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EXHIBIT 10(n)
[COMERICA BANK LETTERHEAD]
November 24, 1997
Mr. Gerald J. Israel
Vice President-Finance
Detrex Corporation
24901 Northwestern Hwy., Suite 500
Southfield, MI 48075-2203
Dear Jerry:
I am pleased to inform you that Comerica Bank ("Comerica") has agreed to provide
a Standby Letter of Credit to Harvel Plastics, Inc. for those purposes and on
those terms and conditions set forth on the attached Term Sheet and General
Conditions (collectively the "Commitment").
Please indicate your acceptance of this Commitment by signing below where
indicated, and return your signed copy of this letter to me within 30 days from
the date of this letter. If your written acceptance is not received by me within
said period of time, this Commitment shall automatically become null and void.
This Commitment may only be accepted as drawn, and may not be accepted in part,
conditionally or subject to modification. The letter of credit must be fully
closed, if at all, on or before February 28, 1998.
Please call me at (313) 222-9278 if you have any questions regarding the terms
of this Commitment or the closing of this transaction.
Sincerely,
COMERICA BANK
By /S/ Daniel T. Ruzylo
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Daniel T. Ruzylo
Its: Vice President
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COMERICA
ACCEPTANCE
The undersigned hereby accept(s) this Commitment and agree(s) to be fully bound
by the terms and conditions set forth therein.
Dated: December 1 , 1997
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HARVEL PLASTICS, INC.
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By: G. J. Israel
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Its: DIRECTOR
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COMERICA
TERM SHEET
I. Letter of Credit
Obligor: Harvel Plastics, Inc., a Pennsylvania corporation.
Amount: Up to a $4,100,000 Standby Letter of Credit to support
the issuance of up to $4,000,000 of bonds to finance the
purchase of equipment for Harvel's expansion to
California.
Term: Up to an eight year letter of credit. No
amortization under the credit will be
required through the year ending 12-31-98.
Beginning on 4-1-99 the Bank will apply a
formula availability reserve/holdback
against the Detrex revolving credit in the
amount of $145,000. The reserve will
increase by $145,000 on 7-1 and 10-1 and
reduce to zero on 1-1.
Collateral: First security interest and/or lien in all
of Obligor's accounts receivable, inventory,
machinery, equipment and a first mortgage on
real estate located at 300 Kuebler Road,
Easton, Pennsylvania. This letter of credit
will be cross collateralized and cross
defaulted with all Comerica debt outstanding
to guarantors.
Borrowing Formula: Advance limited to 100% of the cost of equipment to be
purchased including up to $553,000 of tooling and
$370,000 of installation costs.
Letter of Credit
Fee: 1-1/2% per annum on the outstanding balance of the Letter
of Credit payable annually in advance. A processing fee
of $150 per draw on the credit will also be charged.
Fees: A) A 1/2% one-time closing fee, plus
B) All out-of-pocket costs of Comerica, plus
C) All legal fees and charges of inside and/or outside
counsel for Comerica, plus
D) Any fees associated with services provided
by W.Y. Campbell & company will be quoted
separately.
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Your good faith deposit will be applied against the above
fees and costs.
Corporate Guaranty: Detrex Corporation, Elco Corporation and Seibert
Oxidermo, Inc., unlimited and secured by a first lien on
Corporate Guarantor's accounts receivable, inventory,
machinery and equipment, and real estate located at 401
Emmet Ave., Bowling Green, Kentucky, 325 Emmet Ave.,
Bowling Green, Kentucky and 26000 Capitol Ave., Redford,
Michigan.
Purpose: To support the acquisition of equipment.
Loan Documentation: The loan shall be evidenced by a loan agreement,
promissory note, guaranties, security agreements,
financing statements, and such other
documents as shall be required by Comerica.
The form and substance of the loan
documentation must be satisfactory to
Comerica.
Other Documents and
Information: A condition to making the loan is receipt by
Comerica of such other information and
documentation as shall be required by
Comerica, including without limit insurance
and opinions of counsel. The form and
substance of such information and
documentation must be satisfactory to
Comerica.
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COMERICA
GENERAL CONDITIONS
The following General Conditions are specifically incorporated within
and form a part of the Commitment to which they are attached. Fulfillment and
discharge of the following General Conditions are essential preconditions to
Comerica's obligation to consummate the proposed loan transaction.
1. Co-Ordination with Comerica's Counsel. ____________________________
will act as our counsel in connection with the Closing of this transaction.
After your acceptance of this Commitment, you are requested to promptly contact
the attorney assigned to your account for the purpose of arranging the ordering
of Uniform Commercial Code searches, the preparation of closing documents and
the coordination of the respective obligations. Please obtain the name of that
attorney from your loan officer. Early contact by your counsel is also
encouraged.
2. Closing Date. Comerica shall set a date and place for Closing.
You should contact your loan officer immediately to advise of your scheduling
preferences and/or potential problems.
3. Delivery of Obligor's Documents. All documentation to be provided
to Comerica by you (other than that to be drafted by Comerica's counsel) shall
be provided as soon as possible after the acceptance of this Commitment. It
would be appreciated if your documentation is delivered to Comerica and its
counsel at least five business days prior to the date established by Comerica
for Closing.
4. Reliance Upon Representations. Comerica's Commitment is given in
reliance upon the truth of all representations and statements made orally or in
writing by or on behalf of the Obligor to Comerica, and those representations
and statements are deemed to be a part of the Commitment. Comerica, at its
discretion, may require the updating (immediately prior to Closing) of any
financial information to be provided with respect to Obligor, any guarantor or
any other party for whom such information is required by the Commitment.
5. Adverse Information. In the event that adverse information comes to
your attention at any time prior to consummation of the loan transaction
proposed by the Commitment, you are required to bring it to Comerica's attention
immediately.
6, Disclaimer by Comerica. By issuance of the Commitment and Closing
of the Loan, Comerica makes no
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representation, warranty or assurance to the Obligor or any guarantor of the
financial viability of the Obligor, the advisability of entering into the
proposed transaction or that Comerica assumes any responsibility whatsoever to
see to the application of any portion of the loan proceeds. By acceptance of the
Commitment (with respect to parties whose acceptance is required) and
consummation of the transaction (with respect to all borrowers and guarantors),
all such parties shall be deemed to have expressly acknowledged the absence of
any such representations, warranties or assurances.
7. Prohibition on Assignment by Obligor. Neither the Commitment nor
any rights under the Commitment are assignable by the Obligor, in whole or in
part, voluntarily, by operation of law or otherwise (including by way of the
sale or assignment of interests in Obligor).
8. Assignment by Comerica. While the Commitment cannot be assigned by
the Obligor without Comerica's prior written consent, the Commitment may be
assigned (including by way of participations) by Comerica, without discharging
Comerica's liability hereunder.
9. Termination of Commitment. The Commitment may be terminated at
Comerica's option, without further liability by Comerica, and in such manner as
Comerica may determine, upon the occurrence of any of the following events:
A. The failure by the Obligor, any guarantor or any other
necessary party to comply with any of the terms and
conditions of the Commitment, or if any representation or
warranty made by or on behalf of Obligor should be or become
untrue or misleading in any material respect;
B. Upon the filing by or against the Obligor, any guarantor or
any affiliated or related party required to deliver or
execute any document or enter into any arrangement on behalf
of the Obligor in connection with fulfillment of the
Obligor's preconditions to Closing, of a petition in
bankruptcy or insolvency or for reorganization or
appointment of a receiver or trustee, or the making by the
Obligor or any such party of any assignment for the benefit
of creditors or the filing of a petition for arrangement by
the Obligor or any such party, which in each case is not
withdrawn, dismissed, cancelled and/or terminated upon the
earlier of 60 days after the filing or entry of the same or
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the date for expiration of the Commitment after its
acceptance by the Obligor; or
C. The occurrence, prior to full closing, of any material and
adverse event or circumstance (measured in Comerica's sole
judgment) affecting the Obligor's business or the security
to be granted to Comerica.
Upon such termination, any otherwise refundable fees paid or to be paid to
Comerica by the Obligor shall constitute liquidated damages. In addition, at
Comerica's election, Obligor shall pay to Comerica, upon demand, the full amount
of all costs and expenses (including without limit in-house or outside attorney
charges) incurred by the Bank in connection with the Commitment and the proposed
transactions.
10. Cancellation for Failure to Close. The Commitment may, in all
events, be cancelled at Comerica's option, communicated to the Obligor in
writing, in the event that the loan proposed to be made pursuant to the
Commitment is not closed within 60 days after the date of the Commitment (unless
an earlier or later Closing date is specifically stated in the body of the
Commitment).
11. Fees Earned Upon Acceptance. Any commitment fees designated as
non-refundable and payable upon acceptance of the Commitment shall be deemed
earned upon acceptance of the Commitment unless otherwise stated in the
Commitment. Obligor shall not be entitled to a refund or credit with respect to
non-refundable commitment fees under any circumstances, unless specifically so
stated in the Commitment.
12.Title, Priority of Liens and Condition of Property. The Obligor
shall own all property in which Comerica is to be granted a lien, security
interest or encumbrance, absolutely and free and clear of all liens,
encumbrances, security interests and claims of other parties. Unless otherwise
stipulated in the Commitment, any lien, security interest or encumbrance to be
created in favor of Comerica shall be a first and prior lien upon the specified
property and all proceeds and products thereof, superior to the lien, right and
interest of any other party except to the extent expressly permitted by the
Commitment. All tangible personal property in which Comerica is to be granted a
security interest shall be and be maintained in good operating condition and
repair.
13. Damage or Destruction to Property. If any real or personal
property to be pledged, assigned, mortgaged or otherwise encumbered in favor of
Comerica in connection with the loan to be made pursuant to the Commitment, is
substantially damaged or destroyed by fire or other casualty
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and is not entirely repaired, restored or replaced (without further encumbrance
of the Obligor's property or assets) prior to Closing, Comerica may cancel the
Commitment by sending written notice to the Obligor.
14. Payment Dates. With respect to loans requiring regular periodic
payments of principal and interest, the first full payment of principal and
interest shall be made on the first day of the first month following Closing,
unless Comerica shall agree otherwise. To the extent that any loan or loans are
to be made pursuant to the Commitment which do not require regular payments of
principal, but interest only, this statement shall apply with respect to the
interest portion to be paid.
15. Waiver or Modification. The provisions of the Commitment
(including without limit these General Conditions) cannot be waived or modified
except in a further written instrument signed by the Obligor and Comerica (with
respect to a modification) or by Comerica (with respect to a waiver).
16. Survival of Closing. The provisions of the Commitment shall
survive the closing of the loan transaction.
17. Captions. Captions to paragraphs in the Commitment and these
General conditions have been inserted solely for the sake of convenient
references, and are entirely without substance or effect.
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