EXHIBIT 10.12
FIRST AMENDMENT TO LOAN AND GUARANTY
AGREEMENT, CONFIRMATION OF SECURITY
AGREEMENT AND CONFIRMATION OF GUARANTY
THIS FIRST AMENDMENT TO LOAN AND GUARANTY AGREEMENT, CONFIRMATION OF
SECURITY AGREEMENT AND CONFIRMATION OF GUARANTY, dated as of November 1, 1993
(this "Amendment"), is among CHECKER MOTORS CO., L.P., a Delaware limited
partnership (the "Company"), CHECKER MOTORS CORPORATION, a New Jersey
corporation ("CMC"), SOUTH CHARLESTON STAMPING & MANUFACTURING COMPANY, a West
Virginia corporation ("SCSM", and CMC and SCSM may each be referred to herein as
a "Guarantor" or collectively as the "Guarantors"), and NBD BANK, N.A., a
national banking association formerly named National Bank of Detroit (the
"Bank").
RECITALS
A. The Company, the Guarantors and the Bank have entered into a Loan
and Guaranty Agreement, dated as of September 17, 1992 (the "Loan Agreement"),
pursuant to which the Bank provided to the Company a $30,000,000 term loan and
the Guarantors guaranteed the indebtedness of the Company.
B. The Company, the Guarantors and the Bank now desire that the Loan
Agreement be amended to provide for an additional uncommitted line of credit in
the amount of $5,000,000 payable by the Company and guaranteed by the
Guarantors.
C. The Company and the Bank further desire to confirm the
effectiveness of the Security Agreement and all other agreements and documents
executed in connection with the Loan Agreement and the Guarantors further desire
to confirm their obligations under the Guaranty and the collateral granted by
them and all other agreements and documents executed in connection with the Loan
Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO LOAN AGREEMENT
Effective upon the date that the conditions precedent set forth in
Section 3 hereof are satisfied, which date shall be determined by the Bank in
its reasonable discretion (the "Amendment Date"), the Loan Agreement is hereby
amended as follows:
1.1 The recital paragraph on the first page is deleted and the
following is substituted in place thereof:
WHEREAS, the Company desires to obtain a term loan in the aggregate
principal amount of $30,000,000 in order to refund existing
indebtedness owed by CMC and SCSM to the Bank and for other
partnership purposes allowed hereunder and the Company desires to
obtain an uncommitted line of credit in aggregate amount not to exceed
$5,000,000 for working capital purposes, the Guarantors, in
consideration of $10.00 and other valuable consideration, the amount
and sufficiency of which is hereby acknowledged, are willing to
guaranty such term loan and line of credit, and the Bank is willing to
make a term loan and provide such a line of credit on the terms and
conditions herein set forth;
1.2 The definition of "FLOATING RATE" contained in Section 1.1 is
deleted and the following is substituted in place thereof:
"FLOATING RATE" shall mean the per annum rate equal to the sum of
(a)(i) with respect to Line of Credit Loans, one percent (1%) per
annum (ii) with respect to the Term Loan, one and one quarter
percent (1-1/4%) per annum plus (b) the Prime Rate in effect from
time to time; such Floating Rate shall change simultaneously with
any change in such Prime Rate.
1.3 The definition of "LOAN" shall be deleted and the following is
substituted in the place thereof:
"LOAN" shall mean any Line of Credit Loan or the Term Loan, and
"Loans" shall mean all Line of Credit Loans and the Term Loan.
1.4 The definition of "NOTES" contained in Section 1.1. is deleted
and the following is substituted in the place thereof:
"NOTES" shall mean the Term Note and the Line of Credit Note, and
each shall be a "Note".
1.5 The following definitions are inserted in Section 1.1 in
appropriate alphabetical order:
"EXPIRY DATE" shall mean the earlier of (a) November 30, 1994, or
(b) the date on which the Line of Credit Note is accelerated
under Section 7.2(a).
"FIRST AMENDMENT" shall mean the First Amendment to Loan and
Guaranty Agreement, Confirmation of Security
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Agreement and Confirmation of Guaranty, dated as of November 1,
1993, among the Company, the Guarantors and the Bank.
"FIRST AMENDMENT DATE" shall mean the Amendment Date, as defined
in Section 1 of the First Amendment.
"LINE OF CREDIT LOANS" shall mean the borrowings under Section
2.1A evidenced by the Line of Credit Note and made pursuant to
Section 2.1A.
"LINE OF CREDIT NOTE" shall mean any promissory note of the
Company evidencing the Line of Credit Loans, substantially in the
form annexed hereto as Exhibit A-1, as amended or modified from
time to time and together with any promissory note or notes
issued in exchange or replacement therefor.
"TERM LOAN" shall mean the borrowing under Section 2.2 evidenced
by the Term Note and made pursuant to Section 2.1. Such Loan
shall be denominated as a Floating Rate Loan.
"TERM NOTE" shall mean the promissory note of the Company
evidencing the Term Loan, in substantially the form annexed
hereto as Exhibit A, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or
replacement therefor.
1.6 A new Section 2.1A is hereby added after existing Section 2.1 to
read as follows:
2.1A LINE OF CREDIT. The Bank agrees, subject to the terms and
conditions of this Agreement, to extend a line of credit to the
Company from time to time from the First Amendment Date through
the Expiry Date, in such amounts as the Company shall from time
to time request, not to exceed $5,000,000 in aggregate principal
amount at any time outstanding. Notwithstanding any provisions
of this Agreement or any other agreements, it is understood and
agreed that (a) the Bank shall at no time be obligated to make
any Line of Credit Loan, despite compliance with any express
conditions precedent thereto, and (b) the aggregate outstanding
principal amount of all loans by the Bank to the Company and the
Guarantors, whether under this Agreement or any other agreement,
shall not exceed $45,000,000.
1.7 A new Section 2.2A is hereby added after existing Section 2.2 to
read as follows:
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2.2A DISBURSEMENT OF LINE OF CREDIT LOANS. All Line of Credit
Loans shall be made as Floating Rate Loans, the proceeds of which
shall be made available to the Company by depositing the proceeds
thereof, in immediately available funds, in an account maintained
and designated by the Company at the Bank.
(b) All Line of Credit Loans made under this Section 2.2A shall
be evidenced by the Line of Credit Note, and shall be due and
payable and bear interest as provided in Article III. The Bank
is hereby authorized by the Company to record on the schedule
attached to the Line of Credit Note, or in its books and records,
the date and amount of each Line of Credit Loan, the amount of
each payment or prepayment of principal thereon, and the other
information provided for on such schedule, which schedule or
books and records, as the case may be, shall constitute prima
facie evidence of the information so recorded, PROVIDED, HOWEVER,
that failure of the Bank to record, or any error in recording,
any such information shall not relieve the Company of its
obligation to repay the outstanding principal amount of the Line
of Credit Loans, all accrued interest thereon and other amounts
payable with respect thereto in accordance with the terms of the
Line of Credit Note and this Agreement.
1.8 A new Section 2.7 is hereby added after Section 2.6 to read as
follows:
2.7 LINE OF CREDIT FEE. The Company further agrees to pay to the
Bank a fee during the period from the First Amendment Date to but
excluding the Expiry Date at a rate equal to three-eighths of one
percent (3/8 of 1%) per annum of the daily average of the
difference between $5,000,000 and the Line of Credit Loans,
payable quarterly in arrears on the last Business Day of each
March, June, September and December, commencing on such Business
Day in December, 1993, and on the Expiry Date.
1.9 A new Section 3.1(d) is hereby added after Section 3.1(c) to read
as follows:
(d) The Company shall pay to the Bank the outstanding principal
amount of the Line of Credit Loans on the Expiry Date.
1.10 Reference in the introductory paragraph to Section 5.2 to
"Maturity Date" shall be deleted and "later of the Maturity Date or the Expiry
Date" should be substituted in place thereof.
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1.11 Section 5.2(b) is hereby deleted and the following is substituted
in place thereof:
(b) CONSOLIDATED TANGIBLE NET WORTH. Permit or suffer
Consolidated Tangible Net Worth of CMC to be less than
$45,000,000 at any time from the Effective Date to and including
December 30, 1995, provided that such minimum required amount
shall increase by $1,000,000 on December 31, 1995 and on each
December 31st thereafter.
1.12 Section 5.2(d) is amended by deleting reference therein to "3.50
to 1.0" and substituting "4.0 to 1.0" in place thereof.
1.13 Section 5.2(g) is amended by deleting the period at the end of clause
(ii) thereof and substituting "; and" in place thereof and adding the following
new clause (iii) to the the end of Section 5.2(g):
(iii) Notwithstanding anything contained in this Agreement to the
contrary, and in accordance with the letter from the Bank dated
September 21, 1993, the proceeds of the sale of not more than 100
taxi medallions may be paid to ICC (which payments are in
addition to those allowed under Section 5.2(i) hereof and are not
subject to any other covenants of this Agreement) to be used
solely to settle litigation with Boeing.
1.14 Section 5.2(i) is hereby deleted and the following is substituted
in place thereof:
(i) PAYMENTS TO ICC. Other than the payment to ICC permitted
by Section 5.2(g)(iii), any payments or transfers of any kind,
directly or indirectly from the Company, any of the Guarantors or
any Subsidiary of the Company or any Guarantor to ICC shall not
exceed in the aggregate, (i) for 1992, the lesser of (x)
$26,000,000 or (y) $21,000,000 plus the Maximum Contingent
Amount; (ii) for 1993, the sum of $25,000,000 plus the difference
between the Maximum Contingent Amount and all Contingent Payments
made in 1992; and (iii) for 1994 and each year thereafter, the
sum of $20,000,000 plus the difference between the Maximum
Contingent Amount and all Contingent Payments made in prior
years, plus, for 1994, the lesser of $5,000,000 or the amount, if
any, by which payments to ICC permitted under this Section 5.2(i)
for 1993 were less than $25,000,000 and plus, for all years after
1994, the lesser of $5,000,000 or the amount, if any, by which
payments to ICC permitted under this Section 5.2(i) for the
immediately previous year were less than $20,000,000. As used
herein, "Maximum Contingent Amount" shall mean the lesser of (i)
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$5,000,000 or (ii) the actual tax payments and other liabilities
paid to the Internal Revenue Service arising from the settlement
of tax audits of federal tax returns of ICC for years prior to
1992 plus payments with respect to certain contingent liabilities
set forth on Schedule 5.2(i) (payments described in this clause
(ii) are defined as the "Contingent Payments"). Notwithstanding
any provision of this Agreement, (i) the Company shall not be
restricted from making additional distributions to its partners
out of funds legally available therefor, and (ii) the Guarantors
shall not be restricted from paying dividends out of a pool
smaller than one equal to one hundred percent of the amount
legally available under the corporate law of its state of
incorporation for such payments or distributions. Prior to any
such additional distribution or payment, the Company shall make a
prepayment to the Bank in an amount equal to one-half of the then
outstanding balance of the Loans, which prepayment shall be
applied to installments of principal of the Loans in the inverse
order of their maturities. The Company agrees that the amount of
payments allowed under this Section 5.2(i) will be adjusted
downward if ICC restructures its debt to the extent allowed under
such restructuring.
1.15 Section 7.1(k) is hereby deleted and the following is substituted
in place thereof:
(k) The occurrence of any Event of Default under the Credit and
Guaranty Agreement, dated as of August 1, 1989, as amended or
modified from time to time (the "SCSM Credit Agreement"), among
SCSM, as the borrower, the Company and CMC, as guarantors, and
the Bank.
1.16 Each reference in Sections 2.1, 2.2 and 2.3 to "a Loan" or "the
Loan" shall be deleted and "the Term Loan" shall be substituted in each place
thereof and each reference in Sections 2.2 and 2.3(e) to "Note" shall be deleted
and "Term Note" shall be substituted in place thereof.
1.17 Each reference in Section 2.4 (except as set forth in Section
1.18) and the first reference in Section 3.1(b) to "the Loan" shall be deleted
and "any Loan" shall be substituted in each place thereof.
1.18 Each reference in the last paragraph of Section 2.4 and in
Section 3.2 to "the Loan" shall be deleted and "each Loan" shall be substituted
in each place thereof.
1.19 Each reference in Section 3.1(a) and 3.1(c) to "Loan" shall be
deleted and "Term Loan" shall be substituted in each thereof.
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1.20 Each reference in Sections 3.4, 3.5, Article IV, Section 5.2(i),
Article VI, Section 7.2 and Article VIII to "Loan" shall be deleted and "Loans"
shall be substituted in each place thereof.
1.21 Each reference in Article IV, Article V, Article VI, Section 7.2
and Article VIII to "Note" shall be deleted and "Notes" shall be substituted in
each place thereof.
1.22 The form of Line of Credit Note annexed hereto as Exhibit A-1 is
hereby added to the Credit Agreement as Exhibit A-1.
1.23 Any schedules attached hereto are substituted for the
corresponding schedules attached to the Credit Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES
Each of the Company and each Guarantor represents and warrants that:
2.1 It has all requisite power and authority, corporate or otherwise,
to execute and deliver this Amendment and to engage in the transactions
contemplated by the Loan Agreement, as amended by this Amendment (the "Amended
Loan Agreement"), and to perform its obligations under the Amended Loan
Agreement and the Line of Credit Note to which it is a party. The execution and
delivery by it of this Amendment and the Line of Credit Note to which it is a
party, and the performance by it of the Amended Loan Agreement and the Line of
Credit Note to which it is a party have been duly authorized by all necessary
action, corporate or otherwise, and do not and will not (a) require any consent
or approval of its stockholders, if any, (b) violate any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to it or of its Articles of
Incorporation, By-Laws or Partnership Agreement, as applicable, or (c) result in
a breach or constitute a default under any indenture or loan or credit agreement
or other agreement, lease or instrument to which it is a party or by which it or
its properties may be bound or affected.
2.2 No authorization, consent, approval, license, exemption of or
filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary to the valid execution or delivery by it of this Amendment or the Line
of Credit Note to which it is a party, or the performance by it of the Amended
Loan Agreement or the Line of Credit Note to which it is a party.
2.3 The Amended Loan Agreement and the Line of Credit Note to which
it is a party constitute its legal, valid and binding obligations enforceable
against it in accordance with their terms.
2.4 After giving effect to the amendments contained in this
Amendment, its representations and warranties contained in Article IV of the
Loan Agreement, Section 2 of the Security Agreement and in Article IV the SCSM
Credit are true on and as of the date hereof with the same force and effect as
if made on and as of the date hereof.
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2.5 After giving the effect to the amendments contained in this
Amendment, there is no Event of Default or event or condition which may become
an Event of Default with notice or lapse of time, or both, as of the date
hereof.
2.6 CMC represents and warrants that, other than the capital stock of
SCSM and Checker Holding Corp. III and its partnership interest in the Company,
the only assets owned by it are those described in the Security Agreement, that
the Bank has a lien and security interest in all such assets of CMC described in
the Security Agreement, such liens and security interests are of a first
priority other than as described in Schedule 2.6 hereto and CMC will promptly
notify the Bank if it acquires any other assets and execute such further
agreements and other documents to grant a first priority lien and security
interest thereon as requested by the Bank.
SECTION 3. CONDITION PRECEDENT
3.1 CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective until the Company and the Guarantors furnish to the Bank the following
documents and complete the following matters, each in form and substance
satisfactory to the Bank:
(a) Certified copies of such corporate and partnership documents of
the Company and each Guarantor, including those evidencing necessary corporate
action with respect to this Agreement, the Line of Credit Note and any other
documents executed in connection herewith as the Bank may request.
(b) The Line of Credit Note duly executed on behalf of each Borrower.
(c) Payment of facility fee to the Bank in amount of $50,000.
(d) The favorable written opinion of counsel for the Company and the
Guarantors, in form and substance satisfactory to the Bank and its counsel.
(e) Such other documents and agreements requested by the Bank,
including without limitation a solvency certificate.
SECTION 4. MISCELLANEOUS
4.1 All references to the Loan Agreement or the Note in the Security
Agreement, any Note, any certificate or instrument or any other document, shall
hereafter be deemed references to the Loan Agreement as amended hereby and to
the Notes as defined in the Loan Agreement after giving effect to this
Amendment, respectively.
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4.2 Capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Loan Agreement or the Security
Agreement, as the case may be.
4.3 This Amendment may be executed upon any number of counterparts
with the same effect as if the signatures thereto were upon the same instrument.
4.4 The Company agrees to pay the reasonable fees and expenses of
Dickinson, Wright, Moon, Van Dusen & Freeman, counsel for the Bank, in
connection with the preparation of this Amendment, the Line of Credit Note and
related documents and the consummation of the transactions contemplated hereby.
4.5 The Company and each Guarantor hereby ratify and confirm the Loan
Agreement, the Notes, the Security Agreement and all other agreements and
documents executed at any time pursuant to the Loan Agreement (all the foregoing
referred to collectively as the "Loan Documents") and agree that each shall
remain in full force and effect and acknowledge that they have no defense,
offset or counterclaim with respect thereto. Each Borrower agrees that all
collateral granted by it, including without limitation pursuant to the Security
Agreement, are cross collateralized and secure all present and future
indebtedness, obligations and liabilities of the Company and each Guarantor now
or hereafter owing to the Bank, including without limitation pursuant to the
Line of Credit Note, the Term Note and the SCSM Credit Agreement. The
Guarantors acknowledge and confirm that they jointly and severally and
unconditionally guarantee all present and future indebtedness, obligations and
liabilities of the Company to the Bank, including without limitation those
pursuant to the Line of Credit Note and the Term Note, and each Guarantor
further acknowledges and confirms that any collateral granted by either
Guarantor, including without limitation any collateral granted pursuant to the
SCSM Credit Agreement and the security agreement and other documents executed
pursuant thereto, (the "SCSM Loan Documents"), are cross collateralized and
secure all present and future indebtedness, obligations and liabilities of the
Company and each Guarantor now or hereafter owing to the Bank, including without
limitation pursuant to the Line of Credit Note and the Term Note, the Loan
Agreement and the SCSM Credit Agreement. The Company and each Guarantor
represent and warrant that the Bank has a first priority (subject only to such
Liens permitted by Section 5.2(e) of the Loan Agreement), perfected and
enforceable lien and security interest on all collateral described in the Loan
Documents and in the SCSM Loan Documents.
4.6 Each Guarantor and the Company represent and warrant that they
are aware of no claims or causes of action by the Company or any Guarantor
against the Bank. Notwithstanding this representation and as further
consideration for the agreements and understandings herein, each Guarantor and
the Company, individually and jointly and severally, for themselves and for
their respective heirs, successors and assigns, hereby release the Bank and its
officers, directors, employees, agents, attorneys, affiliates, subsidiaries,
successors and assigns from any liability, claim, right or cause of action which
now exists or hereafter arises, whether known or unknown, arising from or in any
way related to facts in existence as of the date hereof.
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4.7 This Amendment constitutes the entire understanding of the
parties with respect to the subject matter hereof and may only be modified or
amended in a writing signed by all parties hereto. Each party hereto
acknowledges that it has been given an opportunity to consult with counsel and
after such consultation or opportunity, knowingly, voluntarily and without
duress enter into this Agreement and each party hereto acknowledges that they
have carefully and completely read all of the terms and provisions hereof.
4.8 This Amendment shall be governed by and construed in accordance
with the laws of the State of Michigan applicable to contracts made and to be
performed entirely within such State without giving effect to choice of law
principles of such State.
WITNESS the due execution hereof, effective as of the 1st day of
November, 1993, which shall be the Effective Date of this Amendment.
CHECKER MOTORS CORPORATION
By: /s/ Jay Harris
-----------------------------------
Its: Vice President
-----------------------------
CHECKER MOTORS CO., L.P.
By: CHECKERS MOTORS CORPORATION,
general partner
By: /s/ Jay Harris
----------------------------------
Its: Vice President
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SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY
By: /s/ Marlan R. Smith
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Its: Assistant Treasurer
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NBD BANK, N.A.
By: /s/ Randy Balluff
----------------------------------
Its: Vice President
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EXHIBIT A-1
LINE OF CREDIT NOTE
$5,000,000 November 1, 1993
Detroit, Michigan
FOR VALUE RECEIVED, the undersigned, CHECKER MOTORS CO., L.P., a
Delaware limited partnership (the "Company"), hereby unconditionally promises to
pay to the order of NBD BANK, N.A., a national banking association (the "Bank"),
at the principal banking office of the Bank in lawful money of the United States
of America and in immediately available funds, the principal sum of Five Million
Dollars ($5,000,000), or such lesser amount as is noted on the schedule attached
hereto, on the Expiry Date; and to pay interest on the unpaid principal balance
hereof from time to time outstanding, in like money and funds, for the period
from the date hereof until the Loans evidenced hereby shall be paid in full, at
the rates per annum and on the dates provided in the Loan Agreement referred to
below.
The Bank is hereby authorized by the Company to note on the schedule
attached to this Line of Credit Note the date and amount of each Loan, the
amount of each payment or prepayment of principal thereon and other information
provided for on such schedule, which schedule shall constitute prima facie
evidence of the information so noted, PROVIDED that any failure by the Bank to
make any such notation shall not relieve the Company of its obligation to repay
the outstanding principal amount of this Line of Credit Note, all accrued
interest hereon and any amount payable with respect hereto in accordance with
the terms of this Line of Credit Note and the Loan Agreement.
The Company and each endorser or guarantor hereof waives presentment,
protest, diligence, notice of dishonor, demand, and any other formality in
connection with this Line of Credit Note. Should the indebtedness evidenced by
this Line of Credit Note or any part thereof be collected in any proceeding or
be placed in the hands of attorneys for collection, the Company agrees to pay,
in addition to the principal and interest due and payable hereon, all costs of
collecting this Line of Credit Note, including attorneys' fees and expenses.
This Line of Credit Note evidences one or more Loans made under a Loan
and Guaranty Agreement, dated as of September 17, 1992 among the Company, South
Charleston Stamping & Manufacturing Company, a West Virginia corporation,
Checker Motors Corporation, a New Jersey corporation, and the Bank, as amended
or modified through the date hereof and as further amended or modified from time
to time (the "Loan Agreement"), to which reference is hereby made for a
statement of the circumstances under which this Line of Credit Note is subject
to prepayment and under which its due date applicable in the absence of demand
may be accelerated and for a description of the collateral and security securing
payment hereof. Capitalized terms used but not defined in this Line of Credit
Note shall have the respective meanings assigned to them in the Loan Agreement.
CHECKER MOTORS CO., L.P.
By: CHECKER MOTORS CORPORATION,
its general partner
By:
----------------------------------
Its:
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Schedule to Line of Credit Note, dated
November 1, 1993, made by Checker Motors Co., L.P.
in favor of NBD Bank, N.A.
Principal Principal Principal
Date Loan Amount of Interest Amount Paid Balance Notation
Made Loan Rate or Pre-paid Outstanding Made by
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