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EXHIBIT 10.12
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into on this 2nd day of
November, 1995, by and between the CITY OF ERIE by and through the ENTERPRISE
DEVELOPMENT ZONE REVOLVING LOAN FUND, (hereinafter, the "Lender") and MCINNES
STEEL COMPANY, with its principal place of business located at 441 East Main
Street, Corry, Pennsylvania 16407 (hereinafter, the "Borrower").
1. The Borrower desires to borrow from the Lender the sum of
Three Hundred Forty-Nine Thousand Five Hundred and no/100 ($349,500.00) Dollars
for use in the conduct of its business known as MCINNES ROLLED RINGS, 1533 BAST
12TH STREET, ERIE, PA 16511, A DIVISION OF MCINNES STEEL COMPANY.
2. Lender has determined that it will lend to Borrower, a
qualifying entity, the sum of Three Hundred Forty-Nine Thousand Five Hundred
and no/100 ($349,500.00) Dollars.
3. The loan of Three Hundred Forty-Nine Thousand Five Hundred and
no/100 ($349,500.00) Dollars to the Borrower on the date hereof as a qualifying
business concern shall be made in accordance with the terms and conditions of
this Agreement, a Promissory Note (a copy of which is attached hereto as
Exhibit A) (the "Note"), a Mortgage on the land and buildings located at 1533
East 12th Street, Erie, PA 16511, and in reliance upon the representations and
warranties of the Borrower set forth herein.
4. This Agreement, the Note and Mortgage (collectively the "Loan
Documents") are hereby incorporated by reference.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and intending to be legally bound hereby, the Lender and the Borrower
agree to the following:
I. THE LOAN
1. Subject to the terms and conditions contained in the Loan
Documents and in reliance upon the representations and warranties of the
Borrower set forth therein, the Lender agrees to make and the Borrower agrees
to accept the Loan, the proceeds of which shall be disbursed by the Lender to
the Borrower on the date of the execution of the Note and Mortgage.
2. The principal balance of the Loan and interest thereon shall
be paid by the Borrower to the Lender in the manner provided in the Note.
3. The loan shall bear and Borrower shall pay Lender interest at
the rate of three (3%) percent per annum.
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4. The loan, including interest established pursuant to Paragraph
3, immediately above, shall be amortized over a period of eighty-four (84)
months.
II. THE COLLATERAL
1. As security for payment of the Note and all other charges
associated therewith, the Borrower hereby grants to the Lender a continuing
security interest in all of the machinery and equipment of McInnes Steel
Company located in Erie or Corry. The security interest shall be a second lien
on the machinery and equipment.
2. As additional security for payment of the Note and all
interest and other charges associated therewith, the Borrower hereby grants to
the Lender a mortgage on the land and buildings located at 1533 East 12th
Street, Erie, PA 16511. This mortgage lien will be junior in lien priority and
distribution to liens of PNC Bank, or successor Lender, and the Pennsylvania
Industrial Development Authority.
3. The Borrower agrees to execute any and all documents that
shall be necessary or desirable, from time to time, to create, perfect,
continue, or maintain the security interest of the Lender in the Collateral.
4. The Lender will have all rights with respect to the security
interest in the Collateral as are provided under the Uniform Commercial Code.
5. The Borrower shall obtain property insurance in the minimum
amount of Three Hundred Forty-Nine Thousand Five Hundred and no/100
($349,500.00) Dollars on both the personal and real property described above.
The insurance policy(ies) shall identify the City of Erie as a loss payee.
III. REPRESENTATIONS AND WARRANTIES
1. As an inducement for the Lender to make the Loan, the Borrower
represents and warrants to the Lender the following:
(a) The Borrower is a corporation duly organized and
operating in accordance with the laws of the Commonwealth of Pennsylvania.
(b) No other persons or entities have an ownership
interest in the Borrower.
(c) The execution, delivery and performance by the
Borrower of the Loan Documents is within power of the Borrower.
(d) The execution, delivery and performance of the Loan
Documents will not violate any provision of law, any order of any
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court or other agency or government, any provisions of any agreement, or other
instrument to which the Borrower is a party or by which it or any of its assets
are bound, or conflict with, result in a breach of, or constitute a default
under any agreement or other instrument binding upon the Borrower, or result in
the creation or imposition of any lien, charge, or encumbrance of any nature
upon any of the assets of the Borrower, other than those in favor of the Lender
arising out of the Loan Documents.
(e) The Loan Documents, when duly executed, will be valid
and binding obligations of the Borrower which are fully enforceable in
accordance with their terms.
(f) There is no action, suit, examination, review or
proceeding by or before any court of law, governmental instrumentality, or
agency now pending or, to the knowledge of the Borrower, threatened against the
Borrower, or against any of its assets or rights, which if adversely
determined, would materially impair its right to carry on business as now being
conducted or contemplated or which would materially adversely affect its
financial condition.
(g) The Borrower has filed, or caused to be filed, all
federal, state and local tax returns which are required to be filed, and has
paid all taxes as are shown on such returns, or in any assessment received by
it, to the extent that such taxes have become due.
(h) The Borrower has all licenses, franchises, consents,
permits, approvals and authorizations required in connection with the conduct
of its business as now being conducted or contemplated; and they are in full
force and effect without any modification, amendment, or revocation which would
materially adversely affect the conduct of its business.
(i) The Borrower has no knowledge of any claim or reason
to believe that it is or may be infringing on or otherwise acting adversely to
the rights of any person under or in respect of any patent, trademark, service
mark, trade name, copyright, license, or other similar intangible right.
(j) All oral and written information which has been
provided by the Borrower does not contain any untrue statement of a material
fact or does not omit a material fact that is necessary to make the information
true and not misleading.
2. Borrower shall make no loans to its shareholders, employees or
officers until the debt created hereby is paid in full or until Lender gives
its prior written approval.
3. The representations and warranties set forth herein shall
survive the execution of this Agreement, the making of the Loan and will
continue in full force and effect for the entire term of this Agreement after
the delivery of the Loan Documents and until the
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Loan and all remaining obligations are paid in full by the Borrower.
IV. AFFIRMATIVE COVENANTS
1. During the term of this Agreement and until repayment in full
of the Loan and all remaining obligations by the Borrower, including all
interest and other charges associated therewith, the Borrower agrees as
follows:
(a) Upon the request of the Lender, the Borrower will be
required to submit various financial information pertaining to the Borrower
including, but not limited to, an income statement, a balance sheet and a
statement of changes in financial position, all of which are prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved, which financial information the Lender may
require to be certified in accordance with generally accepted accounting
principles by an independent certified public accountant, selected by the
Borrower and satisfactory to the Lender.
(b) The Borrower will maintain, with financially sound
and reputable insurers, appropriate amounts of insurance to protect its
properties, the Collateral and the Borrower's business against losses or
damages of the kind customarily insured by corporations or businesses similarly
situated to that of the Borrower including, but not limited to, adequate fire
and extended coverage, insurance, business interruption insurance, necessary
workers' compensation insurance, products liability insurance and such other
insurance as may be reasonably required by law or as may be reasonably required
in writing by the Lender; and the Lender shall be named as the insured or loss
payee with respect to all of the foregoing insurance. The Borrower will, upon
request, furnish to the Lender a schedule of all insurance it carries setting
forth in detail the amount and type of such insurance.
(c) The Borrower will maintain in good condition, repair
and working order, all properties used or useful in its business including, but
not limited to, the Collateral.
(d) The Borrower will pay all debts incurred in the
ordinary course of business and other obligations in accordance with normal
terms or any applicable grace periods or duly contest the obligation pursuant
to any applicable law or statute. The Borrower will pay all taxes, assessments
and other governmental charges levied upon any of its properties or assets or
in respect to its franchises, business, income or profits before it becomes
delinquent or duly contest the obligation pursuant to any applicable law or
statute.
(e) The Borrower will promptly notify the Lender in
writing of any event or material adverse change in the condition,
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operations, business, financial or otherwise, of the Borrower which, if
existing at the date hereof, would require qualification of the representations
and warranties set forth herein.
(f) The Borrower will make available for inspection by
the lender its books, computer software programs, records and properties when
reasonably requested to do so and will promptly furnish the Lender with such
information regarding its business operations and financial condition as the
Lender may request, all of which shall be maintained by the Lender in
confidence.
V. NEGATIVE COVENANTS
1. The Borrower agrees that during the term of this Agreement and
until repayment in full of the Loan and all remaining obligations by the
Borrower, including all interest and other charges associated therewith,
without the prior written consent of the Lender:
(a) The Borrower will not, directly or indirectly,
purchase, sell, lease, sublease, transfer or otherwise dispose of its
properties or assets for less than full and adequate consideration.
(b) Except as expressly permitted herein, the Borrower
will not pay any bonus or additional compensation to any related person in
excess of amounts in effect as of the date of this Agreement, except any bonus
or additional compensation which would not in the aggregate materially impair
the financial condition of the Borrower.
(c) The Borrower will not undertake any merger,
consolidation, liquidation, dissolution, incorporation, or change in existence,
structure, or ownership.
VI. EVENTS OF DEFAULT
1. The occurrence of any one or more of the following events
shall constitute an event of default ("Event of Default") under this Agreement:
(a) If the Borrower fails to pay any installment of
interest or principal under the Note within ten (10) days after such payment
becomes due;
(b) If any representation or warranty made herein by the
Borrower or any other oral information, written statement, certificate, product
report, or financial statement at any time furnished by or for the Borrower in
connection herewith, proves to be false or erroneous in any material respect
when made;
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(c) If the Borrower fails to perform or observe any other
provision, covenant, or agreement contained in this Agreement (other than
mentioned in subparagraph (a) hereof) or in the remaining Loan Documents and
such failure remains unremedied for twenty (20) days after the Lender has given
written notice to the Borrower to cure the same;
(d) If the Borrower discontinues business, or if there
occurs a material adverse change in the business, properties, or the condition
or operations, financial or otherwise, of the Borrower which continues
unremedied for twenty (20) days after the Lender has given written notice to
the Borrower;
(e) If the Borrower is adjudicated as bankrupt or
insolvent, or ceases, is unable, or admits in writing its inability to pay its
debts as they mature, or makes an appointment for the benefit of its creditors;
(f) If the Borrower applies for, or consents to, the
appointment of any receiver, trustee, or similar officer for it or for all or
any substantial part of its property, or any such receiver, trustee, or similar
officer is appointed without the application or consent of the Borrower and
such appointment continues thereafter undischarged for a period of twenty (20)
days, or if the Borrower institutes, or consents to the institution of (by
petition, application, answer, consent or otherwise), any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution,
liquidation, or similar proceeding relating to it under the laws of any
jurisdiction, or if any such proceeding is instituted against the Borrower and
remains thereafter unstayed or undismissed for a period of twenty (20) days; or
(g) Any judgment, writ, warrant of attachment or
execution or similar process is issued or levied against a substantial part of
the property of the Borrower and such judgment, writ or similar process is not
released, vacated, or fully bonded within twenty (20) days after its issue or
levy.
VII. REMEDIES UPON DEFAULT
1. If an Event of Default shall occur, the Lender shall have the
following rights:
(a) In the event that one or more of the Events of
Default set forth in Article VI, Paragraph 1, subparagraphs (a) through (d)
hereof occurs and is not waived by the Lender, then, in any such event, and at
any time thereafter, the Lender may, at its option, terminate the Loan
Agreement and declare the unpaid principal of, and all interest and other
charges, if any, then accrued on, the Note and any other liabilities hereunder,
and all other indebtedness of the Borrower to the Lender immediately due and
payable in full, without presentment, demand, protest, or other
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notice of any kind, all of which the Borrower hereby expressly waives.
(b) Upon the happening of an Event of Default referred to
in Article VI, Paragraph 1, subparagraphs (e) through (g) hereof, the Note and
all other obligations of the Borrower to the Lender then existing will become
immediately due and payable in full, without presentment, demand, protest or
notice of any kind, all of which the Borrower hereby expressly waives.
(c) The remedies in this Article are in addition to, not
in limitation of, any other right, power, or remedy, either in law, in equity
or otherwise, to which the Lender may be entitled. No failure or delay on the
part of the Lender in exercising any right, power or remedy will operate as a
waiver thereof, nor will any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other rights the
Lender may have.
VIII. MISCELLANEOUS
1. No waiver of any provision of the Loan Documents or consent to
departures therefrom, is effective unless made in writing and signed by the
Lender. No such consent or waiver extends beyond the particular case and
purpose involved. No notice or demand given in any case constitutes a waiver of
the right to take other action in the same, similar or instances without such
notice or demand. No amendment of this Agreement is effective unless made in
writing and signed by the Borrower and the Lender.
2. The Borrower agrees to pay all costs and expenses in
connection with the preparation, execution, delivery and administration of the
Loan Documents, as well as such legal fees and expenses incurred in connection
with the enforcement of the Loan Documents.
3. The Loan Documents will be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania. Headings and
titles herein are for convenience only and will not influence the construction
or interpretation of the terms of this Agreement. The Borrower expressly agrees
to venue and personal jurisdiction in Erie County, Pennsylvania.
4. All written communications must be addressed to the Lender or
to the Borrower, as the case may be, at their respective addresses set forth
above or at such other address as either party may designate to the other in
writing. Such communications will be effective upon deposit in the United
States mail by certified mail, properly addressed with postage prepaid.
5. All agreements, representations, warranties and covenants made
by the Borrower and the Shareholder will survive the making of the Loan
hereunder and will bind the parties, their successors and
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assigns, and inure to the benefit of the parties and their respective
successors and assigns.
6. If any provision of this Loan Agreement, or any covenant,
stipulation, obligation, agreement, act, or action made, assumed, entered into,
or taken is for any reason held to be illegal or invalid in any jurisdiction,
such a legality or invalidity shall not affect any provision or any other
covenant, stipulation, obligation, agreement, act, or action made, assumed,
entered into, or taken, each of which shall be construed and enforced as if
such a legal or invalid portion were not contained herein and shall not affect
the enforceability of that provision in any other jurisdiction.
IN WITNESS WHEREOF, this Loan Agreement is executed and sealed by the
parties on the day and year first above written.
CITY OF ERIE, by and through the
ENTERPRISE DEVELOPMENT ZONE
REVOLVING LOAN FUND
Attest:
By: /s/ Joyce A. Savacchia
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/s/ James Klemm Mayor
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City Clerk
By: /s/ Brenda A. Pundt
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City Controller
BORROWER
MCINNES STEEL COMPANY
Attest:
By: Timothy M. Hunter, Treasurer
/s/ James E. Spoden, Asst. Secy. ----------------------------
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