EXHIBIT 10.1
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LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") is made and
entered into as of June 1, 1998 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 January 14, 1997 between Bank and Borrower.
SECTION 1. THE LOAN
1.1.1 The Revolver-To-Term Loan. Bank will loan to Borrower an
amount not to exceed Thirteen Million Eight Hundred Thousand Dollars
($13,800,000) outstanding in the aggregate at any one time (the
"Revolver-To-Term Loan"). Borrower may borrow, repay and reborrow all or
part of the Revolver-To-Term Loan in accordance with the terms of the
Revolver-To-Term Note. All borrowings of the Revolver-To-Term Loan must be
made before June 30, 2000 at which time all unpaid principal under the
Revolver-To-Term Loan shall be converted to a fully amortizing loan as set
forth in subsection 1.1.3. The Revolver-To-Term Loan shall be evidenced by a
promissory note (the "Revolver-To-Term Note") on the standard form used by
Bank for commercial loans. Bank shall enter each amount borrowed and repaid
in Bank's records and such entries shall be deemed to be the amount of the
Revolver-To-Term Loan outstanding. Omission of Bank to make any such entries
shall not discharge Borrower of its obligation to repay in full with interest
all amounts borrowed.
1.1.2 The Standby L/C Sublimit. As a sublimit to the Revolving Loan,
Bank shall issue, as Borrower may request from time to time 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 reasonably 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 Four Million Dollars ($4,000,000.00) and shall reduce, dollar for
dollar, the maximum amount available under the Revolving-To-Term-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 30, 2000. At Borrower's request, Bank will issue L/C's on behalf of
Borrower's subsidiaries, including but not limited to: 1) Xxxxxxx Strong-Tie
Company, Inc.; 2) Xxxxxxx Dura-Vent Company, Inc. and 3) Xxxxxxx Strong-Tie,
International Inc., so long as the Borrower executes the Bank's standard
form for L/C applications and reimbursement agreement.
Borrower currently maintains an outstanding L/C in the amount of Four Hundred
Seventy Thousand Pounds Sterling (GBP470,000) maturing January 1, 1999 and an
L/C in the amount of Three Hundred Thirty Three Thousand Nine Hundred Ninety
Eight Dollars and fifty cents ($333,998.50) maturing on June 1, 1999. These
L/C's shall now be considered as utilization under the L/C sublimit.
1.1.3 The Term Loan. At Borrower's request and solely to repay the
Revolver-To-Term Loan, Bank will loan to Borrower the sum outstanding at the
maturity of the Revolver-To-Term Loan in one disbursement on or before June
1, 2000 (the "Term Loan"). In the event of a prepayment of principal of the
Term Loan and payment of any resulting fees, any prepaid amounts shall be
applied to the scheduled principal payments in the reverse order of their
maturity. The Term Loan shall be evidenced by the Revolver-To-Term Note.
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 the promissory note
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-To-Term Loan shall
be used for general working capital purposes and acquisitions.
1.4.1 Interest. The unpaid principal balance of the Revolving-To-Term
Loan shall bear interest at the rate(s) specified in the Note and selected by
Borrower.
1.4.2 Interest. The unpaid principal balance of the Term Loan shall
bear interest at the rate(s) specified in the Note and selected by Borrower.
1.5 Unused Fee. On June 30 and December 30 of each year beginning
December 30, 1998, 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 to Term Loan.
1.6 Stand-by Letter of Credit Fees. Borrower agrees to pay Bank three
quarters of one percent (.75%) 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 Thirteen Million Eight Hundred Thousand Dollars ($13,800,000), 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 03/31/98, together with
supporting schedules, and a consolidated income statement for the three (3)
months ended 03/31/98, have heretofore been furnished to Bank, and are true
and complete in all material respects and fairly represent the financial
condition of Borrower during the period covered thereby. Since 03/31/98,
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.
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, to the best of its knowledge and
belief, 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, to the best of its knowledge and belief, 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., and its subsidiaries;
(b) Within one hundred twenty (120) days after the close of each
fiscal year, a consolidated financial statement of the Borrower accompanied
by the unqualified opinion of an independent certified public accountant.
(c) Give written notice to Bank within fifteen (15) days of any
guaranty issued obligating Borrower or Guarantors;
(d) Notice of occurrence of any Event of Default or of any event,
condition or occurrence which, with the giving of notice or the passage of
time or both, would constitute an Event of Default;
(e) Copies of any amendments to Borrower's loan documents with
Well Fargo Bank;
(f) 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;
(g) 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
(h) 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 One Hundred Million Dollars ($100,000,000.00),
plus fifty percent (50%) of net income after 12/31/97 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, and monies due from affiliates (including
officers, shareholders and directors).
4.5 Adjusted Total Liabilities to Tangible Net Worth. Borrower will at
all times maintain a ratio of adjusted total liabilities to tangible net
worth of not greater than 1.5:1.0. "Adjusted Total Liabilities" shall mean
total liabilities plus all guarantees and similar contingent liabilities of
Borrower and Guarantors.
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. During the Term Loan period, Borrower will maintain a
ratio of Cash Flow to Debt Service of not less than 1.5:1.0. 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 except as otherwise provided in Section
5.2.
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; (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); and (f) unsecured
indebtedness of subsidiaries in an aggregate amount not to exceed Ten Million
Dollars ($10,000,000).
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. Borrower will not become a guarantor or surety, pledge
its credits or properties in any manner in excess of $25,000,000 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 Twenty Million Dollars ($20,000,000) in any
fiscal year.
5.6 Lease Obligations. Borrower or Subsidiary will not incur new
operating lease obligations as lessee which would result in aggregate lease
payments for any fiscal year exceeding Fifteen Million Dollars
($15,000,000). Each said lease shall be of equipment or real property for
use by Borrower or Subsidiary in the ordinary course of its business.
5.7 Except for the amendment anticipated to be executed prior to June
30, 1998, 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.
5.8 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;
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, other than the
default referred to in subsection 6.1 above, and such default shall not be
cured within ten (10) business days after the occurrence thereof;
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.
6.7 Borrower or any Guarantor suffers a change in Control. "Control"
shall mean the possession, directly or indirectly, of the power to direct, or
cause the direction of, the management or policies of the Borrower or
Guarantor, through the ownership of fifty one percent (51%) or more of voting
securities. For purposes of this section, change in Control shall not apply
to either Xxxxxxx Xxxxxxx or Xxxxxx X Xxxxxxxxx.
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.
INTENTIONALLY LEFT BLANK
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/Xxxxxxx xxxxxxx /s/Lebbeus S. Case, Jr.
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Xxxxxxx Xxxxxxx Lebbeus S. Case, Jr.
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
ACKNOWLEDGED BY GUARANTORS:
XXXXXXX STRONG-TIE COMPANY, INC.
/s/Xxxxxx Xxxxxxxxx /s/Xxxxx Xxxxxx
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XXXXXXX DURA-VENT COMPANY, INC.
/s/Xxxxxx Xxxxxxxxx /s/Xxxxx Xxxxxx
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