EXHIBIT 10.34
EXECUTION COPY
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ATMOSPHERE ANNEALING, INC.
CREDIT AGREEMENT
DATED AS OF NOVEMBER 18, 2003
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CREDIT AGREEMENT
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THIS CREDIT AGREEMENT, made as of the 18th day of November, 2003, by
and between ATMOSPHERE ANNEALING, INC., a Michigan corporation ("Company"), and
THE HUNTINGTON NATIONAL BANK, a national banking association ("Lender").
RECITALS
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A. Company desires to obtain certain credit facilities from
Lender.
B. Lender is willing to extend such credit to Company on the
terms and conditions herein set forth.
NOW, THEREFORE, Lender and Company agree as follows:
W I T N E S S E T H
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1. DEFINITIONS
For the purposes of this Agreement the following terms will have the
following meanings:
"Account" shall mean any right to payment of Company for goods sold or
leased or for services rendered.
"Account Debtor" shall mean the party who is obligated on or under any
Account.
"Advance" shall mean a borrowing requested by Company and made by
Lender under Article 2 of this Agreement.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and executive officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation for the purposes of this definition if such Person possesses,
directly or indirectly, the power (i) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such corporation
or (ii) to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.
"Applicable LIBO/LIBOR Margin" shall mean the following:
NOTE MARGIN
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Revolving Credit Note 2.25%
Term Note A 2.50%
Term Note B 3.63%
"Applicable Prime Margin" shall mean the following:
NOTE MARGIN
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Revolving Credit Note -.25%
Term Note A 0%
Term Note B 1.0%
"Base LIBOR Rate" shall mean, with respect to a LIBOR Borrowing for an
Interest Period, LIBOR as of 11:00 a.m. two (2) London Business Days prior to
the first day of such Interest Period for deposits with maturities approximately
equal to such Interest Period and in an amount approximately equal to the amount
of such LIBOR Borrowing.
"BCGW Subordination Agreement" shall mean the Subordination Agreement
dated as of the date hereof, executed and delivered by BCGW, Inc. to Lender.
"Borrowing Base" shall mean as of any date of determination, eighty
percent (80%) of Eligible Accounts.
"Business Day" shall mean any day on which commercial banks are open
for domestic and international business (including dealings in foreign exchange)
in Detroit, London and New York.
"Capital Expenditure" shall mean, without duplication, any payment made
directly or indirectly for the purpose of acquiring or constructing fixed
assets, real property or equipment which in accordance with GAAP would be added
as a debit to the fixed asset account of a Company, including, without
limitation, amounts paid or payable under any conditional sale or other title
retention agreement or under any lease or other periodic payment arrangement
which is of such a nature that payment obligations of either, thereunder would
be required by GAAP to be capitalized and shown as liabilities on the balance
sheet of Company.
"Capital Lease" shall mean any lease of any property (whether real,
personal or mixed) by Company as lessee which, in conformity with GAAP, is, or
is required to be accounted for as
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a capital lease on the balance sheet of Company, together with any renewals of
such leases (or entry into new leases) on substantially similar terms.
"Daily Fluctuating LIBO Rate" shall mean the rate obtained by dividing:
(1) the actual or estimated per annum rate, or the arithmetic mean of the per
annum rates, of interest for deposits in U.S. dollars for one (1) month periods,
as offered and determined by Lender in its sole discretion based upon
information which appears on page LIBOR01, captioned British Bankers Assoc.
Interest Rate Settlement Rates, of the Reuters America Network, a service of
Reuters America Inc. (or such other page that may replace that page on that
service for the purpose of displaying LIBO rates; or, if such service ceases to
be available or ceases to be used by Lender, such other reasonably comparable
money rate service as Lender may select) or upon information obtained from any
other reasonable procedure, on each date the Daily Fluctuating LIBO Rate is
determined; by (2) an amount equal to one minus the stated maximum rate
(expressed as a decimal), if any, of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) that is specified on each date the Daily Fluctuating LIBO Rate is
determined by the Board of Governors of the Federal Reserve System (or any
successor agency thereto) for determining the maximum reserve requirement with
respect to eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank of such
System or any other regulations of any governmental authority having
jurisdiction with respect thereto, all as conclusively determined by Lender,
absent manifest error, such result to be rounded up, if necessary, to the
nearest whole multiple of one-sixteenth of one percent (1/16 of 1.0%) per annum.
Subject to any maximum or minimum interest rate limitation specified herein or
by applicable law, the interest rate shall change automatically without notice
to Borrower immediately on each day with each change in the Daily Fluctuating
LIBO Rate or the reserve requirement, as applicable, with any change thereto
effective as of the opening of business of the day of the change (the "Index").
The Index is not necessarily the lowest rate charged by Lender on its loans. If
the Index becomes unavailable during the time of this loan, Lender may designate
a substitute index after written notice to Borrower. Lender will tell Company
the current index rate upon Borrower's written request. The interest rate change
will not occur more often than once each day.
"Debt" shall mean, as of any applicable time of determination thereof,
the total liabilities of Company at such time which are required to be shown on
its balance sheet, as determined in accordance with GAAP.
"Debt Ratio" shall mean as of any date of determination, a ratio, the
numerator of which is Debt as of such date, and the denominator of which is
Tangible Net Worth as of such date.
"Default" shall mean any event or omission which, with the passage of
time, the giving of notice, or both, would constitute an Event of Default as
defined herein.
"EBITDA" shall mean for any period of determination, the net income of
Company for such period, plus, to the extent deducted in determining net income,
income tax expense, depreciation, amortization and interest expense for such
period, all as determined in accordance with GAAP.
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"Eligible Account" shall mean an Account (but shall not include
interest and service charges) arising in the ordinary course of Company's
business which meets each of the following requirements:
(a) it is not owing more than ninety (90) days after the date of
the original invoice or other writing evidencing such Account;
(b) it arises from the sale or lease of goods and such goods have been
shipped or delivered to the Account Debtor under such Account; or it arises from
services rendered and such services have been performed;
(c) it is evidenced by an invoice, dated not later than the date of
shipment or performance, rendered to such Account Debtor or some other evidence
of billing reasonably acceptable to Lender;
(d) it is not evidenced by any note or other negotiable instrument or
by any chattel paper;
(e) it is a valid, legally enforceable obligation of the Account Debtor
thereunder, and is not subject to any offset, counterclaim or other defense on
the part of such Account Debtor or to any known claim on the part of such
Account Debtor denying liability thereunder in whole or in part;
(f) it is not subject to any sale of accounts, any rights of offset,
assignment, lien or security interest whatsoever other than to Lender;
(g) it is not owing by a subsidiary or affiliate of Company, nor by an
Account Debtor (other than General Motors de Mexico and Xxxxxxxxxx Tool and Die)
which (i) does not maintain its chief executive office in the United States of
America, (ii) is not organized under the laws of the United States of America,
or any state thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality or other
instrumentality thereof;
(h) it is not an account owing by the United States of America or any
state or political subdivision thereof, or by any department, agency, public
body corporate or other instrumentality of any of the foregoing, unless all
necessary steps are taken to comply with the Federal Assignment of Claims Act of
1940, as amended, or with any comparable state law, if applicable, and all other
necessary steps are taken to perfect Lender's security interest in such account;
(i) it is not owing by an Account Debtor for which Company has received
a notice of (i) the death of the Account Debtor or any partner of the Account
Debtor, (ii) the dissolution, liquidation, termination of existence, insolvency
or business failure of the Account Debtor, (iii) the appointment of a receiver
for any part of the property of the Account Debtor, or (iv) an assignment for
the benefit of creditors, the filing of a petition in bankruptcy, or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against the Account Debtor;
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(j) it is not an account billed in advance, payable on delivery, for
unbilled sales, payable at a future date in accordance with its terms, subject
to a retainage or holdback by the Account Debtor or otherwise insured by a
surety company;
(k) it is not owing by an Account Debtor who has failed to pay twenty
five percent (25%) or more of the aggregate amount of its Accounts owing to
Company within ninety (90) days after the date of the respective invoices or
other writings evidencing such Accounts; and
(l) it is not an Account which when aggregated with all other Accounts
owing by the same Account Debtor would cause Debtor's Accounts owing from such
Account Debtor to exceed an amount equal to thirty percent (30%) of Debtor's
aggregate Accounts owing from all Account Debtors, provided, however, Lender in
its sole discretion may, upon prior written notice to Company, may establish
higher or lower concentration limits for any specific Account Debtor;
(m) it is not owing by any Account Debtor whose obligations Lender, in
its reasonable commercial discretion shall have notified Company are not deemed
to constitute Eligible Accounts. Any such notification shall apply only to
Accounts created after the date thereof.
An Account which is at any time an Eligible Account, but which
subsequently fails to meet any of the foregoing requirements, shall forthwith
cease to be an Eligible Account.
"Environmental Laws" shall mean all federal, state and local laws
including statutes, regulations, ordinances, codes, rules, and other
governmental restrictions and requirements, relating to environmental pollution,
contamination or other impairment of the environment or any hazardous or toxic
substances of any nature. These Environmental Laws shall include but not be
limited to the Federal Solid Waste Disposal Act, the Federal Clean Air Act, the
Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of
1976, the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, and the Federal Superfund Amendments and Reauthorization
Act of 1986.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, or any successor act or code.
"Event of Default" shall mean any of the Events of Default specified in
Section 11 hereof.
"Excess Cash Flow" shall mean, for any fiscal quarter of Company as to
which the Fixed Charge Coverage Ratio (calculated based on financial results for
that quarter alone) exceeded 1.2 to 1.0, the amount which, if subtracted from
the numerator used to calculate such Fixed Charge Coverage Ratio, would result
in the Fixed Charge Coverage Ratio being 1.2 to 1.0.
"Fixed Charge Coverage Ratio" shall mean as of any date of
determination, a ratio, the numerator of which is EBITDA for the four fiscal
quarters ending on such date, plus rent and lease expense and property taxes of
Company for such period, less dividends and other distributions paid by Company
during such period, and the denominator of which is the sum of all regularly
scheduled payments of principal on indebtedness (excluding principal payments
with respect to the Revolving Credit Note but including the principal component
of Capital Lease obligations) of Company paid or due and payable during such
period, plus the sum of all
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payments of interest (including the interest component of Capital Lease
obligations) paid or due and payable by Company during such period and Non-
Funded Capital Expenditures, rent and lease expense and property and income
taxes paid by Company during such period.
"GAAP" shall mean, as of any applicable date of determination,
generally accepted accounting principles consistently applied. In calculating
the financial covenants in this Agreement, GAAP shall be determined based on
GAAP as in effect on the date of this Agreement. In all other cases GAAP shall
be determined based on GAAP as in effect from time to time.
"Indebtedness" shall mean all loans, advances, indebtedness,
obligations and liabilities of Company to Lender under this Agreement, together
with all other indebtedness, obligations and liabilities whatsoever of Company
to Lender arising under or in connection with this Agreement, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising.
"Interest Period" shall mean, with respect to a LIBOR Borrowing, a
period of one (1) month, commencing on the date of the first advance of Term
Note A or Term Note B, as applicable, with respect to such LIBOR Borrowing. If
any Interest Period would otherwise end on a day which is not a London Business
Day, such Interest Period shall be extended to end on the next succeeding London
Business Day.
"Leverage Ratio" shall mean as of the last day of each fiscal quarter
of Company, a ratio, the numerator of which is all indebtedness of Company to
Bank as of such date and the denominator of which is EBITDA for the four fiscal
quarters ending on such date.
"LIBO Rate" shall mean for any date, the fluctuating per annum interest
rate equal to the Applicable LIBO/LIBOR Margin above the Daily Fluctuating LIBO
Rate.
"LIBOR" shall mean, with respect to an Interest Period, the British
Bankers' Association ("BBA") interest settlement rate based on an average of
rates quoted by BBA designated banks as being, in BBA's view, the offered rate
at which deposits in U.S. Dollars are being quoted to prime banks in the London
interbank market at 11:00 a.m. (London time) two (2) London Business Days prior
to the first day of such Interest Period, such deposits being for a period of
time equal or comparable to such Interest Period and in an amount equal or
comparable to the principal amount of the Advance to which the Interest Period
relates, as such rates are determined by the BBA and displayed on the Xxxxxx'x
Screen.
"LIBOR Borrowing" shall mean the principal amount of any portion of
Term Note A or Term Note B bearing interest at the LIBOR Rate.
"LIBOR Lending Office" shall mean such branch of Lender, domestic or
foreign, as it may hereafter designate as its LIBOR Lending Office by notice to
Company.
"LIBOR Rate" shall mean, with respect to an Interest Period, the sum of
the Applicable LIBO/LIBOR Margin plus the quotient of: (i) the Base LIBOR Rate
applicable to that Interest Period, divided by (ii) one (1) minus the Reserve
Requirement (expressed as a decimal) applicable to the Interest Period. The
LIBOR Rate shall be rounded to 5 decimal places.
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"Loan Documents" shall mean collectively, this Agreement, any Notes,
the Security Agreement, the Subordination Agreements, and any other instruments
or agreements executed at any time pursuant to or in connection with any such
documents.
"London Business Day" shall mean a Business Day on which dealings in
dollar deposits are carried out in the London Interbank market and on which
banks, generally, in New York, New York are open for business.
"Maxco Subordination Agreement" shall mean the Subordination Agreement
dated as of the date hereof, executed and delivered by Maxco, Inc. to Lender.
"Mortgages" shall mean the mortgages of real property located in North
Xxxxxx, Indiana and Canton, Ohio, to be executed and delivered by Company and
dated as of the date hereof.
"Non-Funded Capital Expenditure" shall mean any Capital Expenditure
purchased with internally generated (i.e., non-borrowed) funds.
"Note" shall mean the Revolving Credit Note, Term Note A, Term Note B
and Term Note C, as the case may be, as any may be amended or modified from time
to time, and "Notes" shall refer to all of them.
"Permitted Liens" shall mean with respect to any Person:
(a) liens for taxes not yet due and payable or which are being
contested in good faith by appropriate proceedings diligently pursued, provided
that provision for the payment of all such taxes has been made on the books of
such Person as may be required by GAAP;
(b) mechanics', materialmen's, banker's, carriers', warehousemen's and
similar liens and encumbrances arising in the ordinary course of business and
securing obligations of such Person that are not overdue for a period of more
than 30 days or are being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such contest such provision
for the payment of such liens and encumbrances has been made on the books of
such Person as may be required by GAAP;
(c) liens arising in connection with worker's compensation,
unemployment insurance, old age pensions and social security benefits and
similar statutory obligations which are not overdue or are being contested in
good faith by appropriate proceedings diligently pursued, provided that in the
case of any such contest provision for the payment of such liens has been made
on the books of such Person as may be required by GAAP;
(d) (i) liens incurred in the ordinary course of business to secure the
performance of statutory obligations arising in connection with progress
payments or advance payments due under contracts with the United States
government or any agency thereof entered into in the ordinary course of business
and (ii) liens incurred or deposits made in the ordinary course of business to
secure the performance of statutory obligations, bids, leases, fee and expense
arrangements with trustees and fiscal agents and other similar obligations
(exclusive of obligations incurred in connection with the borrowing of money,
any lease-purchase arrangements or the payment of the deferred purchase price of
property), provided that full
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provision for the payment of all such obligations set forth in clauses (i) and
(ii) has been made on the books of such Person as may be required by generally
accepted accounting principles, consistently applied; and
(e) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real properties,
which do not materially interfere with the business of such Person.
"Person" or "person" shall mean any individual, corporation,
partnership, joint venture, limited liability company, association, trust,
unincorporated association, joint stock company, government, municipality,
political subdivision or agency, or other entity.
"Prepayment Premium" shall mean, in the case of a Principal Prepayment,
an amount equal to the positive difference, if any, between (i) the aggregate
amount of interest which would otherwise be payable on the prepaid principal
amount for the remainder of the applicable Interest Period, and (ii) the
aggregate amount of interest Lender would earn if the prepaid principal amount
were reinvested at the Treasury Rate for the remainder of the applicable
Interest Period. The term "Treasury Rate" means the yield on U.S. Treasury
securities at constant maturity as interpolated by the U.S. Treasury from the
daily yield curve, based on the closing market big yields on actively-traded
U.S. Treasury securities in the over-the-counter market, as such yields are
stated under the heading referred to as "U.S. Government Securities, Treasury
Constant Maturities" in Document H.15(519), presently published by the Board of
Governors of the Federal Reserve System and titled "Federal Reserve Statistical
Release." The Treasury Rate used to calculate a Prepayment Premium shall be the
constant maturity yield value read from the yield curve at the fixed maturity
which is the same as, or is the next closest period which is longer than, the
applicable Interest Period.
"Principal Prepayment" shall a payment of principal of Term Note A or
Term Note B which is bearing interest at the LIBOR Rate on a day which is not
the last day of the applicable Interest Period.
"Prime Rate" shall mean the per annum interest rate established by
Lender as its prime commercial rate for its borrowers as such rate may vary from
time to time, which rate is not necessarily the lowest rate on loans made by
Lender at any such time, plus the Applicable Prime Margin.
"Request for Advance" shall mean a Request for Advance issued by
Company under this Agreement in the form annexed to this Agreement as Exhibit
"B".
"Reserve Requirement" shall mean, with respect to an Interest Period,
the daily average during such Interest Period of the aggregate reserve
requirement (including all basic, supplemental, marginal and other reserves and
taking into account any transitional adjustments or other scheduled changes in
reserve requirements during such Interest Period) which may be imposed on Lender
under Regulation D on Eurocurrency liabilities, in the case of LIBOR Borrowings.
"Revolving Credit Maturity Date" shall mean August 15, 2004.
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"Revolving Credit Note" shall mean the Note described in Section 2.1
hereof made by Company to Lender in the form annexed to this Agreement as
Exhibit "C".
"Security Agreement" shall mean the separate Security Agreements dated
as of the date hereof pursuant to which Company grants to Lender a first
priority security interest in all accounts, chattel paper, documents, fixtures,
general intangibles, goods, instruments, inventory and equipment and all other
personal property, wherever located and whether now owned or hereafter acquired,
together with all replacements thereof, substitutions therefor, accessions
thereto and all proceeds and products of all the foregoing.
"Subordinated Debt" shall mean, as of any time of determination
thereof, any Debt of Company which is subordinated in priority of payment to the
Indebtedness pursuant to an agreement executed and delivered to and in form and
detail satisfactory to Lender.
"Subordination Agreement" shall mean the Maxco Subordination Agreement
or the BCGW Subordination Agreement, as applicable, and "Subordination
Agreements" shall mean both of them.
"Tangible Net Worth" shall mean, as of any date of determination, the
excess of (i) the net book value of all assets of Company (other than amounts
due from Affiliates, patents, patent rights, trademarks, trade names,
franchises, copyrights, licenses, goodwill, and similar intangible assets) after
all appropriate deductions in accordance with GAAP (including, without
limitation, reserves for doubtful receivables, obsolescence, depreciation and
amortization) over (ii) all Debt of Company, in each case determined in
accordance with GAAP.
"Term Loan A Maturity Date" shall mean November 1, 2008.
"Term Loan B Maturity Date" shall mean November 1, 2008.
"Term Loan C Maturity Date" shall mean November 1, 2005.
"Term Note A" shall mean the Note issued by Company under Article 3A of
this Agreement in the form attached as Exhibit "D".
"Term Note B" shall mean the Note issued by Company under Article 3B of
this Agreement in the form attached as Exhibit "A".
"Term Note C" shall mean the Note issued by Company under Article 3C of
this Agreement in the form attached as Exhibit "E".
"Term Note" shall mean Term Note A, Term Note B or Term Note C, as
applicable, and "Term Notes" shall mean all of them.
2. THE INDEBTEDNESS: REVOLVING CREDIT
2.1 Subject to the terms and conditions of this Agreement, Lender
shall make Advances to Company at any time and from time to time until the
Revolving Credit Maturity Date, not to exceed Six Million Dollars ($6,000,000)
in aggregate principal amount at any one time outstanding. All of the Advances
under this Article 2 shall be evidenced by the Revolving
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Credit Note under which Advances, repayments and readvances may be made, subject
to the terms and conditions of this Agreement.
2.2 The Revolving Credit Note shall mature on the Revolving Credit
Maturity Date, and each Advance from time to time outstanding thereunder shall
bear interest at the LIBO Rate or as otherwise provided under this Agreement.
The amount and date of each Advance and the amount and date of any repayment
shall be noted on Lender's records, which records will be conclusive evidence
thereof absent demonstrable error.
2.3 Company may request an Advance under this Article 2 upon the
delivery to Lender of a Request for Advance executed by an authorized officer of
either Company, subject to the following:
(a) each such Request for Advance shall set forth the information
required on the Request for Advance form annexed hereto as Exhibit "B";
(b) each such Request for Advance shall be delivered to Lender by
11:00 a.m. Detroit time on the proposed date thereof;
(c) the principal amount of such Advance, plus the sum of the amount
of all other outstanding Advances under this Article 2, shall not exceed the
formula set forth in Section 2.5 below; and
(d) a Request for Advance, once delivered to Lender, shall be
irrevocable.
2.4 Company may prepay all or part of the outstanding balance of the
Advance(s) under the Revolving Credit Note at any time without premium or
penalty.
2.5 The aggregate principal amount at any one time outstanding under
the Revolving Credit Note shall never exceed the Borrowing Base. Company shall
immediately make all payments necessary to comply with this provision.
2.6 Proceeds of the initial Advance under the Revolving Credit Note
shall be used first to refinance existing indebtedness owed to National City
Bank, and to pay legal fees and broker fees. Thereafter, proceeds of Advances
shall be used solely for working capital purposes.
3A THE INDEBTEDNESS: TERM LOAN A
3A.1 Lender agrees to loan to Company, and Company agrees to borrow,
on the date of execution of this Agreement, the sum of Two Million Five Hundred
Thirteen Thousand Dollars ($2,513,000). At the time of borrowing, Company agrees
to execute Term Note A with appropriate insertions as evidence of the
indebtedness hereunder. The loan made under this Article 3A shall be subject to
the terms and conditions of this Agreement.
3A.2 The indebtedness represented by Term Note A shall be repaid in
consecutive monthly principal installments in the amounts listed on Schedule
3A.2 attached hereto, commencing on December 18, 2003, and on the eighteenth day
of each month thereafter until the
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Term Loan A Maturity Date, when the entire unpaid balance of principal and
interest thereon shall be due and payable.
3A.3 The proceeds of Term Loan A shall be first used to refinance
indebtedness owed by Company to National City Bank.
3A.4 Term Note A shall bear interest at a rate per annum equal to the
LIBOR Rate. Monthly payments of interest shall be payable on the last day of
each Interest Period, commencing on the last day of the first Interest Period,
and thereafter on the last day of each subsequent Interest Period. The LIBOR
Rate, the Interest Period, and the amount and date of any repayment shall be
noted on Lender's records, which records will be presumed correct absent
manifest error. Notwithstanding the foregoing, from and after the occurrence of
any Event of Default, Term Note A shall bear interest, payable on demand, at a
rate per annum equal three percent (3%) above the LIBOR Rate until the end of
the then current Interest Period, at which time Term Note A shall bear interest
at the rate of three percent (3%) above the Prime-based Rate. Interest shall be
calculated on the basis of a 360 day year for the actual number of days elapsed.
The LIBOR Rate shall be reset at the end of each Interest Period.
3B THE INDEBTEDNESS: TERM LOAN B
3B.1 Lender agrees to loan to Company, and Company agrees to borrow,
on the date of execution of this Agreement, the sum of Three Million Eight
Hundred Fifty Thousand Dollars ($3,850,000). At the time of borrowing, Company
agrees to execute Term Note B with appropriate insertions as evidence of the
indebtedness hereunder. The loan made under this Article 3B shall be subject to
the terms and conditions of this Agreement.
3B.2 The indebtedness represented by Term Note B shall be repaid in
consecutive monthly principal installments in the amounts listed on Schedule
3B.2 attached hereto, commencing on December 18, 2003, and on the eighteenth day
of each month thereafter until the Term Loan B Maturity Date, when the entire
unpaid balance of principal and interest thereon shall be due and payable.
3B.3 The proceeds of Term Loan B shall be first used to refinance
indebtedness owed by Company to Xxxxxxxx Xxxx Xxxx.
0X.0 Xxxx Note B shall bear interest at a rate per annum equal to the
LIBOR Rate. Monthly payments of interest shall be payable on the last day of
each Interest Period, commencing on the last day of the first Interest Period,
and thereafter on the last day of each subsequent Interest Period. The LIBOR
Rate, the Interest Period, and the amount and date of any repayment shall be
noted on Lender's records, which records will be presumed correct absent
manifest error. Notwithstanding the foregoing, from and after the occurrence of
any Event of Default, Term Note B shall bear interest, payable on demand, at a
rate per annum equal three percent (3%) above the LIBOR Rate until the end of
the then current Interest Period, at which time Term Note B shall bear interest
at the rate of three percent (3%) above the Prime-based Rate. Interest shall be
calculated on the basis of a 360 day year for the actual number of days elapsed.
The LIBOR Rate shall be reset at the end of each Interest Period.
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3C THE INDEBTEDNESS: TERM LOAN C
3C.1 Lender agrees to loan to Company, and Company agrees to borrow, on
the date of execution of this Agreement, the sum of Eight Hundred Thousand
Dollars ($800,000). At the time of borrowing, Company agrees to execute Term
Note C with appropriate insertions as evidence of the indebtedness hereunder.
The loan made under this Article 3C shall be subject to the terms and conditions
of this Agreement.
3C.2 The indebtedness represented by Term Note C shall be repaid in
equal consecutive quarterly principal installments of One Hundred Thousand
Dollars each, commencing on January 1, 2004, and on the first day of each April,
July, October and January thereafter until the Term Loan C Maturity Date, when
the entire unpaid balance of principal and interest thereon shall be due and
payable.
3C.3 The proceeds of Term Loan C shall be first used to refinance
indebtedness owed by Company to National City Bank.
3C.4 The unpaid principal balance of Term Note C outstanding from time
to time shall bear interest at a per annum rate equal to the Prime Rate plus
one-half of one percent (1/2%), or as otherwise provided hereunder. Interest
shall be due and payable on each principal installment due date.
4. INTEREST ON REVOLVING CREDIT NOTE; PREPAYMENTS
4.1 The Revolving Credit Note and the Advances thereunder shall bear
interest from the date thereof on the unpaid principal balance thereof from time
to time outstanding, at a rate per annum equal to the LIBO Rate. Interest shall
be payable monthly on the first Business Day of each month, commencing on
December 1, 2003, and at maturity. Notwithstanding the foregoing, from and after
the occurrence of any Event of Default and during the continuation thereof, the
Indebtedness outstanding under the Revolving Credit Note shall bear interest,
payable on demand, at a rate per annum equal to three percent (3%) above the
Prime Rate. Interest shall be calculated on the basis of a 360 day year for the
actual number of days elapsed. The interest rate shall change on the effective
date of any change in the LIBO Rate or Prime Rate, but not more frequently than
daily.
4.2 (a) At its option and upon one (1) Business Day's prior written,
telephonic or telegraphic notice to the Lender, the Company may prepay any
portion of any Term Note in whole at any time or in part from time to time, with
accrued interest on the principal being prepaid to the date of such prepayment.
All prepayments of Term Note C and prepayments of Term Loan A and Term Loan B
made on the last day of the applicable Interest Period will be without premium
or penalty. Any other prepayment will be subject to the provisions of Section
13.1.
(b) Term Loan C shall be subject to required principal reductions in
the amount of 40% of Excess Cash Flow, payable in respect of each fiscal quarter
from and including the fiscal quarter ending September 30, 2003, and each fiscal
quarter thereafter until Term Loan C has been paid in full, on the earlier of
(i) the date of delivery of the Company's quarterly financial
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statements pursuant to Section 8.1(d) hereof for such fiscal quarter and (ii) 45
days after the end of each fiscal quarter. All such payments shall be subject to
Section 13.1.
(c) Each partial prepayment of any Term Note shall be applied to the
principal payments due thereunder in the inverse order of their maturities.
5. SPECIAL PROVISIONS, CHANGES IN CIRCUMSTANCES AND YIELD PROTECTION
-REVOLVING CREDIT NOTE
5.1 For any period for which the applicable interest rate is the LIBO
Rate, if Lender shall designate a LIBOR Lending Office which maintains books
separate from those of the rest of Lender, Lender shall have the option of
maintaining and carrying the relevant Advance on the books of such LIBOR Lending
Office.
5.2 In the event that Lender determines that by reason of (a) any
change arising after the date of this Agreement affecting the interbank
eurocurrency market or affecting the position of Lender with respect to such
market, adequate and fair means do not exist for ascertaining the applicable
interest rates by reference to which the Daily Fluctuating LIBO Rate then being
determined is to be fixed, (b) any change arising after the date of this
Agreement in any applicable law or governmental rule, regulation or order (or
any interpretation thereof, including the introduction of any new law or
governmental rule, regulation or order), or (c) any other circumstances
affecting Lender or the interbank eurocurrency market (such as, but not limited
to, official reserve requirements required by Regulation D of the Board of
Governors of the Federal Reserve System), the Daily Fluctuating LIBO Rate plus
the applicable spread shall not represent the effective pricing to Lender of
accruing interest based upon the Daily Fluctuating LIBO Rate, then, and in any
such event, the accrual of interest hereunder based upon the Daily Fluctuating
LIBO Rate shall be suspended until Lender shall notify Company that the
circumstances causing such suspension no longer exist and beginning on the date
of such suspension interest shall accrue hereunder at a variable rate of
interest per annum, equal to the Prime Rate.
5.3 In the event that on any date Lender shall have determined that
accruing interest hereunder based upon the Daily Fluctuating LIBO Rate has
become unlawful by compliance by Lender in good faith with any law, governmental
rule, regulation or order, then, and in any such event, Lender shall promptly
give notice thereof to Company. In such case, when required by law, interest
shall accrue hereunder at a variable rate of interest per annum equal to the
Prime Rate.
5.4 If, due to (a) the introduction of or any change in or in the
interpretation of any law or regulation, (b) the compliance with any guideline
or request from any central bank or other public authority (whether or not
having the force of law), or (c) the failure of Company to pay any amount when
required by the terms of this Agreement or the Revolving Credit Note, there
shall be any loss or increase in the cost to Lender of accruing interest
hereunder based upon the Daily Fluctuating LIBO Rate, then Company agrees that
it shall, from time to time, upon demand by Lender, pay to Lender additional
amounts sufficient to compensate Lender for such loss or increased cost. A
certificate as to the amount of such loss or increase cost, submitted to Company
by Lender, shall be conclusive evidence, absent demonstrable error, of the
correctness of such amount.
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5.5 A late installment charge equal to five percent (5%) of each late
installment (but not balloon payments) under any Note may be charged on any
installment (but not balloon) payment not received by Lender within ten (10)
calendar days after the installment due date but acceptance of this charge shall
not waive any Default or Event of Default under this Agreement.
6. CONDITIONS
6.1 Company agrees to furnish Lender, prior to the initial borrowing
under this Agreement, in form and substance to be satisfactory to Lender, with
(i) certified copies of resolutions of the Board of Directors of Company
evidencing approval of the borrowings and transactions contemplated hereunder;
(ii) a certificate of good standing from the state of Company's incorporation
and from the state(s) in which Company is required to be qualified to do
business; (iii) an opinion of Company's legal counsel; (iv) evidence of
compliance with all conditions included in Lender's commitment letter dated
October 29, 2003, (v) such other documents and instruments as Lender may
require; (vi) evidence that as of such date, the Company has minimum borrowing
availability under the Revolving Credit Note of at least $700,000; and (vii) the
March and September financial statements listed in Section 7.6 hereof.
6.2 As security for all indebtedness of Company to Lender,
Company agrees to furnish, execute and deliver to Lender, or cause to be
furnished, executed and delivered to Lender, prior to or simultaneously with the
initial borrowing hereunder, in form to be satisfactory to Lender and supported
by appropriate resolution in certified form authorizing same, the following:
(a) The Security Agreement;
(b) The Subordination Agreements, together with the original
subordinated promissory notes, endorsed to Lender;
(c) The Mortgages;
(d) Financing Statements required or requested by Lender to perfect
all security interests to be conferred upon Lender under this Agreement and to
accord Lender a perfected first priority security position under the Uniform
Commercial Code (subject only to the encumbrances permitted hereunder); and
(e) Such other documents or agreements of security and appropriate
assurances of validity and perfected first priority of lien or security interest
as Lender may request at any time.
6.3 Concurrently with the execution of this Agreement, Company pay to
Lender its non-refundable loan origination fee in the amount of $21,850.
7. REPRESENTATIONS AND WARRANTIES
Company represents and warrants and such representations and
warranties shall be deemed to be continuing representations and warranties
during the entire life of this Agreement:
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7.1 Company is a corporation duly organized and existing in good
standing under the laws of the State of Michigan; Company is in good standing in
each jurisdiction in which it is required to be qualified to do business;
execution, delivery and performance of this Agreement and other documents and
instruments required under this Agreement, and the issuance of the Notes by
Company, are within its corporate powers, have been duly authorized, are not in
contravention of law or the terms of Company's Articles of Incorporation or
Bylaws and do not require the consent or approval of any governmental body,
agency or authority; and this Agreement and other documents and instruments
required under this Agreement and Notes, when issued and delivered, will be
valid and binding on Company in accordance with their terms.
7.2 The execution, delivery and performance of this Agreement and any
other documents and instruments required under this Agreement, and the issuance
of the Notes by Company, are not in contravention of the unwaived terms of any
indenture, agreement or undertaking to which Company is a party or by which it
is bound.
7.3 No litigation or other proceeding before any court or
administrative agency is pending, or to the knowledge of the officers of Company
is threatened against Company, the outcome of which would reasonably be expected
to materially impair Company's financial condition or the ability of Company to
carry on its business.
7.4 There are no security interests in, liens, mortgages, or other
encumbrances on any of either Company's assets, except to Lender or as otherwise
permitted by this Agreement.
7.5 Company does not maintain or contribute to any employee pension
benefit plan subject to title IV of the "Employee Retirement Income Security Act
of 1974" (herein called "ERISA"), except those set forth in attached Schedule
7.5. Company has not received notice of any withdrawal liability of Company in
connection with such pension plans, or notice of any existing material liability
of Company with respect to any pension plan owed to the Pension Benefit Guaranty
Corporation ("PBGC") or any successor thereto.
7.6 The Company-prepared financial statements of Company dated March
31, 2001, March 31, 2002 and March 31, 2003, and the interim Company-prepared
financial statements dated June 30, 2002, September 30, 2002, June 30, 2003 and
September 30, 2003, previously furnished to Lender, were prepared in accordance
with GAAP (provided, however, that any Company prepared financial statements may
exclude footnotes and cash flow as required by GAAP) and fairly present in all
material respects the financial condition of the Company as of such date; since
said dates there has been no material adverse change in the financial condition
of Company; and to the best knowledge of Company's officers, Company has no
material contingent obligations (including any liability for taxes) not
disclosed by or reserved against in said balance sheet, and at the present time
there are no material unrealized or anticipated losses from any present
commitment of Company.
7.7 The financial projections previously furnished by Company to
Lender were as of the date thereof and are as of the date of execution of this
Agreement reasonable in all material respects.
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7.8 All tax returns and tax reports of Company required by law to
have been filed have been duly filed or extensions obtained, and all taxes,
assessments and other governmental charges or levies (other than those presently
payable without penalty and those currently being contested in good faith for
which adequate reserves have been established) upon Company (or any of its
properties) which are due and payable and for which the failure to pay would
materially adversely affect its business or the value of their property or
assets have been paid. The charges, accruals and reserves on the books of
Company in respect of the Federal income tax for all periods are adequate in the
opinion of Company.
7.9 As of the date hereof, there are no subsidiaries of Company.
7.10 Except as set forth in Schedule 7.10:
(a) Company, in the conduct of its business, is in compliance in
all material respects with all federal, state or local laws, statutes,
ordinances and regulations applicable to it. Company has all approvals,
authorizations, consents, licenses, orders and other permits of all governmental
agencies and authorities, whether federal, state or local, required to permit
the operation of its business as presently conducted.
(b) Company is not a party to any litigation or administrative
proceeding, nor so far as is known by Company is any litigation or
administrative proceeding threatened against Company, which in either case (i)
asserts or alleges that Company violated Environmental Laws, (ii) asserts or
alleges that Company is required to clean up, remove, or take remedial or other
response action due to the disposal, depositing, discharge, leaking or other
release of any hazardous substances or materials, (iii) asserts or alleges that
Company is required to pay all or a portion of the cost of any past, present, or
future cleanup, removal or remedial or other response action which arises out of
or is related to the disposal, depositing, discharge, leaking or other release
of any hazardous substances or materials by Company.
(c) Company is not subject to any judgment, decree, order or
citation related to or arising out of applicable Environmental Laws; and to the
best knowledge of Company, Company has not been named or listed as a potentially
responsible party by any governmental body or agency in a matter arising under
any applicable Environmental Laws.
(d) Company has all permits, licenses and approvals required under
applicable Environmental Laws.
7.11 Company is not an "investment company" within the meaning of
the Investment Companies Act of 1940, as amended. Company is not engaged
principally, or as one of its important activities, directly or indirectly, in
the business of extending credit for the purpose of purchasing or carrying
margin stock, and none of the proceeds of any of the loans hereunder will be
used, directly or indirectly, for any purpose which would violate the provisions
of Regulation U or X of the Board of Governors of the Federal Reserve System.
Terms for which meanings are provided in Regulation U of the Board of Governors
of the Federal Reserve System or any regulations substituted therefor, as from
time to time in effect, are used in this paragraph with such meanings.
16
7.12 Company has good and valid title to the property pledged,
mortgaged or otherwise encumbered or to be encumbered by it under the Security
Agreements and the Mortgages.
7.13 The execution, delivery and performance of the Subordination
Agreements have been duly authorized by Maxco, Inc. and BCGW, Inc., as
applicable; and the Subordination Agreements are valid and binding on Maxco,
Inc. and BCGW, Inc. in accordance with their terms.
8. AFFIRMATIVE COVENANTS
Company covenants and agrees that it will, so long as Lender may make
any advance under this Agreement and thereafter so long as any indebtedness
remains outstanding under this Agreement:
8.1 Furnish Lender:
(a) within ninety (90) days after and as of the end of each fiscal
year of Company, a balance sheet, statement of income and statement of its cash
flows certified by an authorized officer of Company as being correct and
accurate to the best of his knowledge;
(b) within ninety (90) days after and as of the end of each fiscal
year of Maxco, Inc., a consolidated balance sheet, statement of income and
statement of cash flows of Maxco, Inc. prepared on an audited basis by
independent certified public accountants satisfactory to Lender, with attached
schedule of consolidating financial information used in preparing the
consolidated financial statements;
(c) within ninety (90) days after the end of each fiscal year of
Company, an annual budget of Company for the then current year, to include a
balance sheet, statement of income and expense, statement of cash flows and
planned capital expenditures, and also including but not limited to, information
pertaining to additions, replacements, rebuilds and ongoing maintenance.
(d) within forty-five (45) days after and as of the end of each
fiscal quarter (including the fourth fiscal quarter) of Company, a balance sheet
and statement of income of Company for the quarter then ended and fiscal year-to
-date, certified by an authorized officer of Company as being correct and
accurate to the best of his knowledge;
(e) within fifteen (15) days after and as of the end of each month,
including the last month of each fiscal year, (i) the monthly aging of Company's
accounts (and a schedule identifying each Eligible Account), and any such
schedule shall be accompanied, if so requested by Lender, by a true and correct
copy of the invoices evidencing Eligible Accounts, and by evidence of
performance, (ii) the monthly aging of Company's accounts payable, and (iii) an
inventory report;
(f) Friday (or on a day otherwise agreed to by Lender in writing)
of each week (or such other date as shall be agreed to in writing by Lender), a
borrowing base report, each in form acceptable to Lender;
17
(g) such information as required by the terms and conditions of any
security agreement referred to in this Agreement;
(h) within three (3) days of receipt, copies of all audit compliance
letters and all certificates of registration and related appendices, with
respect to the certifications referred to in Section 8.14; and
(i) promptly, and in form to be satisfactory to Lender, such other
information as Lender may request from time to time.
8.2 Pay and discharge, all taxes and other governmental charges, and
all contractual obligations calling for the payment of money, before the same
shall become overdue under standard business practices, unless and to the extent
only that such payment is being contested in good faith with adequate reserves.
8.3 Maintain insurance coverage on its physical assets and against
other business risks in such amounts and of such types as are customarily
carried by companies similar in size and nature, and in the event of acquisition
of additional property, real or personal, or of incurrence of additional risks
of any nature, increase such insurance coverage in such manner and to such
extent as prudent business judgment and present practice would dictate; and in
the case of all policies covering property mortgaged or pledged to Lender or
property in which Lender shall have a security interest of any kind whatsoever,
other than those policies protecting against casualty liabilities to strangers,
all such insurance policies shall provide that the loss payable thereunder shall
be payable to Company and Lender (as mortgagee) as their respective interests
may appear, copies of all said policies, including all endorsements thereon and
those required hereunder, to be deposited with Lender.
8.4 Permit Lender, through its authorized attorneys, accountants and
representatives, to examine Company's books, accounts, records, ledgers and
assets of every kind and description at all reasonable times upon oral or
written request of Lender, which shall include but shall not be limited to
collateral audits of Company conducted by Lenders. So long as no Default or
Event of Default has occurred and is continuing, Company shall not be obligated
to pay for such collateral audits.
8.5 Promptly notify Lender after becoming aware of any Default or
Event of Default under this Agreement, and promptly inform Lender of the
existence or occurrence of any condition or event which could have a material
adverse effect upon Company's financial condition.
8.6 Maintain in good standing all licenses required by the State of
Michigan or any agency thereof, or other governmental authority that may be
necessary or required for Company to carry on its general business objects and
purposes.
8.7 Comply with all requirements imposed by ERISA as presently in
effect or hereafter promulgated, including but not limited to, the minimum
funding requirements of any Pension Plan.
18
8.8 Promptly notify Lender after the occurrence thereof in writing of
any of the following events:
(a) the termination of a Pension Plan pursuant to Subtitle C of
Title IV of ERISA or otherwise;
(b) the appointment of a trustee by a United States District Court
to administer a Pension Plan;
(c) the commencement by the Pension Benefit Guaranty Corporation,
or any successor thereto of any proceeding to terminate a Pension Plan;
(d) the failure of a Pension Plan to satisfy the minimum funding
requirements for any plan year as established in Section 412 of the Internal
Revenue Code of 1954, as amended, or any similar provision under the Internal
Revenue Code of 1986, as amended;
(e) the withdrawal of Company from a Pension Plan; or
(f) a reportable event, within the meaning of Title IV of ERISA.
8.9 Furnish Lender, upon Lender's request, in form satisfactory to
Lender, with pledges, assignments, mortgages, lien instruments or other security
instruments covering any or all of Company's real and personal property, of
every nature and description, whether now owed or hereafter acquired, to the
extent that Lender may in its sole discretion require.
8.10 Furnish to the Lender concurrently with the delivery of each
of the financial statements required by Sections 8.1(a) and (d) a statement
prepared and certified by the chief financial officer of Company (or in such
officer's absence, a responsible senior officer of Company) (a) setting forth
all computations necessary to show compliance by Company with the financial
covenants contained in Sections 8.11, 8.12 and 8.13 hereof, (b) stating that as
of the date thereof, no Default or Event of Default hereunder has occurred and
is continuing, or if any such event or condition has occurred and is continuing
or exists, specifying in detail the nature and period of existence thereof and
any action with respect thereto taken or contemplated to be taken by Company and
(c) stating that the signer has personally reviewed this Agreement and that such
certificate is based on an examination sufficient to assure that such
certificate is accurate.
8.11 Maintain, as of the end of each fiscal quarter, a Fixed Charge
Coverage Ratio of not less than 1.2 to 1.0.
8.12 Maintain, as of the end of such fiscal quarter, a Leverage Ratio
of not more than 2.6 to 1.
8.13 Maintain, as of the end of each fiscal quarter, a Debt Ratio of
not more than 2.75 to 1.
19
8.14 Maintain at all times its current QS-9000, ISO-9002 and ISO 14001
certifications, or (if such certificates are replaced) obtain and maintain at
all times any and all successor certifications.
8.15 Maintain equipment maintenance expenditures at a level consistent
with prior practice; and not permit any reduction in Company's equipment
maintenance program that causes or is reasonably likely to cause a reduction in
value or functionality of Company's equipment.
9. NEGATIVE COVENANTS
Company covenants and agrees that so long as Lender may make any
Advances under this Agreement and thereafter so long as any Indebtedness remains
outstanding under this Agreement, it will not, without Bank's prior written
consent:
9.1 Purchase, acquire, or redeem any of its stock or other equity
interests or make any material change in its capital structure.
9.2 Enter into any merger or consolidation or sell, lease, transfer, or
dispose of all, substantially all, or any part of its assets, except sales of
inventory in the ordinary course of its business.
9.3 Guarantee, endorse, or otherwise become secondarily liable for or
upon the obligations of others, except by endorsement for deposit in the
ordinary course of business and guaranties in favor of Lender and guarantees
described in attached Schedule 9.3.
9.4 Purchase or otherwise acquire or become obligated for the purchase
of all or substantially all of the assets or business interests of any Person or
any equity interests of any Person or in any other manner effectuate or attempt
to effectuate an expansion of present business by acquisition.
9.5 Affirmatively pledge or mortgage any of its assets, whether now
owned or hereafter acquired, or create, suffer or permit to exist any lien,
security interest in, or encumbrance thereon, except:
(a) to Lender;
(b) the Permitted Liens;
(c) liens described in attached Schedule 9.5; and
(d) liens and security interests upon fixed assets acquired by
Company after the date of this Agreement, provided that (i) any such lien or
security interest is created solely for the purpose of securing indebtedness
representing, or incurred to finance, the cost of the item(s) of property
subject thereto; (ii) the principal amount of the indebtedness secured by such
lien does not exceed 100% of the fair value of the property at the time it was
acquired, (iii) the lien or security interest does not extend to any property
other than such item(s) of property and proceeds
20
thereof, and (iv) the amount of indebtedness securing such liens does not exceed
the maximum amount permitted by Section 9.13(d).
9.6 Sell, assign, transfer or confer a security interest in any
account, contract, note, trade acceptance or other receivable, except to Lender.
9.7 Alter the character of its business from that conducted as of the
date of this Agreement.
9.8 Declare or pay any dividends or make any other distribution upon
its stock.
9.9 Make or agree to make any Capital Expenditure if the amount
thereof, plus all other Capital Expenditures made during the then current fiscal
year, would exceed $1,000,000.
9.10 Enter into any transaction or series of transactions with any
Affiliate other than on terms and conditions as favorable to Company as would be
obtainable in a comparable arms-length transaction with a Person other than an
Affiliate.
9.11 Make or allow to remain outstanding any investment (whether such
investment shall be of the character of investment in shares of stock, evidence
of indebtedness or other securities or otherwise) in, or any loans or advances
or extensions of credit to, any Person, except:
(a) investments of surplus cash in cash equivalents;
(b) investments described on Schedule 9.11 attached hereto; and
(c) investments not to exceed $25,000 in the aggregate outstanding
at any one time.
9.12 Enter into or become subject to any agreement (i) prohibiting the
creation or assumption of any lien or encumbrance upon the properties or assets
of Company or (ii) requiring an obligation to become secured (or further
secured) if another obligation is secured or further secured.
9.13 Become or remain obligated for any indebtedness for borrowed
money, or for any indebtedness incurred in connection with the acquisition of
any property, real or personal, tangible or intangible, except:
(a) indebtedness to Lender;
(b) current unsecured trade payables and accrued liabilities arising
in the ordinary course of either Company's business;
(c) indebtedness described in attached Schedule 9.13;
(d) purchase money indebtedness and finance leasing transactions
incurred after the date hereof while no Default or Event of
Default has occurred and is continuing in
21
connection with the acquisition of new or used fixed assets in an aggregate
amount not exceeding $200,000 in the aggregate at any time outstanding; and
(e) Subordinated Debt.
9.14 Make any payments with respect to the Subordinated Debt except
payments expressly permitted to be paid pursuant to the terms of any
subordination agreement executed in connection with such Subordinated Debt.
9.15 Permit its fiscal year to end on any day other than March 31.
9.16 Without limiting the provisions of Section 9.10, pay or agree to
pay any management or similar fees to Maxco, Inc. or any other Affiliate, or
make any payments to any such Person except as specifically provided in the
Maxco Subordination Agreement.
10. ENVIRONMENTAL PROVISIONS
10.1 Company shall comply with all applicable Environmental Laws.
10.2 Company shall provide to Lender, promptly upon receipt, copies of
any correspondence, notice, pleading, citation, indictment, complaint, order,
decree, or other document from any source asserting or alleging a circumstance
or condition which requires or may require a financial contribution by Company
to a cleanup, removal, remedial action, or other response by or on the part of
Company under applicable Environmental Laws or which seeks damages or civil,
criminal or punitive penalties from either Company for an alleged violation of
Environmental Laws.
10.3 Company shall promptly notify Lender in writing as soon as Company
becomes aware of the occurrence or existence of any condition or circumstance
which makes the environmental warranties contained in this Agreement incomplete
or inaccurate in any material respect as of any date.
10.4 In the event of any condition or circumstance that makes any
environmental warranty, representation and/or agreement incomplete or inaccurate
in any material respect as of any date, Company shall, at the request of Lender,
at its sole expense, retain an environmental consultant, acceptable to Lender,
to conduct a thorough and complete investigation regarding the changed condition
and/or circumstance. A copy of the environmental consultant's report will be
promptly delivered to Lender upon completion.
10.5 At any time Company, directly or indirectly through any
environmental consultant or other representative, determines to undertake an
environmental audit, assessment or investigation, Company shall promptly provide
Lender with written notice of the initiation of the environmental audit, fully
describing the purpose and intended scope of the environmental audit. Upon
receipt, Company will promptly provide to Lender copies of all final findings
and conclusions of any such environmental investigation.
10.6 Company hereby indemnifies, saves and holds Lender and any of its
past, present and future officers, directors, shareholders, employees,
representatives and consultants harmless
22
from any and all loss, damages, suits, penalties, costs, liabilities and
expenses (including but not limited to reasonable investigation, environmental
audit(s), and legal expenses) arising out of any claim, loss or damage to any
property, injuries to or death of persons, contamination of or adverse affects
on the environment, or any violation of any applicable Environmental Laws,
caused by or in any way related to any property owned or operated by Company, or
due to any acts of Company or its officers, directors, shareholders, employees,
consultants and/or representatives; provided, however, that the foregoing
indemnification shall not be applicable when arising solely from events or
conditions occurring while the Lender is in sole possession (subject to the
rights of any creditors of Company) of such property.
It is expressly understood and agreed that the indemnifications granted
herein are intended to protect Lender, its past, present and future officers,
directors, shareholders, employees, consultants and representatives from any
claims that may arise by reason of the security interest, liens and/or mortgages
granted to Lender, or under any other document or agreement given to secure
repayment of any indebtedness from Company, whether or not such claims arise
before or after Lender has foreclosed upon and/or otherwise become the owner of
any such property. All obligations of indemnity as provided hereunder shall be
secured by the collateral documents.
It is expressly agreed and understood that the provisions hereof shall
and are intended to be continuing and shall survive the repayment of any
indebtedness from Company to Lender.
10.7 Company shall maintain all permits, licenses and approvals
required under applicable Environmental Laws.
11. EVENTS OF DEFAULT
11.1 Upon occurrence of any of the following events of default:
(a) non-payment of any installment of the principal or interest of the
Notes when due;
(b) non-payment of any other outstanding Indebtedness within ten (10)
days of demand by Lender;
(c) default in the observance or performance of any of the conditions,
covenants or agreements of Company set forth in Sections 2.5, 8.1, 8.3, 8.4,
8.5, 8.8, 8.10, 8.11, 8.12, 8.13, 9 (in its entirety), 10.2, 10.3 or 10.5;
(d) default in observance or performance of any of the other
conditions, covenants or agreements of Company herein set forth, and continuance
thereof for thirty (30) days;
(e) any representation or warranty made by Company or any other Person
herein or in any instrument submitted pursuant hereto proves untrue in any
material respect when made or deemed made;
(f) default in the observance or performance of any of the conditions,
covenants or agreements of Company or any other Person set forth in any
collateral document which may
23
be given to secure the Indebtedness hereunder or in any other collateral
document related to or connected with this Agreement or the indebtedness
hereunder;
(g) default in the payment of any other obligation of Company for
borrowed money in an aggregate amount in excess of Ten Thousand Dollars
($10,000), or in the observance or performance of any conditions, covenants or
agreements related or given with respect to any obligations for borrowed money
in an aggregate amount in excess of Ten Thousand Dollars ($10,000) sufficient to
permit the holder thereof to accelerate the maturity of such obligation;
(h) judgment(s) for the payment of money in excess of the sum of Fifty
Thousand Dollars ($50,000) in the aggregate shall be rendered against Company
and any such judgment(s) shall remain unpaid, unvacated, unbonded or unstayed by
appeal or otherwise for a period of thirty (30) consecutive days from the date
of its entry and any such judgment is not covered by insurance from a solvent
insurer who is defending such action without reservation of rights;
(i) the occurrence of any "reportable event", as defined in the
Employee Retirement Income Security Act of 1974 and any amendments thereto,
which is determined to constitute grounds for termination by the Pension Benefit
Guaranty Corporation of any employee pension benefit plan maintained by or on
behalf of Company for the benefit of any of its employees or for the appointment
by the appropriate United States District Court of a trustee to administer such
plan and is reasonably likely that the occurrence of such event would result in
a material adverse effect on Company and such reportable event is not corrected
and such determination is not revoked within thirty (30) days after notice
thereof has been given to the plan administrator or Company; or the institution
of proceedings by the Pension Benefit Guaranty Corporation to terminate any such
employee benefit pension plan or to appoint a trustee to administer such plan;
or the appointment of a trustee by the appropriate United States District Court
to administer any such employee benefit pension plan;
(j) if there shall be any change for any reason whatsoever in the
management, ownership or control of Company which shall in the reasonable
judgment of Bank materially adversely affect future prospects for the successful
operation of Company; or
(k) if any Subordination Agreement is revoked or if any Person(s)
executing such Subordination Agreement shall disavow such agreement or deny that
it has any liability thereunder;
then, or at any time thereafter, unless such default is remedied,
Lender may give notice to Company declaring all outstanding indebtedness
hereunder and under the Notes to be due and payable, whereupon all indebtedness
then outstanding hereunder and under the Notes shall immediately become due and
payable without further notice and demand, and Lender shall not be obligated to
make further Advances under this Agreement.
11.2 If a creditors' committee shall have been appointed for the
business of Company; or if Company shall have made a general assignment for the
benefit of creditors or shall have been adjudicated bankrupt, or shall have
filed a voluntary petition in bankruptcy or for reorganization or to effect a
plan or arrangement with creditors; or shall file an answer to a
24
creditor's petition or other petition filed against it, admitting the material
allegations thereof for an adjudication in bankruptcy or for reorganization; or
shall have applied for or permitted the appointment of a receiver, or trustee or
custodian for any of its property or assets; or such receiver, trustee or
custodian shall have been appointed for any of its property or assets and such
receiver, trustee or custodian so appointed shall not have been discharged
within thirty (30) days after the date of his appointment or if an order shall
be entered and shall not be dismissed or stayed within thirty (30) days from its
entry, approving any petition for reorganization of Company, then the Notes and
all indebtedness then outstanding hereunder shall automatically become
immediately due and payable and Lender shall not be obligated to make further
Advances under this Agreement.
11.3 Upon the occurrence and during the continuance of an Event of
Default, Lender shall have and may exercise any one or more of the rights and
remedies for which provision is made for a secured party under the UCC, under
the Security Agreement or under any other document contemplated hereby or for
which provision is provided by law or in equity, including, without limitation,
the right to take possession and sell, lease or otherwise dispose of any or all
of the collateral and to set off against the Indebtedness any amount owing by
Lender to Company and/or any property of Company in possession of Lender.
Company agrees, upon request of Lender, to assemble the collateral and make it
available to Lender at any place designated by Lender.
11.4 All of the Indebtedness shall constitute one loan secured by
Lender's security interest in the collateral and by all other security
interests, mortgages, liens, claims, and encumbrances now and from time to time
hereafter granted from Company to Lender. Lender may in its sole discretion
apply the collateral to any portion of the Indebtedness. The proceeds of any
sale or other disposition of the Collateral authorized by this Agreement shall
be applied by Lender, first upon all expenses authorized by the Michigan Uniform
Commercial Code (or other applicable law) or otherwise in connection with the
sale and all reasonable attorneys' fees and legal expenses incurred by Lender;
the balance of the proceeds of such sale or other disposition shall be applied
in the payment of the Indebtedness, first to interest, then to principal, then
to other Indebtedness and the surplus, if any, shall be paid over to Company or
to such other Person or Persons as may be entitled thereto under applicable law.
Company shall remain liable for any deficiency, which Company shall pay to
Lender immediately upon demand.
11.5 The remedies provided for herein are cumulative to the remedies
for collection of the Indebtedness as provided by law, in equity or by any
mortgage, security agreement or other document contemplated hereby. Nothing
herein contained is intended, nor shall it be construed, to preclude Lender from
pursuing any other remedy for the recovery of any other sum to which Lender may
be or become entitled for the breach of this Agreement by Company.
12. MISCELLANEOUS
12.1 This Agreement shall be binding upon and shall inure to the
benefit of Company and Lender and their respective successors and assigns,
except that the credit provided for under this Agreement and no part thereof and
no obligation of Lender hereunder shall be assignable or otherwise transferable
by Company.
25
12.2 Company shall pay all closing costs and expenses, including, by
way of description and not limitation, attorney fees, lien search fees, and
appraisal fees incurred by Lender in connection with the commitment,
consummation and closing of this Agreement. All of said amounts required to be
paid by Company may, at Lender's option, be charged by Lender as an advance
against the proceeds of the Notes. All costs, including actual attorney fees
incurred by Lender in protecting or enforcing any of its or any of the Lender's
rights against Company or any collateral or in defending Lender from any claims
or liabilities by any party or otherwise incurred by Lender in connection with
an event of default or the enforcement of this Agreement or the related
documents, including by way of description and not limitation, such charges in
any court or bankruptcy proceedings or arising out of any claim or action by any
person against Lender which would not have been asserted were it not for
Lender's relationship with Company hereunder, shall also be paid by Company.
12.3 Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP.
12.4 No delay or failure of Lender in exercising any right, power or
privilege hereunder shall affect such right, power or privilege, nor shall any
single or partial exercise thereof preclude any further exercise thereof, or the
exercise of any other power, right or privilege. The rights of Lender under this
Agreement are cumulative and not exclusive of any right or remedies which Lender
would otherwise have.
12.5 All notices and other communications provided to any party hereto
under this Agreement shall be in writing and shall be given by personal
delivery, by mail, by reputable overnight courier, or by facsimile and addressed
or delivered to it at its address set forth below or at such other address as
may be designated by such party in a notice to the other parties that complies
as to delivery with the terms of this Section 12.5. Any notice, if personally
delivered or if mailed and properly addressed with postage prepaid and sent by
registered or certified mail, shall be deemed given when received; any notice,
if given to a reputable overnight courier and properly addressed, shall be
deemed given two (2) Business Days after the date on which it was sent, unless
it is actually received sooner by the named addressee; and any notice, if
transmitted by facsimile, shall be deemed given when received (answerback
confirmed in the case of telexes and receipt confirmed in the case of
telecopies).
To Company:
000 Xx. Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Fax No. (000) 000-0000
To Lender:
000 X. Xxx Xxxxxx Xxxx, 0xx Xxxxx
Xxxx, Xxxxxxxx 00000
26
Attention: Xxxxx Xxxxxx
Fax No. (000) 000-0000
12.6 This Agreement and the Notes have been delivered at Troy,
Michigan, and shall be governed by and construed and enforced in accordance with
the laws of the State of Michigan. Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
12.7 No amendments or waiver of any provisions of this Agreement nor
consent to any departure by Company therefrom shall in any event be effective
unless the same shall be in writing and signed by Lender, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No amendment, waiver or consent
with respect to any provision of this Agreement shall affect any other provision
of this Agreement.
12.8 All sums payable by Company to Lender under this Agreement or the
other documents contemplated hereby shall be paid directly to Lender at its
principal office set forth in Section 12.5 hereof in immediately available
United States funds, without set off, deduction or counterclaim. In its sole
discretion, Lender may charge any and all deposit or other accounts of Company
with Lender for all or a part of any Indebtedness then due; provided, however,
that this authorization shall not affect Company's obligation to pay, when due,
any Indebtedness whether or not account balances are sufficient to pay amounts
due.
12.9 Any payment of the Indebtedness made by mail will be deemed
tendered and received only upon actual receipt by Lender at the address
designated for such payment, whether or not Lender has authorized payment by
mail or any other manner, and shall not be deemed to have been made in a timely
manner unless received on the date due for such payment, time being of the
essence. Company expressly assumes all risks of loss or liability resulting from
non-delivery or delay of delivery of any item of payment transmitted by mail or
in any other manner. Acceptance by Lender of any payment in an amount less than
the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default, and at any time thereafter and until the entire amount then due has
been paid, Lender shall be entitled to exercise any and all rights conferred
upon it herein upon the occurrence of an Event of Default. Company waives the
right to direct the application of any and all payments at any time or times
hereafter received by Lender from or on behalf of Company. Company agrees that
Lender shall have the continuing exclusive right to apply and to reapply any and
all payments received at any time or times hereafter against the Indebtedness in
such manner as Lender may deem advisable, notwithstanding any entry by Lender
upon any of its books and records. Company expressly agrees that to the extent
Lender receives any payment or benefit and such payment or benefit, or any part
thereof, is subsequently invalidated, declared to be fraudulent or preferential,
set aside or is required to be repaid to a trustee, receiver, or any other party
under any Bankruptcy act, state or federal law, common law or equitable cause,
then to the extent of such payment or benefit, the Indebtedness or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment
27
or benefit had not been made and, further, any such repayment by Lender, to the
extent that Lender did not directly receive a corresponding cash payment, shall
be added to and be additional Indebtedness payable upon demand by Lender.
12.10 In the event Company's obligation to pay interest on the
principal balance of the Notes is or becomes in excess of the maximum interest
rate which Company is permitted by law to contract or agree to pay, giving due
consideration to the execution date of this Agreement, then, in that event, the
rate of interest applicable shall be deemed to be immediately reduced to such
maximum rate and all previous payments in excess of such maximum rate shall be
deemed to have been payments in reduction of principal and not of interest.
12.11 COMPANY AND LENDER ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS
A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.
12.12 This Agreement shall become effective upon the execution hereof
by Lender and Company.
13. SPECIAL PROVISIONS, CHANGES IN CIRCUMSTANCES AND YIELD PROTECTION -
TERM NOTE A AND TERM NOTE B; PATRIOT ACT NOTIFICATION
13.1 If Company makes any payment of principal with respect to a LIBOR
Borrowing on a day which is not the last day of an Interest Period applicable to
such LIBOR Borrowing, Company will pay the Prepayment Premium to Lender on
demand.
13.2 If, with respect to an Interest Period for any LIBOR Borrowing,
Lender determines in its sole discretion, that, by reason of circumstances
affecting the interbank Eurodollar market generally, deposits in United States
dollars (in the applicable amounts) are not being offered to banks in the
interbank Eurodollar market for such Interest Period, or the LIBOR Rate will not
adequately and fairly reflect the cost to Lender of maintaining or funding the
LIBOR Borrowing for such Interest Period, Lender shall promptly give notice
thereof to Company. Thereafter, until Lender gives notice to the Company that
such circumstances no longer exist, (a) the obligation of Lender to fund LIBOR
Borrowings shall be suspended until such illegality is remedied, and (b) the
Company shall repay in full the then-outstanding principal amount of LIBOR
Borrowings, together with accrued interest thereon, or such LIBOR Borrowings
shall automatically be converted to the Prime Rate, on the last day of the
then-current Interest Period applicable to each LIBOR Borrowing, and, in the
event such conversion or repayment results in a financial charge to Lender,
Company will pay the Prepayment Premium to Lender on demand.
28
13.3 If, after the date of this Agreement, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Lender with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for Lender to make, maintain or fund
LIBOR Borrowings, Lender shall promptly give notice thereof to the Company.
Thereafter, (a) the obligation of Lender to fund LIBOR Borrowings shall be
suspended until such illegality is remedied, and (b) the Company shall repay in
full the then-outstanding principal amount of LIBOR Borrowings, together with
accrued interest thereon, or such LIBOR Borrowings shall automatically be
converted to the Prime Rate, either: (1) on the last day of the then-current
Interest Period applicable to such LIBOR Borrowings, or (2) immediately if
Lender may not lawfully continue to fund and maintain such LIBOR Borrowings
until such date, and, in the event such conversion or repayment results in a
financial charge to Lender Company will pay the Prepayment Premium to Lender on
demand.
13.4 If any governmental authority or regulatory agency, central bank
or other comparable authority, shall at any time impose, modify or deem
applicable any reserve (including, without limitation, the Reserve Requirement
or any other reserve imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, Lender to Company, or shall impose
on Lender or the interbank Eurodollar market any other condition, guideline or
request affecting LIBOR Borrowings, Term Note A or Term Note B Note or Lender's
obligation to make advances of LIBOR Borrowings, and the result of any of the
foregoing, shall be to increase the cost to Lender of making or maintaining
LIBOR Borrowings, or to reduce the amount of any sum received or receivable by
Lender under this Agreement or under Term Note A or Term Note B by an amount
deemed by Lender to be material, then, within five (5) days after demand by
Lender, Company shall pay to Lender as additional interest such additional
amount or amounts as will compensate Lender for such increased cost or
reduction. A certificate of Lender claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of manifest error. Lender's determination of
amounts payable under this Section shall be calculated as though Lender funded
the applicable LIBOR Borrowings through the purchase of a Eurodollar deposit of
the type, maturity and amount corresponding to the deposit used as a reference
in determining the Base LIBOR Rate with respect to such LIBOR Borrowing, whether
or not Lender in fact purchased such deposit. In such event, Lender shall have
the option to immediately terminate Company's right to request LIBOR Borrowings,
and the unpaid balance of any outstanding LIBOR Borrowings, with accrued
interest at the highest rate permitted to be charged by stipulation in writing
between Lender and Company, at the option of Lender, shall immediately become
due and payable. The obligations of the Company under this Section shall survive
payment of the Loans and termination of this Agreement.
13.5 If Lender shall determine that the adoption, amendment or revision
of any applicable law, rule or regulation affecting Lender's capital
requirements or adequacy with respect to Term Note A or Term Note B, or the
interpretation or administration thereof by any governmental authority or
regulatory agency, central bank or other comparable authority, or compliance by
Lender with any applicable law, rule or regulation affecting Lender's capital
29
requirements or adequacy with respect to Term Note A or Term Note B, or any
request, interpretation or directive (whether or not having the force of law) of
any governmental authority or regulatory agency, central bank or other
comparable authority which affects Lender's capital requirements with respect to
Term Note A or Term Note B, has or would have the effect of reducing the rate of
return on Lender's capital to a level below the rate of return Lender would have
realized in the absence of such adoption, amendment, revision, interpretation,
administration or compliance (taking into account Lender's policies with respect
to capital adequacy) by an amount considered by Lender to be material, then,
upon demand by Lender, Company shall pay to Lender as additional interest or as
fees, as determined by Lender in its sole discretion, such additional amount or
amounts as will compensate Lender for such reduction in its rate of return. Such
adjustments in interest or fees shall be imposed upon Lender's demand and shall
apply to the then outstanding principal balance of the Loans and to subsequent
advances under this Agreement. In determining such amount or amounts, Lender
shall use any reasonable averaging and attribution methods. A certificate of
Lender claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error.
13.6 In accordance with the requirements of this Section 13, if Term
Note A or Term Note B shall bear interest at the Prime Rate, then interest shall
be payable monthly on the unpaid principal balance of such Notes from time to
time outstanding, commencing on the first day of the calendar month following
the date on which the Prime Rate becomes effective. Interest shall be computed
on a daily basis using a year of 360 days, and assessed for the actual number of
days elapsed, and in such computation effect shall be given to any change in the
interest rate resulting from a change in the Prime Rate on the date of such
change in the Prime Rate.
30
13.7 The following notification is provided to Borrower pursuant to
Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318:
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. TO
HELP THE GOVERNMENT FIGHT THE FUNDING OF TERRORISM AND MONEY LAUNDERING
ACTIVITIES, FEDERAL LAW REQUIRES ALL FINANCIAL INSTITUTIONS TO OBTAIN,
VERIFY, AND RECORD INFORMATION THAT IDENTIFIES EACH PERSON OR ENTITY
THAT OPENS AN ACCOUNT, INCLUDING ANY DEPOSIT ACCOUNT, TREASURY
MANAGEMENT ACCOUNT, LOAN, OTHER EXTENSION OF CREDIT, OR OTHER FINANCIAL
SERVICES PRODUCT. WHAT THIS MEANS FOR BORROWER: WHEN BORROWER OPENS AN
ACCOUNT, IF BORROWER IS AN INDIVIDUAL, THE LENDER WILL ASK FOR
BORROWER'S NAME, TAXPAYER IDENTIFICATION NUMBER, RESIDENTIAL ADDRESS,
DATE OF BIRTH, AND OTHER INFORMATION THAT WILL ALLOW BANK TO IDENTIFY
BORROWER, AND, IF BORROWER IS NOT AN INDIVIDUAL, THE LENDER WILL ASK
FOR BORROWER'S NAME, TAXPAYER IDENTIFICATION NUMBER, BUSINESS ADDRESS,
AND OTHER INFORMATION THAT WILL ALLOW THE LENDER TO IDENTIFY BORROWER.
THE LENDER MAY ALSO ASK, IF BORROWER IS AN INDIVIDUAL, TO SEE
BORROWER'S DRIVER'S LICENSE OR OTHER IDENTIFYING DOCUMENTS, AND, IF
BORROWER IS NOT AN INDIVIDUAL, TO SEE BORROWER'S LEGAL ORGANIZATIONAL
DOCUMENTS OR OTHER IDENTIFYING DOCUMENTS.
WITNESS the due execution hereof as of the day and year first above
written.
THE HUNTINGTON NATIONAL BANK ATMOSPHERE ANNEALING, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxxxxx
------------------------------- -------------------------------
Its: Vice President Its: President
------------------------------- -------------------------------
31
EXHIBIT "A"
TERM NOTE B
$3,850,000 Troy, Michigan
___________, 2003
FOR VALUE RECEIVED, ATMOSPHERE ANNEALING, INC., a Michigan corporation
("Company"), promises to pay to the order of THE HUNTINGTON NATIONAL BANK, a
national banking association ("Lender"), at 000 Xxxx Xxx Xxxxxx, Xxxx, Xxxxxxxx,
in lawful money of the United States of America, Three Million Eight Hundred
Fifty Thousand Dollars ($3,850,000), together with interest thereon as
hereinafter set forth.
This Note shall be payable in equal consecutive monthly principal
installments in the amounts provided in Section 3B.2 of the Agreement
(hereinafter defined), beginning December 18, 2003, and on the eighteenth day of
each month thereafter until the Term Loan B Maturity Date, when the entire
unpaid balance of principal and interest accrued thereon shall be due and
payable.
The principal balance from time to time outstanding hereunder shall
bear interest at the LIBOR Rate applicable under the Agreement or as otherwise
determined thereunder, and interest shall be computed, assessed and payable as
set forth in the Agreement.
This Note evidences borrowing under, is subject to, is secured in
accordance with, may be prepaid in accordance with, and may be matured under the
terms of the Credit Agreement dated as of November 18, 2003, by and between
Company and Lender (as the same may be amended or modified from time to time,
"Agreement") to which reference is hereby made. As additional security for this
Note, Company grants Lender a lien on all property and assets, including
deposits and other credits, of Company, at any time in possession or control of
or owing by Lender for any purpose.
Company hereby waives presentment for payment, demand, protest and
notice of protest and notice of dishonor and nonpayment of this Note and agrees
that no obligation hereunder shall be discharged by reason of any extension,
indulgence, or forbearance granted by any holder of this Note to any party now
or hereafter liable hereon. Any transferees of, or endorser, guarantor or surety
paying this Note in full shall succeed to all rights of Lender, and Lender shall
be under no further responsibility for the exercise thereof or the loan
evidenced hereby. Nothing herein shall limit any right granted by other
instrument or by law.
All capitalized terms used but not defined herein shall have the
meanings given to them in the Agreement.
ATMOSPHERE ANNEALING, INC.
By:_______________________________
Its:______________________________
EXHIBIT "B"
REQUEST FOR ADVANCE
Pursuant to the Credit Agreement dated as of November 18, 2003
("Agreement"), the undersigned hereby requests THE HUNTINGTON NATIONAL BANK to
make an Advance to the undersigned on ___________________, 200__, in the amount
of _______________________________ Dollars ($_____________) under the Revolving
Credit Note dated November 18, 2003, issued by Company (as defined in the
Agreement) to said Lender ("Note"). The undersigned certifies that no Default or
Event of Default (as such terms are defined in the Agreement) exists on the date
hereof, and none will exist upon the making of the Advance requested hereunder.
The undersigned further certifies that upon advancing the sum requested
hereunder, the aggregate principal amount outstanding under the Note will not
exceed the face amount thereof or any advance formula applicable to Advances
under such Note. If the amount advanced to the Company under the Note shall at
any time exceed the face amount thereof or any Advance formula applicable to
Advances under such Note, the undersigned will immediately pay such excess
amount.
The undersigned hereby authorizes said Lender to disburse the proceeds
of this Request for Advance by crediting the account of the undersigned with
Lender separately designated by the undersigned or as the undersigned may
otherwise direct.
Dated this ______ day of _______________, 200__.
ATMOSPHERE ANNEALING, INC.
By:_______________________________
Its:______________________________
EXHIBIT "C"
REVOLVING CREDIT NOTE
$6,000,000 Troy, Michigan
__________, 2003
On or before the Revolving Credit Maturity Date, ATMOSPHERE ANNEALING,
INC., a Michigan corporation ("Company"), promises to pay to the order of THE
HUNTINGTON NATIONAL BANK, a national banking association ("Lender"), at 000 Xxxx
Xxx Xxxxxx, Xxxx, Xxxxxxxx, in lawful money of the United States of America the
indebtedness or so much of the sum of Six Million Dollars ($6,000,000) as may
from time to time have been advanced and then be outstanding hereunder pursuant
to the Credit Agreement dated as of November 18, 2003, by and between Company
and Lender (as the same may be amended or modified from time to time, herein
called "Agreement"), together with interest thereon as hereinafter set forth.
Each of the Advances hereunder shall bear interest at the LIBO Rate
from time to time applicable thereto under the Agreement or as otherwise
determined thereunder, and interest shall be computed, assessed and payable as
set forth in the Agreement.
This Note is a note under which advances, repayments and readvances may
be made from time to time, subject to the terms and conditions of the Agreement.
This Note evidences borrowing under, is subject to, is secured in accordance
with, and may be matured under, the terms of the Agreement, to which reference
is hereby made. As additional security for this Note, Company grants Lender a
lien on all property and assets including deposits and other credits of Company,
at any time in possession or control of or owing by Lender for any purpose.
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon. Any transferees of, or endorser, guarantor or surety paying this
Note in full shall succeed to all rights of Lender, and Lender shall be under no
further responsibility for the exercise thereof or the loan evidenced hereby.
Nothing herein shall limit any right granted Lender by other instrument or by
law.
All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
ATMOSPHERE ANNEALING, INC.
By:______________________________
Its:_____________________________
EXHIBIT "D"
TERM NOTE A
$2,513,000 Troy, Michigan
___________, 2003
FOR VALUE RECEIVED, ATMOSPHERE ANNEALING, INC., a Michigan corporation
("Company"), promises to pay to the order of THE HUNTINGTON NATIONAL BANK, a
national banking association ("Lender"), at 000 Xxxx Xxx Xxxxxx, Xxxx, Xxxxxxxx,
in lawful money of the United States of America, Two Million Five Hundred
Thirteen Thousand Dollars ($2,513,000), together with interest thereon as
hereinafter set forth.
Principal shall be payable in consecutive monthly installments in the
amounts provided in Section 3A.2 of the Agreement (hereinafter defined),
beginning December 18, 2003, and on the eighteenth day of each month thereafter
until the Term Loan A Maturity Date, when the entire unpaid balance of principal
and interest accrued thereon shall be due and payable.
The principal balance from time to time outstanding hereunder shall
bear interest at the LIBOR Rate from time to time applicable thereto under the
Agreement (as defined below) or as otherwise determined thereunder, and interest
shall be computed, assessed and payable as set forth in the Agreement.
This Note evidences borrowing under, is subject to, is secured in
accordance with, may be prepaid in accordance with, and may be matured under the
terms of the Credit Agreement dated as of November 18, 2003 by and between
Company and Lender (as the same may be amended or modified from time to time,
"Agreement") to which reference is hereby made. As additional security for this
Note, Company grants Lender a lien on all property and assets, including
deposits and other credits, of Company, at any time in possession or control of
or owing by Lender for any purpose.
Company hereby waives presentment for payment, demand, protest and
notice of protest and notice of dishonor and nonpayment of this Note and agrees
that no obligation hereunder shall be discharged by reason of any extension,
indulgence, or forbearance granted by any holder of this Note to any party now
or hereafter liable hereon. Any transferees of, or endorser, guarantor or surety
paying this Note in full shall succeed to all rights of Lender, and Lender shall
be under no further responsibility for the exercise thereof or the loan
evidenced hereby. Nothing herein shall limit any right granted by other
instrument or by law.
All capitalized terms used but not defined herein shall have the
meanings given to them in the Agreement.
ATMOSPHERE ANNEALING, INC.
By:______________________________
Its:_____________________________
EXHIBIT "E"
TERM NOTE C
$800,000 Troy, Michigan
___________, 2003
FOR VALUE RECEIVED, ATMOSPHERE ANNEALING, INC., a Michigan corporation
("Company"), promises to pay to the order of THE HUNTINGTON NATIONAL BANK, a
national banking association ("Lender"), at 000 Xxxx Xxx Xxxxxx, Xxxx, Xxxxxxxx,
in lawful money of the United States of America, Eight Hundred Thousand Dollars
($800,000), together with interest thereon as hereinafter set forth.
Principal shall be payable in equal consecutive quarterly principal
installments in the amount of One Hundred Thousand Dollars ($100,000) each,
beginning January 1, 2004, and on the first day of each April, July, October and
January thereafter until the Term Loan C Maturity Date, when the entire unpaid
balance of principal and interest accrued thereon shall be due and payable.
Interest shall be due and payable on each principal installment due date.
The principal balance from time to time outstanding hereunder shall
bear interest at the rate from time to time applicable thereto under the
Agreement (as defined below) or as otherwise determined thereunder, and interest
shall be computed, assessed and payable as set forth in the Agreement.
This Note evidences borrowing under, is subject to, is secured in
accordance with, may be prepaid in accordance with, and may be matured under the
terms of the Credit Agreement dated as of November 18, 2003 by and between
Company and Lender (as the same may be amended or modified from time to time,
"Agreement") to which reference is hereby made. As additional security for this
Note, Company grants Lender a lien on all property and assets, including
deposits and other credits, of Company, at any time in possession or control of
or owing by Lender for any purpose.
Company hereby waives presentment for payment, demand, protest and
notice of protest and notice of dishonor and nonpayment of this Note and agrees
that no obligation hereunder shall be discharged by reason of any extension,
indulgence, or forbearance granted by any holder of this Note to any party now
or hereafter liable hereon. Any transferees of, or endorser, guarantor or surety
paying this Note in full shall succeed to all rights of Lender, and Lender shall
be under no further responsibility for the exercise thereof or the loan
evidenced hereby. Nothing herein shall limit any right granted by other
instrument or by law.
All capitalized terms used but not defined herein shall have the
meanings given to them in the Agreement.
ATMOSPHERE ANNEALING, INC.
By:_______________________________
Its:______________________________
SCHEDULE 3A.2
PRINCIPAL AMORTIZATION SCHEDULE - TERM NOTE A
Payment Number Payment Amount
-------------- --------------
1 $ 15,078.08
2 $ 15,157.36
3 $ 15,237.06
4 $ 15,317.19
5 $ 15,397.73
6 $ 15,478.69
7 $ 15,560.09
8 $ 15,641.91
9 $ 15,724.16
10 $ 15,806.84
11 $ 15,889.96
12 $ 15,973.51
13 $ 16,057.51
14 $ 16,141.94
15 $ 16,226.82
16 $ 16,312.15
17 $ 16,397.92
18 $ 16,484.15
19 $ 16,570.83
20 $ 16,657.96
21 $ 16,745.56
22 $ 16,833.61
23 $ 16,922.13
24 $ 17,011.11
25 $ 17,100.56
26 $ 17,190.48
27 $ 17,280.87
28 $ 17,371.74
29 $ 17,463.09
30 $ 17,554.91
31 $ 17,647.22
32 $ 17,740.02
33 $ 17,833.30
34 $ 17,927.07
35 $ 18,021.34
36 $ 18,116.10
37 $ 18,211.36
38 $ 18,307.12
39 $ 18,403.39
40 $ 18,500.16
41 $ 18,597.44
42 $ 18,695.23
43 $ 18,793.54
44 $ 18,892.36
45 $ 18,991.70
46 $ 19,091.57
47 $ 19,191.96
48 $ 19,292.88
49 $ 19,394.32
50 $ 19,496.31
51 $ 19,598.82
52 $ 19,701.88
53 $ 19,805.48
54 $ 19,909.62
55 $ 20,014.32
56 $ 20,119.56
57 $ 20,225.35
58 $ 20,331.70
59 $ 20,438.62
60 $ 1,473,124.34
SCHEDULE 3B.2
PRINCIPAL AMORTIZATION SCHEDULE - TERM NOTE B
Payment Number Payment Amount
-------------- --------------
1 $55,451.21
2 $55,719.68
3 $55,989.46
4 $56,260.54
5 $56,532.94
6 $56,806.65
7 $57,081.69
8 $57,358.06
9 $57,635.77
10 $57,914.82
11 $58,195.22
12 $58,476.99
13 $58,760.11
14 $59,044.61
15 $59,330.48
16 $59,617.74
17 $59,906.39
18 $60,196.44
19 $60,487.89
20 $60,780.75
21 $61,075.03
22 $61,370.74
23 $61,667.87
24 $61,966.45
25 $62,266.47
26 $62,567.94
27 $62,870.88
28 $63,175.28
29 $63,481.15
30 $63,788.50
31 $64,097.35
32 $64,407.68
33 $64,719.52
34 $65,032.88
35 $65,347.74
36 $65,664.13
37 $65,982.06
38 $66,301.52
39 $66,622.53
40 $66,945.10
41 $67,269.22
42 $67,594.92
43 $67,922.19
44 $68,251.05
45 $68,581.49
46 $68,913.54
47 $69,247.20
48 $69,582.47
49 $69,919.37
50 $70,257.89
51 $70,598.06
52 $70,939.87
53 $71,283.34
54 $71,628.47
55 $71,975.27
56 $72,323.75
57 $72,673.92
58 $73,025.78
59 $73,379.35
60 $73,734.59
SCHEDULE 7.5
PENSION PLANS
401(k) Plan
SCHEDULE 7.10
ENVIRONMENTAL DISCLOSURES
Atmosphere Annealing
October 30, 2003
North Xxxxxx, Indiana
Letter of Warning from IDEM Air Section Chief on March 30, 1998 and Draft Permit
identifying enforcement issues dated February 11, 2001. These air issues, which
relate to permit of shot blast equipment, were resolved without penalty by
making an acknowledgment of new air requirements in accordance with IDEM's
August 24, 2001 letter.
Property was identified as contaminated upon acquisition in about 1995, and
immediate predecessor of current Atmosphere Annealing performed response actions
that cleaned up contamination after acquisition.
The Company site is a property under Indiana law because it routinely supplies
Section 312 reports under 42 USC 11022.
IDEM Air Compliance Branch sent violation letter for failure to send a
compliance certification. The Company will comply and send it.
Canton, Ohio
Letter of Violation issued April 21, 2003 by Ohio EPA related to alleged
hazardous waste regulations. The Company replied to the allegations, and the
Ohio EPA on October 14, 2003 found that the Company had "returned to
compliance".
Company received notices of violations of its sewer use permit from Canton's
Water Pollution Control Center on December 29, 1998; January 21, 1999; December
22, 1999; July 21, 2000; July 13, 2001; January 16, 2002; December 6, 2002, and
July 8, 2003. The Company has responded and where necessary corrected the
alleged violations.
Some contamination was cleaned up at time of acquisition in 1985 by current
Atmosphere Annealing's immediate predecessor.
Lansing, Michigan
Mt. Hope Street facility
Letter of Violation in 2000 from MDEQ Air Quality Division alleging nuisance
emissions. Company investigated allegations and concluded that the allegations
were unsubstantiated and were unlikely to recur even if they were substantiated.
No further written notice has been sent.
MDEQ communication in 2003 regarding odor complaint by alleged neighbor. The
company has not found any proof to support claim, although it is considering
some minor changes to exhaust stacks.
MDEQ Waste Management Division sent letter of warning alleging certain waste
reporting and recordkeeping violations. The Company has resolved the allegations
per the MDEQ WMD=s letter of December 11, 1998.
Xxxxxxx Street facility
Atmosphere Annealing was identified as potentially responsible party (PRP) by US
EPA for generating material allegedly released at AABCO facility in Detroit,
Michigan, which resulted in the United States incurring response costs. The
company later paid $3,000 to PRP group to resolve claims for these response
costs.
The Company, as a result of a RCRA inspection, received notice in December 2001
about RCRA violations related to containers, reporting and recordkeeping
requirements. The Company's consultant indicates that those items have been
resolved.
SCHEDULE 9.3
GUARANTEE MATTERS
None.
SCHEDULE 9.5
PERMITTED LIENS
Xxxxx County, Ohio
SECURED PARTY DATE FILE NUMBER
USS/KOBE Steel Company 03-19-99 76799
Textron Financial Corporation 02-23-01 U0095395
Ohio
SECURED PARTY DATE FILE NUMBER
Citicorp Del-Lease, Inc. 09-28-98 AP0087792
USS/KOBE Steel Company 03-24-99 AP0134391
Textron Financial Corporation 02-23-01 AP313790
Michigan
SECURED PARTY DATE FILE NUMBER
Norwest Financial Leasing 08-24-99 D558186
Citicorp Del Lease, Inc. 09-20-99 D567782
Pitney Xxxxx Credit Corporation 04-04-00 D638249
American Axle & Manufacturing, Inc. 07-24-02 D938102
Republic Engineered Products, LLC 12-03-02 0000000000-3
SCHEDULE 9.11
EXISTING INVESTMENTS
None.
SCHEDULE 9.13
PERMITTED DEBT
Textron Financial Corporation $69,545.29
Certain indebtedness in connection with bonds on the property which is secured
by cash collateral.
