1
5314071-0001
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement (the "AGREEMENT") is made and entered into by
and between the undersigned borrower (the "BORROWER") and the undersigned bank
(the "BANK") as of the date set forth on the last page of this Agreement.
ARTICLE I. LOANS
1.1 REVOLVING CREDIT LOANS. From time to time prior to DECEMBER 1, 2003 (the
"MATURITY DATE") or the earlier termination hereof, the Borrower may borrow from
the Bank for working capital purposes up to the aggregate principal amount
outstanding at any one time of the lesser of (i) $ 2,000,000.00 (the "LOAN
AMOUNT"), less letters of credit issued by the Bank, or (ii) if applicable, the
BORROWING BASE (defined below). All revolving loans hereunder will be evidenced
by a single promissory note of the Borrower payable to the order of the Bank in
the principal amount of the Loan Amount (the "NOTE"). Although the Note will be
expressed to be payable in the full Loan Amount, the Borrower will be obligated
to pay only the amounts actually disbursed hereunder, together with accrued
interest on the outstanding balance at the rates and on the dates specified
therein and such other charges provided for herein. In the event that the
principal amount outstanding under the Note exceeds the Borrowing Base at any
time, the Borrower will immediately, without request, prepay an amount
sufficient to eliminate such excess.
1.2 BORROWING BASE. The Borrowing Base will be an amount equal to the sum of
(i) 80.00 % of the face amount of Eligible Accounts, and (ii) the lesser of
$ N/A or 50.00 % of the Borrower's cost of Eligible Inventory, as such cost may
be diminished as a result of any event causing loss or depreciation in value of
Eligible Inventory less (iii) the current outstanding loan balance on note(s) in
the original amount(s) of $ 2,000,000.00, and less (iv) undrawn amounts of
outstanding letters of credit issued by Bank or any affiliate thereof. The
Borrower will provide the Bank with information regarding the Borrowing Base in
such form and at such times as the Bank may request. The terms used in this
Section 1.2 will have the meanings set forth in a supplement entitled "Financial
Definitions," a copy of which the Borrower acknowledges having received with
this Agreement and which is incorporated herein by reference.
1.3 ADVANCES AND PAYING PROCEDURE. The Bank is authorized and directed to
credit any of the Borrower's accounts with the Bank (or to the account the
Borrower designates in writing) for all loans made hereunder, and the Bank is
authorized to debit such account or any other account of the Borrower with the
Bank for the amount of any principal or interest due under the Note or other
amount due hereunder on the due date with respect thereto. Each advance shall be
in the minimum amount of $5,000.
1.4 CLOSING FEE. The Borrower will pay the Bank a one-time closing fee of $ N/A
contemporaneously with execution of this Agreement. This fee is in addition to
all other fees, expenses and other amounts due hereunder.
1.5 LOAN FACILITY FEE. The Borrower will pay a loan facility fee equal to:
[ ] $ N/A per annum, payable annually in advance; (or)
-------------
[x] 0.125% per annum of the Loan Amount, payable annually in
------------- advance; (or)
[ ] N/A% per annum of the difference between the Loan Amount
------------- and the unpaid principal amount of the Note
outstanding from time to time, payable quarterly, in
arrears, on the last business day of each third
calendar month, and at maturity; (or)
[ ] N/A% per annum of the unpaid principal amount of the Note
------------- outstanding from time to time, payable quarterly,
in arrears, on the last business day of each third
calendar month; and at maturity.
The loan facility fee is payable for the entire period that this Agreement is
in effect, regardless of whether any amounts are outstanding hereunder at any
given time.
1.6 EXPENSES AND ATTORNEYS' FEES. The Borrower will reimburse the Bank and any
Participant (defined below) for all attorneys' fees and all other costs, fees
and out-of-pocket disbursements incurred by the Bank or any Participant in
connection with the preparation, execution, delivery, administration, defense
and enforcement of this Agreement or any of the other Loan Documents (defined
below), including fees and costs related to any waivers or amendments with
respect thereto (examples of costs and fees include but are not limited to fees
and costs for: filing, perfecting or confirming the priority of the Bank's lien,
title searches or insurance, appraisals, environmental audits and other reviews
related to the Borrower, any collateral or the loans, if requested by the Bank).
The Borrower will also reimburse the Bank and any Participant for all costs of
collection, including all attorneys' fees, before and after judgment, and the
costs of preservation and/or liquidation of any collateral.
1.7. COMPENSATING BALANCES. The Borrower will maintain on deposit with the Bank
in non-interest bearing accounts average daily collected balances, in excess of
that required to support account activity and other credit facilities extended
to the Borrower by the Bank, an amount at least equal to the sum of (i) $ N/A
and (ii) N/A % of the Loan Amount as computed on a monthly basis. If the
Borrower fails to keep and maintain such balances, it will pay a deficiency fee,
payable within five days after receipt of a statement therefor calculated on the
amount by which the Borrower's average daily balances are less than the
requirements set forth above, computed at a rate equal to the rate set forth in
the Note.
1.8 CONDITIONS TO BORROWING. The Bank will not be obligated to make (or
continue to make) advances hereunder unless (i) the Bank has received executed
originals of the Note and all other documents or agreements applicable to the
loans described herein, including but not limited to the documents specified in
Article III (collectively with this Agreement the "LOAN DOCUMENTS"), in form and
content satisfactory to the Bank; (ii) if the loan is secured, the Bank has
received confirmation satisfactory to it that the Bank has a properly perfected
security interest, mortgage or lien, with the proper priority; (iii) the Bank
has received certified copies of the Borrower's Articles of Incorporation and
By-Laws, or its Partnership Agreement (as appropriate), certification of
corporate or partnership status satisfactory to the Bank and all other relevant
documents; (iv) the Bank has received a certified copy of a resolution or
authorization in form and content
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satisfactory to the Bank authorizing the loan and all acts contemplated by this
Agreement and all related documents, and confirmation of proper authorization of
all guaranties and other acts of third parties contemplated hereunder; (v) the
Bank has been provided with an Opinion of the Borrower's counsel in form and
content satisfactory to the Bank confirming the matters outlined in Section 2.2
and such other matters as the Bank requests; (vi) no default exists under this
Agreement or under any other Loan Documents, or under any other agreements by
and between the Borrower and the Bank; and (vii) all proceedings taken in
connection with the transactions contemplated by this Agreement (including any
required environmental assessments), and all instruments, authorizations and
other documents applicable thereto, are satisfactory to the Bank and its
counsel.
ARTICLE II. WARRANTIES AND COVENANTS
While any part of the credit granted to the Borrower under this Agreement or the
other Loan Documents is available or any obligations under any of the Loan
Documents are unpaid or outstanding, the Borrower continuously warrants and
agrees as follows:
2.1 ACCURACY OF INFORMATION. All information, certificates or statements given
to the Bank pursuant to this Agreement and the other Loan Documents will be true
and complete when given.
2.2 ORGANIZATION AND AUTHORITY; LITIGATION. If the Borrower is a corporation or
partnership, the Borrower is a validly existing corporation or partnership (as
applicable) in good standing under the laws of its state of organization, and
has all requisite power and authority, corporate or otherwise, and possesses all
licenses necessary, to conduct its business and own its properties. The
execution, delivery and performance of this Agreement and the other Loan
Documents (i) are within the Borrower's power; (ii) have been duly authorized by
proper corporate or partnership action (as applicable); (iii) do not require the
approval of any governmental agency, other entity or person; and (iv) will not
violate any law, agreement or restriction by which the Borrower is bound. This
Agreement and the other Loan Documents are the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their terms. There is no litigation or administrative proceeding threatened or
pending against the Borrower which would, if adversely determined, have a
material adverse effect on the Borrower's financial condition or its property.
2.3 EXISTENCE; BUSINESS ACTIVITIES; ASSETS. The Borrower will (i) preserve its
corporate or partnership (as applicable) existence, rights and franchises; (ii)
not make any material change in the nature or manner of its business activities;
(iii) not liquidate, dissolve, merge or consolidate with or into another entity;
and (iv) not sell, lease, transfer or otherwise dispose of all or substantially
all of its assets.
2.4 USE OF PROCEEDS; MARGIN STOCK; SPECULATION. Advances by the Bank hereunder
will be used exclusively by the Borrower for working capital and other regular
and valid purposes. The Borrower will not, without the prior written consent of
the Bank, redeem, purchase, or retire any of the capital stock or declare or pay
any dividends, or make any other payments or distributions of a similar type or
nature. The Borrower will not use any of the loan proceeds to purchase or carry
"margin" stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System). No part of any of the proceeds will be used for
speculative investment purposes, including, without limitation, speculating or
hedging in the commodities and/or futures market.
2.5 ENVIRONMENTAL MATTERS. Except as disclosed in a written schedule attached to
this Agreement (if no schedule is attached, there are no exceptions), there
exists no uncorrected violation by the Borrower of any federal, state or local
laws (including statutes, regulations, ordinances or other governmental
restrictions and requirements) relating to the discharge of air pollutants,
water pollutants or process waste water or otherwise relating to the environment
or Hazardous Substances as hereinafter defined, whether such laws currently
exist or are enacted in the future (collectively "ENVIRONMENTAL LAWS"). The term
"HAZARDOUS SUBSTANCES" will mean any hazardous or toxic wastes, chemicals or
other substances, the generation, possession or existence of which is prohibited
or governed by any Environmental Laws. The Borrower is not subject to any
judgment, decree, order or citation, or a party to (or threatened with) any
litigation or administrative proceeding, which asserts that the Borrower (i) has
violated any Environmental Laws; (ii) is required to clean up, remove or take
remedial or other action with respect to any Hazardous Substances (collectively
"REMEDIAL ACTION"); or (iii) is required to pay all or a portion of the cost of
any Remedial Action, as a potentially responsible party. Except as disclosed on
the Borrower's environmental questionnaire provided to the Bank, there are not
now, nor to the Borrower's knowledge after reasonable investigation have there
ever been, any Hazardous Substances (or tanks or other facilities for the
storage of Hazardous Substances) stored, deposited, recycled or disposed of on,
under or at any real estate owned or occupied by the Borrower during the periods
that the Borrower owned or occupied such real estate, which if present on the
real estate or in soils or ground water, could require Remedial Action. To the
Borrower's knowledge, there are no proposed or pending changes in Environmental
Laws which would adversely affect the Borrower or its business, and there are no
conditions existing currently or likely to exist while the Loan Documents are in
effect which would subject the Borrower to Remedial Action or other liability.
The Borrower currently complies with and will continue to timely comply with all
applicable Environmental Laws; and will provide the Bank, immediately upon
receipt, copies of any correspondence, notice, complaint, order or other
document from any source asserting or alleging any circumstance or condition
which requires or may require a financial contribution by the Borrower or
Remedial Action or other response by or on the part of the Borrower under
Environmental Laws, or which seeks damages or civil, criminal or punitive
penalties from the Borrower for an alleged violation of Environmental Laws.
2.6 COMPLIANCE WITH LAWS. The Borrower has complied with all laws applicable to
its business and its properties, and has all permits, licenses and approvals
required by such laws, copies of which have been provided to the Bank.
2.7 RESTRICTION ON INDEBTEDNESS. The Borrower will not create, incur, assume or
have outstanding any indebtedness for borrowed money (including capitalized
leases) except (i) any indebtedness owing to the Bank and its affiliates, and
(ii) any other indebtedness outstanding on the date hereof, and shown on the
Borrower's financial statements delivered to the Bank prior to the date hereof,
provided that such other indebtedness will not be increased.
2.8 RESTRICTION ON LIENS. The Borrower will not create, incur, assume or permit
to exist any mortgage, pledge, encumbrance or other lien or levy upon or
security interest in any of the Borrower's property now owned or hereafter
acquired, except (i) taxes and assessments which are either not delinquent or
which are being contested in good faith with adequate reserves provided; (ii)
easements, restrictions and minor title irregularities which do not, as a
practical matter, have an adverse effect upon the ownership and use of the
affected property; (iii) liens in favor of the Bank and its affiliates; and (iv)
other liens disclosed in writing to the Bank prior to the date hereof.
2.9 RESTRICTION ON CONTINGENT LIABILITIES. The Borrower will not guarantee or
become a surety or otherwise contingently liable for any obligations of others,
except pursuant to the deposit and collection of checks and similar matters in
the ordinary course of business.
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2.10 INSURANCE. The Borrower will maintain insurance to such extent, covering
such risks and with such insurers as is usual and customary for businesses
operating similar properties, and as is satisfactory to the Bank, including
insurance for fire and other risks insured against by extended coverage, public
liability insurance and workers' compensation insurance; and will designate the
Bank as loss payee with a "Lender's Loss Payable" endorsement on any casualty
policies and take such other action as the Bank may reasonably request to ensure
that the Bank will receive (subject to no other interests) the insurance
proceeds on the Bank's collateral.
2.11 TAXES AND OTHER LIABILITIES. The Borrower will pay and discharge, when due,
all of its taxes, assessments and other liabilities, except when the payment
thereof is being contested in good faith by appropriate procedures which will
avoid foreclosure of liens securing such items, and with adequate reserves
provided therefor.
2.12 FINANCIAL STATEMENTS AND REPORTING. The financial statements and other
information previously provided to the Bank or provided to the Bank in the
future are or will be complete and accurate and prepared in accordance with
generally accepted accounting principles. There has been no material adverse
change in the Borrower's financial condition since such information was provided
to the Bank. The Borrower will (i) maintain accounting records in accordance
with generally recognized and accepted principles of accounting consistently
applied throughout the accounting periods involved; (ii) provide the Bank with
such information concerning its business affairs and financial condition
(including insurance coverage) as the Bank may request; and (iii) without
request, provide the Bank with management-prepared financial statements:
[X] quarterly within ___45__ days of the end of each quarter;
[ ] monthly within ____N/A__ days of the end of each month;
and annual AUDITED FINANCIAL STATEMENTS PREPARED BY AN ACCOUNTING FIRM
ACCEPTABLE TO THE BANK WITHIN 120 DAYS OF THE END OF EACH FISCAL YEAR.
2.13 INSPECTION OF PROPERTIES AND RECORDS; FISCAL YEAR. The Borrower will permit
representatives of the Bank to visit and inspect any of the properties and
examine any of the books and records of the Borrower at any reasonable time and
as often as the Bank may reasonably desire. The Borrower will not change its
fiscal year.
2.14 FINANCIAL STATUS. The Borrower will maintain at all times:
(i) Net Working Capital in the amount of at least (v) Capital Expenditures not to exceed $_____N/A_____ per
$________N/A_____. fiscal year.
(ii) Tangible Net Worth in the amount of at least (vi) Cash Flow Coverage Ratio of at least _______N/A________.
$________N/A_____.
(iii) Debt to Worth Ratio of not more than (vii) Officers, Directors, Partners, and Management Salaries and Other
_________N/A_____. Compensation not to exceed $____N/A_____ per fiscal year.
(iv) Current Ratio of at least ___________N/A______.
The terms used in this Section 2.14 will have the meanings set forth in a
supplement entitled "Financial Definitions," a copy of which the Burrower hereby
acknowledges having received with this Agreement and which is incorporated
herein by reference.
2.15. PAID-IN-FULL PERIOD. [ ] If checked here, all revolving loans under this
Agreement and the Note must be paid in full for a period of at least N/A
consecutive days during each fiscal year.
ARTICLE III. COLLATERAL AND GUARANTIES
3.1 COLLATERAL. This Agreement and the Note are secured by any and all security
interests, pledges, mortgages/deeds of trust or liens now or hereafter in
existence granted to the Bank to secure indebtedness of the Borrower to the
Bank, including without limitation as described in the following documents:
[ ] Real Estate Mortgage(s)/Deed(s) of Trust dated______________________________
covering real estate located at_____________________________________________
____________________________________________________________________________
[X] Security Agreement(s) dated __06/08/01_/s/ JAMG_____________________________
[ ] Collateral Pledge Agreement(s) dated________________________________________
[ ] Other_______________________________________________________________________
____________________________________________________________________________
3.2 GUARANTIES. This loan is guaranteed by______________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
3.3 CREDIT BALANCES; SETOFF. As additional security for the payment of the
obligations described in the Loan Documents and any other obligations of the
Borrower to the Bank of any nature whatsoever (collectively the "OBLIGATIONS"),
the Borrower hereby grants to the Bank a security interest in, a lien on and an
express contractual right to set off against all depository account balances,
cash and any other property of the Borrower now or hereafter in the possession
of the Bank and the right to refuse to allow withdrawals from any account
(collectively "SETOFF"). The Bank may, at any time upon the occurrence of a
default hereunder (notwithstanding any notice requirements or grace/cure periods
under this or other agreements between the Borrower and the Bank) Setoff against
the Obligations WHETHER OR
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NOT THE OBLIGATIONS (INCLUDING FUTURE INSTALLMENTS) ARE THEN DUE OR HAVE BEEN
ACCELERATED, ALL WITHOUT ANY ADVANCE OR CONTEMPORANEOUS NOTICE OR DEMAND OF ANY
KIND TO THE BORROWER, SUCH NOTICE AND DEMAND BEING EXPRESSLY WAIVED.
The information in this Article III is for information only and the omission of
any reference to an agreement will not affect the validity or enforceability
thereof. The rights and remedies of the Bank outlined in this Agreement and the
documents identified above are intended to be cumulative.
ARTICLE IV. DEFAULTS
4.1 DEFAULTS. NOTWITHSTANDING ANY CURE PERIODS DESCRIBED BELOW, THE BORROWER
WILL IMMEDIATELY NOTIFY THE BANK IN WRITING WHEN THE BORROWER OBTAINS KNOWLEDGE
OF THE OCCURRENCE OF ANY DEFAULT SPECIFIED BELOW. Regardless of whether the
Borrower has given the required notice, the occurrence of one or more of the
following will constitute a default:
(a) NONPAYMENT. The Borrower shall fail to pay (i) any interest due on the Note
or any fees, charges, costs or expenses under the Loan Documents by 5 days
after the same becomes due; or (ii) any principal amount of the Note when
due.
(b) NONPERFORMANCE. The Borrower or any guarantor of Borrower's Obligations to
the Bank ("GUARANTOR") shall fail to perform or observe any agreement,
term, provision, condition, or covenant (other than a default occurring
under (a), (c), (d), (e), (f) or (g) of this Section 4.1) required to be
performed or observed by the Borrower or any Guarantor hereunder or under
any other Loan Document or other agreement with or in favor of the Bank.
(c) MISREPRESENTATION. Any financial information, statement, certificate,
representation or warranty given to the Bank by the Borrower or any
Guarantor (or any of their representatives) in connection with entering
into this Agreement or the other Loan Documents and/or any borrowing
thereunder, or required to be furnished under the terms thereof, shall
prove untrue or misleading in any material respect (as determined by the
Bank in the exercise of its judgment) as of the time when given.
(d) DEFAULT ON OTHER OBLIGATIONS. The Borrower or any Guarantor shall be in
default under the terms of any loan agreement, promissory note, lease,
conditional sale contract or other agreement, document or instrument
evidencing, governing or securing any indebtedness owing by the Borrower or
any Guarantor to the Bank or any indebtedness in excess of $10,000 owing by
the Borrower to any third party, and the period of grace, if any, to cure
said default shall have passed.
(e) JUDGMENTS. Any judgment shall be obtained against the Borrower or any
Guarantor which, together with all other outstanding unsatisfied judgments
against the Borrower (or such Guarantor), shall exceed the sum of $10,000
and shall remain unvacated, unbonded or unstayed for a period of 30 days
following the date of entry thereof.
(f) INABILITY TO PERFORM; BANKRUPTCY/INSOLVENCY. (i) The Borrower or any
Guarantor shall die or cease to exist; or (ii) any Guarantor shall attempt
to revoke any guaranty of the Obligations described herein, or any guaranty
becomes unenforceable in whole or in part for any reason; or (iii) any
bankruptcy, insolvency or receivership proceedings, or an assignment for
the benefit of creditors, shall be commenced under any Federal or state law
by or against the Borrower or any Guarantor; or (iv) the Borrower or any
Guarantor shall become the subject of any out-of-court settlement with its
creditors; or (v) the Borrower or any Guarantor is unable or admits in
writing its inability to pay its debts as they mature.
(g) ADVERSE CHANGE; INSECURITY. (i) There is a material adverse change in the
business, properties, financial condition or affairs of the Borrower or any
Guarantor, or in any collateral securing the Obligations; or (ii) the Bank
in good xxxxx xxxxx itself insecure.
4.2 TERMINATION OF LOANS; ADDITIONAL BANK RIGHTS. Upon the Maturity Date or the
occurrence of any of the events identified in Section 4.1, the Bank may at any
time (notwithstanding any notice requirements or grace/cure periods under this
or other agreements between the Borrower and the Bank) (i) immediately terminate
its obligation, if any, to make additional loans to the Borrower; (ii) Setoff;
and/or (iii) take such other steps to protect or preserve the Bank's interest in
any collateral, including without limitation, notifying account debtors to make
payments directly to the Bank, advancing funds to protect any collateral and
insuring collateral at the Borrower's expense; all without demand or notice of
any kind, all of which are hereby waived.
4.3 ACCELERATION OF OBLIGATIONS. Upon the Maturity Date or the occurrence of
any of the events identified in Sections 4.1(a) through 4.1(e) and 4.1(g), and
the passage of any applicable cure periods, the Bank may at any time thereafter,
by written notice to the Borrower, declare the unpaid principal balance of any
Obligations, together with the interest accrued thereon and other amounts
accrued hereunder and under the other Loan Documents, to be immediately due and
payable; and the unpaid balance will thereupon be due and payable, all without
presentation, demand, protest or further notice of any kind, all of which are
hereby waived, and notwithstanding anything to the contrary contained herein or
in any of the other Loan Documents. Upon the occurrence of any event under
Section 4.1(f), the unpaid principal balance of any Obligations, together with
all interest accrued thereon and other amounts accrued hereunder and under the
other Loan Documents, will thereupon be immediately due and payable, all without
presentation, demand, protest or notice of any kind, all of which are hereby
waived, and notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents. NOTHING CONTAINED IN SECTION 4.1, SECTION 4.2 OR
THIS SECTION WILL LIMIT THE BANK'S RIGHT TO SETOFF AS PROVIDED IN SECTION 3.3 OR
OTHERWISE IN THIS AGREEMENT.
4.4 OTHER REMEDIES. Nothing in this Article IV is intended to restrict the
Bank's rights under any of the Loan Documents or at law, and the Bank may
exercise all such rights and remedies as and when they arc available.
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ARTICLE V. OTHER TERMS
5.1 FINANCIAL DEFINITIONS SUPPLEMENT. If a Borrowing Base or covenants
regarding financial status apply to this loan, the "FINANCIAL DEFINITIONS"
Supplement identified in Sections 1.2 and 2.14 of this Agreement is hereby
incorporated into this Agreement. The Borrower acknowledges receiving a copy of
such Supplement.
5.2 ADDITIONAL TERMS; ADDENDUM/SUPPLEMENTS. The warranties, covenants,
conditions and other terms described in this Section and/or in the Addendum
and/or other attached document(s) referenced in this Section are incorporated
into this Agreement:
SEE ATTACHED ADDENDUM
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ARTICLE VI. MISCELLANEOUS
6.1 DELAY; CUMULATIVE REMEDIES. No delay on the part of the Bank in exercising
any right, power or privilege hereunder or under any of the other Loan Documents
will operate as a waiver thereof, nor will any single or partial exercise of any
right, power or privilege hereunder preclude other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and remedies
herein specified are cumulative and are not exclusive of any rights or remedies
which the Bank would otherwise have.
6.2 RELATIONSHIP TO OTHER DOCUMENTS. The warranties, covenants and other
obligations of the Borrower (and the rights and remedies of the Bank) that are
outlined in this Agreement and the other Loan Documents are intended to
supplement each other. In the event of any inconsistencies in any of the terms
in the Loan Documents, all terms will be cumulative so as to give the Bank the
most favorable rights set forth in the conflicting documents, except that if
there is a direct conflict between any preprinted terms and specifically
negotiated terms (whether included in an addendum or otherwise), the
specifically negotiated terms will control.
6.3 PARTICIPATIONS; GUARANTORS. The Bank may, at its option, sell all or any
interests in the Note and other Loan Documents to other financial institutions
(the "PARTICIPANT"), and in connection with such sales (and thereafter) disclose
any financial information the Bank may have concerning the Borrower to any such
Participant or potential Participant. From time to time, the Bank may, in its
discretion and without obligation to the Borrower, any Guarantor or any other
third party, disclose information about the Borrower and this loan to any
Guarantor, surety or other accommodation party. This provision does not obligate
the Bank to supply any information or release the Borrower from its obligation
to provide such information, and the Borrower agrees to keep all Guarantors
advised of its financial condition and other matters which may be relevant to
the Guarantors' obligations to the Bank.
6.4 SUCCESSORS. The rights, options, powers and remedies granted in this
Agreement and the other Loan Documents will extend to the Bank and to its
successors and assigns, will be binding upon the Borrower and its successors and
assigns and will be applicable hereto and to all renewals and/or extensions
hereof.
6.5 INDEMNIFICATION. Except for harm arising from the Bank's willful
misconduct, the Borrower hereby indemnifies and agrees to defend and hold the
Bank harmless from any and all losses, costs, damages, claims and expenses of
any kind suffered by or asserted against the Bank relating to claims by third
parties arising out of the financing provided under the Loan Documents or
related to any collateral (including, without limitation, the Borrower's failure
to perform its obligations relating to Environmental Matters described in
Section 2.5 above). This indemnification and hold harmless provision will
survive the termination of the Loan Documents and the satisfaction of the
Obligations due the Bank.
6.6 NOTICE OF CLAIMS AGAINST BANK; LIMITATION OF CERTAIN DAMAGES. In order to
allow the Bank to mitigate any damages to the Borrower from the Bank's alleged
breach of its duties under the Loan Documents or any other duty, if any, to the
Borrower, the Borrower agrees to give the Bank immediate written notice of any
claim or defense it has against the Bank, whether in tort or contract, relating
to any action or inaction by the Bank under the Loan Documents, or the
transactions related thereto, or of any defense to payment of the Obligations
for any reason. The requirement of providing timely notice to the Bank
represents the parties' agreed-to standard of performance regarding claims
against the Bank. Notwithstanding any claim that the Borrower may have against
the Bank, and regardless of any notice the Borrower may have given the Bank, THE
BANK WILL NOT BE LIABLE TO THE BORROWER FOR CONSEQUENTIAL AND/OR SPECIAL DAMAGES
ARISING THEREFROM, EXCEPT THOSE DAMAGES ARISING FROM THE BANK'S WILLFUL
MISCONDUCT.
6.7 NOTICES. Notice of any record shall be deemed delivered when the record has
been (a) deposited in the United States Mail, postage pre-paid, (b) received by
overnight delivery service, (c) received by telex, (d) received by telecopy,
(e) received through the internet, and (f) when personally delivered.
6.8 PAYMENTS. Payments due under the Note and other Loan Documents will be made
in lawful money of the United States, and the Bank is authorized to charge
payments due under the Loan Documents against any account of the Borrower. All
payments may be applied by the Bank to principal, interest and other amounts due
under the Loan Documents in any order which the Bank elects.
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6.9 APPLICABLE LAW AND JURISDICTION; INTERPRETATION; JOINT LIABILITY;
SEVERABILITY. This Agreement and all other Loan Documents will be governed by
and interpreted in accordance with the internal laws of the State of
__OHIO________, except to the extent superseded by Federal law. Invalidity of
any provisions of this Agreement will not affect any other provision. THE
BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL
COURT SITUATED IN THE COUNTY OR FEDERAL JURISDICTION OF THE BANK'S BRANCH WHERE
THE LOAN WAS ORIGINATED, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS,
WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS
AGREEMENT, THE NOTE, THE COLLATERAL, ANY OTHER LOAN DOCUMENT, OR ANY
TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF
THE FOREGOING. Nothing herein will affect the Bank's rights to serve process in
any manner permitted by law, or limit the Bank's right to bring proceedings
against the Borrower in the competent courts of any other jurisdiction or
jurisdictions. This Agreement, the other Loan Documents and any amendments
hereto (regardless of when executed) will be deemed effective and accepted only
upon the Bank's receipt of the executed originals thereof. If there is more than
one Borrower, the liability of the Borrowers will be joint and several, and the
reference to "Borrower" will be deemed to refer to all Borrowers. Invalidity of
any provision of this Agreement shall not affect the validity of any other
provision.
6.10 COPIES; ENTIRE AGREEMENT; MODIFICATION. The Borrower hereby acknowledges
the receipt of a copy of this Agreement and all other Loan Documents.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR
ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.
THE TERMS OF THIS AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT.
THIS NOTICE SHALL ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS
NOW IN EFFECT BETWEEN BORROWER AND THE BANK. A MODIFICATION OF ANY OTHER CREDIT
AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK, WHICH OCCURS AFTER
RECEIPT BY BORROWER OF THIS NOTICE, MAYBE MADE ONLY BY ANOTHER WRITTEN
INSTRUMENT, ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT
ENFORCEABLE AND SHOULD NOT BE RELIED UPON.
6.11 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY JOINTLY AND
SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, ANY
COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR
CONNECTED THERETO. THE BORROWER AND THE BANK EACH REPRESENTS TO THE OTHER THAT
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
6.12 ATTACHMENTS. ALL DOCUMENTS ATTACHED HERETO, INCLUDING ANY APPENDICES,
SCHEDULES, RIDERS, AND EXHIBITS TO THIS AGREEMENT, ARE HEREBY EXPRESSLY
INCORPORATED BY REFERENCE.
IN WITNESS WHEREOF, the undersigned have executed this REVOLVING CREDIT AGREEMENT as of __JUNE 8, 2001_/s/_JU___.
(Individual Borrower) __HMI INDUSTRIES, INC.______________________________________________
Borrower Name (Organization)
____________________________________________________(SEAL) a __OHIO Corporation________________________________________________
By___/s/_Julie A. McGraw____________________________________________
Borrower Name _____________N/A___________________________
Name and Title ___JULIE MCGRAW, CONTROLLER__________________________
____________________________________________________(SEAL)
By__________________________________________________________________
Borrower Name _____________N/A___________________________ Name and Title _____________________________________________________
FIRSTAR BANK. N.A.____________________________________________(Bank)
By_/s/_Judith Ulrich________________________________________________
Name and Title __JUDITH X. XXXXXX, VICE PRESIDENT___________________
Borrower Address: __6000 XXXXXXXX XXXXXX XXXXX 000, XXXXX XXXXX, XX 44131___________________________________________________________
__________________________________________________________________________________________________________________
Borrower Telephone No.: ____________________________________________________________________________________________________________
1125A Page 6 of 6 1/01
7
5314071-0001
ADDENDUM TO REVOLVING CREDIT AGREEMENT
This Addendum is made part of the Revolving Credit Agreement (the
"AGREEMENT ") made and entered into by and between the undersigned borrower (the
"BORROWER") and the undersigned bank (the "BANK") as of the date identified
below. The warranties, covenants and other terms described below are hereby
added to the Agreement.
TANGIBLE NET WORTH: BORROWER SHALL MAINTAIN A TANGIBLE NET WORTH AT ALL
TIMES OF NOT LESS THAN $7,400,000; CALCULATED AT THE END OF THE
QUARTER, INCREASING AT THE END OF EACH FISCAL YEAR BY 50% OF POSITIVE
NET INCOME.
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND
AMORTIZATION/INTEREST: BORROWER SHALL MAINTAIN AN INTEREST COVERAGE
RATIO OF GREATER THAN OR EQUAL 5:1.0:1 CALCULATED ON A ROLLING 4
QUARTER BASIS.
INDEBTEDNESS: RESTRICTION ON OTHER INDEBTEDNESS OTHER THAN VENDOR
FINANCING. VENDOR FINANCING NOT TO EXCEED $1.7MM FOR THE TERM OF THE
REVOLVER AND TO BE UNSECURED OR SECURED BY SPECIFIC TOOL & DIE. OTHER
BORROWINGS NOT TO EXCEED $300,000.
MAXIMUM CAPITAL EXPENDITURES: NOT TO EXCEED $4,100,000 IN 2001 AND
$1,000,000 EVERY YEAR THEREAFTER
DIVIDENDS: RESTRICTION ON PAYMENT OF DIVIDENDS UNLESS WRITTEN
PERMISSION FROM BANK.
EMPLOYEE ADVANCES: EMPLOYEE ADVANCES/LOANS NOT TO EXCEED $5,000.00
ADVANCES: ADVANCES UNDER THE REVOLVING LINE OF CREDIT WILL BE LIMITED
TO 80% OF ELIGIBLE ACCOUNTS RECEIVABLE LESS THAN 90 DAYS OLDS, PLUS 50%
INVENTORY SUBJECT TO A 50% CAP FOR INVENTORY. MONTHLY BORROWING BASE
AND MONTHLY STATEMENTS WILL BE REQUIRED ONCE A MINIMUM OF $500,000 IS
OUTSTANDING ON THE REVOLVER.
ADD TO SECTION 2.2: THE BORROWER'S CURRENT ACCOUNTING FIRM IS
ACCEPTABLE TO BANK. AFTER WORDS ACCEPTABLE TO BANK.
ADD TO SECTION 6.5: GROSS NEGLIGENCE AFTER WORDS ARISING FROM THE
BANKS.
Dated as of: June 8, 2001 /s/ JAMG
-------------------------
(Individual Borrower) HMI INDUSTRIES, INC.
-----------------------------------------
Borrower Name (Organization)
----------------------------(SEAL) a OHIO Corporation
-----------------------------------------
By /s/ Xxxxx X. XxXxxx
---------------------------------------
Borrower Name N/A
-------------------- Name and Title XXXXX XXXXXX, CONTROLLER
----------------------------
----------------------------(SEAL)
By
----------------------------------------
Borrower Name N/A Name and Title
-------------------- ----------------------------
FIRSTAR BANK, N.A. XXXX(Bank)
------------------------------------------
By /s/ Xxxxxx Xxxxxx
----------------------------------------
Name and Title XXXXXX X XXXXXX, VICE
----------------------------
PRESIDENT
----------------------------
1123A (c)Firstar Corporation 1998 4/98
8
ATTACHMENT A
------------
BORROWING BASE CERTIFICATE
Pursuant to our Loan Agreement dated June 8, 2001, (the "Agreement, between HMI
Industries, Inc., (the "Borrower"), and Firstar, N.A., (the "Bank"), the
undersigned hereby certifies that he/she is an authorized signer for the
Borrower that the Borrowing Base (as defined in the Agreement) that is required
once a minimum of $500,000.00 is outstanding as of _________________________ is
calculated as follows:
CALCULATION OF BORROWING BASE
1. Eligible Accounts
All Accounts Receivable $
---------------
Less Accounts over 90 days from invoice $
---------------
Less Accounts of debtors who are also creditors
to the extent of credit (contra accounts) $
---------------
Less Accounts to affiliates and employees $
---------------
Less non insured foreign Accounts $
---------------
Less Accounts subject to adjustment or in dispute $
---------------
Less 10% insured foreign Accounts $
---------------
Less Accounts of any customer balance that 25%
of the balance due is over 90 days then entire
Account is ineligible $
---------------
Total Eligible Accounts $
---------------
Less 20% $
---------------
TOTAL ELIGIBLE ACCOUNTS $
---------------
2. Eligible Inventory (Cost Basis)
- excludes WIP and consigned inventory
Inventory at Cost: $
---------------
- Page 1 of 2
9
ATTACHMENT A
------------
less 50% $
---------------
Net Inventory $
---------------
Total Eligible Inventory $
---------------
3. BORROWING BASE
4.
A. Total Eligible Accounts $
-------------------
B. Total Eligible Inventory $
-------------------
C. Borrowing Base (A + B) $
B CANNOT BE GREATER THAN 50% OF C -------------------
D. Less Outstandings as of Report Date $
-------------------
E. Availability (Overadvance) as of
Report Date $
-------------------
ARE ACCOUNTS RECEIVABLE FROM CUSTOMERS LOCATED IN MN, NJ, OR WV GREATER THAN 5%
FOR ANY ONE DEBTOR OR 25% IN TOTAL? YES/NO
The undersigned further certifies that, to the best of his/her knowledge and
belief as of the date hereof, no event of default of any clause of the Agreement
nor any event which, with notice or lapse of time or both, would constitute such
an Event of Default has occurred and is continuing unremedied under this
agreement.
Dated , 19 .
------------ --
By:
-----------------------
Its:
-----------------------
- Page 2 of 2
10
5314071-0001
FINANCIAL DEFINITIONS SUPPLEMENT
TO
REVOLVING CREDIT AGREEMENT
AND
TERM LOAN AGREEMENT
1. The term "CAPITAL EXPENDITURES" shall mean the aggregate amount of all
purchases or acquisition of fixed assets, including real estate, motor
vehicles, equipment, fixtures, leases and any other items that would be
capitalized on Debtor's books under generally accepted accounting
principles. The term "Capital Expenditures" will not include
expenditures or charges for the usual and customary maintenance, repair
and retooling of any fixed asset, the acquisition of new tooling in the
ordinary course of business or fixed asset acquisitions evidenced by a
binding purchase order or agreement made prior to the date of this
Agreement.
2. The term "CASH FLOW COVERAGE RATIO" shall mean the relationship,
expressed as a numerical ratio, between:
(i) The total of Borrower's after-tax income (less dividends if
the Borrower is an S Corporation) plus depreciation; and
(ii) Current maturities of long-term debt.
3. The term "CURRENT RATIO" shall mean the relationship, expressed as a
numerical ratio, between the amount described below in 7(i) and the
amount described in 7(ii).
4. The term "DEBT TO WORTH RATIO" shall mean the relationship, expressed
as a numerical ratio, between:
(i) the total of all liabilities of the Borrower which would
appear on a balance sheet of the Borrower in accordance with
generally accepted accounting principles; and
(ii) Tangible Net Worth.
5. The term "ELIGIBLE ACCOUNT" shall mean an account owing to the Borrower
which meets all of the following requirements at the time it comes into
existence and continues to meet the same until it is collected in full:
(i) SALE OF GOODS OR SERVICES RENDERED. It arose from the
performance of services by the Borrower, or from a bona fide
sale or lease of goods on terms in effect as of the date of
this Agreement as disclosed by the Borrower to the Bank; which
services have been fully performed for an account debtor or
which goods have been delivered or shipped to an account
debtor residing in the United States or to a foreign account
debtor acceptable to the Bank and supported by a letter of
credit acceptable to the Bank or to the United States or any
agency or department thereof whose accounts are assigned to
the Bank under the Federal Assignment of Claims Act; and for
which the Borrower has genuine and complete invoices, shipping
documents or receipts;
(ii) AGE AND DUE DATE. It is payable within 30 days of the date of
invoice, and in each instance is not more than 60 days past
due;
(iii) OWNERSHIP. It is owned and assignable by the Borrower free of
all claims, encumbrances and security interests (except the
Bank's paramount security interest);
(iv) NO DEFENSES. It is enforceable by the Borrower and the Bank
against the account debtor for the amount shown as owing in
the statements furnished by the Borrower to the Bank; it and
the transaction out of which it arose comply with all
applicable laws and regulations; it is not subject to any
setoff, credit allowance or adjustment except discount for
prompt payment, nor has the account debtor returned the goods
or disputed liability; and it did not arise from a conditional
sale, guaranteed sale, sale on approval, sale or return or
sale on consignment;
(v) FINANCIAL CONDITION OF ACCOUNT DEBTOR. Neither the Borrower
nor the Bank has any notice or knowledge of anything which
might impair the credit standing of the account debtor or the
prospect of payment of the account, nor does the dollar amount
of past-due invoices as a portion of the total dollar amount
due from an account debtor exceed 10%, which limitation may
change from time to time;
(vi) AFFILIATES. It is not due from an Affiliate of the Borrower,
including, without limitation, (a) a parent corporation; (b)
subsidiary corporation; (c) an entity controlled by any
controlling shareholder(s) of the Borrower; or (d) any
officer, director, shareholder or owner of the Borrower or of
any Affiliate. (collectively "Affiliate");
1126A (c)Firstar Corporation 1998 Page 1 of 2 3/98
11
(vii) OTHER PROVISIONS.
6. The term "ELIGIBLE INVENTORY" shall mean inventory (as defined under
the Uniform Commercial Code in the state where the Bank's main office
is located) of the Borrower which meets all of the following
requirements and continues to meet the same until it is sold or
otherwise disposed of:
(i) OWNERSHIP. It is owned and assignable by the Borrower free of
all claims, encumbrances and security interests (except the
Bank's paramount security interest); it is located in the
United States; it is not stored with any bailee, warehouseman,
Affiliate or other party without a written agreement in favor
of the Bank; and it is not held by the Borrower nor put in the
field by the Borrower as a conditional sale, guaranteed sale,
sale on approval, sale or return or sale on consignment.
(ii) CONDITION. It is in good condition; it is not materially
declined in value; it is not work-in-process; it is of an age,
type and quantity acceptable to the Bank; and, in the case of
goods held for sale, it is new and unused (except as the Bank
may otherwise consent in writing);
(iii) OTHER PROVISIONS.
7. The term "NET WORKING CAPITAL" shall mean:
(i) the amount of all assets which under generally accepted
accounting principles would appear as current assets on the
balance sheet of the Borrower,
Less
(ii) the amount of all liabilities which under generally accepted
accounting principles would appear as current liabilities on
such balance sheet, including all indebtedness payable on
demand or maturing (whether by reason of specified maturity,
fixed prepayments, sinking funds or accruals of any kind, or
otherwise) within 12 months or less from the date of the
relevant statement, including all lease and rental obligations
due in 12 months or less under capitalized leases, and
including customers' advances and progress xxxxxxxx on
contracts.
8. The term "OFFICER, DIRECTORS, PARTNERS, AND MANAGEMENT SALARIES AND
OTHER COMPENSATION" shall mean the aggregate amount of all salaries,
bonuses, dividends (except for satisfaction of the income tax liability
for Subchapter S corporations), partnership distributions, draws,
profit-sharing payments or other compensation of any kind to officers,
directors, partners, and other employees having management or executive
responsibilities (and all amounts to family members of any such
persons).
9. The term "TANGIBLE NET WORTH" shall mean the total of all assets
properly appearing on the balance sheet of the Borrower in accordance
with generally accepted accounting principles, less the sum of the
following:
(i) the book amount of all such assets which would be treated as
intangibles under generally accepted accounting principles,
including, without limitation, all such items as goodwill,
trademarks, trademark rights, trade names, trade name rights,
brands, copyrights, patents, patent rights, licenses, deferred
charges and unamortized debt discount and expense;
(ii) any write-up in the book value of any such assets resulting
from a revaluation thereof subsequent to the date of the
Revolving Credit Agreement, or the Term Loan Agreement, as the
case may be;
(iii) all reserves, including reserves for depreciation,
obsolescence, depletion, insurance, and inventory valuation,
but excluding contingency reserves not allocated for any
particular purpose and not deducted from assets;
(iv) the amount, if any, at which any shares of stock of the
Borrower appear on the asset side of such balance sheet;
(v) all liabilities of the Borrower shown on such balance sheet;
(vi) all investments in foreign affiliates and nonconsolidated
domestic affiliates; and
(vii) all accounts or notes due to the Borrower from any
shareholder, director, officer, employee or affiliate of the
Borrower or from any relative of such party.
1126A Page 2 of 2 3/98
12
-------------------------------------------------
FOR BANK USE ONLY Reviewed by
---------------
-------------------------------------------------
Due DECEMBER 1, 2003
--------------------
Customer # 5314071 Loan # 0001
------------- ---------------
-------------------------------------------------
REVOLVING CREDIT NOTE
$ 2,000,000.00 JUNE 8, 2001 /s/JAMG
------------------ ------------------------
FOR VALUE RECEIVED, the undersigned borrower (the "BORROWER"), promises
to pay to the order of FIRSTAR BANK, N.A. (the "BANK"), the principal sum of TWO
------------------ ---
MILLION AND NO/100 Dollars ($ 2,000,000.00), payable DECEMBER 1, 2003.
------------------ ----------------- ----------------
Interest.
THE UNPAID PRINCIPAL BALANCE WILL BEAR INTEREST AT AN ANNUAL RATE EQUAL TO
THE PRIME RATE ANNOUNCED BY THE BANK.
THE INTEREST RATE HEREUNDER WILL BE ADJUSTED EACH TIME THAT THE PRIME RATE
CHANGES.
Payment Schedule.
INTEREST IS PAYABLE BEGINNING JULY 1, 2001, AND ON THE SAME DATE OF EACH
CONSECUTIVE MONTH THEREAFTER (EXCEPT THAT IF A GIVEN MONTH DOES NOT HAVE
SUCH A DATE, THE LAST DAY OF SUCH MONTH), PLUS A FINAL INTEREST PAYMENT WITH
THE FINAL PAYMENT OF PRINCIPAL.
Interest will be computed for the actual number of days principal is
unpaid, using a daily factor obtained by dividing the stated interest rate by
360.
Principal amounts remaining unpaid after the maturity thereof, whether
at fixed maturity or by reason of acceleration of maturity, shall bear interest
from and after maturity until paid at a rate of 5% per annum plus the rate
otherwise payable hereunder.
In no event will the interest rate hereunder exceed that permitted by
applicable law. If any interest or other charge is finally determined by a court
of competent jurisdiction to exceed the maximum amount permitted by law, the
interest or charge shall be reduced to the maximum permitted by law, and the
Bank may credit any excess amount previously collected against the balance due
or refund the amount to the Borrower.
Subject to applicable law, if any payment is not made on or before its
due date, the Bank may collect a delinquency charge of 5.00% of the unpaid
amount. Collection of the late payment fee shall not be deemed to be a waiver of
the Bank's right to declare a default hereunder.
Without affecting the liability of any Borrower, endorser, surety or
guarantor, the Bank may, without notice, renew or extend the time for payment,
accept partial payments, release or impair any collateral security for the
payment of this Note, or agree not to xxx any party liable on it.
This Revolving Credit Note constitutes the Note issued under a
Revolving Credit Agreement dated as of the date hereof between the Borrower and
the Bank, to which Agreement reference is hereby made for a statement of the
terms and conditions under which loans evidenced hereby were or may be made and
a description of the terms and conditions upon which the maturity of this Note
may be accelerated, and for a description of the collateral securing this Note.
1128OH (c)Firstar Corporation 1998 11/00
13
CONFESSION OF JUDGMENT. Borrower hereby irrevocably authorizes and
empowers any attorney-at-law to appear for Borrower in any action upon or in
connection with this Revolving Credit Note at any time after the obligations
under this Revolving Credit Note become due, as herein provided, in any court in
or of the State of Ohio or elsewhere, and waives the issuance and service of
process with respect thereto, and irrevocably authorizes and empowers any such
attorney-at-law to confess judgment in favor of Bank against Borrower, the
amount due thereon or hereon, plus interest as herein provided, and all costs of
collection, and waives and releases all errors in any said proceedings and
judgments and all rights of appeal from the judgment rendered. The Borrower
agrees and consents that the attorney confessing judgment on behalf of the
Borrower hereunder may also be counsel to the Bank and/or any of the Bank's
affiliates, and the Borrower hereby further waives any conflict of interest
which might otherwise arise and consents to the Bank paying such confessing
attorney a legal fee or allowing such attorneys' fees to be paid from proceeds
of collection of this Revolving Credit Note and/or any and all collateral and
security for the obligations.
WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF THE COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
The Borrower hereby acknowledges the receipt of a copy of this Note.
(Individual Borrower) __HMI INDUSTRIES, INC.______________________________________________
Borrower Name (Organization)
____________________________________________________(SEAL) a __OHIO Corporation________________________________________________
By___/s/_Julie A. McGraw____________________________________________
Borrower Name _____________N/A___________________________
Name and Title ___JULIE MCGRAW, CONTROLLER__________________________
____________________________________________________(SEAL)
By__________________________________________________________________
Borrower Name _____________N/A___________________________ Name and Title _____________________________________________________
1128OH 11/00
14
ARTICLE 9 CERTIFICATE
(FOR PERSONAL PROPERTY SECURED LOANS EXCLUDING PERSONAL TRUSTS)
-------------------------
Date: June 8, 2001 "Borrower" HMI Industries "Bank" Firstar
------------- ------------------ ----------
The Undersigned pledgor of collateral to the Bank (hereafter "Pledgor") in his
or her capacity as set forth below warrants and attests to Bank, its successors
and assigns, the following:
1. LEGAL NAME. The exact legal name of Pledgor is:
HMI INDUSTRIES INC.
----------------------------------------------------------------------
----------------------------------------------------------------------
(Note: If Pledgor is a sole proprietorship, indicate the exact name of
the individual owner of the proprietorship, INCLUDING MIDDLE initial.
If Pledgor is a general partnership without a formal partnership name,
list the exact names of the partners who comprise the partnership.)
2 TYPE OF ENTITY. Pledgor is a (check one):
[ ] husband and wife borrowing relationship
[ ] sole proprietorship
[ ] general partnership
[ ] limited partnership
[ ] limited liability partnership
[ ] limited liability limited partnership
[ ] limited liability company
[X] corporation
[ ] other (please designate)
-------------------------------------
3. REGISTERED ORGANIZATION. If Pledgor is an entity created by and
registered with a state or the United States, check one and insert
information as appropriate:
[X] United States
[X] State of DELAWARE (please designate)
---------
4. REGISTRATION DOCUMENTATION. If Pledgor is a registered organization,
attached is a file-stamped photocopy of Pledgor's current organization
filing including all amendments (e.g., Articles of Incorporation,
Articles of Organization, Certificate of Limited Partnership).
ATTACHING A CERTIFICATE OF GOOD STANDING OR CERTIFICATE OF STATUS IS
NOT SUFFICIENT FOR THIS REQUIREMENT.
5. ORGANIZATION NUMBER. If Pledgor is an organization and has an
organization identification number, please specify
-------------------
----------------------------------------------------------------------,
or if no separate identification number exists for the organization,
indicate that "none exists" by checking this box [ ]. THIS IS NOT THE
SSI OR TAXPAYER ID NUMBER.
6. EMPLOYER ID #/SOCIAL SECURITY #: Pledgor's EIN or SS number is:
--------
7 PLEDGOR'S LOCATION.
[ ] Husband/wife or sole proprietorship, indicate complete address of
principal residence
-----------------------------------------------------------------------
Also indicate any other address that might be considered a
residence (e.g., vacation home)
-----------------------------------------------------------------------
[X] Registered Organization: location is state of registration. Add
mailing address of chief executive office here:
0000 Xxxxxxxx Xxx #000 Xxxxx Xxxxx XX 00000
-----------------------------------------------------------------------
(c)U.S. Bancorp
15
[ ] Registered Organization organized under the laws of the United
States: consult counsel
[ ] Foreign Pledgor: consult counsel
[ ] All other organizations, indicate address of chief executive
office
-----------------------------------------------------------------
8. PRIOR NAMES. List all former names of Pledgor during the past five (5)
years, including those names which existed prior to any acquisition,
merger or consolidation with or into Pledgor, or any name of Pledgor
that existed before Pledgor changed its name to its current name or
changed its form of business (e.g., sole proprietor to LLC).
Reason (e.g., merger, acquisition,
Change of Name From Change of Name To Date name changes, entity change)
------------------- ----------------- ---- ----------------------------
------------------- ----------------- ---- ----------------------------
------------------- ----------------- ---- ----------------------------
9. PRIOR JURISDICTIONS. (NOTE: THIS REPRESENTATION APPLIES TO REGISTERED
ORGANIZATIONS ONLY). If on or after July 1, 2001 the Pledgor changed
its registration (e.g., Articles of Incorporation, Articles of
Organization, Limited Partnership Certificate) from a different state
(e.g., Iowa to Wisconsin), list the prior state of registration.
State Date of Change
----- --------------
---------------------------- ----------------------------
10. PRIOR PRINCIPAL LOCATIONS OF PLEDGOR. Other than that location listed
in Section 7 above, list the city, state and county of the current
principal location (or residence) of Pledgor and any prior location
during the last six (6) months.
State County
----- ------
---------------------------- ----------------------------
11. COLLATERAL LOCATIONS. Other than that location listed in Section 7
above, list each city, state and county in which any of the following
collateral IS CURRENTLY LOCATED or WAS LOCATED during the last six (6)
months: inventory, equipment.
State County
----- ------
STRONGSVILLE, OHIO CUYAHOGA
---------------------------- ----------------------------
---------------------------- ----------------------------
12. FIXTURES, TIMBER TO BE CUT, AS EXTRACTED MINERALS, FARM PRODUCTS.
Please list street address of collateral and attach a legal
description:
------------------------------------------------------
County of
---------------------------------------------.
[ ] THERE HAVE BEEN NO CHANGES SINCE THE LAST CERTIFICATE DATED
-----------.
Pledgor represents and warrants that the foregoing statements are true and
correct in all respects, and that such warranties and representations are made
under and in connection with certain credit facilities between the Borrower and
the Bank, and any inaccuracy of such representations or warranties will
constitute a default under such facilities.
(Individual) (Organization)
By: /s/ Xxxxx X XxXxxx
------------------------------------ ------------------------------------
XXXXX X XXXXXX CONTROLLER
------------------------------------ ------------------------------------
(Print Name) (Print Name and Title)
(Individual)
By:
------------------------------------ ------------------------------------
------------------------------------ ------------------------------------
(Print Name) (Print Name and Title)
(c)U.S. Bancorp
16
5314071
CORPORATE RESOLUTION FOR BORROWING AND PLEDGING ASSETS
HMI INDUSTRIES, INC.
--------------------------------------------------
NAME OF CORPORATION
WHEREAS, it is necessary for this corporation to borrow money from
FIRSTAR BANK, N.A. (the "BANK ") from time to time;
------------------
NOW, THEREFORE, RESOLVED, that any of the officers of this corporation denoted below: [XXXX AUTHORIZED OFFICERS]
--------
[ ] Chairman of the Board [ ] Treasurer [ ] Any Assistant Secretary
[ ] President [ ] Secretary [ ] Other:
---------------------
[ ] Any Vice President [ ] Any Assistant Treasurer [ ] Other:
---------------------
is (are) authorized, on behalf of and in the name of this corporation, (a) to
borrow money from the Bank from time to time in such amounts as such officer(s)
shall deem advisable; (b) to make, execute, seal with the corporate seal, and
deliver to the Bank, from time to time, loan agreements, disbursing agreements,
notes, applications for letters of credit, and other evidence of or agreements
concerning such indebtedness, in such amounts with such maturities, at such
rates of interest, and upon such terms and conditions as said officer(s) shall
approve; (c) to pledge, assign, mortgage or otherwise grant a security interest
in any or all real property, fixtures, tangible or intangible personal property,
or any other assets of this corporation, to execute, seal with the corporate
seal, and deliver to the Bank such security agreements, chattel mortgages,
assignments, financing statements, real estate mortgages, lease or rental
assignments, assignments of life insurance, agreements not to encumber, or other
agreements respecting any or all interests in real or personal property now
owned or hereafter acquired by this corporation as may be requested by the Bank
to secure any obligations of this corporation to the Bank, now existing or
hereafter arising, all upon such terms and conditions as said officer(s) shall
approve, and to perform such acts required of this corporation in such
agreements or otherwise to perfect such security interests; (d) to sell to the
Bank, with or without recourse, accounts, contract rights, general intangibles,
instruments, documents, chattel paper, equipment, inventory, insurance policies,
deposit accounts, rights in action or other personal property of this
corporation; (e) to endorse or assign and deliver such property to the Bank, and
from time to time to withdraw and make substitutions of such property, or to
sell such property to third persons and cause the proceeds of such sales to be
applied against the obligations of this corporation to the Bank; (f) to give
subordinations, guaranties or other financial understandings to the Bank; and
(g) to endorse and deliver for discount with the Bank, notes, certificates of
deposit, bills of exchange, orders for the payment of money, chattel paper,
commercial, or other business paper, howsoever drawn, either belonging to or
coming into the possession of this corporation. The signature(s) of said
officer(s) appearing on any of the foregoing instruments shall be conclusive
evidence of (his/her) (their) approval thereof.
FURTHER RESOLVED, that the authority granted to the officers of this
corporation shall continue in full force and effect, and said Bank may rely
thereon in dealing with such officers, unless and until written notice of any
change in or revocation of such authority shall be delivered to said Bank to the
attention of Commercial Loan Operations by an officer or director of this
corporation, and any action taken by said officers and relied on by said Bank
pursuant to the authority granted herein prior to its receipt of such written
notice shall be fully and conclusively binding on this corporation.
FURTHER RESOLVED, that the actions of any officer of this corporation
heretofore taken in borrowing money from the Bank for and on behalf of this
corporation, and in securing such indebtedness in any manner authorized herein,
and in selling or assigning property of this corporation to the Bank with or
without recourse, and in discounting with the Bank commercial and other business
paper, be and the same hereby are in all respects ratified, confirmed and
approved.
FURTHER RESOLVED, that in consideration of any loans or other financial
accommodation made by the Bank to this corporation, this corporation shall be
authorized to and shall assume full responsibility for and hold the Bank
harmless from any and all payments made or any other actions taken by the Bank
in reliance upon the signatures, including facsimiles thereof, of any person or
persons holding the offices of this corporation designated above regardless of
whether or not the use of the facsimile signature was unlawful or unauthorized
and regardless of by whom or by what means the purported signature or facsimile
signature may have been affixed to any instrument if such signatures reasonably
resemble the specimen or facsimile signatures as provided to the Bank, or for
refusing to honor any signatures not provided to the Bank; and that this
corporation agrees to indemnify the Bank against any and all claims, demands,
losses, costs, damages or expenses suffered or incurred by the Bank resulting
from or arising out of any such payment or other action. The foregoing
indemnification shall be effective and may be enforced by the Bank upon delivery
to the Bank of a copy of this resolution certified by the Secretary, Assistant
Secretary or any other officer of this corporation.
FURTHER RESOLVED, that the Secretary, Assistant Secretary or any other
officer of this corporation is authorized and directed to certify to the Bank
the foregoing resolutions and that the provisions thereof are in conformity with
the Articles of Incorporation and By-Laws of this corporation and to certify to
the Bank the names of the persons now holding the offices referred to above and
any changes hereafter in the persons holding said offices together with
specimens of the signatures of such present and future officers.
FURTHER RESOLVED, that all prior resolutions of this
corporation authorizing the borrowing of money from the Bank and the securing
thereof, be and they hereby are rescinded and superseded as to all borrowings
from the Bank and security transactions with respect thereto effected after the
date of adoption of these resolutions.
0310A (c)Firstar Corporation 1998 12/98
(CONTINUED ON REVERSE SIDE)
17
I HEREBY CERTIFY that I am the duly elected, qualified and acting
______________________ Secretary and the custodian of the records of the
above-named corporation, a corporation organized and existing and in good
standing under the laws of the State of __OHIO_________________. The foregoing
resolutions [choose one:] [ ] are true and correct copies of the resolutions
duly adopted in accordance with law and the Charter or Articles or Certificate
of Incorporation and By-Laws or Code of Regulations, as applicable, of the
corporation on _________________________________ and that such resolutions are
now in full force and effect without modifications and are duly recorded in the
minute book of the corporation; [ ] are in conformity with existing resolutions,
the Charter or Articles or Certificate of Incorporation and By-Laws or Code of
Regulations, as applicable, of the corporation, and permit the officers
designated herein to undertake all the activities set forth above.
I FURTHER CERTIFY that set forth below are the true titles, names and
genuine signatures of the duly elected or appointed, qualified and acting
officers of said corporation presently holding such offices who are authorized
under the foregoing resolutions:
Title Name* Signature*
----- ----- ----------
Chairman of
the Board
---------------------------- -----------------------------
President
---------------------------- -----------------------------
Vice President
---------------------------- -----------------------------
---------------------------- -----------------------------
Treasurer Xxxxx X XxXxxx /s/ Xxxxx X XxXxxx
---------------------------- -----------------------------
Secretary
---------------------------- -----------------------------
Assistant Treasurer
---------------------------- -----------------------------
Assistant Secretary
---------------------------- -----------------------------
Other
---------------------------- -----------------------------
Title Name
Other
---------------------------- -----------------------------
Title Name
I FURTHER CERTIFY that copies of the Charter or Articles or Certificate
of Incorporation and By-Laws or Code of Regulations, as applicable, of the
corporation which have heretofore been delivered to the Bank or which are
delivered herewith are true and correct copies and that such Charter or Articles
or Certificate and By-Laws or Code of Regulations, as applicable, are presently
in full force and effect.
IN WITNESS WHEREOF, I have affixed my name in my official capacity and
have caused the corporate seal of the corporation to be hereunto affixed on
__June 8, 2001_____.
(CORPORATE SEAL)
/s/ Xxxx Xxxxx
------------------------
Secretary
*Only the names and signatures of officers who will act in transactions with the
Bank need be inserted.
0310A 12/98
18
5314071
BUSINESS SECURITY AGREEMENT
This Business Security Agreement ("AGREEMENT") is made and entered into by the
undersigned borrower, guarantor and/or other obligor/pledgor (the "DEBTOR") in
favor of FIRSTAR BANK, N.A. (the "BANK") as of the date set forth on the last
------------------
page of this Agreement.
ARTICLE I. SECURITY INTEREST
1.1 GRANT OF SECURITY INTEREST. Debtor hereby grants a security interest in and
collaterally assigns the Collateral (defined below) to Bank to secure all of
Debtor's Obligations (defined below) to Bank. The intent of the parties hereto
is that the Collateral secures all Obligations of Debtor to Bank, whether or not
such Obligations exist under this Agreement or any other agreements, whether now
or hereafter existing, between Debtor and Bank or in favor of Bank, including,
without limitation, any note, any loan or security agreement, any lease, any
mortgage, deed of trust or other pledge of an interest in real or personal
property, any guaranty, any letter of credit or banker's acceptance, any
agreement for any other services or credit extended by Bank to Debtor even
though not specifically enumerated herein, and any other agreement with Bank
(together and individually, the "LOAN DOCUMENTS" ).
1.2 "COLLATERAL" means all of the following whether now owned or existing or
hereafter acquired by Debtor (or by Debtor with spouse), wherever located
(including all documents, general intangibles, additions and accessions, spare
and repair parts, special tools, replacements, returned or repossessed goods and
books and records relating to the following; and all proceeds, supporting
obligations and products of the following) [CHECK ALL THAT APPLY]:
[X] All accounts, instruments, documents, chattel paper, general
intangibles, contract rights, investment property (including any
securities entitlements and/or securities accounts held by Debtor),
securities and certificates of deposit, deposit accounts, and letter of
credit rights;
[X] All inventory;
[X] All equipment;
[X] All fixtures; and
[ ] Specific Collateral (the following, whether constituting equipment,
inventory or fixtures):
-----------------------------------------------------------------------
-----------------------------------------------------------------------
In the event the first four boxes are checked, Debtor acknowledges and agrees
that, in applying the law of any jurisdiction that at any time enacts all or
substantially all of the uniform provisions of Revised Article 9 of the Uniform
Commercial Code (1999 Official Text), the foregoing collateral description
covers all assets of Debtor. Bank may at any time and from time to time file
financing and continuation statements and amendments thereto reflecting the
same. Unless otherwise defined, the terms set forth in this Agreement shall have
the meanings set forth in the Uniform Commercial Code as adopted in the Loan
Documents and as amended from time to time. The defined terms hereunder shall be
interpreted in a manner most favorable to Bank.
1.3 "OBLIGATIONS" means all Debtor's debts (except for consumer credit if
Debtor is a natural person), liabilities, obligations, covenants, warranties,
and duties to Bank (plus its affiliates including any credit card debt, but
specifically excluding any type of consumer credit), whether now or hereafter
existing or incurred, whether liquidated or unliquidated, whether absolute or
contingent, whether arising out of the Loan Documents or otherwise, and all
other debts and obligations due Bank under any lease, agricultural, real estate
or other financing transaction and regardless of whether such financing is
related in time or type to the financing provided at the time of grant of this
security interest, and regardless of whether such Obligations arise out of
existing or future credit granted by Bank to any Debtor, to any Debtor and
others, to others guaranteed, endorsed or otherwise secured by any Debtor or to
any debtor-in-possession or other successor-in-interest of any Debtor, and
including principal, interest, fees, expenses and charges relating to any of the
foregoing.
ARTICLE II. WARRANTIES AND COVENANTS
In addition to all other warranties and covenants of Debtor under the Loan
Documents which are expressly incorporated herein as part of this Agreement and
while any part of the credit granted Debtor under the Loan Documents is
available or any Obligations of Debtor to Bank are unpaid or outstanding, Debtor
continuously warrants and agrees as follows:
2.1 DEBTOR'S NAME, LOCATION; NOTICE OF LOCATION CHANGES. Except as indicated in
the ARTICLE 9 CERTIFICATE executed by Debtor and made a part hereof. Debtor's
name and organizational structure has remained the same during the past five (5)
years. Debtor will continue to use only the name set forth with Debtor's
signature unless Debtor gives Bank prior written notice of any change.
Furthermore, Debtor shall not do business under another name nor use any trade
name without giving ten (10) days prior written notice to Bank. Debtor will not
change its status or organizational structure without the prior written consent
of Bank. Debtor will not change its location or registration (if Debtor is a
registered organization) to another state without prior written notice to Bank.
The address appearing in the ARTICLE 9 CERTIFICATE is Debtor's chief executive
office (or residence if Debtor is a sole proprietor).
2.2 STATUS OF COLLATERAL. All Collateral is genuine and validly existing.
Except for items of insignificant value or as otherwise reflected in writing by
Debtor to Bank under a borrowing base or otherwise, (i) Collateral constituting
inventory, equipment and fixtures is in good condition, not obsolete and is
either currently saleable or usable; and (ii) Collateral constituting accounts,
contract rights, notes, chattel paper and other third-party obligations to pay
is fully enforceable in accordance with its terms and not subject to return,
dispute, setoff, credit allowance or adjustment, except for discounts for prompt
payment. Unless Debtor provides Bank with written notice to the contrary, Debtor
has no notice or knowledge of anything that would impair the ability of any
third-party obligor to pay any debt to Debtor when due.
1150A Page 1 of 4 3/01
19
2.3 OWNERSHIP; MAINTENANCE OF COLLATERAL; RESTRICTIONS ON LIENS AND
DISPOSITIONS. Debtor is the sole owner of the Collateral free of all liens,
claims, other encumbrances and security interests except as permitted in writing
by Bank. Debtor shall: (i) maintain the Collateral in good condition and repair
(reasonable wear and tear excepted), and not permit its value to be impaired;
(ii) not permit waste, removal or loss of identity of the Collateral; (iii) keep
the Collateral free from all liens, executions, attachments, claims,
encumbrances and security interests (other than Bank's paramount security
interest and those permitted in writing by Bank); (iv) defend the Collateral
against all claims and legal proceedings by persons other than Bank; (v) pay and
discharge when due all taxes, levies and other charges or fees upon the
Collateral except for payment of taxes contested by Debtor in good faith by
appropriate proceedings so long as no levy or lien has been imposed upon the
Collateral; (vi) not lease, sell or transfer the Collateral to any party nor
move it to any new location outside of the ordinary course of business; (vii)
not permit the Collateral, without the consent of Bank, to become a fixture or
an accession to other goods; (viii) not permit the Collateral to be used in
violation of any applicable law, regulation or policy of insurance; and, (ix) as
to the Collateral consisting of instruments and chattel paper, preserve Bank's
rights in it against all other parties. Notwithstanding the above, Debtor may
sell, lease or transfer inventory in the ordinary course of its business
provided that no sale, lease or transfer shall include any transfer or sale in
satisfaction (partial or complete) of a debt owed by Debtor; title will not pass
to buyer until Debtor physically delivers the goods to buyer or Debtor ships the
goods F.O.B. to buyer's destination; and sales and/or leases to Debtor's
affiliates shall be for fair market value, cash on delivery, with the proceeds
remitted to Bank.
2.4 MAINTENANCE OF SECURITY INTEREST; PURCHASE MONEY SECURITY INTERESTS. Debtor
shall take any action requested by Bank to preserve the Collateral and to
establish the value of, the priority of, to perfect, to continue the perfection
of or to enforce Bank's interest in the Collateral and Bank's rights under this
Agreement; and shall pay all costs and expenses related thereto. Debtor shall
also cooperate with Bank in obtaining control (for purposes of perfection under
the Uniform Commercial Code) of Collateral consisting of deposit accounts,
investment property, letter of credit rights, electronic chattel paper and any
other collateral where Bank may obtain perfection through control. Debtor hereby
authorizes Bank to take any and all actions described above and in place of
Debtor with respect to the Collateral and hereby ratifies any such actions Bank
has taken prior to the date of this Agreement and hereafter, which actions may
include, without limitation, filing UCC financing statements and obtaining or
attempting to obtain control agreements from holders of the Collateral. Debtor
and Bank intend to maintain the full effect of any purchase money security
interest granted in favor of Bank notwithstanding the fact that the Collateral
so purchased is also pledged as security for other Obligations under the Loan
Documents.
2.5 COLLATERAL INSPECTIONS; MODIFICATIONS AND CHANGES IN COLLATERAL. At
reasonable times, Bank may examine the Collateral and Debtor's records
pertaining to it, wherever located, and make copies of such records at Debtor's
expense; and Debtor shall assist Bank in so doing. Without Bank's prior written
consent, Debtor shall not alter, modify, discount, extend, renew or cancel any
Collateral, except for ordinary discounts for prompt payment on accounts,
physical modifications to the inventory occurring in the manufacturing process
or alterations to equipment which do not materially affect its value. Debtor
shall promptly notify Bank in writing of any material change in the condition of
the Collateral and of any change in location of the Collateral.
2.6 COLLATERAL RECORDS, REPORTS AND STATEMENTS. Debtor shall keep accurate and
complete records respecting the Collateral in such form as Bank may approve. At
such times as Bank may require, Debtor shall furnish to Bank any
records/information Bank might require, including, without limitation, a
statement certified by Debtor and in such form and containing such information
as may be prescribed by Bank showing the current status and value of the
Collateral.
2.7 CHATTEL PAPER, INSTRUMENTS, ETC. Chattel paper, instruments, drafts, notes,
acceptances, and other documents which constitute Collateral shall be on forms
satisfactory to Bank. Debtor shall promptly xxxx chattel paper to indicate
conspicuously Bank's security interest therein, shall not deliver any chattel
paper or negotiable instruments to any other entity and, upon request, shall
deliver all original chattel paper, instruments, drafts, notes, acceptances and
other documents which constitute Collateral to Bank.
2.8 UNITED STATES GOVERNMENT CONTRACTS. If any accounts or contract rights
arose out of contracts with the United States or any of its departments,
agencies or instrumentalities, Debtor shall promptly notify Bank and execute any
writings required by Bank so that all money due or to become due under such
contracts shall be assigned to Bank under the Federal Assignment of Claims Act.
2.9 ENVIRONMENTAL MATTERS. Except as disclosed in a written schedule attached
to this Agreement (if no schedule is attached, there are no exceptions), there
exists no uncorrected violation by Debtor of any federal, state or local laws
(including statutes, regulations, ordinances or other governmental restrictions
and requirements) relating to the discharge of air pollutants, water pollutants
or process waste water or otherwise relating to the environment or Hazardous
Substances as hereinafter defined, whether such laws currently exist or are
enacted in the future (collectively "ENVIRONMENTAL LAWS"). The term "HAZARDOUS
SUBSTANCES" shall mean any hazardous or toxic wastes, chemicals or other
substances, the generation, possession or existence of which is prohibited or
governed by any Environmental Laws. Debtor is not subject to any judgment,
decree, order or citation, or a party to (or threatened with) any litigation or
administrative proceeding, which asserts that Debtor (i) has violated any
Environmental Laws; (ii) is required to clean up, remove or take remedial or
other action with respect to any Hazardous Substances (collectively "REMEDIAL
ACTION"); or (iii) is required to pay all or a portion of the cost of any
Remedial Action, as a potentially responsible party. There are not now, nor to
Debtor's knowledge after reasonable investigation have there ever been, any
Hazardous Substances (or tanks or other facilities for the storage of Hazardous
Substances) stored, deposited, recycled or disposed of on, under or at any real
estate owned or occupied by Debtor during the periods that Debtor owned or
occupied such real estate, which if present on the real estate or in soils or
ground water, could require Remedial Action. To Debtor's knowledge, there are no
proposed or pending changes in Environmental Laws which would adversely affect
Debtor or its business, and there are no conditions existing currently or likely
to exist while the Loan Documents are in effect which would subject Debtor to
Remedial Action or other liability. Debtor currently complies with and will
continue to timely comply with all applicable Environmental Laws; and will
provide Bank, immediately upon receipt, copies of any correspondence, notice,
complaint, order or other document from any source asserting or alleging any
circumstance or condition which requires or may require a financial contribution
by Debtor or Remedial Action or other response by or on the part of Debtor under
Environmental Laws, or which seeks damages or civil, criminal or punitive
penalties from Debtor for an alleged violation of Environmental Laws.
2.10 INSURANCE. Debtor will maintain insurance to such extent, covering such
risks and with such insurers as is usual and customary for businesses operating
similar properties, and as is satisfactory to Bank, including insurance for fire
and other risks insured against by extended or comprehensive coverage, public
liability insurance and workers' compensation insurance; and will designate Bank
as loss payee with a "Lender's Loss Payable" endorsement on any casualty
policies and take such other action as Bank may reasonably request to ensure
that Bank will receive (subject to no other interests) the insurance proceeds of
the Collateral. Debtor hereby assigns all insurance proceeds to and irrevocably
directs, while any Obligations remain unpaid, any insurer to pay to Bank the
proceeds of all such
1150A Page 2 of 4 3/01
20
insurance and any premium refund; and authorizes Bank to endorse Debtor's name
to effect the same, to make, adjust or settle, in Debtor's name, any claim on
any insurance policy relating to the Collateral; and, at the option of Bank, to
apply such proceeds and refunds to the Obligations or to restoration of the
Collateral, returning any excess to Debtor.
ARTICLE III. COLLECTIONS
3.1 DEPOSIT WITH BANK. At any time Bank may require that all proceeds of
Collateral received by Debtor shall be held by Debtor upon an express trust for
Bank, shall not be commingled with any other funds or property of Debtor and
shall be turned over to Bank in precisely the form received (but endorsed by
Debtor, if necessary for collection) not later than the business day following
the day of their receipt. All proceeds of Collateral received by Bank directly
or from Debtor shall be applied against the Obligations in such order and at
such times as Bank shall determine.
ARTICLE IV. RIGHTS AND DUTIES OF BANK
In addition to all other rights (including setoff) and duties of Bank under the
Loan Documents which are expressly incorporated herein as a part of this
Agreement, the following provisions shall also apply:
4.1 AUTHORITY TO PERFORM FOR DEBTOR. Debtor presently appoints any officer of
Bank as Debtor's attorney-in-fact (coupled with an interest and irrevocable
while any Obligations remain unpaid) to do any of the following upon default by
Debtor hereunder (notwithstanding any notice requirements or grace/cure
periods under this or other agreements between Debtor and Bank): (i) to file,
endorse or place the name of Debtor on any invoice or document of title relating
to accounts, drafts against customers, notices to customers, notes, acceptances,
assignments of government contracts, instruments, financing statements, checks,
drafts, money orders, insurance claims or payments or other documents evidencing
payment or a security interest relating to the Collateral; (ii) to receive, open
and dispose of all mail addressed to Debtor and to notify the Post Office
authorities to change the address for delivery of mail addressed to Debtor to an
address designated by Bank; (iii) to do all such other acts and things necessary
to carry out Debtor's duties under this Agreement and the other Loan Documents;
and (iv) to perfect, protect and/or realize upon Bank's interest in the
Collateral. If the Collateral includes funds or property in depository accounts,
Debtor authorizes each of its depository institutions to remit to Bank, without
liability to Debtor, all of Debtor's funds on deposit with such institution upon
written direction by Bank after default by Debtor hereunder. All acts by Bank
are hereby ratified and approved, and Bank shall not be liable for any acts of
commission or omission, nor for any errors of judgment or mistakes of fact or
law.
4.2 VERIFICATION AND NOTIFICATION; BANK'S RIGHTS. Bank may verify Collateral in
any manner, and Debtor shall assist Bank in so doing. Upon the occurrence of a
default hereunder, Bank may at any time and Debtor shall, upon request of Bank,
notify the account debtors to make payment directly to Bank; and Bank may
enforce collection of, sell, settle, compromise, extend or renew the
indebtedness of such account debtors; all without notice to or the consent of
Debtor. Until account debtors are so notified, Debtor, as agent of Bank, shall
make collections on the Collateral. Bank may at any time notify any bailee
possessing Collateral to turn over the Collateral to Bank.
4.3 COLLATERAL PRESERVATION. Bank shall use reasonable care in the custody and
preservation of any Collateral in its physical possession but in determining
such standard of reasonable care, Debtor expressly acknowledges that Bank has no
duty to: (i) insure the Collateral against hazards; (ii) ensure that the
Collateral will not cause damage to property or injury to third parties; (iii)
protect it from seizure, theft or conversion by third parties, third parties'
claims or acts of God; (iv) give to Debtor any notices received by Bank
regarding the Collateral; (v) perfect or continue perfection of any security
interest in favor of Debtor; (vi) perform any services, complete any
work-in-process or take any other action in connection with the management or
maintenance of the Collateral; or (vii) xxx or otherwise effect collection
upon any accounts even if Bank shall have made a demand for payment upon
individual account debtors. Notwithstanding any failure by Bank to use
reasonable care in preserving the Collateral, Debtor agrees that Bank shall not
be liable for consequential or special damages arising therefrom.
ARTICLE V. DEFAULTS AND REMEDIES
Bank may enforce its rights and remedies under this Agreement upon default. A
default shall occur if Debtor fails to comply with the terms of any Loan
Documents (including this Agreement or any guaranty by Debtor), a demand for
payment is made under a demand loan, or any other obligor fails to comply with
the terms of any Loan Documents for which Debtor has given Bank a guaranty or
pledge.
5.1 CUMULATIVE REMEDIES; NOTICE; WAIVER. In addition to the remedies for
default set forth in the Loan Documents, Bank upon default shall have all other
rights and remedies for default provided by the Uniform Commercial Code, as well
as any other applicable law and this Agreement, INCLUDING, WITHOUT LIMITATION
THE RIGHT TO REPOSSESS, RENDER UNUSABLE AND/OR DISPOSE OF THE COLLATERAL WITHOUT
JUDICIAL PROCESS. The rights and remedies specified herein are cumulative and
are not exclusive of any rights or remedies which Bank would otherwise have.
With respect to such rights and remedies:
(a) ASSEMBLING COLLATERAL; STORAGE; USE OF DEBTOR'S NAME/OTHER PROPERTY.
Bank may require Debtor to assemble the Collateral and to make it
available to Bank at any convenient place designated by Bank. Debtor
recognizes that Bank will not have an adequate remedy in Law if this
obligation is breached and accordingly, Debtor's obligation to
assemble the Collateral shall be specifically enforceable. Bank
shall have the right to take immediate possession of said Collateral
and Debtor irrevocably authorizes Bank to enter any of the premises
wherever said Collateral shall be located, and to store, repair,
maintain, assemble, manufacture, advertise and sell, lease or
dispose of (by public sale or otherwise) the same on said premises
until sold, all without charge or rent to Bank. Bank is hereby
granted an irrevocable license to use, without charge, Debtor's
equipment, inventory, labels, patents, copyrights, franchises,
names, trade secrets, trade names, trademarks and advertising matter
and any property of a similar nature; and Debtor's rights under all
licenses and franchise agreements shall inure to Bank's benefit.
Further, Debtor releases Bank from obtaining a bond or surety with
respect to any repossession and/or disposition of the Collateral.
(b) NOTICE OF DISPOSITION. Written notice, when required by law, sent to
any address of Debtor in this Agreement, at least ten (10) calendar
days (counting the day of sending) before the date of a proposed
disposition of the Collateral is reasonable notice. Notification to
account debtors by Bank shall not be deemed a disposition of the
Collateral. Notice of any record shall be deemed delivered when the
record has been (a) deposited in the United States Mail, postage
pre-paid, (b) received by over-
1150A Page 3 of 4 3/01
21
night delivery service, (c) received by telex, (d) received by telecopy,
(e) received through the internet, and (f) when personally delivered.
(c) POSSESSION OF COLLATERAL/COMMERCIAL REASONABLENESS. Bank shall not, at any
time, be obligated to either take or retain possession or control of the
Collateral. With respect to Collateral in the possession or control of
Bank, Debtor and Bank agree that as a standard for determining commercial
reasonableness, Bank need not liquidate, collect, sell or otherwise dispose
of any of the Collateral if Bank believes, in good faith, that disposition
of the Collateral would not be commercially reasonable, would subject Bank
to third-party claims or liability, that other potential purchasers could
be attracted or that a better price could be obtained if Bank held the
Collateral for up to 2 years. Bank may sell Collateral without giving any
warranties and may specifically disclaim any warranties of title or the
like. Furthermore, Bank may sell the Collateral on credit (and reduce the
Obligations only when payment is received from the buyer), at wholesale
and/or with or without an agent or broker; and Bank need not complete,
process, repair, clean-up or otherwise prepare the Collateral prior to
disposition. If the purchaser fails to pay for the Collateral, Bank my
resell the Collateral and Debtor shall be credited with the cash proceeds
of the sale. Bank may comply with any applicable state or federal law
requirements in connection with a disposition of the Collateral and
compliance will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.
(d) WAIVER BY DEBTOR. Bank has no obligation and Debtor waives any obligation
to attempt to satisfy the Obligations by collecting the obligations from
any third parties and Bank may release, modify or waive any collateral
provided by any third party to secure any of the Obligations, all without
affecting Bank's rights against Debtor. Debtor further waives any
obligation on the part of Bank to marshal any assets in favor of Debtor or
in payment of the Obligations. Notwithstanding any provisions in this
Agreement or any other agreement between Debtor and Bank, Debtor does not
waive any statutory rights except to the extent that the waiver thereof is
permitted by law.
(e) WAIVER BY BANK. Bank may permit Debtor to attempt to remedy any default
without waiving its rights and remedies hereunder, and Bank may waive any
default without waiving any other subsequent or prior default by Debtor.
Furthermore, delay on the part of Bank in exercising any right, power or
privilege hereunder or at law shall not operate as a waiver thereof, nor
shall any single or partial exercise of such right, power or privilege
preclude other exercise thereof or the exercise of any other right, power
or privilege. NO WAIVER OR SUSPENSION SHALL BE DEEMED TO HAVE OCCURRED
UNLESS BANK HAS EXPRESSLY AGREED IN WRITING SPECIFYING SUCH WAIVER OR
SUSPENSION.
ARTICLE VI. MISCELLANEOUS
All other provisions in the Loan Documents are expressly incorporated as a part
of this Agreement.
ALL DOCUMENTS ATTACHED HERETO, INCLUDING ANY APPENDICES, SCHEDULES, RIDERS, AND
EXHIBITS TO THIS AGREEMENT, ARE HEREBY EXPRESSLY INCORPORATED BY REFERENCE.
IN WITNESS WHEREOF, the undersigned has/have executed this BUSINESS SECURITY
AGREEMENT as of __JUNE 8, 2001______________.
(Individual Debtor) __HMI INDUSTRIES, INC.______________________________________________
Debtor Name (Organization)
____________________________________________________(SEAL) a __OHIO Corporation________________________________________________
By___/s/_Julie McGraw_______________________________________________
Debtor Name _______________N/A___________________________
Name and Title ___JULIE MCGRAW, CONTROLLER__________________________
____________________________________________________(SEAL)
By__________________________________________________________________
Debtor Name _______________N/A___________________________ Name and Title _____________________________________________________
1150A Page 4 of 4 3/01
