$20,000,000 Detroit, Michigan
June 17, 1997
RENEWAL TERM NOTE
On February 7, 2005 (the "Maturity Date"), for value received, the
undersigned promises to pay to the order of Comerica Bank ("Bank") at any
office of the Bank in the State of Michigan, Twenty Million Dollars
($20,000,000) (U.S.) with interest from the date of this Note at the rate of
eight and four hundred forty-five thousandths percent (8.445%) per annum until
maturity, whether by acceleration or otherwise, or until Default, as later
defined, and after that at a default rate equal to the rate of interest
otherwise prevailing under this Note, plus three percent (3%) per annum (but
in no event in excess of the maximum rate permitted by law). Interest shall be
calculated for the actual number of days the principal is outstanding on the
basis of a 360-day year. Principal and interest under this Note shall be due
and payable as follows:
(i) commencing on September 1, 1997 and on the first day of each
calendar quarter thereafter through April 1, 2000, payments of
interest only shall be due and payable;
(ii) thereafter, commencing on July 1, 2000 and on the first day of
each calendar quarter thereafter until the Maturity Date, when all
amounts outstanding under this Note shall be due and payable in
full, payments of principal shall be due and payable each in the
amount of One Million Dollars ($1,000,000), plus accrued interest.
If any payment of principal or interest under this Note shall be payable on a
day other than a day on which the Bank is open for business, this payment
shall be extended to the next succeeding business day and interest shall be
payable at the rate specified in this Note during this extension. A late
payment charge equal to five percent (5%) of each late payment may be charged
on any payment not received by the Bank within ten (10) calendar days after
the payment due date, but acceptance of payment of this charge shall not waive
any Default under this Note.
The Bank does not have to accept any prepayment of principal under this
Note except as described below or as required under applicable law. The
undersigned may prepay principal of this Note in increments of $500,000 at any
time as long as the Bank is provided written notice of the prepayment at least
five business days prior to the date of prepayment. The notice of prepayment
shall contain the following information: (a) the date of prepayment (the
"Prepayment Date") and (b) the amount of principal to be prepaid. On the
Prepayment Date, the undersigned will pay to the Bank, in addition to the
other amounts then due on this Note, the Prepayment Amount described below.
The Bank, in its sole discretion, may accept any prepayment of principal even
if not required to do so under this Note and may deduct from the amount to be
applied against principal the other amounts required as part of the Prepayment
Amount.
The Prepaid Principal Amount (as defined below) will be applied to this
Note in the reverse order of which the principal payments would have been due
under this Note's principal amortization schedule. If the Bank exercises its
right to accelerate the payment of this Note prior to its stated maturity, the
undersigned will pay to the Bank, in addition to the other amounts then due on
this Note, on the date specified by the Bank as the Prepayment Date, the
Prepayment Amount.
The Bank's determination of the Prepayment Amount will be conclusive in
the absence of obvious error or fraud. If requested in writing by the
undersigned, the Bank will provide the undersigned a written statement
specifying the Prepayment Amount.
For purposes of this Note, the Prepayment Amount shall be equal to the
sum of: (i) the amount of principal which the undersigned has elected to
prepay or the amount of principal which the Bank has required the undersigned
to prepay because of acceleration, as the case may be (the "Prepaid Principal
Amount"), (ii) interest accruing on the Prepaid Principal Amount up to, but
not including, the Prepayment Date, (iii) Five Hundred Dollars ($500) plus
(iv) the present value, discounted at the Reinvestment Rates (as defined
below), of the positive amount by which (A) the interest the Bank would have
earned had the Prepaid Principal Amount been paid according to the Note's
amortization schedule at the Note's interest rate exceeds (B) the interest the
Bank would earn by reinvesting the Prepaid Principal Amount at the
Reinvestment Rates (defined below).
As used herein, "Reinvestment Rates" shall mean the per annum rates of
interest equal to one half percent (1/2%) above the rates of interest reasonably
determined by the Bank to be in effect not more than seven days prior to the
Prepayment Date in the secondary market for United States Treasury Obligations
in amount(s) and with maturity(ies) which correspond (as closely as possible)
to the principal installment amount(s) and the payment date(s) against which
the Prepaid Principal Amount will be applied.
If the undersigned (a) fails to pay this Note or any of the Indebtedness
when due, by maturity, acceleration or otherwise, or fails to pay any
Indebtedness owing on a demand basis upon demand; or (b) fails to comply with
any of the terms or provisions of any agreement between the undersigned and
the Bank as in effect from time to time; or (c) becomes insolvent or the
subject of a voluntary or involuntary proceeding in bankruptcy, or a
reorganization, arrangement or creditor composition proceeding, ceases doing
business as a going concern, is the subject of a dissolution, merger or
consolidation (other than a merger or consolidation in which the undersigned
is the survivor); or (d) if any warranty or representation made by the
undersigned or any guarantor in connection with this Note or any of the
Indebtedness shall be discovered to be untrue or incomplete; or (e) if there
is any termination, notice of termination, or breach of any guaranty, pledge,
collateral assignment or subordination agreement relating to all or any part
of the Indebtedness; or (f) if there is any failure by the undersigned to pay
when due, taking into account any applicable period of grace or cure, any of
its indebtedness for borrowed money (other than to the Bank) or in the
observance or performance of any term, covenant or condition in any document
evidencing, securing or relating to such indebtedness; or (g) if there occurs
an event of default under that certain $50,000,000 long term Credit Agreement
dated as of June 17, 1997 among the undersigned and certain subsidiaries of
the undersigned as borrowers, certain commercial lending institutions
(including the Bank) as lenders, ABN AMRO Bank N.V. as agent for such lenders
and the Bank as documentation agent for such lenders, that certain $50,000,000
short term Credit Agreement dated as of June 17, 1997 among the undersigned
and certain subsidiaries of the undersigned as borrowers, certain commercial
lending institutions (including the Bank) as lenders, ABN AMRO Bank N.V. as
agent for the lenders and the Bank as documentation agent for such lenders,
that certain $3,230,357.07(8.82%) Renewal Term Note dated as of June 17, 1997
issued by the undersigned in favor of the Bank or that certain $20,000,000
(6.75%) Renewal Term Note dated as of June 17, 1997 issued by the undersigned
in favor of the Bank, each such agreement in the form existing as of the date
hereof, and notwithstanding (x) the repayment of any indebtedness covered
thereby or (y) any amendment, supplement or termination of any such credit
agreement after the date hereof; then the Bank, upon the occurrence of any of
these events (each a "Default"), may at its option and without prior notice to
the undersigned, declare any or all of the Indebtedness to be immediately due
and payable (notwithstanding any provisions contained in the evidence of it to
the contrary), sell or liquidate all or any portion of the collateral, set off
against the Indebtedness any amounts owing by the Bank to the undersigned,
charge interest at the default rate hereunder or as provided in the document
evidencing the relevant Indebtedness and exercise any one or more of the
rights and remedies granted to the Bank by any agreement with the undersigned
or given to it under applicable law. All payments under this Note shall be in
immediately available United States funds, without setoff or counterclaim.
This Note shall bind the undersigned, and its successors and assigns.
The undersigned waives presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices, and agrees that no extension or indulgence
to the undersigned or release, substitution or nonenforcement of any security,
or release or substitution of the undersigned, any guarantor or any other
party, whether with or without notice, shall affect the obligations of the
undersigned. The undersigned waives all defenses or right to discharge
available under Section 3-606 of the Uniform Commercial Code and waives all
other suretyship defenses or right to discharge. The undersigned agrees that
the Bank has the right to sell, assign, or grant participations, or any
interest, in any or all of the Indebtedness, and that, in connection with this
right, but without limiting its ability to make other disclosures to the full
extent allowable, the Bank may disclose all documents and information which
the Bank now or later has relating to the undersigned or the Indebtedness,
other than any documents or information reasonably determined by the
undersigned to be competitive or proprietary in nature and specifically
identified as such, in writing, to Bank.
All agreements between the undersigned and Bank pertaining to the
indebtedness described herein are expressly limited so that in no event
whatsoever shall the amount of interest paid or agreed to be paid to Bank
exceed the highest rate of interest permissible under applicable law. If, from
any circumstances whatsoever, fulfillment of any provision of any of the
Agreements, this Note or any other instrument securing this Note or all or any
part of the indebtedness secured thereby, at the time performance of such
provision shall be due, shall involve exceeding the interest limitation
validly prescribed by law which a court of competent jurisdiction may deem
applicable hereto, then, the obligation to be fulfilled shall be reduced to an
amount computed at the highest rate of interest permissible under such
applicable law, and if, for any reason whatsoever, Bank shall ever receive as
interest an amount which would be deemed unlawful under such applicable law,
such interest shall be automatically applied to the payment of the principal
amount described herein or otherwise owed by the undersigned to Bank (in the
inverse order of any applicable maturities and whether or not then due and
payable) and not to the payment of interest.
The undersigned acknowledges and agrees that there are no contrary
agreements, oral or written, establishing the terms of this Note and agrees
that the terms and conditions of this Note may not be amended, waived or
modified except in a writing signed by an officer of the Bank expressly
stating that the writing constitutes an amendment, waiver or modification of
the terms of this Note. As used in this Note, the word "undersigned" means,
individually and collectively, each maker, accommodation party, indorser and
other party signing this Note in a similar capacity. If any provision of this
Note is unenforceable in whole or part for any reason, the remaining
provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN.
THE UNDERSIGNED AND THE 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 THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
This Renewal Term Note is given in replacement and renewal of that
certain Term Note previously issued by the undersigned to Bank dated February
7, 1995.
SIMPSON INDUSTRIES, INC.
By:
Its: