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EXHIBIT 10.18
AMENDED AND RESTATED
CREDIT FACILITY AND SECURITY AGREEMENT
ACCOUNTS RECEIVABLE, INVENTORY AND EQUIPMENT
THIS AGREEMENT is made by and between G. L. INDUSTRIES OF INDIANA,
INC., an Indiana corporation ("Borrower") and KEYBANK NATIONAL ASSOCIATION, a
national banking association with its main office at 127 Public Square,
Cleveland, Ohio 44114-1306 ("Bank").
WITNESSETH:
WHEREAS, Borrower entered into a certain Loan Agreement with Ameritrust
Company National Association ("Ameritrust") dated February 27, 1989, as amended
(the "Original Agreement");
WHEREAS, Bank is successor by merger to Ameritrust;
WHEREAS, Bank and Borrower have agreed to amend and restate the
Original Agreement to reflect the changes agreed to by the parties.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the Borrower and Bank hereby mutually agree that
the Original Agreement shall be amended and restated in its entirety as
follows:
As of the 1st day of March, 1996, Borrower and Bank, in consideration
of the premises, and the covenants and agreements contained herein, hereby
mutually agree as follows:
1. DEFINITIONS
"ACCOUNT" means (a) any account, and (b) any right to payment for Goods sold or
leased or for services rendered which is not evidenced by an Instrument or
Chattel Paper, whether or not it has been earned by performance.
"ACCOUNT DEBTOR" means the Person who is obligated on an Account Receivable.
"ACCOUNT RECEIVABLE" means:
(a) any account receivable, Account, Chattel Paper, Contract Right,
General Intangible, Document, or Instrument owned, acquired, or
received by a Person;
(b) any other indebtedness owed to or receivable owned, acquired, or
received by a Person of whatever kind and however evidenced; and
(c) any right, title, and interest in a Person's Goods which were
sold, leased, or furnished by that Person and gave rise to either
(a) or (b) above, or both of them. This includes, without
limitation:
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Instrument or a series of Instruments, the group of writings taken together
constitutes Chattel Paper.
"COLLATERAL" means:
(a) all of Borrower's Accounts Receivable, whether now owned or hereafter
acquired or received by Borrower;
(b) all of Borrower's Inventory, whether now owned or hereafter acquired
by Borrower;
(c) all of Borrower's Equipment, whether now owned or hereafter acquired
by Borrower;
(d) all funds on deposit in the Cash Collateral Account;
(e) all of Borrower's Cash Security; and
(f) all of the Proceeds, products, profits, and rents of Borrower's
Accounts Receivable, Inventory, Equipment, Cash Security, and Cash
Collateral Account.
"CONTRACT RIGHT" means (a) any contract right, and (b) any right to payment
under a contract not yet earned by performance and not evidence by an Instrument
or Chattel paper.
"DEPOSIT ACCOUNT" means (a) any deposit account, and (b) any
demand, time, savings, passbook, or a similar account maintained with a bank,
savings and loan association, credit union, or similar organization, other than
an account evidenced by a certificate of deposit.
"DOCUMENT" means (a) any document, (b) any document of title, including
a bill of lading, dock warrant, dock receipt, warehouse receipt or order for
the delivery of Goods, and any other document which in the regular course of
business or financing is treated as adequately evidencing that the Person in
possession of it is entitled to receive, hold, and dispose of the document and
the Goods it covers, and (c) any receipt covering Goods stored under a statute
requiring a bond against withdrawal or a license for the issuance of receipts
in the nature of warehouse receipts even though issued by a Person who is the
owner of the Goods and is not a warehouseman.
"ENVIRONMENTAL LAW" means any federal, state, or local statute, law, ordinance,
code, rule, regulation, order or decree regulating, relating to, or imposing
liability upon a Person in connection with the use, release or disposal of any
hazardous, toxic or dangerous substance, waste or material.
"EQUIPMENT" means:
(a) any equipment, including without limitation, machinery, office
furniture and furnishings, tools, dies, jigs, and molds;
(b) all Goods that are used or bought for use primarily in a Person's
business;
(c) all Goods that are not Consumer Goods, Farm Products, or Inventory;
and
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(d) all substitutes or replacements for, and all parts, accessories,
additions, attachments, or accessions to (a) to (c) above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"ERISA AFFILIATE" means each Person (whether or not incorporated) which
together with Borrower or any Affiliate would be treated as a single employer
under ERISA.
"EVENT OF DEFAULT" means the occurrence of any of the events set forth in
Section 9 of this Agreement.
"FINANCIAL IMPAIRMENT" means the distressed economic condition of a Person
manifested by any one or more of the following events:
(a) adjudicated bankruptcy or insolvency or death or discontinuation of
the business of the Person;
(b) the Person ceases, is unable, or admits in writing its inability, to
make timely payment upon the Person's debts, obligations, or
liabilities as they mature or come due;
(c) assignment by the Person for the benefit of creditors;
(d) voluntary institution by the Person or consent granted by the Person
to the involuntary institution [whether by petition, complaint,
application, default, answer (including, without limitation, an answer
or any other permissible or required responsive pleading admitting (1)
the jurisdiction of the forum or (2) any material allegations of the
petition, complaint, application, or other writing to which such
answer serves as a responsive pleading thereto), or otherwise] of any
bankruptcy, insolvency, reorganization, arrangement, readjustment of
debt, dissolution, liquidation, receivership, trusteeship, or similar
proceeding pursuant to or purporting to be pursuant to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation, receivership, trusteeship, or similar law of
any jurisdiction;
(e) voluntary application by the Person for or consent granted by the
Person to the involuntary appointment of any receiver, trustee, or
similar officer (1) for the Person or (2) of or for all or any
substantial part of the Person's property;
(f) entry, without the Person's application, approval, or consent, of any
order that is not dismissed, stayed, or discharged within sixty (60)
days from its entry, which is pursuant to or purporting to be pursuant
to any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation, receivership,
trusteeship or similar law of any jurisdiction (1) approving an
involuntary petition seeking an arrangement of the Person's creditors,
(2) approving an involuntary petition seeking reorganization of the
Person, or (3) appointing any receiver, trustee, or similar officer
(i) for the Person, or (ii) of or for all or any substantial part of
the Person's property;
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(g) any judgment, writ, warrant of attachment, execution, or similar
process is issued or levied against all or any substantial part of the
Person's property aggregating in excess of $60,000 and such judgment,
writ, warrant of attachment, execution, or similar process is not
released, vacated, stayed or fully bonded within thirty (30) days
after its issue or levy.
"FOREIGN ACCOUNT RECEIVABLE" means any Account Receivable which arises out of
contracts with or orders from an Account Debtor which is not a resident of the
United States or Canada.
"GENERAL INTANGIBLE" means (a) any general intangible, and (b) any personal
property (including things in action) other than Goods, Accounts, Contract
Rights, Chattel Paper, Documents, Instruments, and money.
"GOODS" means (a) any goods, and (b) all things which are movable at the time
the security interest granted Bank under this Agreement attaches or which are
fixtures but does not include money, Instruments, Documents, Accounts, Chattel
Paper, General Intangibles, and Contract Rights.
"GOVERNMENT ACCOUNT RECEIVABLE" means any Account Receivable which arises out
of contracts with or orders from the United States or any of its departments
agencies, or instrumentalities.
"INSTRUMENT" means:
(a) any instrument;
(b) any negotiable or nonnegotiable instrument (including, without
limitation, drafts, checks, acceptances, certificates of deposit, and
notes);
(c) any security; and
(d) any other writing which:
(1) evidences a right to the payment of money,
(2) is not itself a security agreement or lease, and
(3) is of a type which in the ordinary course of business is
transferred by delivery with any necessary endorsement or
assignment.
"INVENTORY" means:
(a) any inventory;
(b) all Goods that are raw materials;
(c) all Goods that are work in process;
(d) all Goods that are materials used or consumed in the ordinary course
of a Person's business;
(e) all Goods that are, in the ordinary course of a Person's business,
held for sale or lease or furnished or to be furnished under contracts
of service; and
(f) all substitutes and replacements for, and parts, accessories,
additions, attachments, or accessions to (a) to (e) above.
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"LOAN ACCOUNT" means an account maintained by Bank on its books, which will
evidence all Advances, accrued interest thereon, other amounts due Bank with
respect to such Advances, and all payments thereof by Borrower.
"MULTIEMPLOYER PLAN" means a plan described in ERISA which covers employees of
the Borrower, any Affiliate, or any ERISA Affiliate.
"OBLIGATIONS" means any of the following obligations, whether direct or
indirect, absolute or contingent, secured or unsecured, matured or unmatured,
originally contracted with Bank or another Person and now owing to or hereafter
acquired in any manner partially or totally by Bank or in which Bank may have
acquired a participation, contracted by Borrower alone or jointly or severally
with another Person:
(a) any and all indebtedness, obligations, liabilities, contracts,
indentures, agreements, warranties, covenants, guaranties,
representations, provisions, terms, and conditions of whatever kind,
now existing or hereafter arising, and however evidenced, that are now
or hereafter owed, incurred, or executed by Borrower to, in favor of,
or with Bank (including, without limitation, those as are set forth or
contained in, referred to, evidenced by, or executed with reference to
this Agreement, the Loan Account, any promissory notes, letter of
credit agreements, advance agreements, indemnity agreements,
guaranties, lines of credit, mortgage deeds, security agreements,
assignments, pledge agreements, hypothecation agreements, Instruments,
and acceptance financing agreements), and including any partial or
total extension, restatement, renewal, amendment, and substitution
thereof or therefor;
(b) any and all claims of whatever kind of Bank against Borrower, now
existing or hereafter arising including, without limitation, any
arising out of or in any way connected with warranties made by
Borrower to Bank in connection with any Instrument deposited with or
purchased by Bank;
(c) any and all of Bank's Related Expenses.
"ORGANIZATION" means a corporation, government or government subdivision or
agency, business trust, estate, trust, limited liability company, partnership,
association, two or more Persons having a joint or common interest, and any
other legal or commercial entity.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant to
Title IV of ERISA.
"PERSON" means an individual or an Organization.
"PLAN" means any plan (other than a Multiemployer Plan) defined in ERISA in
which the Borrower or any Affiliate is, or has been at any time during the
preceding two (2) years, an "employer" or a "substantial employer" as such
terms are defined in ERISA.
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"PRIME RATE" means that interest rate established from time to time by Bank as
Bank's Prime Rate, whether or not publicly announced; the Prime Rate may not be
the lowest interest rate charged by Bank for commercial or other extensions of
credit.
"PROCEEDS" means (a) any proceeds, and (b) whatever is received upon the sale,
exchange, collection, or other disposition of Collateral or Proceeds, whether
cash or non-cash. Cash Proceeds includes, without limitation, moneys, checks,
and Deposit Accounts. Proceeds includes, without limitation, any Account
arising when the right to payment is earned under a Contract Right, any
insurance payable by reason of loss or damage to the Collateral, and any return
or unearned premium upon any cancellation of insurance. Except as expressly
authorized in this Agreement, Bank's right to Proceeds specifically set forth
herein or indicated in any financing statement shall never constitute an
express or implied authorization on the part of Bank to Borrower's sale,
exchange, collection, or other disposition of any or all of the Collateral.
"PROHIBITED TRANSACTION" means any prohibited transaction as that term is
defined for purposes of ERISA.
"QUALIFIED ACCOUNT RECEIVABLE" means an Account Receivable of Borrower which, at
all times until it is collected in full, continuously meets the following
requirements:
(a) is not subject to any claim for credit, allowance, or adjustment by
the Account Debtor or any set off or counter claim;
(b) arose in the ordinary course of Borrower's business from the
performance (fully completed) of services or bona fide sale of Goods
which have been shipped to the Account Debtor, and not more than
ninety (90) days have elapsed since the performance (fully completed)
of services or the sale of Goods for or to the Account Debtor;
(c) no notice of the Financial Impairment of the Account Debtor has been
received by Borrower;
(d) is not subject to an assignment, pledge, claim, mortgage, lien, or
security interest of any type except that granted to or in favor of
Bank;
(e) Account Debtor has not rejected, returned, revoked acceptance of, or
refused to accept any of the Goods which are the subject of the
Account Receivable,
(f) Borrower has not received any Instrument or Chattel Paper with respect
to or in payment of the Account Receivable;
(g) Bank has not determined in good faith that the Account Receivable is
unsatisfactory in any respect;
(h) is not a Government Account Receivable, unless Bank's security
interest in such Government Account Receivable is perfected according
to the Federal Assignment of Claims Act;
(i) is not an Account Receivable due from any Affiliate, shareholder or
employee of Borrower;
(j) is not a Foreign Account Receivable;
(k) is not evidenced by a promissory note or any other negotiable
instrument;
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(l) is not a tooling Account Receivable except upon completion and
acceptance of the tooling by the Account Debtor; and
(m) is not an Account Receivable owed to Borrower by an Account Debtor
which has failed to pay more than 40% of its currently outstanding
Accounts Receivable within 90 days of service or sale of goods.
"QUALIFIED INVENTORY" means all Inventory EXCEPT Inventory which is:
(a) located outside the United States;
(b) in the possession of a bailee or a third party;
(c) work in process;
(d) damaged, defective, obsolete or reserved for;
(e) held by Borrower or a third party on consignment;
(f) cartons; or
(g) Bank has determined in good faith that the Inventory is
unsatisfactory in any respect.
"RELATED EXPENSES" means any and all costs, liabilities, and expenses
(including, without limitation, losses, damages, penalties, claims, actions,
reasonable attorney's fees, legal expenses, judgments, suits, and disbursements)
incurred by, imposed upon, or asserted against, Bank in any attempt by Bank:
(a) to obtain, preserve, perfect, or enforce any security interest
evidenced by (i) this Agreement, or (ii) any other pledge agreement,
mortgage deed, hypothecation agreement, guaranty, security agreement,
assignment, or security instrument executed or given by Borrower to or
in favor of Bank;
(b) to obtain payment, performance, and observance of any and all of the
Obligations;
(c) to maintain, insure, audit, collect, preserve, repossess, and dispose
of any of the Collateral, including, without limitation, costs and
expenses for appraisals, assessments, and audits of Borrower or the
Collateral; or
(d) incidental or related to (a) through (c) above, including, without
limitation, interest thereupon from the date incurred, imposed, or
asserted until paid at the rate payable as set forth in Section 2 of
this Agreement, but in no event greater than the highest rate
permitted by law.
"REPORTABLE EVENT" means any reportable event as that term is defined for
purposes of ERISA.
"SUBORDINATED DEBT" means Indebtedness of a Person which is subordinated, in a
manner satisfactory to the Bank, to all indebtedness owing to the Bank.
"SUBSIDIARY" means any Person of which more than fifty percent (50%) of (i) the
voting stock entitling the holders thereof to elect a majority of the Board of
Directors, manager, or
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trustee thereof, or (ii) the interest in the capital or profits of such
Person, which at the time is owned or controlled, directly or
indirectly, by the Borrower or one or more other Affiliate.
"TANGIBLE NET WORTH" means the total assets of Borrower less the sum
of Borrower's (i) total liabilities excluding Subordinated Debt plus
(ii) the aggregate amount of all intangible assets, and Accounts
Receivable due from any Affiliate, shareholder or employee of Borrower.
"TERMINATION DATE" means January 31, 1997, or such earlier date on
which the commitment of the Bank to make Advances pursuant to Section
2(a) hereof shall have been terminated pursuant to Section 9 of this
Agreement.
The foregoing definitions shall be applicable to the singulars and
plurals of the foregoing defined terms.
2. STATEMENT OF TERMS
(a) (i) Bank will, subject to the terms and conditions of
this Agreement, up to and including the Termination
Date, make Advances to or for the account of
Borrower up to but not exceeding an aggregate
unpaid principal amount outstanding at any one time
on Advances equal to the lesser of (a) the line of
credit approved for Borrower, which is currently
Three Million Five Hundred Thousand Dollars
($3,500,000) or (b) the Borrowing Base. The
Borrower may borrow, repay and reborrow such
maximum amount of credit. On the basis of any
reasonable credit or collateral considerations, the
dollar amounts of the line of credit and the
Borrowing Base, and any one or more of the
percentages of the Borrowing Base, may be changed
by Bank at any time upon written notice to
Borrower, to be effective on the day such notice is
mailed to Borrower. The Bank shall debit to the
Loan Account the amount of each Advance made under
this Agreement and all interest, other
compensation, or other fees payable on all Advances
and shall credit to the Loan Agreement each payment
of (a) principal and interest on account of each
Advance and (b) other amounts payable under this
Agreement by the appropriate entries. The Loan
Account shall constitute prima facie evidence of
all Advances made by Bank pursuant to this
Agreement absent manifest error. In the event of
any discrepancy between the records of Bank and
Borrower with regard to the Loan Account, the
records of Bank shall prevail unless the Borrower
notifies Bank of an error within five (5) business
days after having discovered any such error or
unless Borrower and Bank mutually agree with regard
to an appropriate change in such records. Borrower
shall execute and deliver to Bank a master
promissory note, substantially in the form of
attached Exhibit B, to evidence all Advances under
this Agreement. The Bank's Advances pursuant to
this Section 2(a) shall be evidence by a properly
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executed master promissory note in the form of Exhibit B ("Master
Promissory Note") with all blanks appropriately filled in.
(ii) As compensation for the Advances made by Bank, Borrower
undertakes and agrees to pay to Bank on the first day of each
calendar month interest, at a rate equal to the Applicable
Interest Rate, upon the actual daily balances in Borrower's Loan
Account during the preceding month (using a day rate based upon a
year of 360 days and charged for actual number of days elapsed).
The rate will increase or decrease on the day of, and by an
amount equal to, each increase or decrease in the Prime Rate.
The rate charged to Borrower under this Agreement shall change
when and as the Prime Rate is changed.
(iii) After maturity (whether by acceleration or otherwise), the unpaid
principal and accrued interest evidenced by the Loan Account shall
bear interest at a rate per annum equal to three percent (30%) in
excess of the interest rate set forth in Section 2(a)(ii) above,
which rate shall be immediately and correspondingly adjusted with
each change in the Prime Rate. Prior to maturity, if any payment
of principal or interest is not paid when due, Borrower shall pay
a late fee of an amount equal to the greater of ten percent (10%)
of such payment or one hundred dollars ($100). Notwithstanding
the Bank's remedies as set forth in Section 10 hereof, prior to
maturity hereof, upon the occurrence of any Event of Default under
this Agreement and until such Event of Default is cured by
Borrower, at Bank's option and upon written notice to Borrower,
the unpaid principal and accrued interest evidenced by the Loan
Account shall bear interest at a rate per annum equal to three
percent (3%) in excess of the interest rate set forth in Section
2(a)(ii) above, which rate shall be immediately and
correspondingly adjusted with each change in the Prime Rate.
(vi) Borrower shall repay to the Bank on the Termination Date the net
balance in the Borrower's Loan Account.
(b) (i) Bank has made a term loan to Borrower in the original principal
amount of Three Million Seven Hundred Eighty Thousand Dollars
($3,780,000). The current outstanding principal balance of the
aforesaid term loan is Four Hundred Seventy-Two Thousand Five
Hundred Dollars ($472,500) and shall be evidenced by a properly
executed amended and restated term note in the form of Exhibit C
("Term Note"), with all blanks appropriately filled in.
(ii) The Borrower shall repay the aggregate amount of principal of the
Term Note to the Bank in twenty-four (24) consecutive and
equal monthly installments of Nineteen Thousand Six Hundred
Eighty-Seven and
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50/100 Dollars ($19,687.50) each beginning March 1, 1996 and
continuing on the first day of each consecutive month
thereafter, until February 1, 1998, when any remaining
principal balance shall be due and payable.
(iii) The Term Note shall bear interest at a rate per annum equal to
the Applicable Interest Rate. In the event of any change in the
Prime Rate, the rate of interest upon the Term Note shall be
immediately correspondingly adjusted, except the interest rate
thereon shall not exceed the highest rate permitted by law. The
Bank will notify the Borrower of the effective date of such
adjustment by written notice through the U.S. mail. Interest on
the Term Note shall be calculated on the basis of a year of 360
days for the actual number of days elapsed and shall be due and
payable starting on March 1, 1996 and continuing on the first
day of each consecutive month thereafter.
(iv) After maturity (whether by acceleration or otherwise), the
unpaid principal and accrued interest evidenced by the Term
Note shall bear interest at a rate per annum equal to three
percent (3%) in excess of the interest rate set forth in
Section 2(b)(iii) above, which rate shall be immediately and
correspondingly adjusted with each change in the Prime Rate.
Prior to maturity, if any payment of principal or interest is
not paid when due, Borrower shall pay a late fee of an amount
equal to the greater of ten percent (10%) of such payment or
one hundred dollars ($100). Notwithstanding the Bank's
remedies as set forth in Section 10 hereof, prior to maturity
hereof, upon the occurrence of any Event of Default under this
Agreement and until such Event of Default is cured by Borrower,
at Bank's option and upon written notice to Borrower, the
unpaid principal and accrued interest evidenced by the Term
Note shall bear interest at a rate per annum equal to three
percent (3%) in excess of the interest rate set forth in
Section 2(b)(iii) above, which rate shall be immediately and
correspondingly adjusted with each change in the Prime Rate.
(c) In order to compensate Bank for its service in preparing and reviewing
this Agreement, the Master Promissory Note, the Term Note and the
documentation relating thereto, Borrower shall pay to Bank on the date
hereof a documentation fee of $2,500.
Borrower agrees to pay Bank a commitment fee on the actual daily
unborrowed portion of Borrower's revolving line of credit hereunder on
and from the date hereof to and including the Termination Date at the
rate of one-quarter of one percent (1/4%) per annum (using a day rate
based upon a year of 360 days and charged for the actual number of
days elapsed), payable on the last day of each
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calendar quarter commencing June 30, 1996, and upon termination or
reduction of such line of credit.
Borrower agrees to pay Bank a collateral monitoring fee of Five
Hundred Dollars ($500) per month, payable on each interest payment
date determined in accordance with Section 2(a) hereof.
(d) If (1) there shall be introduced or changed any treaty, statute,
regulation, or other law, or there shall be any change in the
interpretation or administration thereof, or there shall be made any
request from any central bank or other lawful governmental authority,
which introduction, change, or compliance shall (a) impose, modify, or
deem applicable any reserve or special deposit requirements against
assets held by or deposits in or loans by Bank or (b) subject Bank to
any tax, duty, fee, deduction, or withholding or (c) change the basis
of taxation of the overall net income (otherwise than by a change in
taxation of the overall net income of Bank) or (d) impose, modify, or
deem applicable any capital adequacy or similar requirement
(including, without limitation, any request or requirement which
affects the manner in which Bank allocates capital resources to is
commitments generally or those under this Agreement) and (2) in Bank's
reasonable opinion any such evert (A) reduces the amount of any
payment to be made to Bank under this Agreement or (B) reduces the
rate of return on the capital of Bank that is reasonably allocable to
Bank's commitments under this Agreement to a level below that which
Bank would have achieved but for that event, then, upon Bank's demand,
Borrower shall pay Bank from time to time such additional amounts as
will compensate Bank for and indemnify it against such increased costs
or reduced payment or reduced rate of return. Each demand shall be
accompanied by a certificate setting forth the amount to be paid and
the computations used in determining the amount, which certificate
shall be presumed to be correct as to the matters set forth therein in
the absence of manifest error. In determining any such amount, Bank
may use any reasonable averaging and attribution methods.
3. SECURITY INTEREST IN COLLATERAL
In consideration of and as security for the full and complete payment,
performance, and observance of all Obligations, Borrower does hereby (a) grant
to Bank a security interest in the Collateral, whether now owned or hereafter
acquired or received by Borrower, and (b) assign to Bank all of its right,
title, and interest (including, without limitation, all rights to payment)
arising under or with respect to all of Borrower's Accounts Receivable, whether
now owned or hereafter acquired or received by Borrower, but not including any
duty, obligation, or liability of Borrower with respect thereto.
4. WARRANTIES
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Borrower represents and warrants to Bank (which representations and
warranties shall survive the execution of this Agreement and all Demand
Advances) that:
(a) Borrower is a duly organized and existing corporation under the
laws of the state of its incorporation and is duly qualified and
in good standing in every state in which it is doing business;
(b) The execution, delivery, and performance hereof are within
Borrower's corporate powers, have been duly authorized, and are
not in contravention of law or the terms of Borrower's charter,
by-laws, or regulations or of any indenture, agreement, or
undertaking to which Borrower is a party or by which it is bound;
(c) This Agreement and the other documents executed pursuant hereto
have been duly executed and are valid and binding obligations of
Borrower fully enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to the rights of
creditors generally and subject to the availability of equitable
remedies and the application of equitable principles;
(d) Except for any security interest granted to or in favor of Bank,
Borrower is, and as to Collateral to be acquired after the date
hereof will be, the owner of the Collateral free from any claim,
lien, encumbrance, or security interest of any type, and Borrower
agrees that it will defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any
interest therein;
(e) The office where Borrower keeps all of its records pertaining to
its Accounts and Contract Rights is located at: 2860 North
National Road, Columbus, Indiana 47202-0387;
(f) Subject to any limitation stated herein or in connection
herewith, all information furnished to Bank concerning Borrower
or the Collateral is, or will be at the time such information is
furnished, accurate and correct in all material respects and
complete insofar as is necessary to give Bank true and accurate
knowledge of the subject matter;
(g) Borrower is the lawful owner of and has full and unqualified
right to transfer a security interest in all of the Collateral to
Bank. Such Collateral is not and will not, so long as Borrower
has any Obligations to Bank, be subject to any adverse financing
statement, encumbrance, claim, lien, or security interest of any
type except any granted to or in favor of Bank;
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(h) Each Qualified Account Receivable included with the aggregate amount
of Qualified Accounts Receivable set forth on each Borrower's
Certificate now or hereafter furnished to Bank shall meet, as of the
date stated thereon, all eligibility requirements specified in the
Section 1 definition of Qualified Account Receivable;
(i) There is no pending or threatened action, suit or proceeding affecting
either Borrower or any of its Affiliates before any court or other
governmental authority or any arbitrator which may materially
adversely affect the condition or operations, financial or otherwise,
of Borrower or the ability of Borrower to perform its obligations
under this Agreement;
(j) The Borrower and each of its Affiliates is in compliance with all
Environmental Laws and all applicable federal, state, and local health
and safety and other laws, regulations, ordinances or rules, except to
the extent that any non-compliance will not, in the aggregate, have a
materially adverse effect on the Borrower and its Affiliates or the
ability of the Borrower to fulfill its obligations under this
Agreement or any of the notes delivered pursuant hereto;
(k) The financial statements of Borrower dated September 30, 1995, copies
of which have been delivered to Bank, fairly present the financial
condition of such Persons as at the respective dates thereof and their
results of operations for the fiscal periods ended on the respective
dates thereof, all in accordance with generally accepted accounting
principles consistently applied, subject, in the case of unaudited
financial statements, to normal recurring year-end adjustments, and
since the respective dates of such financial statements, there has
been no material adverse change in Borrower's condition or operations;
(l) Borrower has filed, or caused to be filed, all federal, state, local
and foreign tax returns required to be filed by it, and has paid, or
caused to be paid, all taxes as are shown on such returns, or on any
assessment received by it, to the extent that such taxes have become
due, except as otherwise contested in good faith. Borrower has set
aside proper amounts on its books, determined in accordance with
generally accepted accounting principles, for the payment of all taxes
for the years that have not been audited by the respective tax
authorities and for taxes being contested by it.
(m) Borrower has received consideration which is the reasonable equivalent
value of the obligations and liabilities that the Borrower has
incurred to Bank. The Borrower is not insolvent as defined in any
applicable state or federal statute, nor will the Borrower be rendered
insolvent by the execution and delivery of this Agreement or the notes
delivered to Bank pursuant hereto. The Borrower is not engaged or
about to engage in any business or transaction for which the assets
retained by it shall be an unreasonably small capital, taking into
consideration the obligations to Bank incurred hereunder. The Borrower
does
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not intend to, nor does it believe that it will, incur debts beyond
its ability to pay them as they mature;
(n) Neither the Borrower nor any Affiliate is in default in the
performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument to
which it is a party, which default materially adversely affects the
business, properties, assets, or financial condition of the Borrower
or such Affiliates;
(o) No Reportable Event or Prohibited Transaction has occurred and is
continuing with respect to any Plan, and the Borrower has incurred no
"accumulated funding deficiency" (as that term is defined by ERISA)
since the effective date of ERISA;
(p) Borrower has places of business or maintains its Inventory and
Equipment at the following locations: 2860 North National Road,
Columbus, Indiana 47202; 820 North National Road, Columbus, Indiana
47202;
(q) Borrower's Location is 2860 North National Road, Columbus, Indiana
47202;
(r) Borrower is not a party to any agreement or other instrument or
subject to any other restriction which materially and adversely
affects or could reasonably be expected to materially and adversely
affect its business, properties, assets, operations or condition,
financial or otherwise.
5. COVENANTS
Borrower undertakes, covenants, and agrees that, until the full and complete
payment, performance, and observance of all Obligations, Borrower:
(a) shall deliver to Bank within thirty (30) days after the close of each
month, a statement of condition and statement of cash flows of
Borrower for such period, certified as complete and correct by a duly
authorized officer of Borrower, as well as a certificate showing
Borrower's compliance with all financial covenants herein;
(b) shall deliver to Bank, not later than ninety (90) days after the end
of each fiscal year of Borrower, financial statements of Borrower
covering such fiscal year and containing an unqualified opinion by a
certified public accountant acceptable to Bank;
(c) shall deliver to Bank within sixty (60) days after the close of each
fiscal year of Borrower, an annual projection of Borrower's financial
statements for the next fiscal year;
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15
(d) shall promptly provide Bank with prior written notification of:
(1) any change in any location where Borrower's Inventory is
maintained, and any new locations where Borrower's Inventory is
to be maintained,
(2) any change in the location of the office where Borrower's records
pertaining to its Accounts and Contract Rights are kept,
(3) the location of any new places of business and the changing or
closing of any of its existing places of business,
(4) any change in Borrower's name, and
(5) any change in Borrower's Location;
(e) shall promptly notify, and shall cause each Affiliate to promptly
notify, the Bank in writing of (a) any future event which, if it had
existed on the date of this Agreement, would have required
qualification of the representations and warranties set forth in
Article 4 hereof and (b) any material adverse change in the condition,
business, or prospects, financial or otherwise, of the Borrower or
such Affiliate;
(f) shall promptly and in any event within ten (10) days after the
occurrence of a Reportable Event with respect to a Plan, provide to
Bank a copy of any materials required to be filed with the PBGC with
respect to such Reportable Event or those that would have been
required to be filed if the thirty (30) day notice requirement to the
PBGC had not been waived;
(g) shall promptly upon receipt, and in no event more than three (3) days
after receipt, of a notice by the Borrower or any Affiliate, ERISA
Affiliate, or any administrator of any Plan or Multiemployer Plan that
the PBGC has instituted proceedings to terminate such Plan or to
appoint a trustee to administer such Plan, provide to Bank a copy of
such notice;
(h) shall not permit its aggregate Obligations to Bank pursuant to
Paragraph 2(a) hereof at any time to exceed the lesser of (1) the
Borrower Base or (2) Borrower's currently approved line of credit;
(i) shall deliver to Bank within twenty (20) days after the close of each
month, in form and substance acceptable to Bank (1) reports designated
as "Aging Report of Accounts Receivable" and "Aging Report of Accounts
Payable", each substantiated by detailed supporting schedules, (2) a
schedule of Borrower's Inventory showing the cost or market value
thereof, whichever is lower, and (3) such other reports as Bank may
reasonably request;
(j) shall, at the time of each borrowing under this Agreement, and at any
other times required by Bank, deliver to Bank a Borrower's
Certificate fully completed as to all figures and information called
for therein and certified as complete and correct by a duly authorized
officer of Borrower;
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(k) shall promptly pay and discharge when due, all taxes, assessments, and
governmental charges of every kind and nature that have been lawfully
levied, assessed, or imposed upon Borrower, its properties including
the use thereof, or any of the Obligations, which, if unpaid, would
become liens against its assets including, without limitation, all
sums due and owing to any taxing authority for income and other taxes
withheld from the wages and salaries of its employees, except to the
extent Borrower is reasonably contesting in good faith any such tax,
assessment, or charge with an adequate reserve provided therefor;
(l) shall at all reasonable times allow Bank by or through any of its
officers, agents, employees, attorneys, or accountants to (1) examine,
inspect, and make extracts from Borrower's books and other records,
including, without limitation, the tax returns of Borrower and any of
Borrower's Affiliates, (2) arrange for verification of Borrower's
Accounts Receivable, under reasonable procedures, directly with
Account Debtors or by other methods, and (3) examine and inspect
Borrower's Inventory wherever located;
(m) shall promptly furnish to Bank upon request (1) additional statements
and information with respect to the Collateral, and all writings and
information relating to or evidencing any of Borrower's Accounts
Receivable (including, without limitation, computer printouts or
typewritten reports listing the mailing addresses of all present
Account Debtors), and (2) any other writings and information as Bank
may request;
(n) shall upon request of Bank promptly take such action and promptly
make, execute, and deliver all such additional and further items,
deeds, assurances, and instruments as Bank may require, including,
without limitation, financing statements, so as to completely vest in
and ensure to Bank its rights hereunder and in or to the Collateral.
If certificates of title are issued or outstanding with respect to any
of Borrower's Inventory, Borrower will cause the interest of Bank to
be properly noted thereon at Borrower's expense;
(o) hereby authorizes, upon prior notice unless Borrower is in default,
Bank or Bank's designated agent (but without obligation by Bank to do
so) to incur Related Expenses (whether prior to, upon, or subsequent
to any Event of Default), and Borrower shall promptly repay,
reimburse, and indemnify Bank for any and all Related Expenses. Bank
may, at its option, debit Related Expenses directly to the Loan
Account;
(p) shall not, without the prior written consent of Bank, borrow any money
or, directly or indirectly, create, incur, assume, guarantee, or
otherwise become or remain liable with respect to any indebtedness for
borrowed money or advances other than (1) Borrower's Obligations, (2)
any indebtedness of Borrower
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existing on the date hereof and not required by Bank to be prepaid as
a condition to execution of this Agreement, and (3) Subordinated Debt;
(q) shall not, without the prior written consent of Bank, loan any money
to or guarantee or assume any obligation of any other Person, or
purchase (1) any evidence of indebtedness or securities (including
stock) other than direct obligations of the United States of America
or any agency thereof, banker's acceptances, and certificates of
deposit issued by any commercial bank in the United States of America,
or (2) the business or substantially all of the property of any other
Person other than Borrower's Subsidiaries, or hereafter make
prepayments or advances to others, provided Borrower may make loans or
advances to others not exceeding Fifty Thousand Dollars ($50,000) at
any one time outstanding, and Borrower may endorse checks, drafts, and
similar instruments for deposit or collection in the ordinary course
of business;
(r) shall not, without the prior written consent of Bank, enter into any
sale and leaseback transaction or arrangement with any other Person
with respect to any of the assets of Borrower or its subsidiaries
(however, this shall not limit performance under any lease contract
existing on the date hereof and disclosed in writing by Borrower to
Bank);
(s) shall keep its Equipment in good working order and repair without
wasting or destroying such Equipment, and shall not without the prior
written consent of Bank:
(i) sell, lease, transfer, assign, encumber, or otherwise dispose of
Equipment having an aggregate book value in excess of One
Hundred Thousand Dollars ($100,000) during any fiscal year of
Borrower, or make any attempt to do so, or
(ii) permit any of its Equipment to be removed from the location(s)
set forth in Section 4(p) hereof, except as provided in said
Section 4(p);
(t) shall not, without the prior written consent of Bank, mortgage,
pledge, grant a security interest, or otherwise voluntarily place or
permit to be placed any lien upon any assets of the Borrower except
any security interest granted to or in favor of Bank;
(u) shall not, without the prior written consent of Bank, (1) merge,
acquire or consolidate with or into, or enter into any merger
agreement with any other Person, or (2) lease, sell, or transfer all
or substantially all its property, assets, and business, including the
stock of any Subsidiary, to any other Person;
(v) shall not, without the prior written consent of Bank, engage in any
transaction with any Affiliate, unless:
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(i) such transaction is at arms length and on terms that are at
least as favorable to Borrower as those prevailing at the time
for comparable transactions which nonaffiliated Persons,
(ii) such transaction does not require Borrower to make payments,
advances or loans to any Affiliate in an amount exceeding Fifty
Thousand Dollars ($50,000) excluding the corporate charge
payable to LDM Technologies, Inc., and
(iii) Borrower will receive no less than fair market value for any
assets transferred;
(w) shall not, without the prior written consent of Bank, make any change
in any location where Borrower's Inventory or Equipment is maintained
or any change in the location of the office where Borrower's records
pertaining to its Accounts and Contract Rights are kept;
(x) shall not use any Collateral in violation of any applicable statute,
ordinance, or regulation;
(y) shall have a Cash Flow Coverage Ratio of at least 1.0 to 1.0 at all
times. The Cash Flow Coverage Ratio shall be tested monthly commencing
June 30, 1996 and calculated on a rolling 12-month basis;
(z) shall not permit the aggregate of its Tangible New Worth plus
Subordinated Debt to be less than One Million Four Hundred
Seventy-Five Thousand Dollars ($1,475,000) at any time during its
fiscal year ending at September 30, 1996 and at each fiscal year end
thereafter;
(aa) shall not, and will not permit any Affiliate to, make any payment
upon its outstanding Subordinated Debt, except in such manner and
amounts as may be expressly authorized in any subordination agreement
presently or hereafter held by the Bank;
(bb) shall not permit the ratio of its Adjusted Debt to its Adjusted
Tangible New Worth, calculated at the same point in time, to be at any
time more than 5.00 to 1.00 during its fiscal year ending September
30, 1996, and (ii) 4.50 to 1.00 during its fiscal year ending
September 30, 1997 and at all times thereafter;
6. COLLECTIONS AND RECEIPT OF PROCEEDS BY BORROWER
(a) Prior to exercise by Bank of its rights under Section 7 of this
Agreement, and except as provided in Subsection 6(b) of this
Agreement, both (1) the lawful collection and enforcement of all of
Borrower's Accounts Receivable, and (2)
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the lawful receipt and retention by Borrower of all Proceeds of all of
Borrower's Accounts Receivable and Inventory shall be as Bank's agent. All
such lawful collections of Borrower's Accounts Receivable and such Proceeds
of Borrower's Accounts Receivable and Inventory shall be remitted daily by
Borrower to Bank in the form in which they are received by Borrower, either
by mailing or by delivering such collections and Proceeds to Bank,
appropriately endorsed for deposit in the Cash Collateral Account. Borrower
will not commingle such collections or Proceeds with any of Borrower's
other funds or property, but will hold such collections and Proceeds
separate and apart therefrom upon an express trust for Bank. Bank may, in
its sole discretion, at any time and from time to time, apply all or any
portion of the account balance in the Cash Collateral Account (allowing two
(2) days for collection and clearance of remittances, however, in the event
Bank applies any proceeds from the Cash Collateral Account as a credit to
any obligations due Bank and such payment includes uncollected funds, the
Borrower will incur a charge for those uncollected funds at the floating
rate payable on Advances) as a credit against (1) the Loan Account,
including the outstanding principal or interest of any Advance, or (2) any
other Obligation. If any remittance shall be dishonored, or if, upon final
payment, any claim with respect thereto shall be made against Bank on its
warranties of collection, Bank may charge the amount of such item against
the Cash Collateral Account or any other Deposit Account maintained by
Borrower with Bank, and, in any event, retain same and Borrower's interest
therein as additional security for the Obligations. The Bank may, in its
sole discretion, at any time and from time to time, release funds from the
Cash Collateral Account to Borrower for use in Borrower's business. The
balance in the Cash Collateral Account may be withdrawn by Borrower
upon termination of this Agreement in accordance with Subsection 12(e) of
this Agreement. At Bank's request, Borrower will cause all remittances
representing collections and Proceeds of Collateral to be mailed to a lock
box in Cleveland, Ohio, to which Bank shall have access for the processing
of such items in accordance with the provisions, terms, and conditions of
Bank's customary lock box agreement.
(b) With respect to Borrower's Instruments, Chattel Paper, and Documents:
(1) Borrower shall daily deliver, or cause to be delivered, to Bank all of
Borrower's Instruments, Chattel Paper, and Documents, appropriately
endorsed either, at Bank's option, (i) to Bank's order, without
limitation or qualification, or (ii) for deposit in the Cash
Collateral Account. Bank, or Bank's designated agent, is hereby
constituted and appointed Borrower's attorney-in-fact with authority
and power to endorse any and all Instruments, Documents, and Chattel
Paper upon Borrower's failure to do so. Such authority and power,
being coupled with an interest, shall be (i) irrevocable until all
Obligations are paid, performed, and observed in full, (ii)
exercisable by Bank at any time and without any
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request upon Borrower by Bank to so endorse, and (iii)
exercisable in Bank's name or Borrower's name;
(2) Borrower hereby waives presentment, demand, notice of
dishonor, protest, notice of protest, and any and all other
similar notices with respect thereto, regardless of the form
of any endorsement thereof;
(3) Bank shall not be bound or obligated to take any action to
preserve any rights therein against prior parties thereto.
7. COLLECTIONS AND RECEIPT OF PROCEEDS BY BANK
Borrower hereby constitutes and appoints Bank, or Bank's designated agent,
as Borrower's attorney-in-fact to exercise, at any time, all or any of the
following powers which, being coupled with an interest, shall be
irrevocable until the complete and full payment, performance, and
observance of all Obligations;
(a) to receive, retain, acquire, take, endorse, assign, deliver,
accept, and deposit, in the Bank's name or Borrower's name, any
and all of Borrower's cash, Instruments, Chattel Paper,
Documents, Proceeds of Accounts Receivable, Proceeds of
Inventory, collection of Accounts Receivable, and any other
writings relating to any of the Collateral;
(b) upon the occurrence and continuation of an Event of Default to
transmit to Account Debtors, on any or all of Borrower's Accounts
Receivable, notice of assignment to Bank thereof and Bank's
security interest therein; and to request from such Persons at
any time, in the Bank's name or in the Borrower's name,
information concerning Borrower's Accounts Receivable and the
amounts owing thereon;
(c) upon the occurrence and continuation of an Event of Default, to
notify and require Account Debtors on Borrower's Accounts
Receivable and purchasers of Borrower's Inventory to make payment
of their indebtedness directly to Bank;
(d) to take or bring, in Bank's name or Borrower's name, all steps,
actions, suits, or proceedings deemed by Bank necessary or
desirable to effect the receipt, enforcement, and collection of
the Collateral;
(e) to accept all collections in any form relating to the Collateral,
including remittances which may reflect deductions, and to
deposit the same, into Borrower's Cash Collateral Account or, at
the option of Bank, to apply them as a payment against the Loan
Account.
8. INSURANCE AND USE OF INVENTORY AND EQUIPMENT
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(a) Until any Event of Default:
(1) Borrower may retain possession of and use its Inventory and
Equipment in any lawful manner not inconsistent with this
Agreement or with the terms, conditions, or provisions of any
policy of insurance thereon.
(2) Borrower may sell or lease its Inventory or Equipment in the
ordinary course of business; provided, however, that a sale or
lease in the ordinary course of business does not include a
transfer in partial or total satisfaction of a debt, except for
transfers in satisfaction or partial or total purchase money
prepayments by a buyer in the ordinary course of Borrower's
business. Until any Event of Default, Borrower may also use and
consume any raw materials or supplies, the use and consumption of
which are necessary in order to carry on Borrower's business.
(b) Borrower shall obtain, and at all times maintain, insurance upon its
Inventory and Equipment in such form, written by such companies, in
such amounts, for such period, and against such risks as may be
reasonably acceptable to Bank, with provisions satisfactory to Bank
for payment of all losses thereunder to Bank and Borrower as their
interests may appear (loss payable endorsement in favor of Bank), and,
if required by Bank, Borrower will deposit the policies with Bank. Any
such policies of insurance shall provide for no less than ten (10)
days prior written cancellation notice to Bank. Any sums received by
Bank in payment of insurance losses, returns, or in the case of an
Event of Default, also unearned premiums under the policies may, at
the option of Bank, be applied upon any Obligation whether or not the
same is then due and payable, or may be delivered to Borrower for the
purpose of replacing, repairing, or restoring its Inventory and
Equipment. Borrower hereby assigns to Bank any return or in the case
of an Event of Default, also unearned premiums, which may be due upon
cancellation of any such policies for any reason and directs the
insurers to pay Bank any amount so due. Bank or Bank's designated
agent is hereby constituted and appointed Borrower's attorney-in-fact
to (either in the name of Borrower or in the name of the Bank), make
adjustments of all insurance losses, sign all applications, receipts,
releases, and other papers necessary for the collection of any such
loss, and any return or unearned premium, execute proof of loss, make
settlements, and endorse and collect all Instruments payable to
Borrower or issued in connection therewith; provided, however, that
prior to an Event of Default, the Borrower's consent, which shall not
be unreasonably withheld or delayed, shall be required.
Notwithstanding any action by Bank hereunder, any and all risk of loss
or damage to Borrower's Inventory and Equipment to the extent of any
and all deficiencies in the effective insurance coverage thereof is
hereby expressly assumed by Borrower.
9. EVENTS OF DEFAULT
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The occurrence of any one or more of the following shall constitute an Event of
Default under this Agreement:
(a) Failure of Borrower to promptly pay, perform, or observe when due,
whether upon demand, at maturity, by acceleration, or otherwise, any
of the Obligations;
(b) Failure of Borrower to promptly pay, perform, or observe when due,
whether upon demand, at maturity, by acceleration, or otherwise, or
any event which either results in or would result in (but for waiver
by the holder(s) or trustee(s) thereof) the acceleration of the
maturity of, any or all of the indebtedness, obligations, liabilities,
contracts, indentures, and agreements aggregating in excess of $50,000
(including, without limitation, any and all warranties, covenants,
guaranties, provisions, terms, and conditions set forth or contained
therein) of whatever kind and however evidenced, owed, incurred, or
executed by Borrower, to, in favor of, or with any and all other
Persons, and including any partial or total extension, renewal,
amendment, restatement, and substitution thereof or therefor;
(c) Any warranty, representation, or statement made or furnished to Bank
in connection with this Agreement or any other writing evidencing or
given as security for any of the Obligations by or on behalf of the
Borrower proves to have been false in any material respect when made,
furnished, or at any time thereafter;
(d) Any uninsured loss, damage, theft, of destruction of the Collateral,
or any levy, seizure, or attachment to, of, or upon any of the
Collateral;
(e) Sale, lease, transfer, assignment, encumbrance, or other disposition
of any of the Collateral in violation of this Agreement, without
Bank's prior written authorization therefor, including any attempt to
accomplish the foregoing;
(f) Any tax lien shall have been filed against Borrower or any of its
property by any federal, state, or municipal authority;
(g) If the Borrower or any Affiliate at anytime hereafter sponsors or
establishes any Plan, and the Borrower or any Affiliate (a) fails to
notify the Bank in writing of such occurrence within ten (10) days
after such Plan is authorized by the Board of Directors or otherwise
by the Borrower or any Affiliate or (b) fails to agree within a
reasonable time to such amendments to this Agreement regarding
provisions with respect to ERISA as the Bank customarily uses at that
time in loan agreements with other borrowers;
(h) Financial Impairment of Borrower;
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(i) Financial Impairment of any endorser, guarantor, or surety upon or for
any of the Obligations.
If there shall occur any Event of Default set forth in (a) through (h) above,
Bank, by written notice to Borrower, may (1) declare the unpaid principal of
and accrued interest on all Obligations to be immediately due and payable and
(2) immediately terminate Bank's commitment to make further Advances under this
Agreement, whereupon Obligations shall become and be forthwith due and payable,
and such commitment shall be terminated, without any further notice,
presentment, or demand of any kind, all of which are hereby expressly waived by
Borrower. If there shall occur any Event of Default set forth in (i) or (j)
above, all Obligations shall automatically become and be immediately due and
payable, and Bank's commitment to make further advances shall automatically be
terminated, without notice, presentment, or demand of any kind, all of which
are hereby expressly waived by Borrower.
10. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT
Upon the occurrence of any such Event of Default and at all times thereafter,
Bank shall have the rights and remedies of a secured party under the Ohio
Uniform Commercial Code in addition to the rights and remedies of a secured
party provided elsewhere within this Agreement or in any other writing executed
by Borrower. Bank may require Borrower to assemble the Collateral and make it
available to Bank at a reasonably convenient place to be designated by Bank.
Unless the Collateral is perishable, threatens to decline speedily in value,
or is of a type customarily sold on a recognized market, Bank will give Borrower
reasonable notice of the time and place of any public sale of the Collateral or
of the time after which any private sale or other intended disposition thereof
is to be made. The requirement of reasonable notice shall be met if such notice
is mailed (deposited for delivery, postage prepaid, by U.S. mail) to either, at
Bank's option (1) Borrower's Location set forth in Subsection 12(c) of this
Agreement (as modified by any change therein which Borrower has supplied in
writing to Bank), or (2) Borrower's address at which Bank customarily
communicates with Borrower, at least ten (10) days before the time of the
public sale or the time after which any private sale or other intended
disposition thereof is to be made. At any such public or private sale, Bank may
purchase the Collateral. After deduction for Bank's Related Expenses, the
residue of any such sale or other disposition shall be applied in satisfaction
of the Obligations in such order of preference as Bank may determine. Any
excess, to the extent permitted by law, shall be paid to Borrower, and Borrower
shall remain liable for any deficiency.
In addition, upon the occurrence of any such Event of Default and at any time
thereafter, Bank shall have the right to obtain new appraisals of Borrower or
the Collateral, the cost of which shall be paid by Borrower.
11. CONDITIONS PRECEDENT TO FUTURE ADVANCES
The obligation of Bank to make any Advance to Borrower after the date of this
Agreement shall be subject to the conditions precedent that on or before the
date of such Advance:
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(a) Borrower shall have paid all fees, costs, expenses, and taxes then
payable by Borrower pursuant to Section 2(c) of this Agreement;
(b) The representations and warranties contained in Section 4 of this
Agreement and in each document, instrument, agreement, and certificate
delivered to Bank by Borrower pursuant to this Agreement shall be true
and correct on and as of such date as if made on and as of such date;
no Event of Default or event or condition that, with the serving of
notice or the lapse of time or both, would constitute an Event of
Default shall have occurred and be continuing or would result from the
making of such Advance; and Bank shall have received, if requested by
Bank, a certificate of the chief executive officer or the chief
financial officer of Borrower, dated as of the date of such Advance,
to such effect (in the absence of Bank's request for such a
certificate, Borrower's borrowing of the Advance shall itself
constitute a representation to Bank to such effect);
(c) The making of such Advance shall not contravene any law, rule or
regulation applicable to Bank;
(d) Not later than 2:00 p.m., Cleveland time, on such date, Bank shall
have received, in writing or by telephone to be promptly confirmed in
writing, a request by Borrower to Bank for an Advance in the requested
amount, and a Borrower's Certificate;
(e) Borrower shall have delivered to Bank an opinion of counsel
substantially in the form attached hereto as Exhibit D.
(f) Bank shall have received such other approvals, opinions, appraisals,
or documents as it may reasonably request.
12. GENERAL
(a) If any provision, term, or portion, of this Agreement, (including,
without limitation, (1) any indebtedness, obligation, liability,
contract, agreement, indenture, warranty, covenant, guaranty,
representation, or condition of this Agreement made, assumed, or
entered into, (2) any act of action taken under this Agreement, or (3)
any application of this Agreement) is for any reason held to be
illegal or invalid, such illegality or invalidity shall not affect any
other such provision, term, or portion of this Agreement, each of
which shall be construed and enforced as if such illegal or invalid
provision, term, or portion were not contained in this Agreement. Any
illegality or invalidity of any application of this Agreement shall
not affect any legal and valid application of this Agreement, and each
provision, term, and portion of this Agreement shall be deemed to be
effective, operative, made, entered into, or taken in the manner and
to the full extent permitted by law.
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(b) Bank shall not be deemed to have waived any of Bank's rights of
this Agreement or under any other agreement, instrument, or
document executed by Borrower, unless such waiver be in writing
and signed by Bank. No delay or omission on part of Bank in
exercising any right shall operate as a waiver of such right or
any other right. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any
future occasion. All Bank's rights and remedies, whether
evidenced by this Agreement or by any other agreement,
instrument, or document shall be cumulative and may be exercised
singularly or concurrently. Any written demands, written
requests, or written notices to Borrower that Bank may elect to
give shall be effective when deposited for delivery, postage
prepaid, by U.S. mail, and addressed either, at Bank's option, to
(1) Borrower's Location set forth in Subsection 12(c) of this
Agreement (as modified by any change therein which Borrower has
supplied in writing to Bank) or, (2) Borrower's address at which
Bank customarily communicates with Borrower. If at any time or
times, by assignment or otherwise, Bank transfers any of the
Obligations or any part of the Collateral to another person, such
transfer shall carry with it Bank's powers and rights under this
Agreement with respect to the Obligation or Collateral so
transferred and the transferee shall have said powers and rights,
whether or not they are specifically referred to in the transfer.
To the extent that Bank retains any other of the Obligations or
any part of the Collateral, Bank will continue to have the rights
and powers with respect to the Obligations and the Collateral as
set forth in this Agreement.
(c) All written notices, requests, or other communications herein
provided for must be addressed:
to Borrower as follows:
G.L. Industries of Indiana
2860 North National Road
Columbus, Indiana 47202
Attn: Carl Busart
cc: LDM Technologies, Inc.
1250 Maplelawn
Troy, Michigan 48084
Attn: Joe Balous, President
to the Bank as follows:
KEYBANK NATIONAL ASSOCIATION
127 Public Square
Cleveland, Ohio 44114-1306
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Attn: Manager, Structured Finance
or at such other address as either party may designate to the
other in writing. Such communication will be effective (i) if by
telex, when such telex is transmitted and the appropriate answer
back is received, (ii) if given by mail, seventy-two (72) hours
after such communication is deposited in the U.S. mail certified
mail return receipt requested, or (iii) if given by other means,
when delivered at the address specified in this Section 12(c).
(d) The laws of the State of Ohio shall govern the construction of
this Agreement (including, without limitation, any terms not
specifically defined in this Agreement that may be so
specifically defined pursuant to Ohio Revised Code Section
1309.01-1309.50 inclusive, and including any amendments thereof
or any substitution therefor) and the rights and duties of
Borrower and Bank. This agreement shall be binding upon and inure
to the benefit of Borrower and Bank and their respective
successors and assigns. The rights and powers given in this
Agreement to the Bank are in addition to those otherwise created
or existing in the same Collateral by virtue of other agreements
or writings.
(e) Borrower may terminate this Agreement by giving Bank not less
than ten (10) days prior written notice of termination and by
paying, performing, and observing in full all Obligations, on or
before such termination date. Notwithstanding the termination of
the line of credit hereunder, this Agreement and the security
interest in the Collateral shall continue in full force and
effect after such termination until all Obligations of Borrower
to Bank have been paid, performed, and observed in full.
(f) In this Agreement unless the context otherwise requires, words in
the singular number include the plural, and in the plural number
include the singular.
(g) Borrower hereby releases Bank from and agrees to indemnify and
hold harmless Bank, and its officers, agents, and employees for
any and all claims of Borrower or any other Person for damage or
loss caused by any act or acts under this Agreement or in
furtherance of this Agreement whether by omission or commission,
and whether based upon any error of judgment or mistake of law or
fact (except willful misconduct or gross negligence) on the part
of Bank, or its officers, agents, and employees.
(h) Bank has the right, in addition to all other rights and remedies
available to it, to set off at any time the unpaid balance of the
Loan Account and any other Obligations against any indebtedness
or obligations owing Borrower by Bank including, without
limitation, all Cash Security.
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(i) Bank is hereby authorized to fill in all blank spaces in this
Agreement, to correct patent errors in this Agreement, to
complete or correct the description of the Collateral, and to
date this Agreement.
(j) This Agreement is assignable by Bank upon notice to Borrower and
shall be binding on Bank's respective successors, assigns, and
nominees;
(k) This Agreement and any promissory notes or other writing executed
and delivered by any Person to Bank in connection herewith
integrate all the terms and conditions mentioned herein or
incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject
matter hereof.
13. JURY TRIAL WAIVER
BORROWER AND BANK EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN BANK AND
BORROWER ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO ANY
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR THE
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
BORROWER: G.L. INDUSTRIES OF INDIANA, INC.
By: Michael Polselli
-------------------------------------
Title: Secretary
----------------------------
By: Joe Balous
-------------------------------------
Title: President
----------------------------
BANK: KEYBANK NATIONAL ASSOCIATION
By: Michele T. Oltman
-------------------------------------
Title: Vice President
---------------------------
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EXHIBIT A
BORROWER'S CERTIFICATE
Certificate No. 1755
Computed as of: March 1, 1996
I, the undersigned, the President of G.L. INDUSTRIES OF
INDIANA, INC. (the "Borrower"), do hereby certify pursuant to
the Amended and Restated Credit Facility and Security Agreement
between the Borrower and KEYBANK NATIONAL ASSOCIATION, dated
March 1, 1996 (the "Agreement"), that the following
computations have been made in accordance with the provisions
of the Agreement and without duplication or overlap:
1. Qualified Accounts Receivable, as defined
in Section 1 of the Agreement.
Total Accounts Receivable $ 2,363,157.55
Less Accounts Receivable Not Qualified $ 520,832.26
Total Qualified Accounts Receivable $ 1,842,325.29
80% of Qualified Accounts Receivable $ 1,473,860.24
2. Qualified Inventory, as defined in Section 1
of the Agreement (cost or market value, whichever
is lower).
Total Qualified Inventory $ 1,814,880.08
50% of Qualified Inventory but no more than
$1,000,000 $ 907,440.04
3. Lesser of Borrowing Base (Total of Nos. 1 and 2)
$ 2,381,300.28 or Borrower's Line of Credit Limit
$3,500,000 $ 2,381,300.28
Advances Outstanding $1,819,287.17
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Borrowing Base Over/Under $562,013.11
I further certify that as of the date of this Borrower's Certificate:
(a) No Event of Default, as set forth in Section 9 of the Agreement,
and no event which, but for a requirement of giving of notice or
passage of time, or both, would constitute such an Event of
Default has occurred or is continuing;
(b) Borrower has places of business or maintains Inventory and
Equipment only at the following locations: 2860 North National
Road, Columbus, Indiana 47202; 820 North National Road, Columbus,
Indiana 47202
(c) Borrower keeps all of its records pertaining to Accounts and
Contract Rights, as those terms are defined in Section 1 of the
Agreement, at Borrower's office located at: 2860 North National
Road, Columbus, Indiana 47202.
(d) Borrower's Location, as defined in Section 1 of the Agreement,
is 2860 North National Road, Columbus, Indiana 47202.
(e) Each representation and warranty made by Borrower to Bank in the
Agreement is true and correct as if made on the date of this
Borrower's Certificate.
Dated this 3rd day of March, 1996.
BORROWER: G.L. INDUSTRIES OF INDIANA, INC.
By: Joe Balous
-----------------------------
Title: President
--------------------------
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EXHIBIT B
AMENDED AND RESTATED
MASTER PROMISSORY NOTE
$3,500,000.00 ___________,________, March 1, 1996
On March 31, 1998, the undersigned (herein called "Borrower") promises to pay
to the order of KEYBANK NATIONAL ASSOCIATION, Cleveland, Ohio (herein called
"Bank"), the sum of Three Million Five Hundred Thousand Dollars ($3,500,000) or
such lesser amount of Advances as shall have actually been borrowed by Borrower
from Bank and not previously repaid, pursuant to the terms of a certain Amended
and Restated Credit Facility and Security Agreement by and between Borrower and
Bank dated March 1, 1996, including any partial or total extension,
restatement, renewal, amendment, and substitution thereof or therefor (herein
called "Agreement") with interest payable monthly on the first day of each
month, starting on the first day of the month following the month in which this
Note is signed, according to the provisions set forth in Section 2(a) of the
Agreement.
This note is being executed and delivered as an amendment to and restatement of
an existing Master Promissory Note executed by Borrower and dated _________,
19___, and the execution and delivery of this Note shall not constitute a
novation and shall not terminate or otherwise affect the first lien and
security interest of the Bank in Borrower's property.
Borrower has assigned to Bank all of Borrower's "Accounts Receivable" and has
granted to Bank a security interest in all of Borrower's Accounts Receivable",
"Inventory", "Equipment", "Cash Security", funds on deposit in the "Cash
Collateral Account", certain other assets, and all "Proceeds", products,
profits, and rents thereof, as security for the payment of this Note and all
other "Obligations", as those terms are defined in Section 1 of the Agreement
(all herein called "Obligations").
Upon the occurrence of any one or more "Events of Default", any and all
Obligations shall, at the option of Bank, immediately become due and payable
without demand, presentment, protest, or notice of any kind, all as provided in
the Agreement.
Borrower expressly waives presentment, demand, notice, protest, and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note, assent to any extension or postponement of
the time of payment or any other indulgence, to any substitution, exchange or
release of collateral, and to the addition or release of any other person
primarily or secondarily liable. Borrower understands and agrees that this
Note is subject to and shall be construed according to the laws of the State of
Ohio.
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Reference is made to the Agreement for certain provisions concerning prepayment
of this Note, rights of Bank and its successors and assigns with respect to
this Note, and related matters. This Note is the "Master Promissory Note"
referred to in the Agreement.
Borrower acknowledges that this Note was signed in Oakland County, in the State
of Michigan.
G.L. INDUSTRIES OF INDIANA, INC.
By: Michael Polselli
------------------------------
Title: Secretary
---------------------------
By: Joe Balous
------------------------------
Title: President
---------------------------
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EXHIBIT C
AMENDED AND RESTATED
TERM NOTE
$472,500.00 March 1 , Michigan ,1996
------- -------
For the value received, the undersigned (herein called
"Borrower") promises to pay to the order of KEYBANK NATIONAL
ASSOCIATION, Cleveland, Ohio, (the "Bank"), its successor and
assigns, at its main office, the principal sum of Four Hundred
Seventy-Two Thousand Five Hundred Dollars ($472,500) in twenty-
four (24) consecutive and equal monthly installments of Nineteen
Thousand Six Hundred Eighty-Seven and 50/100 Dollars
($19,687.50) each beginning on March 1, 1996 and continuing on
the first day of each consecutive month thereafter until
February 1, 1998, when any remaining principal balance shall be
due and payable.
Borrower promises to pay interest on the unpaid principal
amount of this Note from the date hereof until such principal
amount is paid in full, at such interest rates, and payable at
such times, as are specified in the Agreement (hereinafter
defined).
This Noted is the Term Note referred to in, and is entitled to
the benefits of the Amended and Restated Credit Facility and
Security Agreement by and between the Bank and Borrower dated
as of March 1, 1996, (the "Agreement"). This Note may be
declared forthwith due and payable in the manner and with the
effect provided in the Agreement, which contains provisions for
acceleration of the maturity hereof upon the happening of
certain stated events, and also for prepayments on account of
principal hereof prior to the maturity hereof upon
the terms and conditions therein specified.
This Note is being executed and delivered as an amendment to
and restatement of an existing Replacement Term Note executed
by Borrower and dated November 1, 1990, and the execution and
delivery of this Note shall not constitute a novation and shall
not terminate or otherwise affect the first lien and security
interest of the Bank in Borrower's property.
Borrower expressly waives presentment, demand, protest, and
notice of dishonor.
Borrower acknowledges that this Note was signed in Oakland
County, in the State of Michigan.
BORROWER: G.L. INDUSTRIES OF INDIANA, INC.
By: Michael Polselli
-------------------------
Title: Secretary
----------------------
By: Joe Balous
-------------------------
Title: President
----------------------
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