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EXHIBIT 10.14
Execution Copy
LOAN AGREEMENT
BETWEEN
XXX FUNDING, L.L.C.
AND
BORROWER AND GUARANTY/MAXCO, INC.
(AS SPECIFIED IN SCHEDULE I)
RELATING TO
XXX FUNDING, L.L.C.
LOAN PROGRAM NOTES
(VARIABLE RATE SERIES A)
DATED AS OF DECEMBER 1, 1997
The interest of XXX Funding, L.L.C., the Obligor, subject to certain specified
exclusions in this Loan Agreement, has been assigned to Michigan National Bank,
as Trustee under a Master Trust Indenture dated as of December 1, 1997.
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS...............................................................................Page 1
Section 1.1. Definitions...................................................................Page 1
Section 1.2. Rules of Interpretation.......................................................Page 3
Section 1.3. Headings......................................................................Page 3
ARTICLE II REPRESENTATIONS..........................................................................Page 3
Section 2.1. Representations of the Obligor................................................Page 3
Section 2.2. Representations of the Borrower...............................................Page 4
ARTICLE III ISSUANCE OF THE NOTES; USE OF PROCEEDS..................................................Page 5
Section 3.1. Agreement to Issue Notes; Application of Note Proceeds........................Page 5
Section 3.2. Obligor Makes No Warranties Regarding the Loan Project........................Page 5
ARTICLE IV REPAYMENT PROVISIONS.....................................................................Page 6
Section 4.1. The Loan......................................................................Page 6
Section 4.2. Repayment of the Loan and Payment of Other Amounts Payable....................Page 6
Section 4.3. No Defense or Setoff--Unconditional Obligation................................Page 7
Section 4.4. Assignment and Pledge of Obligor's Rights.....................................Page 7
ARTICLE V SPECIAL COVENANTS AND AGREEMENTS..........................................................Page 7
Section 5.1. Obligor's, Trustee's, and Bank's Right of Access to
Loan Project..................................................................Page 7
Section 5.2. Borrower to Maintain Existence; Conditions Under
Which Exceptions Permitted....................................................Page 8
Section 5.3. Indemnification Covenants.....................................................Page 8
Section 5.4. Insurance.....................................................................Page 9
Section 5.5. Eminent Domain...............................................................Page 10
Section 5.6. Qualification in State.......................................................Page 10
Section 5.7. Letter of Credit.............................................................Page 10
Section 5.8. Obligor's Limited Liability..................................................Page 10
Section 5.9. Compliance with Laws.........................................................Page 10
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES..........................................................Page 11
Section 6.1. Events of Default............................................................Page 11
Section 6.2. Remedies on Default..........................................................Page 12
Section 6.3. Agreement to Pay Attorneys' Fees and Expenses................................Page 13
Section 6.4. No Remedy Exclusive..........................................................Page 13
Section 6.5. No Additional Waiver Implied by One Waiver...................................Page 13
ARTICLE VII PREPAYMENT OF LOAN PAYMENTS............................................................Page 14
Section 7.1. General Option to Prepay the Loan Payments...................................Page 14
Section 7.2. Obligation to Prepay Loan Payments on Failure to Renew
or Replace Letter of Credit and Other Events.................................Page 14
Section 7.3. Notice of Prepayment.........................................................Page 14
ARTICLE VIII MISCELLANEOUS.........................................................................Page 15
Section 8.1. Notices......................................................................Page 15
Section 8.2. Assignments..................................................................Page 16
Section 8.3. Severability.................................................................Page 16
Section 8.4. Execution of Counterparts....................................................Page 16
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Section 8.5. Amounts Remaining in Any Fund or With Trustee................................Page 16
Section 8.6. Amendments, Changes, and Modifications.......................................Page 17
Section 8.7. Governing Law................................................................Page 17
Section 8.8. Authorized Borrower Representative...........................................Page 17
Section 8.9. Term of Loan Agreement.......................................................Page 17
Section 8.10. Binding Effect..............................................................Page 17
Section 8.11. References to Bank and Letter of Credit.....................................Page 18
Section 8.12. Obligor Not Liable..........................................................Page 18
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LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Loan Agreement") dated as of December 1,
1997, by and between XXX FUNDING, L.L.C., a Michigan limited liability company
(the "Obligor"), and the BORROWER specified in Schedule I (the "Borrower");
RECITALS:
A. Pursuant to a Master Indenture dated as of December 1, 1997 (the
"Master Indenture") between the Obligor and Michigan National Bank (the
"Trustee"), as supplemented by the Related Supplement described in Schedule I to
this Loan Agreement (the "Related Supplement") (the Master Indenture and the
Related Supplement, together, the "Indenture"), the Obligor is issuing an
Installment (the "Installment") of its Loan Program Notes of the Series
described in Schedule I (the Notes of such Series, whether issued pursuant to
the Installment or not, for purposes of this Loan Agreement, the "Notes").
B. From the proceeds of the Installment the Obligor desires to loan the
amount set forth in Schedule I (the "Loan") to the Borrower for the funding of
the project set forth in Schedule I (the "Loan Project"), a portion of which
Loan will be used by the Obligor to defray the Borrower's Pro Rata Share of
Issuance Costs.
C. Under the terms of this Loan Agreement, the Borrower will make Loan
Payments, and will be responsible for paying its Pro Rata Share of all Issuance
Costs and Administrative Expenses. It is understood that the Obligor's
obligation with respect to the Notes is subject to the limitations that
principal of and interest on the Notes and any other costs or pecuniary
liability relating to the Notes, the Loan or any proceeding, document, or
certification incidental to the foregoing, including this Loan Agreement, shall
never constitute nor give rise to a charge against the general credit, general
funds or assets of the Obligor (including funds pertaining to other loans or
activities of the Obligor), but shall be a limited obligation of the Obligor
payable only as provided in the Indenture.
NOW, THEREFORE, in consideration of the respective representations and
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless otherwise indicated, all words and
phrases defined in the Indenture shall have the same meanings in this Loan
Agreement. The following terms have been defined in the opening paragraph and
Recitals of this Loan Agreement: "Borrower," "Indenture," "Installment," "Loan,"
"Loan Project," "Master Indenture," "Notes," "Related Supplement" and "Trustee."
In addition, the following words and phrases shall have the following meanings
unless the context in which they are used shall indicate another or different
meaning:
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"Administrative Expenses" include all fees and expenses, other than
Issuance Costs, payable with respect to the administration and maintenance of
the Indenture and the payment and remarketing, if applicable, of the Notes,
including, but not limited to, the fees and expenses of the Trustee, the fees
and expenses of the Remarketing Agent, the annual fees and expenses of each
Rating Agency rating the Notes, the cost of providing amendments to any
disclosure document that may be necessary or desirable, fees payable to the Bank
for the Letter of Credit (unless paid directly to the Bank by the Borrower
pursuant to the Reimbursement Agreement) and annual administrative fees and
expenses payable to the Obligor.
"Authorized Borrower Representative" means the person at the time
designated to act on behalf of the Borrower by written certificate furnished to
the Obligor. That certificate may designate an alternate or alternates. In the
event that all persons so designated become unavailable or unable to act and the
Borrower fails to designate a replacement within ten days after such
unavailability or inability to act, the Obligor may appoint an interim
Authorized Borrower Representative until such time as the Borrower designates
that person.
"Event of Default" means any occurrence or event specified as such in
and defined as such by Section 6.1 hereof.
"Issuance Costs" mean items of expense payable or reimbursable directly
or indirectly by the Obligor and related to the authorization, sale and issuance
of the Notes, which items of expense shall include, but not be limited to,
Obligor application and issuance fees, printing costs, costs of reproducing
documents, filing and recording fees, initial fees and charges of the Trustee,
note discounts, legal fees and charges, professional consultants' fees, costs of
credit ratings, fees and charges for execution, transportation and safekeeping
of the Notes, and other costs, charges and fees in connection with the
foregoing.
"Loans" means, collectively, the Loan and all other loans made by the
Obligor to other borrowers from the proceeds of the Notes.
"Loan Payments" means the amounts required to be paid by the Borrower
pursuant to Section 4.2(a) hereof.
"Note Placement Agreement" means the Note Placement Agreement by and
between the Obligor and Placement Agent relating to the Installment.
"Person" or "persons" means natural persons, partnerships, limited
liability companies, firms, associations, corporations and public bodies.
"Placement Agent" means First of America Securities, Inc.
"Pro Rata Share" means (i) with respect to the payment of Issuance
Costs, a fraction the numerator of which is the original principal amount of the
Loan and the denominator is the original principal amount of all Loans funded
from the Installment; (ii) with respect to the indemnity provisions of Section
5.3 of this Loan Agreement, a fraction the numerator of which is the original
principal amount of the Loan and the denominator of which is the original
principal amount of all Loans funded from proceeds of the Notes (whether funded
from the
LOAN AGREEMENT
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Installment or not), (iii) with respect to payment of Administrative Expenses, a
fraction the numerator of which is the weighted average principal amount of the
Loan outstanding during the period for which such Administrative Expenses are
payable and the denominator of which is the weighted average principal amount of
all Loans outstanding during the period for which such Administrative Expenses
are payable (in each case such weighted average to be determined by the Obligor
according to any method it reasonably determines to be equitable and subject to
reasonable reallocation by the Obligor in the event of a shortfall in amounts
available to pay Administrative Expenses for any reason) and (iv) with respect
to the Notes, a fraction the numerator of which is the principal amount of the
Loan outstanding and the denominator of which is the principal amount of the
Notes outstanding.
"State" means the State of Michigan.
SECTION 1.2. RULES OF INTERPRETATION. For all purposes of this Loan
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Loan Agreement as a whole and not
to any particular article, section or other subdivision.
(b) The terms defined in this Article I have the meanings
assigned to them in this Article I and include the plural as well as
the singular, and the gender used shall include the other gender.
(c) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles.
SECTION 1.3. HEADINGS. The headings of the various articles and
sections herein are for convenience only and shall not define or limit the
provisions hereof.
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS OF THE OBLIGOR. The Obligor makes the
following representations as the basis for its undertakings under this Loan
Agreement:
(a) The Obligor is a Michigan limited liability company with
full authority to issue the Notes and execute and enter into this Loan
Agreement and the Indenture.
(b) Neither the execution and delivery of this Loan Agreement,
the consummation of the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of this Loan
Agreement conflicts with or results in a breach of the terms,
conditions or provisions of any restriction, agreement or instrument to
which the Obligor is a party, or by which it or any of its property is
bound, or constitutes a default under any of the foregoing.
LOAN AGREEMENT
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SECTION 2.2. REPRESENTATIONS OF THE BORROWER. The Borrower makes the
following representations as the basis for its undertakings under this Loan
Agreement:
(a) The Borrower is the type of entity set forth in Schedule I
organized under the laws of the state set forth in Schedule I, and is
qualified to conduct its business in the State, has the requisite power
and authority to conduct its business, to own its properties and to
execute and deliver, and to perform all of its obligations under this
Loan Agreement and the Reimbursement Agreement and by proper action
this Loan Agreement, the Note Placement Agreement, the Remarketing
Agreement and the Reimbursement Agreement have been duly authorized,
executed and delivered by, and, assuming due authorization by the other
parties thereto, are valid and binding obligations of, the Borrower.
(b) Neither the authorization, execution or delivery of this
Loan Agreement and the Reimbursement Agreement, the consummation of the
transactions contemplated by this Loan Agreement and the Reimbursement
Agreement nor the fulfillment of or compliance with the terms and
conditions of this Loan Agreement and the Reimbursement Agreement will
require any consent or approval of the directors, shareholders,
partners and/or members, as applicable, of the Borrower which has not
been obtained, result in a breach of or constitute a default under any
of the terms, conditions or provisions of any agreement or instrument
to which the Borrower is now a party or by which it is bound, or
constitute a default under any of the foregoing, or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of the Borrower
prohibited under the terms of any instrument or agreement, or violate
any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower, or of the organizational documents of
the Borrower.
(c) The Borrower is not in default (i) under any order, writ,
judgment, injunction, decree, determination or award or any indenture,
agreement, lease or instrument or (ii) under any law, rule or
regulation wherein such default could materially adversely affect the
Borrower or the ability of the Borrower to perform its obligations
under this Loan Agreement.
(d) Each facility, if any, operated by the Borrower conforms
in all material respects with all applicable zoning, planning,
building, environmental and other regulations of the governmental
authorities having jurisdiction over the same and all licenses and
approvals the Borrower requires to operate its facilities, if any, have
been obtained from appropriate state and federal agencies and
departments or, if not obtained on the date of this Loan Agreement, are
expected to be obtained in the normal course of business at or prior to
the time such authorizations, consents or approvals are required to be
obtained.
(e) To the best of the knowledge of the Borrower, no
authorizations, consents or approvals of governmental bodies or
agencies are required in connection with the execution and delivery by
the Borrower of this Loan Agreement or the Reimbursement Agreement or
in connection with the carrying out by the Borrower of its obligations
LOAN AGREEMENT
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under this Loan Agreement or the Reimbursement Agreement which have not
been obtained or, if not obtained on the date of this Loan Agreement,
are expected to be obtained in the normal course of business at or
prior to the time such authorizations, consents or approvals are
required to be obtained.
(f) There are no actions or proceedings pending or, to the
best of the knowledge of the Borrower, threatened before any court or
administrative agency which will, in the reasonable judgment of the
Borrower, materially adversely affect the ability of the Borrower to
meet its obligations under this Loan Agreement or the Reimbursement
Agreement.
ARTICLE III
ISSUANCE OF THE NOTES; USE OF PROCEEDS
SECTION 3.1. AGREEMENT TO ISSUE NOTES; APPLICATION OF NOTE PROCEEDS. In
order to provide funds to finance the Loan Project, as provided in Section 4.1
hereof, and at the request of the Borrower, the Obligor agrees that, pursuant to
the Indenture, it will issue, sell and cause to be delivered to the purchaser or
purchasers thereof, the Notes bearing interest, maturing and subject to prior
redemption as set forth in the Indenture. The Obligor will make available the
proceeds of the Notes to the Borrower in the amount of the Loan (less the
Borrower's Pro Rata Share of Issuance Costs) by depositing the proceeds of the
Notes in the Project Fund pursuant to the Indenture. Disbursements of money on
deposit in the Project Fund shall be made in accordance with the conditions set
forth in the Indenture.
When funds are to be requested by the Borrower, the Borrower shall
itemize the amounts requested, the payee of each amount requested, and shall,
prior to delivering the same to the Obligor, obtain the written approval of the
Bank for the disbursement requested. The Borrower shall complete a requisition
certificate, in the form set forth as Exhibit D to the Master Indenture, on
behalf of the Obligor and shall obtain the written approval of the Bank on such
certificate. Assuming that the request is in proper form, and that the amounts
requested do not exceed the aggregate amount available to be drawn down on the
Loan (with any earnings from the Project Fund attributable thereto), the Obligor
will submit the certificate to the Trustee for payment.
SECTION 3.2. OBLIGOR MAKES NO WARRANTIES REGARDING THE LOAN PROJECT.
The Obligor makes no warranty or representation, express or implied or
otherwise, with respect to the Loan Project, it being agreed that the Borrower
is to bear all risks incident to the Loan Project. The Obligor is to have no
responsibility or liability for any defect or deficiency in the Loan Project,
whether patent or latent. The Obligor makes no warranty or representation that
the moneys contained in the Project Fund will be sufficient to pay all of the
costs of the Loan Project.
LOAN AGREEMENT
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ARTICLE IV
REPAYMENT PROVISIONS
SECTION 4.1. THE LOAN. The Obligor covenants and agrees, upon the terms
and conditions of this Loan Agreement, to loan all or a portion of the proceeds
received from the sale of the Notes in the amount of the Loan to the Borrower in
order to finance all or a part of the Loan Project. Pursuant to this covenant
and agreement, the Obligor will issue the Notes upon the terms and conditions
contained in the Indenture and this Loan Agreement, and will loan the proceeds
of the Notes in the amount of the Loan to the Borrower to be applied as provided
in Article III hereof. These proceeds shall be disbursed by the Trustee to or on
behalf of the Borrower at the direction of the Obligor as provided in Section
4.03 of the Master Indenture.
SECTION 4.2. REPAYMENT OF THE LOAN AND PAYMENT OF OTHER AMOUNTS PAYABLE.
(a) The Borrower covenants and agrees to make or cause to be
made Loan Payments to the Trustee, as assignee of the Obligor, equal to
the principal of, premium, if any, and interest on the Notes (or the
Borrower's Pro Rata Share of the Notes, if multiple Loans are made from
the proceeds of the Notes) for deposit by the Trustee in the Note Fund,
which shall at all times be sufficient to enable the Trustee to pay
when due (whether at maturity or upon redemption prior to maturity or
acceleration) the principal of, premium, if any, and interest on the
Notes (or the Borrower's Pro Rata Share of the Notes, if multiple Loans
are made from the proceeds of the Notes). All Loan Payments shall be
made or shall be on deposit in immediately available funds not later
than 12:00 p.m., Detroit, Michigan, time on the Business Day on which
such payment on the Notes is to be made. If the Borrower shall fail to
pay or cause to be paid any Loan Payments under this Section 4.2(a),
the Loan Payment so in default shall continue as an obligation of the
Borrower until the amount so in default shall have been fully paid. The
Trustee is authorized and directed to draw moneys under the Letter of
Credit in accordance with the provisions of the Indenture to pay the
principal of, premium, if any, and interest on the Notes if and when
due, and any moneys derived from a drawing under the Letter of Credit
attributable to the Borrower's Pro Rata Share of Notes shall constitute
a credit against the obligation of the Borrower to make the payments
set forth above.
(b) To the extent they are not paid out of the Project Fund
and allocated to the Borrower's Loan, the Borrower shall pay to the
Obligor the Obligor's fee at closing and Pro Rata Share of all other
Issuance Costs and the following within ten days of demand therefor,
including but not limited to, (i) other out-of-pocket costs and
expenses of the Obligor incidental to the performance of its
obligations under this Loan Agreement, the Indenture and the Note
Placement Agreement, to the extent not paid as Project Costs, and (ii)
the out-of-pocket expenses of the Obligor incurred by the Obligor in
enforcing the provisions of this Loan Agreement and the Indenture.
(c) The Borrower also agrees to pay to the Obligor, within 10
days of demand, its Pro Rata Share of Administrative Expenses.
LOAN AGREEMENT
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(d) If the date when any of the payments required to be made
by this Section 4.2 is not a Business Day, then such payments may be
made on the next Business Day with the same force and effect as if made
on the normal due date, and no interest shall accrue for the period
after such date through such next Business Day.
SECTION 4.3. NO DEFENSE OR SETOFF--UNCONDITIONAL OBLIGATION. The
obligations of the Borrower to make the payments required in Section 4.2 hereof
and to perform and observe the other agreements on its part contained herein
shall be absolute and unconditional, irrespective of any defense or any rights
of setoff, recoupment or counterclaim it might otherwise have against the
Obligor, the Trustee or the Bank. During the term of this Loan Agreement, the
Borrower shall pay the payments to be made in Section 4.2 hereof and all other
payments required hereunder free of any deductions and without abatement,
diminution or setoff other than those herein expressly provided. Until such time
as the principal of, premium, if any, and interest on the Notes shall have been
fully paid, or provision for the payment thereof shall have been made in
accordance with the Indenture, the Borrower: (i) will not suspend or discontinue
any payments provided for in Section 4.2 hereof; (ii) will perform and observe
all of its agreements contained in this Loan Agreement; and (iii) will not
terminate this Loan Agreement for any cause, including, without limiting the
generality of the foregoing, its failure to complete the Project, the occurrence
of any acts or circumstances that may constitute failure of consideration,
destruction of or damage to the Borrower's facilities, commercial frustration of
purpose, any change in the tax laws of the United States of America or the State
or any political subdivision thereof, or any failure of the Obligor, the Trustee
or the Bank to perform and observe any agreement, whether express or implied, or
any duty, liability or obligation arising out of or connected with this Loan
Agreement, except to the extent permitted by this Loan Agreement.
SECTION 4.4. ASSIGNMENT AND PLEDGE OF OBLIGOR'S RIGHTS. As security for
the payment of the Notes (including redemption payments), the Obligor will
assign and pledge to the Trustee all right, title, and interest of the Obligor
in and to this Loan Agreement, including the right to receive payments hereunder
(except the right to receive payments, if any, under Sections 4.2(b), 4.2(c),
5.3, 6.3, and 8.12 hereof and the rights to make determinations and receive
notices as herein provided, all of which constitute "Reserved Rights" as defined
in the Indenture), and hereby directs the Borrower to make said payments
directly to the Trustee. The Borrower herewith assents to such assignment and
pledge and will make or cause to be made payments directly to the Trustee
without defense or setoff by reason of any dispute between the Borrower and the
Obligor, the Trustee or the Bank.
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.1. OBLIGOR'S, TRUSTEE'S, AND BANK'S RIGHT OF ACCESS TO LOAN
PROJECT. The Borrower agrees that during the term of this Loan Agreement the
Obligor, the Trustee, the Bank, and their duly authorized agents shall have the
right during regular business hours, with reasonable notice, to examine and
inspect all books and records of the Borrower relating to the Loan Project,
provided that neither the Obligor, the Trustee, nor the Bank will materially
disturb
LOAN AGREEMENT
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the business operations of the Borrower and each shall hold in confidence all
confidential information, trade secrets, patents, and patentable information.
SECTION 5.2. BORROWER TO MAINTAIN EXISTENCE; CONDITIONS UNDER WHICH
EXCEPTIONS PERMITTED. Except as provided below, the Borrower each agrees that
during the term of this Loan Agreement it will maintain its existence and will
not dispose of all or substantially all of its assets. The Borrower may
consolidate with or merge into another entity or permit one or more entities to
consolidate with or merge into it, provided that any surviving, resulting or
transferee entity shall be qualified to do business in the State and shall
assume in writing or by operation of law all of the obligations of the Borrower
under this Loan Agreement and the Reimbursement Agreement.
SECTION 5.3. INDEMNIFICATION COVENANTS.
(a) The Obligor and its members, officers, agents, and
employees (the "Indemnified Persons") shall not be liable to the
Borrower for any reason except for the breach of any obligation of the
Obligor or Indemnified Persons under this Agreement or the willful
misconduct or sole gross negligence of the Obligor or Indemnified
Persons. The Borrower shall indemnify and hold the Obligor and the
Indemnified Persons harmless from any loss, expense (including
reasonable counsel fees), or liability of any nature due to any and all
suits, actions, legal or administrative proceedings, or claims arising
or resulting from, or in any way connected with:
(1) the acquisition, operation, use or
maintenance of the Loan Project or facilities of the Borrower;
(2) any act, failure to act, or misrepresentation by
any person, firm, corporation, or governmental agency,
including the Obligor, in connection with the issuance, sale,
delivery or remarketing of the Notes;
(3) any act, failure to act, or misrepresentation by
the Obligor in connection with this Loan Agreement, the
Indenture, the Note Placement Agreement, or any other document
involving the Obligor in this matter;
(4) any liability of the Obligor to the Placement
Agent pursuant to Paragraph 7 of the Note Placement Agreement
and to the Remarketing Agent pursuant to Section 3 of the
Remarketing Agreement which arises in connection with or as a
consequence of the Loan; or
(5) the selection and appointment of firms providing
services related to the Note transaction.
If any suit, action, or proceeding is brought against the Obligor or
any Indemnified Person, that action or proceeding shall be defended by
counsel to the Obligor or the Borrower, as the Obligor shall determine.
If the defense is by counsel to the Obligor the Borrower shall
indemnify the Obligor and Indemnified Persons for the reasonable cost
of that defense including reasonable counsel fees. If the Obligor
determines that the
LOAN AGREEMENT
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Borrower shall defend the Obligor or Indemnified Person, the Borrower
shall immediately assume the defense at its own cost. The Borrower
shall not be liable for any settlement of any proceeding made without
its consent (which consent shall not be unreasonably withheld).
(b) The Borrower shall not be obligated to indemnify the
Obligor or any Indemnified Person under subsection (a), if a court with
competent jurisdiction finds that the liability in question was caused
by the willful misconduct or sole gross negligence of the Obligor or
the involved Indemnified Person, unless the court determines that,
despite the adjudication of liability but in view of all circumstances
of the case, the Obligor or the Indemnified Person(s) is (are) fairly
and reasonably entitled to indemnity for the expenses which the court
considers proper.
(c) The Borrower shall also indemnify the Obligor for all
costs and expenses, including reasonable counsel fees, incurred in:
(1) enforcing any obligation of the Borrower
under this Loan Agreement or any related agreement;
(2) taking any action requested by the Borrower;
(3) taking any action required by this Loan
Agreement, the Indenture, the Note Placement Agreement or any
related agreement; or
(4) taking any action considered necessary by the
Obligor and which is authorized by this Loan Agreement, the
Indenture, the Remarketing Agreement, the Note Placement
Agreement, or any related agreement.
(d) The indemnification provisions herein contained shall not
be exclusive or in limitation of, but shall be in addition to, the
rights to indemnification of the Indemnified Persons or the Indemnified
Parties under any other agreement or law by which the Borrower is bound
or to which it is subject.
(e) The obligations of the Borrower under this section shall
survive any assignment or termination of this Loan Agreement.
(f) Except for an indemnification relating solely to the Loan
and not to any of the other Loans made pursuant to the Indenture, the
foregoing indemnification of the Obligor or Indemnified Persons by the
Borrower shall be limited to the Borrower's Pro Rata Share of the
amount by which the Obligor or Indemnified Persons is or are to be
indemnified by the Borrower and all other Borrowers receiving Loans.
SECTION 5.4. INSURANCE. The Borrower represents and covenants that it
will keep, or cause to be kept, in force adequate insurance of a nature that
entities would maintain for like facilities and in accordance with the
requirements of the Reimbursement Agreement or any agreement securing the
Reimbursement Agreement. It is understood and agreed that the Obligor and the
Trustee shall have no duties or responsibilities whatsoever with respect to such
LOAN AGREEMENT
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insurance. The net proceeds received from any casualty or property insurance
shall be applied as provided in the Reimbursement Agreement or any agreement
securing the Reimbursement Agreement.
Except as required by the Reimbursement Agreement or any agreement
securing the Reimbursement Agreement, the Borrower shall have the sole right and
responsibility to adjust any losses with its insurers and to conduct
negotiations in connection therewith.
SECTION 5.5. EMINENT DOMAIN. In the event that title to, or the
temporary use of, the facilities of the Borrower shall be taken by Eminent
Domain, the Borrower shall be obligated to continue to pay the Loan Payments
specified in Section 4.2(a) hereof. Any net proceeds received by the Borrower as
a result of such eminent domain to be applied as provided in the Reimbursement
Agreement or any agreement securing the Reimbursement Agreement.
SECTION 5.6. QUALIFICATION IN STATE. Subject to the provisions of
Section 5.2 hereof, the Borrower agrees that throughout the term of this Loan
Agreement, it will be qualified to do business in the State.
SECTION 5.7. LETTER OF CREDIT. On or prior to the issuance, sale and
delivery of the Notes, the Borrower hereby covenants and agrees to assist the
Obligor to obtain and deliver to the Trustee the Letter of Credit to be issued
by the Bank in favor of the Trustee for the benefit of the owners from time to
time of the Notes. The Letter of Credit shall comply with the additional
requirements stated in Section 5.01 of the Master Indenture.
SECTION 5.8. OBLIGOR'S LIMITED LIABILITY. It is recognized that the
Obligor's only source of funds with which to carry out its commitments with
respect to this Loan Agreement will be from the proceeds from the sale of the
Notes; and it is expressly agreed that the Obligor shall have no liability,
obligation, or responsibility with respect to this Loan Agreement except to the
extent of funds available from such Note proceeds.
SECTION 5.9. COMPLIANCE WITH LAWS. The Borrower shall, throughout the
term of this Loan Agreement and at no expense to the Obligor or Trustee,
promptly comply with all laws, ordinances, orders, rules, regulations and
requirements of duly constituted public authorities which are applicable to the
Loan Project or to the repair and alteration of its facilities, or to the use or
manner of use of its facilities, provided, however, that such laws, ordinances,
orders, rules, regulations and requirements shall not unlawfully discriminate
against the Borrower. Notwithstanding the foregoing, the Borrower shall have the
right to contest the legality of any such law, ordinance, order, rule,
regulation or requirement as applied to the Loan Project or its facilities
provided that, in the opinion of legal counsel acceptable to the Bank, such
contest shall not in any way materially and adversely affect or impair the
obligations of the Borrower under this Loan Agreement.
LOAN AGREEMENT
Page 10
14
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT. The occurrence and continuation of any
one of the following shall constitute an Event of Default hereunder:
(a) failure by the Borrower to pay or cause to be paid any
amounts required to be paid as Loan Payments under this Loan Agreement
on the dates and in the manner specified herein; or
(b) failure by the Borrower to observe and perform any
covenant, condition or agreement on its part to be observed or
performed in this Loan Agreement, other than as referred to in
subsection (a) above, for a period of 30 days after written notice,
specifying such failure and requesting that it be remedied, is given to
the Borrower by the Obligor, the Trustee or the Bank, unless (i) the
Trustee and the Bank shall agree in writing to an extension of such
time prior to its expiration or (ii) if the failure is such that it can
be corrected but not within such 30-day period, corrective action is
instituted by the Borrower within such period and diligently pursued
until such failure is corrected; or
(c) the dissolution or liquidation of the Borrower or the
filing by the Borrower of a voluntary petition in bankruptcy, or
failure by the Borrower promptly to lift any execution, garnishment or
attachment of such consequence as will impair its ability to carry on
its obligations hereunder, or an order for relief under Title 11 of the
United States Bankruptcy Code, as amended from time to time, is entered
against the Borrower, or a petition or answer proposing the entry of an
order for relief against the Borrower under Title 11 of the United
States Bankruptcy Code, as amended from time to time, or its
reorganization, arrangement or debt readjustment under any present or
future federal bankruptcy act or any similar federal or state law shall
be filed in any court and such petition or answer shall not be
discharged within 90 days after the filing thereof, or the Borrower
shall fail generally to pay its debts as they become due, or a
custodian (including without limitation a receiver, trustee, assignee
for the benefit of creditors or liquidator of the Borrower) shall be
appointed for or take possession of all or a substantial part of its
property and shall not be discharged within 90 days after such
appointment or taking possession, or the Borrower shall consent to or
acquiesce in such appointment or taking possession, or assignment by
the Borrower for the benefit of its creditors, or the entry by the
Borrower into an agreement of composition with its creditors, or the
adoption of a resolution by the directors of the Borrower or the taking
of any other action to file a petition or answer proposing the entry of
an order for relief against the Borrower under Title 11 of the United
States Bankruptcy Code, as amended from time to time, or its
reorganization, arrangement or debt readjustment under any present or
future federal bankruptcy act or any similar federal or state laws;
provided, that the term "dissolution or liquidation of the Borrower,"
as used in this subsection (c), shall not be construed to include the
cessation of the corporate existence of the Borrower resulting either
from a merger or consolidation of the Borrower into or with another
entity or a dissolution or liquidation of the Borrower following a
transfer of all or
LOAN AGREEMENT
Page 11
15
substantially all of its assets as an entirety, under the conditions
permitting such actions contained in Section 5.2 hereof; or
(d) any material warranty, representation or other statement
made by or on behalf of the Borrower contained herein, or in any
document or certificate furnished by the Borrower in compliance with or
in reference hereto, is false or misleading in any material respect
when made; or
(e) The occurrence of an Event of Default under the
Reimbursement Agreement.
SECTION 6.2. REMEDIES ON DEFAULT. Whenever any Event of Default shall
have occurred and be continuing hereunder, the Trustee may take any one or more
of the following remedial steps:
(a) The Obligor or the Trustee may exercise any right, power
or remedy permitted to it by law, and shall have in particular, without
limiting the generality of the foregoing, the right to declare the
unpaid Loan Payments to be immediately due and payable, if concurrently
with or prior to such declaration the unpaid principal of and all
unpaid accrued interest on the Notes (or a portion of the Notes
representing the Borrower's Pro Rata Share of Notes) have been declared
to be due and payable under the Indenture, and upon such declaration
the unpaid Loan Payments shall thereupon become forthwith due and
payable in an amount sufficient to pay the principal of and interest on
the Notes (or such portion of Notes) under Section 8.02 of the Master
Indenture, without presentment, demand or protest, all of which are
hereby expressly waived. The Borrower shall forthwith pay to the
Trustee the entire principal of and interest accrued on such Notes.
Any declaration of acceleration of the Notes may be waived,
rescinded and annulled pursuant to and in accordance with Section 8.11
of the Master Indenture.
(b) The Obligor or the Trustee may take whatever action at law
or in equity as may appear necessary or desirable to collect the
payments and other amounts then due and thereafter to become due or to
enforce the performance and observance of any obligation, agreement or
covenant of the Borrower under this Loan Agreement, provided, however,
all such action shall be with the consent of the Bank (which consent
shall be required only so long as the Letter of Credit is in effect and
has not been wrongfully dishonored).
(c) The Obligor or the Trustee shall, subject to the
limitations set forth in Section 5.1 of this Loan Agreement, have
reasonable access to inspect, examine and make copies of the books and
records and any and all accounts, data and income tax and other tax
returns of the Borrower relating to the Loan Project or an Event of
Default during regular business hours of the Borrower if reasonably
necessary in the opinion of the Trustee or the Obligor.
LOAN AGREEMENT
Page 12
16
In case the Obligor or the Trustee shall have proceeded to enforce its
rights under this Loan Agreement and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Obligor or the Trustee as the case may be, then and in every such case
the Borrower, the Obligor and the Trustee shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Borrower, the Obligor and the Trustee shall continue as though no
such proceeding had been taken, except to the extent of any adverse
determination.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Borrower under the federal bankruptcy laws or any
other applicable law, or in case a receiver or trustee shall have been appointed
for the property of the Borrower, or in the case of any other similar judicial
proceedings relative to the Borrower, or to the creditors or property of the
Borrower, the Trustee shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount owing and unpaid pursuant to this Loan Agreement and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
allowed in such judicial proceedings relative to the Borrower, its creditors or
its property, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of its charges and expenses; and any receiver, assignee or trustee in bankruptcy
or reorganization is hereby authorized to make such payments to the Trustee, and
to pay to the Trustee any amount due it for compensation and expenses, including
reasonable attorney fees incurred by it up to the date of such distribution.
SECTION 6.3. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In the
event the Obligor or the Trustee should employ attorneys or incur other expenses
for the collection of the payments due under this Loan Agreement or the
enforcement of the performance or observance of any obligation or agreement on
the part of the Borrower herein contained, the Borrower agrees that it will on
demand therefor pay to the Obligor or the Trustee the reasonable fees of such
attorneys and such other expenses so incurred by the Obligor or the Trustee.
SECTION 6.4. NO REMEDY EXCLUSIVE. No remedy herein conferred upon or
reserved to the Obligor or the Trustee is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Loan Agreement
and the Indenture now or hereafter existing at law or in equity or by statute.
No delay or omission to exercise any right or power accruing upon any Event of
Default hereunder shall impair any such right or power or shall be construed to
be a waiver thereof, but any such right and power may be exercised from time to
time and as often as may be deemed expedient. In order to entitle the Obligor to
exercise any remedy reserved to it in this Article VI, it shall not be necessary
to give any notice, other than such notice as may be herein expressly required.
Such rights and remedies as are given the Obligor hereunder shall also extend to
the Trustee, and the Trustee and the Owners from time to time of the Notes shall
be deemed third party beneficiaries of all covenants and agreements herein
contained.
SECTION 6.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event
any agreement contained in this Loan Agreement should be breached by the
Borrower and thereafter
LOAN AGREEMENT
Page 13
17
waived by the Obligor or the Trustee, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
ARTICLE VII
PREPAYMENT OF LOAN PAYMENTS
SECTION 7.1. GENERAL OPTION TO PREPAY THE LOAN PAYMENTS. With the
written consent of the Bank (so long as the Letter of Credit is in effect and
has not been wrongfully dishonored), the Borrower shall have, and is hereby
granted, the option to prepay the Loan Payments payable under Section 4.2(a)
hereof, in whole or in part, by directing the Obligor to direct the Trustee to
redeem all or a portion of the Notes then Outstanding, in the manner, at the
redemption prices (including premium, if any), from the sources and on the dates
specified in the Indenture and in the Notes for optional redemption. The Trustee
shall, in accordance with Section 4.04 of the Indenture, draw upon the Letter of
Credit to prepay the principal of and any applicable redemption premium and
accrued interest on the Notes payable under this Section 7.1 in accordance with
the terms of the Letter of Credit. The Borrower may not revoke its election to
prepay all or part of the Loan Payments without the prior written consent of the
Bank.
SECTION 7.2. OBLIGATION TO PREPAY LOAN PAYMENTS ON FAILURE TO RENEW OR
REPLACE LETTER OF CREDIT AND OTHER EVENTS. The Borrower acknowledges that the
Notes are subject to mandatory redemption prior to maturity if the Borrower does
not renew the Letter of Credit or obtain a Substitute Letter of Credit at least
60 days prior to the date of expiration or termination of the Letter of Credit,
and may be subject to other mandatory redemption, all as provided in the
Indenture. The Loan is subject to prepayment on the date of any such redemption
at a price equal to the redemption price of the Notes (or Borrower's Pro Rata
Share of Notes) to be redeemed (including accrued interest and any redemption
premium).
SECTION 7.3. NOTICE OF PREPAYMENT. To exercise an option granted to the
Borrower by Section 7.1 hereof, the Borrower shall give not less than 30 days
written notice to the Obligor (45 days if the Loan has been made from the
proceeds of Fixed Rate Notes), the Trustee and the Bank which notice shall
specify therein the date upon which prepayment will be made, which date shall be
not less than 30 days from the date the notice is mailed (45 days if the Loan
has been made from the proceeds of Fixed Rate Notes), and shall specify that all
of the outstanding Loan Payments or a specified portion thereof is to be so
prepaid. The Obligor has directed the Trustee to take forthwith all steps (other
than the payment of the money required to redeem the Notes) necessary under the
applicable provisions of the Indenture to effect the redemption of the Notes (or
a portion thereof) as provided in this Article VII.
LOAN AGREEMENT
Page 14
18
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. NOTICES. All notices, certificates or other communications
shall be sufficiently given and shall be deemed given on the first to occur of
(i) two Business Days after such notices are deposited in the United States mail
and sent by first class mail, postage prepaid, (ii) when the same are delivered,
in each case, to the parties at the addresses set forth below or at such other
address as a party may designate by notice to the other parties, or (iii) when
the same are sent by facsimile or telecopy (the receipt of which is orally or
electronically confirmed) promptly confirmed in writing by first class mail,
postage prepaid:
If to the Obligor:
XXX Funding, L.L.C.
c/o MAXCO, Inc.
0000 Xxxxxxxxxx Xxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Vice President
Telephone: (000) 000-0000
Telefax: (000) 000-0000
and
c/o LandEquities Corporation
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, President
Telephone: (000) 000-0000
Telefax: (000) 000-0000
If to the Borrower:
As set forth in Schedule I.
If to the Trustee:
By First Class Mail By Hand Delivery
Michigan National Bank Michigan National Bank
00 Xxxxxx Xxxxxx, X.X. 00 Xxxxxx Xxxxxx, X.X.
X.X. Xxx 0000 Xxxxx Xxxxxx, Xxxxxxxx 00000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000 Attention: Corporate Trust
Attention: Corporate Trust Department Department
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telefax: (000) 000-0000 Telefax: (000) 000-0000
LOAN AGREEMENT
Page 15
19
If to the Bank:
First of America Bank, N.A.
IBM Building, 0xx Xxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
with a copy to:
First of America Bank, N.A.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
[Mail Code K-B01-2C]
Attention: Corporate and Municipal Finance Division
Telephone: (000) 000-0000
Telefax: (000) 000-0000
A duplicate copy of each notice, certificate or other communication given
hereunder by either the Obligor or the Borrower to the other shall also be given
to the Trustee and the Bank.
SECTION 8.2. ASSIGNMENTS. The Obligor shall assign and pledge to the
Trustee its right, title and interest in and to this Loan Agreement as provided
by Section 4.4 hereof, and the Borrower may with the consent of the Bank (so
long as the Letter of Credit is in effect and has not been wrongfully
dishonored) assign to any surviving, resulting or transferee corporation or
entity its rights and obligations under this Loan Agreement as provided by
Section 5.2 hereof.
SECTION 8.3. SEVERABILITY. If any provision of this Loan Agreement
shall be held or deemed to be or shall, in fact, be illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative or unenforceable to any
extent whatsoever.
SECTION 8.4. EXECUTION OF COUNTERPARTS. This Loan Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
SECTION 8.5. AMOUNTS REMAINING IN ANY FUND OR WITH TRUSTEE. It is
agreed by the parties hereto that after payment in full of (i) the principal of,
premium, if any, and interest on the Notes, (ii) the fees, charges, indemnities
and expenses of the Obligor and the Trustee in accordance herewith and with the
Indenture (the payment of which fees, charges, indemnities and expenses shall be
evidenced by a written certification of the Obligor that it has fully paid all
such fees, charges, indemnities and expenses), and (iii) all other amounts
required to be paid under this Loan Agreement and the Indenture, any amounts
remaining in any fund or account maintained under this Loan Agreement or for the
Borrower under the Indenture, and not applied to the principal of, premium, if
any, and interest on the Notes or, as applicable, the Borrower's Pro Rata Share
of the Notes shall belong to and be paid to the Borrower by the Trustee at the
LOAN AGREEMENT
Page 16
20
direction of the Obligor, provided, that, prior to making any payments, Trustee
shall request a written statement from the Bank as to whether or not the Bank
has been reimbursed by the Borrower for any and all drawings under the Letter of
Credit pursuant to the Reimbursement Agreement or whether any other obligations
are then due and owing to the Bank under the Reimbursement Agreement, and such
amounts remaining in the Note Fund shall, upon written notice from the Bank that
the Borrower has not reimbursed the Bank under the Reimbursement Agreement for
any such drawing under the Letter of Credit or for any other obligation then due
and owing to the Bank under the Reimbursement Agreement (which notice shall
state the unreimbursed amount), belong to and be paid to the Bank by the Trustee
to the extent that the Borrower has not so reimbursed the Bank.
SECTION 8.6. AMENDMENTS, CHANGES, AND MODIFICATIONS. Subsequent to the
initial issuance of the Notes and prior to their payment in full, this Loan
Agreement may not be effectively amended, changed, modified, altered, or
terminated without the written consent of the Trustee and the Bank (so long as
the Letter of Credit is in effect and has not been wrongfully dishonored).
SECTION 8.7. GOVERNING LAW. This Loan Agreement shall be governed
exclusively by and construed in accordance with the applicable law of the
State.
SECTION 8.8. AUTHORIZED BORROWER REPRESENTATIVE. Whenever under the
provisions of this Loan Agreement the approval of the Borrower is required or
the Borrower is required to take some action at the request of the Obligor, the
Trustee or the Bank, such approval or such request shall be given for the
Borrower by the Authorized Borrower Representative, and the Obligor, the
Trustee, and the Bank shall be authorized to act on any such approval or request
and neither party hereto shall have any complaint against the other or against
the Trustee or the Bank as a result of any such action taken.
SECTION 8.9. TERM OF LOAN AGREEMENT. This Loan Agreement shall be in
full force and effect from the date hereof, and shall continue in effect until
the payment in full of all principal of, premium, if any, and interest on the
Notes, or provision for the payment thereof shall have been made pursuant to
Article XIII of the Indenture, all fees, charges, indemnities and expenses of
the Obligor and the Trustee have been fully paid or provision made for such
payment (the payment of which fees, charges, indemnities and expenses shall be
evidenced by a written certification of the Borrower that it has fully paid all
such fees, charges, indemnities and expenses) and all other amounts due
hereunder have been duly paid or provision made for such payment and all
obligations of the Borrower to the Bank under the Reimbursement Agreement have
been paid. All representations, certifications and covenants by the Borrower as
to the indemnification of various parties as described in Section 5.3 hereof and
the payment of fees and expenses of the Obligor and the Trustee as described in
Section 6.3 hereof shall survive the termination of this Loan Agreement.
SECTION 8.10. BINDING EFFECT. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Obligor, the Borrower and their
respective successors and assigns; subject, however, to the limitations
contained in Sections 4.4 and 5.2 hereof.
LOAN AGREEMENT
Page 17
21
SECTION 8.11. REFERENCES TO BANK AND LETTER OF CREDIT. At any time
while the Letter of Credit has been wrongfully dishonored, all references to the
Bank and the Letter of Credit shall be ineffective.
SECTION 8.12. OBLIGOR NOT LIABLE. Notwithstanding any other provision
of this Loan Agreement (a) the Obligor shall not be liable to the Borrower, the
Trustee, the owners of Notes or any other person for any failure of the Obligor
to take action under this Loan Agreement unless the Obligor (i) is requested in
writing by an appropriate person to take such action, (ii) is assured to its
satisfaction of payment of, indemnification against or reimbursement for any
expenses in such action and (iii) is afforded a reasonable period under the
circumstances to take such action, and (b) neither the Obligor nor any member of
the Obligor or any other official or employee of the Obligor shall be liable to
the Borrower or any other person for any action taken by its officers, servants,
agents, members, counsel or employees, or for any failure to take action under
this Loan Agreement except that the Obligor agrees to take, or refrain from, any
action required by an injunction and to comply with any final judgment for
specific performance. In acting under this Loan Agreement, or in refraining from
acting under this Loan Agreement, the Obligor may conclusively rely on the
advice of its counsel. Nothing in this Loan Agreement is a covenant,
stipulation, obligation or agreement of any present or future employee, member,
counsel or agent of the Obligor in his individual capacity, and neither the
members of the Obligor nor any person executing this Loan Agreement or the Notes
shall be subject to any personal liability or accountability by reason of such
execution by the Obligor or any officer or employer of the Obligor.
[Execution of this Loan Agreement appears on Schedule I]
LOAN AGREEMENT
Page 18
22
SCHEDULE I
TO
LOAN AGREEMENT DATED DECEMBER 1, 1997
1. Borrower's Name: Atmosphere Annealing, Inc.
2. Type of Organization: Corporation
3. State of Organization: Michigan
4. Borrower's Address, Phone
and Fax Number: 000 Xxxx Xx. Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
5. Related Supplement: Supplemental Indenture No. 1
6. Series Designation of Notes: Variable Rate Series A
7. Amount of Loan: $5,385,000
8. Description of Loan Project: To refinance various term
loans with the Bank; acquire
manufacturing facilities in
Lansing, Michigan; finance
plant renovations and equipment
purchases in Ohio and Indiana
and pay the costs of issuance.
IN WITNESS WHEREOF, the Obligor and the Borrower have caused this Loan
Agreement to be executed in their respective names by their duly authorized
agents, all as of the date first above written.
ATMOSPHERE ANNEALING, INC. XXX FUNDING, L.L.C.
By: BY: MAXCO, INC., ITS MEMBER
----------------------
Xxxxxxx Xxxxxxx
Its: Treasurer By:
------------------------
Its: Vice President
BY: LANDEQUITIES
CORPORATION, ITS MEMBER
By:
------------------------
Its: President
23
GUARANTY - MAXCO, INC.
THIS GUARANTY AGREEMENT ("Guaranty") is entered into as of December 1,
1997, by and between MAXCO, Inc., a Michigan corporation (the "Guarantor") and
First of America Bank, N.A. (together with any successors, as "Bank").
RECITALS:
A. Arrangements have been made for the sale by XXX Funding,
L.L.C. (the "Issuer") of its $43,260,000 Loan Program Notes (Variable Rate
Series A) (Installment No. 1) (collectively the "Note") issued pursuant to a
Master Trust Indenture dated as of December 1, 1997 (the "Master Indenture")
between the Borrower and Michigan National Bank, as Trustee (the "Trustee") and
Supplemental Trust Indenture No. 1 between the Issuer and the Trustee dated as
of December 1, 1997 (the "Supplemental Indenture") (the Master Indenture and
the Supplemental Indenture are herein termed the "Indenture").
B. Pursuant to a Loan Agreement between the Issuer and the
Borrower of even date herewith ("Loan Agreement") a portion of the proceeds of
the sale of the Notes (the "Loan Amount," as specified in Schedule I) will be
loaned by the Issuer to the Borrower specified on Schedule I to this Guaranty
(the "Borrower") to refinance certain existing indebtedness of the Borrower and
to finance the Project described in the Loan Agreement on certain real property
owned by the Borrower; and
C. Borrower has secured payment and performance of its
liabilities and obligations under the Reimbursement Agreement (as defined
below) with mortgagesincluding security agreements and assignment of rents and
leases as of the date hereof on certain real estate owned by the Borrower and
located in North Xxxxxx, Indiana and Canton, Ohio ( collectively the
"Mortgage") and the Borrower has granted a security agreement to the Bank as of
the date hereof (the "Security Agreement") which also secures payment and
performance of its liabilities and obligations under the Reimbursement
Agreement (as defined below); and
D. The Borrower and the Bank are parties to a Borrower
Reimbursement Agreement (the "Reimbursement Agreement") whereby the Borrower
agrees to reimburse the Bank for its pro rata share of monies advanced by the
Bank pursuant to drafts by the Trustee on the Bank's Letter of Credit No.
023735 (the "Letter of Credit") issued pursuant to a Master Reimbursement
Agreement between the Issuer and the Bank dated as of December 1, 1997 (the
"Master Reimbursement Agreement") and which provides the liquidity facility for
payment of the purchase price of the Note upon tender thereof and a credit
facility for payment of principal of and interest on the Note on the scheduled
due dates and redemption; and
E. The Borrower is an affiliate of the Guarantor and the
Guarantor desires that the Bank issue the Letter of Credit in order to enhance
the marketability of the Notes and is willing to enter into this Guaranty as an
inducement to the Bank to issue the Letter of Credit on behalf of the Borrower
which is related to the Guarantor by common ownership and management.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the Guarantor, hereby covenants and agrees with the
Bank as follows:
24
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
SECTION 1.1 The Guarantor represents and warrants as follows:
(a) The Guarantor is a Michigan corporation, and is
legally organized and validly existing under the laws of the
state of its incorporation, and is duly qualified to do
business and in good standing in every jurisdiction in which
such qualification is material to such entity's business and
operations or the ownership of its properties, and has all
authority to conduct the business now being conducted by it,
to own and operate the properties used in such business, and
to execute and carry out and perform its obligations under
this Guaranty.
(b) The execution, delivery and performance by the
Guarantor of this Guaranty to which each such entity is a
party have been duly authorized by all necessary corporate
action, do not contravene or violate (i) the Articles of
Incorporation and Bylaws of the Guarantor, (ii) any law,
order, rule or regulation applicable to the Guarantor, or
(iii) any contract or agreement to which the Guarantor is a
party or by which any such entity is bound and do not result
in or require the creation of any lien, security interest or
other charge or encumbrance (other than pursuant hereto or to
the Operative Documents (as defined in Article VIII below))
upon or with respect to any of the properties of any such
entity.
(c) All authorizations or approvals of any governmental
body required to be obtained by the Guarantor for (i) the
execution, delivery and performance by the Guarantor of this
Guaranty and (ii) the issue and sale by the Borrower of the
Notes, have been obtained and remain in full force and effect.
(d) This Guaranty is a legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor,
as applicable, in accordance with its terms, except as the
enforceability may be limited by principles of equity or by
bankruptcy, insolvency or similar laws affecting the
enforcement of rights of creditors of the Guarantor generally.
(e) There is no litigation undisclosed to the Bank, legal
or administrative proceedings, investigations or any other
action of any nature, pending, or to its knowledge, threatened
or affecting the Guarantor, which includes the possibility of
any judgment or liability not covered by insurance which may
materially or adversely affect the Project or the rights of
the Guarantor to carry on business as now conducted. Details
of all litigation, legal or administrative proceedings,
investigations or any other action of a similar nature,
pending or threatened against any of the Guarantor, at any
time during the term of this Guaranty will be brought to the
attention of the Bank, in writing forthwith.
(f) All financial statements and information relating to
the Guarantor which have been or may hereafter be delivered to
the Bank are true and correct and have been prepared in
accordance with generally accepted accounting principles
consistently applied, and there have been no material adverse
changes in the
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financial condition of the Guarantor since the submission of
any financial information to Bank and no such material adverse
changes in such financial condition are imminent or
threatened.
(g) All federal, state and other tax returns and reports
of the Guarantor, including reports from any governmental
authority, for the proper maintenance and operation of the
properties, assets and business of the Guarantor, as may be
required by law to be filed or paid, have been filed, and all
federal and other taxes, assessments, fees and other
governmental charges, (other than those presently payable,
without penalty) imposed upon the Guarantor or its properties
or assets, which are due and payable, have been fully paid
unless being contested by the Guarantor or any of them in the
ordinary course of business.
(h) The Guarantor has not willfully or negligently acted
or failed to act in a manner which would violate any state or
federal environmental law in effect at such time or now in
effect with respect to use or occupancy of any of its
property.
ARTICLE II
AGREEMENTS
SECTION 2.1 The Guarantor hereby unconditionally, guarantees to the
Bank (a) the full and prompt payment of all of the Borrower's obligations and
indebtedness required to be paid under the Reimbursement Agreement, whether now
existing or later arising, when and as the same shall become due, to the extent
of the Guaranteed Amount specified in Schedule I (the "Guaranteed Amount"),
plus payment of accrued interest and reasonable attorneys' fees and court costs
for collection of such obligations and indebtedness by the Bank, and (b) the
performance of all covenants and agreements of the Borrower under the
Reimbursement Agreement. All payments by the Guarantor shall be paid in lawful
money of the United States of America. Each and every default in payment of the
principal of, premium, if any, or interest on the Reimbursement Agreement or
performance of covenants and agreements of the Borrower under the Reimbursement
Agreement shall give rise to a separate cause of action hereunder, and separate
suits may be brought hereunder as each cause of action arises. In the event
that the Guarantor shall be entitled to set off the value of any collateral
given to the Bank by the Borrower, the value of such collateral shall first be
credited to the portion of the Borrower's obligations and indebtedness under
the Reimbursement Agreement for which the Guarantor is not liable and then to
the portion of such obligations and indebtedness for which the Guarantor is
liable.
SECTION 2.2 The obligations of the Guarantor under this Guaranty
shall be absolute and unconditional and shall remain in full force and effect
until the entire obligations and indebtedness of the Borrower under the
Reimbursement Agreement shall have been paid or duly provided for, and such
obligations shall not be affected, modified or impaired upon the happening from
time to time of any event, including without limitation any of the following,
whether or not with notice to, or the consent of, the Guarantor:
(a) The waiver, compromise, settlement, release or
termination of any or all of the obligations, covenants or
agreements of the Issuer contained in the Indenture, or of the
payment, performance or observance thereof;
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(b) The failure to give notice to the Guarantor of the
occurrence of a default or an event of default under the terms
and provisions of this Guaranty, the Operative Documents, the
Reimbursement Agreement and any and all collateral documents
delivered pursuant thereto;
(c) The transfer, assignment or mortgaging or the
purported transfer, assignment or mortgaging of all or any
part of the interest of the Bank or the Borrower in the
Premises (as defined in the Reimbursement Agreement) except as
referred to in the Reimbursement Agreement or any failure of
title with respect to the Bank's or the Borrower's interest in
the Premises or in the real estate subject to the Mortgage or
the invalidity, unenforceability or termination of the
Reimbursement Agreement, the Mortgage, the Security Agreement,
the Indenture, the Personal Guaranty, the Company Guaranty, or
the Notes;
(d) The waiver, compromise, settlement, release or
termination of the Borrower's obligations, covenants or
agreements contained in the Reimbursement Agreement or the
Indenture, or of the payment, performance or observance
thereof;
(e) The extension of the time for payment of any
principal of, premium, if any, or interest on the Notes, owing
or payable on the Notes, or of the time for performance of any
obligations, covenants or agreements under or arising out of
the Operative Documents or the extension or the renewal of any
thereof;
(f) The modification or amendment (whether material or
otherwise) of any obligation, covenant or agreement set forth
in the Operative Documents or this Guaranty;
(g) The taking or the omission of any of the actions referred
to in this Guaranty or the Operative Documents;
(h) Any failure, omission, delay or lack on the part of
the Borrower or Bank to enforce, assert or exercise any right,
power or remedy conferred on the Borrower or the Bank in this
Guaranty or the Operative Documents, or any other act or acts
on the part of the Borrower, Bank or any of the holders from
time to time of the Notes;
(i) The voluntary or involuntary liquidation,
dissolution, sale or other disposition (other than by way of
mortgage or granting of security interest to secure borrowing
of the Guarantor) of all or substantially all the assets,
marshalling of assets and liabilities, receivership,
insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition with
creditors or readjustment of, or other similar proceedings of
the Borrower, the Personal Guarantor, the Company Guarantor,
or any of them, or any lessee of the Project or any of the
assets of any of them, or any allegation or contest of the
validity of this Guaranty, the Indenture, the Mortgage, the
Security Agreement, the Company Guaranty, the Personal
Guaranty, or the Reimbursement Agreement, or the disaffirmance
of the Reimbursement Agreement, the Mortgage, the Security
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Agreement, the Indenture, the Company Guaranty, the Personal
Guaranty, or this Guaranty;
(j) To the extent permitted by law, any event or action
that would, in the absence of this clause, result in the
release or discharge by operation of law of the Guarantor, the
Company Guarantor, or the Personal Guarantor from the
performance or observance of any obligation, covenant or
agreement contained in this Guaranty, the Company Guaranty, or
the Personal Guaranty; or
(k) The default or failure of the Guarantor, the Company
Guarantor, or the Personal Guarantor fully to perform any of
their obligations set forth in this Guaranty, the Company
Guaranty, or the Personal Guaranty.
SECTION 2.3 No set-off, counterclaim, reduction, or diminution of an
obligation, or any defense of any kind or nature (other than performance by the
Guarantor of its obligations hereunder) which the Guarantor has or may have
against the Borrower, the Bank or any holder of the Notes shall be available
hereunder to the Guarantor against the Bank.
SECTION 2.4 In the event of a default in the performance of any
covenants and agreements by the Borrower under the Reimbursement Agreement, the
Bank may proceed to enforce its rights hereunder and the Bank shall have the
right to proceed first and directly against the Guarantor, under this Guaranty
without proceeding against or exhausting any other remedies which it may have
and without resorting to any other security or guaranty held by the Bank.
SECTION 2.5 The Guarantor hereby expressly waives notice from the
Bank of its acceptance and reliance on this Guaranty. The Guarantor agrees to
pay all costs, expenses and fees, including all reasonable attorneys' fees
which may be incurred by the Bank in enforcing or attempting to enforce this
Guaranty or protecting the rights of the Bank hereunder following any default
on the part of the Guarantor hereunder, whether the same shall be enforced by
suit or otherwise.
SECTION 2.6 This Guaranty shall not be deemed to create any right in,
or to be in whole or in part for the benefit of any person other than the Bank,
and its permitted successors and assigns, and may be enforced only by the Bank.
ARTICLE III
AFFIRMATIVE COVENANTS
SECTION 3.1 From the date hereof until any indebtedness and
obligations under the terms of the Reimbursement Agreement are paid in full,
the Guarantor covenants and agrees that it will:
(a) Reporting. Provide or cause to be provided to the
Bank within 90 days after the end of each fiscal year, the
Guarantor's annual audited financial statements internally
prepared in accordance with generally accepted accounting
principles which shall include a balance sheet, statement of
income, statement of reconcilation of stockholder's equity,
statement of cashflows, and within 45 days after the end of
each quarter, the Guarantor's quarterly direct financial
reports
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which shall include a balance sheet at the end of each such
quarterly period and an income statement for the period for
the beginning of the current fiscal year to the end of such
quarter. A quarterly financial statement shall be prepared on
substantially the same accounting basis as the annual
statements described above and shall be certified by an
officer of the Guarantor as being true and correct to
the best of his or her knowledge and belief (subject to audit
and year-end adjustments).
(b) No Default Certificate. Together with such delivery
of the financial statements required by Section 3.1 (a) above,
furnish to the Bank a certificate of an officer of the
Guarantor stating that no Event of Default has occurred
hereunder, nor has any event occurred which, with notice
and/or passage of time, would constitute such an Event of
Default, or if any such Event of Default exists or would exist
with notice and/or the passage of time, stating the nature
thereof, the period of existence thereof and what action the
Guarantor proposes to take with respect thereto.
(c) Adverse Events. Promptly inform the Bank of the
occurrence of any Event of Default or of any event which, with
notice and/or the passage of time would become an Event of
Default, or of any occurrence which has or could reasonably be
expected to have a materially adverse effect upon the
business, properties, financial condition or ability to comply
with its obligations hereunder of the Guarantor.
(d) Other Information As Requested. Promptly furnish to
the Bank such other information regarding the operations,
business affairs and financial condition of the Guarantor as
the Bank may reasonably request from time to time, permit the
Bank, its employees, attorneys and its agents, to inspect all
of the books, records and properties of the Guarantor at any
reasonable time upon reasonable notice during normal business
hours.
(e) Maintain Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect the
existence, rights and franchises of the Guarantor and comply
with all applicable laws; continue to conduct and operate the
business of the Guarantor substantially as conducted and
operated during the present and preceding calendar year; at
all times maintain, preserve and protect all franchises and
trade names and preserve all the remainder of the property
used or useful in the conduct of the business of the Guarantor
and keep the same in good repair, working order and condition;
and from time to time make, or cause to be made, all needed
and proper repairs, renewals, replacements, betterments and
improvements thereto so that the business carried on in
connection therewith may be properly and advantageously
conducted at all times.
(f) Maintain Insurance. Maintain insurance against fire,
theft, and other casualty on its insurable real and personal
property at full replacement cost with policy terms and
conditions and companies acceptable to the Bank and maintain
insurance against liability on account of damage to persons or
property and as required under all workers' compensation laws.
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(g) Pay Taxes and Assessments. Duly pay and discharge or
cause to be paid and discharged all taxes, assessments and
other governmental charges imposed upon the Guarantor and its
properties or any part thereof or upon the income or profits
therefrom, as well as all claims for labor, materials or
supplies which, if unpaid, might by law become a lien or
charge upon its properties, except such items as are being in
good faith appropriately contested and for which security
sufficient to cover payment of such taxes or liens has been
provided to Bank.
(h) Accounting. Maintain a standard, modern system of
accounting for the Guarantor to permit the duly authorized
representatives of Bank at all reasonable times to examine and
inspect the books and records of the Guarantor or any related
business entity of the Guarantor, and to make abstracts and
copies thereof, and to inspect any property of the Guarantor
wherever the same may be located.
(i) Use of Property. All use of the Guarantor's
properties shall be in compliance with all state and federal
environmental laws, now existing or hereinafter enacted and
all permits, approvals and licenses concerning the use and
operation of such properties.
(j) Compliance with Law. The Guarantor shall comply with
all applicable federal, state and local laws, ordinances,
rules and regulations, including, but not limited to, all
environmental laws, ordinances, rules and regulations and
shall keep their real property free and clean of any liens
imposed pursuant to such laws, ordinances, rules and
regulations, and deliver to Bank such internally prepared
information, reports and forms satisfactory to Bank, together
with such other reports as Bank may reasonably request from
time to time to establish compliance with such laws.
(k) Litigation. The Guarantor will during the term of
this Guaranty, promptly furnish to the Bank, in writing, the
details of all material litigation, legal or administrative
proceedings, investigations or other actions of any nature
affecting the Guarantor, and, upon request of the Bank, submit
to the Bank the opinion of counsel to the Guarantor as to the
merits thereof. For purposes of this covenant only, "material"
shall be deemed to be any litigation, proceeding,
investigation or other action threatened in an amount
exceeding $50,000.
(l) Subordination. Except for payments on Subordinated
Indebtedness (as defined in the Subordination Agreement
described herein) as allowed by the Subordination Agreement of
even date between the Borrower, the Guarantor and the Bank
("Subordination Agreement") and advances for insurance, taxes
or rent by the Guarantor for the benefit of the Borrower,
subordinate any and all debt of the Borrower due to the
Guarantor to monies or like obligations owed the Bank. The
Guarantor may pay any such indebtedness in accordance with its
terms so long as the Guarantor is not in default hereunder and
will not become in default as a result of such payment under
any indebtedness owed to the Bank.
(m) Tangible Net Worth. Guarantor agrees to maintain
Tangible Net Worth of not less than Thirty Million and No/100
Dollars ($30,000,000) and a ratio of Debt to Tangible Net
Worth of not more than 1.75 to 1.0. "Tangible Net Worth"
shall
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include the amount of total assets excluding the amount of
Intangible Assets minus the amount of total liabilities,
exclusive of Subordinated Debt, if any. "Intangible Assets"
shall include at book value, without limitation, leasehold
improvements, goodwill, patents, copyrights, secret processes,
deferred expenses relating to sales, general administrative,
research and development expense, and all amounts due from any
officer, employee, director, shareholder, member or Related
Person. "Debt means all liabilities including but not limited
to, accruals, deferrals, and capitalized leases, less
Subordinated Debt, if any.
(n) Working Capital. Guarantor agrees to maintain net
working capital (excess of Current Assets over Current
Liabilities) of not less than Seven Million Five Hundred
Thousand and no/100 Dollars ($7,500,000). "Current Assets"
shall mean the sum of cash, marketable securities having a
maturity of less than one (1) year, or which can be readily
liquidated in less than one year, inventory at lower of cost
or market, and ordinary trade accounts receivable excluding
any amount due from any officer, employee, director,
shareholder, member or Related Person. "Current Liabilities"
shall include all indebtedness normally held as due within one
(1) year (exclusive of Subordinated Debt, if any), and any
unsubordinated debt due to any officer, employee, director,
shareholder, member or Related person.
ARTICLE IV
FURTHER COVENANTS
SECTION 4.1 Covenants and Agreements with Respect to Other
Indebtedness. So long as the obligations of the Borrower to the Bank under
the Reimbursement Agreement remain outstanding, the Guarantor agrees to comply
with all covenants and agreements made in any and all instruments evidencing
any Other Indebtedness owed or to be owed by Guarantor to the Bank.
ARTICLE V
[INTENTIONALLY DELETED]
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6. 1
(a) The occurrence of any of the following events shall
be an event of default hereunder unless waived in writing by
the Bank:
(i) Any representation or warranty made by the
Guarantor pursuant hereto or in any financial data or
other information now or hereafter delivered shall
prove to have been incorrect in any material respect
when made; or
(ii) If any principal, premium, if any, or
interest or any other sums, owing by the Guarantor or
any of them to the Bank, whether now existing
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or hereafter arising, are not paid when due, whether
by acceleration or otherwise; or
(iii) The Guarantor shall fail to perform or
observe any term, covenant or agreement contained in
this Guaranty (other than by reason of non-payment),
after 30 days written notice having been given to the
Guarantor by Bank; or
(iv) Any material provision of this Guaranty shall
at any time for any reason cease to be valid and
binding on the Guarantor, or shall be declared to be
null and void, or the validity or enforceability
thereof against the Guarantor shall be contested by
the Guarantor or any governmental agency or
authority, or the Guarantor shall deny that it has
any or further liability or obligation under this
Guaranty; or
(v) The default by the Guarantor in the due
payment of any of its indebtedness for borrowed money
in excess of $50,000 or in the observance or
performance of any term, covenant or condition in any
agreement or instrument evidencing, securing or
relating to such indebtedness, and such default shall
be continued for the sooner to occur of a period of
30 days or the acceleration of such indebtedness; or
(vi) The entry against the Guarantor, of one or
more judgments or decrees involving an aggregate
liability of $50,000 or more, which has or have
become non-appealable and shall remain undischarged,
unsatisfied by insurance and unstayed for more than
20 days, whether or not consecutive; or the issuance
and levy of a writ of attachment or garnishment
against the property of the Guarantor, in an action
claiming $50,000 or more, and which is not released
or appealed and bonded in a manner satisfactory to
the Bank; or
(vii) If the Guarantor, shall voluntarily suspend
transaction of its business; or if the Guarantor
shall make a general assignment for the benefit of
creditors; or shall be the object of a petition under
the United States Bankruptcy Code which is not
dismissed within 30 days of the filing of such
petition; or shall file a voluntary petition in
bankruptcy or for a reorganization or to effect a
plan or other arrangement with its creditors; or
shall file an answer to a creditor's petition or
other petition against it (admitting the material
allegations thereof) for liquidation or adjustment of
debts or for a reorganization; or shall apply for or
permit the appointment of a receiver, trustee, or
custodian for any substantial portion of its
properties or assets; or if any order shall be
entered by any court approving an involuntary
petition seeking reorganization which is not
dismissed within 30 days after entry; or if a
receiver, trustee, or custodian shall be appointed
for it or for any substantial portion of its property
or assets; or if it becomes unable to meet its
obligations as they mature; or
(viii) The occurrence of a default or an Event of
Default under any of Operative Documents.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.1 The obligations of the Guarantor hereunder shall arise
absolutely and unconditionally upon the issuance of the Letter of Credit. The
execution and delivery of this Guaranty shall not impair or diminish in any
respect the obligations of the Guarantor under this Guaranty or the Operative
Documents.
SECTION 7.2 No delay or omission to exercise any right or power
accruing upon any default, omission or failure or performance hereunder shall
impair any such right or power or shall be construed to be a waiver thereof,
but any such right and power may be exercised from time to time and as often as
may be deemed expedient. In order to entitle the Bank to exercise any remedy
reserved to it in this Guaranty, it shall not be necessary to give any notice,
other than such notice as may be expressly required herein or in the Operative
Documents. In the event any provision contained in the Guaranty should be
breached by any party and thereafter duly waived by the other party so
empowered to act, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder. No waiver,
amendment, release or modification of this Guaranty shall be established by
conduct, custom or course of dealing, but solely by an instrument in writing
duly executed by the parties to this Guaranty.
SECTION 7.3 Guarantor waives any and all defenses, claims and
discharges of the Borrower with respect to the indebtedness described in
paragraph 2.1 above, except the defense of discharge by payment. Without
limiting the generality of the foregoing, Guarantor will not assert, plead or
enforce against the Bank any defense of waiver, release, discharge of
bankruptcy, statute of limitations, res judicata, statute of frauds,
anti-deficiency statute, fraud, incapacity, minority, usury, illegality or
unenforceability that may be available to Borrower or any other person liable
in respect of any such indebtedness or any set-off available against Bank to
the Borrower or any such other person, whether or not on account of a related
transaction. Guarantor shall be liable for any deficiency remaining after
foreclosure of or realization upon any security for all or part of the
indebtedness described in paragraph 2.1 above, whether or not liability of the
Borrower or any other obligor for the deficiency changed pursuant to statute or
judicial decision.
SECTION 7.4 If any payment applied by the Bank to the indebtedness
described in paragraph 2.1 above is set aside, recovered, rescinded, or
required to be returned for any reason (including, without limitation, the
bankruptcy, insolvency or reorganization of the Borrower or any other obligor)
the indebtedness to which the payment was applied shall, for the purposes of
this Guaranty, be deemed to have continued in existence, notwithstanding such
application, and this Guaranty shall be enforceable as to such indebtedness as
fully as if the Bank had not made the application.
SECTION 7.5 The Guarantor agrees to indemnify the Bank and hold it
harmless from and against any and all losses, expenses, damages, costs and
reasonable attorneys' fees incurred by the Bank in connection with or as a
result of the assertion of any and all claims for the return of monies
(including the proceeds of any collateral received or applied by the Bank in
partial or full payment of the indebtedness), including without limitation all
such claims based upon allegations that monies so received by the Bank
constituted trust funds under any applicable law or that the payment of such
monies or the granting of such collateral to the Bank constituted a
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preference or a fraudulent transfer under the Bankruptcy Act or any other
applicable law. This indemnity shall extend to and include all monies
recovered from or paid over by the Bank as a result of such claim, regardless
of the basis thereof, and all costs and expenses including reasonable
attorneys' fees incurred by the Bank in investigating, evaluating and
contesting such claims, regardless of the outcome.
SECTION 7.6 The Guarantor represents and warrants that it has
received and reviewed the Reimbursement Agreement between the Bank and the
Borrower understands its terms and provisions, and the obligations of the
Borrower which the Guarantor is guaranteeing hereby.
SECTION 7.7 The Guaranty, with respect to the obligations referred to
herein, constitutes the entire agreement, and supersedes all prior agreements
and understanding, both written and oral, between the parties with respect to
the subject matter hereof and may be executed simultaneously in several
counterparts. each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
SECTION 7.8 The invalidity or unenforceability of any one or more
phrases, sentences, clauses or sections in this Guaranty contained, shall not
affect the validity or enforceability of the remaining portions of this
Guaranty, or any part thereof.
SECTION 7.9 This Guaranty shall be construed under the laws of the
State of Michigan.
SECTION 7.10 Notices, if any, required to be given to any party
hereunder shall be given to the parties at the addresses listed in and as
provided in the Reimbursement Agreement and to the Guarantor at 0000 Xxxxxxxxxx
Xxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx Xxxxxxx.
SECTION 7.11 This Agreement is personal to the parties hereto and is
for their sole benefit and is not made for the express or implied benefit of
any other person or entity.
SECTION 7.12 This Guaranty shall bind the Guarantor, and its
successors and assigns, and shall inure to the benefit of the Bank, its
successors and assigns.
ARTICLE VIII
DEFINITIONS
When used herein "Operative Documents" shall mean the Notes, the
Indenture, the Reimbursement Agreement, the Mortgage, the Company Guaranty, the
Personal Guaranty, and the Security Agreement and any other agreement or
instrument securing or relating to any of the foregoing.
The definitions contained in the Reimbursement Agreement are
incorporated herein by reference unless otherwise defined herein.
THE UNDERSIGNED AND BANK 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
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THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS GUARANTY OR
THE INDEBTEDNESS.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed as of the date first above written.
MAXCO, INC.
By:
--------------------------------
Xxxxxxx Xxxxxxx
Its: Vice President of Finance
ACCEPTED:
FIRST OF AMERICA BANK, N.A.
By:
-----------------------------
Xxxxxxx X. Xxxxxxxxx
Its: Vice President
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