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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 14, 1995
RAVENS METAL PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-1709 55-0398374
(State or other jurisdiction of (Commission (IRS employer identification
incorporation or organization) file number) number)
P.O. BOX 10002, 861 EAST TALLMADGE AVENUE, AKRON, OHIO 44310
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (216) 630-4528
Former name or former address, if changed since last report: NOT APPLICABLE
The total number of pages in this report is 29.
Page 1 of 29
EXHIBIT INDEX APPEARS ON PAGE 3
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ITEM 5. OTHER EVENTS. On August 14, 1995, the Company entered into a Supply
Agreement with Wirt Metal Products, Inc. ("Wirt"), pursuant to which the
Company will have the right to purchase from Wirt, at competitive prices, up to
60% of the Company's requirements for aluminum extrusions manufactured to the
Company's specifications and used by the Company in the manufacture of its
aluminum truck and utility trailers. The term of the Supply Agreement is seven
years. Jacob Pollock, the Chairman and Chief Executive Officer of the Company
owns 50% of the capital stock of Wirt and certain members of his family own the
remaining 50% of such capital stock.
The State of Ohio will issue its State Economic Development Revenue Bonds (Ohio
Enterprise Bond Fund) Series 1995-2 (Wirt Metal Products, Inc. Project) in the
aggregate principal amount of $2,115,000 (the "Bonds") pursuant to a Trust
Agreement dated as of April 1, 1988, as supplemented by a Fiftieth Supplemental
Trust Agreement dated as of July 1, 1995, between the Treasurer of the State of
Ohio and The Provident Bank, as trustee ("Trustee"), and will provide Wirt with
$2,500,000 in project funds under Section 166.01(B) of the Ohio Revised Code,
for the purpose of leasing certain machinery and equipment pursuant to a lease
dated July 1, 1995 (the "Lease") between Wirt and the Director of Development
of the State of Ohio (the "Section 166 Project Funds"). As a condition to
providing the Bonds and the Section 166 Project Funds, the Director of
Development of the State of Ohio (the "Director") requires the Company and
certain other persons and business entities affiliated with Wirt to enter into
a Guaranty Agreement, pursuant to which the Company and other affiliates of
Wirt ("Guarantors"), jointly and severally, will guarantee to the Trustee full
and prompt payment of amounts due from time to time with respect to the Bonds
and the Section 166 Project Funds, including expenses and charges, court costs
and reasonable attorneys' fees. In addition, Guarantors will guarantee
prompt performance of the covenants of Wirt contained in the Lease. The
Guaranty Agreement, dated as of July 1, 1995, was executed by the Company on
August 14, 1995.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(C) EXHIBITS.
(99)(a) Supply Agreement dated as of August 14, 1995 between Wirt
Metal Products, Inc. and Ravens Metal Products, Inc.
(99)(b) Guaranty Agreement dated as of July 1, 1995 and executed
by the Company on August 14, 1995 among Wirt Metal
Products, Inc., J. Pollock & Co., Ravens Metal Products,
Inc., Signs and Blanks, Inc., Jacob Pollock, Gertrude
Pollock, Richard D. Pollock, The Provident Bank, as
trustee, and The Director of Development of the State of
Ohio
SIGNATURE
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 hereunto duly authorized.
RAVENS METAL PRODUCTS, INC.
By: /s/ John J. Stitz
----------------------------------
John J. Stitz
Chief Financial Officer
Dated: August 21, 1995
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RAVENS METAL PRODUCTS, INC.
FORM 8-K CURRENT REPORT
INDEX OF EXHIBITS
EXHIBIT
(99)(a) Supply Agreement dated as of August 14, 1995 between Wirt
Metal Products, Inc. and Ravens Metal Products, Inc.
(99)(b) Guaranty Agreement dated as of July 1, 1995 and executed
by the Company on August 14, 1995 among Wirt Metal
Products, Inc., J. Pollock & Co., Ravens Metal Products,
Inc., Signs and Blanks, Inc., Jacob Pollock, Gertrude
Pollock, Richard D. Pollock, The Provident Bank, as
trustee, and The Director of Development of the State of
Ohio
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RAVENS METAL PRODUCTS, INC.
FORM 8-K CURRENT REPORT
AUGUST 21, 1995
EXHIBIT (99)(A)
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SUPPLY AGREEMENT
----------------
THIS SUPPLY AGREEMENT is entered into effective the ______ day of
_________________, 1995, between WIRT METAL PRODUCTS, INC., an Ohio corporation
of 861 East Tallmadge Avenue, Akron, Ohio 44310 (Wirt) and RAVENS METAL
PRODUCTS, INC., a Delaware corporation duly licensed to do business in Ohio,
with offices at 861 East Tallmadge Avenue, Akron, Ohio 44310 (Ravens).
R E C I T A L S
---------------
A. Wirt is in the business of producing and selling aluminum
extrusions.
B. Ravens is in the business of designing and manufacturing aluminum
truck and utility trailers (Trailers) and uses aluminum extrusions in the
manufacture of its Trailers.
C. Wirt desires Ravens to sign a guaranty of certain financing from
the State of Ohio (Guaranty) to facilitate the relocation of Wirt's
manufacturing facility to Stark County, Ohio and to produce and supply aluminum
extrusions to Ravens to Ravens' specifications and Ravens desires to sign such
Guaranty to facilitate such financing and to have Wirt supply up to 60% of
Ravens' requirements for aluminum extrusions to manufacture its Trailers all in
accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual promises,
agreements, and covenants set forth below, the parties agree as follows:
1.0 INCORPORATION OF RECITALS. The recitals contained above are
incorporated herein by this reference.
2.0 PRODUCTS TO BE PURCHASED AND SOLD. The products to be purchased
and sold pursuant to this Agreement shall be aluminum extrusions manufactured
to Ravens' specifications (Product). Ravens' specifications are set forth in
EXHIBIT A, attached hereto and incorporated herein by this reference
(Specifications).
3.0 QUANTITY.
A. TOTAL VOLUME. Ravens shall have the right to purchase from Wirt
up to 60% of Ravens' requirements of Product to manufacture its
Trailers. Ravens shall endeavor to distribute its Product
purchases equally throughout a 12 month period. In no event,
shall Wirt be required to produce in excess of 1,500,000 pounds
per month for Ravens.
B. MINIMUM ORDER QUANTITIES. All orders for Product shall be in the
following minimum quantities and as illustrated in Figure 1-1.
The Product is manufactured from one of three press sizes. The
sizes are referred to as the (i) 3000 ton press, (ii) 2200 ton
press, and (iii) 1400 ton press. All orders from the 3000 ton
press shall have a minimum of 2000 lbs. per line item. All orders
from the 2200 ton press shall have a minimum of 1500 lbs. per line
item. All orders from the 1400 ton press shall have a minimum of
1000 lbs. per line item. Wirt shall advise Ravens of what press
produces each shape.
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FIGURE 1-1: MINIMUM ORDER QUANTITIES
PRESS (TONS) POUNDS PER LINE ITEM
3000 2000
2200 1500
1400 1000
4.0 PRICE. The purchase price (Purchase Price) for Product shall be
determined by either a formula price or a guaranteed price. Under either
pricing method, Wirt will be competitive with other qualified producers of
extrusions of like type and quality and Wirt will match such other qualified
producers' bona fide offers as to price.
A. FORMULA PRICE. Formula pricing shall be the sum of (i) the prior
month's Midwest transaction price for P-1020 primary aluminum as
published in METALS WEEK for the month prior to any order, (ii) a
$.10 per pound billet upcharge, until such time as Wirt's new cast
house is built and then at such lower per pound billet upcharge as
agreed upon by the parties, (iii) a $.335 per pound extrusion
upcharge (subject to SECTION 4.0(C)), (iv) if decking is involved,
a $.10 per pound charge, and (v) any additional charges incurred
by Wirt as a result of specifications and changes not reflected in
this Agreement (Formula Price).
B. GUARANTEED PRICE. In order for Ravens to have the opportunity to
sell Trailers forward into the future at fixed prices so as not to
be subject to the volatility of the aluminum market, Ravens shall
have the option to lock in a Purchase Price for a given tonnage
for a given period of time. Upon Ravens' written request, Wirt
shall provide Ravens a guaranteed price for billet with the
applicable upcharges as set forth in SECTION 4(A) (Guaranteed
Price). Ravens warrants and agrees that Guaranteed Price orders
are not cancelable, their scheduled months of delivery cannot be
changed, and their quantity is not subject to increase or
reduction.
C. ESCALATION OF EXTRUSION UPCHARGE. SECTION 4.0(A)(III) above shall
be subject to price increases on Wirt's demonstration to Ravens
increased costs to Wirt due to extraordinary causes other than as
set forth SECTION 17.0.
In either pricing scenario in subsections 4.0(A) or 4.0(B), and other
than the decking, all of Ravens' pricing is the same whether the shape is solid
or hollow. Additionally, the pricing is the same for large order quantity and
small order quantity items. Any taxes that may be imposed upon the sale of
Product, whether Federal, state, or local government, shall be paid by Ravens
in addition to the Purchase Price.
5.0 TERM. This Agreement shall have a term of seven years from the
date hereof.
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6.0 FORECASTING ORDERS. Ravens shall provide Wirt a three month
rolling forecast of estimated Product requirements from Wirt (Forecast). The
Forecast shall be in gross pounds. By the end of the first week of the month
prior to the month of shipment, Ravens shall submit written purchase orders to
Wirt for the month of shipment (Purchase Orders). At the same time, Ravens
shall revise the Forecast, with the month of shipment removed, the next
calendar month added to the Forecast and the other months revised as needed.
Wirt agrees to block out production time for Ravens requirements hereunder.
7.0 ORDER PROCESS. Ravens shall submit to Wirt, written Purchase
Orders for Ravens' Product requirements (Firm Order) as set forth in SECTION
6.0 above. Wirt shall issue Firm Order acknowledgements acknowledging the Firm
Order. Ravens shall use its best efforts to provide Wirt as much lead time as
possible between the Purchase Order date and the delivery date, provided that,
Wirt shall be entitled to a minimum of three to four weeks between the Purchase
Order date and the requested delivery date.
8.0 UNSCHEDULED ORDERS. Orders that are non-scheduled and require
Wirt to work overtime to insure the Product will be delivered to Ravens'
location when needed, may be subject to an upcharge to be negotiated on a
case-by-case basis. Wirt shall use its best efforts to satisfy non-scheduled
orders, but in no event shall Wirt be in default if it is unable to satisfy
Ravens time requirements.
9.0 PAYMENT AND DELIVERY TERMS.
A. PAYMENT. The Purchase Price for Product shall be paid within 45
days of shipment of such Product to Ravens.
B. DELIVERY. Delivery of Product shall be F.O.B. at Wirt's
manufacturing facility and delivery shall be deemed complete when
such Product is so delivered.
C. SHIPPING TOLERANCES. All orders shall be deemed completed
provided they fall within the following shipping tolerances per
line item:
LINE ITEM # TOLERANCE
0 - 1000 -20%/+20%
1001 - 4999 -15%/+15%
5000 and over -10%/10%
D. PACKING REQUIREMENTS. Product will be packed in bare bundles for
all shipments. Requests for special packing requirements may be
subject to additional charges as determined by Wirt.
E. ACCEPTANCE/REJECTION OF PRODUCT. Ravens shall have ten working
days to inspect and/or reject Product for visible defects or
damage. On rejection, Wirt shall replace said Product at its sole
cost and expense including freight costs.
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10.0 EXTRUSION DIES. Wirt shall be responsible at its sole cost and
expense for maintaining and, if necessary, replacing Ravens' extrusion dies
which are in Wirt's possession or come into Wirt's possession in a method that
is customary and standard with the industry including such dies, if any, which
are damaged or worn out in Wirt's manufacturing process. The expense and cost
of any initial order for any new extrusion dies required by Ravens, will be
Ravens'. In the event Ravens does not purchase a particular Product requiring
a particular extrusion for 24 consecutive months, Wirt shall have the right to
dispose of the die for such Product upon prior notice to Ravens. Ravens has
the right to request within ten days of Wirt advising Ravens of its intention
to dispose of a die, that the die be retained. In such event, Wirt shall
retain the die.
11.0 FABRICATION. From time to time, Ravens may require fabrication
services for its products. Ravens shall give Wirt the opportunity to bid on
any and all fabrication services which it requires and which are within Wirt's
capabilities. Ravens shall have no obligation to purchase fabrication services
from Wirt. Price and delivery terms for any such fabrication services shall be
consistent with usual and customary industry practices.
12.0 TOLLING. The parties anticipate that in the future Wirt will
have the capacity to accept Ravens' scrap from aluminum extrusions Ravens uses
in producing its Trailers and to rework the same for producing new extrusions
(Tolling). The parties agree that Wirt will do such Tolling for Ravens at such
price as the parties shall agree.
13.0 ASSIGNMENT AND BENEFIT. Neither party to this Agreement may
assign its rights under this Agreement without the prior written consent of the
other party. Subject to the foregoing, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, their successors and
assigns.
14.0 LIMITATION OF LIABILITY.
A. WARRANTY. Wirt hereby warrants to Ravens that all Product
furnished hereunder shall conform to the physical properties set
forth in the Mechanical Property Limits Tables as set forth in the
Aluminum Association publication entitled ALUMINUM STANDARDS AND
DATA TENTH EDITION 1990. Further Wirt warrants the Product shall
be free of defects in material and/or workmanship for a period of
four years from the date of receipt of said Product. Defective
product in amounts of less than 500 lbs. can be aggregated and
returned to Wirt on skids and Wirt shall either, at Ravens'
option, issue a credit to Ravens for such returned product or
shall replace the same.
IN CONSIDERATION OF THE EXPRESS WARRANTY SET FORTH ABOVE, RAVENS
UNDERSTANDS AND AGREES THAT ALL OTHER WARRANTIES EXPRESS OR IMPLIED ARISING
UNDER LAW, EQUITY OR CUSTOM OF TRADE INCLUDING, WITHOUT LIMITATION, THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR PURPOSE ARE EXCLUDED FROM ALL
FIRM ORDERS PROCESSED HEREUNDER.
B. LIMITATION OF LIABILITY. Except for liability to third parties,
if any, under the provisions of SECTION 16.0, Wirt's sole
liability to Ravens and Ravens' sole and exclusive remedy for
Wirt's breach of the express warranty set forth above shall be the
replacement at Wirt's expense of such Product. In no event shall
Wirt be liable to Ravens, whether arising under contract, breach
of warranty, tort (including negligence), for any special,
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incidental or consequential loss or damage of any nature arising from
or related to Wirt's performance, non-performance or mal-performance
hereunder.
15.0 DEFAULT.
A. It shall be a default hereunder if Wirt shall:
1. materially breach any of its obligations under this Agreement,
which material breach is not cured within 30 days after
written notice thereof is sent by Ravens to Wirt, provided,
however, that if Wirt shall initiate a good faith diligent
effort within such 30 day period to cure the material breach
specified in the notice, but shall not be able to do so
because of a cause or causes beyond the control of Wirt, then
any such failure shall not be considered a default of this
Agreement by Wirt so long as Wirt shall continue in good faith
such diligent efforts to cure such default, and shall do so
within a reasonable period of time; provided, however, that
the parties understand that delays in delivery or
non-compliance with Specifications will be detrimental to
Ravens' business and accordingly recognize that any pattern or
practice of delivery delays and/or specification
non-compliance by Wirt will constitute a pattern or practice
of material breaches by Wirt of its obligations under this
Agreement; or
2. materially breach any of its obligations under this Agreement,
and such material breach is the second material breach within
any six month period.
Upon any default by Wirt, Ravens shall be entitled to remedies at law
or in equity, except as limited in this Agreement, including, but not limited
to, the right to terminate this Agreement upon ten days prior written notice to
Wirt. Upon such termination, all obligations under this Agreement, excluding
Wirt's obligations to deliver Product theretofore ordered by Ravens and Wirt's
obligations relating to Product theretofore sold by Wirt to Ravens, and Ravens
payment obligations for Product delivered or to be delivered under the Orders,
shall terminate, and Ravens shall be entitled to remedies at law or in equity,
except as limited in this Agreement.
B. It shall be a default hereunder if Ravens shall:
1. materially breach any of its obligations under this Agreement,
which material breach is not remedied within 30 days after
written notice thereof is sent by Wirt to Ravens provided,
however, that if Ravens shall initiate a good faith diligent
effort within such 30 day period to cure the material breach
specified in the notice, but shall not be able to do so
because of a cause or causes beyond the control of Ravens,
then any such failure shall not be considered a default of
this Agreement by Ravens so long as Ravens shall continue in
good faith such diligent efforts to cure such default, and
shall do so within a reasonable period of time; or
2. materially breach any of its obligations under this Agreement,
and such material breach is the second material breach within
any six-month period.
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Upon any default by Ravens, Wirt shall be entitled to any remedies
available in equity or at law, except as limited in this Agreement, including,
but not limited to the right to terminate this Agreement upon ten days prior
written notice to Ravens. Upon such termination, all obligations under this
Agreement, excluding Wirt's obligations to deliver Product theretofore ordered
by Ravens and Wirt's obligations relating to Product theretofore sold by Wirt
to Ravens, and Ravens' payment obligations for Product delivered or to be
delivered under the Orders, shall terminate, and Wirt shall be entitled to
remedies at law or in equity, except as limited in this Agreement.
16.0 INSURANCE. Wirt will provide at its sole cost and expense,
general and products liability insurance. Such insurance will include the
following terms and conditions: (a) Ravens as additional insured, (b)
contractual liability coverage, (c) 30 day notice of cancellation or material
change, and (d) limits of $3 million per occurrence.
Any deductible applicable to claims is the sole expense of Wirt. Wirt
will not make any modifications to the provisions set forth in (a) through (d)
above without the written consent of Ravens, which consent shall not be
unreasonably withheld.
17.0 FORCE MAJEURE. Wirt shall not be responsible or liable to Ravens
for delay or damages associated therewith for delay arising from or directly
related to strike, fire, floods, other acts of God, reasonable inability to
obtain labor or materials, war or civil insurrection or any other similar act
or occurrence whether related or unrelated and beyond the reasonable control of
Wirt. In the event of any such delay, Wirt shall promptly notify Ravens of the
event and as soon as practicable, the resultant delay resulting therefrom.
In the event Wirt incurs cost increases due to the occurrence of any
such event, Wirt shall be entitled to recover the direct cost increases from
Ravens in the pricing of Product to be delivered hereunder.
18.0 NOTICES. Any notice or other communications required under this
Agreement shall be in writing (including telecopy communications), and shall be
sent by mail, telecopier or courier as follows:
(a) if to Wirt Metal Products, Inc., addressed to:
Wirt Metal Products, Inc.
861 East Tallmadge Avenue
Akron, Ohio 44310
Attention: Richard D. Pollock, President
Telephone: (216) 630-4545
Telecopier: (216) 630-4540
(b) if to Ravens Metal Products, Inc. addressed to:
Ravens Metal Products, Inc.
861 East Tallmadge Avenue
Akron, Ohio 44310
Attention: Lowell Morgan, President
Telephone: (216) 630-4528
Telecopier: (216) 630-4535
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Any party hereto shall be entitled to specify a different address by
giving written notice as aforesaid to the other party. All notices shall be
deemed to have been duly given or made when delivered by courier or three days
after being deposited in the mail, postage prepaid, or when telecopied, receipt
acknowledged.
19.0 MISCELLANEOUS. This Agreement supersedes all prior agreements
between the parties with respect to the subject matter hereof. Headings are
for convenience only and are not a part of this Agreement. Any failure by any
of the parties to comply with any of the obligations, agreements, or conditions
set forth in this Agreement may be waived by the other party, but any such
waiver shall not be deemed a waiver of any other obligations or conditions
contained in this Agreement. A corporate officer signing this document on
behalf of a corporate party warrants that he or she has full authority to sign
this document. This Agreement shall be construed and governed under the laws
and jurisdiction of Ohio. If a lawsuit is filed with respect to this
Agreement, the prevailing party shall be entitled to collect all reasonable
attorney's fees and costs. This Agreement may not be altered, amended, or
modified except by written instrument signed by all parties.
IN WITNESS WHEREOF, the parties have executed this agreement effective
the day and year first above-written.
WIRT METAL PRODUCTS, INC.
BY________________________________________
_________________ ITS ____________________
RAVENS METAL PRODUCTS, INC.
BY________________________________________
_________________ ITS ____________________
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[RAVENS LOGO]
EXHIBIT A RAVENS SPECIFICATIONS
Aluminum Extrusions supplied to Ravens will meet Mechanical Property Limits and
Chemical Composition Limits set forth in published "Aluminum Association
Standards and Data" for the specified alloy and temper.
Critical dimensional tolerances, including length of extrusions will be within
limits specified by Ravens for individual part numbers. Part numbers for which
dimensional tolerances are not specified by Ravens will be supplied within
Aluminum Association Standard Extrusion Tolerances.
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RAVENS METAL PRODUCTS, INC.
FORM 8-K CURRENT REPORT
AUGUST 21, 1995
EXHIBIT (99)(B)
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GUARANTY AGREEMENT
among
WIRT METAL PRODUCTS, INC.
(an Ohio corporation)
and
J. POLLOCK & CO.
(an Ohio corporation)
and
RAVENS METAL PRODUCTS, INC.
(a Delaware corporation)
and
SIGNS AND BLANKS, INC.
(an Ohio corporation)
and
JACOB POLLOCK
(an individual)
and
GERTRUDE POLLOCK
(an individual)
and
RICHARD D. POLLOCK
(an individual)
and
THE PROVIDENT BANK
(as Trustee)
and
THE DIRECTOR OF DEVELOPMENT
OF THE STATE OF OHIO
Dated as of
July 1, 1995
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GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty Agreement") is made and entered
into as of the 1st day of July, 1995, by and among WIRT METAL PRODUCTS, INC.,
an Ohio corporation (the "Company"), J. POLLOCK & CO., an Ohio corporation
("JPC"), RAVENS METAL PRODUCTS, INC., a Delaware corporation ("RMP"), SIGNS AND
BLANKS, INC., an Ohio corporation ("S&B"), JACOB POLLOCK, an individual,
GERTRUDE POLLOCK, an individual, RICHARD D. POLLOCK, an individual, THE
PROVIDENT BANK, a bank organized and existing under and by virtue of the laws
of the State of Ohio (the "Trustee"), with its principal place of business
located in Cincinnati, Ohio, and the DIRECTOR OF DEVELOPMENT OF THE STATE OF
OHIO (the "Director"). The Company, JPC, RMP and S&B are hereinafter referred to
individually as a "Corporate Guarantor" and collectively as the "Corporate
Guarantors." Jacob Pollock, Gertrude Pollock and Richard D. Pollock are
hereinafter referred to individually as an "Individual Guarantor" and
collectively as the "Individual Guarantors." The Corporate Guarantors and the
Individual Guarantors sometimes collectively referred to herein as the
"Guarantors." Any capitalized terms used but not defined herein are used as
defined in the Financing Agreement, defined herein.
WITNESSETH:
WHEREAS, the State of Ohio (the "Issuer") intends to issue its State
Economic Development Revenue Bonds (Ohio Enterprise Bond Fund) Series 1995-2
(Wirt Metal Products, Inc. Project) (the "Bonds"), in the aggregate principal
amount of Two Million One Hundred Fifteen Thousand Dollars ($2,115,000) under
and pursuant to a Trust Agreement dated as of April 1, 1988, as supplemented by
a Fiftieth Supplemental Trust Agreement dated as of July 1, 1995 (collectively,
the "Indenture"), by and between the Treasurer of Ohio and the Trustee; and
WHEREAS, the Director intends to provide the Company with $2,500,000
in financial assistance under the Act (the "166 Assistance") on the terms and
conditions provided in a Lease dated as of July 1, 1995 (the "Financing
Agreement") between the Director and the Company; and
WHEREAS, the proceeds derived from the issuance of the Bonds and the
166 Assistance are moneys for the acquisition and installation of an eligible
project, as defined in Section 166.01(B) of the Ohio Revised Code, consisting
of certain machinery and equipment as described in the Financing Agreement,
which machinery and equipment (collectively, the "Project") are to be leased to
the Company pursuant to the Financing Agreement; and
WHEREAS, the JPC, RMP and S&B are affiliated with the Company, and the
Individual Guarantors are the principal shareholder of the Company, his spouse
and son; and
WHEREAS, the Guarantors desire that the Issuer issue the Bonds and
apply the proceeds thereof as outlined above, and that the Director provide the
166 Assistance, and are willing to execute this Guaranty Agreement in order to
induce the Issuer to issue the Bonds and effect such application of Bond
proceeds and to induce the Director to provide the 166 Assistance;
<PAGE> 4
NOW, THEREFORE, the Guarantors do hereby covenant and agree with the
Trustee and the Director, for the benefit of all who at any time become holders
or owners of the Bonds and the Director. as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF GUARANTORS
Section 1.1. Each Corporate Guarantor does hereby represent and
warrant that it is a corporation duly organized and validly existing under the
laws of the State except for RMP, which is a corporation duly organized and
validly existing under the laws of the State of Delaware and is qualified to do
business in the State, and is not in violation of any provisions of its
articles of incorporation, code of regulations or other governing instruments.
Each Corporate Guarantor represents and warrants that it has the power to enter
into this Guaranty Agreement, that it has duly authorized the execution and
delivery of this Guaranty Agreement by proper action and that neither this
Guaranty Agreement nor the agreements herein contained contravene or constitute
a default under any law or agreement, instrument or indenture to which such
Corporate Guarantor is a party or by which such Corporate Guarantor's property
is bound.
Section 1.2. Each of the Individual Guarantors does hereby represent
and warrant that neither this Guaranty Agreement nor the covenants and
agreements contained herein contravene or constitute a default under any law or
agreement, instrument or indenture to which such Individual Guarantor is a
party or by which such Individual Guarantor's property is bound.
ARTICLE II
GENERAL COVENANTS
Section 2.1. The Guarantors, jointly and severally, hereby
unconditionally guarantee to the Trustee, and to any successor trustee under
the Indenture (a) the full and prompt payment of amounts equal to the principal
of and premium, if any, on each Bond when and as the same shall become due,
whether at the stated maturity thereof, by acceleration, call for redemption
(whether or not pursuant to any mandatory sinking fund provisions of the
Indenture), or otherwise, and (b) the full and prompt payment of amounts equal
to the interest on each Bond when and as the same shall become due, and (c) the
full and prompt payment of the 166 Assistance Rent when and as the same shall
become due, and (d) the full and prompt payment of all expenses and charges
(including court costs and reasonable attorney's fees) paid or incurred by the
Trustee and/or the Director in realizing upon any of the payments hereby
guaranteed or, to the extent permitted by law, in enforcing this Guaranty
Agreement, and (e) the prompt performance of each of the covenants of the
Company contained in the Financing Agreement. All payments by the Guarantors
hereunder shall be made in lawful money of the United Stated of America. Each
and every default in payment of an amount equal to the principal of or premium,
if any, or interest on any Bond, on the 166 Assistance Rent or any other
payment to be made by the Company pursuant to the Financing Agreement, shall
give rise to a separate cause of action hereunder, and separate suits may be
brought hereunder as each cause of action arises. In the event of an Event of
Default (as defined in the Financing Agreement), the Director shall not
exercise any of the Director's remedies under Section 9.2 of the Financing
Agreement until the
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Guarantors have been given notice of such Event of Default and the Guarantors
have had ten (10) business days to cure such Event of Default after such
notice. As used in the preceding sentence, "business day" shall mean any
Monday, Tuesday, Wednesday, Thursday or Friday which is not a national holiday.
Section 2.2. The obligations of the Guarantors under this Guaranty
Agreement shall be an absolute, unconditional, present and continuing guaranty
of payment and not collectability and shall remain in full force and effect
until an aggregate amount equal to the entire amounts guaranteed hereunder
shall have been paid or provided for pursuant to the Financing Agreement or
this Guaranty Agreement, and such obligations shall not be affected, modified
or impaired by reason of the happening from time to time of any event,
including without limitation any one or more of the following, whether or not
with notice to, or consent of, the Guarantors:
(a) the assignment, pledge or mortgaging or the purported
assignment, pledge or mortgaging of all or any part of the interest of the
Issuer in the Project or any failure of title with respect to the Issuer's
interest in the Project, or
(b) the waiver of the performance or observance by the Issuer or
any of the Guarantors of any of the obligations, covenants or agreements
contained in the Indenture or this Guaranty Agreement; or
(c) the extension of the time for payment of principal of or
premium, if any, or interest on any Bond or of the time for performance of any
other obligations, covenants or agreements under or arising out of the
Indenture or this Guaranty Agreement or the extension or the renewal of any
thereof; or
(d) the modification or amendment of any obligation, covenant or
agreement set forth in the Indenture; or
(e) the taking or omission of any of the actions referred to in
the Indenture or any actions under this Guaranty Agreement; or
(f) any invalidity or unenforceability of any terms or provisions
of any of the Bonds or the Indenture, or any loss or release or substitution
of, or other dealing with, any security created by the Indenture or any of the
Bonds; or
(g) any failure, omission, delay or lack of diligence on the part
of the Trustee to enforce, assert or exercise any right, power or remedy
conferred on the Trustee in this Guaranty Agreement or in the Indenture, or any
other act or acts on the part of the Issuer, the Trustee or any of the holders
from time to time of the Bonds; or
(h) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets, marshalling of assets
and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors
or readjustment of, or other similar proceedings affecting any of the
Guarantors, the Issuer or the Trustee or any of the assets of any of them, or
any contest of the validity of this Guaranty Agreement or the Indenture in any
such proceeding; or
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(i) to the extent permitted by law, the release or discharge of
any of the Guarantors from the performance or observance of any obligation,
covenant or agreement contained in this Guaranty Agreement by operation of law;
or
(j) the default or failure of the Guarantors fully to perform any
of the Guarantors' obligations set forth in this Guaranty Agreement; or
(k) the failure of the Trustee to give notice to the Guarantors of
the occurrence of any default under the Indenture or the Bonds; or
(l) the compromise, settlement, release, discharge or termination
of any or all of the obligations, covenants or agreements of the Issuer under
the Indenture, by operation of law or otherwise, except as may result from
payment in full of the Bonds as to principal, interest and premium, if any, as
hereinbefore stated; or
(m) any other event, circumstance, right, claim or defense of any
character whatsoever, whether or not similar to the foregoing.
Section 2.3. No set-off, counterclaim, reduction, or diminution of any
obligation, or any defense of any kind or nature (excepting payment in fact)
which any of the Guarantors has or may have, in their capacities as Guarantors
hereunder, against the Issuer, the Director or the Trustee shall limit or in
any way affect the Guarantors' obligations under Section 2.1 hereof.
Section 2.4. If the Company shall fail to pay any installment of rent
in the amount and at the time set forth in Sections 4.3 or 4.4 of the Financing
Agreement, or shall fail to make any other payment when due under the Financing
Agreement, the Trustee may proceed hereunder, and the Trustee, in the Trustee's
sole discretion, or the Director, in the Director's sole discretion, shall have
the right to proceed first and directly against the Guarantors, under this
Guaranty Agreement without proceeding against or exhausting any other remedies
which the Trustee or the Director may have and without resorting to any other
security or guaranty held by the Issuer, the Trustee or the Director; provided,
however, that the Director shall not have the right to take any action
hereunder with respect to the Guarantors which would adversely affect the
Bonds.
Section 2.5. Each of the Guarantors hereby expressly waives notice
from the Trustee or the holders from time to time of any of the Bonds of any
acceptance of and reliance upon this Guaranty Agreement by the Trustee or the
holders, and hereby expressly waives notice from the Director from time to time
of any of the 166 Assistance of any acceptance of and reliance upon this
Guaranty Agreement by the Director. Each of the Guarantors agrees to pay all
the reasonable costs, expenses and fees, including all reasonable attorneys'
fees, which may be incurred by the Trustee and the Director in enforcing or
attempting to enforce this Guaranty Agreement following any default on the part
of the Guarantors hereunder, whether the same shall be enforced by suit or
otherwise. If any such fees and expenses are not so reimbursed, the amount
thereof shall, to the extent permitted by law, constitute indebtedness secured
hereby, and in any action brought to collect such indebtedness, the Trustee and
the Director shall be entitled to seek the recovery of such fees and expenses
in such action except as limited by law or by judicial order or decision
entered in such proceedings.
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Section 2.6. Each of the Guarantors hereby waives and releases the
others from any claim or right of subrogation or indemnity whatsoever that each
may have against the other or any respective successors or assigns (including,
without limitation, any trustee in bankruptcy) relating to or arising in
connection with this Guaranty Agreement and the obligations guaranteed hereby
and hereby waives and releases any claim or right of recourse which each has
with respect to the security for such obligations under the Financing Agreement
or otherwise. Each of the Guarantors agrees that, if any Event of Default (as
defined in the Financing Agreement) shall occur and be continuing, including
but not limited to any default relating to a bankruptcy petition being filed,
each of the Guarantors shall unconditionally and irrevocably release any and
all claims that such Guarantor may have against any of the others and shall
refrain from filing any proof of claim in any bankruptcy proceedings involving
any of the others or any respective successors or assigns. Each of the
Guarantors acknowledges that the intent of this provision is to preclude each
Guarantor from being deemed to be a "creditor" of any of the others as that
term is defined in the U. S. Bankruptcy Code, as amended, in accordance with
relevant judicial interpretations. Each of the Guarantors acknowledges that
this Section is intended for the benefit of the Director and the Trustee and
has been provided in consideration of the issuance of the Bonds and the 166
Assistance and the execution and delivery of the Financing Agreement, and may
not be modified or amended no~ may compliance with the terms hereof be waived
without the express written consent of the Director and the Trustee and may be
enforced by the Director, the Trustee or any of the other Guarantors, or any
respective successors or assigns, including, without limitation, any trustee in
bankruptcy of any of the other Guarantors.
Section 2.7. (a) In the event of the death of any of the Individual
Guarantors, the estate of such Individual Guarantor shall be released from all
obligations arising under this Guaranty Agreement if, but only if, the Trustee
is provided with an irrevocable letter of credit, a bond or cash collateral in
an amount that would be sufficient to defease the Bonds, which letter of
credit, bond or cash collateral shall secure payment of all those obligations
guaranteed by such Individual Guarantor under this Guaranty Agreement, all upon
terms and conditions acceptable to the Director in the Director's sole
discretion, and which letter of credit, bond or cash collateral may be reduced
from time to time thereafter to an amount that is not less than the amount that
would be sufficient to defease the Bonds.
(b) Each Individual Guarantor shall be released from all
obligations arising under this Guaranty Agreement if, but only if, the Trustee
is provided with an irrevocable letter of credit, a bond or cash collateral in
an amount that would be sufficient to defease the Bonds, which letter of
credit, bond or cash collateral shall secure payment of all those obligations
guaranteed by such Individual Guarantor under this Guaranty Agreement, all upon
terms and conditions acceptable to the Director in the Director's sole
discretion, which letter of credit, bond or cash collateral may be reduced from
time to time thereafter to an amount that is not less than the amount that
would be sufficient to defease the Bonds.
Section 2.8. Notwithstanding any provision of this Guaranty Agreement
to the contrary, the obligation of the Guarantors under this Guaranty Agreement
shall in no event exceed the aggregate amount of the obligations guaranteed in
Section 2.1 hereof.
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ARTICLE III
SPECIAL COVENANTS
Section 3.1. Throughout the term of this Guaranty Agreement, the
Company shall:
(a) Taxes and Assessments. Pay and discharge promptly, or cause to
be paid and discharged promptly, when due and payable, all taxes, assessments
and governmental charges or levies imposed upon the Company, the Company's
income or any of the Company's property, or upon any part thereof, as well as
all claims of any kind (including claims for labor, materials and supplies)
which, if unpaid, might by law become a lien or charge upon the Company's
property. Nothing in this Section shall require the Company to pay or discharge
any such tax, assessment, governmental charge or levy so long as the validity
thereof shall be contested in good faith and by appropriate legal proceedings,
provided that the Company shall have delivered to the Director a bond, letter
of credit or such other security than amount sufficient to pay or discharge the
tax, assessment, charge or levy or an opinion of counsel, selected by the
Company and reasonably acceptable to the Director, to the effect that
nonpayment of any such items during the pendency of such contest will not
adversely affect the Director's right, title or interest in the Project.
(b) Maintain Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect the Company's existence
and the Company's material rights and franchises .
(c) Maintain Property. Maintain and keep the Company's property in
good repair, working order and condition, reasonable wear and tear excepted,
and from time to time make all repairs, renewals and replacements which, in the
opinion of the Company, are necessary and proper so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this subsection shall prevent the
Company from selling or otherwise disposing of any property of the Company
whenever, in the good faith judgment of the Company, such property is obsolete,
worn out, without economic value or unnecessary for the conduct of the business
of the Company.
(d) Maintain Insurance. Keep the Project and all of the Company's
insurable property insured against loss or damage by fire and other risks,
maintain public liability insurance against claims for personal injury, death,
or property damage suffered by others upon, in or about such property; and
maintain all such worker's compensation or similar insurance as may be required
under the laws of any state or jurisdiction in which the Company may be engaged
in business. All insurance for which provision has been made in this subsection
shall be maintained against such risks and in at least such amounts (but
subject to such deductibles) as such insurance is usually carried by persons
engaged in the same or similar businesses, and all insurance herein provided
for shall be effected and maintained in force under a policy or policies issued
by insurers of recognized responsibility, except that the Company may effect
worker's compensation or similar insurance in respect of operations in any
state or other jurisdiction either through an insurance fund operated by such
state or other jurisdiction or by causing to be maintained a system or systems
of self-insurance which is in accordance with applicable law
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<PAGE> 9
(e) Furnish Information and Certificates. Furnish to the Director
the financial reports and certificates required to be furnished under Section
7.4(e) of the Financing Agreement and such other information respecting the
business, properties or the condition or operations financial or otherwise, of
the Company as the Director may reasonably request, provided that reasonable
provision is made for protecting proprietary information of the Company.
(f) Deliver Notice. Forthwith upon learning of any of the
following, deliver written notice thereof to the Director, describing the same
and the steps being taken by the Company with respect thereto:
(i) the occurrence of an Event of Default under the Financing
Agreement or an event or circumstance which would
constitute an Event of Default, but for the requirement
that notice be given or time elapse or both, or
(ii) any action, suit or proceeding by the Company or against
the Company at law or in equity, or before any
governmental instrumentality or agency, instituted or
threatened which, if adversely determined, would
materially impair the right or ability of the Company to
carry on the business which is contemplated in connection
with the Project or would materially impair the right or
ability of the Company to perform the transactions
contemplated by the Financing Agreement, or would
materially and adversely affect the Company's business,
operations, assets or condition, or
(iii) the occurrence of a Reportable Event, as defined in the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), under, or the institution of steps by
the Company to withdraw from, or the institution of any
steps to terminate, any employee benefit plan as to which
the Company may have liability.
(g) Inspection Rights. At any reasonable time and from time to time
during regular business hours, upon reasonable notice, permit the Director, or
any agents or representatives thereof, to examine and make copies of and
abstract from the Company's records and books of account of, and visit the
properties of, the Company, and discuss the business affairs of the Company,
with any of the Company's officers; provided, however, that the Company
reserves the right to restrict access to any of the Company's facilities in
accordance with reasonably adopted procedures relating to safety and security.
(h) Zoning. Planning and Environmental Reputations. The Provision of
the Project will be completed and the Project will be operated and maintained
in such manner as to conform with all applicable zoning, planning, building and
other applicable governmental regulations (or variances therefrom) and
Environmental Laws imposed by any Governmental Authority and as to be
consistent with the purposes of the Act.
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(i) Use of Project Fund Moneys and 166 Assistance. All moneys
disbursed from the Project Fund (except for any amounts transferred to the
Collateral Proceeds Account pursuant to the terms of the Financing Agreement)
and the 166 Assistance shall be used for the payment of Allowable Costs related
to the Provision of the Project. No part of any such moneys shall be knowingly
paid to or retained by the Company or any shareholder or employee of the
Company as a fee, kick-back or consideration of any type. The Company has no
identity of interest with, or interest in, any contractor, architect,
subcontractor, laborer or material man performing work or services or supplying
materials in connection with the Provision of the Project.
(j) Federal Income Tax Compliance Agreement. At all relevant times,
comply with all obligations required of the Company by the Federal Income Tax
Compliance Agreement.
(k) Environmental Matters. Throughout the term of this Guaranty
Agreement, the Company shall:
(i) ensure that the Project Site and Project Equipment remain
in compliance with all Environmental Laws and will not
place or permit to be placed any Hazardous Substances on
or in the Project Site or Project Equipment except as not
prohibited by applicable Environmental Laws or appropriate
Governmental Authorities;
(ii) maintain a system to assure and monitor continued
compliance with all applicable Environmental Laws which
system shall include periodic reviews of such compliance;
(iii) (A) employ in connection with the Company's use of the
Project Site and Project Equipment appropriate technology
necessary to maintain compliance with any applicable
Environmental Laws; and (B) dispose of any and all
Hazardous Substances generated at the Project Site only at
facilities and with carriers that maintain valid permits
under the Resource Conservation and Recovery Act of 1976,
as amended, and any other applicable Environmental Laws,
and use its best efforts to obtain certificates of
disposal, such as hazardous waste manifest receipts, from
all treatment, transport, storage or disposal facilities
or operators employed by the Company in connection with
the transport or disposal of any Hazardous Substances
generated at the Project Site;
(iv) in the event the Company obtains, gives or receives notice
of any release or threat of release of a reportable
quantity of any Hazardous Substances at the Project Site
(any such event being hereinafter referred to as a
"Hazardous Discharge") or receives any notice of
violation, request for information or notification that it
is potentially responsible for investigations or cleanup
of environmental conditions at the Project Site, demand
letter or complaint, order, citation, or other written
notice with regard to any Hazardous Discharge or violation
of Environmental Laws affecting the Project Site or
Project Equipment or the Company's interest therein (any
of the foregoing is referred to herein as an
"Environmental Complaint") from any person or entity,
including any Governmental Authority responsible in whole
or in part for
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<PAGE> 11
environmental matters in the state in which the Project Site
and Project Equipment are located or the United States
Environmental Protection Agency (any such person or entity is
referred to herein as an "Environmental Authority"), then the
Company shall, within five (5) business days, give written
notice of same to the Director detailing facts and
circumstances of which the Company is aware giving rise to
the Hazardous Discharge or Environmental Complaint. Such
information is to be provided to allow the Director to protect
the Director's security interest in the ,Project and is not
intended to create nor shall it create any obligation upon the
Director with respect thereto;
(v) promptly forward to the Director copies of any request for
information, notification of potential liability, demand
letter relating to potential responsibility with respect to
the investigation or cleanup of Hazardous Substances at any
other site owned~ operated or used by Company to dispose of
Hazardous Substances and continue to forward copies of
correspondence between the Company and the Environmental
Authority regarding such claims to the Director until the
claim is settled. The Company shall promptly forward to the
Director copies of all documents and reports concerning a
Hazardous Discharge at the Project Site that the Company is
required to file under any Environmental Laws. Such
information is to be provided solely to allow the Director to
protect Director' s security interest in the Project and is
not intended to create nor shall it create any obligation upon
the Director with respect thereto;
(vi) respond promptly to any Hazardous Discharge or Environmental
Complaint and take all necessary action in order to safeguard
the health of any person and to avoid subjecting the Project
to any lien. If the Company shall fail to respond promptly to
any Hazardous Discharge or Environmental Complaint or the
Company shall fail to comply with any of the requirements of
any Environmental Laws, the Director may, but without the
obligation to do so, for the sole purpose of protecting the
Director's interest in the Project: (i) give such notices or
(ii) enter onto the Project Site (or authorize third parties
to enter onto the Project Site) and take such actions as the
Director (or such third parties as directed by the Director)
deem reasonably necessary or advisable, to clean up, remove,
mitigate or otherwise deal with any such Hazardous Discharge
or Environmental Complaint. All reasonable costs and expenses
incurred by the Director (or such third parties) in the
exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation
or proceedings, fines and penalties, together with interest,
thereon from the date expended at the Interest Rate for
Advances shall be paid upon demand by the Company and until
paid shall be treated as additional rent secured by the liens
and security interests created by the terms of the Financing
Agreement;
(vii) promptly, upon the written request of the Director from
time to time, provide the Director, at the Company' s expense,
with an environmental site assessment or environmental audit
report prepared by an environmental engineering firm
acceptable in the reasonable opinion of the Director, to
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assess with a reasonable degree of certainty the existence of
a Hazardous Discharge and the potential costs in connection
with abatement, cleanup and removal of any Hazardous
Substances found on, under, at or within the Project Site. Any
report or investigation of such Hazardous Discharge proposed
and acceptable to an appropriate Environmental Authority that
is charged to oversee the clean-up of such Hazardous Discharge
shall be acceptable to the Director. If such estimates,
individually or in the aggregate, exceed One Hundred Thousand
Dollars ($100,000), the Director shall have the right to
require the Company to post a bond, letter of credit or other
security reasonably satisfactory to the Director to secure
payment of these costs and expenses;
(viii) defend and indemnify the Director and hold the Director
harmless from and against all loss, liability, damage and
expense, claims, costs, fines and penalties, including
reasonable attorneys' fees, suffered or incurred by the
Director under or on account of any Environmental Laws,
including, without limitation, the presence of any Hazardous
Substances affecting the Project Site or any Project
Equipment, whether or not the same originates or emerges from
the Project Site or any contiguous real estate or any Project
Equipment, including any loss of value of the Project
Equipment as a result of the foregoing except to the extent
such loss, liability, damage and expense is attributable to
any Hazardous Discharge resulting from actions on the part of
the Director; and
(ix) promptly, and in full compliance with all applicable
requirements of any Environmental Authority having
jurisdiction, remediate any Environmental Complaint or
Hazardous Discharge. The Company shall furnish the Director
with progress reports not less frequently than once every
ninety (90) calendar days following the date hereof reporting
on the status of such remediation activities and shall issue a
final report to the Director within thirty (30) days following
the completion of such remediation activities. Such final
report may consist of but shall include a copy of the final
report of environmental consultant(s) as are employed to
supervise such environmental remediation activity.
The Company's obligations under this Section 3. 1(k) shall arise
upon the discovery of the presence of any Hazardous Substances at
the Project Site, whether or not any Environmental Authority has
taken or threatened any action in connection with the presence of
any Hazardous Substances. The Company's obligation and the
indemnifications hereunder shall survive the termination of this
Guaranty Agreement.
Section 3.2. Throughout the term of this Guaranty Agreement, the
Company shall not, without the prior written consent of the Director:
(a) Maintain Existence. Sell, transfer or otherwise dispose of
all, or substantially all, of the Company's assets, consolidate with or merge
into any other entity, or permit one or more entities to consolidate with or
merge into the Company; provided, however, that the Company may, without
violating the agreement contained in this subsection, consolidate
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with or merge into another entity, or permit one or more other entities to
consolidate with or merge into the Company, or sell, transfer or otherwise
dispose of all, or substantially all, of the Company's assets as a entity and
thereafter dissolve if: (i) the prior written consent of the Director is
obtained; or (ii) (A) the surviving, resulting or transferee entity, as the
case may be, assumes in writing all of the obligations of the Company under the
Financing Agreement (if such surviving, resulting or transferee entity is other
than the Company); and (B) the surviving, resulting or transferee entity, as
the case may be, is an entity duly organized and validly existing under the
laws of the State or duly qualified to do business therein, and has a net worth
of not less than that of the Company immediately prior to such disposition,
consolidation or merger, transfer or change of form.
(b) ERISA. Voluntarily terminate any employee benefit plan or
other plan (a "Plan") maintained for employees of the Company and covered by
Title IV of ERISA, so as to result in any material liability of the Company to
the Pension Benefit Guaranty Corporation ("PBGC"), enter into any Prohibited
Transaction (as defined in Section 4975 of the Internal Revenue Code of 1954,
as amended, and in ERISA) involving any Plan which results in any material
liability of the Company to the PBGC, cause any occurrence of any Reportable
Event (as defined in Title IV of ERISA) which results in any material liability
of the Company to the PBGC, or allow or suffer to exist any other event or
condition which results in any material liability of the Company to the PR('~.
(c) Agreements. Enter into any agreement containing any provision
which would be violated or breached by the performance of the Company's
obligations under the Financing Agreement or under any instrument or document
delivered or to be delivered by the Company under the Financing Agreement or in
connection with the Financing Agreement.
(d) Financial Covenants.
(i) Net Worth. Permit the net worth of the Company to be less
than $2,000,000 at December 31, 1995 and to be less than
an amount equal to $2,000,000 plus 50% of net income for
the previous year, as determined in accordance with GAAP
and after all distributions for taxes relating to the
Company have occurred, at December 31 of each year
thereafter. For purposes of this paragraph, "net worth"
means the total tangible net worth of the Company plus all
Subordinated Debt of the Company, all as determined in
accordance with generally accepted accounting principles
applied on a basis consistent with that of prior years
("GAAP").
(ii) Debt-to-Equity Ratio. Maintain a debt-to-equity ratio of
less than 5:1 at December 31, 1995, of less than 3.5:1 at
December 31, 1996, and of less than 3:1 at December 31 of
each year thereafter. For purposes of this paragraph,
"debt-to-equity ratio" means the total long-term debt of
the Company minus all Subordinated Debt of the Company
divided by the total tangible net worth plus Subordinated
Debt of the Company, all as determined in accordance with
GAAP.
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(iii) Shareholder Salaries. Bonuses and Dividends. Declare, pay,
issue or otherwise distribute to its shareholders (present
or future) or individuals or entities to or from whom
stock would be attributed under Section 318 of the Code
(with the definition of family expended to include
brothers and sisters) any dividends other than
distributions for taxes incurred by such persons with
respect to the Company if such would cause the Company to
breach any of the covenants set forth in the immediately
preceding clauses (i) or (ii).
(iv) Key-Man Life Insurance. Fail to procure and maintain in
effect a keyman life insurance policy on Richard D.
Pollock in the amount of at least $1,000,000 that names
the Director and the Trustee as the sole beneficiaries
thereof.
(v) Encumber or Transfer of Project. Pledge, assign,
sell-leaseback, hypothecate or in any manner encumber any
of the Project Equipment or interest therein, except as
otherwise expressly permitted by the Financing Agreement;
provided, however, that in no event shall the Company
sell, assign and otherwise convey all or any part of the
Project in a manner which causes, or will cause, the
Project to be operated in a way not consistent with the
Code.
(vi) Removal of Project Equipment. Remove, transfer or
transport any of the Project Equipment from the Project
Site.
(vii) Discontinue Project. Suspend or discontinue operation of
the Project.
(viii) Subordination of Note. Fail to (A) deliver to the Trustee
and the Director an inter creditor and subordination
agreement, in form acceptable to the Trustee and the
Director, by and among the Trustee, the Director, the
Company and Jacob Pollock providing for the subordination
of the Subordinated Debt, or (B) comply with the terms of
said inter creditor and subordination agreement.
(ix) Loans to Guarantors. Pay, or otherwise make a distribution
as satisfaction for, principal of or interest on any loan
made to the Company by any other Guarantor thereof,
unless: (A) such loan is evidenced by a promissory note in
a form satisfactory to the Director, (B) payment of the
principal of and interest on the note has been
subordinated to rental payments under the Financing
Agreement and to the Company's obligation to guaranty the
Bonds and 166 Assistance Rent pursuant hereto pursuant to
a subordination agreement in form and substance
satisfactory to the Director, and (C) such Guarantor shall
have waived its, his or her right to file a proof of claim
with respect to that loan in any bankruptcy proceeding in
a manner satisfactory to the Director. No payments shall
be made with respect to any such loan, except in
accordance with the terms of such applicable subordination
agreement. The Company shall not make loans to any other
Guarantor except in the ordinary course of business which
loans in the aggregate shall not exceed $100,000.
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Section 3.3. Throughout the term of the Financing Agreement, none of
the Individual Guarantors shall, without the prior written consent of the
Director sell or otherwise dispose of his or her equity interest in the
Company; provided that each of the Individual Guarantors may transfer his or
her equity interest in the Company to his or her spouse or children or any
trust established for the benefit of such persons. Any equity interest in the
Company so transferred shall be deemed to be beneficially owned by the
respective Individual Guarantor for the purpose of this Guaranty Agreement.
ARTICLE IV
NOTICE AND SERVICE OF PROCESS, PLEADINGS AND OTHER PAPERS
Section 4.1. Each of the Guarantors covenants and agrees that the
Guarantors are subject to service of process in the State of Ohio, and that the
Guarantors will remain so subject to that service of process so long as there
are any outstanding Bonds. If any of the Guarantors should not be subject to
that service of process for any reason, such Guarantor designates and appoints
as its, his or her agent, without power of revocation, the Secretary of State
of Ohio, Columbus, Ohio 43266-0418, upon whom shall be served all process,
pleadings, notices or other papers that may be served upon such Guarantor as a
result of any of such Guarantor's covenants, agreements and obligations under
this Guaranty Agreement. Each of the Guarantors hereby irrevocably submits to
the jurisdiction of the courts of the State of Ohio and waives any defenses
thereto.
Section 4.2. Any process, pleadings, notices or other papers served
upon any agent appointed in the preceding Section shall, be sent at the same
time by registered or certified mail, postage prepaid, to the Company and the
Corporate Guarantors at the Company's Notice Address set forth in the Financing
Agreement, to the Individual Guarantors at the following addresses: if to any
of the Corporate Guarantors: 861 East Tallmadge Avenue, P.O. Box 4810, Akron,
Ohio 44310; if to Jacob or Gertrude Pollock: 2375 Covington Road, Apartment
416, Akron, Ohio 44313; if to Richard Pollock: 4276 Idlebrook Drive, Akron,
Ohio 44333; and to any other addresses that may be furnished by the Guarantors
to the Trustee in writing from time to time.
ARTICLE V
MISCELLANEOUS
Section 5.1. The obligations of the Guarantors hereunder shall arise
absolutely and unconditionally when the Bonds shall have been issued, sold and
delivered by the Issuer and the proceeds thereof paid to the Trustee in
accordance with the terms of the Indenture. The obligations of the Guarantors
hereunder shall be released when the principal amount of the Bonds and any
interest and monthly service charges accrued thereon, the 166 Assistance and
any interest and monthly service charges accrued thereon, and any other fees or
charges due under the Trust Agreement or the Financing Agreement have been paid
in full.
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Section 5.2. No remedy herein conferred upon or reserved to the Trustee or
the Director is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Guaranty Agreement or now or
hereafter existing at law or in equity. No delay or omission to exercise any
right or power accruing upon any default, omission or failure of performance
hereunder shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right or power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Trustee and
the Director to exercise any remedy reserved to the Trustee or the Director in
this Guaranty Agreement, it shall not be necessary to give any notice, other
than such notice as may be herein expressly required. In the event any
provision contained in this Guaranty Agreement should be breached by any
Guarantor and thereafter duly waived by the Trustee, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder. No waiver, amendment, release or modification of this
Guaranty Agreement shall be established by conduct, custom or course of
dealing, but solely by an instrument in writing duly executed by the Trustee.
Section 5.3. This Guaranty Agreement may be amended to the same extent
and upon the same conditions that the Indenture may be amended by a written
agreement signed by the parties hereto. Nothing contained herein shall permit,
or be construed as permitting, any amendment, change or modification of this
Guaranty Agreement which would (i) reduce the amounts payable by any Guarantor
hereunder, (ii) change the time or times for payment of the amounts payable by
any Guarantor hereunder, or (iii) change the unconditional nature of the
Guaranty Agreement herein contained.
Section 5.4. This Guaranty Agreement constitutes the entire agreement,
and supersedes all prior agreements and understandings, both written and oral,
of the parties with respect to the subject matter hereof, and may be executed
simultaneously in several counterparts, each of which shall be regarded as an
original, and all of which together shall constitute but one and the same
instrument.
Section 5.5. This Guaranty Agreement constitute a separate instrument,
enforceable in accordance with its terms, and neither this Guaranty Agreement
nor the obligations of the Guarantors hereunder shall, under any circumstance
or in any legal proceeding, be deemed to have merged into or with any other
agreement or obligations of such Guarantors.
Section 5.6. The invalidity or unenforceability of any one or more
phrases, sentences, clauses or Sections contained in this Guaranty Agreement
shall not affect the validity or enforceability of the remaining portions of
this Guaranty Agreement, or any part thereof.
Section 5.7. This Guaranty Agreement shall be deemed to be a contract
made under the laws of the State of Ohio and for all purposes shall be governed
by and construed in accordance with the laws of the State of Ohio.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 17
IN WITNESS WHEREOF, each of the Guarantors has caused this Guaranty
Agreement to be executed each in its, his or her name and on its, his or her
behalf, respectively, and the Trustee and the Director, by their respective
officers or representatives, have acknowledged acceptance of this Guaranty
Agreement, all as of the day and year first above written.
INDIVIDUAL GUARANTORS CORPORATE GUARANTORS
Wirt Metal Products, Inc.
By:
- ------------------------------ -----------------------------
Jacob Pollock
J. Pollock & Co.
By:
- ------------------------------ -----------------------------
Gertrude Pollock
Ravens Metal Products, Inc.
By:
- ------------------------------ -----------------------------
Richard D. Pollock
Signs and Blanks, Inc.
By:
-----------------------------
THE DIRECTOR OF DEVELOPMENT THE PROVIDENT BANK, TRUSTEE
OF THE STATE OF OHIO
By: By:
--------------------------- -----------------------------
Assistant Vice President
By:
-----------------------------
Trust Officer
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