Exhibit 4.01
December 18, 2001
TecStar Mfg. Company and Plastics Mfg. Company
Attn: Xxxxx Xxxxxxxxx-VP/Finance
X000 X00000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Dear Xx. Xxxxxxxxx:
This Letter Agreement (the "Agreement") is made and entered into as of
this l8th day of December, 2001, by and between TecStar Mfg. Company and
Plastics Mfg. Company (the "Customer") and M&I Xxxxxxxx & Xxxxxx Bank (the
"Lender").
Customer covenants that so long as any obligation is owed to Lender or
Lender has any outstanding commitment to lend to Customer, under any
Note(s) evidencing a loan, from the Customer to the Lender (the
"Note(s)"), and all extensions, renewals or modifications of the Note,
Customer shall:
1. Furnish the following security documents (the "Security
Documents"):
(i) Revolving Business Note;
(ii) General Business Security Agreement of TecStar Mfg. Company
of even date;
(iii) UCC-1 National Financing Statement of TecStar Mfg. Company
filed with the Wisconsin Department of Financial Institutions
on November 16, 2000 as filing No. 02010013;
(iv) General Business Security Agreement of Plastics Mfg. Company
of even date; and
(v) UCC-1 National Financing Statement to Plastics Mfg. Company
filed with the Wisconsin Department of Financial Institutions
on October 12, 1999 as filing No. 01889153.
2. Furnish to Lender, as soon as available, such financial information
respecting Customer as Lender from time to time requests, and without
request furnish to Lender:
(i) Within 120 days after the end of each fiscal year of Customer
a balance sheet of Customer as of the close of such fiscal year
and related statements of income and retained earnings and cash
flow for such year all in reasonable detail and satisfactory in
scope to Lender, prepared in accordance with generally accepted
accounting principles applied on a consistent basis, audited by
an independent certified public accountant, selected by Customer
and acceptable to Lender,
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(ii) Within 30 days after the end of each month a balance sheet
of Customer as of the end of such month and related statements
of income and retained earnings and cash flow for the period
from the prepared in accordance with generally accepted
accounting principles applied on a consistent basis, certified,
subject to normal year-end adjustments, by beginning of the
fiscal year to the end of such month, a financial representative
of Customer, and
(iii) As soon as available and in any event within 120 days after
the end of each calendar year, a statement of income of Xxxx
Xxxxxxx for the year just ended, together with a detailed
listing of all assets and liabilities as of the close of the
calendar year just ended all prepared in accordance with
generally accepted accounting principles applied an a
consistent basis.
3. Furnish a guaranty of payment of the loans duly executed by Xxxx
Xxxxxxx on WBA form 151.
4. The aggregate amount of all Revolving Loans at any time outstanding
under this Agreement shall never exceed the lesser of the Revolving
Credit Limit or the Borrowing Base described on Exhibit A.
5. Debtor shall furnish to Lender a Borrower's Certification, monthly
when borrowing, by the 10th day with figures as of the close of
business of the preceding month. All Borrowers' Certifications shall
be in the form on Exhibit B.
6. Timely perform and observe the following financial covenants, all
calculated in accordance with general accepted account principles
applied on a consistent basis:
(i) Maintain at all times a ratio of total liabilities to tangible
net worth of not greater than 4.00 to 1.00
(ii) Maintain at all times a tangible net worth of not less than
$7,900,000.00 increasing to $10,000,000.00 by September 30, 2002.
(iii) Not make any expenditures for fixed or capital assets which
would cause the aggregate of all such expenditures to exceed
$2,000,000.00 during any fiscal year, in addition to
$5,000,000.00 lease line.
7. Not without prior written consent of Lender change its Executive
Vice President, Xxxxx Xxxxxxxx, officer, or management duties of such
officer.
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It shall also be an event of default if a "Change in Control" shall
occur. As used herein, a "Change in Control" shall be deemed to have
occurred if either (a) any person or entity shall acquire, directly
or indirectly, beneficial ownership after the date hereof of more
then 50% of the voting stock of Debtor or (b) during any period of 12
consecutive months, individuals who at the beginning of such 12 month
period were shareholders of the Debtor shall cease for any reason to
constitute a majority of the shareholders of the Debtor.
8. This Agreement amends but does not terminate an existing General
Business Security Agreement and Appendix A, dated October 4, 1999,
and subsequently amended, between Plastics Mfg. Company & TecStar
Mfg. Company ("Debtor") and M&I Northern Bank n/k/a M&I Xxxxxxxx &
Ilsley Bank ("Lender").
A breach of any term or condition in this Agreement shall constitute
an additional event of default under the Note.
Please confirm your acknowledgment and acceptance of the terms and
conditions of this Agreement by signing and dating below.
Very truly yours,
XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
Vice President
Accepted and Agreed:
December 18, 2001
TecStar Mfg. Company
By: XXXXX XXXXXXXXX
Xxxxx Xxxxxxxxx, VP/Finance
Plastics Mfg. Company
By: XXXXX XXXXXXXXX
Xxxxx Xxxxxxxxx, VP/Finance
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EXHIBIT A
(A) DEFINITIONS.
(i) "QUALIFIED INVENTORY" means inventory (as that term is defined in
the Wisconsin Uniform Commercial code) [a] which is in good
condition and is owned by customer free and clear of all
encumbrances and security interests (except for Lender's
security interest); and [b] the existence, location, amount and
lower of cost or wholesale market value of which have been certified
to in a manner satisfactory to Lender by a representative of customer
at such times as Lender may request.
(ii) "QUALIFIED ACCOUNT" means an account owing to Customer which meets
the following specifications:
[a] It arose from the performance of services by Customer, or from
a bona fide sale or lease of goods which have been delivered or
shipped to the account debtor and for which Customer has genuine
invoices, shipping documents or receipts.
[b] It is payable not more than 30 days from the earlier of
performance of the services, delivery of goods or date of
invoice, and is not more than 90 days past due.
[c] It is owned by Customer free and clear of all encumbrances and
security interest (other than Lender's).
[d] It is genuine and enforceable against the account debtor for
the amount shown as owing in the certificates furnished by
customer to Lender. It and the transaction out of which it arose
comply with all applicable laws and regulations. It is not
subject to any set-off, credit allowance or adjustment, except
discount for prompt payment, nor has the account debtor returned
the goods or disputed his liability.
[e] Its existence and amount have been certified to in a manner
satisfactory to Lender by a representative of customer at such
times as Lender may request.
[f] Customer has no notice or knowledge of anything, which might
impair the credit standing of the account debtor.
[g] Lender has not notified Customer that the account or account
debtor is unsatisfactory.
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(iii) "TANGIBLE NET WORTH" means the excess of total assets over total
liabilities, total assets and total liabilities each to be
determined in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the
financial statements excluding, however, from the determination of
total assets all assets which would be classified as intangible
assets under generally accepted accounting principles including,
without limitation, goodwill, patents, trademarks, trade names,
copyrights, franchises, and certain other assets including
investments, advances, and/or loans to affiliated business entities,
officers, shareholders, and/or employees.
(iv) "DEBT/TANGIBLE NET WORTH" means the relationship expressed as a
numerical ratio, between [1] the total of all liabilities of the
Customer which would appear on the balance sheet of the Customer in
accordance with generally accepted accounting principles applied on
a consistent basis, and [2] Tangible Net Worth.
(v) "QUALIFIED FIXED ASSETS" means buildings, machinery, equipment,
furniture, furnishings and other tangible assets which would be
classified as fixed assets on the balance sheet of TecStar Mfg.
Company and Plastics Mfg. Company (Customer) in accordance with
generally accepted accounting principles, consistently applied,
except assets which are not subject to a valid, fully perfected
security interest in favor of the M&I Xxxxxxxx Xxxxxx Bank under the
laws of the jurisdiction where such fixed assets are located.
(b) BORROWING BASE. The aggregate amount of all Revolving Loans at any
time outstanding under the Agreement shall never exceed the lessor of
the Revolving Credit Limit or the Borrowing Base. The Borrowing Base
shall be defined as an amount equal to the sum of:
(a) QUALIFIED INVENTORY. For Qualified Inventory at cost (determined
in accordance with generally accepted accounting principles) or
wholesale market value, whichever is lower, exclusive of any
transportation, processing or handling charges:
Raw Material (plastic resin only) 60% not to exceed
$1,500,000.00; Work in Progress N/A% Finished Goods 50% not to
exceed $1,500,000.00; Components 50% not to exceed $500,000.00;
total inventory not to exceed $3,000,000.00 in the aggregate;
plus
(b) QUALIFIED ACCOUNTS. 80% of the amount owing on Qualified Accounts.
In addition to other required payments, Customer shall pay Lender in
reduction of the Obligations such sums as may be necessary from time to
time to maintain the above ratio(s).
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REVOLVING BUSINESS NOTE
M&I Xxxxxxxx & Xxxxxx Bank
TECSTAR MFG.
COMPANY AND PLASTICS MFG. COMPANY DECEMBER 18, 2001 $10,000,000.00
Customer Date Amount
The undersigned. ("Customer", whether one or more) promises to pay to the
order of M&I Xxxxxxxx & Ilsley ("Lender") at 000 X. Xxxxx Xxxxxx.,
Xxxxxxxxx, XX 00000, the principal sum of $10,000,000.00 or, if less, the
aggregate unpaid principal amount of all loans made under this Note, plus
interest, as set forth below.
Lender will disburse loan proceeds to Customer's deposit account number
________________ or by other means acceptable to Lender.
Interest is payable on JANUARY 1, 2002, and on the same day of each
CONSECUTIVE month thereafter and at maturity.
Principal is payable FEBRUARY 1, 2003.
This Note bears interest on the unpaid principal balance before maturity
(whether upon demand, acceleration or otherwise) at the rates set forth on
Exhibit A attached hereto.
Interest is computed on the basis of a 360-day year on the actual number
of days principal is unpaid. Unpaid principal and interest bear interest
after maturity (whether by acceleration or lapse of time) until paid at
the prime rate of interest adopted by Lender as its base rate
determinations from time to time which may or may not be the lowest rate
charged by Lender ("Prime Rate") (with the rate changing as and when that
Prime Rate changes) plus 3%.
If any payment is not paid when due, if a default occurs under any other
obligation of any Customer to Lender or if Lender deems itself insecure,
the unpaid balance shall, at the option of Lender, and without notice
mature and become immediately payable. The unpaid balance shall
automatically mature and become immediately payable in the event any
Customer, surety, or guarantor becomes the subject of bankruptcy or other
insolvency proceedings. Lender's receipt of any payment on this Note after
the occurrence of an event of default shall not constitute a waiver of the
default or Lender's rights and remedies upon such default.
This Note may be prepaid in full or in part without penalty.
Lender is authorized to automatically charge payments due under this Note
to account number _______________ at M&I Xxxxxxxx & Xxxxxx Bank (See
reverse side regarding Notice of Transfers Varying in Amount.)
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N/A - Check here only if this Note is to be secured by a first lien
mortgage or equivalent security interest on a one-to-four family dwelling
used as Customer's principal place of residence.
This Note includes additional provisions on reverse side.
TECSTAR MFG. COMPANY
By: XXXXX XXXXXXXXX (SEAL) W190 N11701 MOLDMAKERS WAY
Xxxxx Xxxxxxxxx, VP/Finance Street Address
PLASTICS MFG. COMPANY XXXXXXXXXX, XX 00000
City/State/Zip
By: XXXXX XXXXXXXXX (SEAL) AC#1377220 Note#10499
Xxxxx Xxxxxxxxx, VP/Finance VSK/caw
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ADDITIONAL PROVISIONS
This Note is secured by all existing and future security agreements,
assignments and mortgages between Lender and Customer, between Lender and
any guarantor of this Note, and between Lender and any other person
providing collateral security for Customer's obligations, and payment may
be accelerated according to any of them. Unless a lien would be prohibited
by law or would render a nontaxable account taxable, Customer grants to
Lender a security interest and lien in any deposit account Customer may at
any time have with Lender. Lender may, at any time after an occurrence of
an event of default, without notice or demand, setoff against any deposit
balances or other money now or hereafter owed any Customer by Lender any
amount unpaid under this Note.
Lender is authorized to make book entries evidencing loans and payments
and the aggregate of all loans as evidenced by those entries is
presumptive evidence that those amounts are outstanding and unpaid to
Lender. Customer covenants that all loans shall be used solely for
business and not personal purposes.
Customer agrees to pay all costs of administration and collection before
and after judgment, including reasonable attorneys' fees (including those
incurred in successful defense or settlement of any counterclaim brought
by Customer or incident to any action or proceeding involving Customer
brought pursuant to the United States Bankruptcy Code) and waives
presentment, protest, demand and notice of dishonor. Customer agrees to
indemnify and hold harmless Lender, its directors, officers, employees and
agents, from and against any and all claims, damages, judgments,
penalties, and expenses, including reasonable attorneys' fees, arising
directly or indirectly from credit extended under this Note or the
activities of Customer. This indemnity shall survive payment of this Note.
Customer acknowledges that Lender has not made any representations or
warranties with respect to, and that Lender does not assume any
responsibility to Customer for, the collectability or enforceability of
this Note or the financial condition of any Customer. Customer authorizes
Lender to disclose financial and other information about Customer to
others. Each Customer has independently determined the collectability and
enforceability of this Note.
Without affecting the liability of any Customer, surety, or guarantor,
Lender may, without notice, accept partial payments, release or impair any
collateral security for the payment of this Note or agree not to xxx any
party liable on it. Without affecting the liability of any surety or
guarantor, Lender may from time to time, without notice, renew or extend
the time for payment. The obligations of all Customers under this Note are
joint and several.
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To the extent not prohibited by law, Customer consents that venue for any
legal proceeding relating to collection of this Note shall be, at Lender's
option, the county in which Lender has its principal office in this state,
the county in which any Customer resides or the county in which this Note
was executed. This Note shall be construed and enforced in accordance with
the internal laws of Wisconsin.
This Note is intended by Customer and Lender as a final expression of this
Note and as a complete and exclusive statement of its terms, there being
no conditions to the enforceability of this Note. This Note may not be
supplemented or modified except in writing, except as set forth in Exhibit
A attached hereto.
PREAUTHORIZED TRANSFER DISCLOSURE
When Customer authorizes Lender to obtain payment of amounts becoming due
Lender by. initiating charges to Customer's account, Customer also
requests and authorizes remitting financial institution to alert and honor
same and to charge same to Customer's account. This authorization will
remain in effect until Customer notifies Lender and the remitting
financial institution in writing to terminate this authorization and
Lender and remitting financial institution have a reasonable time to act
on the termination. NOTICE OF TRANSFERS VARYING IN AMOUNT: If Lender and
remitting financial institution are not the same, Customer is an
individual, the account was established primarily for personal, family or
household purposes and the regular payments may vary in amount, Customer
has the right to receive a notice from Lender 10 days before each payment
of how much the payment will be; however, by signing this Note, Customer
elects to receive notice only when current payment would differ by more
than 100% from previous payment.
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EXHIBIT A TO REVOLVING BUSINESS NOTE
This Note bears interest on the unpaid principal balance before maturity
(whether upon demand, acceleration or otherwise) at an annual rate equal
to the adjusted Interbank Rate (as defined below) plus 275 basis points,
which rate will change as of the first day of each third calendar month.
If the first day of any third calendar month is not a regular Business
Day, the Adjusted Interbank Rate shall be established on the preceding
Business Day. "Business Day" shall mean any day other than a Saturday,
Sunday, public holiday or other day when commercial banks in Wisconsin are
authorized or required by law to close.
Customer may, from time to time and without premium or penalty, borrow and
repay the Loans in whole or in part PROVIDED requests for advances or
repayments occur prior to 3:00 P.M. on any Business Day.
"Adjusted Interbank Rate" means an annual rate for all loans evidenced by
this Note (the "Loans") (rounded upwards, if necessary, to the nearest
1/100 of 1%), determined pursuant to the following formula:
Adjusted Interbank Rate = INTERBANK RATE
1 - Interbank Reserve
Requirement
"Interbank Rate" means with respect to any Loan, the rate per annum equal
to the rate (rounded upwards, if necessary, to the nearest 1/16 of 1%)
quoted as the rate at which dollar deposits in immediately available funds
are offered on the first day of each third calendar month in the interbank
Eurodollar market on or about 9:00 A.M., Milwaukee time, for a period of
one (1) calendar month. If the first day of any third calendar month is
not a regular Business Day, the Interbank Rate shall be established on the
preceding Business Day. Lender currently uses the Knight Ridder
Information Service to provide information with respect to the interbank
Eurodollar market, but Lender may change the service providing such
information at any time. Each such determination shall be conclusive and
binding upon the parties hereto in the absence of demonstrable error.
"Interbank Reserve Requirement" means a percentage (expressed as a
decimal) equal to the aggregate reserve requirements in effect on the
first day of each calendar month (including all basic, supplemental,
marginal and other reserves and taking into account any transitional
adjustments or other scheduled changes in reserve requirements during each
calendar month) specified for "Eurocurrency Liabilities" under Regulation
D of the Board of Governors of the Federal Reserve System, or any other
regulation of the Board of Governors which prescribes reserve requirements
applicable to "Eurocurrency Liabilities" as presently defined in
Regulation D, as then in effect, as applicable to the class or classes of
banks of which Lender is a member. As of the date of this Note, the
Interbank Reserve Requirement is 0%.
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INCREASED COSTS. If, Regulation D of the Board of Governors of the
Federal Reserve System, or the adoption of any applicable law, rule or
regulation of general application, or any change therein, or any
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Lender with any request or
directive of general application (whether or not having the force of law)
of any such authority, central bank or comparable agency:
(a) shall subject Lender to any tax, duty or other charge with
respect to the Loans, the Note or its obligation to make Loans, or shall
change the basis of taxation of payments to Lender of the principal of or
interest on the Loans or any other amounts due under this Note in respect
of the Loans or its obligation to make Loans (except for changes in the
rate of tax on the overall net income of Lender); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve
included in the determination of interest rates pursuant to this Note),
special deposit or similar requirement against assets of, deposits with or
for the account of, or credit extended by, Lender, or
(c) shall affect the amount of capital required or expected to
be maintained by Lender or any corporation controlling Lender, or
(d) shall impose on Lender any other condition affecting the
Loam, the Note or its obligation to make Loans;
and the result of any of the foregoing is to increase the cost to (or in
the case of Regulation D referred to above, to impose a cost on) Lender of
making or maintaining any Loans, or to reduce the amount of any sum
received or receivable by Lender under this Note with respect thereto,
then within ten (10) days after demand by Lender (which demand shall be
accompanied by a statement setting forth the basis of such demand),
Customer shall pay directly to Lender such additional amount or amounts as
will compensate Lender for such increased cost or such reduction.
Determinations by Lender for purposes of this section of the effect of any
change in applicable laws or regulations or of any interpretations,
directives or requests thereunder on its costs of making or maintaining
Loans or sums receivable by it in respect of Loans, and of the additional
amounts required to compensate Lender in respect thereof, shall be
conclusive, absent manifest error.
DEPOSITS UNAVAILABLE OR INTEREST RATE UNASCERTAINABLE.
(a) If Lender is advised that deposits in dollars (in the
applicable amount) are not being offered to banks in the relevant market
for a period of (90) ninety days, or Lender otherwise determines (which
determination shall be binding and conclusive on all parties) that by
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reason of circumstances affecting to interbank Eurodollar market adequate
and reasonable means do not exist for ascertaining the applicable
Interbank Rate; or
(b) If lenders similar to Lender have determined that the
Interbank Rate will not adequately and fairly reflect the cost to such
lenders of maintaining or funding loans based on the Interbank Rate, or
that the making or funding of such Interbank Rate loans has become
impracticable as a result of an event occurring after the date of the Note
which in the opinion of Lender materially affects such Interbank Rate
loans;
then so long as such circumstances shall continue, Lender shall not be
under any obligation to make or continue Loans based an the Interbank Rate
and on the first Business Day of the next calendar month, such Loans shall
bear interest at the prime rate of Interest adopted by Lender as its base
rate for interest rate determinations from time to time which may or may
not be the lowest rate charged by Lender ("Prime Rate") (with the rate
changing as and when that Prime Rate changes) plus 0%. If such an
agreement cannot be reached, such Loans shall be repaid in full by
Customer.
CHANGE IN LAW RENDERING INTERBANK RATE LOANS UNLAWFUL. In the event that
any change in (including the adoption of any new) applicable laws or
regulations, or any change in the interpretation of applicable laws or
regulations by any governmental or other regulatory body charged with the
administration thereof, should make it unlawful for any lender to make,
maintain or fund Loans based on the Interbank Rate, then: (a) Lender shall
promptly notify Customer, (b) the obligation of Lender to make or continue
Loans based on the Interbank Rate shall be suspended for the duration of
such unlawfulness, and (c) on the first Business Day of the following
calendar month, such Loans shall bear interest at the Prime Rate plus 0%,
with the interest rate to change on each day that the Prime Rate changes.
Dated as of December 18, 2001.
TECSTAR MFG. COMPANY (SEAL) M&I XXXXXXXX & XXXXXX BANK (SEAL)
By: XXXXX XXXXXXXXX By: XXXXXX X. XXXXXXX
Xxxxx Xxxxxxxxx, VP/Finance Xxxxxx X. Xxxxxxx, Vice President
Plastics Mfg. Company (SEAL)
By: XXXXX XXXXXXXXX
Xxxxx Xxxxxxxxx, VP/Finance
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