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EXHIBIT 10.52
LOAN AGREEMENT
BETWEEN
STANDARD FEDERAL BANK
AND
XXXXXXX GROUP LEASING, INC.
THIS LOAN AGREEMENT is made and delivered this 17th day of, July 1996, by
and between XxXxxxx Group Leasing, Inc., a Michigan corporation ("Borrower"),
whose address/principal office is 6200 Elmridge, Xxxxxxxx Xxxxxxx, Xxxxxxxx
00000, and Standard Federal Bank, a federal savings bank ("Standard Federal"),
whose address is 0000 Xxxx Xxx Xxxxxx Xxxx, Xxxx, Xxxxxxxx 00000.
RECITALS:
A. The Borrower has requested a revolving line of credit loan in the
principal amount of $7,500,000.00 for the purpose of financing equipment leases
on the terms and conditions herein provided.
B. Standard Federal is willing to supply such financing subject to the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in reliance upon the representations herein provided and
in consideration of the premises and the mutual promises herein contained, the
Borrower and Standard Federal hereby agree as follows:
SECTION 1. EQUIPMENT LEASE LINE OF CREDIT
1.1 Standard Federal hereby extends to the Borrower a revolving line of credit
loan (the "Line of Credit"), which shall not exceed at any one time outstanding
the Credit Limit as hereafter defined. The term "Credit Limit" shall mean the
lesser of: (a) Seven Million Five Hundred Thousand and 00/100 Dollars
($7,500,000.00), or (b) an amount equal to 80% of Eligible Lease Receivables.
The term "Eligible Lease Receivables" shall mean lease receivables which are
less than 90 days old and are not doubtful as to collectibility or disputed as
to existence or amount or subject to offset, contra-indebtedness or return,
exclusive of discounts and rebates, and are otherwise acceptable to Standard
Federal in its sole discretion, and may include up to $690,000.00 in lease
receivables from Galion Holding Company but shall not otherwise be
intra-company or owing from any affiliated or related company or other entity,
as such lease receivables are disclosed in the statements timely furnished to
Standard Federal pursuant to Section 3 below.
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1.2 The Borrower shall be obligated to repay all advances made hereunder with
respect to any lease which becomes 90 days or more delinquent and such
repayment shall be due and payable 15 days after the lease receivable statement
which discloses such delinquency is timely furnished to Standard Federal
pursuant to Section 3 below.
1.3 The Line of Credit herein extended shall be subject to the terms and
conditions of a Promissory Note (Line of Credit) of even date herewith and all
renewals and amendments thereof (the "Line of Credit Note"). The Line of
Credit shall be payable and shall bear interest as set forth in the Line of
Credit Note. This Loan Agreement and the Line of Credit Note are of equal
materiality and shall each be construed in such manner as to give full force
and effect to all provisions of both documents.
1.4 Standard Federal shall, from time to time during the term hereof, make
advances to Borrower under the Line of Credit upon request therefor by
Borrower, provided that upon giving effect to such advance no Event of Default
(as defined in the Line of Credit Note or this Agreement) and no event which
with notice and/or the passage of time would become an Event of Default shall
exist at the time the advance is to be made; and provided further that upon
giving effect to such advance and at the time the advance is to be made all of
the representations and warranties of Borrower contained in this Agreement and
all other documents executed in connection with the Line of Credit are true and
correct in all material respects; and provided further that at the time the
advance is to be made Standard Federal shall not have previously or
concurrently declared all amounts owing under the Line of Credit Note to be
immediately due and payable; and provided further the amount requested shall
not cause the total amount outstanding under the Line of Credit to exceed the
Credit Limit.
1.5 If at any time the amount outstanding under the Line of Credit shall
exceed the Credit Limit, Borrower shall, on demand, forthwith pay to Standard
Federal such sums as are necessary to reduce the amount outstanding to an amount
not greater than the Credit Limit.
1.6 Borrower shall pay to Standard Federal, on the first day of each month,
commencing on the first payment date after the date hereof, and continuing on
the same day of each consecutive month thereafter until the termination of the
Line of Credit and all sums owing for principal and interest with respect to
the Line of Credit are paid in full, an Unused Line Fee in the amount of 0.25%
per annum of the amount available for draw but not advanced from time to time
on the Line of Credit ("Unused Line"). The amount of the Unused Line Fee
payable on the first day of each month will be determined by multiplying the
average daily balance of the Unused Line for the calendar month which ends one
month prior to the due date of such Unused Line Fee by .020833%.
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1.7 In all events, unless earlier terminated, the Line of Credit shall
terminate March 31, 1998. Upon termination, Borrower shall forthwith pay to
Standard Federal all sums owing for principal and interest with respect to the
Line of Credit.
SECTION 1A. CONDITIONS TO OPENING LINE OF CREDIT
1A.1 The following are conditions precedent to the obligation of Standard
to opening the Line of Credit hereunder:
1A.1(a) The Borrower shall have delivered or shall have had delivered to
Standard Federal, in form and substance satisfactory to Standard Federal and its
counsel, each of the following:
a. A duly executed copy of this Loan Agreement;
b. A duly executed copy of the Line of Credit Note and such
other loan documents as Standard Federal shall require to evidence
and document the Line of Credit (the "Loan Documents");
c. Such credit applications, financial statements,
authorizations, and such information concerning the Borrower and its
business, operations, and condition (financial and otherwise) as
Standard Federal may reasonably request;
d. Certified copies of resolutions of the Board of Directors of
the Borrower approving the execution and delivery of the Loan
Documents required hereunder;
e. A certificate of the Secretary or an Assistant Secretary of
the Borrower certifying the names and true signatures of the
officers of the Borrower authorized to sign the Loan Documents
required hereunder;
f. Copies of the Articles of Incorporation of the Borrower,
certified by the Secretary of State of Michigan as of a recent date;
g. Copies of the Articles of Incorporation and Bylaws of the
Borrower, certified by the Secretary or an Assistant Secretary of
the Borrower as of the date of this Agreement as being accurate and
complete;
h. Certificate of good standing of the Borrower from the
Secretary of State of Michigan as of a recent date;
i. Certificates of authority and good standing of the Borrower
for each state in which the Borrower is qualified to do business;
j. A certificate of compliance of the chief financial officer or
treasurer of the Borrower in form satisfactory to Standard Federal
dated as of the date of this Agreement;
k. Such certificates, binders or other evidence of all insurance
required of the Borrower under this Loan Agreement as Standard
Federal may reasonably require; and
l. Acknowledgement copies of all UCC-1 financing statements
filed with respect to the Collateral accompanied by a
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search report showing such financing statements as duly filed and
evidencing that the security interest of Standard Federal in the
Collateral is prior to all other security interests of record.
1A.1(b) All acts and conditions (including, without limitation, the obtaining
of any necessary regulatory approvals and the making of any required filings,
recordings, or registrations) required to be done and performed and to have
happened precedent to the execution, delivery, and performance of the Loan
Documents required hereunder and to constitute the same legal, valid, and
binding obligations, enforceable in accordance with their respective terms,
shall have been done and performed and shall have happened in due and strict
compliance with all applicable laws.
1A.1(c) All documentation, including, without limitation, documentation for
corporate and legal proceedings in connection with the transactions
contemplated by the Loan Documents shall be satisfactory in form and substance
to Standard Federal and its counsel and all fees and charges, including
recording and filing fees, shall have been paid as required hereunder.
1A.2 As conditions precedent to Standard Federal's obligation to fund any
request for an advance under the Line of Credit, at and as of the date of the
funding thereof;
a. The representations and warranties of the Borrower contained
in the Loan Documents shall be accurate and complete in all respects
as if made on and as of such date;
b. The Borrower shall have paid all fees and expenses, including
any recording fees and charges, required hereunder;
c. There shall not have occurred an Event of Default or any
event which with the passage of time of the giving of notice or both
would constitute an Event of Default; and
d. Following the making of such loan or advance, the aggregate
principal amount outstanding will not exceed the limitations
described in Section 1.
SECTION 2. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to Standard Federal that as of
the date of acceptance of this Agreement, as of the time any advance is to be
made hereunder and, unless expressly provided otherwise herein or agreed to by a
writing signed by Standard Federal, at all times any amounts are outstanding
hereunder:
2.1 The Borrower and each of its subsidiaries, if any, are corporations
duly organized, validly existing and in good standing under the laws of the
state of their incorporation; the Borrower and each of its subsidiaries (if any)
have the legal power and
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authority to own their properties and assets and to carry out their business as
now being conducted and each is qualified to do business in the state of its
incorporation and in every jurisdiction where the nature of its business or the
property owned or operated by it makes such qualification necessary and is
otherwise in compliance with all applicable laws, statutes, regulations, rules
and requirements of any federal, state, judicial, regulatory or administrative
body having jurisdiction of the Borrower or any of its assets; the Borrower has
the legal power and authority to execute and perform this Agreement, to borrow
money in accordance with its terms, to execute and deliver the Line of Credit
Note and other documents contemplated hereby, to grant to Standard Federal
security interests in the Collateral, as hereby contemplated, and to do any and
all other things required of it hereunder; and this Agreement, the Line of
Credit Note and all other documents contemplated hereby, when executed by the
Borrower's duly authorized officers will constitute its valid and binding legal
obligations enforceable in accordance with their terms.
2.2 The execution, delivery and performance of this Agreement, the
borrowings hereunder and the execution and delivery of the Line of Credit Note
and other documents contemplated hereby (a) have been duly authorized by all
requisite corporate action, (b) do not require governmental approval or the
approval of any person not a party to this Agreement, (c) will not result (with
or without notice and/or the passage of time) in any conflict with or breach or
violation of or default under, any provision of law, the Articles of
Incorporation or Bylaws of the Borrower or any indenture, agreement or other
instrument to which the Borrower is a party, or by which it or any of its
properties or assets are bound, and (d) will not result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of the Borrower other than in favor of Standard
Federal and as contemplated hereby.
2.3 There is not pending or, to the best of the knowledge of the Borrower,
threatened, any litigation, proceeding or governmental investigation which could
materially and adversely affect the business of the Borrower or its
subsidiaries, if any, or its ability to perform its covenants hereunder.
2.4 Borrower has good and marketable title to its properties given as
security as herein described, and, except for liens in favor of Standard
Federal, liens for taxes not delinquent or being contested in good faith and
liens created in connection with worker's compensation, unemployment insurance
and social security, or to secure the performance of bids, tenders or contracts
(other than for the repayment of borrowed money), leases, statutory obligations,
surety and appeal bonds, and other obligations of like nature made in the
ordinary course of business, none of the Borrower's or any of its subsidiaries'
(if any) assets are subject to any mortgage, pledge, lien, security interest, or
other
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encumbrance of any kind or character except as have been disclosed to Standard
Federal in writing. The Borrower owns all material patents, trademarks,
service marks, trade names, copyrights, licenses and other rights, free from
any material restrictions, that are necessary for the operation of its business
as presently conducted.
2.5 All financial data which has been or shall hereafter be furnished to
Standard Federal for the purposes of, or in connection with, this Agreement,
including particularly, but without limitation, the audited consolidated
financial statements of XxXxxxx Industries, Inc. and the Form 10-Q's filed with
the Securities and Exchange Commission by XxXxxxx Industries, Inc. pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, and the transactions
contemplated hereby has been and/or shall be prepared in accordance with
generally accepted accounting principles consistently applied, and does or will
fairly present the financial condition of the Borrower as of the dates, and the
results of its operations for the periods, for which the same is furnished to
Standard Federal.
2.6 There has been no material adverse change in the business, properties
or condition (financial or otherwise) of the Borrower or its subsidiaries (if
any) since the date of the latest financial statements provided to Standard
Federal and there are no material debts, liabilities or obligations (absolute or
contingent) of the Borrower except as reflected in such financial statements (or
in the notes thereto).
2.7 The Borrower is not in default in the repayment of any indebtedness
for money borrowed by it nor has there occurred any event which, with or without
notice or the passage of time or both, would constitute a default by the
Borrower under any agreement or instrument pertaining to any indebtedness for
money borrowed by it.
2.8 Borrower has filed all reports and tax returns required by
governmental authority to be filed by it prior to the date hereof and Borrower
has received no notice that such reports or returns have been rejected, declared
insufficient, or otherwise challenged by such governmental authority.
2.9 The principal officers of the Borrower ("Principal Officers") are as
follows:
Chairman of the Board Xxxxxxx X. XxXxxxx
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President Xxxxx Xxxxx
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Secretary Xxxx X. Xxxxxxxx
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2.10 The Borrower is a wholly-owned subsidiaries of XxXxxxx Industries,
Inc., a Michigan corporation, and has no subsidiaries.
2.11 None of the proceeds of the Line of Credit will be used for the
purpose of purchasing or carrying any "margin stock" as defined in Regulation U
or G of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 221
and 207), or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry a margin stock or for any other purpose
which might constitute this transaction a "purpose credit" within the meaning of
such Regulation U or G. Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stocks. Neither Borrower
nor any person acting on behalf of Borrower has taken or will take any action
which might cause the Line of Credit Note or any of the other documents executed
in conjunction therewith, including this Agreement, to violate Regulations U or
G or any other regulations of the Board of Governors of the Federal Reserve
System or to violate Section 7 of the Securities Exchange Act of 1934 or any
rule or regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect. Borrower and its subsidiaries, if any, own no "margin
stock" except for that described in the financial statements provided to
Standard Federal and, as of the date hereof, the aggregate value of all "margin
stock" owned by Borrower and its subsidiaries, if any, does not exceed 25% of
all of the value of all of Borrower's and its subsidiaries', if any, assets.
2.12 Neither the Borrower nor, to the best of Borrower's knowledge after
due inquiry, any other person or entity, has caused or permitted any waste, oil,
pesticides, or any substance or material of any kind which is currently known or
suspected to be toxic or hazardous, including but not limited to any substance
defined as a "Hazardous Waste" in Title 40, Part 261 of the Code of Federal
Regulations, (hereinafter referred to as "Hazardous Material") to be discharged,
dispersed, released, disposed of, or allowed to escape on, under or at any
property owned, occupied or operated by any Borrower in violation of any
Hazardous Materials Laws (as hereinafter defined), nor has any property owned,
occupied or operated by any Borrower, or any part thereof, ever been used by the
Borrower or, to the best of Borrower's knowledge after due inquiry, any prior
owner or any other person, as a dump, storage or disposal site for any Hazardous
Material, nor has there occurred any other violation of the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., or any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards of conduct concerning, any Hazardous Material
("Hazardous Materials Laws") with respect to any property owned, occupied or
operated by any Borrower. No asbestos or asbestos-containing materials have
been installed, used, incorporated into, or disposed of on any property
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owned, occupied or operated by any Borrower. No polychlorinated biphenyls
("PCBs") are located on or in any property owned, occupied or operated by any
Borrower, in the form of electrical transformers, fluorescent light fixtures
with ballasts, cooling oils, or any other device or form. All underground
storage tanks located on any property owned, occupied or operated by any
Borrower have been installed and are being operated in full compliance with all
applicable Hazardous Materials Laws. The Borrower: (a) has not received any
notice of any release, threatened release, escape, seepage, leakage, spillage,
discharge or emission of any Hazardous Materials in, under or upon any property
owned, occupied or operated by any Borrower or of any violation of any
Hazardous Materials Law, and (b) does not know of any basis for any such notice
or violation.
2.13 No "reportable event," as defined in the Employee Retirement Income
Security Act of 1974 and any amendments thereto ("ERISA"), has occurred and is
continuing with respect to any employee pension and/or profit sharing benefit
plan maintained by or on behalf of the Borrower for the benefit of any of its
employees. The Pension Benefit Guaranty Corporation ("PBGC") has not
instituted proceedings to terminate any such employee pension and/or profit
sharing plan or to appoint a trustee to administer such plan. The Borrower
has maintained and funded and caused each of its subsidiaries, if any, to
maintain and fund all employee pension and/or profit sharing plans in
accordance with their terms and with all applicable provisions of ERISA.
Neither the Borrower nor any duly appointed administrator of any employee
pension and/or profit sharing plan: (a) has incurred any liability to PBGC with
respect to any such plan other than for premiums not yet due or payable, (b)
has instituted or intends to institute proceedings to terminate any such plan
under Section 4042 or 4041A of Erisa, or (c) has withdrawn from any
Multi-Employer Pension Plan (as that term is defined in Section 3(37) of
ERISA).
2.14 There is no material fact that the Borrower has not disclosed to
Standard Federal which could have a material adverse effect on the properties,
business, prospects or condition (financial or otherwise) of the Borrower or any
of its subsidiaries. For purposes of this Section 2.14, a "material adverse
effect" means any circumstance or event which (a) could have any adverse effect
whatsoever upon the validity, performance or enforceability of any material
provision of the Loan Documents, (b) is or might be material and adverse to the
financial condition or business operations of the Borrower or any subsidiary,
(c) could impair the ability of the Borrower to fulfill its obligations under
the Loan Documents, or (d) causes an Event of Default or any event which, with
notice or lapse of time or both, could become an Event of Default. Neither the
financial statements referred to in Section 2.5 hereof, nor any certificate or
statement delivered herewith or heretofore by Borrower in connection with the
negotiations of this Loan Agreement, contains any untrue statement
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of a material fact or omits to state any material fact necessary to keep the
statements contained herein or therein, under the circumstances in which they
were made, from being misleading.
2.15 Each request for an advance under the Line of Credit shall constitute,
without the necessity of specifically containing a written statement, a
representation and warranty by Borrower that no Event of Default exists and that
all representations and warranties contained in this Section 2 or in any
mortgage, guaranty, security agreement or other document given to secure or
relating to the Line of Credit Note or this Agreement are true and correct at
and as of the time the advance is to be made.
SECTION 3. AFFIRMATIVE COVENANTS OF BORROWER
3.1 Prior to Standard Federal's disbursement of any advances under the Line
of Credit, the Borrower shall; (a) furnish to Standard Federal, if Standard
Federal so requires, certified copies of its Articles of Incorporation, Bylaws
and Certificate of Good Standing, which Articles of Incorporation and Good
Standing Certificate are to be certified by the appropriate official of the
Borrower's state of incorporation; (b) furnish to Standard Federal if Standard
Federal so requires a statement of the Borrower and the chief financial officer
of Borrower certifying that they are unaware of the occurrence of an Event of
Default or of any event which with notice and/or the passage of time could
become an Event of Default; and (c) furnish Standard Federal such other
instruments, documents, opinions or certificates as Standard Federal or its
counsel shall reasonably require. All actions, proceedings, instruments and
documents required or requested hereunder shall be satisfactory to and approved
by Standard Federal and/or its counsel prior to the disbursement of advances
under the Line of Credit.
3.2 From the date hereof until all amounts owing under the Line of Credit
are paid in full and all obligations under the Line of Credit Note, this
Agreement and all other documents executed in connection with the Line of Credit
are fully paid, performed and satisfied and so long as Standard Federal has any
commitment to make advances hereunder, the Borrower covenants and agrees it
will:
3.2(a) Furnish to Standard Federal as soon as available and, in any event,
within 120 days after the close of each fiscal year of XxXxxxx Industries, Inc.,
a Michigan corporation ("XxXxxxx"), or, in the event XxXxxxx obtains an
extension of the filing date from the Securities Exchange Commission, by such
extended date, detailed financial statements of XxXxxxx as of the close of such
fiscal year, containing a consolidated balance sheet of XxXxxxx and its
subsidiaries,and statements of income and cash flows of XxXxxxx and its
subsidiaries for such fiscal year prepared in accordance with generally accepted
accounting principles and in a manner consistent with prior such statements
containing an analysis of sources and
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uses of funds and such other comments and financial details as are usually
included in similar reports. Such statements shall be accompanied by an
opinion thereon (which shall not be qualified by reason of any limitation
imposed by XxXxxxx) of independent certified public accountants selected by
XxXxxxx and acceptable to Standard Federal as to the fairness of the statements
included in the report and to the effect that the examination of such accounts
in connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, includes such tests of
the accounting records and such other auditing procedures as were considered
necessary in the circumstances.
3.2(b) Furnish to Standard Federal as soon as available and, in any event,
within 90 days after the close of each fiscal year, detailed financial
statements of the Borrower as of the close of such fiscal period containing a
consolidated balance sheet of the Borrower and its subsidiaries, if any, and
statements of income and cash flows of the Borrower and its subsidiaries, if
any, for such fiscal period and for the portion of the fiscal year ending with
such period in reasonable detail and form acceptable to Standard Federal and
certified by the chief financial officer of the Borrower as being true and
correct and as having been prepared in accordance with generally accepted
accounting principles consistently applied, subject to year-end adjustments, if
any.
3.2(c) Furnish to Standard Federal, within a reasonable time not to exceed
20 days after the end of each calendar month, a statement of lease receivables,
in a form acceptable to Standard Federal, certified as correct by Borrower or a
principal officer of Borrower showing the agings thereof and the payment,
write-off or other disposition of former lease receivables the disposition of
which has not previously been reported to Standard Federal, and such other
information and data as Standard Federal may reasonably require. Borrower will
further specifically disclose any facts known to Borrower which facts would tend
to render doubtful the collectibility of any lease receivable disclosed in such
statements or which would indicate that the existence or amount of such
receivable is disputed by the lessee thereon.
3.2(d) Promptly inform Standard Federal of the occurrence of any Event of
Default or of any event (including without limitation any pending or threatened
litigation or other proceedings before any governmental body or agency) which
could have a materially adverse effect upon the Borrower's business, properties,
financial condition or ability to comply with its obligations hereunder or under
the Line of Credit Note.
3.2(e) Furnish such other information as Standard Federal may reasonably
request and permit Standard Federal and its agents, attorneys and employees to
inspect all of the books, records and properties of the Borrower at any
reasonable time.
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3.2(f) Maintain adequate insurance with responsible companies in such
amounts and against such risks and hazards as are normally insured against by
similar businesses, and provide Standard Federal evidence of such insurance upon
request; policies of casualty insurance shall contain a customary mortgagee
clause requiring payment of proceeds to Borrower and to Standard Federal as
their interests may appear and all other insurance shall contain a customary
loss payable clause requiring payment of proceeds to Borrower and to Standard
Federal as their interests may appear and all insurance policies shall provide
that no cancellation, reduction in amount, change in coverage or expiration
thereof shall be effective until at least 30 days prior written notice has been
given by the insurer to Standard Federal; and pay when due all taxes,
assessments, fees and similar charges of every kind and nature lawfully assessed
upon the Borrower and/or its property, except to the extent being contested in
good faith; and in the event the Borrower fails to maintain such insurance or to
pay promptly any taxes or charges when due, then and in such event Standard
Federal, in its sole discretion, may, but shall not be required to, pay the same
and any amounts expended by Standard Federal for such purpose shall become a
part of the Line of Credit and shall bear interest at the rate applicable to the
outstanding principal balance owing under the Line of Credit Note.
3.2(g) Preserve and keep in full force and effect its own and its material,
operating subsidiaries' (if any) corporate existence in good standing and
maintain voting control in its present controlling shareholder(s); keep current
all filings of assumed name certificates for each name under which and each
county in which the Borrower does business and promptly inform Standard Federal
of any assumed names under which it does business which were not used by the
Borrower on the date of this Agreement; continue to conduct and operate its
business substantially as presently conducted and operated in accordance with
all applicable laws and regulations; maintain and protect all franchises and
trade names and preserve all the remainder of its property used or useful in
the conduct of its business and keep the same in good repair and condition; pay
its indebtedness and obligations when due under normal terms and maintain
proper books of record and account, and; otherwise remain in compliance with
all applicable laws, statutes, regulations, rules and requirements of any
federal, state, judicial, regulatory or administrative body having jurisdiction
of the Borrower or any of its assets, except to the extent noncompliance is
immaterial and would not have a material adverse effect on Borrower.
3.2(h) At all times meet and cause each of its subsidiaries, if any, to meet
the minimum funding requirements of ERISA with respect to all employee pension
and/or profit sharing plans subject to ERISA and, with respect to any such
employee benefit plan, promptly notify Standard Federal in writing of any
reportable event, as defined in ERISA, or any proposed termination (voluntary
or
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otherwise) which could give rise to material termination liability within the
meaning of ERISA Section 4062.
3.3 The Borrower will not make any change in its accounting policies or
financial reporting practices and procedures, except changes in accounting
policies which are required or permitted by generally accepted accounting
principles and changes in financial reporting practices and procedures which
are required or permitted by generally accepted accounting principles.
3.4 The Borrower shall use the monies loaned hereunder only for the
purpose(s) set forth in the preamble hereto.
SECTION 4. SECURITY
4.1 In order to secure: (1) the full and timely performance of the
Borrower's covenants set forth herein and in the Line of Credit Note, (2) the
repayment of any and all indebtedness of the Borrower to Standard Federal
arising pursuant to the Line of Credit Note (including any renewals or
substitutions thereof), this Agreement and any mortgage, guaranty, security
agreement or other document given to secure or relating to the Line of Credit
Note or this Agreement, and (3) all other indebtedness and liabilities of the
Borrower to Standard Federal arising under this Agreement or the Line of Credit
Note, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising:
4.1(a) The Borrower hereby grants unto Standard Federal a security interest in
the following property and the proceeds thereof: (i) any and all securities or
other property received by the Borrower with respect to, on account of or in
exchange for any item of Collateral; (ii) all stock and/or liquidating dividends
(whether the same be in the form of cash or other property) paid upon, on
account of or with respect to any item of Collateral; and (iii) all bank
deposits, instruments, negotiable documents, chattel paper and any and all other
property of the Borrower of any kind whatsoever which shall at any time be in
the possession or under the control of Standard Federal;
4.1(b) The Borrower will grant to Standard Federal a security interest of first
priority in certain equipment leases and the equipment described therein as
provided in an Assignment of Equipment Leases and Security Agreement of even
date herewith from the Borrower to Standard Federal, and all schedules thereto,
the provisions of which are hereby incorporated herein by reference; and
4.1(c) The Borrower will cause XxXxxxx Industries, Inc. to assign to Standard
Federal as collateral security a life insurance policy on the life of Xxxxxxx
X. XxXxxxx in the face amount of $2,000,000.00 (herein, together with the
property described in
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Sections 4.1(a) (i), (ii) and (iii) and 4.1(b) above, referred to as the
"Collateral" or "item(s) of Collateral").
4.2 The Borrower shall execute and deliver to Standard Federal any and
all documents (including financing statements) as Standard Federal may require
to insure the perfection and priority of its liens and security interests in the
Collateral and furnish, if Standard Federal so requires, proof of hazard
insurance policies, in accordance with Section 3.2(g) above, relating to the
Collateral.
SECTION 5. EVENTS OF DEFAULT
The occurrence of any of the events enumerated in Sections
5.1 to 5.10 below shall constitute an Event of Default for purposes of this
Agreement:
5.1 FAILURE TO PAY MONIES DUE. If any indebtedness of the Borrower to
Standard Federal on the Line of Credit is not paid when due, regardless of
whether such indebtedness has arisen pursuant to the terms of the Line of Credit
Note, this Agreement or any mortgage, security agreement, guaranty, instrument
or other agreement executed in conjunction herewith.
5.2 MISREPRESENTATION. If any warranty or representation made by or for
the Borrower and/or any endorser or guarantor of the Line of Credit Note in
connection with the loan(s) evidenced thereby, or if any financial data or any
other information now or hereafter furnished to Standard Federal by or on behalf
of the Borrower and/or any endorser or guarantor of the Line of Credit Note
shall prove to be false, inaccurate or misleading in any material respect.
5.3 NONCOMPLIANCE WITH AFFIRMATIVE COVENANTS AND OTHER AGREEMENTS. If
the Borrower shall fail to perform any of its obligations and covenants under
Section 3 of this Agreement, or shall fail to comply with any of the other
provisions of this Agreement or the Line of Credit Note or any other agreement
with Standard Federal to which it may be a party, other than the payment of
principal and interest.
5.4 BUSINESS SUSPENSION. If the Borrower and/or any endorser or
guarantor of the Line of Credit Note shall voluntarily suspend transaction of
its business.
5.5 BANKRUPTCY, ETC. If the Borrower and/or any endorser or guarantor of
the Line of Credit Note: (a) makes a general assignment for the benefit of
creditors; (b) shall file a voluntary petition in bankruptcy or for a
reorganization to effect a plan or other arrangement with creditors; or shall
file an answer to a creditor's petition or other petition against Borrower
and/or any endorser or guarantor of the Line of Credit Note for relief in
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bankruptcy or for a reorganization which answer admits the material allegations
thereof; or if any order for relief shall be entered by any court of
bankruptcy jurisdiction with respect to the Borrower and/or any endorser or
guarantor of the Line of Credit Note, or if bankruptcy, reorganization or
liquidation proceedings are instituted against Borrower and/or any endorser or
guarantor of the Line of Credit Note and remain undismissed for 60 days; (c)
has entered against it any order by any court approving a plan for the
reorganization of the Borrower or any endorser or guarantor of the Line of
Credit Note or any other plan or arrangement with creditors of the Borrower or
any endorser or guarantor of the Line of Credit Note; (d) shall apply for or
permit the appointment of a receiver, trustee or custodian for any substantial
portion of the Borrower's and/or any endorser's or guarantor's properties or
assets; or (e) becomes unable to meet its debts as they mature or becomes
insolvent.
5.6 JUDGMENTS AND WRITS. If there shall be entered against the Borrower
and/or any endorser or guarantor of the Line of Credit Note one or more
judgments or decrees which are not insured against or satisfied or appealed from
and bonded within the time or times limited by applicable rules of procedure for
appeal as of right or if a writ of attachment or garnishment against the
Borrower and/or any endorser or guarantor of the Line of Credit Note shall be
issued and levied in an action claiming $100,000.00 or more and not released,
bonded or appealed from within 30 days after the levy thereof.
5.7 MERGER. If the Borrower shall merge or consolidate with another entity.
5.8 CHANGE OF CONTROL OR MANAGEMENT. If the Borrower or a controlling
portion of its voting stock or a substantial portion of its assets comes under
the practical, beneficial or effective control of any person or persons other
than those having such control as of the date of execution of the Line of Credit
Note, whether by reason of merger, consolidation, sale or purchase of stock or
assets or otherwise, if any such change of control, in the sole and absolute
discretion of Standard Federal, adversely impacts upon the ability of the
Borrower to carry on its business as theretofore conducted.
5.9 OTHER DEFAULTS. If the Borrower and/or any endorser or guarantor of the
Line of Credit Note shall default in the due payment of any material
indebtedness to whomsoever owed, or shall default in the observance or
performance of any material term, covenant or condition in any mortgage,
security agreement, guaranty, instrument, lease or agreement to which the
Borrower and/or any endorser or guarantor of the Line of Credit Note is a party.
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5.10 REPORTABLE EVENT. If there shall occur any "reportable event", as
defined in the Employee Retirement Income Security Act of 1974 and any
amendments thereto, which is determined to constitute grounds for termination by
the Pension Benefit Guaranty Corporation of any employee pension benefit plan
maintained by or on behalf of the Borrower for the benefit of any of its
employees or for the appointment by the appropriate United States District Court
of a trustee to administer such plan and such reportable event is not corrected
and such determination is not revoked within 30 days after notice thereof has
been given to the plan administrator or the Borrower; or the institution of
proceedings by the Pension Benefit Guaranty Corporation to terminate any such
employee benefit pension plan or to appoint a trustee to administer such plan;
or the appointment of a trustee by the appropriate United States District Court
to administer any such employee benefit pension plan.
SECTION 6. REMEDIES UPON EVENT OF DEFAULT
6.1 Upon the occurrence of any Event of Default described in Sections 5.2,
5.3 or 5.9 hereof which is not cured or waived in writing by Standard Federal
within 15 days after written notice to the Borrower of such default; or upon the
occurrence of any Event of Default described in Section 5.1 which continues
unremedied for 10 days, or upon the occurrence of any Event of Default described
in Sections 5.4, 5.5, 5.6, 5.7, 5.8 or 5.10, Standard Federal's commitment to
lend hereunder, if any, shall terminate and Standard Federal may, without
notice, declare the entire unpaid and outstanding principal balance of the Line
of Credit and all accrued interest to be due and payable in full forthwith,
without presentment, demand or notice of any kind, all of which are hereby
expressly waived by Borrower, and thereupon Standard Federal shall have and may
exercise any one or more of the rights and remedies provided herein or in the
Line of Credit Note or in any mortgage, guaranty, security agreement or other
document relating hereto or granted secured parties under the Michigan Uniform
Commercial Code, including the right to take possession of and dispose of the
Collateral, or otherwise provided by applicable law, and to offset against the
Line of Credit any amount owing by Standard Federal to the Borrower.
SECTION 7. MISCELLANEOUS.
7.1 No default shall be waived by Standard Federal except in writing and a
waiver of any default shall not be a waiver of any other default or of the same
default on a future occasion. No single or partial exercise of any right, power
or privilege hereunder, or any delay in the exercise hereof, shall preclude
other or further exercise of the rights of the parties to this Agreement.
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7.2 No forbearance on the part of Standard Federal in enforcing any of its
rights under this Agreement, nor any renewal, extension or rearrangement of any
payment or covenant to be made or performed by the Borrower hereunder shall
constitute a waiver of any of the terms of this Agreement or of any such right.
7.3 This Agreement shall be construed in accordance with the law of the State
of Michigan.
7.4 All covenants, agreements, representations and warranties made in
connection with this Agreement and any document contemplated hereby shall
survive the borrowing hereunder and shall be deemed to have been relied upon by
Standard Federal. All statements contained in any certificate or other
document delivered to Standard Federal at any time by or on behalf of the
Borrower pursuant hereto shall constitute representations and warranties by the
Borrower.
7.5 The Borrower agrees that it will pay all costs and expenses incurred by
Standard Federal in enforcing Standard Federal's rights under this Agreement
and the documents contemplated hereby, including without limitation any and all
reasonable fees and disbursements of legal counsel to Standard Federal.
7.6 This Agreement shall inure to the benefit of and shall be binding upon
the parties hereto and their respective heirs, personal representatives,
successors and assigns; provided, however, that the Borrower shall not assign or
transfer its rights or obligations hereunder without the prior written consent
of Standard Federal.
7.7 If any provision of this Agreement shall be held or deemed to be or
shall, in fact, be inoperative or unenforceable as applied in any particular
case in any or all jurisdictions, or in all cases because it conflicts with any
other provision or provisions hereof or any constitution or statute or rule of
public policy, or for any other reason, such circumstances shall not have the
effect of rendering the provision in question inoperative or unenforceable in
any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any extent
whatever. The invalidity of any one or more phrases, sentences, clauses or
sections contained in this Agreement, shall not affect the remaining portions of
this Agreement, or any part thereof.
SECTION 8. ADDITIONAL PROVISIONS
8.1 In addition to the terms, covenants and conditions set forth above, the
parties hereto hereby agree as follows:
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8.1(a) Borrower shall cause XxXxxxx to execute and deliver to Standard Federal
an unlimited payment guaranty of the obligations of Borrower under the Line of
Credit in form and substance acceptable to Standard Federal.
IN WITNESS WHEREOF, the Borrower and Standard Federal have caused this
Loan Agreement to be executed as of the day and year first written above.
BORROWER:
XXXXXXX GROUP LEASING, INC., a Michigan
corporation
-------------------------- By: /s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx
Its: President
-----------------------------
00-0000000
----------------------------------------
Taxpayer Identification Number
STANDARD FEDERAL:
STANDARD FEDERAL BANK, a federal savings
bank
By: Xxxxx X. Xxxxxxxx
---------------------------
Its: Vice President
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