EXHIBIT 10.2
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LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") is made and
entered into as of January 14, 1997 by and between Xxxxxxx Manufacturing
Co., Inc., a California Corporation ("Borrower") and UNION BANK OF
CALIFORNIA, N.A. ("Bank"). This Agreement amends and restates in its
entirety that certain loan agreement dated July 15, 1995 between Bank and
Xxxxxxx Manufacturing Co., Inc..
SECTION 1. THE LOAN
1.1.1 The Revolving Loan. Bank will loan to Borrower an amount not to
exceed Thirteen Million and Eight Hundred Thousand Dollars ($13,800,000.00)
outstanding in the aggregate at any one time (the "Revolving Loan").
Borrower may borrow, repay and reborrow all or part of the Revolving Loan
in accordance with the terms of the Revolving Note. All borrowings of the
Revolving Loan must be made before June 1, 1998, at which time all unpaid
principal and interest of the Revolving Loan shall be due and payable. The
Revolving Loan shall be evidenced by a promissory note (the "Revolving
Note") on the standard form used by Bank for commercial loans.
1.1.2 The Standby L/C Sublimit. As a sublimit to the Revolving Loan,
Bank shall issue, for the account of Borrower, one or more irrevocable,
standby or commercial letters of credit (individually, an "L/C" and
collectively, the "L/Cs"). All such L/Cs shall be drawn on such terms and
conditions as are acceptable to Bank. The aggregate amount available to be
drawn under all outstanding L/Cs and the aggregate amount of unpaid
reimbursement obligations under drawn L/Cs shall not exceed Two Million
Dollars ($2,000,000.00) and shall reduce, dollar for dollar, the maximum
amount available under the Revolving Loan. Each L/C shall be governed by
the terms of (and Borrower agrees to execute) Bank's standard form for L/C
applications and reimbursement agreements. No L/C may be issued for a
period exceeding 12 months, and no L/C shall expire after June 1, 1998. At
Borrower's request, Bank will issue L/C's with the following affiliates
named as the Account Party, so long as the Borrower executes the Bank's
standard form for L/C applications and reimbursement agreements:
1. Xxxxxxx Holdings, Inc.
2. Xxxxxxx Strong-Tie, International, Inc.
3. Xxxxxxxx-Xxxxxxx Fastening Systems, Inc.
4. Xxxxxxx Strong-Tie Company, Inc.
5. Xxxxxxx Dura-Vent Company, Inc.
Borrower currently maintains an outstanding L/C in the amount of Two
Hundred and Seventy-five Thousand Pounds Sterling (GBP275,000) maturing June
15, 1997 and an L/C in the amount of Four Hundred and Sixteen Thousand Two
Hundred Eighty Four Dollars and fifty cents ($416,284.50) maturing on June
1, 1997. These L/C's shall now be considered as utilization under the L/C
sublimit.
1.1.3 The Term Loan. Solely to repay the Revolving Loan, Bank will
loan to Borrower the sum outstanding related to an acquisition by Borrower
at the maturity of the Revolving Loan in one disbursement on or before June
1, 1998 provided Borrower is in compliance with all other terms and
conditions of this Agreement. The principal amount of the Term Loan shall
be amortized over a maximum of a three (3) year period and shall be repaid
in equal monthly installments, as set forth in a promissory note executed
by Borrower on or before said date.
1.2 Terminology.
As used herein the word "Loan" shall mean, collectively, all the
credit facilities described above.
As used herein the word "Note" shall mean, collectively, all the
promissory notes described above.
As used herein, the words "Loan Documents" shall mean all
documents executed in connection with this Agreement.
1.3 Purpose of Loan. The proceeds of the Revolving Loan shall be used
for general working capital purposes and acquisitions.
1.4.1 Interest. The unpaid principal balance of the Revolving Loan
shall bear interest at the rate(s) specified in the Revolving Note; or, at
borrower's option, Bank will make available under the Line advances bearing
interest at (1.00%) above the London Interbank Offer Rate ("LIBOR"), quoted
by the Bank at the time of Borrower's election, provided Borrower shall
give Bank two (2) business days prior written notice of said election, for
amounts greater than Two Hundred and Fifty Thousand Dollars ($250,000), and
for periods of not less than one (1) month and not longer than one (1)
year, but at no time shall such periods extend beyond June 1, 1998.
1.4.2 Interest. The unpaid principal balance of the Term Loan shall
bear interest at the rate(s) specified in the Term Note; or, at borrower's
option, Bank will make available under the Term Loan advances bearing
interest at (1.25%) above the London Interbank Offer Rate ("LIBOR"), quoted
by the Bank at the time of Borrower's election, provided Borrower shall
give Bank two (2) business days prior written notice of said election, for
amounts greater than Two Hundred and Fifty Thousand Dollars ($250,000), and
for periods of not less than one (1) month and not longer than one (1)
year, but at no time shall such periods extend beyond the maturity of the
term note.
1.5 Unused Fee. On June 15 and December 15 of each year, or the
earlier termination of the Loan, Borrower shall pay to Bank a fee of one
eighth of one percent (.125%) per year on the unused portion of the
Revolving Loan.
1.6 Stand-by Letter of Credit Fees. Borrower agrees to pay Bank one
percent (1%) per annum of the principal face sum of all L/C's.
1.7 Disbursement. Upon execution hereof, Bank shall disburse the
proceeds of the Loan as provided in Bank's standard form Authorization
executed by Borrower.
1.8 Controlling Document. In the event of any inconsistency between
the terms of this Agreement and any Note or any of the other Loan
Documents, the terms of such Note or other Loan Documents will prevail over
the terms of this Agreement.
SECTION 2. CONDITIONS PRECEDENT
Bank shall not be obligated to disburse all or any portion of the
proceeds of the Loan unless at or prior to the time for the making of such
disbursement, the following conditions have been fulfilled to Bank's
satisfaction:
2.1 Compliance. Borrower shall have performed and complied with all
terms and conditions required by this Agreement to be performed or complied
with by it prior to or at the date of the making of such disbursement and
shall have executed and delivered to Bank the Note and other documents
deemed necessary by Bank.
2.2 Guaranties. Xxxxxxx Strong-Tie Company, Inc., and Xxxxxxx Dura-
Vent Company, Inc. (collectively the "Guarantors") shall have executed and
delivered to Bank their respective continuing guaranties, each in the
amount of Fourteen Million One Hundred Thousand Dollars ($14,100,000), in
form and amount satisfactory to Bank.
2.3 Borrowing Resolution. Borrower shall have provided Bank with
certified copies of resolutions duly adopted by the Board of Directors of
Borrower, authorizing this Agreement and the Loan Documents. Such
resolutions shall also designate the persons who are authorized to act on
Borrower's behalf in connection with this Agreement and to do the things
required by Borrower pursuant to this Agreement.
2.4 Continuing Compliance. At the time any disbursement is to be
made, there shall not exist any event, condition or act which constitutes
an event of default under Section 6 hereof or any event, condition or act
which with notice, lapse of time or both would constitute such event of
default; nor shall there be any such event, condition, or act immediately
after the disbursement were it to be made.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
3.1 Authority to Borrow. The execution, delivery and performance of
this Agreement, the Note and all other agreements and instruments required
by Bank in connection with the Loan are not in contravention of any of the
terms of any indenture, agreement or undertaking to which Borrower is a
party or by which it or any of its property is bound or affected.
3.2 Financial Statements. The financial statements of Borrower,
including both a consolidated balance sheet at September 30, 1996, together
with supporting schedules, and a consolidated income statement for the nine
(9) months ended September 30, 1996, have heretofore been furnished to
Bank, and are true and complete and fairly represent the financial
condition of Borrower during the period covered thereby. Since September
30, 1996, there has been no material adverse change in the financial
condition or operations of Borrower.
3.3 Litigation. There is no litigation or proceeding pending or
threatened against Borrower or any of its property which is reasonably
likely to affect the financial condition, property or business of Borrower
in a materially adverse manner or result in liability in excess of
Borrower's insurance coverage.
3.4 Default. Borrower is not now in default in the payment of any of
its material obligations, and there exists no event, condition or act which
constitutes an event of default under Section 6 hereof and no condition,
event or act which with notice or lapse of time, or both, would constitute
an event of default.
3.5 Organization. Borrower is duly organized and existing under the
laws of the state of its organization, and has the power and authority to
carry on the business in which it is engaged and/or proposes to engage.
3.6 Authorization. This Agreement and all things required by this
Agreement have been duly authorized by all requisite action of Borrower.
3.7 Compliance With Laws. Borrower is not in violation with respect
to any applicable laws, rules, ordinances or regulations which materially
affect the operations or financial condition of Borrower.
3.8 ERISA. Any defined benefit pension plans as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), of
Borrower meets, as of the date hereof, the minimum funding standards of
Section 302 of ERISA, and no Reportable Event or Prohibited Transaction as
defined in ERISA has occurred with respect to any such plan.
3.9 Continuing Representations. These representations shall be
considered to have been made again at and as of the date of each
disbursement of the Loan and shall be true and correct as of such date or
dates.
SECTION 4. AFFIRMATIVE COVENANTS
Until the Note and all sums payable pursuant to this Agreement or any
other of the Loan Documents have been paid in full, unless Bank waives
compliance in writing, Borrower agrees that:
4.1 Use of Proceeds. Borrower will use the proceeds of the Loan only
as provided in subsection 1.3 above.
4.2 Records. Borrower will keep and maintain full and accurate
accounts and records of its operations according to generally accepted
accounting principles.
4.3 Information Furnished. Borrower will furnish to Bank:
(a) Within sixty (60) days after the close of each fiscal
quarter, a consolidated and consolidating financial statement, to include a
balance sheet, income statement, statement of cash flow and consolidating
schedules for Xxxxxxx Manufacturing Company, Inc., Xxxxxxx Holdings, Inc.,
Xxxxxxx Strong-Tie Company, Inc., Xxxxxxx Strong-Tie International, Inc.,
Xxxxxxx Dura-Vent Company, Inc., Xxxxxxxx-Xxxxxxx Fastening Systems, Inc,
and Xxxxxxx Venture Capital;
(b) Within one hundred twenty (120) days after the close of each
fiscal year, an unqualified, audited consolidated financial statement of
Xxxxxxx Manufacturing Company, Inc., prepared by an independent certified
public accountant acceptable to Bank;
(c) Give written notice within fifteen (15) days of all
litigation affecting Borrowers or Guarantors in which the amount is Five
Million Dollars ($5,000,000.00) or more;
(d) Give written notice to Bank within fifteen (15) days of any
property loss affecting Borrowers or Guarantors in which the amount is Five
Million Dollars ($5,000,000.00) or more;
(e) Notice of occurrence of any Event of Default or of any event,
condition or occurrence which, with the giving of notice or the message of
time or both, would constitute an Event of Default;
(f) Copies of any amendments to Borrower's loan documents with
Well Fargo Bank;
(g) Prompt written notice to Bank of all events of default
under any of the terms or provisions of this Agreement or of any other
agreement, contract, document or instrument entered, or to be entered into
with Bank; and of any litigation which, if decided adversely to Borrower,
would have a material adverse effect on Borrower's financial condition; and
of any other matter which has resulted in, or is likely to result in, a
material adverse change in its financial condition or operations;
(h) Prior written notice to Bank of any changes in Borrower's
officers and other senior management; Borrower's name; and location of
Borrower's assets, principal place of business or chief executive office;
and
(i) Give written notice at least 30 days prior to the proposed
closing date of any acquisition in excess of Eight Million Dollars
($8,000,000.00), providing a description of the business or assets to be
acquired and the terms of the acquisition.
4.4 Tangible Net Worth. Borrower will at all times maintain Tangible
Net Worth of not less than Fifty Million Dollars ($50,000,000.00), as of
December 30, 1996 plus fifty percent (50%) of net income measured on a
quarterly basis. "Tangible Net Worth" shall mean net worth increased by
indebtedness of Borrower subordinated to Bank and decreased by patents,
licenses, trademarks, trade names, goodwill and other similar intangible
assets, organizational expenses, security deposits, prepaid costs and
expenses and monies due from affiliates (including officers, shareholders
and directors).
4.5 Debt to Tangible Net Worth. Borrower will at all times maintain a
ratio of total liabilities to tangible net worth of not greater than
1.50:1.0.
4.6 Profit From Operations. Borrower will maintain a net profit from
operations, as defined by generally accepted accounting principles, of any
positive amount for each fiscal year.
4.7 Cash Flow. Borrower will maintain a ratio of Cash Flow to Debt
Service of not less than 1.50:1.0. Compliance with this subsection shall
be measured as of the end of each fiscal year. "Cash Flow" shall mean net
profit before taxes to which interest, net of capitalized interest,
depreciation, amortization, and other noncash expenses are added for the
twelve (12) month period immediately preceding the date of calculation.
"Debt Service" shall mean interest expenses plus prior period current
portion of long-term debt, including subordinated debt payments.
4.8 Litigation and Attorneys' Fees. Borrower will pay promptly to
Bank upon demand, reasonable attorneys' fees (including but not limited to
the reasonable estimate of the allocated costs and expenses of in-house
legal counsel and legal staff) and all costs and other expenses paid or
incurred by Bank in collecting, modifying or compromising the Loan or in
enforcing or exercising its rights or remedies created by, connected with
or provided for in this Agreement or any of the Loan Documents, whether or
not an arbitration, judicial action or other proceeding is commenced. If
such proceeding is commenced, only the prevailing party shall be entitled
to attorneys' fees and court costs.
4.9 Additional Requirements. Borrower will promptly, upon demand by
Bank, take such further action and execute all such additional documents
and instruments in connection with this Agreement as Bank in its reasonable
discretion deems necessary, and promptly supply Bank with such other
information concerning its affairs as Bank may request from time to time.
4.10 Bank Expenses. Borrower will pay or reimburse Bank for all
costs, expenses and fees incurred by Bank in preparing and documenting this
Agreement and the Loan, and all amendments and modifications thereof,
including but not limited to all filing and recording fees, costs of
appraisals, insurance and attorneys' fees, including the reasonable
estimate of the allocated costs and expenses of in-house legal counsel and
legal staff.
SECTION 5. NEGATIVE COVENANTS
Until the Note and all other sums payable pursuant to this Agreement
or any other of the Loan Documents have been paid in full, unless Bank
waives compliance in writing, Borrower agrees that:
5.1 Encumbrances and Liens. Borrower will not create, assume or
suffer to exist any mortgage, pledge, security interest, encumbrance, or
lien in all or any portion of its accounts receivable or other rights to
payment, general intangibles, inventory or equipment.
5.2 OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to
Bank; (b) trade debt incurred by Borrower in the normal course of its
business; (c) the existing liabilities of Borrower disclosed to Bank on its
financial statement referenced in Section 3.2 hereof; (d) indebtedness
arising under existing real estate secured loans, provided however that
such indebtedness shall not exceed the lesser of (I) 100% of the purchase
price of the real property or (ii) the appraised value; and (e) unsecured
indebtedness of Borrower to Xxxxx Fargo Bank in an aggregate amount not to
exceed Nine Million and Two Hundred Thousand Dollars ($9,200,000.00).
5.3 Sale of Assets, Liquidation or Merger. Borrower will not
liquidate, dissolve, or enter into any consolidation, merger, partnership
or other combination, nor convey, nor sell, nor lease all or the greater
part of its assets or business; nor permit the dissolution, merger,
consolidation or sale of all or any greater part of the assets of any of
Borrower's affiliates or subsidiaries.
5.4 Guaranties. Borrowers will not become a guarantor or surety,
pledge its credits or properties in any manner in excess of $1,000,000 in
the aggregate
5.5 Acquisitions. Borrower will not make any acquisitions or acquire
any net assets, other than fixed or capital assets acquired in the normal
course of business, in excess of Fifteen Million Dollars ($15,000,000) in
any fiscal year.
5.6 Except for the amendment anticipated to be executed prior to
January, 1997, the terms of which have been advised to the Bank, Borrower
will not amend, alter, supplement or otherwise modify the terms of
Guarantor's existing indebtedness to Xxxxx Fargo Bank, N.A.
5.7 Borrower will not transfer the proceeds of any loan or advance
hereunder, or any other asset of Borrower to any affiliate or Guarantor,
unless such transfer is evidenced by a valid and enforceable instrument or
statement or account.
SECTION 6. EVENTS OF DEFAULT
The occurrence of any of the following events ("Events of Default")
shall terminate any obligation on the part of Bank to make or continue the
Loan and automatically, unless otherwise provided under the Note, shall
make all sums of interest and principal and any other amounts owing under
the Loan immediately due and payable, without notice of default,
presentment or demand for payment, protest or notice of nonpayment or
dishonor, or any other notices or demands:
6.1 Borrower shall default in the due and punctual payment of the
principal of or the interest on the Note or any of the other Loan Documents
and such default shall not be cured within ten (10) business days after the
occurrence thereof; or
6.2 Any default shall occur under the Note; or
6.3 Borrower or any Guarantor shall default in the due performance or
observance of any covenant or condition of the Loan Documents;
6.4 Any guaranty required hereunder is breached or becomes
ineffective, or any Guarantor disavows or attempts to revoke or terminate
such guaranty; or
6.5 If, in the opinion of Bank, there is materially adverse change in
the financial condition of Borrower or any Guarantor, or for any reason
Bank believes that the prospect of payment or performance pursuant to the
Credit Facilities, any other indebtedness of Borrower to Bank, or any other
agreement or instrument required by Bank in connection with the Credit
Facilities has been impaired; or
6.6 Borrower or any Guarantor shall commit or do, or fail to commit or
do, any act or thing which would constitute an event of default under any
of the terms of any other agreement, document, or instrument executed, or
to be executed by it and concerning a financial obligation of Borrower or
any such Guarantor (including without limitation the existing loan
documents with Xxxxx Fargo Bank), and such default shall not have been
cured within any applicable period of grace provided in such agreement,
document or instrument.
SECTION 7. MISCELLANEOUS PROVISIONS
7.1 Additional Remedies. The rights, powers and remedies given to
Bank hereunder shall be cumulative and not alternative and shall be in
addition to all rights, powers and remedies given to Bank by law against
Borrower or any other person, including but not limited to Bank's rights of
setoff or banker's lien.
7.2 Nonwaiver. Any forbearance or failure or delay by Bank in
exercising any right, power or remedy hereunder shall not be deemed a
waiver thereof and any single or partial exercise of any right, power or
remedy shall not preclude the further exercise thereof. No waiver shall be
effective unless it is in writing and signed by an officer of Bank.
7.3 Inurement. The benefits of this Agreement shall inure to the
successors and assigns of Bank and the permitted successors and assignees
of Borrower, and any assignment of Borrower without Bank's consent shall be
null and void.
7.4 Applicable Law. This Agreement and all other agreements and
instruments required by Bank in connection therewith shall be governed by
and construed according to the laws of the State of California.
7.5 Amendments. This Agreement may be amended only in writing signed
by all parties hereto.
7.6 Integration Clause. Except for documents and instruments
specifically referenced herein, this Agreement constitutes the entire
agreement between Bank and Borrower regarding the Loan and all prior
communications verbal or written between Borrower and Bank shall be of no
further effect or evidentiary value.
7.7 Construction. The section and subsection headings herein are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
7.8 Amendments. This Agreement may be amended only in writing signed
by all parties hereto.
7.9 Counterparts. Borrower and Bank may execute one or more
counterparts to this Agreement, each of which shall be deemed an original.
SECTION 8. SERVICE OF NOTICES
8.1 Any notices or other communications provided for or allowed
hereunder shall be effective only when given by one of the following
methods and addressed to the respective party at its address given with the
signatures at the end of this Agreement and shall be considered to have
been validly given: (a) upon delivery, if delivered personally; (b) upon
receipt, if mailed, first class postage prepaid, with the United States
Postal Service; (c) on the next business day, if sent by overnight courier
service of recognized standing; and (d) upon telephoned confirmation of
receipt, if telecopied.
8.2 The addresses to which notices or demands are to be given may be
changed from time to time by notice delivered as provided above.
THIS AGREEMENT is executed on behalf of the parties by duly authorized
officers as of the date first above written.
UNION BANK OF CALIFORNIA, N.A.
/s/Xxxxx Xxxxxxx /s/Xxxxxxx Xxxxxxx
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Xxxxx Xxxxxxx Xxxxxxx Xxxxxxx
Vice President Vice President
Address:
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telephone: (000)000-0000 FAX: (000)000-0000
XXXXXXX MANUFACTURING CO., INC.
/s/Xxxxxx Xxxxxxxxx /s/Xxxxx Xxxxxx
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Xxxxxx Xxxxxxxxx Xxxxx Xxxxxx
President Chief Financial Officer
Address:
0000 Xxxxxx Xxxxx, xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Telephone: (000)000-0000 FAX: (000)000-0000
GUARANTORS
XXXXXXX STRONG-TIE COMPANY INC.
/s/Xxxxxx Xxxxxxxxx /s/Xxxxx Xxxxxx
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XXXXXXX DURA-VENT COMPANY, INC.
/s/Xxxxxxx Xxxxxxx /s/Xxxxx Xxxxxx
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