Prime
Rate, and (c) in respect of other amounts payable by the Company hereunder
(other than interest), a per annum rate that is equal to the sum of two percent
(2%) per annum. plus the Prime Rate.
"Payment Date" shall mean as to any Eurodollar Loan the last day of
each Interest Period with respect thereto, and as to any Prime Loan or Federal
Funds Loan, the 12th calendar day of each month.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Plan" has the meaning given to that term in Section 3(3) of ERISA and
established or maintained by the Company, any of its Subsidiaries or any
Affiliate and includes any Plan as to which the Company, any of its Subsidiaries
or any Affiliate may have any liability.
"Prime Loan" means any Loan that bears interest at the Prime Rate.
"Prime Rate means at any time the rate of interest most recently
announced by the Bank as its "prime rate," which is not necessarily the lowest
rate of interest charged by the Bank to its customers, which Prime Rate shall
change simultaneously with any change in the Bank's "prime rate."
"Revolving Loans" means the Loans described in Section 2.1, and shall
be Prime Loans or Eurodollar Loans, or Federal Funds Loans.
"Revolving Note" means the Note described in Section 2.3.
"Stock Acquisition Agreement" means the Stock Acquisition Agreement,
dated October 26, 1993, between the Company, The Xxxxx Company and all of the
shareholders of The Xxxxx Company.
"Stockholders' Equity" means, at any time, the sum of the following
accounts set forth in a combined balance sheet of the Company, prepared in
accordance with GAAP: (a) all outstanding capital stock; (b) capital surplus and
additional paid in capital; and (c) retained earnings.
"Subsidiary" means any corporation, voluntary association, joint stock
company, voting trust or similar organization of which the Company and its other
subsidiaries own directly or indirectly more than 50 percent of the shares of
stock having general voting power under ordinary circumstances to elect a
majority of the board of directors, managers, trustees or others performing
similar functions.
"Termination Date" means the earlier to occur of (a) December 1, 1995
and (b) the date on which the Credit shall be terminated pursuant to Sections
2.5 or 7.
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"Unmatured Event of Default" means an event or condition which with
the lapse of time or giving of notice to the Company, or both, would constitute
an Event of Default.
"Working Capital" means at any time, the amount by which Current
Assets exceed Current Liabilities.
1.2 Financial Terms. Unless otherwise defined or the context otherwise
requires, all financial and accounting terms shall be defined under generally
accepted accounting principles. For purposes of calculating covenants under this
Agreement, any amounts which would otherwise be included as liabilities or
amortized on any financial statement of the Company pursuant to SFAS #106,
regarding post retirement health care benefits, shall not be considered as
liabilities or expenses of the Company.
ARTICLE II. THE LOANS.
----------------------
2.1 Revolving Loans. Subject to the terms and conditions of this
Agreement, the Bank agrees to make loans (collectively called the "Revolving
Loans" and individually called a "Revolving Loan") to the Company, which
Revolving Loans the Company may repay and reborrow during the period from the
Effective Date, to but not including, the Termination Date, in those amounts as
the Company may from time to time request, but not exceeding Forty-three Million
Five Hundred Thousand Dollars ($43,500,000) (or that amount as may be fixed by
the Company pursuant to Section 2.5) in the aggregate at any one time
outstanding.
2.2 Loan Options. Each Revolving Loan shall bear interest at the
Eurodollar Rate, the Prime Rate, or the Adjusted Federal Funds Rate and for
those Interest Periods as the Company may elect.
As to the Eurodollar Loan, the Bank may, if it so elects, fulfill its
commitment by causing a branch or affiliate to make or continue that Loan,
provided that in that event that Loan shall be deemed for the purposes of this
Agreement to have been made by the Bank and the obligation of the Company to
repay such Loan shall nevertheless be to the Bank and shall be deemed held by
the Bank, to the extent of that Loan, for the account of such branch or
affiliate. Notwithstanding any provision of this Agreement to the contrary, the
Bank shall be entitled to fund and maintain its funding of all or any part of
the Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if the
Bank had actually funded and maintained each Eurodollar Loan during each related
Interest Period through the purchase of deposits in the interbank Eurodollar
market having a maturity corresponding to that related Interest Period and
bearing an interest rate equal to the Eurodollar Rate for that Interest Period.
2.3 Borrowing Procedures. The Company shall before 1:00 p.m. on a Banking
Day give the Bank at least three (3) full Banking Days' prior telephonic notice
(promptly confirmed in writing) of each request for a Eurodollar Loan. The
Company shall give the Bank telephonic notice (promptly confirmed in writing)
before 3:00 p.m. on any Banking Day on which the Company wants the Bank to make
a Prime Loan or Federal Funds Loan. Each request shall specify the date (which
day shall be a Banking Day), amount and type of Loan and, if that Loan is to be
a Eurodollar Loan, the initial
5
Interest Period for that Loan. The Company shall apportion each Eurodollar Loan,
Prime Loan or Federal Funds Loan only in minimum aggregate amounts of $100,000
or integral multiples thereof. Subject to the terms and conditions of this
Agreement, the proceeds of each requested Loan shall be made available to the
Company by depositing the proceeds thereof, in immediately available funds, in
an account maintained and designated by the Company at the Bank. All Revolving
Loans shall be evidenced by the Revolving Note in the form set forth as Exhibit
A hereto, with appropriate insertions, which Revolving Note shall be dated the
date of the initial Revolving Loan and shall mature on the Termination date. The
Bank is hereby authorized by the Company to note on the schedule attached to the
Revolving Note or on its books and records, the date, amount and type of each
Loan and the duration of the related Interest Period (if applicable), the amount
of each payment or prepayment of principal thereon, and the other information
provided for on that schedule, which schedule or books and records, as the case
may be, shall constitute prima facie evidence of the information so noted,
provided that failure of the Bank to make any such notation shall not relieve
the Company of its obligation to repay, the outstanding principal amount of the
Loans, all accrued interest thereon and other amounts payable with respect
thereto in accordance with the terms of the Revolving Note and this Agreement.
2.4 Continuation and/or Conversion of Loans. The Company may elect (i) to
continue any outstanding Eurodollar Loan from the current Interest Period into a
subsequent Interest Period to begin on the last day of that current Interest
Period, or (ii) subject to the limitations of Section 2.8 hereof to convert any
portion of a Eurodollar Loan, Prime Loan or a Federal Funds Loan from a Loan of
one type into a Loan of another type, by giving at least three (3) Banking Days'
prior telephonic notice (promptly confirmed in writing) to the Bank of such
continuation or conversion, specifying the date, amount and, for each Eurodollar
Loan, the Interest Period. Absent notice of continuation or conversion, each
Loan shall automatically continue as a Loan of the current type, in the same
amount and the same Interest Period on the last day of the current Interest
Period for that Loan. No portion of the Loan shall be converted to another type
of Loan at any time that an Event of Default or an Unmatured Event of Default
shall exist.
2.5 Termination and Reduction of Credit. The Company shall have the right
to terminate or permanently reduce the amount of the Credit at any time and from
time to time, subject to the requirements set forth under Section 4.5, provided,
however, that (a) the Company shall give written notice of such termination or
reduction to the Bank specifying the amount and effective date thereof, (b) each
partial reduction of the Credit shall be in an amount equal to $100,000 or an
integral multiple thereof, (c) no termination or reduction shall be permitted
with respect to any portion of the Credit as to which a request for a Loan
pursuant to Section 2.3 is then pending, and (d) the Company shall repay the
outstanding principal of the Revolving Note in excess of the then reduced amount
of the Credit, including accrued interest to the date of the reduction on the
principal amount being repaid. The Credit or any portion thereof so terminated
or reduced may not be reinstated.
2.6 Conditions for Disbursement of Initial Loan. The obligation of the
Bank to make the initial Loan hereunder subject to receipt by the Bank of the
following documents and fulfillment by the Company of the following
requirements, in form and substance satisfactory to the Bank:
6
(a) Certificates of recent date of the appropriate authority or
official of the Company's and each of its Subsidiaries' respective states
of incorporation certifying as to the good standing and corporate existence
of the Company and each Subsidiary together with copies of all articles or
certificates of incorporation of the Company and each such Subsidiary on
file in that office certified as a recent date by that authority or
official and certified as true and correct as of the date of that Loan by a
duly authorized officer of the Company;
(b) Copies of the bylaws of the Company together with all authorizing
resolutions and evidence of other corporate action taken by the Company to
authorize the execution, delivery and performance by the Company of this
Agreement and the Note and the consummation by the Company of the
transactions contemplated hereby, each certified as true and correct as of
the date of that Loan by a duly authorized officer of the Company;
(c) Certificates of incumbency of the Company, containing, and
attesting to the genuineness o& the signatures of those officers authorized
to act on behalf of the Company in connection with this Agreement and the
Revolving Note and the consummation by the Company of the transactions
contemplated hereby, certified as true and correct as of the date of such
Loan by a duly authorized officer of the Company;
(d) The Revolving Note duly executed on behalf of the Company and
dated on or before the date of such Loan; and
(e) The favorable written opinion of the Company's counsel, addressed
to the Bank and dated the Effective Date, in substantially the form of
Exhibit B.
2.7 Conditions for Disbursement of Each Loan. The obligation of the Bank
to make any Loan (including the initial Loan) is subject to the satisfaction of
the following conditions precedent:
(a) The representations and warranties contained in Article V of this
Agreement shall be true and correct on and as of the date that Loan is
made; and
(b) No Event of Default, and no event or condition which might become
such an Event of Default with notice or lapse of time, or both, shall exist
or shall have occurred and be continuing on the date such Loan is made.
The Company shall be deemed to have made a certification to the Bank at the time
of the making of each Loan to the effects set forth in clauses (a) and (b) of
this Section 2.7.
2.8 Minimum Amounts; Limitation on Number of Loans. Except for
conversions or payments required pursuant to Section 4.4, each Loan and each
prepayment thereof shall be in a minimum amount of $100,000.
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ARTICLE III. PAYMENTS, OFFSETS AND PREPAYMENTS.
------------------------------------------------
3.1 Method and Place of Payment. All payments hereunder shall be made
without set off or counterclaim and shall be made to the Bank prior to 3:00
p.m., Grand Rapids, Michigan time, on the date due at its principal banking
office in the City of Grand Rapids, Michigan, or at any other place as may be
designated by the Bank to the Company in writing. Any payments received after
3:00 p.m., Grand Rapids, Michigan time, shall be deemed received on the next
Banking Day. Subject to the definition of "Interest Period", whenever any
payment to be made hereunder or under the Note shall be stated to be due on a
date other than a Banking Day, that payment may be made on the next Banking Day,
and that extension of time shall be included in the computation of interest or
any fees. At the time of mailing each payment, the Company shall specify to the
Bank that obligation of the Company hereunder to which that payment is to be
applied, or, in the event that the Company fails to so specify or if an Event of
Default has occurred and is continuing, that payment shall be applied as the
Bank may determine in its sole discretion.
3.2 Principal Payments. Unless earlier payment is required under this
Agreement, the Company shall pay to the Bank on the Termination Date the
outstanding principal amount of the Revolving Loans.
3.3 Prepayments.
(a) The Company may from time to time prepay the principal of the
Revolving Loan in whole or in part without premium, provided, however, that
any prepayment of a Eurodollar Loan shall be made on a Payment Date;
provided further that any partial prepayment of principal shall be in an
amount of $100,000 or an integral multiple thereof.
(b) The Company shall prepay the principal of the Revolving Loan in
whole without premium within sixty (60) days of a material change in the
Company's management, provided, however, that any such prepayment of a
Eurodollar Loan shall be made on the last day of that 60-day period, if
that last day is a Payment Date, and if it is not a Payment Date, on the
next Payment Date immediately following the end of that 60-day period, and
provided, further that any such prepayment shall include accrued interest
to the date of prepayment. For the purposes hereof, "a material change in
the Company's management" shall mean a majority of the people who are
members of the Board of Directors of the Company on the date hereof ceasing
to hold those positions.
3.4 Interest Payments. The Company shall pay interest to the Bank on the
unpaid principal amount of each Loan, for the period commencing on the date such
Loan is made until such Loan is paid in full, on the Payment Date applicable
thereto and at maturity (whether at stated maturity, by acceleration or
otherwise), and thereafter on demand, at the following rates per annum:
(a) During those periods that that Loan is a Eurodollar Loan, the
Eurodollar Rate applicable to that Loan for each related Eurodollar
Interest Period.
8
(b) During those periods that that Loan is a Prime Loan, the Prime
Rate.
(c) During those periods that that Loan is a Federal Funds Loan, the
Adjusted Federal Funds Rate.
(d) Notwithstanding the foregoing paragraphs (a), (b) and (c), the
Company agrees to pay interest on demand at the Overdue Rate on the
outstanding principal amount of any Loan and any other amount payable by
the Company hereunder (other than interest) which is not paid in full when
due (whether at stated maturity, by acceleration or otherwise) for the
period commencing on the due date thereof until the same is paid in full.
3.5 Method of Calculation Interest. Interest on the Loan and other
amounts due under this Agreement shall be computed on the basis of a year
consisting of 360 days and paid for actual days elapsed, calculated as to each
Interest Period from and including the day thereof but excluding the last day of
the relevant period.
3.6 Offset. In addition to and not in limitation of all rights of offset
that the Bank or other holder of the Revolving Note may have under applicable
law, the Bank or other holder of the Revolving Note shall, upon the occurrence
of any Event of Default, have the right to appropriate and apply to the payment
of the Revolving Note, any and all balances, credits, deposits, accounts or
moneys of the Company then or thereafter with the Bank or other holder.
3.7 Payment on Non-Banking Day; Payment Computations. Except as otherwise
provided in this Agreement to the contrary, whenever any installment of
principal of, or interest on, any Loan outstanding hereunder or any other amount
due hereunder, becomes due and payable on a day that is not a Banking Day, the
maturity thereof shall be extended to the next succeeding Banking Day and, in
the case of any installment of principal, interest shall be payable thereon at
the rate per annum. determined in accordance with this Agreement during that
extension.
3.8 HLT Classification. In the event that after the Effective Date, the
Loans or any Credit hereunder are classified on the Bank's books as a "highly
leveraged transaction" (an "HLT Classification") by the Bank or any governmental
authority, central bank or comparable agency having jurisdiction over the Bank,
the Bank shall promptly give notice of that HLT Classification to the Company
whereupon the Bank and the Company shall commence negotiations in good faith to
agree on revised interest rates and/or margins hereunder reflecting that HLT
Classification. In the event that the Company and the Bank fail to agree on
revised interest rates and/or margins within 90 days of the notice given by the
Bank referred to above, then the Bank may (i) by five Banking Days' notice to
the Company terminate the unused portions of the Credit and they shall thereupon
terminate, and (ii) by five Banking Days' notice to the Company declare all
amounts outstanding under the Revolving Note (together with accrued interest
thereon and any other amounts payable hereunder) to be, and all such amounts
shall thereupon become, absolutely and immediately due and payable. The Company
hereby absolutely and unconditionally agrees to pay to the Bank on the date of
any such acceleration all amounts payable hereunder and under the Note. The Bank
acknowledges that an HLT Classification (including any election to accelerate
amounts payable hereunder and under the Notes, as provided herein) is not a
Default or an Event of Default hereunder.
9
ARTICLE IV. YIELD PROTECTION AND CONTINGENCIES.
------------------------------------------------
4.1 Additional Costs. 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 the Bank, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive of any such authority (whether or not having the force of
law), shall (i) affect the basis of taxation of payments to the Bank of any
amounts payable by the Company under this Agreement (other than taxes imposed on
the overall net income of the Bank), or (ii) shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by the Bank, or
(iii) shall impose any other condition with respect to this Agreement, the
Revolving Note or the Loans, and the result of any of the foregoing is to
increase the cost to the Bank of making or maintaining any Eurodollar Loan or to
reduce the amount of any sum receivable by the Bank thereon, then the Company
shall pay to the Bank, from time to time, upon request by the Bank additional
amounts sufficient to compensate the Bank for such increased cost or reduced sum
receivable to the extent the Bank is not compensated therefor in the computation
of the interest rate applicable to that Eurodollar Loan. A detailed statement as
to the amount of that increased cost or reduced sum receivable, prepared in good
faith and submitted by the Bank to the Company, shall be conclusive and binding
for all purposes absent manifest error in computation.
4.2 Limitation of Requests and Elections. Notwithstanding any other
provision of this Agreement to the contrary, if, upon receiving a request for a
Eurodollar Loan, pursuant to Section 2.3, or a request for a continuation of a
Loan as a Loan of the then existing type pursuant to Section 2.4, or conversion
of a Loan to a Loan of a different type pursuant to Section 2.4, (a) in the case
of any Eurodollar Loan, deposits in Dollars for periods comparable to the
Interest Period elected by the Company are not available to the Bank in the
relevant interbank or secondary market or otherwise, or (b) the Eurodollar Rate
will not adequately and fairly reflect the cost to the Bank of making or
maintaining the related Eurodollar Loan, or (c) by reason of national or
international financial, political or economic conditions or by reason of any
applicable law, treaty, rule or regulation (whether domestic or foreign) now or
hereafter in effect, or the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive of that
authority (whether or not having the force of law), including without limitation
exchange controls, it is impracticable, unlawful or impossible for the Bank (i)
to make the relevant Loan or (ii) to continue such Loan as a Loan of the then
existing type or (iii) to convert a Loan, then the Company shall not be
entitled, so long as such circumstances continue, to request a Loan of the
affected type pursuant to Section 2.3 or a continuation of or conversion to a
Loan of the affected type pursuant to Section 2.4. In the event that such
circumstances no longer exist, the Bank shall again consider requests for
continuations of and conversions to Loans of the affected type pursuant to
Section 2.4.
4.3 Capital Adequacy Adjustment. 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 the Bank, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by the Bank
with any guideline, request or directive of that 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
10
to be maintained by the Bank or any corporation controlling the Bank and the
Bank determines that the amount of that capital is increased by or based upon
the existence of the Bank's obligations hereunder and that increase has the
effect of reducing the rate of return on the Bank's or that controlling
corporation's capital as a consequence of those obligations hereunder to a level
below that which the Bank or that controlling corporation could have achieved
but for such circumstances (taking into consideration its policies with respect
to capital adequacy) by an amount deemed by the Bank to be material, then the
Company shall pay to the Bank, from time to time, upon written request by the
Bank, additional amounts sufficient to compensate the Bank for any increase in
the amount of capital and reduced rate of return which the Bank reasonably
determines to be allocable to the existence of the Bank's obligations hereunder.
A statement as to the amount of that compensation, prepared in good faith and in
reasonable detail by the Bank, and submitted by the Bank to the Company, shall
be conclusive and binding for all purposes absent manifest error in computation.
4.4 Illegality and Impossibility. In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect, or any interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof, or
compliance by the Bank with any request or directive of such authority (whether
or not having the force of law), including without limitation exchange controls,
shall make it unlawful or impossible for the Bank to maintain any Loan under
this Agreement, the Company shall upon receipt of notice thereof from. the Bank,
either convert the Loan to a Loan of a different type, or repay in full the then
outstanding principal amount of each Loan so affected together with all accrued
interest thereon to the date of payment and all amounts due to the Bank under
Section 4.5 (a) on the last day of the then current Interest Period applicable
to that Loan if the Bank may lawfully continue to maintain such Loan to that
day, or (b) immediately if the Bank may not continue to maintain that Loan to
that day.
4.5 Indemnification. If the Company makes any payment of principal with
respect to any Loan on any other date than the last day of an Interest Period
applicable thereto (except for any prepayment made under Section 4.4 of this
Agreement) or if the Company fails to make any payment of principal or interest
in respect of a Loan when due, the Company shall reimburse the Bank on demand
for any resulting loss or expense incurred by the Bank, including without
limitation any loss incurred in obtaining, liquidating or employing deposits
from third parties. A detailed statement as to the amount of that loss or
expense, prepared in good faith and submitted by the Bank to the Company, shall
be conclusive and binding for all purposes absent manifest error in computation.
Notwithstanding the foregoing, if the Bank proposes to charge any amount to the
Company under Section 4.1 or Section 4.3, the Company shall have the right to
immediately prepay all Revolving Loans and shall not be responsible for any loss
or expense incurred by the Bank as a result of that prepayment.
11
ARTICLE V. WARRANTIES AND REPRESENTATIONS.
--------------------------------------------
The Company represents and warrants to the Bank as follows:
5.1 Corporate Existence. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan.
5.2 Qualifications. The Company and its Subsidiaries are duly qualified
and authorized to do business, and are in good standing as foreign corporations,
in each jurisdiction in which the failure to be so qualified or authorized to do
business would have a material adverse effect upon the Company's consolidated
financial condition, their contracts, their continuing business operations or
the validity or enforceability of this Agreement or the Note.
5.3 Power, Authority, Licenses and Permits. The Company and its
Subsidiaries have all requisite corporate power and authority and all necessary
licenses and permits to own and operate their properties and to carry on their
businesses as now conducted.
5.4 Financial Statements. The consolidated balance sheet of the Company
as of June 30, 1993, and the related consolidated statements of income, of
retained earnings and of changes in financial position for the fiscal year then
ended, accompanied by audit reports thereon containing opinions without
qualification, except as therein noted, of the Company's independent certified
public accountants, copies of all of which have been delivered to the Bank, have
been prepared by the Company in accordance with generally accepted accounting
principles consistently applied and present fairly the consolidated financial
position of the Company as of such date and the results of its consolidated
operations for such fiscal year.
5.5 Adverse Changes. Since June 30, 1993, there has been no change in the
business, prospects, profits, properties or condition (financial or otherwise)
of the Company or its Subsidiaries that individually or in the aggregate has
been or is likely to be materially adverse.
5.6 No Misrepresentations. Neither this Agreement, nor the financial
statements referred to in Section 5.4 above, nor any other written statement
furnished by the Company to the Bank in connection with the negotiation of the
Loans provided for herein, contains any untrue statement of a material fact or
omits a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact that the Company has not disclosed to
the Bank in writing that materially affects adversely, or, to the best of the
knowledge of the officers and directors of the Company, in the future is likely
to materially affect adversely, the properties, business, prospects, profits or
condition (financial or otherwise) of the Company or its ability to perform its
obligations under this Agreement.
5.7 No Litigation Defaults. Except as disclosed on Exhibit C attached
hereto, there are no proceedings pending, or to the knowledge of the officers of
the Company threatened, before any court, governmental authority or arbitration
board or tribunal against or affecting the Company or any of its Subsidiaries,
the outcome of which may reasonably be expected to materially adversely affect
the financial condition, business, operations or properties of the Company or
any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is in
default with respect to any order, judgment or decree of any court, governmental
authority or arbitration board or tribunal.
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5.8 Corporate Power, Due Authorization, No Conflict and Approvals. The
Company has full corporate power to execute, deliver and perform this Agreement
and the Note; the execution, delivery and performance of this Agreement and of
the Note, have been duly authorized by appropriate corporate action of the
Company and will not conflict with or violate the provisions of the articles of
incorporation or bylaws of the Company or of any law, rule, judgment, order,
agreement or instrument to which the Company is a party or by which it is bound,
nor do the same require any approval or consent of any public authority or other
third party, and this Agreement and the Note have been duly executed and
delivered by, and constitute the valid and binding obligations of the Company,
enforceable in accordance with their terms.
5.9 Taxes. To the best of the knowledge of the Company and its officers
and directors, all tax returns required to be filed by the Company and its
Subsidiaries in any jurisdiction have been filed, and all taxes, assessments,
fees and other governmental charges upon the Company or upon its assets, income
or Franchises, which are shown on such returns to be due and payable, have been
paid. The Company knows of no proposed additional tax assessment against it or
its Subsidiaries.
5.10 Margin Securities. The Company does not own or intend to carry or
purchase any "margin security" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System, 12 C.F.R. Chapter II.
5.11 Liens. None of the assets of the Company or any of its Subsidiaries
is subject to any mortgage, pledge, title retention lien, or other lien,
encumbrance or security interest, except (i) for current taxes not delinquent or
taxes being contested in good faith and by appropriate proceedings, (ii) for
liens arising in the ordinary course of business for sums not due or sums being
contested in good faith and by appropriate proceedings and not involving any
deposits or advances or borrowed money or the deferred purchase price of
property or services, (iii) to the extent shown in the financial statements
referred to in Section 5.4 and (iv) as listed on Exhibit D.
5.12 Subsidiaries. Exhibit E to this Agreement correctly sets forth (i)
the state in which the Company and its Subsidiaries, respectively, are
incorporated, (ii) the state or states in which the Company and its Subsidiaries
conduct their respective businesses and (iii) a list of the stock of each class
of each Subsidiary of the Company, showing in each case the number of shares of
stock of each class outstanding and the shares of each class owned by the
Company and each Subsidiary of the Company. The shares of stock listed on
Exhibit E as owned by the Company have been duly issued and are fully paid and
nonassessable, and are so owned free and clear of any liens, claims or other
encumbrances.
5.13 Purpose. The proceeds of the Loans will be used by the Company (a) to
acquire the stock of The Xxxxx Company pursuant to the Stock Purchase Agreement
and (b) for general working capital purposes.
5.14 Compliance. The Company and its Subsidiaries are in material
compliance with all statutes and governmental rules and regulations applicable
to them, including without limitation, ERISA insofar as such Act applies to
them. There is no condition with any Plan which could result in the incurrence
by the Company or any of its Subsidiaries of any material liability, fine or
penalty.
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5.15 Investment Company Act Representation. The Company is not an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
5.16 Public Utility Holding Company Act Representation. The Company is not
a "holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
ARTICLE VI. AFFIRMATIVE AND NEGATIVE COVENANTS.
------------------------------------------------
From the date of this Agreement and thereafter until the Termination Date
and until the Note and other liabilities of the Company hereunder are paid in
full the Company agrees that it will:
6.1 Financial Statements and Other Information. Furnish to the Bank:
(i) within 100 days after each fiscal year of the Company, a copy
of the Company's annual audit report prepared on a consolidated basis in
conformity with generally accepted accounting principles applied on a basis
consistent with that of the preceding fiscal year and certified by an
independent certified public accountant who shall be satisfactory to the
Bank;
(ii) within 45 days after each quarter (except the last quarter) of
each fiscal year of the Company, a copy of its unaudited financial
statement, prepared in the same manner as the audit report referred to in
clause (i) hereof and signed by the Company's chief financial officer;
(iii) together with the financial statements furnished by the Company
under preceding clauses (i) and (ii), a certificate of the Company's chief
financial officer to the effect that no, Event of Default or Unmatured
Event of Default has occurred and is continuing, or, if there is any such
event, describing it and the steps, if any, being taken to cure it and
containing a computation of, and showing compliance with, each of the
financial ratios and restrictions contained in this Section 6;
(iv) copies of each filing and report made by the Company or any
Subsidiary with or to any securities exchange or the Securities and
Exchange Commission, and of each communication from the Company or any
Subsidiary to shareholders generally, promptly upon the filing or making
thereof;
(v) immediately upon learning of the occurrence of any of the
following, written notice thereof, describing the same and the steps being
taken by the Company or the Subsidiary affected with respect thereto: (a)
the occurrence of an Event of Default or an Unmatured Event of Default or
(b) the institution of, or any adverse determination in, any litigation,
arbitration proceeding or governmental proceeding which is material to the
Company and its Subsidiaries on a consolidated basis; and
14
(vi) from time to time, such other information as the Bank may
reasonably request.
6.2 Corporate Existence. Maintain and preserve, and cause each Subsidiary
to maintain and preserve, its respective corporate existence and all rights,
privileges, license, patents, patent rights, copyrights, trademarks, trade
names, franchises and other authority to the extent material and necessary for
the conduct of its respective business in the ordinary course as conducted from
time to time.
6.3 Access. Permit, and cause each Subsidiary to permit, access by the
Bank to the books and records of the Company and each Subsidiary during normal
business hours and permit, and cause each Subsidiary to permit, the Bank to make
copies of said books and records.
6.4 Insurance. Maintain, and cause each Subsidiary to maintain, insurance
to such extent and against such hazards and liabilities as is commonly
maintained by companies similarly situated or as the Bank may reasonably request
from time to time.
6.5 Repair. Maintain, preserve and keep its, and cause each Subsidiary to
maintain, preserve and keep their, properties in good repair, working order and
condition and from time to time make and cause each Subsidiary to make, all
necessary and proper repairs, renewals, replacements, additions and improvements
thereto so that at all times the efficiency thereof shall be fully preserved and
maintained.
6.6 Taxes and Liabilities. Pay, and cause each Subsidiary to pay, before
the same becomes delinquent all taxes, assessments and other liabilities, except
as contested in good faith and by appropriate proceedings.
6.7 Merger, Acquisitions, Purchase and Sale. Not:
(i) be a party to any merger or consolidation;
(ii) except in the normal course of its business, sell transfer,
convey or lease all or any substantial part of its assets;
or
(iii) sell or assign, with or without recourse, any accounts
receivable or chattel paper;
(iv) purchase or otherwise acquire all or substantially all the
assets of any person, corporation, or other entity, or any shares of the
stock of, or similar interest in, any other corporation or entity,
except that the Bank agrees that the Company may (a) merge or consolidate with
or acquire another corporation so long as the Company is the surviving entity of
any of the foregoing and (b) sell, transfer, convey or lease any of its assets
so long as such arrangement does not result in a material adverse change in the
business, financial condition or operations of the Company, provided,
15
however, that the foregoing exceptions and consent shall only be applicable if
(x) in the event of any transaction involving ten percent (10%) or more of the
Company's assets (determined on a consolidated basis), the Bank shall have given
its prior written consent thereto and (y) in all cases, immediately prior to and
following that transaction, the Company shall be in compliance with all
covenants contained in Article VI hereof and there shall not have occurred an
Event of Default or Unmatured Event of Default.
6.8 Compliance with ERISA. Comply, and cause each Subsidiary to comply,
with all statutes and governmental rules and regulations applicable to them,
including, without limitation, ERISA insofar as that Act applies to them. Not
permit, and not permit any Subsidiary to permit, any condition to exist in
connection with any Plan which might constitute grounds for the PBGC to
institute proceedings to have such Plan terminated or a trustee appointed to
administer that Plan; and not engage in, or permit to exist or occur, or permit
any of its Subsidiaries to engage in, or permit to exist or occur, any other
condition, event or transaction with respect to any such Plan which could result
in the incurrence by the Company or any of its Subsidiaries of any material
liability, fine or penalty.
6.9 Minimum Working Capital. Maintain at all times a consolidated Working
Capital of not less than $20,000,000.
6.10 Minimum Stockholders' Equity. Maintain at all times a consolidated
Stockholders' Equity of not less than $62,000,000.
6.11 Ratio of Liabilities to Stockholders' Equity. Maintain a ratio of
total consolidated Liabilities to consolidated Stockholders' Equity that is not
greater than 1.25 to 1.0.
6.12 Intangibles. Not permit consolidated Intangibles to exceed
$23,000,000.
6.13 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any mortgage, pledge, title retention lien, or other lien, encumbrance or
security interest ("Lien") with respect to any assets now owned or hereafter
acquired, except for Liens:
(i) for current taxes not delinquent or taxes being contested in
good faith and by appropriate proceedings;
(ii) arising in the ordinary course of business for sums not due or
sums being contested in good faith and by appropriate proceedings and not
involving any deposits or advances or borrowed money or the deferred
purchase price of property or services;
(iii) referred to in Section 5.11; or
(iv) arising in connection with property acquired after the date
hereof and attaching only to the property being acquired,
16
provided, however that except for Liens permitted by paragraphs (i) and (iii) of
this Section, no Liens may attach to any of the Company's current assets.
6.14 Rental Payments. Not make aggregate rental payments on non-
capitalized, non cancellable leases with remaining terms in excess of one (1)
year in any twelve (12) month period that exceed five percent (5%) of the
Company's consolidated Stockholders' Equity determined as of the last day of
such period, provided that rental payments made under the following leases shall
be excluded in determining whether the Company has complied with this covenant:
(a) Lease, dated August 17, 1993, between The Xxxxx Company and American
National Bank and Trust Company of Chicago, et al., and (b) Agreement of Lease,
dated March 1, 1988, between 160508 Canada, Inc. and Roll-it, Inc.
6.15 Other Agreements. Not enter into any agreement containing any
provision which would be violated or breached by the performance of its
obligations hereunder or under any instrument or document delivered hereunder.
6.16 Use of Proceeds. Not use or permit any Loans hereunder to be used,
either directly or indirectly, for any purpose which would violate Regulation G
or U of the Board of Governors of the Federal Reserve System, as amended from
time to time (and furnish to the Bank, upon its request, a statement of
conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U of the Board of Governors of the Federal Reserve.
6.17 Notice of Investigations, and Proceedings and Litigation. Notify the
Bank in writing within 10 days after receipt whenever the Company receives
notice of the commencement of (a) formal proceedings or any investigation by a
federal or state environmental agency against the Company or any Subsidiary
regarding the compliance by the Company or any Subsidiary with Environmental
Laws, or (b) any other material, judicial or administrative proceeding or
litigation commenced by or against the Company or any Subsidiary.
6.18 Dividends. Pay any dividends, other than dividends payable in the
capital stock of the Company on any shares of any class of its capital stock
during any period when an Event of Default or an Unmatured Event of Default
shall exist.
6.19 Distribution of Assets. Except for dividends permitted by Section
6.18 hereof, and except for redemptions of the Company not in excess of $100,000
in any fiscal year, purchase, redeem, or otherwise acquire or make other
distribution of its assets, by reduction of capital or otherwise, with respect
to any shares of any class of its capital stock.
ARTICLE VII. EVENTS OF DEFAULT AND REMEDIES.
---------------------------------------------
7.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
(i) Non-Payment. Default, and the continuance thereof for five (5)
days, in the payment of principal of, or interest on, the Note when due, or
any fee hereunder.
17
(ii) Default Under Other Indebtedness. Default in the payment when
due (subject to any applicable grace period), whether by acceleration or
otherwise, of any other Indebtedness (whether owed to the Bank or any other
person or entity) in excess of $50,000 of, or guaranteed by, the Company or
any Subsidiary (except any such indebtedness of any Subsidiary to the
Company or to any other Subsidiary) or default in the performance or
observance of any obligation or condition with respect to such Indebtedness
if the effect of such default is to accelerate the maturity of that
Indebtedness or to permit the holder or holders thereof, or any trustee or
agent for such holders, to immediately cause that Indebtedness to become
due and payable prior to its expressed maturity.
(iii) Insolvency. The Company or any of its Subsidiaries becomes
insolvent or generally fails, to pay, or admits in writing its inability to
pay, its debts as they mature, or applies for, consents to, or acquiesces
in the appointment of a trustee, receiver or other custodian for the
Company, such Subsidiary or any property thereof, or, in the absence of
such application, consent or acquiescence, a trustee, receiver or other
custodian is appointed for the Company, any of its Subsidiaries or for a
substantial part of the property of the Company or any of its Subsidiaries
and is not discharged within sixty (60) days; or any bankruptcy,
reorganization, debt arrangement, or other proceeding under any bankruptcy
or insolvency law, or any dissolution or liquidation proceeding is
instituted by or against the Company or any of its Subsidiaries and if
instituted against the Company or any of its Subsidiaries is consented to
or acquiesced in by the Company or such Subsidiary or remains for sixty
(60) days undismissed; or any warrant of attachment is issued against any
substantial portion of the property of the Company or any of its
Subsidiaries which is not released within sixty (60) days of service.
(iv) ERISA. The PBGC applies to a United States District Court for
the appointment of a trustee to administer any Plan or for a decree
adjudicating that any Plan must be terminated; a trustee is appointed
pursuant to ERISA to administer any Plan; any action is taken to terminate
any such Plan or any Plan is permitted or caused to be terminated if, at
the time such action is taken or such termination of any such Plan occurs,
the Plan's "vested liabilities", as defined in Section 3(25) of ERISA,
exceed the then value of its assets at the time of such termination.
(v) Agreements. Default in the performance of any of the Company's
agreements herein set forth (and not constituting an Event of Default under
any of the preceding subsections of this Section 7.1) and continuance of
such default for thirty (30) days after notice thereof to the Company from
the Bank, provided that any failure by the Company to comply with its
covenants set forth in Sections 6.7, 6.9, 6.10, 6.11, 6.12, 6.13, 6.18 and
6.19 shall constitute an Event of Default without notice to the Company
from the Bank.
(vi) Warranty. Any warranty made by the Company herein is untrue in
any material respect, or any schedule, statement, report, notice, writing
or certification furnished by the Company to the Bank is untrue in any
material respect on the date as of which the facts set forth are stated or
certified.
18
(vii) Litigation. Notice is given to the Company by the Bank that,
in the good faith opinion of the Bank, any litigation, arbitration
proceeding or government proceeding which has been instituted against the
Company or any of its Subsidiaries will, to a material extent, adversely
affect the consolidated financial condition or continued operation of the
Company, and such litigation or proceeding is not dismissed within 30 days
after such notice.
7.2 Remedies. If any Event of Default described in Section 7.1 is
continuing, the Bank may declare the Credit to be terminated and the Note to be
due and payable, whereupon the Credit shall immediately terminate and the Note
shall become immediately due and payable, all without notice of any kind (except
that if an event described in Section 7.1(iii) occurs, the Credit shall
immediately terminate and the outstanding Note shall become immediately due and
payable without declaration or notice of any kind). The Bank shall promptly
advise the Company of any declaration, but failure to do so shall not impair the
effect of that declaration.
ARTICLE VIII. OTHER PROVISIONS.
--------------------------------
8.1 Delay. No delay on the part of the Bank or the holder of the Note in
the exercise of any power or right shall operate as a waiver thereof, nor shall
any single or partial exercise of any power or right preclude other or further
exercise thereof, or the exercise of any other power or right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
8.2 Notice. Any notice hereunder to the Company or the Bank shall be in
writing and, if mailed, shall be deemed to be given one business day after being
sent by registered or certified mail, postage prepaid, and addressed to the
Company or the Bank as its address set forth below, or at such other address as
the Company or the Bank may, by written notice, designate as its address for
purposes of notice hereunder.
Bank. Old Kent Bank and Trust Company
Corporate Banking Department
Xxx Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000
ATTN: Xxxxx X. Xxxxxxx, Vice President
Company. Xxxxx & Xxxx Manufacturing Company
0000 Xxx Xxxxxxxxxx Xxxxx, X.X.
Xxxxx Xxxxxx, Xxxxxxxx 00000
ATTN: Xxxxxxx X. Xxxxx, President
8.3 Expenses. The Company agrees, whether or not any Loan is made
hereunder, to pay the Bank upon demand for all reasonable expenses, including
reasonable fees of attorneys for the Bank incurred by the Bank in connection
with (i) the preparation, negotiation and execution of this Agreement, the Note
and any document required to be furnished in connection therewith, (ii) the
negotiation, preparation and signing of waivers of this Agreement or the Note,
(iii) the preparation of any and all amendments to this Agreement or the Note
and all other instruments or documents provided for herein or delivered or to be
delivered hereunder or in connection herewith, and (iv) the
19
enforcement of the Company's obligations hereunder or under the Note. The
Company also agrees (v) to indemnify and hold the Bank harmless from any loss or
expense that may arise or be created by the acceptance of telephonic or other
instructions for making Loans and (vi) to pay, and save the Bank harmless from
all liability for, any stamp or other taxes which may be payable with respect to
the execution or delivery of this Agreement or the issuance of the Note or of
any other instruments or documents provided for herein or to be delivered
hereunder or in connection herewith. The Company's foregoing obligations shall
survive any termination of this Agreement.
8.4 Law. This Agreement and the Revolving Note shall be governed by and
construed in accordance with the laws of the State of Michigan, without regard
to principles of conflicts of law.
8.5 Successors. This Agreement shall be binding upon the Company and the
Bank and their respective successor and assigns, and shall inure to the benefit
of the Company and the Bank and the successors and assigns of the Bank. The
Company shall not assign its rights or delegate its duties hereunder without the
consent of the Bank.
8.6 Usury. Notwithstanding any provisions of this Agreement or the
Revolving Note, in no event shall the amount of interest paid or agreed to be
paid to the Bank exceed an amount computed as the highest rate of interest
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provisions of this Agreement or the Revolving Note at the
time performance of such provision shall be due, shall involve exceeding the
interest rate limitation validly prescribed by law which a count of competent
jurisdiction may deem applicable hereto, then ipso facto, the obligations to be
fulfilled shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever the Bank
shall ever receive as interest an amount that would be deemed unlawful under
applicable law, that interest shall be automatically applied to the payment of
principal of the Loan outstanding hereunder (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the Company
if such principal has been paid in full.
8.7 Amendments, Etc. This Agreement and any term or provision hereof may
be amended, waived or terminated by an instrument in writing by the party
against which it is to be enforced, unless that instrument by its terms calls
for the execution by both parties, in which event such instrument must be signed
by both the Company and the Bank. Any such amendment, waiver or termination
shall be effective only in the specific instance and for the specific purpose
for which given.
8.8 Headings. The headings of the various subdivisions hereof are for the
convenience of reference only and shall in no way modify any of the terms or
provisions hereof.
8.9 Integration and Severability. This Agreement embodies the entire
agreement and understanding between the Company and the Bank and supersedes all
prior agreements and understandings relating to the subject matter hereof. In
case any one or more of the obligations of the Company under this Agreement or
the Note shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining obligations of the
Company shall not in any way be affected or impaired thereby, and any
invalidity, illegality or unenforceability in one jurisdiction shall not affect
the validity, legality or enforceability of the obligations of the Company under
this Agreement or the Note in any other jurisdiction.
20
8.10 Independence of Covenants. All covenants contained herein shall be
given independent effect so that if a particular action or condition is not
permitted by any of those covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitation of, another covenant shall
not avoid the occurrence of an Event of Default if that action is taken or
condition exists.
8.11 Rights Cumulative and Waivers. Each and every right granted to the
Bank hereunder or under any other document delivered hereunder, or in connection
herewith, or allowed it by law or equity, shall be cumulative and may be
exercised from time to time. No failure on the part of the Bank to exercise, and
no delay in exercising, any right shall operate as a waiver thereof or as a
waiver of any other right.
8.12 Relationship of Company and Bank. The relationship between the
Company and the Bank is solely that of borrower and lender. The Bank has no
fiduciary responsibilities to the Company. The Bank does not undertake any
responsibility to the Company to review or inform the Company of any matter in
connection with any phase of the Company's business or operations. The Company
shall rely entirely upon its own judgment with respect to its business, and any
review, inspection, supervision, or information supplied to the Company by the
Bank is for the protection of the Bank and neither the Company nor any third
party is entitled to rely thereon.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date stated above in the first paragraph of this Agreement.
XXXXX & XXXX MANUFACTURING COMPANY
By /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx, President
OLD KENT BANK AND TRUST COMPANY
By /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx, Vice President
21
EXHIBIT A
---------
REVOLVING NOTE
--------------
$43,500,000 Grand Rapids, Michigan
November 29, 1993
FOR VALUE RECEIVED, the undersigned, XXXXX & XXXX MANUFACTURING COMPANY, a
Michigan corporation (the "Company"), hereby promises to pay to the order of OLD
KENT BANK AND TRUST COMPANY, a Michigan banking corporation (the "Bank"), in
lawful currency of the United States of America and in immediately available
funds, on December 1, 1995, the principal sum of Forty-three Million Five
Hundred Thousand Dollars ($43,500,000), or, if less, the aggregate unpaid
principal amount of Revolving Loans made by the Bank to the Company pursuant to
the Loan Agreement described below, and to pay interest on the unpaid principal
balance hereof from time to time outstanding, in like money and funds, for the
period from the date hereof until those Revolving Loans shall be paid in full,
at the rates per annum. and on the dates provided in the Loan Agreement referred
to below.
The Bank is hereby authorized by the Company to note on the schedule
attached to this Revolving Note or on its books and records the date and amount
of each Revolving Loan, the applicable interest rate and type and the duration
of the related Interest Period (if applicable), the amount of each payment or
prepayment of principal thereon, and the other information provided for on that
schedule, which schedule or such books and records, as the case may be, shall
constitute prima facie evidence of the information so noted, provided that any
failure by the Bank to make any that notation shall not relieve the Company of
its obligation to repay the outstanding principal amount of this Revolving Note,
all accrued interest hereon and any amount payable with respect hereto in
accordance with the terms of this Revolving Note and the Loan Agreement.
The Company and each endorser or guarantor hereof waives demand,
presentment, protest, diligence, notice of dishonor and any other formality in
connection with this Revolving Note.
This Revolving Note evidences one or more Revolving Loans made under a Loan
Agreement, dated as of November 29, 1993, (the "Loan Agreement"), between the
Company and the Bank, to which reference is hereby made for a statement of the
circumstances under which this Revolving Note is subject to prepayment and under
which its due day may be accelerated. Capitalized terms used but not defined in
this Revolving Note shall have the respective meanings assigned to them in the
Loan Agreement.
XXXXX & XXXX MANUFACTURING COMPANY
By
-----------------------------------
Xxxxxxx X. Xxxxx, President
A-1
Accepted by:
OLD KENT BANK AND TRUST COMPANY
By
-----------------------------------
Xxxxx X. Xxxxxxx, Vice President
A-2
SCHEDULE TO REVOLVING NOTE
DATED NOVEMBER 29,1993, MADE BY
XXXXX & XXXX MANUFACTURING COMPANY
IN FAVOR OF
OLD KENT BANK AND TRUST COMPANY
Principal
Date Loan Principal Type Interest Amount Paid, Principal
Made or Amount of of Period (if Prepaid or Balance Notation
Converted Loan Loan applicable) Converted Outstanding Made by
----------- --------- ---- ----------- ------------ ----------- ---------
A-3
EXHIBIT B
---------
FORM OF COMPANY COUNSEL OPINION
-------------------------------
November 29, 1993
Old Kent Bank and Trust Company
Xxx Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel to Xxxxx & Xxxx Manufacturing Company, a Michigan
corporation (the "Company") in connection with the Loan Agreement dated as of
November 29, 1993 (the "Loan Agreement"), entered into between the Company and
Old Kent Bank and Trust Company (the "Bank"). Except as otherwise indicated in
this Opinion Letter, capitalized terms are defined as set forth in the Loan
Agreement or the Accord (see below).
This Opinion Letter is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). Accordingly, it is subject to a number of qualifications, exceptions,
definitions, limitations on coverage and other limitations, all as more
particularly described in the Accord. The law covered by the opinions expressed
in this Opinion Letter is limited to the federal law of the United States and
the law of the state of Michigan.
For purposes of this Opinion Letter, we have examined copies of the Loan
Agreement and the Revolving Note dated November 29, 1993 (the "Revolving Note")
made by the Company in favor of the Bank in the principal amount of $43,500,000.
The Loan Agreement and the Revolving Note are hereinafter together referred to
as the "Loan Documents".
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of Michigan, has the requisite
corporate power and authority to carry on its business as presently conducted,
and to own and operate its properties and to enter into and perform its
obligations under the Loan Documents, and is duly qualified to transact business
in all other jurisdictions where, because of the nature of its activities or
properties, such qualification is required.
2. Each of the Affiliates (as hereinafter defined) is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Michigan, and is duly qualified to transact business in all other jurisdictions
where, because of the nature of its respective activities or properties, such
qualification is required. As used herein, "Affiliates" means Modar, Inc., a
Michigan corporation, and Xxxxx Manufacturing Company, a Michigan corporation.
3. The Loan Documents are enforceable against the Company.
B-1
4. The execution, delivery and performance by the Company of the Loan
Documents do not (i) violate the articles of incorporation or bylaws of the
Company, or (ii) result in any breach of any of the obligations of, or
constitute a default under, the provisions of any written agreement or other
written instrument relating to the borrowing of money to which the Company is a
party, or by which it may be bound, or (iii) violate applicable provisions of
statutory law or regulation.
5. No consent or approval of any governmental body, federal or state of
Michigan, or of any non-governmental person (including, without limitation, any
creditor or stockholder of the Company or any of the Affiliates) is necessary
for the execution, delivery and performance by the Company of the Loan
Documents; provided, however, no opinion is expressed with respect to the effect
of your compliance with any laws or regulations applicable to the transaction on
account of the nature of your business, or facts relating specifically to you,
or as to the effect of any such non-compliance on the opinions set forth above.
6. The Company does not, in its ordinary course of business, extend or
maintain credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock (within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System) and, based on the representations of
the Company in the Loan Documents, no part of the proceeds of the Loan Documents
will be used for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any such margin stock or maintaining or extending credit to
others for such purpose.
We hereby confirm to you that, except as set forth in Exhibit C to the Loan
Agreement, there are not actions or proceedings against the Company pending, or
overtly threatened in writing, before any court, governmental agency or
arbitrator which, if adversely determined, could have a materially adverse
effect on the Company's financial condition or business or on the Company's
ability to perform or otherwise comply with its obligations set forth in the
Loan Documents.
Very truly yours,
VARNUM, RIDDERING, XXXXXXX & XXXXXXX
Xxxxxxx X. Xxxxx
B-2
EXHIBIT C
---------
DESCRIPTION OF PENDING LITIGATION
---------------------------------
Xxxxxxx vs. Xxxxx & Xxxx Mfg, Co., et. al., U.S. District Court (S.D.
Florida), Case No. 93-2174, relates to claimed infringement of Xxxxxxx Patent
(U.S. Patent No.: 4,315,661) on a "Euro-slide" mechanism. Answer is due on
December 10, 1993. Significant prior art has been uncovered which appears to
support a defense of patent invalidity.
Xxxxxx Xxxxxxxx, vs. Tomisite Systems Corp., et. al., Supreme Court of the
State of New York, Case No.: 92-17657, relates to a personal injury case (injury
to foot) resulting from a lateral file cabinet failure. Xxxxx & Xxxx was made a
third party defendant by the cabinet manufacturer, Fillip Metal Cabinet Company.
Plaintiff's demand is for $3 million with respect to first party defendants,
Globe Desk Company and Fillip Metal Cabinet Company. Xxxxx & Xxxx has filed an
answer and affirmative defenses. The Home Insurance Company has undertaken to
defend for its insured, Xxxxx & Xxxx. See related case, Xxxx Supply vs. Fillip
Metal, below.
Xxxx Supply Company vs. Fillip Metal Cabinet Company, Circuit Court
(Illinois 19th Judicial District), Case No.: 92 L 191, relates to a commercial
contract claim asserted by Xxxx Supply as against Fillip Metal for nonpayment of
open account. Fillip Metal counterclaimed against Xxxx and by third party
complaint against Xxxxx & Xxxx alleging breach of express and/or implied
warranties for drawer slide products. Xxxxx & Xxxx moved for and obtained
summary judgment on the grounds of lack of privity and lack of warranty. Fillip
Metal has appealed and all parties have filed briefs. Appellate decision will
likely issue in 18 to 24 months.
Rev-A-Shelf Inc., vs. Xxxxx & Xxxx Mfg. Co., U.S. District Court (W.D.
Kentucky), Case No.: 92-0168-L (CS), relates to a declaratory judgment action
brought by Rev-A-Shelf in order to determine whether their product infringes a
patent licensed to Xxxxx & Xxxx. This matter has been in a settlement mode
since the deposition of Rev-A-Shelf's key witness. It is anticipated that Rev-A-
Shelf will cease its infringing activities and will enter into a consent order.
Xxxxx & Xxxx Mfg. Co. vs. Advertising Technologies, Inc., U.S. District
Court (W.D. Michigan), Case No.: 1:93 cv 866, relates to a breach of contract
claim for a failure on the part of Adtech to provide advertising audit services.
Damages are approximately $59,000. Counsel for Adtech has indicated he will
propose a stipulated judgment.
Xxxxx & Xxxx Mfg. Co. vs. Accuride International, Inc., U.S. District Court
(W.D. Michigan), Case No.: 1:93 cv 959, relates to a claim by Xxxxx & Xxxx
regarding deceptive trade practices on the part of a competing drawer slide
manufacturer. A consent order enjoining the practices has entered with costs
and fees to Xxxxx & Xxxx. The court retains jurisdiction for the purpose of
monitoring the terms of the consent order for the next two months.
In Re PNP Holdings Corporation (Pay'n Pak Stores, Inc.), U.S. Bankruptcy
Court (X.X. Xxxxxxxxxx), Case No.: 91-06976/91-06977, Adversary No.: A93-07175,
relates to a preference claim asserted by debtor PNP against Xxxxx & Xxxx. The
claim totals approximately $341,000 although substantial set-offs (subsequent
new value, tort claims, etc.) have been raised by Xxxxx &
C-1
Xxxx. Exposure in this matter is believed to be less than $160,000. This case is
likely to be set for trial in March of 1994.
Xxxxx & Xxxx Mfg. Co. vs. Venture Horizon Corporation, State Court
California, relates to a collection action to recover approximately $23,000 in
accounts receivable. A verbal agreement to compromise this for approximately
$13,000 in view of claimed set-offs has been reached.
Northeast Gravel is a state (Michigan) waste site that is currently the
focus of a voluntary remedial investigation. Xxxxx & Xxxx has been noticed as a
potentially responsible party. Although it is far too early to forecast exposure
potential, it is clear that Xxxxx & Xxxx'x respective share will be quite small.
U.S. E.P.A. vs. Butterworth Landfill relates to a Superfund action brought
by the U.S. E.P.A. Currently the six major PRP's are working on a remedial
design work plan. Xxxxx & Xxxx has been noticed as a de minimis PRP. Potential
exposure is unknown. We have had some insurance reimbursement in this case for
defense costs.
U.S. E.P.A. vs. Conservation Chemical Company, relates to a Superfund
action in Gary, Indiana involving a landfill. Xxxxx & Xxxx has been noticed as a
de minimis PRP and has participated in a de minimis PRP group. Exposure so far
has been limited to approximately $750,00. This site has a very large number of
PRP's and it is expected that Xxxxx & Xxxx'x liability, if any, will be modest.
U.S. E.P.A. vs. Lakeland Disposal, relates to an Indiana landfill currently
the subject of a Superfund action. Xxxxx & Xxxx has been noticed as a PRP
although no evidence has been produced to link Xxxxx & Xxxx to the site. The
U.S. E.P.A. is considering our arguments for removal from the PRP list.
U.S. E.P.A. vs. State Disposal, relates to a landfill in Grand Rapids
Township. Xxxxx & Xxxx received a Section 104(e) request from the U.S. E.P.A. in
1990, and no further agency action has been undertaken since that time.
U.S. E.P.A. vs. Muncie Race Track, relates to a landfill in Muncie, Indiana
currently the subject of Superfund action. Xxxxx & Xxxx'x subsidiary, Xxxxx
Mfg., was served with a Section 104(e) request from the U.S. E.P.A. A freedom of
information request indicates that Xxxxx contributed general trash only to this
site.
Xxxxxxx Xxxxx vs. Xxxxx & Xxxx, Workers' Compensation Appeals Board
(California), Case No.: BGN 0129163, relates to a workers' compensation claim
filed by a former employee of the Xxxxx & Xxxx Western Division. A settlement
offer of $17,000 has reportedly been accepted by the claimant.
In Re National Transport Services, Inc., U.S. Bankruptcy Court, (W.D.
Arkansas), Case No.: 90-1204M, Adversary No.: 92-7595, relates to a rate
undercharge claim by the Trustee against Modar, Inc. Case is being settled for
$1,000.
C-2
Xxxxx & Xxxx Mfg. Co. vs. Xxxx America, et. al., Kent County Circuit Court
(Michigan), Case No.: 92-77171-NZ, relates to claims of breach of warranty,
negligence and misrepresentation against defendants roof installer and
manufacturer of roof membrane. Damages are believed to be in excess of $500,000.
Trial is currently anticipated in the summer of 1994.
Xxxxx Xxxxx, is a workers' compensation claim that has been paid
voluntarily. Currently, the claimant is seeking to redeem her claim and
terminate her employment with the company. Estimated settlement value of this
case lies in the range of $25,000 to $60,000.
Xxxxxxx Xxxxx vs. Xxxxx & Xxxx Mfg. Co., Bureau of Worker's Disability
Compensation, (Michigan), relates to a claim of work related injury. This claim
has been compromised and a redemption of $50,000 has been scheduled.
Xxxxxxx Xxxxxxx vs. Xxxxx & Xxxx Mfg. Co., Michigan Department of Civil
Rights, Case No. - 124654-EMD, 23A926519R, relates to a claim of race/gender
discrimination. The Company feels strongly that there is no basis for the claim.
Estimated exposure presuming a finding in favor of the claimant would he in the
range of $15,000 to $50,000.
Xxxxx X. Xxxx vs. Xxxxx & Xxxx Mfg. Co., Michigan Department of Civil
Rights, Case No. 117813-EM20, relates to a claim of discrimination on the basis
of a disability. Claimant had pursued and received a workers' compensation award
for a shoulder pain that turned out to result from a torn rotator cuff. Claimant
brought a concurrent claim with the MDCR owing to her belief that she was
eligible for a return to work and, also, that she could be accommodated. Her
initial claim was denied by MDCR and she has petitioned for a redetermination.
The Company vigorously contests this claim and perceives no merit in it.
Xxxxxx Xxxxx vs. Xxxxx & Xxxx Mfg. Co., Bureau of Workers' Disability
Compensation, (Michigan), relates to a claim of work related injury that has
been handled on a voluntary basis. The last petition in this matter related to
the establishment of a new date of injury. Claimant has affected a return to
work under light duty status. The Bureau retains jurisdiction.
C-3
EXHIBIT D
LIST OF EXISTING LIENS
----------------------
Blanket filing by Xxxxx X. Xxxxxxxxx, as nominee and agent of the Landlords
under the Skokie Lease dated August 20, 1990
D-1
EXHIBIT E
SUBSIDIARIES OF THE COMPANY
---------------------------
State in Which Stock of Stock Owned
State of Business is Each Class by the
Company Incorporation Conducted Outstanding Company
------- ------------- --------- ----------- -------
Xxxxx & Xxxx Michigan Michigan, Common None
Manufacturing Co. California 2,919,845 shares
Class B Common -
2,402,784 shares
Modar, Inc. Michigan Michigan Common - 100%
8,581 shares
Xxxxx Michigan Michigan, Common - 100%
Manufacturing Co. Indiana 1,000 shares
Xxxxx & Xxxx Ontario, Quebec, Common - 100%
Canada Inc. Canada Ontario 100,000 shares
Preferred -
5,589,565 shares
E-1
CERTIFICATE OF XXXXX & XXXX MANUFACTURING COMPANY
The undersigned, Xxxxxxx X. Xxxxx, President and Chief Executive officer of
Xxxxx & Xxxx Manufacturing Company, a Michigan corporation (the "Company"),
hereby certifies that:
1. Except for the terms of that certain Loan Agreement between the
Company and Metropolitan Life Insurance Company, dated March 16, 1988, and the
terms of that certain Loan Agreement between the Company and Old Kent Bank &
Trust Company of even date herewith, the Company is not a party to any other
agreement pursuant to which the Company has borrowed funds from a bank or other
lending source.
2. The execution, delivery and performance by the Company of the Loan
Agreement by and among the Company and Old Kent Bank & Trust Company will not
contravene any contract or undertaking entered into by Company.
3. Based in part upon an examination of the business and operation of the
Company and its subsidiaries, Modar, Inc., a Michigan corporation, and Xxxxx
Manufacturing Company, a Michigan corporation:
A. The Company does business solely in the states of California and
Michigan. The Company does not transact business in any other state.
X. Xxxxx, Inc. does business solely in the state of Michigan. Modar, Inc.
does not transact business in any other state.
X. Xxxxx Manufacturing Corporation does business solely in the states of
Michigan and Indiana. Xxxxx Manufacturing Company does not transact
business in any other state.
Dated: November 29, 1993 XXXXX & XXXX MANUFACTURING COMPANY
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx
Its President and CEO
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "Amendment"), is made as of
February 16, 1995, by and between XXXXX & XXXX MANUFACTURING COMPANY, a Michigan
corporation (the "Company") and OLD KENT BANK (formerly Old Kent Bank and Trust
Company), a Michigan banking corporation (the "Bank").
RECITALS:
--------
A. On November 29, 1993, Company and Bank signed a Loan Agreement (the
"Loan Agreement"), providing for Bank to extend to Company a revolving bank
credit of up to $43,500,000;
B. Company and Bank wish to amend the Loan Agreement on the terms and
conditions set forth in this Amendment.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Restatement of Warranties and Representations. Company hereby confirms
to Bank that the warranties and representations set forth in the Loan Agreement
were true, accurate and complete when made and remain true, accurate and
complete as of the date of this Amendment.
2. No Events of Default; Compliance with Covenants. Company hereby
confirms and acknowledges to Bank that no event of default has occurred under
the Loan Agreement as of the date of this Amendment, and that as of the date of
this Amendment, Company has complied with all of the affirmative and negative
covenants set forth in the Loan Agreement.
3. Amendments Concerning Definitions Under the Loan Agreement. The
following definitions set forth in Section 1.1 of the Loan Agreement are hereby
amended in their entirety to read as follows:
"Adjusted Federal Funds Rate" means fifty-five one-hundredths of one
percent (.55%) above the Federal Funds Rate in effect from time to time.
"Eurodollar Rate" means, with respect to any Eurodollar Loan and the
related Eurodollar Interest Period, the per annum rate that is equal to the sum
of:
(a) fifty one-hundredths of one percent (.50%) per annum, plus
(b) the rate obtained by dividing (1) the per annum rate of interest
at which deposits in Dollars for that Eurodollar Interest Period and in an
aggregate amount comparable to the amount of such Eurodollar Loan are
offered to the Bank by other prime banks in the London interbank market,
selected in the Bank's discretion, at approximately 11:00 a.m. London time,
as the case may be, on the second Banking Day prior to the first day of
that Eurodollar Interest Period, by (ii) a percentage equal to 100 percent
minus the percentage, if any, that is specified on the first day of that
Eurodollar Interest Period by the Board of Governors of the Federal Reserve
System (or any successor agency) (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) for
determining the reserve requirements with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities" in Regulation D of
that Board maintained by a
member bank of that System, and for purposes hereof, any Eurodollar Loan
shall be considered to be "eurocurrency liabilities" as defined in
Regulation D) to be maintained by member banks of such System;
all as conclusively determined by the Bank, that sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%), and that Eurodollar Rate to be adjusted as and when any change
occurs in the reserve requirements referred to in subparagraph (b) above.
"Termination Date" means the earlier to occur of (a) November 1, 1996
and (b) the date on which the Credit shall be terminated pursuant to Sections
2.5 or 7.
4. Amendments Concerning Article 11 of the Loan Agreement.
(a) Section 2.1 of the Loan Agreement is hereby amended to replace the
number $43,500,000 with the number $47,500,000 so that the maximum amount
of Revolving Loans that Company may borrow from Bank under the Loan
Agreement is increased from $43,500,000 to $47,500,000.
(b) To evidence the increase in the maximum amount of the Revolving
Loans from $43,500,000 to $47,500,000, Company shall execute and deliver to
Bank a Revolving Note in the form attached hereto as Exhibit A which will
replace in its entirety the Revolving Note previously executed and
delivered to Bank on November 29, 1993.
(c) The following Section 2.9 is hereby added to the Loan Agreement:
2.9 Commitment Fee. As long as Bank is obligated to extend
Revolving Loans to Company, Company shall pay to Bank a revolving line of
credit facility fee on the daily average unused amount of the maximum
$47,500,000 commitment of Bank to extend Revolving Loans at a rate equal to
one-eighth of one percent (1/8%) per year, computed on the basis of a 360
day year for the actual number of days elapsed. These accrued revolving
line of credit facility fees shall be paid quarterly in arrears on the
first day of each May, August, November and February, commencing May 1,
1995.
5. Other Provisions Not Effected. Except as hereby amended, no other
provisions of the Loan Agreement shall be amended and all provisions of the Loan
Agreement shall hereafter remain in full and effect.
IN WITNESS WHEREOF, the parties have signed and delivered this Amendment on
the date first written above.
XXXXX & XXXX MANUFACTURING COMPANY
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx, Chairman
OLD KENT BANK
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx, Vice President
EXHIBIT A
---------
REVOLVING NOTE
--------------
$47,500,000 Grand Rapids, Michigan
February 6, 1995
FOR VALUE RECEIVED, the undersigned, XXXXX & XXXX MANUFACTURING COMPANY, a
Michigan corporation (the "Company"), hereby promises to pay to the order of OLD
KENT BANK, a Michigan banking corporation (the "Bank"), in lawful currency of
the United States of America and in immediately available funds, on November 1,
1996, the principal sum of Forty-seven Million Five Hundred Thousand Dollars
($47,500,000), or, if less, the aggregate unpaid principal amount of Revolving
Loans made by the Bank to the Company pursuant to the Loan Agreement described
below; and to pay interest on the unpaid principal balance hereof from time to
time outstanding, in like money and funds, for the period from the date hereof
until those Revolving Loans shall be paid in full, at the rates per annum and on
the dates provided in the Loan Agreement referred to below.
The Bank is hereby authorized by the Company to note on the schedule
attached to this Revolving Note or on its books and records the date and amount
of each Revolving Loan, the applicable interest rate and type and the duration
of the related Interest Period (if applicable), the amount of each payment or
prepayment of principal thereon, and the other information provided for on that
schedule, which schedule or such books and records, as the case may be, shall
constitute prima facie evidence of the information so noted, provided that any
failure by the Bank to make any that notation shall not relieve the Company of
its obligation to repay the outstanding principal amount of this Revolving Note,
all accrued interest hereon and any amount payable with respect hereto in
accordance with the terms of this Revolving Note and the Loan Agreement.
The Company and each endorser or guarantor hereof waives demand,
presentment, protest, diligence, notice of dishonor and any other formality in
connection with this Revolving Note.
This Revolving Note evidences one or more Revolving Loans made under a Loan
Agreement, dated as of November 29, 1993, and amended on February 16, 1995
(collectively, the "Loan Agreement"), between the Company and the Bank, to which
reference is hereby made for a statement of the circumstances under which this
Revolving Note is subject to prepayment and under which its due day may be
accelerated. Capitalized terms used but not defined in this Revolving Note shall
have the respective meanings assigned to them in the Loan Agreement.
XXXXX & XXXX MANUFACTURING COMPANY
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Xxxxxxx X. Xxxxx, Chairman
A-1
Accepted by:
OLD KENT BANK
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Xxxxx X. Xxxxxxx, Vice President
A-2
SCHEDULE TO REVOLVING NOTE
DATED FEBRUARY 16, 1995, MADE BY
XXXXX & XXXX MANUFACTURING COMPANY
IN FAVOR OF
OLD KENT BANK
Principal
Date Loan Principal Type Interest Amount Paid, Principal
Made or Amount of of Period (if Prepaid or Balance Notation
Converted Loan Loan applicable) Converted Outstanding Made by
----------- --------- ---- ---------- ------------ ----------- --------
A-3
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (the "Amendment"), made as of June
28, 1996, by and between XXXXX & XXXX MANUFACTURING COMPANY, a Michigan
corporation (the "Company") and OLD KENT BANK (formerly Old Kent Bank and Trust
Company), a Michigan banking corporation, of Grand Rapids, Michigan (the
"Bank"):
RECITALS:
--------
A. Company and Bank have signed a Loan Agreement, dated as of November
29, 1993, and a First Amendment to Loan Agreement, dated as of February 16, 1995
(the Loan Agreement and the First Amendment to Loan Agreement are collectively
the "Loan Agreement"), providing for Bank to extend to Company a revolving bank
credit of up to $47,500,000;
B. Company and Bank wish to amend the Loan Agreement on the terms and
conditions set forth in this Amendment.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Restatement of Warranties and Representations. Company hereby confirms
to Bank that the warranties and representations set forth in the Loan Agreement
were true, accurate and complete when made and remain true, accurate and
complete as of the date of this Amendment.
2. No Events of Default; Compliance with Covenants. Company hereby
confirms and acknowledges to Bank that no event of default has occurred under
the Loan Agreement as of the date of this Amendment, and that as of the date of
this Amendment, Company has complied with all of the affirmative and negative
covenants set forth in the Loan Agreement.
3. Amendments Concerning Definitions Under the Loan Agreement.
(A) The following definitions set forth in Section 1. 1 of the Loan
Agreement are hereby amended in their entirety to read as follows:
"Adjusted Federal Funds Rate" means the Federal Funds Rate in
effect from time to time, plus the Applicable Margin.
"Eurodollar Rate" means, with respect to any Eurodollar Loan and
the related Eurodollar Interest Period, the per annum rate that is
equal to the sum of
(a) the Applicable Margin, plus
(b) the rate obtained by dividing (i) the per annum rate of
interest at which deposits in Dollars for that Eurodollar Interest
Period and in an aggregate amount comparable to the amount of such
Eurodollar Loans are offered to the Bank by other prime banks in the
London interbank market, selected in the Bank's discretion, at
approximately 11:00 a.m. London time, as the case May be, on the
second Banking Day prior to the first day of that Eurodollar Interest
Period by (ii) a percentage equal to 100 percent minus the percentage,
if any, that is specified on the first day of that Eurodollar Interest
Period by the Board of Governors of the Federal Reserve System
(or any successor agency) (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) for
determining the reserve requirements with respect to eurocurrency
funding (currently referred to as "eurocurrency liabilities" in
Regulation D of that Board maintained by a member bank of that System,
and for purposes hereof, any Eurodollar Loan shall be considered to be
"eurocurrency liabilities" as defined in Regulation D) to be
maintained by member banks of such System;
"Termination Date" means the earlier to occur of (a) November 1,
1997 and (b) the date on which the Credit shall be terminated pursuant
to Sections 2.5 or 7.
(B) The following definitions are hereby added to the Loan Agreement:
"Applicable Margin" shall mean the following margin based upon
the Interest Coverage Ratio as adjusted on the first day of each
fiscal quarter of the Company based upon such ratio for the four
fiscal quarters immediately preceding the fiscal quarter most recently
ended; provided, that, the Eurodollar Rate shall not be adjusted
pursuant to the Applicable Margin for any outstanding Eurodollar Loan
until after the end of the Eurodollar Interest Period for such
Eurodollar Loan:
APPLICABLE MARGIN
-----------------
Eurodollar Federal Commitment
Interest Coverage Ratio Loans Funds Loans Fee
---------- ----------- ----------
(a) Greater than 15.0 to 1.0 .25% .40% .10%
(b) Greater than or equal to .30% .40% .125%
10.0 to 1.0 but less than
Or equal to 15.0 to 1.0
(c) Greater than or equal to .35% .45% .125%
4.0 to 1.0 but less than
10.0 to 1.0
(d) Less than 4.0 to 1.0 .40% .50% .15%
"EBIT" shall mean, for any period, the earnings of the Company for
such period before interest, extraordinary items consented to by the Bank
in writing, and taxes, all as determined in accordance with GAAP.
Interest Coverage Ratio" shall mean, as of the end of any fiscal
quarter, the ratio of (a) EBIT for the four fiscal quarters then ending to
(b) all interest paid or payable by Company on Indebtedness, all as
determined in accordance with GAAP.
4. Amendments Concerning Article II of the Loan Agreement.
(A) Execution of New Revolving Note. To reflect the change in the
definition of the Termination Date, Company shall execute and deliver to
Bank a Revolving Note in the form attached hereto as Exhibit A which will
replace, in its entirety, the Revolving Note previously executed and
delivered to Bank on February 16, 1995.
(B) Commitment Fee. Section 2.9 of the Loan Agreement is hereby
amended in its entirety as follows:
As long as Bank is obligated to extend Revolving Loans to Company,
Company shall pay to Bank a revolving line of credit facility fee on
the daily average unused amount of the maximum $47,500,000 commitment
of Bank to extend Revolving Loans at a rate equal to the Applicable
Margin computed on the basis of a 360 day year for the actual number
of days elapsed. These accrued revolving line of credit facility fees
shall be paid quarterly in arrears on the first day of each May,
August, November and February, commencing August 1, 1996.
5. Other Provisions Not Effected. Except as hereby amended, no other
provisions of the Loan Agreement shall be amended and all provisions of the Loan
Agreement shall hereafter remain in full force and effect.
IN WITNESS WHEREOF, the parties have signed and delivered this Amendment on
the date first written above.
XXXXX & XXXX MANUFACTURING COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
Its: Executive Vice President
------------------------------------
OLD KENT BANK
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx, Vice President
EXHIBIT A
---------
REVOLVING NOTE
--------------
$47,500,000 Grand Rapids, Michigan
June 28, 1996
FOR VALUE RECEIVED, the undersigned, XXXXX & XXXX MANUFACTURING COMPANY, a
Michigan corporation (the "Company"), hereby promises to pay to the order of OLD
KENT BANK, a Michigan banking corporation (the "Bank"), in lawful currency of
the United States of America and in immediately available funds, on November 1,
1997, the principal sum of Forty-seven Million Five Hundred Thousand Dollars
($47,500,000), or, if less, the aggregate unpaid principal amount of Revolving
Loans made by the Bank to the Company pursuant to the Loan Agreement described
below; and to pay interest on the unpaid principal balance hereof from time to
time outstanding, in like money and funds, for the period from the date hereof
until those Revolving Loans shall be paid in full, at the rates per annum and on
the dates provided in the Loan Agreement referred to below.
The Bank is hereby authorized by the Company to note on the schedule
attached to this Revolving Note or on its books and records the date and amount
of each Revolving Loan, the applicable interest rate and type and the duration
of the related Interest Period (if applicable), the amount of each payment or
prepayment of principal thereon, and the other information provided for on that
schedule, which schedule or such books and records, as the case may be, shall
constitute prima facie evidence of the information so noted, provided that any
failure by the Bank to make any that notation shall not relieve the Company of
its obligation to repay the outstanding principal amount of this Revolving Note,
all accrued interest hereon and any amount payable with respect hereto in
accordance with the terms of this Revolving Note and the Loan Agreement.
The Company and each endorser or guarantor hereof waives demand,
presentment, protest, diligence, notice of dishonor and any other formality in
connection with this Revolving Note.
This Revolving Note evidences one or more Revolving Loans made under a Loan
Agreement, dated as of November 29, 1993, and amended on February 16, 1995, and
June 28, 1996 (collectively, the "Loan Agreement"), between the Company and the
Bank, to which reference is hereby made for a statement of the circumstances
under which this Revolving Note is subject to prepayment and under which its due
day may be accelerated. Capitalized terms used but not defined in this Revolving
Note shall have the respective meanings assigned to them in the Loan Agreement.
XXXXX & XXXX MANUFACTURING COMPANY
By:_______________________________
Its:______________________________
A-1
Accepted by:
OLD KENT BANK
By:_________________________________
Xxxxx X. Xxxxxxxx, Vice President
A-2
SCHEDULE TO REVOLVING NOTE
DATED JUNE 28, 1996, MADE BY
XXXXX & XXXX MANUFACTURING COMPANY
IN FAVOR OF
OLD KENT BANK
Principal
Date Loan Principal Type Interest Amount Pd Principal
Made or Amount of of Period (if Prepaid or Balance Notation
Converted Loan Loan applicable) Converted Outstanding Made by
----------- --------- ---- ----------- ---------- ----------- --------
A-3
REVOLVING NOTE
--------------
$47,500,000 Grand Rapids, Michigan
November 1, 1997
FOR VALUE RECEIVED, the undersigned, XXXXX & XXXX MANUFACTURING COMPANY, a
Michigan corporation (the "Company"), hereby promises to pay to the order of OLD
KENT BANK, a Michigan banking corporation (the "Bank"), in lawful currency of
the United States of America and in immediately available funds, on November 1,
1999, the principal sum of Forty-seven Million Five Hundred Thousand Dollars
($47,500,000), or, if less, the aggregate unpaid principal amount of revolving
Loans made by the Bank to the Company pursuant to the Loan Agreement described
below and to pay interest on the unpaid principal balance hereof from time to
time outstanding, in like money and funds, for the period from the date hereof
until those Revolving Loans shall be paid in full, at the rates per annum and on
the dates provided in the Loan Agreement referred to below.
The Bank is hereby authorized by the Company to note on the schedule
attached to this Revolving Note or on its books and records the date and amount
of each Revolving Loan, the applicable interest rate and type and duration of
the related Interest Period (if applicable), the amount of each payment or
prepayment of principal thereon, and the other information provided for on that
schedule, which schedule or such books and records, as the case may be, shall
constitute prima facie evidence of the information so noted, provided that any
failure by the Bank to make any that notation shall not relieve the Company of
its obligation to repay the outstanding principal amount of this Revolving Note,
all accrued interest hereon and any amount payable with respect hereto in
accordance with the terms of this Revolving Note and the Loan Agreement.
The Company and each endorser or guarantor hereof waives demand,
presentment, protest, diligence, notice of dishonor and any other formality in
connection with this Revolving Note.
This Revolving Note evidences one or more Revolving Loans made under a Loan
Agreement, dated as of November 29, 1993, and amended on February 16, 1995, and
June 28, 1996 (collectively, the "Loan Agreement'), between the Company and the
Bank, to which reference is hereby made for a statement of the circumstances
under which this Revolving Note is subject to prepayment and under which its due
day may be accelerated. Capitalized terms used but not defined in this Revolving
Note shall have the respective meanings assigned to them in the Loan Agreement.
XXXXX & XXXX MANUFACTURING COMPANY
By:
-------------------------------------
Xxxxxxx X. Xxxxxxx
Its: Executive Vice President
-------------------------------------
A-4
Accepted by:
OLD KENT BANK
By:
----------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
A-5
