EXHIBIT 4(f)
NBD Bank
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
August 28, 1998
Hastings Manufacturing Company
000 Xxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxxx, Treasurer
Re: $6,600,000 TERM LOAN AND $3,000,000 CREDIT AUTHORIZATION
TO MAKE REVOLVING CREDIT LOANS AND ISSUE LETTERS OF CREDIT
Gentlemen:
This Amended and Restated Letter Agreement (this "Agreement") contains
the terms and conditions under which NBD Bank, a Michigan banking
corporation (the "Bank"), may, in its sole discretion, make loans to and
issue commercial and standby letters of credit for the benefit of Hastings
Manufacturing Company, a Michigan corporation (the "Company").
This Agreement is intended to amend and restate that certain Letter
Agreement dated May 31, 1994, as amended by First Amendment to Letter
Agreement dated as of May 2, 1995, Second Amendment to Letter Agreement
dated as of September 30, 1995, Third Amendment to Letter Agreement dated
as of May 31, 0000, Xxxxxx Xxxxxxxxx to Credit Agreement dated as of May
31, 1996 and Fifth Amendment to Letter Agreement dated as of May 31, 1998,
each by and between the Company and the Bank.
1. DEFINITIONS. As used herein the following terms shall have the
following respective meanings:
"ADVANCES" shall mean the Revolving Credit Loans and the Letter of
Credit Advances made or issued under this Agreement.
"APPLICABLE MARGIN" shall mean, with the respect to any Eurodollar
Rate Loan, Floating Rate Loan, commitment fees payable under paragraph 4 or
standby letter of credit fees payable pursuant to paragraph 3(d), as the
case may be, the applicable margin set forth in the table below based on
the Funded Debt Ratio and the ratio of Total Liabilities to Tangible Net
Worth, as adjusted on the first day of each fiscal quarter based on each
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August 28, 1998
Page 2
such ratio as of the last day of the fiscal quarter immediately preceding
such fiscal quarter, commencing with the fiscal quarter ending September
30, 1998, PROVIDED that the Applicable Margin in effect on the first day of
any Eurodollar Interest Period for any Eurodollar Rate Loan shall remain in
effect for the entire Eurodollar Interest Period and, notwithstanding
anything herein to the contrary, upon or during the continuance of any
Event of Default the Applicable Margin shall be based on the highest
possible Applicable Margin described in the table below, regardless of the
Funded Debt Ratio or the ratio of Total Liabilities to Tangible Net Worth:
APPLICABLE MARGIN OTHER FEES
--------------------------------------------------------------------------------------
FUNDED DEBT TOTAL PRIME LIBOR COMMIT- STANDBY
TO EBITDA LIABILITIES TO MENT FEE LETTER OF
TANGIBLES NET CREDIT
WORTH COMMISSION
--------------------------------------------------------------------------------------
>2.50: 1.00 or >1.90: 1.00 0 b.p. 200 b.p. 25 b.p. 200 b.p.
>1.40: 1.00 or >1.40: 1.00 0 b.p. 175 b.p. 25 b.p. 175 b.p.
<1.40: 1.00 and <1.40: 1.00 0 b.p. 150 b.p. 25 b.p. 150 b.p.
The middle tier set forth in the table above shall apply through and
including September 30, 1998, until adjusted as provided above.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or
other day on which the Bank is not open to the public for carrying on
substantially all of its banking functions.
"CAPITAL LEASE" of any person shall mean any lease which, in
accordance with generally accepted accounting principles, is or should be
capitalized on the books of such person.
"CHANGE OF CONTROL" shall mean the following event: any Person or
group of Persons (within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended) shall either (i) acquire
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934) of 30%
or more of the outstanding shares of voting stock of the Company or (ii)
obtain the power (whether or not exercised) to elect a majority of the
Company's directors.
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August 28, 1998
Page 3
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations thereunder.
"CONSOLIDATED" shall mean, when used with reference to any financial
term in this Agreement, the aggregate for two or more persons of the
amounts signified by such term for all such persons determined on a
consolidated basis in accordance with generally accepted accounting
principles.
"CONTINGENT LIABILITIES" of any person shall mean, as of any date, all
obligations of such person or of others for which such person is
contingently liable, as obligor, guarantor, surety, accommodation party,
partner or in any other capacity, or in respect of which obligations such
person assures a creditor against loss or agrees to take any action to
prevent any such loss (other than endorsements of negotiable instruments
for collection in the ordinary course of business), including without
limitation all reimbursement obligations of such person in respect of any
letters of credit, surety bonds or similar obligations (including, without
limitation, bankers acceptances) and all obligations of such person to
advance funds to, or to purchase assets, property or services from, any
other person in order to maintain the financial condition of such other
person.
"CUMULATIVE NET INCOME" of any person shall mean, as of any date, the
net income (after deduction for income and other taxes of such person
determined by reference to income or profits of such person) for the period
commencing on the specified date through the end of the most recently
completed fiscal year of such person (but without reduction for any net
loss incurred for any fiscal year during such period), taken as one
accounting period, all as determined in accordance with generally accepted
accounting principles.
"DEBT SERVICE COVERAGE RATIO" shall mean, for any period, the ratio of
(i) Cumulative Net Income plus all amounts deducted in determining such
Cumulative Net Income on account of (a) Interest Expense and (b) income
taxes and the State of Michigan single business tax to (ii) Interest
Expense plus the current portion of Funded Debt, commencing June 30, 1998
for the four consecutive fiscal quarters most recently ended of the Company
and its Subsidiaries on a consolidated basis in accordance with generally
accepted accounting principles.
"DEFAULT" shall mean any event or condition which might become an
Event of Default with notice or lapse of time or both.
"DOLLARS" and "$" shall mean the lawful money of the United States of
America.
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August 28, 1998
Page 4
"EBITDA" shall mean, for any period, Cumulative Net Income for such
period plus all amounts deducted in determining such Cumulative Net Income
on account of (a) Interest Expense and (b) income taxes and the State of
Michigan single business tax, and (c) depreciation and amortization
expense, all as determined for the Company and its Subsidiaries on a
consolidated basis in accordance with generally accepted accounting
principles.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) which, together with the Company, would be treated as a
single employer under Section 414 of the Code and the regulations
promulgated thereunder.
"EURODOLLAR BUSINESS DAY" shall mean, with respect to any Eurodollar
Rate Loan, a day which is both a Business Day and a day on which dealings
in Dollar deposits are carried out in the London interbank market.
"EURODOLLAR INTEREST PERIOD" shall mean, with respect to any
Eurodollar Rate Loan, the period commencing on the day such Eurodollar Rate
Loan is made or converted to a Eurodollar Rate Loan and ending on the day
which is one, two, three or six months thereafter (or such other period as
may be agreed to by the Bank), as the Company may elect under paragraph 6,
and each subsequent period commencing on the last day of the immediately
preceding Eurodollar Interest Period and ending on the day which is one,
two, three or six months thereafter (or such other period as may be agreed
to by the Bank), as the Company may elect under paragraph 6, PROVIDED,
HOWEVER, that (a) any Eurodollar Interest Period which commences on the
last Eurodollar Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Eurodollar Business Day of the
appropriate subsequent calendar month, (b) each Eurodollar Interest Period
which would otherwise end on a day which is not a Eurodollar Business Day
shall end on the next succeeding Eurodollar Business Day or, if such next
succeeding Eurodollar Business Day falls in the next succeeding calendar
month, on the next preceding Eurodollar Business Day, and (c) no Eurodollar
Interest Period shall be permitted which would end after Maturity Date A
with respect to any Revolving Credit Loan or Maturity Date B with respect
to the Term Loan.
"EURODOLLAR RATE" shall mean, with respect to any Eurodollar Rate
Loan and the related Eurodollar Interest Period, the per annum rate that is
equal to the sum of the Applicable Margin plus the rate per annum obtained
by dividing (A) the per annum rate of interest at which deposits in Dollars
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August 28, 1998
Page 5
for such Eurodollar Interest Period and in an aggregate amount comparable
to the amount of such Eurodollar Rate Loan to be made by the Bank are
offered to the Bank by other prime banks in the London interbank market at
approximately 11:00 a.m. London time on the second Eurodollar Business Day
prior to the first day of such Eurodollar Interest Period by (B) an amount
equal to one minus the stated maximum rate (expressed as a decimal) of all
reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) that are specified on
the first day of such Eurodollar Interest Period by the Board of Governors
of the Federal Reserve System (or any successor agency thereto) for
determining the maximum reserve requirement with respect to eurocurrency
funding (currently referred to as "Eurocurrency liabilities" in Regulation
D of such Board) maintained by a member bank of such System; all as
conclusively determined by the Bank, such sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one
percent (1/100 of 1%).
"EURODOLLAR RATE LOAN" shall mean any Loan which bears interest at
the Eurodollar Rate.
"EVENT OF DEFAULT" shall mean any of the events or conditions
described in paragraph 13 of this Agreement.
"FEDERAL FUNDS RATE" shall mean the per annum rate of interest
established and announced by the Bank from time to time as the opening
federal funds rate paid by the Bank in its regional federal funds market
for overnight borrowings from other banks, which Federal Funds Rate shall
change simultaneously with any change in such announced rate.
"FLOATING RATE" shall mean the per annum rate equal to the sum of the
Applicable Margin plus the greater of (i) the sum of (a) one percent (1%)
per annum plus (b) the Federal Funds Rate in effect from time to time, or
(ii) the Prime Rate in effect from time to time; which Floating Rate shall
change simultaneously with any change in such Federal Funds Rate or Prime
Rate, as the case may be.
"FLOATING RATE LOAN" shall mean any Loan which bears interest at the
Floating Rate.
"FUNDED DEBT" of any person, as of any date, shall mean: (a) all debt
for borrowed money and similar monetary obligations evidenced by bonds,
notes, debentures, Capital Lease obligations or otherwise, including
without limitation obligations in respect of the deferred purchase price of
properties or assets, in each case whether direct or indirect; (b) all
liabilities secured by any Lien existing on property owned or acquired
subject thereto, whether or not the liability secured thereby shall have
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August 28, 1998
Page 6
been assumed; (c) all reimbursement obligations under outstanding letters
of credit in respect of drafts which (i) may be presented or (ii) have been
presented and have not yet been paid, and (d) all Contingent Liabilities
relating to any of the obligations of others similar in character to those
described in the foregoing clauses (a) through (c).
"FUNDED DEBT RATIO" shall mean, as of any date, the ratio of (a)
Funded Debt as of such date to (b) EBITDA, commencing June 30, 1998 for the
four consecutive fiscal quarters most recently ended of the Company and its
Subsidiaries on a consolidated basis in accordance with generally accepted
accounting principles.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall mean generally
accepted accounting principles applied on a basis consistent with that
reflected in the most recent financial statements of the Company submitted
to the Bank prior to the date hereof.
"GUARANTY" shall mean each guaranty agreement from time to time
entered into by any Guarantor for the benefit of the Bank pursuant to this
Agreement in substantially the form of Exhibit C hereto.
"GUARANTOR" shall mean each Subsidiary of the Company.
"INDEBTEDNESS" of any person shall mean, as of any date, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person as lessee under any Capital Lease, (c) all obligations which are
secured by any Lien existing on any asset or property of such person
whether or not the obligation secured thereby shall have been assumed by
such person, (d) the unpaid purchase price for goods, property or services
acquired by such person, except for trade accounts payable arising in the
ordinary course of business that are not past due, (e) all obligations of
such person to purchase goods, property or services where payment therefor
is required regardless of whether delivery of such goods or property or the
performance of such services is ever made or tendered (generally referred
to as "take or pay contracts"), (f) all liabilities of such person in
respect of unfunded benefit liabilities under any plan of such person or of
any member of a controlled group of which such person is a member, (g) all
obligations of such person in respect of any interest rate or currency
swap, rate cap or other similar transaction (valued in an amount equal to
the highest termination payment, if any, that would be payable by such
person upon termination for any reason on the date of determination),
except any such obligations arising under any interest rate or currency
swap, rate cap or other similar transaction entered into by and between
such person and the Bank, and (h) all obligations of others similar in
character to those described in clauses (a) through (g) of this definition
for which such person is contingently liable, as obligor, guarantor, surety
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August 28, 1998
Page 7
or in any other capacity, or in respect of which obligations such person
assures a creditor against loss or agrees to take any action to prevent any
such loss (other than endorsements of negotiable instruments for collection
in the ordinary course of business), including without limitation all
reimbursement obligations of such person in respect of letters of credit,
surety bonds or similar obligations and all obligations of such person to
advance funds to, or to purchase assets, property or services from, any
other person in order to maintain the financial condition of such other
person.
"INTEREST EXPENSE" shall mean, for any period, total interest and
related expense (including, without limitation, that portion of any
Capitalized Lease obligation attributable to interest expense in conformity
with generally accepted accounting principles, amortization of debt
discount, all capitalized interest, the interest portion of any deferred
payment obligations, all commissions, discounts and other fees and charges
owed with respect to letter of credit and bankers acceptance financing, the
net costs and net payments under any interest rate hedging, cap or similar
agreement or arrangement, prepayment charges, agency fees, administrative
fees, commitment fees and capitalized transaction costs allocated to
interest expense) and all dividends and other distributions on any
preferred capital stock of the Company paid, payable or accrued during such
period, without duplication for any period, with respect to all outstanding
Indebtedness of the Company and its Subsidiaries, all as determined for the
Company and its Subsidiaries on a consolidated basis for such period in
accordance with generally accepted accounting principles.
"INTEREST PAYMENT DATE" shall mean, (a) with respect to any Negotiated
Rate Loan, the last day of each Negotiated Interest Period with respect to
such Negotiated Rate Loan, (b) with respect to any Eurodollar Rate Loan,
the last day of each Eurodollar Interest Period with respect to such
Eurodollar Rate Loan, in either case of any Interest Period exceeding
ninety days, those days that occur during such Interest Period at intervals
of ninety days after the first day of such Interest Period, and (c) in all
other cases, the last Business Day of each March, June, September and
December occurring after the date hereof, commencing with the first such
Business Day occurring after the date of this Agreement.
"INTEREST PERIOD" shall mean any Eurodollar Interest Period or
Negotiated Interest Period.
"LETTER OF CREDIT" shall mean a standby or commercial letter of credit
having a stated expiry date not later than one year from the date of
issuance thereof, issued on or prior to Maturity Date A by the Bank for the
account of the Company under an application and related documentation
acceptable to the Bank requiring, among other things, immediate
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August 28, 1998
Page 8
reimbursement by the Company to the Bank in respect of all drafts or other
demand for payment honored thereunder and all expenses paid or incurred by
the Bank relative thereto.
"LETTER OF CREDIT ADVANCE" shall mean any issuance of any Letter of
Credit under paragraph 2.
"LETTER OF CREDIT DOCUMENTS" shall have the meaning ascribed thereto
in paragraph 3.
"LIEN" shall mean any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, conditional sale or title
retaining contract, sale and leaseback transaction, financing statement
filing, lessor's or lessee's interest under any lease, subordination of any
claim or right, or any other type of lien, charge, encumbrance,
preferential arrangement or other claim or right.
"LOAN" shall mean any Revolving Credit Loan or Term Loan.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a)
the business, assets, operations or condition (financial or otherwise) of
the Company and its Subsidiaries on a consolidated basis, (b) the ability
of the Company or any Subsidiary to perform its obligations under this
Agreement or any Note, or (c) the validity of enforceability of this
Agreement or any Note or the rights or remedies of the Bank under this
Agreement or any Note.
"MATURITY DATE A" shall mean the earlier to occur of (a) May 31, 2000,
and (b) the date on which the Advances shall be due and payable pursuant to
paragraph 13 of this Agreement.
"MATURITY DATE B" shall mean the earlier to occur of (a) June 30,
2003, and (b) the date on which the Term Loan shall be due and payable
pursuant to paragraph 13 of this Agreement.
"MAXIMUM AMOUNT" shall mean the maximum amount of the Advances that
may be made hereunder pursuant to paragraph 2(a), which shall be $3,000,000
as such amount may be amended from time to time.
"MULTIEMPLOYER PLAN" shall mean any "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"NEGOTIATED INTEREST PERIOD" shall mean with respect to any
Negotiated Rate Loan, the period commencing on the date such Negotiated
Rate Loan is made or converted to a Negotiated Rate Loan and ending on the
date agreed upon between the Company and the Bank at the time such
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August 28, 1998
Page 9
Negotiated Rate Loan is made, and each subsequent period commencing on the
last day of the immediately preceding Negotiated Interest Period and ending
on the date agreed upon between the Company and the Bank at the time such
Negotiated Rate Loan is elected to be continued as a Negotiated Rate Loan
by the Company under paragraph 6 of this Agreement, PROVIDED, HOWEVER, that
no Negotiated Interest Period which would end after Maturity Date A with
respect to any Revolving Credit Loan or Maturity Date B with respect to the
Term Loan shall be permitted.
"NEGOTIATED RATE" shall mean, with respect to any Negotiated Rate
Loan, the rate per annum agreed upon between the Company and the Bank at
the time such Negotiated Rate Loan is made.
"NEGOTIATED RATE LOAN" shall mean any Loan which bears interest at
the Negotiated Rate.
"NOTE" shall mean any Revolving Credit Note or Term Note.
"OVERDUE RATE" shall mean, (a) in respect of principal of Floating
Rate Loans or any other amount payable by the Company hereunder (other than
interest and indebtedness described in clause (b) of this definition), an
interest rate per annum that is equal to the sum of three percent (3%) per
annum plus the Floating Rate, and (b) in respect of principal of Negotiated
Rate Loans or Eurodollar Rate Loans, an interest rate per annum that is
equal to the sum of three percent (3%) per annum plus the per annum rate in
effect thereon until the end of the then current Interest Period for such
Loan and, thereafter, an interest rate per annum that is equal to the sum
of three percent (3%) per annum plus the Floating Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"PERMITTED LIENS" shall mean Liens permitted by paragraph 10(e) of
this Agreement.
"PERSON" shall include an individual, a corporation, a limited
liability company, an association, a partnership, a trust or estate, a
joint stock company, an unincorporated organization, a joint venture, a
trade or business (whether or not incorporated), a government (foreign or
domestic) and any agency or political subdivision thereof, or any other
entity.
"PLAN" shall mean any pension plan (including a Multiemployer Plan)
subject to Title IV of ERISA or to the minimum funding standards of Section
412 of the Code which has been established or maintained by the Company or
any ERISA Affiliate.
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August 28, 1998
Page 10
"PRIME RATE" shall mean the per annum rate of interest announced by
the Bank from time to time as its "prime rate" (it being acknowledged that
such announced rate may not necessarily be the lowest rate charged by the
Bank to any of its customers), which Prime Rate shall change simultaneously
with any change in such announced rate.
"PROHIBITED TRANSACTION" shall mean any transaction involving any
Plan which is proscribed by Section 406 of ERJSA or Section 4975 of the
Code and to which no statutory or administrative exemption applies.
"REPORTABLE EVENT" shall mean a reportable event with respect to any
Plan as described in Section 4043(c) of ERISA, excluding those events as to
which the thirty (30) day notice period is waived under Part 2615 of the
regulations promulgated by the PBGC under ERISA.
"REVOLVING CREDIT FACILITY" shall mean the credit facility described
in paragraph 2(a).
"REVOLVING CREDIT LOAN" shall mean any loan pursuant to paragraph
2(a).
"REVOLVING CREDIT NOTE" shall mean the master promissory note of the
Company evidencing a Revolving Credit Loan, in substantially the form
annexed hereto as EXHIBIT A, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or
replacement therefor.
"SUBSIDIARY" of any person shall mean any other person (whether now
existing or hereafter organized or acquired) in which (other than directors
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which
have such power or right only by reason of the happening of a contingency),
at the time as of which any determination is being made, are owned,
beneficially and of record, by such person or by one or more of the other
Subsidiaries of such person or by any combination thereof. Unless
otherwise specified, reference to "Subsidiary" shall mean a Subsidiary of
the Company.
"SWAP AGREEMENT" shall mean the swap agreement dated as of even date
herewith by and between the Company and the Bank, as the same may hereafter
be amended or modified from time to time.
"TANGIBLE NET WORTH" of any person shall mean, as of any date, (a) the
amount of any capital stock, paid in capital and similar equity accounts
plus (or minus in the case of a deficit) the capital surplus and retained
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August 28, 1998
Page 11
earnings of such person and the amount of any foreign currency translation
adjustment account shown as a capital account of such person, less (b) the
net book value of all items of the following character which are included
in the assets of such person: (i) goodwill, including without limitation,
the excess of cost over book value of any asset, (ii) organization or
experimental expenses, (iii) unamortized debt discount and expense, (iv)
patents, trademarks, trade names and copyrights, (v) treasury stock, (vi)
deferred taxes and deferred charges, (vii) franchises, licenses and
permits, and (viii) other assets which are deemed intangible assets under
generally accepted accounting principles.
"TERM LOAN" shall mean the term loan issued pursuant to paragraph
2(b).
"TERM NOTE" shall mean the promissory note of the Company evidencing
the Term Loan, in substantially the form annexed hereto as EXHIBIT B, as
amended or modified from time to time and together with any promissory note
or notes issued in exchange or replacement therefor.
"TOTAL LIABILITIES" of any person shall mean, as of any date, all
obligations which, in accordance with generally accepted accounting
principles, are or should be classified as liabilities on a balance sheet
of such person.
2. LOANS AND ADVANCES.
(a) REVOLVING CREDIT LOANS AND ADVANCES. The Bank may, in its
sole and uncontrolled discretion, make Revolving Credit Loans to the
Company or issue Letters of Credit for the benefit of the Company. The
aggregate outstanding principal amount of Advances made by the Bank to the
Company hereunder shall not at any time exceed the Maximum Amount. The
aggregate stated amount of Letter of Credit Advances issued by the Bank for
the benefit of the Company under this Agreement shall not at any time
exceed One Million Dollars ($1,000,000). The Revolving Credit Loans shall
be evidenced by Revolving Credit Notes, payable on demand by the Bank but
no later than Maturity Date A, with interest payable prior to maturity
(whether by demand or otherwise) on demand by the Bank but no later than
each Interest Payment Date and at maturity (whether by demand or otherwise)
at the Negotiated Rate, the Eurodollar Rate or the Floating Rate, as
elected by the Company hereunder and during such periods as may be
permitted hereunder, and after maturity (whether by demand or otherwise) on
demand at the Overdue Rate. The Letter of Credit Advances, if not promptly
reimbursed pursuant to paragraph 3 hereof, shall bear interest on demand at
the Overdue Rate. All Negotiated Rate Loans shall be in the minimum amount
of $500,000 and in integral multiples of $100,000, all Eurodollar Rate
Loans shall be in the minimum amount of $1,000,000 and in integral
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August 28, 1998
Page 12
multiples of $100,000, and all Floating Rate Loans shall be in the minimum
amount of $50,000 and in integral multiples thereof. All Letter of Credit
Advances shall be in a minimum amount of $50,000.
(b) TERM LOAN. The Bank agrees to make a term loan to the
Company in the amount of Six Million Six Hundred Thousand Dollars
($6,600,000). The Term Loan shall be evidenced by the Term Note, and,
unless earlier payment is required under this Agreement, shall be payable
in equal quarterly principal payments of $330,000, plus interest (at the
Negotiated Rate, the Eurodollar Rate or the Floating Rate, as elected by
the Company hereunder and during such periods as may be permitted
hereunder, and after maturity, whether by demand or otherwise on demand at
the Overdue Rate).
(c) PREPAYMENT OF LOANS. The Company may at any time and from
time to time prepay all or a portion of the Eurodollar Rate Loans or
Floating Rate Loans, without premium or penalty, PROVIDED that (i) the
Company may not prepay any portion of any such Loan as to which an election
for a continuation of or a conversion to a Eurodollar Rate Loan is pending
pursuant to this paragraph 2, and (ii) unless earlier payment is required
under this Agreement, any Eurodollar Rate Loan or Negotiated Rate Loan may
only be prepaid on the last day of the then current Interest Period with
respect to such Loan. Upon the giving of such notice, the aggregate
principal amount of such Loan or portion thereof so specified in such
notice, together with such accrued interest and other amounts, shall become
due and payable on the specified prepayment date.
3. LETTER OF CREDIT ADVANCES: REIMBURSEMENT PAYMENTS.
(a) The Company agrees to pay to the Bank, on the day on which
the Bank shall honor a draft or other demand for payment presented or made
under any Letter of Credit, an amount equal to the amount paid by the Bank
in respect of such draft or other demand under such Letter of Credit and
all expenses paid or incurred by the Bank relative thereto. Unless the
Company shall have made such payment to the Bank an such day, upon each
such payment by the Bank, the Bank shall be deemed to have disbursed to the
Company, and the Company shall be deemed to have elected to satisfy its
reimbursement obligation by, a Loan bearing interest at the Floating Rate
in an amount equal to the amount so paid by the Bank in respect of such
draft or other demand under such Letter of Credit. Such Loan shall be
disbursed notwithstanding any failure to satisfy any conditions for
disbursement of any Loan set forth in paragraph 8 hereof and, to the extent
of the Loan so disbursed, the reimbursement obligation of the Company under
this paragraph 3 shall be deemed satisfied.
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August 28, 1998
Page 13
(b) The reimbursement obligation of the Company under this
paragraph 3 shall be absolute, unconditional and irrevocable and shall
remain in fall force and effect until all obligations of the Company to the
Bank hereunder shall have been satisfied, and such obligations of the
Company shall not be affected, modified or impaired upon the happening of
any event, including without limitation, any of the following, whether or
not with notice to, or the consent of, the Company:
(i) Any lack of validity or enforceability of any Letter of
Credit or any documentation relating to any Letter of Credit or
to any transaction related in any way to such Letter of Credit
(the "Letter of Credit Documents");
(ii) Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any
interest in collateral or security, with respect to any of the
Letter of Credit Documents;
(iii) The existence of any claim, setoff, defense or other
right which the Company may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any
persons or entities for whom any such beneficiary or any such
transferee may be acting) Bank or any other person or entity,
whether in connection with any of the Letter of Credit Documents,
the transactions contemplated herein or therein or any unrelated
transactions;
(iv) Any draft or other statement or document presented
under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(v) Payment by the Bank to the beneficiary under any Letter
of Credit against presentation of documents which do not comply
with the terms of the Letter of Credit, including failure of any
documents to bear any reference or adequate reference to such
Letter of Credit;
(vi) Any failure, omission, delay or lack on the part of the
Bank or any party to any of the Letter of Credit Documents to
enforce, assert or exercise any right, power or remedy conferred
upon the Bank or any such party under this Agreement or any of
the Letter of Credit Documents, or any other acts or omissions on
the part of the Bank or any such party;
Hastings Manufacturing Company
August 28, 1998
Page 14
(vii) Any other event or circumstance that would, in the
absence of this clause, result in the release or discharge by
operation of law or otherwise of the Company from the performance
or observance of any obligation, covenant or agreement contained
in this paragraph 3.
(c) No setoff, counterclaim, reduction or diminution of any
obligation or any defense of any kind or nature which the Company has or
may have against the beneficiary of any Letter of Credit shall be available
hereunder to the Company against the Bank.
(d) On or before the date of issuance of any Letter of Credit,
the Company agrees to pay to the Bank a fee computed: (i) at a rate equal
to the Applicable Margin of the maximum amount available to be drawn from
time to time under such Letter of Credit for the period from and including
the date of issuance of such Letter of Credit to and including the stated
expiry date of such Letter of Credit, in the case of standby letters of
credit, and (ii) at a rate to be agreed upon between the Bank and the
Company in the case of commercial letters of credit. Such fees are non-
refundable and the Company shall not be entitled to any rebate of any
portion thereof if such Letter of Credit does not remain outstanding
through its stated expiry date or for any other reason. The Company
further agrees to pay to the Bank, on demand, such other customary
administrative fees, charges and expenses of the Bank in respect of the
issuance, negotiation, acceptance, amendment, transfer and payment of such
Letter of Credit or otherwise payable pursuant to the application and
related documentation under which such Letter of Credit is issued.
4. COMMITMENT FEE. The Company agrees to pay to the Bank a
commitment fee on the daily average unused amount of the Revolving Credit
Facility (calculated on a 360-day basis), at a rate equal to the Applicable
Margin. Accrued commitment fees shall be payable quarterly in arrears on
the last Business Day of each March, June, September and December,
commencing on the first such Business Day occurring after the date of this
Agreement, and on Maturity Date A.
5. REQUEST FOR ADVANCES. The Company shall give the Bank a written
request, or a verbal request followed immediately by a written request, for
each requested Revolving Credit Loan not later than 11:00 a.m. Detroit
time, on the date such Advance is requested to be made in the case of any
requested Revolving Credit Loan, and three Business Days prior to the date
such Advance is requested to be made in the case of any requested Letter of
Credit Advance, which notice shall specify whether a Negotiated Rate Loan,
Eurodollar Rate Loan, Floating Rate Loan or Letter of Credit Advance is
Hastings Manufacturing Company
August 28, 1998
Page 15
requested and, in the case of each requested Negotiated Rate Loan or
Eurodollar Rate Loan, the Interest Period to be initially applicable to
such Revolving Credit Loan.
6. CONTINUATION AND CONVERSION OF LOANS. The Company may elect,
subject to the Bank's approval in its sole discretion, to continue a
Negotiated Rate Loan as a Negotiated Rate Loan or may elect to convert a
Floating Rate Loan to a Negotiated Rate Loan or a Eurodollar Rate Loan, or
may elect to convert a Negotiated Rate Loan to a Floating Rate Loan or a
Eurodollar Rate Loan, or may elect to convert a Eurodollar Rate Loan to a
Negotiated Rate Loan or a Floating Rate Loan, in each case by giving
written request therefor, or a verbal request followed immediately by a
written request, not later than 11:00 a.m. Detroit time on the date such
continuation or conversion is requested, PROVIDED that an outstanding
Negotiated Rate Loan or Eurodollar Rate Loan may only be continued on the
last day of the then-current Interest Period with respect to such Loan and
PROVIDED, FURTHER, if a continuation of a Loan as, or conversion of a Loan
to, a Negotiated Rate Loan or a Eurodollar Rate Loan is requested, such
request shall also specify the applicable Interest Period to be applicable
thereto. If the Company shall not deliver such a notice with respect to
any Negotiated Rate Loan or Eurodollar Rate Loan, the Company shall be
deemed to have elected to convert such Loan on the last day of the then
current Negotiated Interest Period with respect to such Negotiated Rate
Loan, or on the last day of the then current Eurodollar Interest Period
with respect to such Eurodollar Rate Loan, to a Floating Rate Loan.
7. INCREASED COSTS; LIMITATIONS ON REQUESTS. The Company agrees
that (a) in the event that any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect (including without
limitation the Federal Deposit Insurance Act) and whether or not presently
applicable to the Bank, or any interpretation or administration thereof by
any governmental authority or compliance by the Bank with any guideline,
request or directive of any such authority (whether or not having the force
of law), shall (i) affect the basis of taxation of payments to the Bank of
any amounts payable by the Company pursuant to this Agreement, (ii) impose,
modify or deem applicable any insurance assessment or reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by the Bank, or (iii) affect the amount of
capital required or expected to be maintained by the Bank or its parent
bank holding company, the Company shall pay to the Bank, from time to time
upon request of the Bank, additional amounts sufficient to compensate the
Bank for such increased costs or reduced sum receivable related thereto,
(b) the Company shall indemnify the Bank for any and all losses the Bank
may incur if the Company makes any payment of principal with respect to any
Negotiated Rate Loan on any date other than the last day of an Negotiated
Interest Period applicable thereto or if the Company fails to borrow any
Hastings Manufacturing Company
August 28, 1998
Page 16
Negotiated Rate Loan after notice requesting such Loan has been given to
the Bank, and (c) the Company shall indemnify the Bank for any and all
losses the Bank may incur if the Company makes any payment of principal
with respect to any Eurodollar Rate Loan on any date other than the last
day of an Eurodollar Interest Period applicable thereto or if the Company
fails to borrow any Eurodollar Rate Loan after notice requesting such Loan
has been given to the Bank. A detailed statement as to the amount of such
increased cost or reduced sum receivable, prepared in good faith and
submitted by the Bank to the Company, shall be conclusive and binding for
all purposes absent manifest error in computation. The Company further
agrees that it may not elect the Negotiated Rate if it is impracticable,
unlawful or impossible for any reason for the Bank to make or maintain a
Negotiated Rate Loan and, if it is unlawful or impossible for the Bank to
maintain an outstanding Negotiated Rate Loan, such Loan shall be
immediately due and payable, together with accrued interest and any amount
specified in paragraph 7(b) hereof, on the last day of the then current
Negotiated Interest Period applicable to such Loan if the Bank may lawfully
continue to maintain such Loan to such day or immediately if the Bank may
not continue to maintain such Loan to such day.
8. CONDITIONS OF LOANS. Prior to or simultaneously with its first
request for an Advance hereunder, the Company shall furnish to the Bank the
following documents, each in form and substance satisfactory to the Bank:
(a) Certified copies of such corporate documents of the
Company, including those evidencing necessary corporate action with respect
to this Agreement, any Note and the Advances hereunder, as the Bank shall
request.
(b) The Revolving Credit Note and the Term Note.
(c) An opinion of counsel to the Company, in form and substance
satisfactory to the Bank, with respect to the matters set forth in
subparagraphs (a) through (e) of paragraph 11 of this Agreement and such
other matters as the Bank may request.
(d) Payment of any fees due as of the date of this Agreement,
including without limitation a closing fee in the amount of $5,000.
(e) Certified copies of such corporate documents and resolutions
as requested by the Bank.
(f) A Guaranty executed by each Guarantor.
(g) Such other documents and agreements requested by the Bank.
Hastings Manufacturing Company
August 28, 1998
Page 17
In addition to the above subparagraphs (a)-(d), no Advance shall be
made under this Agreement if any of the representations and warranties
contained in this Agreement are not true and correct as of the date on
which such Advance is made or requested to be made or if any Default or
Event of Default shall exist or shall have occurred and be continuing on
the date such Advance is made or requested to be made. A request for
Advance by the Company shall be deemed to be a representation that the
conditions in this paragraph have been satisfied.
9. AFFIRMATIVE COVENANTS. The Company covenants and agrees that,
until Maturity Date B and thereafter until payment in fall of the principal
of and accrued interest on each Note and the performance of all other
obligations of the Company under this Agreement, unless the Bank shall
otherwise consent in writing, it shall, and shall cause each of its
Subsidiaries to:
(a) PRESERVATION OF CORPORATE EXISTENCE, ETC. Do or cause to be
done all things necessary to preserve, renew and keep in full force and
effect its legal existence and its qualification as a foreign corporation
in good standing in each jurisdiction in which such qualification is
necessary under applicable law, and the rights, licenses, permits
(including those required under any environmental law), franchises,
patents, copyrights, trademarks and trade names material to the conduct of
its businesses; and defend all of the foregoing against all claims,
actions, demands, suits or proceedings at law or in equity or by or before
any governmental instrumentality or other agency or regulatory authority.
(b) COMPLIANCE WITH LAWS, ETC. Comply in all material respects
with all applicable laws, rules, regulations and orders of any governmental
authority, whether federal, state, local or foreign (including without
limitation ERISA, the Code and all federal, state and local environmental
laws, regulations and orders), in effect from time to time; and pay and
discharge promptly when due all taxes, assessments and governmental charges
or levies imposed upon it or upon its income, revenues or property, before
the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise, which, if unpaid,
might give rise to Liens upon such properties or any portion thereof,
except to the extent that payment of any of the foregoing is then being
contested in good faith by appropriate legal proceedings and with respect
to which adequate financial reserves have been established on the books and
records of the Company or such Subsidiary.
(c) MAINTENANCE OF PROPERTIES, INSURANCE. Maintain, preserve
and protect all property that is material to the conduct of the business of
the Company or any of its Subsidiaries and keep such property in good
repair, working order and condition and from time to time make, or cause to
Hastings Manufacturing Company
August 28, 1998
Page 18
be made all needful and proper repairs, renewals, additions, improvements
and replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times in accordance
with customary and prudent business practices for similar businesses; and
maintain in full force and effect insurance with responsible and reputable
insurance companies or associations in such amounts, on such terms and
covering such risks, including fire and other risks insured against by
extended coverage, as is usually carried by companies engaged in similar
businesses and owning similar properties similarly situated and maintain in
full force and effect public liability insurance, insurance against claims
for personal injury or death or property damage occurring in connection
with any of its activities or any of any properties owned, occupied or
controlled by it, in such amount as it shall reasonably deem necessary, and
maintain such other insurance as may be required by law or as may be
reasonably requested by the Bank for purposes of assuring compliance with
this paragraph 9(c).
(d) REPORTING REQUIREMENTS. Furnish to the Bank the following:
(i) Promptly and in any event within three calendar days
after becoming aware of the occurrence of (A) any Default or
Event of Default, (B) the commencement of any material litigation
against, by or affecting the Company or any of its Subsidiaries,
and any material developments therein, or (C) any development in
the business or affairs of the Company or any of its Subsidiaries
which has resulted in or which is likely in the reasonable
judgment of the Company, to result in a material adverse change
in the business, properties, operations or condition (financial
or otherwise) of the Company or any of its Subsidiaries, a
statement of the chief financial officer of the Company setting
forth details of such Default or Event of Default or event or
condition and the action which the Company or such Subsidiary, as
the case may be, has taken and proposes to take with respect
thereto;
(ii) As soon as available and in any event within 45 days
after the end of each fiscal quarter of the Company, the
consolidated balance sheet of the Company and its Subsidiaries as
of the end of such quarter, and the related consolidated
statements of income, retained earnings and changes in cash flow
for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, setting forth in each
case in comparative form the corresponding figures for the
corresponding date or period of the preceding fiscal year, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer of the Company as
Hastings Manufacturing Company
August 28, 1998
Page 19
having been prepared in accordance with generally accepted
accounting principles, together with a certificate of the chief
financial officer of the Company stating (A) that no Default or
Event of Default has occurred and is continuing or, if a Default
or Event of Default has occurred and is continuing, a statement
setting forth the details thereof and the action which the
Company has taken and proposes to take with respect thereto, and
(B) that a computation (which computation shall accompany such
certificate and shall be in reasonable detail) showing compliance
with paragraph 10(a), (b), (c), (d), (h), (i) and (j) hereof is
in conformity with the terms of this Agreement;
(iii) As soon as available and in any event within 90 days
after the end of each fiscal year of the Company, a copy of the
consolidated balance sheet of the Company and its Subsidiaries as
of the end of such fiscal year and the related consolidated
statements of income, retained earnings and changes in cash flow
of the Company and its Subsidiaries for such fiscal year, with a
customary audit report of BDO Xxxxxxx or other independent
certified public accountants selected by the Company and
acceptable to the Bank, without qualifications unacceptable to
the Bank, together with a certificate of such accountants stating
(A) that they have reviewed this Agreement and stating further
whether, in the course of their review of such financial
statements, they have become aware of any Default or Event of
Default and, if such Default or Event of Default exists and is
continuing, a statement setting forth the nature and status
thereof, and (B) that a computation by the Company (which
computation shall accompany such certificate and shall be in
reasonable detail) showing compliance with paragraph 10(a), (b),
(c), (d), (h), (i) and (j) hereof is in conformity with the terms
of this Agreement;
(iv) Promptly after the sending or filing thereof, copies of
all reports, proxy statements and financial statements which the
Company or any of its Subsidiaries sends to or files with any of
their respective security holders or any securities exchange or
the Securities and Exchange Commission or any successor agency
thereof; and
(v) Promptly, such other information respecting the
business, properties, operations or condition (financial or
otherwise) of the Company or any of it Subsidiaries as Bank may
from time to time reasonably request.
Hastings Manufacturing Company
August 28, 1998
Page 20
(e) ACCOUNTING; ACCESS TO RECORDS, BOOKS, ETC. Maintain a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in
accordance with generally accepted accounting principles and to comply with
the requirements of this Agreement and, at any reasonable time and from
time to time, permit the Bank or any agents or representatives thereof to
examine and make copies of and abstracts from the records and books of
account of, and visit the properties of, the Company and its Subsidiaries,
and to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with their respective directors, officers, employees and
independent auditors, and by this provision the Company does hereby
authorize such persons to discuss such affairs, finances and accounts with
the Bank.
10. NEGATIVE COVENANTS. Until Maturity Date B and thereafter until
payment in full of the principal of and accrued interest on any outstanding
Note and the performance of all other obligations of the Company under this
Agreement, the Company agrees that, unless the Bank shall otherwise consent
in writing it shall not, and shall not permit any of its Subsidiaries to:
(a) FUNDED DEBT RATIO. Permit or suffer the Funded Debt Ratio
of the Company and its Subsidiaries to be greater than: (i) 2.80 to 1.00 at
any time from and including the date hereof to but excluding December 31,
1998 or (ii) 2.50 to 1.00 from and including December 31, 1998 to but
excluding December 31, 1999 or (iii) 2.00 to 1.00 thereafter.
(b) DEBT SERVICE COVERAGE RATIO. Permit or suffer the Debt
Service Coverage Ratio of the Company and its Subsidiaries to be less than
1.20:1.00 at any time.
(c) TOTAL LIABILITIES TO TANGIBLE NET WORTH. Permit or suffer
the ratio of the consolidated Total Liabilities of the Company and its
Subsidiaries to the consolidated Tangible Net Worth of the Company and its
Subsidiaries to be greater than 2.00 to 1.00 at any time.
(d) INDEBTEDNESS. Create, incur, assume or in any manner become
liable in respect of, or suffer to exist, any Indebtedness other than:
(i) The Advances;
(ii) The Indebtedness described on SCHEDULE 10(D), having
the same terms as those existing on the date of this Agreement,
but no extension or renewal thereof shall be permitted;
(iii) Indebtedness of any Subsidiary of the Company owing to
the Company or to any other Subsidiary of the Company; and
Hastings Manufacturing Company
August 28, 1998
Page 21
(iv) Indebtedness under lines of credit to other banks in an
aggregate principal amount not to exceed $2,500,000 at any time.
(e) LIENS. Create, incur or suffer to exist any Lien on any of
the assets, rights, revenues or property, real, personal or mixed, tangible
or intangible, whether now owned or hereafter acquired, of the Company or
any of its Subsidiaries, other than:
(i) Liens for taxes not delinquent or for taxes being
contested in good faith by appropriate proceedings and as to
which adequate financial reserves have been established on its
books and records;
(ii) Liens (other than any Lien imposed by ERISA) created
and maintained in the ordinary course of business which are not
material in the aggregate, and which would not have a Material
Adverse Effect and which constitute: (A) pledges or deposits
under worker's compensation laws, unemployment insurance laws or
similar legislation, (B) good faith deposits in connection with
bids, tenders, contracts or leases to which the Company or any of
its Subsidiaries is a party for a purpose other than borrowing
money or obtaining credit, including rent security deposits, (C)
Liens imposed by law, such as those of carriers, warehousemen and
mechanics, if payment of the obligation secured thereby is not
yet due, (D) Liens securing taxes, assessments or other
governmental charges or levies not yet subject to penalties for
nonpayment, and (E) pledges or deposits to secure public or
statutory obligations of the Company or any of its Subsidiaries,
or surety or customs bonds to which the Company or any of its
Subsidiaries is a party; and
(iii) Each Lien described in on SCHEDULE 10(E) may be
suffered to exist upon the same terms as those existing on the
date hereof, but no extension or renewal thereof shall be
permitted.
(f) MERGER; ACQUISITIONS; ETC. Purchase or otherwise acquire,
whether in one or a series of transactions, all or a substantial portion of
the business assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, of any person, or all or a substantial portion of
the capital stock of or other ownership interest in any other person nor
make any substantial change in the nature of its business; nor merge or
consolidate or amalgamate with any other person or take any other action
having a similar effect, nor enter into any joint venture or similar
arrangement with any other person, PROVIDED, HOWEVER, that this paragraph
10(f) shall not prohibit any merger or acquisition if the Company shall be
Hastings Manufacturing Company
August 28, 1998
Page 22
the surviving or continuing corporation thereof and, immediately after such
merger or acquisition, no Default or Event of Default shall exist or shall
have occurred and be continuing.
(g) DISPOSITION OF ASSETS, ETC. Sell, lease, license, transfer,
assign or otherwise dispose of all or a substantial portion of its
business, assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, whether in one or a series of transactions, other
than inventory sold in the ordinary course of business upon customary
credit terms and sales of scrap or obsolete material or equipment.
(h) DIVIDENDS AND OTHER RESTRICTED PAYMENTS. Make, pay, declare
or authorize any dividend, payment or other distribution in respect of any
class of its capital stock or any dividend, payment or distribution in
connection with the redemption, purchase, retirement or other acquisition,
directly or indirectly, of any shares of its capital stock other than such
dividends, payments or other distributions to the extent payable solely in
shares of the capital stock of the Company, PROVIDED, HOWEVER, that, if no
Default or Event of Default shall exist or shall have occurred and be
continuing, the Company may make, pay, declare or authorize dividends,
payments and other such distributions made after the date hereof which, in
the aggregate, do not exceed the sum of (i) $2,000,000 at any time plus
(ii) beginning January 1, 1998, fifty percent (50%) of the consolidated
Cumulative Net Income of the Company and its Subsidiaries. For purposes of
this paragraph 10(h), "capital stock" shall include capital stock and any
securities exchangeable for or convertible into capital stock and any
warrants, rights or other options to purchase or otherwise acquire capital
stock or such securities.
(i) INVESTMENTS, LOANS AND ADVANCES. Purchase or otherwise
acquire any capital stock of or other ownership interest in, or debt
securities of or other evidences of Indebtedness of, any other person; nor
make any loan or advance of any of its funds or property or make any other
extension of credit to, or make any investment or acquire any interest
whatsoever in, any other person; nor incur any Material contingent
liability, other than (i) extensions of trade credit made in the ordinary
course of business on customary credit terms and commission, travel and
similar advances made to officers and employees in the ordinary course of
business, and (ii) amounts which do not exceed, in the aggregate,
$1,000,000.
(j) LEASES. Enter into, permit or suffer to remain outstanding
any arrangement for the leasing of real or personal property, wherein the
total annual liability for lease payments exceeds $750,000 in the aggregate
for the Company and its Subsidiaries, excluding those lease obligations of
the Company under the EDC bonds described on SCHEDULE 10(J).
Hastings Manufacturing Company
August 28, 1998
Page 23
(k) NEGATIVE PLEDGE LIMITATION. Enter into any agreement with
any person other than the Bank pursuant hereto which prohibits or limits
the ability of the Company or any Subsidiary to create, incur, assume or
suffer to exist any Lien upon any of its assets, rights, revenue or
property, real, personal or mixed, tangible or intangible, whether now
owned or hereafter acquired.
For purposes of this paragraph 10, compliance with the covenants shall
be determined in accordance with generally accepted accounting principles;
PROVIDED, HOWEVER, that (i) the terms "Tangible Net Worth" and "Cumulative
Net Income," as such terms are defined and used herein, shall exclude the
one-time effect of the application of Statement of Financial Accounting
Standard 106 ("SFAS 106") on the financial condition of the Company in an
approximate amount of $11,209,000, (ii) the term "Total Liabilities," as
such term is defined and used herein, shall exclude the amount shown on the
balance sheet of the Company under the heading "Post-Retirement Benefit
Obligation" or similar title evidencing the liability of the Company under
SFAS 106, such excluded amount not to exceed the initial adjustment of
$16,916,167 to "Post-Retirement Benefit Obligation," (iii) the amount shown
on the balance sheet of the Company under the heading "Intangible Pension
Asset" shall not be deemed as an intangible asset for purposes of the
definition of "Tangible Net Worth," as such term is defined and used
herein, so long as there is a relate, offsetting figure of the same or
greater amount in the "Stockholder's Equity" section of the balance sheet
of the Company under the heading "Pension Liabilities Adjustment" and (iv)
in all other respects generally accepted accounting principles shall be
construed to include the charges to income and other accounting adjustments
required under SFAS 106 from and after the date of such initial one-time
SFAS 106 adjustment.
11. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Bank that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan, and
is duly qualified to do business and is in good standing in each additional
jurisdiction where such qualification is necessary.
(b) The execution, delivery and performance of this Agreement
and by the Company and the issuance, delivery and performance of any Note
by the Company are within its corporate powers, have been duly authorized
by the Company, and are not in contravention of law or of the terms of its
Articles of Incorporation or By-laws, or of any undertaking to which the
Company is a party or by which it may be bound and do not result in any
Lien (other than Permitted Liens).
Hastings Manufacturing Company
August 28, 1998
Page 24
(c) This Agreement is, and any Note when issued will be, valid,
binding and enforceable against the Company in accordance with the
respective terms thereof.
(d) No consent, approval or authorization of or declaration or
filing with any governmental authority or any other person on the part of
the Company is required in connection with the execution, delivery and
performance of this Agreement or any Note or the consummation of the
transactions contemplated by this Agreement.
(e) No litigation or governmental proceeding is pending or, to
the knowledge of the officers of the Company, threatened against the
Company which could have a Material Adverse Effect.
(f) All financial statements famished by the Company to the Bank
are complete and accurate in all material respects and present fairly the
financial condition of the Company as of the dates of such statements and
the results of its operations for the periods covered thereby, in
accordance with generally accepted accounting principles, and there has
been no material adverse change in the condition of the Company, financial
or otherwise, since the date of the latest of such statements for the
Company.
(g) The Company is solvent, able to pay its Indebtedness
(including Contingent Liabilities) as it matures, has capital sufficient to
carry on its business and all business in which it is about to engage, and
the present fair saleable value of its assets is greater than the amount of
its Indebtedness (including Contingent Liabilities).
(h) The Company is in compliance in all material respects with
all laws, rules, regulations, orders or similar requirements of any
federal, state or local governmental authority, including without
limitation those relating to environmental matters.
(i) Each of the representations and warranties in the Swap
Agreement is true and correct in all respects as if made on and as of the
date hereof
(j) There exists no default, Event of Default or event or
condition which, with notice or the lapse of time or both could become such
a default or Event of Default, under the Swap Agreement.
Hastings Manufacturing Company
August 28, 1998
Page 25
12. FEES. The Company shall pay all fees and other expenses incurred
by the Bank in connection with this Agreement, including without limitation
the fees and expenses of Xxxxxxxxx Xxxxxx PLLC, counsel for the Bank, in
connection with preparation of this Agreement and the documents required
hereunder, and any modification, amendment, waiver or consent under this
Agreement or any enforcement or protection of any of the Bank's rights
under this Agreement.
13. EVENTS OF DEFAULT. The Loans and all other indebtedness,
obligations and liabilities of the Company to the Bank hereunder are
payable upon demand, and the failure of the Company to make any payment
demanded by the Bank immediately upon demand shall be deemed an Event of
Default under this Agreement. In addition, each of the following shall
also be deemed an Event of Default under this Agreement, and upon the
occurrence of any of the following each Note and all accrued interest
thereon and all other indebtedness, obligations and liabilities of the
Company to the Bank shall be immediately due and payable, without notice or
demand:
(a) failure to make any payment when due (whether by demand or
otherwise) of principal or failure to pay make any payment of interest on
any Note or any other amount due under this Agreement within five days of
the due date; or
(b) any other default in the performance or observance of any
term, covenant or agreement of the Company contained in this Agreement or
any Note; or
(c) any representation or warranty made by the Company herein or
any statement or certificate furnished by the Company hereunder proves to
be untrue in any material respect; or
(d) failure to perform or observe any term, covenant or
agreement contained in paragraph 10 hereof; or
(e) the Company or any of its Subsidiaries shall fail to pay any
part of the principal of, the premium, if any, or the interest on, or any
other payment of money due under any other document, agreement or
instrument now or hereafter evidencing any indebtedness, obligation or
liability of any kind, beyond any period of grace provided with respect
thereto, if the effect of such failure is to cause, or permit the holders
of such indebtedness (or a trustee on behalf of such holders) to cause, any
payment in respect of such indebtedness to become due prior to its due
date; or
Hastings Manufacturing Company
August 28, 1998
Page 26
(f) the Company or any of its Subsidiaries becomes insolvent or
bankrupt, or makes an assignment for the benefit of creditors or consents
to the appointment of a trustee or receiver for itself or for the greater
part of its properties; or a trustee or receiver is appointed for the
Company or any of its Subsidiaries without its consent; or bankruptcy,
reorganization or liquidation proceedings are instituted by or against the
Company or any of its Subsidiaries; or
(g) the Company or any of its Subsidiaries shall suffer any
money judgment not covered by insurance, writ or warrant of attachment or
similar process involving an amount in excess of $100,000 in the aggregate,
and shall not discharge, vacate, bond or stay the same within a period of
thirty (30) days or, in any event, within ten (10) days of the date of any
proposed sale thereunder; or
(h) any of the following events shall occur, if such event could
alone or in combination with any other such event or events have a Material
Adverse Effect: a Reportable Event that results in or could result in
material liability of the Company to the PBGC or to any Plan which could
constitute grounds for termination of any Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer any Plan or the filing by the Company or any ERISA Affiliate of
a notice of intent to terminate a Plan or the institution of other
proceedings to terminate a Plan; or the Company or any ERISA Affiliate
shall fail to pay when due any material liability to the PBGC or to a Plan;
or the PBGC shall have instituted proceedings to terminate, or to cause a
trustee to be appointed to administer, any Plan; or any person engages in a
Prohibited Transaction with respect to any Plan which results in or could
result in material liability of the Company; or failure by the Company or
any ERISA Affiliate to make a required installment or other payment to any
Plan within the meaning of Section 302(f) of ERISA or Section 412(n) of the
Code that results in or could result in material liability of the Company
to the PBGC or any Plan; or the withdrawal of the Company or any ERISA
Affiliate from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA; or the Company or any
ERISA Affiliate becomes an employer with respect to any Multiemployer Plan
without the prior written consent of the Bank; or
(i) any Change of Control; or
(j) any material adverse change in the business or financial
condition of the Company or any of its Subsidiaries.
14. SET-OFF. In addition to any rights and remedies of the Bank
provided by law, the Bank shall have the right, without prior written
notice to the Company, any such notice being expressly waived by the
Hastings Manufacturing Company
August 28, 1998
Page 27
Company to the extent permitted by applicable law, upon the occurrence of
any Event of Default and so long as such Event of Default is continuing, to
set off and apply against any obligations, whether matured or unmatured, of
the Company to the Bank, any amount owing by the Bank to the Company, at or
at any time after the happening of any of the above-mentioned events, and
such right of set-off may be exercised by the Bank against the Company or
against any assignee for the benefit of creditors, receiver, or execution,
judgment or attachment creditor of Company, or against anyone else claiming
through or against the Company of such assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by the Bank prior to the making, filing or issuance or service
upon the Bank of, or of notice of, assignment for the benefit of
creditors, appointment or application for the appointment of a receiver,
or issuance of execution, subpoena or order or warrant. The Bank agrees
promptly to notify the Company after any set-off and application made by
the Bank, provided that the failure to give such notice shall not affect
the validity of such set-off and application.
15. INTEREST LIMITATION. Notwithstanding any provision of this
Agreement or any Note, in no event shall the amount of interest paid or
agreed to be paid by the Company exceed an amount computed at the highest
rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Agreement or
any Note, at the time performance of such provision shall be due, shall
involve exceeding the interest rate limitation validly prescribed by law
which a court of competent jurisdiction may deem applicable hereto, then,
IPSO FACTO, the obligations to be fulfilled shall be reduced to an amount
computed at the highest rate of interest permissible under applicable law,
and if for any reason whatsoever the Bank shall ever receive as interest an
amount which would be deemed unlawful under such applicable law such
interest shall be automatically applied to the payment of principal of the
loans outstanding hereunder (whether or not then due and payable) and not
for the payment of interest, or shall be refunded to the Company if such
principal and all other obligations of the Company to the Bank have been
irrevocably paid in full.
16. NOTICES. All notices, demands, request and consents hereunder
shall be in writing and shall be effective when received, except that any
notice or demand which by any provision of this Agreement is required or
provided to be given or served to or upon the Company shall be deemed to
have been given or served for all purposes by being sent as registered
mail, postage prepaid, addressed as follows: Hastings Manufacturing
Company, 000 Xxxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Xx. Xxxxxx
X. Xxxxxxxxx, Treasurer, or, if any other address shall at any time be
designated by the Company in writing to the Bank, to such other address.
Hastings Manufacturing Company
August 28, 1998
Page 28
17. PAYMENTS. All payments to be made by the Company hereunder shall
be made in immediately available funds to the Bank at its banking office in
Detroit, Michigan not later than 11:00 a.m. Detroit time on the date on
which such payment shall become due, and all payments received after 11:00
a.m. shall be deemed received on the following Business Day.
18. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the Company and the Bank and supersedes all prior
agreements and understandings relating to the subject matter hereof. No
amendment, modification or waiver of any provision of this Agreement nor
any consent to a departure therefrom shall be effective unless the same
shall be in writing and signed by the Company and the Bank. No failure of
the Bank or of the holder of any Note in exercising any right, power or
privilege hereunder shall affect such right, power or privilege, nor shall
any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies of the Bank and those of the holder of any Note under this
Agreement are cumulative and not exclusive of any rights or remedies which
either of them may otherwise have. Except as set forth in paragraph 10
hereof, all financial terms used but not defined herein shall be
interpreted in accordance with generally accepted accounting principles.
All amounts due hereunder which are not paid when due (other than interest)
shall bear interest at the Overdue Rate.
19. EXPENSES, INDEMNIFICATION
(a) The Company agrees to pay, or reimburse the Bank for the
payment of, on demand, (i) the reasonable fees and expenses of counsel to
the Bank, including without limitation the fees and expenses of Xxxxxxxxx
Xxxxxx PLLC, in connection with the preparation, execution, delivery and
administration of this Agreement and the Notes, and in connection with
advising the Bank as to its rights and responsibilities with respect
thereto, and in connection with any amendments, waivers or consents in
connection therewith, and (ii) all stamp and other taxes and fees payable
or determined to be payable in connection with the execution, delivery,
filing or recording of this Agreement or the Notes, or the consummation of
the transactions contemplated hereby, and any and all liabilities with
respect to or resulting from any delay in paying or omitting to pay such
taxes or fees, and (iii) all reasonable costs and expenses of the Bank
(including reasonable fees and expenses of counsel and whether incurred
through negotiations, legal proceedings or otherwise) in connection with
any Default or Event of Default or the enforcement of, or the exercise or
preservation of any rights under, this Agreement or the Notes or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement, and (iv) all reasonable costs and expenses
of the Bank (including reasonable fees and expenses of counsel) in
Hastings Manufacturing Company
August 28, 1998
Page 29
connection with any action or proceeding relating to a court order,
injunction or other process or decree restraining or seeking to restrain
the Bank from paying any amount under, or otherwise relating in any way to,
any Letter of Credit and any and all costs and expenses which any of them
may incur relative to any payment under any Letter of Credit.
(b) The Company hereby indemnifies and agrees to hold harmless
the Bank, and its respective officers, directors, employees and agents,
harmless from and against any and all claims, damages, losses, liabilities,
costs or expenses of any kind or nature whatsoever which the Bank or any
such person may incur or which may be claimed against any of them by reason
of or in connection with any Letter of Credit, and neither the Bank or any
of its respective officers, directors, employees or agents shall be liable
or responsible for: (i) the use which may be made of any Letter of Credit
or for any acts or omissions of any beneficiary in connection therewith;
(ii) the validity, sufficiency or genuineness of documents or of any
endorsement thereon, even if such documents should in fact prove to be in
any or all respects invalid, insufficient, fraudulent or forged; (iii)
payment by the Bank to the beneficiary under any Letter of Credit against
presentation of documents which do not comply with the terms of any Letter
of Credit, including failure of any documents to bear any reference or
adequate reference to such Letter of Credit; (iv) any error, omission,
interruption or delay in transmission, dispatch or delivery of any message
or advice, however transmitted, in connection with any Letter of Credit; or
(v) any other event or circumstance whatsoever arising in connection with
any Letter of Credit; PROVIDED, HOWEVER, that the Company shall not be
required to indemnify the Bank and such other persons, and the Bank shall
be liable to the Company to the extent, but only to the extent, of any
direct, as opposed to consequential or incidental, damages suffered by the
Company which were caused by (A) the Bank's wrongful dishonor of any Letter
of Credit after the presentation to it by the beneficiary thereunder of a
draft or other demand for payment and other documentation strictly
complying with the terms and conditions of such Letter of Credit, or (B)
the Bank's payment by the Bank to the beneficiary under any Letter of
Credit against presentation of documents which do not comply with the terms
of the Letter of Credit to the extent, but only to the extent, that such
payment constitutes gross negligence of willful misconduct of the Bank. It
is understood that in making any payment under a Letter of Credit the Bank
will rely on documents presented to it under such Letter of Credit as to
any and all matters set forth therein without further investigation and
regardless of any notice or information to the contrary, and such reliance
and payment against documents presented under a Letter of Credit
substantially complying with the terms thereof shall not be deemed gross
negligence or willful misconduct of the Bank in connection with such
payment. It is further acknowledged and agreed that the Company may have
rights against the beneficiary or others in connection with any Letter of
Hastings Manufacturing Company
August 28, 1998
Page 30
Credit with respect to which the Bank are alleged to be liable and it shall
be a precondition of the assertion of any liability of the Bank under this
paragraph 20 that the Company shall first have exhausted all remedies in
respect of the alleged loss against such beneficiary and any other parties
obligated or liable in connection with such Letter of Credit and any
related transactions.
20. WAIVER OF JURY TRIAL. The Bank and the Company, after consulting
or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right either of them may have to a
trial by jury in any litigation based upon or arising out of this Agreement
or any related instrument or agreement or any of the transactions
contemplated by this Agreement or any course of conduct, dealing,
statements (whether oral or written) or actions of either of them. Neither
the Bank nor the Company shall seek to consolidate, by counterclaim or
otherwise, any such action in which a jury trial has been waived with any
other action in which a jury trial cannot be or has not been waived. These
provisions shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Company except by a written
instrument executed by both of them.
21. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Michigan applicable to
contracts made and to be performed entirely within such State, without
regard to the conflict of laws principles of such State.
22. BINDING EFFECT. This Agreement is, and the Notes to which the
Company is a party when delivered hereunder will be, legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their respective terms.
Hastings Manufacturing Company
August 28, 1998
Page 31
Should the foregoing be agreeable to you, as it is to us, please
indicate your agreement and acceptance by executing and returning the
enclosed copy of this letter, whereupon this Agreement shall be effective
as of the date of this letter.
Very truly yours,
NBD BANK
By /S/ XXXXXX XXXX
Its: Vice President-Corporate Banking
Agreed and accepted.
HASTINGS MANUFACTURING COMPANY
By /S/ XXXXXX X. XXXXXXXXX
Its: Vice President - Finance
Dated: August 28, 1998
