UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended September 30, 1995
----------------------------
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
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Commission File Number: 0-1837
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FEDERAL SCREW WORKS
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(Exact name of registrant as specified in its charter)
Michigan 38-0533740
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2400 Buhl Building, Detroit Michigan 48226
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, and area code (313) 963-2323
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. YES __X__ NO _____
At September 30, 1995, the Company had one class of common stock outstanding,
$1.00 par value common stock. There were 1,086,662 shares of such common stock
outstanding at that time.
(continued)
<PAGE>
Part I FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FEDERAL SCREW WORKS
CONDENSED BALANCE SHEETS (UNAUDITED)
(Thousands of Dollars)
September 30 June 30
1995 1995
------------ ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash ............................................. $ 72 $ 395
Accounts Receivable, Less Allowance of $25,000 ... 10,851 10,238
Inventories:
Finished Products ................................ 3,827 3,636
In-Process Products .............................. 6,423 6,163
Raw Materials And Supplies ....................... 3,848 3,337
-------- --------
14,098 13,136
Prepaid Expenses And Other Current Accounts ...... 759 502
Deferred Income Taxes ............................ 10 91
-------- --------
Total Current Assets .......................... 25,790 24,362
Other Assets:
Intangible Pension Asset ......................... 2,624 2,624
Cash Value Of Life Insurance ..................... 4,757 4,730
Miscellaneous .................................... 1,082 973
-------- --------
8,463 8,327
Property, Plant And Equipment ...................... 69,835 68,574
Less Accumulated Depreciation .................... 40,555 39,961
-------- --------
29,280 28,613
-------- --------
Total Assets ....................................... $ 63,533 $ 61,302
======== ========
</TABLE>
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<PAGE>
Part I FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
September 30 June 30
1995 1995
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable ................................. $ 5,429 $ 4,607
Payroll And Employee Benefits .................... 2,595 4,857
Dividends Payable ................................ 869 109
Federal Income Taxes ............................. 271 349
Taxes, Other Than Income Taxes ................... 870 1,284
Accrued Pension Contributions .................... 318 481
Other Accrued Liabilities ........................ 814 749
Current Maturities Of Long-Term Debt ............. 400 400
-------- --------
Total Current Liabilities ..................... 11,566 12,836
Long Term Liabilities:
Long-Term Debt ................................... 12,255 8,700
Unfunded Pension Obligation ...................... 3,399 3,399
Postretirement Benefits Other Than Pensions ...... 4,197 3,745
Deferred Income Taxes ............................ 207 341
Employee Benefits ................................ 1,294 1,324
-------- --------
Total Long-Term Liabilities ................... 21,352 17,509
Stockholders' Equity:
Common Stock, $1.00 Par Value, Authorized
2,000,000 Shares; 1,086,662 Shares
Outstanding Both at September 30, 1995
and June 30, 1995 ................................ 1,087 1,087
Additional Capital ............................... 2,798 2,772
Retained Earnings ................................ 27,997 28,365
Unfunded Pension Costs ........................... (1,267) (1,267)
-------- --------
Total Stockholders' Equity .................... 30,615 30,957
-------- --------
Total Liabilities and Stockholders' Equity ......... $ 63,533 $ 61,302
======== ========
<FN>
See Accompanying Notes.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
FEDERAL SCREW WORKS
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Thousands of Dollars, Except Per Share)
Three Months Three Months
Ended Ended
September 30 September 30
l995 1994
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<S> <C> <C>
Net Sales ...................................... $20,904 $19,838
Costs And Expenses:
Cost of Products Sold ....................... 18,845 17,861
Selling And Administrative Expenses ......... 1,102 1,082
Interest Expense ............................ 198 107
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Total Costs And Expenses ................. 20,145 19,050
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Earnings Before Federal
Income Taxes ................................ 759 788
Federal Income Taxes ........................... 257 256
------- -------
Net Earnings ................................... $ 502 $ 532
======= =======
Per Share Of Common Stock:
Net Earnings Per Share ......................... $ .46 $ .49
======= =======
Cash Dividends Per Share ....................... $ .80 $ .50
======= =======
<FN>
See Accompanying Notes.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
FEDERAL SCREW WORKS
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Thousands of Dollars)
Three Months
Ended September 30
1995 1994
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<S> <C> <C>
Operating Activities
Net Earnings ..................................... $ 502 $ 532
Adjustments to Reconcile Net Earnings to Net Cash
Provided By (Used In) Operating Activities:
Depreciation and Amortization ................ 836 715
Increase In Cash Value of Life Insurance ..... (27) 40
Change In Deferred Income Taxes .............. (53) 173
Employee Benefits ............................ (30) (45)
Amortization of Restricted Stock ............. 12 19
Other ........................................ 355 222
Changes In Operating Assets And Liabilities:
Accounts Receivable ........................ (613) (449)
Inventories And Prepaid Expenses ........... (1,219) (767)
Accounts Payable And Accrued Expenses ...... (2,030) (2,076)
------- -------
Net Cash Used In Operating Activities .............. (2,267) (1,636)
Investing Activities
Purchases of Property, Plant And Equipment--Net... (1,502) (1,101)
Financing Activities
Proceeds From Bank Borrowings .................... 3,555 1,530
Dividends Paid ................................... (109) (109)
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Net Cash Provided By Financing Activities .......... 3,446 1,421
------- -------
Decrease In Cash ................................... (323) (1,316)
Cash At Beginning Of Period ........................ 395 1,374
------- -------
Cash At End Of Period .............................. $ 72 $ 58
======= =======
<FN>
See Accompanying Notes.
</TABLE>
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<PAGE>
FEDERAL SCREW WORKS
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A - Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial reporting. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation
have been included. The results of operations for the three months ended
September 30, 1995, are not necessarily indicative of the results to be
expected for the fiscal year ending June 30, 1996.
Note B - Debt
On October 24, 1995, the Company entered into a new $25,000,000 Revolving
Credit and Term Loan Agreement with a Bank. This Agreement replaces the
Agreement previously in effect. The Company has the option to convert
borrowings thereunder (classified as long-term debt) to a term note through
October 31, 1998, the expiration of the Agreement. Payments under the term
note, if the conversion option is exercised, would be made quarterly and could
extend to October 31, 1999. The Company has the option to extend the Agreement
for one year beyond the revolving credit maturity date then in effect. As of
September 30, 1995, there were $10,855,000 in outstanding borrowings under the
Revolving Credit and Term Loan Agreement.
Note C - Dividends
Cash dividends per share are based on the number of shares outstanding at the
respective dates of declaration. The dividends declared in the first quarter
of fiscal 1996 include a special dividend of $.70 per share which was paid
October 2, 1995.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS: Net sales for the Company's first quarter ended
September 30, 1995, increased $1,066,000, or 5.4%, compared with net sales for
the first quarter of the prior year. The increase is largely attributable to
the continued strong demand in both the refrigeration and automotive
industries, as well as the addition of new business for this year.
Gross profit for the three month period ended September 30, 1995, increased
$34,000, or 1.8%, as compared with gross profit for the first quarter of the
prior year. The increase is attributable mainly to the increase in sales.
Selling and administrative expenses increased $20,000, or 1.9%, for the first
quarter ended September 30, 1995, as compared with the first quarter of the
prior year. The increase is mainly attributable to commissions paid to outside
salesmen due to the increase in sales.
DIVIDENDS: The Board of Directors, in August 1995, declared a $.10 per share
dividend, and an extra $.70 per share dividend, paid October 2, 1995, to
shareholders of record September 8, 1995.
LIQUIDITY AND CAPITAL RESOURCES: Working capital increased by $2,698,000 from
$11,526,000 at June 30, 1995, to $14,224,000 at September 30, 1995. The
principal factors that contributed to the change were an increase in accounts
receivable and inventories due to increased sales levels. Also contributing
was the reduction in payroll and employee benefits due to the payment of
year-end bonuses and profit sharing payments in the fourth quarter of fiscal
year 1995.
At September 30, 1995, the Company had available $5,145,000 under its bank
credit agreement.
Capital expenditures for the three month period ended September 30, 1995, were
approximately $1.5 million, and, for the year, are expected to approximate
$5.8 million, of which approximately $1.9 million has been committed as of
September 30, 1995.
There have been no material changes concerning environmental matters since
those reported in the Registrant's Form 10-K for the fiscal year ended June
30, 1995.
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<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The information set forth in the last paragraph of the Liquidity and
Capital Resources discussion in Item 2 of Part I concerning environmental
matters is incorporated by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit - Revolving Credit and Term Loan Agreement between Federal
Screw Works and Comerica Bank dated October 24, 1995.
(b) Reports on Form 8-K. There was no SEC Form 8-K filed this quarter.
There were no unusual charges or credits to income, nor a change in
independent accountants.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Federal Screw Works
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Date November 13, 1995 /s/ W. T. ZurSchmiede, Jr.
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W. T. ZurSchmiede, Jr.
Chairman, Chief Executive Officer
and Chief Financial Officer
Date November 13, 1995 /s/ John M. O'Brien
------------------- ------------------------------
John M. O'Brien
Vice President
-8-
EXECUTION COPY
______________________________________________________________________________
______________________________________________________________________________
AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
BY AND BETWEEN
FEDERAL SCREW WORKS
AND
COMERICA BANK
AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
THIS AGREEMENT, made this 24th day of October, 1995, by and between
FEDERAL SCREW WORKS, a Michigan corporation, of Detroit, Michigan (herein
called "Company") and Comerica Bank, a Michigan banking corporation, successor
by merger to Manufacturers Bank, N.A., formerly known as Manufacturers
National Bank of Detroit, of Detroit, Michigan (herein called "Bank");
A. Company and Bank entered into a Revolving Credit and
Term Loan Agreement dated September 21, 1989, as amended ("Prior
Agreement").
B. Company and Bank desire to amend and restate the Prior
Agreement.
NOW THEREFORE, the parties agree that Prior Agreement is amended and
restated in its entirety as follows:
WITNESSETH:
1. DEFINITIONS
For the purposes of this Agreement the following terms will have the
following meanings:
"Advance" shall mean a borrowing requested by Company and made by
Bank under Article 2 of this Agreement, including any refunding or conversion
of such borrowing pursuant to Section 2.8 hereof, and shall include a
Eurodollar-based Advance, Prime-based Advance, Negotiated Rate Advance and any
advance in respect of a Letter of Credit under Section 2.11, hereof.
"Applicable Fee Percentage" shall mean, as of any date of
determination thereof, the applicable percentage used to calculate the fees
due and payable hereunder determined by reference to the appropriate columns
in the Pricing Matrix attached hereto as Schedule 1.
"Applicable Interest Rate" shall mean (a) with respect to Advances
under the Revolving Credit Note, the Eurodollar-based Rate, the Prime-based
Rate or the Negotiated Rate, as selected by Company from time to time, and (b)
with respect to indebtedness outstanding under the Term Notes, the
Eurodollar-based Rate, the Prime-based Rate or the Fixed Rate, as selected by
Company from time to time, subject to the terms and conditions of this
Agreement.
"Applicable Margin" shall mean, as of any date of determination
thereof, the applicable interest rate margin determined by reference to the
appropriate columns in the Pricing Matrix attached to this Agreement as
Schedule 1.
"Business Day" shall mean any day on which commercial banks are open
for domestic and international business (including dealings in foreign
exchange) in Detroit, London and New York.
"Capital Expenditures" shall mean any expenditures for the purchase
or other acquisition for value of fixed or capital assets, determined in
accordance with GAAP.
"Capitalized Lease" shall mean any lease of any property (whether
real, personal or mixed) which, in conformity with GAAP, is required to be
capitalized on the Company's balance sheet.
"Commitment" shall mean Bank's obligation to extend credit to the
Company by making Advances to and issuing Letters of Credit for the account of
the Company in accordance with the terms and conditions of this Agreement up
to but not exceeding in the aggregate at any one time outstanding the
Commitment Amount.
"Commitment Amount" shall mean Twenty-Five Million Dollars
($25,000,000.00), subject to any reductions or termination of said amount, as
provided in Section 2.11 of this Agreement.
"Current Ratio" shall mean, as of any date of determination, the
ratio of Company's current assets to its current liabilities, as determined in
accordance with GAAP.
"Debt to Worth Ratio" shall mean, as of any date of determination,
the ratio of Company's Total Liabilities to its Tangible Net Worth.
"Environmental Laws" shall mean all federal, state and local laws
including statutes, regulations, ordinances, codes, rules, and other
governmental restrictions and requirements, relating to environmental
pollution, contamination or other impairment of the environment or any
hazardous or toxic substances of any nature. These Environmental Laws shall
include but not be limited to the Federal Solid Waste Disposal Act, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, and the Federal Superfund
Amendments and Reauthorization Act of 1986.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, or any successor act or code.
"Eurodollar-based Advance" shall mean an Advance which bears interest
at the Eurodollar-based Rate.
"Eurodollar-based Rate" shall mean a per annum interest rate which is
the Applicable Margin (subject, if applicable, to adjustment under Section 4.7
hereof), plus the quotient of:
(a) the per annum interest rate at which Bank's Eurodollar
Lending Office offers deposits to prime banks in the
eurodollar market in an amount comparable to the
relevant Eurodollar-based Advance or principal amount
outstanding under any Term Note, as applicable, and
for a period equal to the relevant Interest Period at
approximately 11:00 a.m. Detroit time two (2) Business
Days prior to the first day of such Interest Period;
divided by
(b) a percentage equal to 100% minus the maximum rate on
such date at which Bank is required to maintain
reserves on "Euro-currency Liabilities" as defined in
and pursuant to Regulation D of the Board of Governors
of the Federal Reserve System or, if such regulation
or definition is modified, and as long as Bank is
required to maintain reserves against a category of
liabilities which includes eurodollar deposits or
includes a category of assets which includes
eurodollar loans, the rate at which such reserves are
required to be maintained on such category.
"Eurodollar Lending Office" shall mean Bank's office located at Grand
Cayman, British West Indies or such other branch of Bank, domestic or foreign,
as it may hereafter designate as its Eurodollar Lending Office by notice to
Company.
"Federal Funds Effective Rate" shall mean, for any day, the rate of
interest per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day, (or if such day is not a
Business Day, for the next preceding Business Day), by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by Bank from three (3) Federal funds brokers of recognized standing
selected by Bank, as the same may be changed from time to time.
"Fixed Charge Ratio" shall mean, as of any date of determination, a
ratio the numerator of which shall be the sum of Net Income for the four
quarter period ending on such date, plus Interest Expense and Income Taxes for
such period, plus payments made by Company under any Operating Leases during
such period, plus non-cash charges for FASB 106, depreciation and
extraordinary losses during such period, minus the sum of dividends paid by
Company during such period and extraordinary gains during such period and the
denominator of which shall be the sum of Interest Expense for such period plus
the aggregate of all payments of principal (including the current portion of
any Capitalized Leases) due and payable or paid during such period with
respect to all indebtedness for borrowed money, excluding readvances of the
Revolving Credit hereunder, and Capitalized Leases for such period, and all
payments made by Company under Operating Leases during such period.
"Fixed Rate" shall mean a per annum interest rate which is equal to
the rate reasonably determined by Bank (based on quotations from established
dealers) to be in effect on the date of Company's election of the Fixed Rate
under any Term Note in the secondary market for United States Treasury
securities of a comparable amount and with a comparable term to maturity plus
the Applicable Margin on such date of Company's election.
"Fixed Rate Prepayment Premium" shall mean an amount equal to the sum
of (a) the discounted net present values of the interest payments that would
otherwise be payable on the principal amount being prepaid, after reducing
each such interest payment by the amount of interest that would be payable on
each interest payment due date if the principal amount being prepaid were
re-invested at the Current Market Rate therefor, plus (b) Five Hundred Dollars
($500). For these purposes, "Current Market Rate" shall mean a per annum
interest rate equal to one-half of one percent (1/2%) above the rate
reasonably determined by Bank (based on quotations from established dealers)
to be in effect not more than seven (7) days prior to the prepayment date in
the secondary market for United States Treasury securities of a comparable
amount and with a comparable term to maturity as the principal amount being
prepaid. For purposes of computation, the discount rate for each computation
will be the Current Market Rate for the relevant principal installment.
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"Income Taxes" shall mean, for any period of determination, the
aggregate amount of taxes paid or payable by Company based on income or
profits for such period of the operations of Company as determined in
accordance with GAAP.
"Interest Expense" shall mean, for any period of determination, the
aggregate gross interest expense (including amortization of original issue
discount and non-cash interest payments or accruals and the interest component
of Capitalized Leases) of Company for such period as determined in accordance
with GAAP.
"Interest Period" shall mean (i) with respect to Eurodollar-based
Advances or portions of any Term Note which bears interest at the
Eurodollar-based Rate, a period of one (1) week, or one (1), two (2), three
(3), or six (6) months, and (ii) with respect to the Negotiated Rate Advances,
a period of up to thirty (30) days, in each case as selected by Company
pursuant to the terms of this Agreement, commencing on the day a
Eurodollar-based Advance or Negotiated Rate Advance, as applicable, is made,
or on the effective date of an election of the Eurodollar-based Rate under any
Term Note, provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the
next succeeding Business Day, except that if the next
succeeding Business Day falls in another calendar
month, the Interest Period shall end on the next
preceding Business Day, and when an Interest Period
begins on a day which has no numerically corresponding
day in the calendar month during which such Interest
Period is to end, it shall end on the last Business
Day of such calendar month;
(b) no Interest Period shall extend beyond the maturity
date set forth in any of the Notes to which such
Interest Period is to apply;
(c) no Interest Period with respect to that portion of
any of the Term Notes to be paid on any principal
installment date shall end past such principal installment
date.
"Letter of Credit Agreement" shall mean any and all standby letter of
credit applications and agreements, or similar documents and agreements,
executed and delivered by Company unto Bank with respect to any Letters of
Credit, and all present and future amendments thereto.
"Letter(s) of Credit" shall mean any and all present and future
standby and documentary letters of credit issued by Bank upon the application
of and for the account of Company, or which Bank is committed or otherwise
obligated to issue for the account of Company, in accordance with the terms of
this Agreement, and as further governed by and subject to any Letter of Credit
Agreement(s) executed and delivered by Company unto Bank with respect thereto.
"Negotiated Rate" shall mean a per annum interest rate other than the
Eurodollar-based Rate or the Prime-based Rate which is offered by Bank and
selected by Company with respect to Advances under the Revolving Credit Note.
The Negotiated Rate and the repayment date of any Negotiated Rate Advances
shall be as mutually agreeable to both Company and Bank.
"Negotiated Rate Advance" shall mean an Advance which bears interest
at the Negotiated Rate.
"Net Income" shall mean, as of any date of determination, net income
of Company as determined in accordance with GAAP.
"Note" shall mean the Revolving Credit Note or any of the Term Notes,
as the case may be, and "Notes" shall refer to all of them.
"Notice of Term Rate" shall mean a Notice of Term Rate issued by
Company under this Agreement in the form annexed to this Agreement as Exhibit
"D".
"Operating Lease" shall mean any lease other than a
Capitalized Lease.
"Pension Plans" shall mean all pension plans of Company which are
subject to ERISA.
"Prime Rate" shall mean the per annum interest rate established by
Bank as its prime rate for its borrowers as such rate may vary from time to
time, which rate is not necessarily the lowest rate on loans made by Bank at
any such time.
"Prime-based Advance" shall mean an Advance which bears interest at
the Prime-based Rate.
"Prime-based Rate" shall mean a per annum rate which is the greater
of (i) the Prime Rate, plus the Applicable Margin (subject if applicable, to
adjustment under Section 4.7 hereof) or (ii) the rate of interest equal to one
percent (1%) plus the Federal Funds Effective Rate.
"Reimbursement Obligations" shall mean the obligations of Company to
pay or reimburse Bank in accordance with the terms and conditions of the
respective Letter of Credit Agreement(s) for any and all drafts and other
requests for payment honored by Bank under or with respect to any Letters of
Credit.
"Request for Advance" shall mean a Request for Advance issued by
Company under this Agreement in the form annexed to this Agreement as Exhibit
"A".
"Revolving Credit Maturity Date" shall mean the earlier to occur of
(i) October 31, 1998, as such date may be extended from time to time pursuant
to Section 2.13 hereof, and (ii) the date on which the Commitment shall be
terminated pursuant to Sections 2.11, 10.2 or 10.3 hereof.
"Revolving Credit Note" shall mean a Note issued by Company under
Article 2 of this Agreement, in the form annexed to this Agreement as Exhibit
"B".
"Tangible Net Worth" shall mean, as of any date of determination, the
dollar amount computed by subtracting Company's Total Liabilities as of such
date from Company's total assets as of such date as determined in accordance
with GAAP and subtracting from such amount Company's goodwill and other
intangible assets, as of such date other than Company's Pension Intangible
Asset, as identified in Company's financial statements, as determined in
accordance with GAAP.
"Term Note" shall mean any note issued by Company under this
Agreement at the time of any borrowing under Article 3 of this Agreement, in
the form annexed hereto as Exhibit "C", and all such notes collectively shall
be referred to as the "Term Notes".
"Total Liabilities" shall mean, as of any date of determination, the
sum of total liabilities of Company as of such date as determined in
accordance with GAAP plus the principal amount of any Letters of Credit issued
for the account of Company as of such date, minus the FASB 106 liability of
Company as of such date.
2. THE INDEBTEDNESS: Revolving Credit
2.1 Bank agrees to make Advances under the Revolving Credit
Note to Company at any time and from time to time from the effective date
hereof until the Revolving Credit Maturity Date, so long as the sum of the
aggregate principal amount of any direct Advances at any time outstanding
under the Revolving Credit Note, the aggregate principal amount at such time
outstanding under the Term Notes, the aggregate amount of Letters of Credit
issued and then outstanding and the aggregate amount of Reimbursement
Obligations at such time does not exceed the Commitment Amount. All of the
Advances under this Section 2.1 shall be evidenced by the Revolving Credit
Note under which Advances, repayments and re-Advances may be made, subject to
the terms and conditions of this Agreement. Upon the repayment of any
principal installment outstanding under any Term Note or the repayment of any
Reimbursement Obligation, or upon the expiration or termination of any Letter
of Credit, Company shall be permitted to request a re-Advance of such amount
repaid, or the amount of such expired or terminated Letter of Credit, or any
portion thereof, under the Revolving Credit Note or request the issuance of
Letters of Credit in such amount repaid, or the amount of such expired or
terminated Letter of Credit, or any portion thereof, subject to the terms and
conditions of this Agreement.
2.2 The Revolving Credit Note shall mature on the Revolving
Credit Maturity Date, and each Advance from time to time outstanding
thereunder shall bear interest at its Applicable Interest Rate. The amount and
date of each Advance under the Revolving Credit Note, its Applicable Interest
Rate, its Interest Period, if applicable, and the amount and date of any
repayment shall be noted on Bank's records, which records will be conclusive
evidence thereof, absent manifest error.
2.3 Interest on the unpaid balance of all Prime-based Advances
from time to time outstanding under the Revolving Credit Note shall be payable
quarterly commencing on December 31, 1995, and on a like day of each quarter
thereafter. Interest accruing at the Prime-based Rate shall be computed on the
basis of a 360 day year and assessed for the actual number of days elapsed,
and in such computation effect shall be given to any change in the Prime-
based Rate resulting from a change in the Prime Rate on the date of such
change in the Prime Rate.
2.4 Interest on each Eurodollar-based Advance under the
Revolving Credit Note shall be payable on the last day of the Interest Period
applicable thereto and, if such Interest Period is longer than three (3)
months, interest shall be payable at intervals of three (3) months after the
first day thereof. Interest accruing at the Eurodollar-based Rate shall be
computed on the basis of a 360 day year and assessed for the actual number of
days elapsed from the first day of the Interest Period applicable thereto to,
but not including, the last day thereof.
2.5 Interest on each Negotiated Rate Advance under the
Revolving Credit Note shall be payable on the last day of the Interest Period
applicable thereto. Interest accruing at the Negotiated Rate shall be computed
on the basis of a 360 day year and assessed for the actual number of days
elapsed.
2.6 Bank shall not be obligated to make any Advance under the
Revolving Credit Note unless Company shall have first filed with Bank a
Request for Advance executed by an authorized officer of Company. Each Request
for Advance shall set forth:
(a) the proposed date of Advance;
(b) whether the Advance is to be a Eurodollar-based
Advance, Prime-based Advance, or a Negotiated Rate
Advance;
(c) whether the Advance is a refunding or conversion of an
outstanding Advance;
(d) the principal amount of such Advance, which in the
case of a Eurodollar-based Advance or a Negotiated Rate
Advance must be at least Five Hundred Thousand Dollars
($500,000.00) including the amount of any outstanding
indebtedness to be combined therewith having the same
Applicable Interest Rate and Interest Period, if any; and
(e) in the case of a Eurodollar-based Advance or a
Negotiated Rate Advance, the duration of the Interest
Period applicable thereto.
In the case of a Eurodollar-based Advance, each Request for Advance must be
delivered to Bank by 12:00 noon Detroit time two (2) Business Days prior to
the proposed date of Advance; in the case of a Prime-based Advance or a
Negotiated Rate Advance, the Request for Advance must be delivered by 12:00
noon Detroit time on such proposed date of Advance. A Request for Advance,
once delivered to Bank, shall not be revocable by Company.
2.7 Company may prepay all or part of the outstanding balance
of any Prime-based Advance(s) under the Revolving Credit Note at any time
without premium, penalty or prejudice to Company's right to reborrow under the
terms of this Agreement. Any other prepayment shall be restricted by Section
4.1 hereof; provided, however, any prepayment of all or part of the
outstanding balance of any Eurodollar-based Advance or Negotiated Rate Advance
shall not prejudice Company's right to reborrow under the terms of this
Agreement.
2.8 Company may refund any Advance under the Revolving Credit
Note in the same type of Advance or convert any Advance to any other type of
Advance upon the delivery to Bank of a Request for Advance, subject to the
following:
(a) each such Request for Advance shall set forth the
proposed date of refunding or conversion, whether the
refunding or conversion is to be as a Eurodollar-based
Advance, a Prime-based Advance, or a Negotiated Rate
Advance, the principal amount(s) to be refunded and/or
converted, and the duration of each applicable Interest
Period, if any;
(b) in the case of a Eurodollar-based Advance, such
Request for Advance shall be delivered to Bank by 12:00 noon
Detroit time two (2) Business Days prior to the
proposed date of refunding or conversion, and in the
case of a Prime-based Advance or a Negotiated Rate
Advance such Request for Advance shall be delivered by
12:00 noon Detroit time on the proposed date of
refunding or conversion, which in the case of an
outstanding Eurodollar-based Advance or a Negotiated
Rate Advance shall only be on the last day of the
Interest Period applicable thereto;
(c) the amount to be converted to or refunded as a
Eurodollar-based Advance or a Negotiated Rate Advance shall
be at least Five Hundred Thousand Dollars ($500,000.00)
including the amount of any outstanding indebtedness or new
Advance to be then combined therewith having the same
Applicable Interest Rate and Interest Period, if any;
(d) except for a refunding of or conversion to a
Prime-based Advance, any such request, once delivered to
Bank, shall not be revocable by Company.
If, as to any outstanding Eurodollar-based Advance or Negotiated Rate Advance,
Bank has not received a Request for Advance on the last day of the Interest
Period applicable thereto, the principal amount thereof which is not then
prepaid shall be automatically converted to a Prime-based Advance and shall
thereafter bear interest at the Prime-based Rate.
2.9 Company agrees that no more than five (5) Applicable
Interest Rates may be in effect at any one time with respect to Advances under
the Revolving Credit Note.
2.10 Company agrees to pay to Bank a non-refundable commitment
fee equal to the Applicable Fee Percentage times the average daily balance of
the unused portion of the Commitment Amount computed on a per annum basis on
the actual number of days elapsed using a year of 360 days. The commitment fee
shall be payable quarterly in arrears commencing December 31, 1995.
2.11 Upon thirty (30) days prior notice to Bank, Company may at
any time permanently terminate the Commitment in its entirety, or from time to
time permanently reduce the Commitment Amount by Five Hundred Thousand Dollars
($500,000.00) or any larger integral multiple thereof; provided that (i) any
such termination or reduction shall not affect the obligations of Company to
pay to Bank all sums owing to Bank under and pursuant to this Agreement at the
time of such termination or revocation, in accordance with the terms of this
Agreement; (ii) if at the time of any reduction of the Commitment Amount the
aggregate principal amount of Advances hereunder to Company plus the aggregate
principal amount of any term loans made under Article 3 hereof, the aggregate
undrawn amount of any Letters of Credit which shall be outstanding at such
time and the aggregate amount of all Reimbursement Obligations outstanding at
such time shall exceed the Commitment Amount, as so reduced, Company shall
immediately reduce any pending Request for Advance on such day by the amount
of such excess and, to the extent any excess remains thereafter, immediately
repay to Bank an amount equal to such excess; (iii) if the termination or
reduction of the Commitment Amount requires the prepayment of a
Eurocurrency-based Advance, a Negotiated Rate Advance or any portion of
indebtedness outstanding under any Term Note which bears interest at the
Eurodollar-based Rate, the termination or reduction may be made only on the
last Business Day of the then current Interest Period applicable to such
Advance or portion of indebtedness under any Term Note; and (iv) no reduction
shall reduce the Commitment Amount to an amount which is less than the sum of
the aggregate undrawn amount of any Letters of Credit outstanding at such
time.
2.12 In addition to direct Advances under the Revolving Credit
Note and term loans under Article 3, below, Bank further agrees to issue for
the account of Company, or commit to issue, from time to time, Letters of
Credit in aggregate face amounts not to exceed One Million Five Hundred
Thousand Dollars ($1,500,000.00) at any one time; provided, however, that the
sum of the aggregate principal amount of all direct Advances at any time
outstanding under the Revolving Credit Note, the aggregate principal amount at
such time outstanding under the Term Notes, if any, and the aggregate amount
of outstanding Letters of Credit and Reimbursement Obligations at such time
shall not exceed the Commitment Amount; and, provided further, that no Letter
of Credit shall, by its terms, have an expiration date which extends beyond
the Revolving Credit Maturity Date. The issuance of Letters of Credit by Bank
shall be subject to the terms and conditions set forth in this Agreement, and
in any Letter of Credit Agreement(s) executed and delivered by Company unto
Bank with respect thereto. Company agrees to pay to Bank a per annum fee equal
to the Applicable Fee Percentage times the undrawn amount of each Letter of
Credit issued pursuant hereto.
2.13 Provided that no event of default has occurred and is
continuing hereunder, Company may, by written notice to Bank prior to
September 30 of each year (but not earlier than September 1 of each year),
request that the Bank extend the then applicable Revolving Credit Maturity
Date to the date that is one year later than the Revolving Credit Maturity
Date then in effect. If Bank does not notify Company that it is willing to
extend the Revolving Credit Maturity Date by November 15 after receipt by Bank
of Company's timely written request, as aforesaid, the Revolving Credit
Maturity Date shall not be extended. Upon written notice from the Bank of its
election to grant Company's request, the Revolving Credit Maturity Date shall
be extended for an additional one year period, the term Revolving Credit
Maturity Date shall mean such extended date.
3. THE INDEBTEDNESS: Term Credit
3.1 Bank agrees to make term loans to Company from time to
time on or before the Revolving Credit Maturity Date, in amounts of not less
than One Million Dollars ($1,000,000) for each term loan as determined by
Company from time to time, so long as the sum of the aggregate principal
amount of direct Advances outstanding at any time under the Revolving Credit
Note, the aggregate principal amount outstanding at such time under the Term
Notes, the aggregate undrawn amount of Letters of Credit and the aggregate
amount of Reimbursement Obligations at such time does not exceed the
Commitment Amount. At the time of each such borrowing under this Section 3.1,
Company agrees to execute a Term Note, with appropriate insertions, as
evidence of the indebtedness hereunder. Each loan made under this Section 3.1
shall be subject to the terms and conditions of this Agreement.
3.2 The indebtedness represented by each Term Note shall be
repaid in equal quarterly principal installments in an aggregate amount
sufficient to fully amortize the indebtedness thereunder from the date of such
Term Note to its maturity commencing on a date three (3) months from the date
of such Term Note and on a like day of each quarter thereafter until the
maturity date applicable to such Term Note, as selected by Company, when the
entire unpaid balance of principal and interest thereon shall be due and
payable.
3.3 Upon the repayment of any outstanding principal
indebtedness represented by any Term Note prior to the Revolving Credit
Maturity Date, Company shall be permitted to request a re-Advance of such
amounts so repaid, or any portion thereof, under the Revolving Credit Note, or
request the issuance of Letters of Credit equal to such amounts so repaid, or
any portion thereof, subject to the terms and conditions of this Agreement.
3.4 Company may elect from time to time an Applicable Interest
Rate and maturity date for any portion of the indebtedness represented by any
Term Note by delivering to Bank a Notice of Term Rate executed by an
authorized office of Company, which sets forth:
(a) the proposed effective date for such Applicable
Interest Rate;
(b) whether the Applicable Interest Rate is to be a
Eurodollar-based Rate, Prime-based Rate, or Fixed Rate;
(c) except in the case of the Prime-based Rate and the
Fixed Rate, the duration of the Interest Period
applicable thereto, provided that if Company elects an
Interest Period which would otherwise end after the
next occurring principal installment payment date
(which election shall be limited to the shortest such
Interest Period), notwithstanding any other provision
of this Agreement, such Interest Period shall end on
such payment date; and
(d) the maturity date of such Term Note, provided that
such maturity date shall not extend beyond the earlier of
(A) five (5) years from the date of such Term Note, or (B)
two (2) years from the Revolving Credit Maturity Date.
Each such notification must be in writing and delivered to the Bank. If
Company elects the Eurodollar-based Rate, such notification must be delivered
by 12:00 noon Detroit time two (2) Business Days prior to the effective date;
if Company elects the Prime-based Rate or the Fixed Rate, such notification
must be delivered by 12:00 noon Detroit time on the effective date of such
election. In the event Company does not deliver a Notice of a Term Rate, the
Applicable Interest Rate shall be the Prime-based Rate which shall remain in
effect for any day or longer period until a Notice of Term Rate is delivered.
3.5 In the event Company selects the Fixed Rate for any
portion of any Term Note, such Fixed Rate shall be the Applicable Interest
Rate with respect thereto until the maturity date of such Term Note.
3.6 Company agrees that no more than five (5) Applicable
Interest Rates may be in effect at any one time with respect to the
indebtedness outstanding under any Term Notes.
3.7 Interest on the unpaid balance of all indebtedness bearing
interest at the Prime-based Rate under any Term Note shall be payable
quarterly commencing on the first principal installment due date with respect
to any such indebtedness and on a like day of each quarter thereafter.
Interest accruing at the Prime-based Rate shall be computed on the basis of a
360 day year and assessed for the actual number of days elapsed, and in such
computation effect shall be given to any change in the Prime-based Rate
resulting from a change in the Prime Rate on the date of such change in the
Prime Rate.
3.8 Interest on any portion of the indebtedness outstanding
under any Term Note which bears interest at the Eurodollar-based Rate shall be
payable on the last day of the Interest Period applicable thereto and if such
Interest Period is longer than three (3) months, interest shall be payable at
intervals of three (3) months after the first day thereof. Interest accruing
at the Eurodollar-based Rate shall be computed on the basis of a 360 day year
and assessed for the actual number of days elapsed from the first day of the
Interest Period applicable thereto to, but not including, the last day
thereof.
3.9 Interest on the unpaid balance of all indebtedness
outstanding under any Term Note at the Fixed Rate shall be payable quarterly
commencing on the first principal installment due date and on a like day of
each quarter thereafter. Interest accruing at the Fixed Rate shall be computed
on the basis of a 360 day year and assessed for the actual number of days
elapsed.
3.10 Company may prepay all or part of the outstanding balance
of any indebtedness which bears interest at the Prime-based Rate under any
Term Note at any time without premium or penalty. Upon two (2) days prior
notice to Bank, Company may prepay all or part of any indebtedness which bears
interest at the Eurodollar-based Rate outstanding under any Term Note on any
principal installment due date applicable thereto, subject to the prepayment
provisions and restrictions set forth in Section 4.1 hereof. Upon two (2) days
prior notice to Bank, Company may prepay any portion of indebtedness
outstanding under any Term Note which bears interest at the Fixed Rate upon
payment of a Fixed Rate Prepayment Premium with respect to such amount
prepaid. A certificate shall be submitted by Bank to Company computing any
applicable Fixed Rate Prepayment Premium, and shall be presumed correct absent
manifest error. Any partial prepayments of indebtedness outstanding under any
Term Note shall be applied to the installments due under such Term Note in the
inverse order of their maturities.
4. SPECIAL PROVISIONS, CHANGES IN CIRCUMSTANCES AND YIELD
PROTECTION, MARGIN ADJUSTMENTS
4.1 If Company makes any payment of principal with respect to
any Eurodollar-based Advance, any Negotiated Rate Advance or any indebtedness
under any Term Note which bears interest at the Eurodollar-based Rate, on any
day other than the last day of an applicable Interest Period (whether
voluntarily, by acceleration, or otherwise) or if Company fails to borrow any
Eurodollar-based Advance, any Negotiated Rate Advance or that portion of any
Term Note which bears interest at the Eurodollar-based Rate after notice has
been given by Company to Bank in accordance with the terms hereof requesting
such Advance or requesting the Eurodollar-based Rate for any portion of any
Term Note, or if Company fails to make any payment of principal or interest
under a Term Note with respect to which the Eurodollar-based Rate is the
Applicable Interest Rate or in respect of a Eurodollar-based Advance or
Negotiated Rate Advance when due, Company shall reimburse Bank on demand for
any resulting loss, cost or expense incurred by Bank as a result thereof,
including, without limitation any such loss, cost or expense incurred in
obtaining, liquidating, employing or redeploying deposits from third parties,
whether or not Bank shall have funded or committed to fund such Advance or
principal under such Term Note. Such amount payable by Company to Bank may
include, without limitation, an amount equal to the excess, if any, of (a) the
amount of interest which would have accrued on the amount so prepaid, or not
so borrowed, refunded or converted, for the period from the date of such
prepayment or of such failure to borrow, refund or convert, through the last
day of the relevant Interest Period, at the Applicable Interest Rate for said
Advance(s) or principal under such Term Note provided under this Agreement,
over (b) the amount of interest (as reasonably determined by Bank) which would
have accrued to Bank on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank eurodollar market.
Calculation of any amounts payable to Bank under this paragraph shall be made
as though Bank shall have actually funded or committed to fund the relevant
Eurodollar-based Advance, Negotiated Rate Advance or Term Note which bears
interest at the Eurodollar-based Rate through the purchase of an underlying
deposit in an amount equal to the amount of such Advance or such principal and
having a maturity comparable to the relevant Interest Period; provided,
however, that Bank may fund any Eurodollar-based Advance, any Negotiated Rate
Advance or principal under any Term Note which bears interest at the
Eurodollar-based Rate in any manner it deems fit and the foregoing assumptions
shall be utilized only for the purpose of the calculation of amounts payable
under this paragraph. Upon the written request of Company, Bank shall deliver
to Company a certificate setting forth the basis for determining such losses,
costs and expenses, which certificate shall be conclusively presumed correct,
absent manifest error; and provided further that any such costs to be paid by
Company to Bank under this Section 4.1 shall not exceed the full amount of
payments that would otherwise have been payable by Company to Bank under this
Agreement had such Advances not been prepaid by Company.
4.2 For any Interest Period for which the Applicable Interest
Rate is the Eurodollar-based Rate, if Bank shall designate a Eurodollar
Lending Office which maintains books separate from those of the rest of Bank,
Bank shall have the option of maintaining and carrying the relevant Advance or
portion of indebtedness under any Term Note which bears interest at the
Eurodollar-based Rate on the books of such Eurodollar Lending Office.
4.3 If, with respect to any Interest Period, Bank determines
that, by reason of circumstances affecting the foreign exchange and interbank
markets generally, deposits in Eurodollars in the applicable amounts are not
being offered to the Bank for such Interest Period, then Bank shall forthwith
give notice thereof to the Company. Thereafter, until Bank notifies Company
that such circumstances no longer exist, the obligation of Bank to make
Eurodollar-based Advances, and the right of Company to convert an Advance to
or refund an Advance as a Eurodollar-based Advance and the right of Company to
elect the Eurodollar-based Rate for any Advance under this Agreement or elect
the Eurodollar-based Rate for any portion of indebtedness under any Term Note
shall be suspended.
4.4 If, after the date hereof, the introduction of, or any
change in, any applicable law, rule or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by Bank (or its
Eurodollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, shall make it unlawful or
impossible for the Bank (or its Eurodollar Lending Office) to honor its
obligations hereunder to make or maintain any Advance or any indebtedness
under any Term Note with interest at the Eurodollar-based Rate, Bank shall
forthwith give notice thereof to Company. Thereafter (a) the obligation of
Bank to make Eurodollar-based Advances and the right of Company to convert an
Advance or refund an Advance as a Eurodollar-based Advance and to elect the
Eurodollar-based Rate for any portion of any Term Note under this Agreement
shall be suspended and thereafter Company may select as Applicable Interest
Rates only those which remain available, and (b) if Bank may not lawfully
continue to maintain a Eurodollar-based Advance or any indebtedness under any
Term Note which bears interest at the Eurodollar-based Rate, as the case may
be, to the end of the then current Interest Period applicable thereto, the
Prime-based Rate shall be the Applicable Interest Rate for the remainder of
such Interest Period.
4.5 If the adoption or implementation after the date hereof
of, or any change after the date hereof in, any applicable law, rule or
regulation of any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
Bank (or its Eurodollar Lending Office) with any request or directive (whether
or not having the force of law) made by any such authority, central bank or
comparable agency after the date hereof (herein called a "Change of Law"):
(a) shall subject Bank (or its Eurodollar Lending Office)
to any tax, duty or other charge with respect to any
Advance or any Note or shall change the basis of
taxation of payments to Bank (or its Eurodollar
Lending Office) of the principal of or interest on any
Advance, any Note or any other amounts due under this
Agreement in respect thereof (except for changes in
the rate of tax on the overall net income of Bank or
its Eurodollar Lending Office imposed by the
jurisdiction in which Bank's principal executive
office or Eurodollar Lending Office is located); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System),
special deposit or similar requirement against assets
of, deposits with or for the account of, or credit
extended by Bank (or its Eurodollar Lending Office) or
shall impose on Bank (or its Eurodollar Lending
Office) or the foreign exchange and interbank markets
any other condition affecting any Advance or any Note;
and the result of any of the foregoing is to increase the cost to Bank of
maintaining any part of the indebtedness hereunder or to reduce the amount of
any sum received or receivable by Bank under this Agreement or under the Notes
by an amount deemed by the Bank to be material, then Bank shall promptly
notify Company of such fact and demand compensation therefor and, within
fifteen (15) days after such demand by Bank, Company agrees to pay to Bank
such additional amount or amounts as will compensate Bank for such increased
cost or reduction; provided, however, that Company shall not be liable
retroactively for such amounts payable to Bank with respect to indebtedness
hereunder existing prior to any such adoption or change in any applicable law,
rule or regulation, unless such adoption or change in applicable laws, rules
or regulations shall have a retroactive application or impact upon Bank. Bank
will promptly notify Company of any event of which it has knowledge which will
entitle Bank to compensation pursuant to this Section 4.5. A certificate of
Bank setting forth the basis for determining such additional amount or amounts
necessary to compensate Bank shall be conclusively presumed to be correct save
for manifest error.
4.6 In the event that at any time after the date of this
Agreement a Change of Law shall, in the reasonable opinion of the Bank,
require the commitment of Bank under this Agreement to be treated as an asset
or otherwise included for purposes of calculating the appropriate amount of
capital to be maintained by Bank, Bank shall notify Company thereof.
Thereafter, Company and Bank shall negotiate in good faith an agreement to
increase the commitment fee payable to Bank under this Agreement, which in the
opinion of Bank will adequately compensate Bank for the costs associated with
such Change of Law; provided, however, that Company shall not be responsible
retroactively for any such increases in commitment fees payable to Bank with
respect to any commitment(s) existing hereunder prior to any such Change of
Law, unless such Change of Law shall have a retroactive application or impact
upon Bank. If such increase is approved in writing by Company within thirty
(30) days from the date of notice to Company from Bank, the commitment fee
payable by Company herein shall, effective from the date of such agreement,
include the amount of the agreed increase. If Company and Bank are unable to
agree on an increase within thirty (30) days from the date of such notice,
Company shall have the option, which shall be exercised by written notice
within forty-five (45) days from the date of the aforesaid notice, to
terminate the commitment of Bank hereunder. If (a) Company and Bank fail to
agree on an increase in the commitment fee, or (b) Company fails to give
timely notice that it has exercised its option to terminate the commitment as
set forth above, then the commitment of Bank to make Advances hereunder or
term loans under Article 3, hereof shall automatically terminate as of the
last day of the aforesaid forty-five (45) day period.
4.7 Adjustments to the Applicable Margin, based on
Schedule 1 shall be implemented as follows:
(i) Such margin adjustments shall be given
prospective effect only, effective (A) as to all Prime-based Advances
outstanding hereunder, immediately upon the required date of delivery of the
financial statements required to be delivered under Section 7.1(b) hereof
establishing applicability of the appropriate adjustments, if any, and (B) as
to each Eurodollar-based Advance outstanding hereunder, effective upon
the expiration of the applicable Interest Period(s), if any, in effect on the
required date of delivery of the latest of such financial statements required
to be delivered hereunder during such Interest Period(s) with no retroactivity
or claw-back.
(ii) With respect to Eurodollar-based Advances
outstanding hereunder, an adjustment hereunder, after becoming effective,
shall remain in effect only through the end of the applicable Interest
Period(s) for such Eurocurrency-based Advances if any; provided, however, that
upon the delivery of quarterly financial statements demonstrating any change
in the ratio of Total Liabilities to Tangible Net Worth, or the occurrence of
any other event which under the terms hereof causes such adjustment no longer
to be applicable, then any such subsequent adjustment or no adjustment, as the
case may be, shall be effective (and said pricing shall thereby be adjusted up
or down, as applicable) with the commencement of each Interest Period
following such change or event, all in accordance with the preceding
subparagraph.
5. CONDITIONS
5.1 Company agrees to furnish Bank prior to the initial
borrowing under this Agreement, in form to be satisfactory to Bank, with (i)
an opinion of Company's counsel; (ii) certified copies of an incumbency
certificate and resolutions of the Executive Committee of Company evidencing
approval of the borrowing and other credit hereunder; (iii) copies of
Company's Bylaws certified as true and complete as of the date of this
Agreement by Company's secretary; (iv) a copy of Company's Articles of
Incorporation certified as true and complete by the Director of the
Corporation and Securities Bureau of the State of Michigan Department of
Commerce; and (v) a certificate of good standing from the state of Company's
incorporation and from the state(s) in which it is qualified to do business.
6. REPRESENTATIONS AND WARRANTIES
Company represents and warrants and such representations and
warranties shall be deemed to be continuing representations and warranties
during the entire life of this Agreement:
6.1 It is a corporation duly organized and existing in good
standing under the laws of the State of Michigan; execution, delivery and
performance of this Agreement, the Notes, and any other documents and
instruments required under this Agreement, and the issuance of the Notes by
Company are within Company's corporate powers, have been duly authorized, are
not in contravention of law or the terms of Company's Articles of
Incorporation or Bylaws, and do not require the consent or approval of any
governmental body, agency or authority; and this Agreement, the Notes, and any
other documents and instruments required under this Agreement, when issued and
delivered under this Agreement, will be valid and binding in accordance with
their terms.
6.2 The execution, delivery and performance of this Agreement,
the Notes, and any other documents and instruments required under this
Agreement, and the issuance of the Notes by Company are not in contravention
of the unwaived terms of any indenture, agreement or undertaking to which
Company is a party or by which it is bound.
6.3 No litigation or other proceeding before any court or
administrative agency is pending, or to the knowledge of the officers of
Company is threatened against Company, the outcome of which could materially
impair Company's financial condition or its ability to carry on its business,
except pending and/or threatened litigation as set forth in Schedule 6.3
attached hereto.
6.4 There are no subsidiaries of Company.
6.5 There exists no default or event of default under the
provisions of any instrument evidencing any permitted debt or any agreement
relating thereto.
6.6 Company does not maintain or contribute to any Pension
Plan subject to ERISA except those Pension Plans identified in Schedule 6.6
hereto. There are no accumulated funding deficiencies within the meaning of
ERISA, or any existing liability with respect to the Pension Plans owed to the
Pension Benefit Guaranty Corporation or any successor thereto, except as
disclosed on Schedule 6.6 hereto.
6.7 The balance sheet and operating statement of Company dated
June 30, 1995, previously furnished Bank, is complete and correct and fairly
presents the financial condition of Company and the results of its operations;
since said date there has been no material adverse change in the financial
condition of Company; to the knowledge of Company's officers, at the present
time Company has no contingent obligations (including any liability for taxes)
not disclosed by or reserved against in said balance sheet or disclosed in
Schedule 6.7 attached hereto, and at the present time there are no material
unrealized or anticipated losses from any present commitment of Company.
6.8 All tax returns and tax reports of Company required by law
to have been filed have been duly filed or extensions obtained, and all taxes,
assessments and other governmental charges or levies (other than those
presently payable without penalty and those currently being contested in good
faith for which adequate reserves have been established) upon Company (or any
of its properties) which are due and payable have been paid for which the
failure to pay would materially adversely affect its business or the value of
its property or assets. The charges, accruals and reserves on the books of
Company in respect of the Federal income tax for all periods are adequate in
the opinion of Company.
6.9 Except as disclosed in Schedule 6.9 hereto:
(a) Company, in the conduct of its business, is in
compliance in all material respects with all federal, state or local laws,
statutes, ordinances and regulations applicable to any of them, the
enforcement of which, if Company were not in compliance, would reasonably be
expected to materially adversely affect its business or the value of its
property or assets. Company has all approvals, authorizations, consents,
licenses, orders and other permits of all governmental agencies and
authorities, whether federal, state or local, required to permit the operation
of its business as presently conducted.
(b) Company is not a party to any litigation or
administrative proceeding, nor so far as is known by Company is any litigation
or administrative proceeding threatened against Company, the outcome of which
would reasonably be expected to have a material adverse effect on the Company
which in either case (i) asserts or alleges that Company violated
Environmental Laws, (ii) asserts or alleges that Company is required to clean
up, remove, or take remedial or other response action due to the disposal,
depositing, discharge, leaking or other release of any hazardous substances or
materials, (iii) asserts or alleges that Company is required to pay all or a
portion of the cost of any past, present, or future cleanup, removal or
remedial or other response action which arises out of or is related to the
disposal, depositing, discharge, leaking or other release of any hazardous
substances or materials by Company.
(c) Company is not subject to any judgment, decree,
order or citation related to or arising out of applicable Environmental Laws
which would reasonably be expected to materially adversely affect its business
or the value of its property or assets and to the best knowledge of the
Company, Company has not been named or listed as a potentially responsible
party by any governmental body or agency in a matter arising under any
applicable Environmental Laws which would reasonably be expected to materially
adversely affect its business or the value of its property or assets.
(d) To the best of Company's knowledge, Company has
all permits, licenses and approvals required under applicable Environmental
Laws, the failure of which to have would have a material adverse effect on the
operation of its business as presently conducted and as proposed to be
conducted.
7. AFFIRMATIVE COVENANTS
Company covenants and agrees that it will, so long as Bank is
committed to make any Advances or term loans under or pursuant to this
Agreement, and thereafter so long as any indebtedness remains outstanding
under this Agreement:
7.1 Furnish Bank:
(a) within ninety (90) days after and as of the end of
each of Company's fiscal years, a detailed audit report of
Company certified to by independent certified public
accountants satisfactory to Bank;
(b) within forty-five (45) days after and as of the end
of each fiscal quarter, excluding the last fiscal quarter of
each fiscal year, a balance sheet and statement of profit
and loss and surplus reconciliation of Company certified by
an authorized officer of Company;
(c) within ninety (90) days after and as of the end of
each of Company's fiscal years, a copy of Company's 10-K
report, annual report to shareholders and any and all other
SEC filings;
(d) within forty five (45) days after and as of the end
of each fiscal quarter, excluding the last fiscal quarter of
each fiscal year, a copy of Company's 10-Q report and any
and all other quarterly SEC filings;
(e) within forty five (45) days after and as of the end of
each fiscal quarter, including the last fiscal quarter
of each fiscal year, a certificate of covenant
compliance and interest rate adjustment report in form
satisfactory to Bank signed by an authorized officer
of Company detailing the computations with respect to
all financial covenants of Company set forth in
Sections 7.2, 7.3, 7.4 and 8.1 hereof (and the
resultant Applicable Margin and Applicable Fee
Percentage then in effect) and certifying that no
condition exists or event has occurred which
constitutes or, with the running of time or the giving
of notice, or both, would constitute a default under
this Agreement; and
(f) promptly, and in form to be satisfactory to Bank, such
other information as Bank may request from time to
time.
7.2 Maintain, as of the end of each fiscal quarter of
Company, a Current Ratio of not less than 1.5 to 1.0.
7.3 Maintain at all times Tangible Net Worth of not less than
the Minimum Tangible Net Worth. "Minimum Tangible Net Worth" initially shall
mean Twenty-One Million Dollars ($21,000,000). On the last day of each of
Company's fiscal years, commencing June 30, 1996, Minimum Tangible Net Worth
shall be increased on a cumulative basis by an amount equal to the sum of (A)
fifty percent (50%) of the Net Income of Company for the fiscal year then
ending, and (B) ninety percent (90%) of Company's proceeds from the issuance
and sale by the Company of additional capital stock or other equity interests
for such period. In no event shall the amount of Tangible Net Worth required
to be maintained by Company hereunder be reduced by any losses incurred by
Company during any fiscal year.
7.4 Maintain, as of the end of each fiscal quarter of Company,
a Fixed Charge Ratio of not less than 1.1 to 1.0.
7.5 Pay and discharge all taxes and other governmental charges
and all contractual obligations calling for the payment of money, before the
same shall become overdue, unless and to the extent only that such payment is
being contested in good faith.
7.6 Maintain insurance coverage on its physical assets and
against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature, and in the event
of incurrence of additional risks of any nature, increase such insurance
coverage in such manner and to such extent as prudent business judgment and
present practice would dictate.
7.7 Permit Bank, through its authorized attorneys,
accountants, and representatives, to examine Company's books, accounts,
records, ledgers and assets of every kind and description at all reasonable
times upon oral or written request of Bank.
7.8 Promptly notify Bank of any condition or event which
constitutes or with the running of time and/or the giving of notice would
constitute a default under this Agreement, and promptly inform Bank of any
material adverse change in Company's financial condition.
7.9 Maintain in good standing all licenses required by the
State of Michigan, or any agency thereof, or other governmental authority that
may be necessary or required for Company to carry on its general business
objects and purposes.
7.10 Comply in all material respects with all requirements
imposed by ERISA as presently in effect or hereafter promulgated including,
but not limited to, the minimum funding requirements of any Pension Plan.
7.11 Promptly notify Bank upon the occurrence thereof of any of
the following events, as soon as they become known by Company:
(a) the termination of any Pension Plan pursuant to
Subtitle C of Title IV of ERISA or otherwise;
(b) the appointment of a trustee by a United States
District Court to administer any Pension Plan;
(c) the commencement by the Pension Benefit Guaranty
Corporation, or any successor thereto, of any
proceeding to terminate any Pension Plan;
(d) the failure of any Pension Plan to satisfy the
minimum funding requirements for any plan year as
established in Section 412 of the Internal Revenue Code of
1954, as amended;
(e) the withdrawal of the Company from any Pension Plan; or
(f) a reportable event, within the meaning of Title IV of
ERISA.
8. NEGATIVE COVENANTS
Company covenants and agrees that so long as Bank is committed to
make any Advances or term loans under and pursuant to this Agreement and
thereafter so long as any indebtedness remains outstanding under this
Agreement, it will not, without the prior written consent of Bank:
8.1 Allow Total Liabilities to exceed One Hundred Ninety
percent (190%) of Tangible Net Worth at any time.
8.2 Make any material change in its general business
objects or purpose.
8.3 Enter into any merger or consolidation or sell, lease,
transfer, or dispose of all, substantially all, or any material part of its
assets, except:
(a) in the ordinary course of Company's business; or
(b) any merger or consolidation in which Company shall be
the surviving corporation thereof;
provided, however, no merger or consolidation or sale, lease, transfer or
disposition of assets described in clauses (a) or (b) above shall be permitted
if, immediately after the consummation of such transaction, and after giving
effect thereto, any event of default hereunder, or any condition or event
which, with the giving of notice or the running of time, or both, would
constitute an event of default hereunder, would occur or exist.
8.4 Guarantee, endorse, or otherwise become secondarily liable
for or upon the obligations of others, except by endorsement for deposit in
the ordinary course of business.
8.5 Become or remain obligated for any indebtedness for
borrowed money, or for any indebtedness incurred in connection with the
acquisition of any property, real or personal, tangible or intangible, except:
(a) indebtedness to Bank;
(b) current unsecured trade, utility or non-extraordinary
accounts payable arising in the ordinary course of
Company's business;
(c) purchase money indebtedness for the acquisition of
fixed assets (including Capitalized Leases);
(d) indebtedness described in Schedule 8.5 attached hereto;
(e) indebtedness in connection with Operating Leases; and
(f) indebtedness incurred by Company with respect to
those Industrial Development Revenue Bonds (Federal Screw
Works Project), Series B and Series C, in the aggregate
principal amount of Eight Million Dollars ($8,000,000)
issued by The City of Big Rapids, Michigan.
8.6 Affirmatively pledge or mortgage any of its assets,
whether now owned or hereafter acquired, or create, suffer or permit to exist
any lien, security interest in, or encumbrance thereon, except:
(a) to Bank;
(b) purchase money security interests in fixed assets to
secure purchase money indebtedness permitted pursuant to
Section 8.5(c) hereof, provided that such security interests
are created substantially contemporaneously with the
acquisition of such fixed assets and do not extend to any
property other than the fixed assets so financed;
(c) liens with respect to Operating Leases;
(d) existing liens, security interests or encumbrances in
or upon the property and assets of Company located in Big
Rapids, Michigan in securing the indebtedness permitted
under Section 8.5(d) hereof;
(e) rights of eminent domain or other police powers with
respect to the taking of property;
(f) the effect of any interests unknown to the Company but
in existence on the date of this Agreement, including
but not limited to, unknown encroachments, overlaps,
boundary disputes, restrictions upon the use of the
Company's premises not appearing in the chain of title
and existing water, mineral and oil exploitation
rights, easements of record upon the Company's real
estate and all other matters of record, but only to
the extent applicable to the Company and its
properties on the date of this Agreement;
(g) 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; and
(h) liens created in connection with workmen's
compensation, unemployment insurance, and social security,
or to secure the performance of bids, tenders or contracts
(other than for the repayment of borrowed money), leases,
statutory obligations, surety and appeal bonds, and other
obligations of like nature made in the ordinary course of
business.
8.7 Sell, assign, transfer or confer a security interest in
any account, contract, note, trade acceptance or other receivable, except to
Bank.
8.8 Enter into, maintain, or make contribution to, directly or
indirectly, any Pension Plan that is subject to ERISA, except any Pension Plan
heretofore described.
8.9 Purchase or otherwise acquire the assets of any business
or the capital stock or other ownership interest of any business if the
aggregate purchase price of any such assets, capital stock or other ownership
interests exceeds Two Hundred Fifty Thousand Dollars ($250,000.00) in any
single transaction or Five Hundred Thousand Dollars ($500,000.00) for all such
transactions.
8.10 Make or permit to remain outstanding loans or advances to
any persons, firms, corporations or other entities or associations in excess
of Five Hundred Thousand Dollars ($500,000.00) in aggregate principal amount
at any one time outstanding.
8.11 Enter into any agreement or covenant with any person or
party other than Bank which would prohibit the granting of any liens or
security interests by Company on any of its property or assets in favor of
Bank.
8.12 Incur or make Capital Expenditures in an aggregate amount
greater than $10,000,000 during any fiscal year, commencing with the fiscal
year ending June 30, 1996, in each case on a non-cumulative basis.
9. ENVIRONMENTAL PROVISIONS
9.1 Company shall comply with all applicable Environmental
Laws.
9.2 Company shall provide to Bank, promptly upon receipt,
copies of any correspondence, notice, pleading, citation, indictment,
complaint, order, decree, or other document from any source asserting or
alleging a circumstance or condition which requires or may require a financial
contribution by Company to a cleanup, removal, remedial action, or other
response by or on the part of Company under applicable Environmental Laws or
which seeks damages or civil, criminal or punitive penalties from Company for
an alleged violation of Environmental Laws.
9.3 Company shall promptly notify Bank in writing as soon as
Company becomes aware of the occurrence or existence of any condition or
circumstance which makes the environmental warranties contained in this
Agreement incomplete or inaccurate in any material respect as of any date.
9.4 In the event of any condition or circumstance that makes
any environmental warranty, representation and/or agreement incomplete or
inaccurate in any material respect as of any date, Company shall, at the
reasonable request of Bank, at its sole expense, retain an environmental
consultant, reasonably acceptable to Bank, to conduct a thorough and complete
investigation regarding the changed condition and/or circumstance. A copy of
the environmental consultant's report will be promptly delivered to both Bank
and Company upon completion.
9.5 At any time Company, directly or indirectly through any
environmental consultant or other representative, determines to undertake an
environmental audit, assessment or investigation relating to any fact, event
or condition which would reasonably be expected to materially adversely affect
its business or the value of its property or assets, Company shall promptly
provide Bank with written notice of the initiation of the environmental audit,
fully describing the purpose and intended scope of the environmental audit.
Upon receipt, Company will promptly provide to Bank copies of all final
findings and conclusions of any such environmental investigation.
9.6 Company hereby indemnifies, saves and holds Bank and any
of its past, present and future officers, directors, shareholders, employees,
representatives and consultants harmless from any and all loss, damages,
suits, penalties, costs, liabilities and expenses (including but not limited
to reasonable investigation, environmental audit(s), and legal expenses)
arising out of any claim, loss or damage of any property, injuries to or death
of persons, contamination of or adverse affects on the environment, or any
violation of any applicable Environmental Laws, caused by or in any way
related to any property owned or operated by Company, or due to any acts of
Company's officers, directors, shareholders, employees, consultants and/or
representatives; provided, however, that the foregoing indemnification shall
not be applicable when arising solely from events or conditions occurring
while the Bank is in sole possession (subject to the rights of any creditors
of Company) of such property. In no event shall Company be liable hereunder
for any loss, damages, suits, penalties, costs, liabilities or expenses
arising from any act of negligence or willful misconduct of Bank, or its
agents or employees.
It is expressly understood and agreed that the indemnifications
granted herein are intended to protect Bank, its past, present and future
officers, directors, shareholders, employees, consultants and representatives
from any claims that may arise by reason of the security interest, liens
and/or mortgages granted to Bank, or under any other document or agreement
given to secure repayment of any indebtedness from Company, whether or not
such claims arise before or after Bank has foreclosed upon and/or otherwise
become the owner of any such property.
It is expressly agreed and understood that the provisions hereof
shall and are intended to be continuing and shall survive the repayment of any
indebtedness from Company to Bank.
9.7 Company shall maintain all permits, licenses and
approvals required under applicable Environmental Laws.
9.8 Unless it is required to do so by law, Bank shall not
disclose to any governmental authority any environmental matters of which
Company notifies Bank under this Section 9.
10. EVENTS OF DEFAULTS
10.1 Upon non-payment of the principal or interest due under
the terms of this Agreement, or the Notes, or non-payment of any Reimbursement
Obligation when due in accordance with the terms thereof, and continuance of
such default for a period of ten (10) days, the Notes and all outstanding
Reimbursement Obligations shall automatically become immediately due and
payable, and Bank's commitment to make further Advances or term loans pursuant
to this Agreement shall automatically terminate.
10.2 Upon occurrence of any of the following events of
default:
(a) default in the observance or performance of any of
the conditions, covenants or agreements of Company set forth
in Sections 7.1, 7.2, 7.3, 7.4, 7.6, 7.7, 7.8 and 8.1
through 8.11, inclusive;
(b) default in the observance or performance of any of
the other conditions, covenants or agreements of Company
herein set forth and continuance thereof for thirty (30)
days after written notice to Company by Bank;
(c) any representation or warranty made by Company herein
or in any instrument submitted pursuant hereto proves
untrue in any material respect;
(d) default in the payment of any other obligation(s) of
Company for borrowed money in principal amounts in excess of
Five Hundred Thousand Dollars ($500,000) in the aggregate or
in the observance or performance of any covenants or
agreements given with respect thereto;
(e) judgments for the payment of money in excess of the
sum of One Hundred Thousand Dollars ($100,000) in the
aggregate shall be rendered against Company, and such
judgment(s) shall remain unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of sixty (60)
consecutive days from the date of its entry;
(f) the occurrence of any "reportable event" as defined in
ERISA, which is determined to constitute grounds for
termination by the Pension Benefit Guaranty Corporation of
any Pension Plan maintained by or on behalf of the Company
for the benefit of any of its employees or for the
appointment by the appropriate United States District Court
of a trustee to administer such Pension Plan and such
reportable event is not corrected and such determination is
not revoked within thirty (30) days after notice thereof has
been given to the plan administrator or the Company; or the
institution of proceedings by the Pension Benefit Guaranty
Corporation to terminate any such Pension Plan or to appoint
a trustee to administer such Pension Plan; or the
appointment of a trustee by the appropriate United States
District Court to administer any such Pension Plan;
(g) if there shall be a material change in ownership or
control of Company, other than an increase in the ownership
interests of those parties presently holding controlling
interests in the Company, which shall in the reasonable
judgment of Bank have a material adverse effect upon the
future prospects for the successful operation of Company;
then, or at any time thereafter, unless such default is remedied, Bank may
give written notice to Company declaring all outstanding indebtedness
hereunder to be due and payable, whereupon the Notes, all Reimbursement
Obligations, and all other indebtedness then outstanding hereunder shall
immediately become due and payable without further notice and demand, as the
case may be, and Bank's commitment to make further Advances and term loans
under this Agreement shall automatically terminate.
10.3 If a creditors' committee shall have been appointed for
the business of Company; or if Company shall have made a general assignment
for the benefit of creditors or shall have been adjudicated bankrupt, or shall
have filed a voluntary petition in bankruptcy or for reorganization or to
effect a plan or arrangement with creditors; or shall file an answer to a
creditor's petition or other petition filed against it, admitting the material
allegations thereof for an adjudication in bankruptcy or for reorganization;
or shall have applied for or permitted the appointment of a receiver or
trustee or custodian for any of its property or assets; or such receiver,
trustee or custodian shall have been appointed for any of its property or
assets (otherwise than upon application or consent of Company) and such
receiver, trustee, or custodian so appointed shall not have been discharged
within forty-five (45) days after the date of his appointment; or if an order
shall be entered and shall not be dismissed or stayed within forty-five (45)
days from its entry, approving any petition for reorganization of Company;
then the Notes, and all outstanding Reimbursement Obligations, and all other
indebtedness then outstanding hereunder shall automatically become immediately
due and payable, and Bank's commitment to make further Advances and term loans
under this Agreement shall automatically terminate.
10.4 From and after the occurrence of any event of default
under this Agreement which arises or occurs after the date of this Agreement
and which is known or reasonably should have become known to Company or any
event which automatically causes the indebtedness outstanding hereunder or
under the Notes to become immediately due and payable, said indebtedness shall
bear interest at a per annum rate equal to three percent (3%) above the
rate(s) otherwise in effect under the Notes, which interest shall be payable
on demand.
11. MISCELLANEOUS
11.1 This Agreement shall be binding upon and shall inure to
the benefit of Company and Bank and their respective successors and assigns,
except that the credit provided for under this Agreement and no part thereof
and no obligation of Bank hereunder shall be assignable or otherwise
transferable by Company.
11.2 Where the character or amount of any asset or liability or
item of income or expense is required to be determined or any consolidation or
other accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with generally accepted accounting
principles consistently applied. Notwithstanding anything to the contrary set
forth herein, however, such determinations or computations shall not reflect
any additions or subtractions or other effects resulting from the application
of Statement of Financial Accounting Standards No. 106(FAS106).
11.3 No delay or failure of Bank 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 power, right or privilege. The rights of Bank
under this Agreement are cumulative and not exclusive of any right or remedies
which Bank would otherwise have.
11.4 Company hereby expressly authorizes Bank to charge any
account(s) maintained by Company with Bank for any and all payments of
principal, interest and other indebtedness payable by Company to Bank in
accordance with the terms of this Agreement, and to the extent that sufficient
sums are not maintained in such account(s) at such time, the balance of such
payments shall be payable by Company to Bank in accordance with the terms of
this Agreement. In those instances where, as a result of any Advance hereunder
on a day when any payment is required to be made by Company to Bank hereunder,
a net reduction in the total outstanding indebtedness of Company to Bank
hereunder shall result, Bank shall be permitted to charge Company's account(s)
maintained with Bank by the amount of any such net reduction in accordance
with the foregoing.
11.5 All notices with respect to this Agreement shall be deemed
to be completed upon mailing by certified mail to the following:
To Company:
2400 Buhl Building
Detroit, Michigan 48226
Attention: Chief Financial Officer
To Bank:
500 Woodward Avenue
Detroit, Michigan 48226
Attention: U.S. Banking - Automotive Group
11.6 This Agreement and the Notes have been delivered at
Detroit, Michigan, and shall be governed by and construed and enforced in
accordance with the laws of the State of Michigan. Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11.7 No amendments of this Agreement shall be effective unless
the same shall be in writing and signed by Company and the Bank, and no waiver
of any provisions of this Agreement nor consent to any departure by Company
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Bank, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No amendment, waiver or consent with respect to any provision of this
Agreement shall affect any other provision of this Agreement.
11.8 This Agreement shall become effective upon the
execution hereof by Bank and Company.
11.9 COMPANY AND BANK HEREBY IRREVOCABLY WAIVE THE RIGHT TO
TRIAL BY JURY WITH RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS AT ANY TIME
IN WHICH COMPANY AND BANK ARE PARTIES ARISING OUT OF THIS AGREEMENT OR THE
OTHER DOCUMENTS CONTEMPLATED HEREBY.
11.10 This Agreement shall be deemed to amend and restate in it
entirety that certain Revolving Credit and Term Loan Agreement dated September
21, 1989, as amended.
WITNESS the due execution hereof on the day and year first above
written.
COMERICA BANK FEDERAL SCREW WORKS
By:________________________________ By:___________________________________
Its:_______________________________ Its:__________________________________
<PAGE>
EXHIBIT "A"
REQUEST FOR ADVANCE
Pursuant to the terms of the Amended and Restated Revolving Credit
and Term Loan Agreement dated October 24, 1995, (herein called "Agreement"),
by and between the undersigned and Comerica Bank, successor by merger to
Manufacturers Bank, N.A., formerly known as Manufacturers National Bank of
Detroit (herein called "Bank"), the undersigned hereby requests Bank to make
an Advance to the undersigned under the TWENTY-FIVE MILLION DOLLAR
($25,000,000) Revolving Credit Note dated October 24, 1995, issued by the
undersigned to Bank (herein called "Revolving Credit Note"), as follows:
Requested Amount of Advance: $_______________________________
Type of Advance: ____________________________________________ _1_/<F1>
Effective Date of Advance: __________________________________
Interest Period (if applicable): ____________________________ _2_/<F2>
Interest Rate: ___________%.
The last day of the Interest Period of the Advance for the
$_______________ being converted or refunded hereunder, if applicable,
is ____________________, 19___.
The undersigned certifies that no event has occurred or condition
exists which constitutes, or with the passage of time and/or giving of notice
would constitute, a default or event of default under the Agreement and none
will exist upon the making of the Advance requested hereunder. The undersigned
further certifies that upon advancing the sum requested hereunder, the
aggregate principal amount outstanding under the Revolving Credit Note and any
Term Notes issued by the undersigned to Bank pursuant to the Agreement plus
the aggregate amount of outstanding Letters of Credit and Reimbursement
Obligations will not exceed the Commitment Amount. If the amount advanced to
the undersigned under the Revolving Credit Note shall at any time exceed the
face amount thereof, the undersigned will pay such excess amount to Bank on
demand.
- --------
<F1> 1 Insert, as applicable, "Eurodollar-based", "Prime-based", or "Negotiated
Rate".
<F2> 2 For a Eurodollar-based Advance insert, as applicable, "one week", "one
month", "two months", "three months", or "six months"; for a Negotiated Rate
Advance insert number of days not greater than thirty (30) days.
<PAGE>
The undersigned hereby authorizes Bank to disburse the proceeds of
this Request for Advance by crediting the account of the undersigned with Bank
separately designated by the undersigned or as the undersigned may otherwise
direct, unless this Request for Advance is being submitted for a conversion or
refunding, in which case, it shall refund or convert that portion stated above
of the existing outstanding indebtedness under the respective Note(s). In
those instances where, subsequent to the Advance requested hereunder, a net
reduction in the total outstanding indebtedness of the undersigned under the
Agreement and Notes occurs, the Bank is hereby authorized to charge and
withdraw from the undersigned's general account maintained with Bank the
amount of such net reduction, and to the extent that sufficient funds are not
maintained in said general account to fully pay any such net reduction, the
balance thereof shall be payable by the undersigned to Bank in accordance with
the terms of the Agreement.
All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
Dated this ____ day of ______________________, 19___.
FEDERAL SCREW WORKS
By:__________________________________
Its:_________________________________
<PAGE>
EXHIBIT "B"
REVOLVING CREDIT NOTE
Detroit, Michigan
$25,000,000 October 24, 1995
On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED,
FEDERAL SCREW WORKS, a Michigan corporation, (herein called "Company")
promises to pay to the order of COMERICA BANK, a Michigan banking corporation
(herein called "Bank") at its main office at 500 Woodward Avenue, Detroit,
Michigan, in lawful money of the United States of America the indebtedness or
so much of the sum of Twenty-Five Million Dollars ($25,000,000) as may from
time to time have been advanced and then be outstanding hereunder pursuant to
the Amended and Restated Revolving Credit and Term Loan Agreement dated as of
October 24, 1995, by and between Company and Bank (as amended from time to
time, herein called "Agreement"), together with interest thereon as
hereinafter set forth.
Each of the Advances hereunder shall bear interest at the Applicable
Interest Rate from time to time applicable thereto under the Agreement or as
otherwise determined thereunder, and interest shall be computed, assessed and
payable as set forth in the Agreement.
This Note is a note under which advances, repayments and readvances
may be made from time to time, subject to the terms and conditions of the
Agreement. This Note evidences borrowing under, is subject to, is secured in
accordance with, and may be matured under, the terms of the Agreement, to
which reference is hereby made. As additional security for this Note, Company
grants Bank a lien on all property and assets including deposits and other
credits of the Company, at any time in possession or control of or owing by
Bank for any purpose.
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon. Any transferees of, or endorser, guarantor or surety paying
this Note in full shall succeed to all rights of Bank, and Bank shall be under
no further responsibility for the exercise thereof or the loan evidenced
hereby. Nothing herein shall limit any right granted Bank by other instrument
or by law.
All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
This Note replaces (by renewal) indebtedness outstanding under that
certain Revolving Credit Note dated January 24, 1990 made in the principal
amount of $16,000,000 by Company payable to Bank, as amended.
FEDERAL SCREW WORKS, a
Michigan corporation
By:__________________________________
Its:_________________________________
<PAGE>
EXHIBIT "C"
TERM NOTE
Detroit, Michigan
$____________ ___________, 199__
FOR VALUE RECEIVED, FEDERAL SCREW WORKS, a Michigan corporation
(herein called "Company") promises to pay to the order of COMERICA BANK, a
Michigan banking corporation (herein called "Bank"), at its main office at 500
Woodward Avenue, Detroit, Michigan, the principal sum of ____________________
_____________________________________________ Dollars ($_____________) in
lawful money of the United States of America payable in quarterly principal
installments of_______________________________________________________ Dollars
($___________) each, commencing on ___________, 199__, and on a like day of
each quarter thereafter until ____________________________________, when the
entire unpaid balance of principal and interest thereon shall be due and
payable, together with interest thereon as hereinafter set forth.
The principal balance from time to time outstanding hereunder shall
bear interest at the Applicable Interest Rate from time to time applicable
thereto under the Agreement (as defined below) or as otherwise determined
thereunder, and interest shall be computed, assessed and payable as set forth
in the Agreement.
This Note evidences borrowing under, is subject to, is secured in
accordance with, may be prepaid in accordance with, and may be matured under
the terms of the Amended and Restated Revolving Credit and Term Loan Agreement
dated as of October 24, 1995 by and between Company and Bank (as amended from
time to time, the "Agreement") to which reference is hereby made. As
additional security for this Note, Company grants Bank a lien on all property
and assets, including deposits and other credits, of the Company, at any time
in possession or control of or owing by Bank for any purpose.
Company hereby waives presentment for payment, demand, protest and
notice of protest and notice of dishonor and nonpayment of this Note and
agrees that no obligation hereunder shall be discharged by reason of any
extension, indulgence, or forbearance granted by any holder of this Note to
any party now or hereafter liable hereon. Any transferees of, or endorser,
guarantor or surety paying this Note in full shall succeed to all rights of
Bank, and Bank shall be under no further responsibility for the exercise
thereof or the loan evidenced hereby. Nothing herein shall limit any right
granted by other instrument or by law.
All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
FEDERAL SCREW WORKS, a
Michigan corporation
By:__________________________________
Its:_________________________________
<PAGE>
EXHIBIT "D"
NOTICE OF TERM RATE
With reference to the Term Note dated ________________ , in the
original principal amount of $ _____________ delivered by the Company to the
Bank under the Amended and Restated Revolving Credit and Term Loan Agreement
dated as of October 24, 1995 by and between the undersigned and Comerica Bank
("Agreement") and pursuant to the Agreement, the Company hereby elects as the
Applicable Interest Rate for the sum of _____________________________________
Dollars ($____________) under such Term Note the ____________________ _1_/<F3>
Rate. Such Applicable Interest Rate shall be effected on _______________,
199__, and the Interest Period applicable thereto, if any, shall be
_________________. _2_/<F4>
All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreement.
Dated this ___ day of _______________, 19___.
FEDERAL SCREW WORKS, a
Michigan corporation
By:__________________________________
Its:_________________________________
- --------
<F3> 1 Insert, as applicable, "Eurodollar-based", "Prime-based or
Fixed".
<F4> 2 Insert, as applicable, "one week", "one month", "two months",
"three months" or "six months".
<PAGE>
SCHEDULE 1
Pricing Matrix (Determination of Pricing Levels)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Applicable Margin
for Advances Applicable Margin for Applicable Fee
of Revolving Credit Advances of Term Loans Percentage For
------------------------ ------------------------------- -------------------------
Revolving
Prime- Credit Letter of
Prime-based Eurodollar- based Eurodollar- Commitment Credit
Rate based Rate Rate based Rate Fixed Rate Fee Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
If the ratio of Total Liabilities to Tangible .00% .875% .25% 1.125% 1.75% .375% To be
Net Worth is less than or equal to 1.5 to 1.0 negotiated
when Letter
of Credit is
requested (1)
If the ratio of Total Liabilities to Tangible .00% 1.00% .25% 1.250% 1.875% .40% 1.00%
Net Worth is greater than 1.5 to 1.0 and
less than or equal to 1.65 to 1.0
If the ratio of Total Liabilities to Tangible .00% 1.25% .25% 1.50% 2.125% .45% 1.25%
Net Worth is greater than 1.65 to 1.0
<FN>
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Not to exceed 1.00%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> $ 72
<SECURITIES> 0
<RECEIVABLES> 10,851
<ALLOWANCES> 0
<INVENTORY> 14,098
<CURRENT-ASSETS> 25,790
<PP&E> 69,835
<DEPRECIATION> 40,555
<TOTAL-ASSETS> 63,533
<CURRENT-LIABILITIES> 11,566
<BONDS> 1,200
<COMMON> 1,087
0
0
<OTHER-SE> 29,528
<TOTAL-LIABILITY-AND-EQUITY> 63,533
<SALES> 20,904
<TOTAL-REVENUES> 20,904
<CGS> 18,845
<TOTAL-COSTS> 19,947
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 198
<INCOME-PRETAX> 759
<INCOME-TAX> 257
<INCOME-CONTINUING> 502
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 502
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
