UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 Quarterly period ended: June 30, 1998
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------- ---------
Commission file number: 0-23804
-------
Simpson Manufacturing Co., Inc.
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-3196943
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4637 Chabot Drive, Suite 200, Pleasanton, CA 94588
------------------------------------------------------------
(Address of principal executive offices)
(Registrant's telephone number, including area code): (925)460-9912
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
----- -----
The number of shares of the Registrant's Common Stock
outstanding as of June 30, 1998: 11,567,209
----------
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
----------------------------
(Unaudited)
1998 1997 1997
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 20,624,535 $ 4,698,928 $ 19,418,689
Trade accounts receivable, net 41,884,459 39,701,166 24,625,568
Inventories 55,150,127 53,373,606 54,982,945
Deferred income taxes 4,048,369 3,923,455 3,536,750
Other current assets 1,243,017 1,258,106 1,723,586
------------ ------------ ------------
Total current assets 122,950,507 102,955,261 104,287,538
Net property, plant and equipment 51,059,397 36,055,534 42,925,088
Investments 537,582 557,331 559,200
Other noncurrent assets 3,067,138 2,971,392 2,993,114
------------ ------------ ------------
Total assets $177,614,624 $142,539,518 $150,764,940
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes Payable and current
portion of long-term debt $ 330,010 $ 26,091 $ 29,605
Trade accounts payable 11,622,431 11,033,264 8,813,196
Accrued liabilities 5,255,517 4,855,687 5,506,903
Income taxes payable 2,951,963 2,837,187 -
Accrued profit sharing trust
contributions 4,545,941 3,876,283 2,886,875
Accrued cash profit sharing
and commissions 4,660,965 3,866,504 3,094,834
Accrued workers' compensation 779,272 809,272 659,272
------------ ------------ ------------
Total current liabilities 30,146,099 27,304,288 20,990,685
Long-term debt, net of current portion 2,727,799 - -
Deferred income taxes and long-term
liabilities 678,034 1,027,037 823,732
------------ ------------ ------------
Total liabilities 33,551,932 28,331,325 21,814,417
------------ ------------ ------------
Commitments and contingencies (Notes 5 and 6)
Shareholders' equity
Common stock 33,519,125 31,551,350 32,377,563
Retained earnings 110,882,928 82,641,173 96,848,685
Accumulated other comprehensive income (339,361) 15,670 (275,725)
------------ ------------ ------------
Total shareholders' equity 144,062,692 114,208,193 128,950,523
------------ ------------ ------------
Total liabilities and
shareholders' equity $177,614,624 $142,539,518 $150,764,940
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 70,786,469 $ 65,554,874 $130,041,019 $117,482,096
Cost of sales 41,708,697 39,228,286 79,089,853 71,836,850
------------ ------------ ------------ ------------
Gross profit 29,077,772 26,326,588 50,951,166 45,645,246
------------ ------------ ------------ ------------
Operating expenses:
Selling 6,129,472 6,366,762 11,754,247 11,575,025
General and administrative 8,916,134 8,077,667 15,780,630 14,304,043
Compensation related to stock plans 45,000 - 102,000 -
------------ ------------ ------------ ------------
15,090,606 14,444,429 27,636,877 25,879,068
------------ ------------ ------------ ------------
Income from operations 13,987,166 11,882,159 23,314,289 19,766,178
Interest income (expense), net 114,302 (18,166) 320,954 142,089
------------ ------------ ------------ ------------
Income before income taxes 14,101,468 11,863,993 23,635,243 19,908,267
Provision for income taxes 5,728,000 4,843,000 9,601,000 8,130,000
------------ ------------ ------------ ------------
Net income $ 8,373,468 $ 7,020,993 $ 14,034,243 $ 11,778,267
============ ============ ============ ============
Net income per common share
Basic $ 0.72 $ 0.61 $ 1.22 $ 1.03
============ ============ ============ ============
Diluted $ 0.69 $ 0.59 $ 1.16 $ 0.99
============ ============ ============ ============
Number of shares outstanding
Basic 11,561,786 11,457,312 11,546,329 11,458,580
============ ============ ============ ============
Diluted 12,081,026 11,901,328 12,059,737 11,892,487
============ ============ ============ ============
</TABLE>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income $ 8,373,468 $ 7,020,993 $ 14,034,243 $ 11,778,267
Other comprehensive income, net of tax:
Foreign currency translation
adjustments (147,402) (75,563) (63,636) (184,784)
------------ ------------ ------------ ------------
Comprehensive income $ 8,226,066 $ 6,945,430 $ 13,970,607 $ 11,593,483
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 14,034,243 $ 11,778,267
------------ ------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss (gain) on sale of capital equipment 6,000 (13,194)
Depreciation and amortization 4,418,512 3,817,462
Deferred income taxes and long-term liabilities (657,319) (1,129,944)
Equity in income of affiliates - (110,000)
Noncash compensation related to stock plans 169,894 103,500
Changes in operating assets and liabilities,
net of effects of acquisitions:
Trade accounts receivable (17,302,209) (17,521,910)
Trade accounts payable 2,809,235 (275,372)
Income taxes payable 3,452,536 2,632,769
Inventories (167,602) (4,973,420)
Accrued liabilities (251,386) (165,525)
Accrued profit sharing trust contributions 1,659,066 1,430,282
Accrued cash profit sharing and commissions 1,566,131 1,574,447
Other current assets 480,569 (235,056)
Accrued workers' compensation 120,000 -
Other noncurrent assets (194,665) 296,903
------------ ------------
Total adjustments (3,891,238) (14,569,058)
------------ ------------
Net cash provided by (used in)
operating activities 10,143,005 (2,790,791)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (12,465,806) (6,803,126)
Proceeds from sale of equipment 29,348 12,730
Proceeds from sale of short-term investments - 3,995,333
Acquisitions, net of cash and equity interest
already owned - (9,352,706)
------------ ------------
Net cash used in investing activities (12,436,458) (12,147,769)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of debt, net of repayments 3,028,204 (254,804)
Issuance of Company's common stock 471,095 76,995
------------ ------------
Net cash provided by (used in) financing activities 3,499,299 (177,809)
------------ ------------
Net increase (decrease) in cash
and cash equivalents 1,205,846 (15,116,369)
Cash and cash equivalents at beginning of period 19,418,689 19,815,297
------------ ------------
Cash and cash equivalents at end of period $ 20,624,535 $ 4,698,928
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Interim Period Reporting
The accompanying unaudited interim condensed consolidated financial
statements have been prepared pursuant to the rules and regulations for
reporting on Form 10-Q. Accordingly, certain information and footnotes
required by generally accepted accounting principles have been condensed or
omitted. These interim statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in Simpson
Manufacturing Co., Inc.'s (the "Company's") 1997 Annual Report on Form 10-K
(the "1997 Annual Report").
The unaudited quarterly condensed consolidated financial statements have been
prepared on the same basis as the audited annual consolidated financial
statements, and in the opinion of management, contain all adjustments
(consisting of only normal recurring adjustments) necessary to present fairly
the financial information set forth therein, in accordance with generally
accepted accounting principles. The year-end condensed consolidated balance
sheet data was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting principles.
The Company's quarterly results may be subject to fluctuations. As a result,
the Company believes the results of operations for the interim periods are
not necessarily indicative of the results to be expected for any future
period.
Net Income Per Common Share
Basic net income per common share is computed based upon the weighted average
number of common shares outstanding. Common equivalent shares, using the
treasury stock method, are included in the diluted per-share calculations for
all periods when the effect of their inclusion is dilutive.
The following is a reconciliation of basic earnings per share ("EPS") to
diluted EPS:
<TABLE>
<CAPTION>
Three Months Ended June 30, 1998 Three Months Ended June 30, 1997
Per Per
Income Shares Share Income Shares Share
------------ ------------ ------ ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to
common shareholders $ 8,373,468 11,561,786 $ 0.72 $ 7,020,993 11,457,312 $ 0.61
Effect of Dilutive Securities
Stock options - 519,240 (0.03) - 444,016 (0.02)
------------ ------------ ------ ------------ ------------ ------
Diluted EPS
Income available to
common shareholders $ 8,373,468 12,081,026 $ 0.69 $ 7,020,993 11,901,328 $ 0.59
============ ============ ====== ============ ============ ======
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1998 Six Months Ended June 30, 1997
Per Per
Income Shares Share Income Shares Share
------------ ------------ ------ ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to
common shareholders $ 14,034,243 11,546,329 $ 1.22 $ 11,778,267 11,458,580 $ 1.03
Effect of Dilutive Securities
Stock options - 513,408 (0.06) - 433,907 (0.04)
------------ ------------ ------ ------------ ------------ ------
Diluted EPS
Income available to
common shareholders $ 14,034,243 12,059,737 $ 1.16 $ 11,778,267 11,892,487 $ 0.99
============ ============ ====== ============ ============ ======
</TABLE>
<PAGE>
Newly Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 131, "Disclosures About Segments
of an Enterprise and Related Information." SFAS No. 131 specifies revised
guidelines for determining an entity's operating segments and the type and
level of financial information to be disclosed. SFAS No. 131 is effective for
annual financial statements issued for periods beginning after December 15,
1997, and accordingly, management has not determined the effect, if any, on
the Company's financial statements for the three and six months ended June
30, 1998.
As of January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income" and has presented Condensed Consolidated Statements of
Comprehensive Income for the three and six month periods ended June 30, 1998
and 1997. The accompanying balance sheets include accumulated other
comprehensive income amounts which consist entirely of foreign currency
translation adjustments.
Certain prior year amounts have been reclassified to conform to the 1998
presentation with no effect on net income as previously reported.
2. Trade Accounts Receivable
Trade accounts receivable consist of the following:
<TABLE>
<CAPTION>
At
At June 30, December 31,
----------------------------
1998 1997 1997
------------ ------------ ------------
<S> <C> <C> <C>
Trade accounts receivable $ 43,707,675 $ 41,721,912 $ 26,398,046
Allowance for doubtful accounts (1,247,263) (1,505,868) (1,539,691)
Allowance for sales discounts (575,953) (514,878) (232,787)
------------ ------------ ------------
$ 41,884,459 $ 39,701,166 $ 24,625,568
============ ============ ============
</TABLE>
3. Inventories
The components of inventories consist of the following:
<TABLE>
<CAPTION>
At
At June 30, December 31,
----------------------------
1998 1997 1997
------------ ------------ ------------
<S> <C> <C> <C>
Raw materials $ 17,486,981 $ 17,426,108 $ 17,882,930
In-process products 5,357,076 5,530,391 5,384,709
Finished products 32,306,070 30,417,107 31,715,306
------------ ------------ ------------
$ 55,150,127 $ 53,373,606 $ 54,982,945
============ ============ ============
</TABLE>
Approximately 90% of the Company's inventories are valued using the LIFO
(last-in, first-out) method. Because inventory determination under the LIFO
method is only made at the end of each year based on the inventory levels and
costs at that time, interim LIFO determinations must necessarily be based on
management's estimates of expected year-end inventory levels and costs. Since
future estimates of inventory levels and costs are subject to change, interim
financial results reflect the Company's most recent estimate of the effect of
LIFO and are subject to adjustment based upon final year-end inventory
amounts. At June 30, 1998 and 1997, and December 31, 1997, the replacement
value of LIFO inventories exceeded LIFO cost by approximately $566,000,
$886,000 and $852,000, respectively.
<PAGE>
4. Net Property, Plant and Equipment
Net property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
At
At June 30, December 31,
----------------------------
1998 1997 1997
------------ ------------ ------------
<S> <C> <C> <C>
Land $ 3,366,519 $ 2,440,682 $ 3,366,519
Buildings and site improvements 17,158,155 12,652,353 17,165,509
Leasehold improvements 3,364,468 2,909,671 3,474,278
Machinery and equipment 58,769,568 53,188,221 55,400,034
------------ ------------ ------------
82,658,710 71,190,927 79,406,340
Less accumulated depreciation and
amortization (46,182,977) (39,480,105) (41,986,005)
------------ ------------ ------------
36,475,733 31,710,822 37,420,335
Capital projects in progress 14,583,664 4,344,712 5,504,753
------------ ------------ ------------
$ 51,059,397 $ 36,055,534 $ 42,925,088
============ ============ ============
</TABLE>
5. Debt
Outstanding debt at June 30, 1998 and 1997, and the available credit at June
30, 1998, consisted of the following:
<TABLE>
<CAPTION>
Available Debt Outstanding
Credit at At June 30,
June 30, ----------------------------
1998 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Revolving line of credit, interest
at bank's reference rate (at June 30,
1998, the bank's reference rate was
8.50%), expires June 2000 $ 12,682,982 $ - $ -
Revolving term commitment, interest
at bank's prime rate (at June 30,
1998, the bank's prime rate was
8.50%), expires June 2000 8,866,004 - -
Revolving line of credit, interest
rate at the bank's base rate of
interest plus 2%, expires June 1999 416,500 - -
Revolving line of credit, interest
rate at the weighted average French
interbank rate of interest plus 1%,
expires February 1999 164,908 - -
Standby letter of credit facilities 1,451,015 - -
Term loan, interest at LIBOR plus
1.375% (at June 30, 1998, the LIBOR
plus 1.375% was 7.0352%), expires
May 2008 - 3,000,000 -
Other notes payable and long-term debt - 57,809 26,091
------------ ------------ ------------
Total credit facilities $ 23,581,409 $ 3,057,809 $ 26,091
============ ============
Standby letters of credit issued
and outstanding (1,451,015)
------------
Total credit available $ 22,130,394
============
</TABLE>
<PAGE>
The Company has three outstanding standby letters of credit. Two of these
letters of credit, in the aggregate amount of $667,995, are used to support
the Company's self-insured workers' compensation insurance requirements. The
third, in the amount of $783,020, is used to guarantee performance on the
Company's leased facility in the UK. In June 1998, the Company's subsidiary,
Simpson Dura-Vent Company, Inc., borrowed $3,000,000 to finance the
construction of its new facility in Ceres, Mississippi. Other notes payable
represent debt associated with foreign businesses acquired in March 1997.
6. Commitments and Contingencies
Note 9 to the consolidated financial statements in the Company's 1997 Annual
Report provides information concerning commitments and contingencies. From
time to time, the Company is involved in various legal proceedings and other
matters arising in the normal course of business.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Certain matters discussed below are forward-looking statements that involve
risks and uncertainties, certain of which are discussed in this report and in
other reports filed by the Company with the Securities and Exchange
Commission. Actual results might differ materially from results suggested by
any forward-looking statements in this report.
The following is a discussion and analysis of the consolidated financial
condition and results of operations for the Company for the three and six
months ended June 30, 1998 and 1997. The following should be read in
conjunction with the interim Condensed Consolidated Financial Statements and
related Notes appearing elsewhere herein.
Results of Operations for the Three Months Ended June 30, 1998, Compared
with the Three Months Ended June 30, 1997
Net sales increased 8.0% in the second quarter of 1998 as compared to the
second quarter of 1997. The increase reflected sales growth throughout the
United States, particularly in the Southeastern region of the country and in
California while international sales for the quarter decreased slightly.
Simpson Strong-Tie's second quarter sales increased 10.3% over the same
quarter last year, while Simpson Dura-Vent's sales decreased 1.7%. Contractor
and dealer distributors were the fastest growing connector sales channels.
The growth rate of Simpson Strong-Tie's seismic and high wind product,
engineered wood product and Anchoring Systems product sales was strong.
Simpson Dura-Vent sales of gas vent products decreased somewhat but the
decline was partially offset by increases in sales of Direct-Vent products.
Income from operations increased 17.7% from $11,882,159 in the second quarter
of 1997 to $13,987,166 in the second quarter of 1998. Gross margins increased
from 40.2% in the second quarter of 1997 to 41.1% in the second quarter of
1998. Selling expenses decreased 3.7% from $6,366,762 in the second quarter
of 1997 to $6,129,472 in the second quarter of 1998. The decrease was
primarily due to higher expenses associated with the acquisition of
additional homecenter business in the second quarter of 1997, offset somewhat
by higher costs related to an increase in the number of salespeople. General
and administrative expenses increased 10.4% from $8,077,667 in the second
quarter of 1997 to $8,916,134 in the second quarter of 1998. The increase was
primarily due to increased cash profit sharing resulting from higher
operating income. The effective tax rate was 40.6% in the second quarter of
1998, a slight decrease from the second quarter of 1997.
Results of Operations for the Six Months Ended June 30, 1998, Compared
with the Six Months Ended June 30, 1997
Net sales increased 10.7% in the first half of 1998 as compared to the first
half of 1997. The increase reflected sales growth throughout the United
States, particularly in the Southeastern region of the country. International
sales also increased at an above average rate, a significant portion of which
was related to the businesses purchased in March 1997. Simpson Strong-Tie's
sales for the first half of 1998 increased 12.9% over the same period in the
prior year, while Simpson Dura-Vent's sales increased 1.9%. Contractor
distributors and homecenters were the fastest growing connector sales
channels. The growth rate of Simpson Strong-Tie's seismic and engineered wood
product sales was strong, and the Anchoring Systems products also contributed
significantly to the increase in sales, primarily as a result of the 1997
purchase of the Isometric Group. Direct-Vent products led Simpson Dura-Vent's
sales with an increase over the same period in the prior year.
Income from operations increased 18.0% from $19,766,178 in the first half of
1997 to $23,314,289 in the first half of 1998. Gross margins increased from
38.9% in the first half of 1997 to 39.2% in the first half of 1998. Selling,
general and administrative expenses increased in the first half of 1998, but
were lower as a percentage of sales. Selling expenses increased 1.5% from
$11,575,025 in the first half of 1997 to $11,754,247 in the first half of
1998. General and administrative expenses increased 10.3% from $14,304,043 in
the first half of 1997 to $15,780,630 in the first half of 1998. The increase
was primarily due to increased cash profit sharing as well as higher
administrative overhead and personnel costs, including those associated with
the 1997 acquisitions. The effective tax rate was 40.6% in the first half of
1998, a slight decrease from the first half of 1997.
<PAGE>
Liquidity and Sources of Capital
As of June 30, 1998, working capital was $92.8 million as compared to $75.7
million at June 30, 1997, and $83.3 million at December 31, 1997. The
principal components of the increase in working capital from December 31,
1997, were increases in the Company's trade accounts receivable totaling
approximately $17.3 million, primarily due to higher sales levels and
seasonal buying programs, and an increase in cash and cash equivalents of
approximately $1.2 million. Partially offsetting these increases were
increases in certain liability accounts, including income taxes payable,
trade accounts payable, accrued profit sharing trust contributions and
accrued cash profit sharing and commissions. These accounts increased an
aggregate of approximately $9.0 million. The balance of the change in working
capital was due to the fluctuation of various other asset and liability
accounts. The working capital change combined with net income and noncash
expenses, such as depreciation, amortization and the issuance of stock under
the Company's stock bonus plan, totaling approximately $18.6 million,
resulted in net cash provided by operating activities of approximately $10.1
million. As of June 30, 1998, the Company had unused credit facilities
available of approximately $22.1 million.
The Company used nearly $12.4 million in its investing activities, primarily
to purchase the capital equipment and property needed to expand its capacity.
The Company plans to continue this expansion throughout the remainder of the
year and into 1999.
Financing activities provided the Company with approximately $3.5 million in
cash. The Company's subsidiary, Simpson Dura-Vent Company, Inc., borrowed
$3.0 million to finance the construction of its new facility in Ceres,
Mississippi. The balance of the cash was generated by the issuance of stock
upon the exercise of stock options by current and former employees.
The Company believes that cash generated by operations and borrowings
available under its existing credit agreements, will be sufficient for the
Company's working capital needs and planned capital expenditures through the
remainder of 1998 and into 1999. Depending on the Company's future growth, it
may become necessary to secure additional sources of financing.
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, the Company is involved in various legal proceedings and
other matters arising in the normal course of business.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Shareholders ("Annual Meeting") was held on May 20,
1998. The following seven nominees were reelected as director by the votes
indicated:
<TABLE>
<CAPTION>
Total Votes Total Votes
For Each Withheld From
Name Director Each Director
- -------------------------- --------------- ---------------
<S> <C> <C>
Earl F. Cheit 9,737,915 9,850
Thomas J Fitzmyers 9,738,415 9,350
Stephen B. Lamson 9,738,415 9,350
Alan R. McKay 9,738,415 9,350
Sunne Wright McPeak 9,727,065 20,700
Barclay Simpson 9,729,115 18,650
Barry Lawson Williams 9,727,565 20,200
</TABLE>
The following proposal was also adopted at the Annual Meeting by the vote
indicated:
<TABLE>
<CATPTION>
Broker
Proposal For Against Abstain Non-Vote
- ---------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
To ratify the appointment of
PriceWaterhouseCoopers LLP as
independent auditors of the
Company for 1998 9,740,354 1,090 6,321 -
</TABLE>
Item 5. Other Information.
If any shareholder should submit a proposal for a vote at the Company's
Annual Meeting of Shareholders in 1999 and if the proponent does not request
that the proposal be included in the Company's proxy materials, the proxies
solicited by the Company's management will confer discretionary authority to
vote for or against the proposal unless the Company receives notice of the
proposal on or before February 28, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
a. Exhibits.
EXHIBIT
NO DESCRIPTION
------- ------------------------------------------------------
<S> <C>
10.1 Loan Agreement, dated June 1, 1998, between Simpson
Manufacturing Co., Inc. and Union Bank of California, N.A.
10.2 Credit Agreement dated June 1, 1998, between Simpson
Manufacturing Co., Inc. and Union Wells Fargo Bank, N.A.
10.3 Loan Agreement, dated as of May 1, 1998, between Simpson
Dura-Vent Company, Inc. and Mississippi Business Finance
Corporation.
10.4 Bond Purchase Agreement, dated as of May 1, 1998, among
Union Bank of California, N.A. and Simpson Dura-Vent
Company, Inc. and Mississippi Business Finance Corporation.
10.5 Credit Agreement, dated July 1, 1998, between Barclays Bank
PLC and Simpson Strong-Tie International, Inc.
11 Statements re computation of earnings per share
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed.
</TABLE>
b. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which
this report is filed.
<PAGE>
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.
Simpson Manufacturing Co., Inc.
-------------------------------
(Registrant)
DATE: AUGUST 13, 1998 By: /s/Stephen B. Lamson
--------------- -------------------------------
Stephen B. Lamson
Chief Financial Officer
EXHIBIT 10.1
------------
LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") is made and
entered into as of June 1, 1998 by and between Simpson Manufacturing Co.,
Inc., a California Corporation ("Borrower") and UNION BANK OF CALIFORNIA,
N.A. ("Bank"). This Agreement amends and restates in its entirety that
certain loan agreement dated January 14, 1997 between Bank and Borrower.
SECTION 1. THE LOAN
1.1.1 The Revolver-To-Term Loan. Bank will loan to Borrower an
amount not to exceed Thirteen Million Eight Hundred Thousand Dollars
($13,800,000) outstanding in the aggregate at any one time (the
"Revolver-To-Term Loan"). Borrower may borrow, repay and reborrow all or
part of the Revolver-To-Term Loan in accordance with the terms of the
Revolver-To-Term Note. All borrowings of the Revolver-To-Term Loan must be
made before June 30, 2000 at which time all unpaid principal under the
Revolver-To-Term Loan shall be converted to a fully amortizing loan as set
forth in subsection 1.1.3. The Revolver-To-Term Loan shall be evidenced by a
promissory note (the "Revolver-To-Term Note") on the standard form used by
Bank for commercial loans. Bank shall enter each amount borrowed and repaid
in Bank's records and such entries shall be deemed to be the amount of the
Revolver-To-Term Loan outstanding. Omission of Bank to make any such entries
shall not discharge Borrower of its obligation to repay in full with interest
all amounts borrowed.
1.1.2 The Standby L/C Sublimit. As a sublimit to the Revolving Loan,
Bank shall issue, as Borrower may request from time to time for the account
of Borrower, one or more irrevocable, standby or commercial letters of credit
(individually, an "L/C" and collectively, the "L/Cs"). All such L/Cs shall
be drawn on such terms and conditions as are reasonably acceptable to Bank.
The aggregate amount available to be drawn under all outstanding L/Cs and the
aggregate amount of unpaid reimbursement obligations under drawn L/Cs shall
not exceed Four Million Dollars ($4,000,000.00) and shall reduce, dollar for
dollar, the maximum amount available under the Revolving-To-Term-Loan. Each
L/C shall be governed by the terms of (and Borrower agrees to execute) Bank's
standard form for L/C applications and reimbursement agreements. No L/C may
be issued for a period exceeding 12 months, and no L/C shall expire after
June 30, 2000. At Borrower's request, Bank will issue L/C's on behalf of
Borrower's subsidiaries, including but not limited to: 1) Simpson Strong-Tie
Company, Inc.; 2) Simpson Dura-Vent Company, Inc. and 3) Simpson Strong-Tie,
International Inc., so long as the Borrower executes the Bank's standard
form for L/C applications and reimbursement agreement.
Borrower currently maintains an outstanding L/C in the amount of Four Hundred
Seventy Thousand Pounds Sterling (GBP470,000) maturing January 1, 1999 and an
L/C in the amount of Three Hundred Thirty Three Thousand Nine Hundred Ninety
Eight Dollars and fifty cents ($333,998.50) maturing on June 1, 1999. These
L/C's shall now be considered as utilization under the L/C sublimit.
<PAGE>
1.1.3 The Term Loan. At Borrower's request and solely to repay the
Revolver-To-Term Loan, Bank will loan to Borrower the sum outstanding at the
maturity of the Revolver-To-Term Loan in one disbursement on or before June
1, 2000 (the "Term Loan"). In the event of a prepayment of principal of the
Term Loan and payment of any resulting fees, any prepaid amounts shall be
applied to the scheduled principal payments in the reverse order of their
maturity. The Term Loan shall be evidenced by the Revolver-To-Term Note.
1.2 Terminology.
As used herein the word "Loan" shall mean, collectively, all the
credit facilities described above.
As used herein the word "Note" shall mean the promissory note
described above.
As used herein, the words "Loan Documents" shall mean all documents
executed in connection with this Agreement.
1.3 Purpose of Loan. The proceeds of the Revolving-To-Term Loan shall
be used for general working capital purposes and acquisitions.
1.4.1 Interest. The unpaid principal balance of the Revolving-To-Term
Loan shall bear interest at the rate(s) specified in the Note and selected by
Borrower.
1.4.2 Interest. The unpaid principal balance of the Term Loan shall
bear interest at the rate(s) specified in the Note and selected by Borrower.
1.5 Unused Fee. On June 30 and December 30 of each year beginning
December 30, 1998, or the earlier termination of the Loan, Borrower shall pay
to Bank a fee of one eighth of one percent (.125%) per year on the unused
portion of the Revolving to Term Loan.
1.6 Stand-by Letter of Credit Fees. Borrower agrees to pay Bank three
quarters of one percent (.75%) per annum of the principal face sum of all
L/C's.
1.7 Disbursement. Upon execution hereof, Bank shall disburse the
proceeds of the Loan as provided in Bank's standard form Authorization
executed by Borrower.
1.8 Controlling Document. In the event of any inconsistency between
the terms of this Agreement and any Note or any of the other Loan Documents,
the terms of such Note or other Loan Documents will prevail over the terms of
this Agreement.
SECTION 2. CONDITIONS PRECEDENT
Bank shall not be obligated to disburse all or any portion of the proceeds of
the Loan unless at or prior to the time for the making of such disbursement,
the following conditions have been fulfilled to Bank's satisfaction:
<PAGE>
2.1 Compliance. Borrower shall have performed and complied with all
terms and conditions required by this Agreement to be performed or complied
with by it prior to or at the date of the making of such disbursement and
shall have executed and delivered to Bank the Note and other documents deemed
necessary by Bank.
2.2 Guaranties. Simpson Strong-Tie Company, Inc., and Simpson Dura-
Vent Company, Inc. (collectively the "Guarantors") shall have executed and
delivered to Bank their respective continuing guaranties, each in the amount
of Thirteen Million Eight Hundred Thousand Dollars ($13,800,000), in form and
amount satisfactory to Bank.
2.3 Borrowing Resolution. Borrower shall have provided Bank with
certified copies of resolutions duly adopted by the Board of Directors of
Borrower, authorizing this Agreement and the Loan Documents. Such
resolutions shall also designate the persons who are authorized to act on
Borrower's behalf in connection with this Agreement and to do the things
required by Borrower pursuant to this Agreement.
2.4 Continuing Compliance. At the time any disbursement is to be made,
there shall not exist any event, condition or act which constitutes an event
of default under Section 6 hereof or any event, condition or act which with
notice, lapse of time or both would constitute such event of default; nor
shall there be any such event, condition, or act immediately after the
disbursement were it to be made.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
3.1 Authority to Borrow. The execution, delivery and performance of
this Agreement, the Note and all other agreements and instruments required by
Bank in connection with the Loan are not in contravention of any of the terms
of any indenture, agreement or undertaking to which Borrower is a party or by
which it or any of its property is bound or affected.
3.2 Financial Statements. The financial statements of Borrower,
including both a consolidated balance sheet at 03/31/98, together with
supporting schedules, and a consolidated income statement for the three (3)
months ended 03/31/98, have heretofore been furnished to Bank, and are true
and complete in all material respects and fairly represent the financial
condition of Borrower during the period covered thereby. Since 03/31/98,
there has been no material adverse change in the financial condition or
operations of Borrower.
3.3 Litigation. There is no litigation or proceeding pending or
threatened against Borrower or any of its property which is reasonably likely
to affect the financial condition, property or business of Borrower in a
materially adverse manner.
3.4 Default. Borrower is not now in default in the payment of any of
its material obligations, and there exists no event, condition or act which
constitutes an event of default under Section 6 hereof and no condition,
event or act which with notice or lapse of time, or both, would constitute an
event of default.
<PAGE>
3.5 Organization. Borrower is duly organized and existing under the
laws of the state of its organization, and has the power and authority to
carry on the business in which it is engaged and/or proposes to engage.
3.6 Authorization. This Agreement and all things required by this
Agreement have been duly authorized by all requisite action of Borrower.
3.7 Compliance With Laws. Borrower, to the best of its knowledge and
belief, is not in violation with respect to any applicable laws, rules,
ordinances or regulations which materially affect the operations or financial
condition of Borrower.
3.8 ERISA. Any defined benefit pension plans as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), of
Borrower, to the best of its knowledge and belief, meets as of the date
hereof, the minimum funding standards of Section 302 of ERISA, and no
Reportable Event or Prohibited Transaction as defined in ERISA has occurred
with respect to any such plan.
3.9 Continuing Representations. These representations shall be
considered to have been made again at and as of the date of each disbursement
of the Loan and shall be true and correct as of such date or dates.
SECTION 4. AFFIRMATIVE COVENANTS
Until the Note and all sums payable pursuant to this Agreement or any
other of the Loan Documents have been paid in full, unless Bank waives
compliance in writing, Borrower agrees that:
4.1 Use of Proceeds. Borrower will use the proceeds of the Loan only
as provided in subsection 1.3 above.
4.2 Records. Borrower will keep and maintain full and accurate
accounts and records of its operations according to generally accepted
accounting principles.
4.3 Information Furnished. Borrower will furnish to Bank:
(a) Within sixty (60) days after the close of each fiscal quarter,
a consolidated and consolidating financial statement, to include a balance
sheet, income statement, statement of cash flow and consolidating schedules
for Simpson Manufacturing Company, Inc., and its subsidiaries;
(b) Within one hundred twenty (120) days after the close of each
fiscal year, a consolidated financial statement of the Borrower accompanied
by the unqualified opinion of an independent certified public accountant.
(c) Give written notice to Bank within fifteen (15) days of any
guaranty issued obligating Borrower or Guarantors;
<PAGE>
(d) Notice of occurrence of any Event of Default or of any event,
condition or occurrence which, with the giving of notice or the passage of
time or both, would constitute an Event of Default;
(e) Copies of any amendments to Borrower's loan documents with
Well Fargo Bank;
(f) Prompt written notice to Bank of all events of default under
any of the terms or provisions of this Agreement or of any other agreement,
contract, document or instrument entered, or to be entered into with Bank;
and of any litigation which, if decided adversely to Borrower, would have a
material adverse effect on Borrower's financial condition; and of any other
matter which has resulted in, or is likely to result in, a material adverse
change in its financial condition or operations;
(g) Prior written notice to Bank of any changes in Borrower's
officers and other senior management; Borrower's name; and location of
Borrower's assets, principal place of business or chief executive office; and
(h) Give written notice at least 30 days prior to the proposed
closing date of any acquisition in excess of Eight Million Dollars
($8,000,000.00), providing a description of the business or assets to be
acquired and the terms of the acquisition.
4.4 Tangible Net Worth. Borrower will at all times maintain Tangible
Net Worth of not less than One Hundred Million Dollars ($100,000,000.00),
plus fifty percent (50%) of net income after 12/31/97 measured on a quarterly
basis. "Tangible Net Worth" shall mean net worth increased by indebtedness of
Borrower subordinated to Bank and decreased by patents, licenses, trademarks,
trade names, goodwill and other similar intangible assets, organizational
expenses, security deposits, and monies due from affiliates (including
officers, shareholders and directors).
4.5 Adjusted Total Liabilities to Tangible Net Worth. Borrower will at
all times maintain a ratio of adjusted total liabilities to tangible net
worth of not greater than 1.5:1.0. "Adjusted Total Liabilities" shall mean
total liabilities plus all guarantees and similar contingent liabilities of
Borrower and Guarantors.
4.6 Profit From Operations. Borrower will maintain a net profit from
operations, as defined by generally accepted accounting principles, of any
positive amount for each fiscal year.
4.7 Cash Flow. During the Term Loan period, Borrower will maintain a
ratio of Cash Flow to Debt Service of not less than 1.5:1.0. Compliance with
this subsection shall be measured as of the end of each fiscal year. "Cash
Flow" shall mean net profit before taxes to which interest, net of
capitalized interest, depreciation, amortization, and other noncash expenses
are added for the twelve (12) month period immediately preceding the date of
calculation. "Debt Service" shall mean interest expenses plus prior period
current portion of long-term debt, including subordinated debt payments.
<PAGE>
4.8 Litigation and Attorneys' Fees. Borrower will pay promptly to Bank
upon demand, reasonable attorneys' fees (including but not limited to the
reasonable estimate of the allocated costs and expenses of in-house legal
counsel and legal staff) and all costs and other expenses paid or incurred by
Bank in collecting, modifying or compromising the Loan or in enforcing or
exercising its rights or remedies created by, connected with or provided for
in this Agreement or any of the Loan Documents, whether or not an
arbitration, judicial action or other proceeding is commenced. If such
proceeding is commenced, only the prevailing party shall be entitled to
attorneys' fees and court costs.
4.9 Additional Requirements. Borrower will promptly, upon demand by
Bank, take such further action and execute all such additional documents and
instruments in connection with this Agreement as Bank in its reasonable
discretion deems necessary, and promptly supply Bank with such other
information concerning its affairs as Bank may request from time to time.
4.10 Bank Expenses. Borrower will pay or reimburse Bank for all costs,
expenses and fees incurred by Bank in preparing and documenting this
Agreement and the Loan, and all amendments and modifications thereof,
including but not limited to all filing and recording fees, costs of
appraisals, insurance and attorneys' fees, including the reasonable estimate
of the allocated costs and expenses of in-house legal counsel and legal
staff.
SECTION 5. NEGATIVE COVENANTS
Until the Note and all other sums payable pursuant to this Agreement or
any other of the Loan Documents have been paid in full, unless Bank waives
compliance in writing, Borrower agrees that:
5.1 Encumbrances and Liens. Borrower will not create, assume or suffer
to exist any mortgage, pledge, security interest, encumbrance, or lien in all
or any portion of its accounts receivable or other rights to payment, general
intangibles, inventory or equipment except as otherwise provided in Section
5.2.
5.2 Other Indebtedness. Create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to
Bank; (b) trade debt incurred by Borrower in the normal course of its
business; (c) the existing liabilities of Borrower disclosed to Bank on its
financial statement referenced in Section 3.2 hereof; (d) indebtedness
arising under existing real estate secured loans, provided however that such
indebtedness shall not exceed the lesser of (i) 100% of the purchase price of
the real property or (ii) the appraised value; (e) unsecured indebtedness of
Borrower to Wells Fargo Bank in an aggregate amount not to exceed Nine
Million and Two Hundred Thousand Dollars ($9,200,000.00); and (f) unsecured
indebtedness of subsidiaries in an aggregate amount not to exceed Ten Million
Dollars ($10,000,000).
<PAGE>
5.3 Sale of Assets, Liquidation or Merger. Borrower will not liquidate,
dissolve, or enter into any consolidation, merger, partnership or other
combination, nor convey, nor sell, nor lease all or the greater part of its
assets or business; nor permit the dissolution, merger, consolidation or sale
of all or any greater part of the assets of any of Borrower's affiliates or
subsidiaries.
5.4 Guaranties. Borrower will not become a guarantor or surety, pledge
its credits or properties in any manner in excess of $25,000,000 in the
aggregate
5.5 Acquisitions. Borrower will not make any acquisitions or acquire
any net assets, other than fixed or capital assets acquired in the normal
course of business, in excess of Twenty Million Dollars ($20,000,000) in any
fiscal year.
5.6 Lease Obligations. Borrower or Subsidiary will not incur new
operating lease obligations as lessee which would result in aggregate lease
payments for any fiscal year exceeding Fifteen Million Dollars
($15,000,000). Each said lease shall be of equipment or real property for
use by Borrower or Subsidiary in the ordinary course of its business.
5.7 Except for the amendment anticipated to be executed prior to June
30, 1998, the terms of which have been advised to the Bank, Borrower will not
amend, alter, supplement or otherwise modify the terms of Guarantor's
existing indebtedness to Wells Fargo Bank, N.A.
5.8 Borrower will not transfer the proceeds of any loan or advance
hereunder, or any other asset of Borrower to any affiliate or Guarantor,
unless such transfer is evidenced by a valid and enforceable instrument or
statement or account.
SECTION 6. EVENTS OF DEFAULT
The occurrence of any of the following events ("Events of Default")
shall terminate any obligation on the part of Bank to make or continue the
Loan and automatically, unless otherwise provided under the Note, shall make
all sums of interest and principal and any other amounts owing under the Loan
immediately due and payable, without notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor, or any other
notices or demands:
6.1 Borrower shall default in the due and punctual payment of the
principal of or the interest on the Note or any of the other Loan Documents;
or
6.2 Any default shall occur under the Note; or
6.3 Borrower or any Guarantor shall default in the due performance or
observance of any covenant or condition of the Loan Documents, other than the
default referred to in subsection 6.1 above, and such default shall not be
cured within ten (10) business days after the occurrence thereof;
6.4 Any guaranty required hereunder is breached or becomes ineffective,
or any Guarantor disavows or attempts to revoke or terminate such guaranty;
or
6.5 If, in the opinion of Bank, there is materially adverse change in
the financial condition of Borrower or any Guarantor, or for any reason Bank
believes that the prospect of payment or performance pursuant to the Credit
Facilities, any other indebtedness of Borrower to Bank, or any other
agreement or instrument required by Bank in connection with the Credit
Facilities has been impaired; or
<PAGE>
6.6 Borrower or any Guarantor shall commit or do, or fail to commit or
do, any act or thing which would constitute an event of default under any of
the terms of any other agreement, document, or instrument executed, or to be
executed by it and concerning a financial obligation of Borrower or any such
Guarantor (including without limitation the existing loan documents with
Wells Fargo Bank), and such default shall not have been cured within any
applicable period of grace provided in such agreement, document or
instrument.
6.7 Borrower or any Guarantor suffers a change in Control. "Control"
shall mean the possession, directly or indirectly, of the power to direct, or
cause the direction of, the management or policies of the Borrower or
Guarantor, through the ownership of fifty one percent (51%) or more of voting
securities. For purposes of this section, change in Control shall not apply
to either Barclay Simpson or Thomas J Fitzmyers.
SECTION 7. MISCELLANEOUS PROVISIONS
7.1 Additional Remedies. The rights, powers and remedies given to Bank
hereunder shall be cumulative and not alternative and shall be in addition to
all rights, powers and remedies given to Bank by law against Borrower or any
other person, including but not limited to Bank's rights of setoff or
banker's lien.
7.2 Nonwaiver. Any forbearance or failure or delay by Bank in
exercising any right, power or remedy hereunder shall not be deemed a waiver
thereof and any single or partial exercise of any right, power or remedy
shall not preclude the further exercise thereof. No waiver shall be
effective unless it is in writing and signed by an officer of Bank.
7.3 Inurement. The benefits of this Agreement shall inure to the
successors and assigns of Bank and the permitted successors and assignees of
Borrower, and any assignment of Borrower without Bank's consent shall be null
and void.
7.4 Applicable Law. This Agreement and all other agreements and
instruments required by Bank in connection therewith shall be governed by and
construed according to the laws of the State of California.
7.5 Amendments. This Agreement may be amended only in writing signed
by all parties hereto.
7.6 Integration Clause. Except for documents and instruments
specifically referenced herein, this Agreement constitutes the entire
agreement between Bank and Borrower regarding the Loan and all prior
communications verbal or written between Borrower and Bank shall be of no
further effect or evidentiary value.
7.7 Construction. The section and subsection headings herein are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
7.8 Amendments. This Agreement may be amended only in writing signed
by all parties hereto.
<PAGE>
7.9 Counterparts. Borrower and Bank may execute one or more
counterparts to this Agreement, each of which shall be deemed an original.
SECTION 8. SERVICE OF NOTICES
8.1 Any notices or other communications provided for or allowed
hereunder shall be effective only when given by one of the following methods
and addressed to the respective party at its address given with the
signatures at the end of this Agreement and shall be considered to have been
validly given: (a) upon delivery, if delivered personally; (b) upon receipt,
if mailed, first class postage prepaid, with the United States Postal
Service; (c) on the next business day, if sent by overnight courier service
of recognized standing; and (d) upon telephoned confirmation of receipt, if
telecopied.
8.2 The addresses to which notices or demands are to be given may be
changed from time to time by notice delivered as provided above.
INTENTIONALLY LEFT BLANK
<PAGE>
THIS AGREEMENT is executed on behalf of the parties by duly authorized
officers as of the date first above written.
UNION BANK OF CALIFORNIA, N.A.
/s/Joellen ademski /s/Lebbeus S. Case, Jr.
- -------------------------- --------------------------
Joellen Ademski Lebbeus S. Case, Jr.
Vice President Vice President
Address:
1800 Harrison Street, Suite 1400
Oakland, CA 94612-3429
Telephone: (510) 271-1747
FAX: (510) 271-1764
SIMPSON MANUFACTURING CO., INC.
/s/Thomas Fitzmyers /s/Steve Lamson
- -------------------------- --------------------------
Thomas Fitzmyers Steve Lamson
President Chief Financial Officer
Address:
4637 Chabot Drive, suite 200
Pleasanton, CA 94588-0789
Telephone:(925) 460-9912
FAX :(925) 847-9114
ACKNOWLEDGED BY GUARANTORS:
SIMPSON STRONG-TIE COMPANY, INC.
/s/Thomas Fitzmyers /s/Steve Lamson
- -------------------------- --------------------------
SIMPSON DURA-VENT COMPANY, INC.
/s/Thomas Fitzmyers /s/Steve Lamson
- -------------------------- --------------------------
EXHIBIT 10.2
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CREDIT AGREEMENT
THIS AGREEMENT is entered into as of June 1, 1998, by and
between SIMPSON MANUFACTURING CO., INC., a California corporation
("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION
("Bank").
RECITAL
Borrower has requested from Bank the credit accommodation
described below, and Bank has agreed to provide said credit
accommodation to Borrower on the terms and conditions contained
herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower
hereby agree as follows:
ARTICLE I
THE CREDIT
SECTION 1.1. TERM COMMITMENT.
(a) Term Commitment. Subject to the terms and conditions
of this Agreement, Bank hereby agrees to make advances to
Borrower from time to time up to and including June 1, 2000, not
to exceed the aggregate principal amount of Nine Million Two
Hundred Dollars ($9,200,000.00) ("Term Commitment"), the
proceeds of which shall be used to finance Borrower's general
corporate purposes, and which shall be converted, at Borrower's
request, on June 1, 2000, to a term loan, as described more fully
below. Borrower's obligation to repay advances under the Term
Commitment shall be evidenced by a promissory note substantially
in the form of Exhibit A attached hereto ("Term Commitment Note"),
all terms of which are incorporated herein by this reference.
(b) Borrowing and Repayment. Borrower may from time to
time during the period in which Bank will make advances under the
Term Commitment borrow and partially or wholly repay its
outstanding borrowings, and reborrow, subject to all the
limitations, terms and conditions contained herein; provided
however, that the total outstanding borrowings under the Term
Commitment shall not exceed the maximum principal amount
available thereunder, as set forth above. The outstanding
principal balance of the Term Commitment shall be due and payable
in full on June 1, 2000; provided however, that so long as
Borrower is in compliance on said date with all terms and
conditions contained herein and in any other documents evidencing
the Term Commitment, Bank agrees, at borrowers request, to
<PAGE>
restructure repayment of said outstanding principal balance so
that principal shall be amortized over five (5) years and shall be
repaid in sixty (60) equal monthly installments, as set forth in
the promissory note executed by Borrower on said date to evidence
the new repayment schedule.
(c) Prepayment. Borrower may prepay principal on the Term
Commitment solely in accordance with the provisions of the Term
Commitment Note.
(d) Letter of Credit Subfeature. As a subfeature under the
Term Commitment, Bank agrees from time to time until the Conversion
Date to issue Standby letters of credit for the account of
Borrower to finance Borrower's workers' compensation insurance
requirements (each, a "Letter of Credit" and collectively,
"Letters of Credit"); provided however, that the form and
substance of each Letter of Credit shall be subject to approval
by Bank, in its sole discretion; and provided further, that the
aggregate undrawn amount of all outstanding Letters of Credit
shall not at any time exceed One Million Six Hundred Thousand
Dollars ($1,600,000.00). Each Letter of Credit shall be issued
for a term designated by Borrower; provided however, that no Letter
of Credit shall have an expiration date subsequent to the Conversion
Date. The undrawn amount of all Letters of Credit shall be reserved
under the Line of Credit and shall not be available for
borrowings thereunder. Each Letter of Credit shall be subject to
the additional terms and conditions of the Letter of Credit
Agreement and related documents, if any, required by Bank in
connection with the issuance thereof (each, a "Letter of Credit
Agreement" and collectively, "Letter of Credit Agreements").
Each draft paid by Bank under a Letter of Credit shall be deemed
an advance under the Line of Credit and shall be repaid by
Borrower in accordance with the terms and conditions of this
Agreement applicable to such advances; provided however, that if
advances under the Line of Credit are not available, for any
reason, at the time any draft is paid by Bank, then Borrower
shall immediately pay to Bank the full amount of such draft,
together with interest thereon from the date such amount is paid
by Bank to the date such amount is fully repaid by Borrower, at
the rate of interest applicable to advances under the Line of
Credit. In such event Borrower agrees that Bank, in its sole
discretion, may debit any demand deposit account maintained by
Borrower with Bank for the amount of any such draft.
SECTION 1.2. INTEREST/FEES.
(a) Interest. The outstanding principal balance of the
Term Commitment shall bear interest at the rate of interest set
forth in the Term Commitment Note.
<PAGE>
(b) Computation and Payment. Interest shall be computed on
the basis of a 360-day year, actual days elapsed. Interest shall
be payable at the times and place set forth in the Term
Commitment Note.
(c) Unused Commitment Fee. Borrower shall pay to Bank a
fee equal to one-eighth percent (1/8%) per annum (computed on the
basis of a 360-day year, actual days elapsed) on the average
daily unused amount of the Term Commitment, which fee shall be
calculated on a monthly basis by Bank and shall be due and
payable by Borrower in arrears within ten (10) days after each
billing is sent by Bank.
(d) Letter of Credit Fees. Borrower shall pay to Bank
(i) fees upon the issuance of each Letter of Credit equal to
three quarters percent (0.75%) per annum (computed on the basis
of a 360-day year, actual days elapsed) of the face amount thereof,
and (ii) fees upon the payment or negotiation by Bank of each draft
under any Letter of Credit and fees upon the occurrence of any
other activity with respect to any Letter of Credit (including
without limitation, the transfer, amendment or cancellation of
any Letter of Credit) determined in accordance with Bank's
standard fees and charges then in effect for such activity.
SECTION 1.3. COLLECTION OF PAYMENTS. Borrower authorizes
Bank to collect all principal, interest and fees due under the
Term Commitment by charging Borrower's demand deposit account
number 4103-117438 with Bank, or any other demand deposit account
maintained by Borrower with Bank, for the full amount thereof.
Should there be insufficient funds in any such demand deposit
account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by Borrower.
SECTION 1.4. GUARANTIES. All indebtedness of Borrower to
Bank shall be guaranteed by Simpson Dura Vent Company, Inc.
("SDV") and Simpson Strong-Tie Company, Inc. ("SST") (each, a
"Guarantor") in the principal amount of Nine Million Two Hundred
Thousand Dollars ($9,200,000.00) each, as evidenced by and subject
to the terms of guaranties in form and substance satisfactory to Bank.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties
to Bank, which representations and warranties shall survive the
execution of this Agreement and shall continue in full force and
effect until the full and final payment, and satisfaction and
discharge, of all obligations of Borrower to Bank subject to this
Agreement.
<PAGE>
SECTION 2.1. LEGAL STATUS. Borrower is a corporation,
duly organized and existing and in good standing under the laws
of the state of California, and is qualified or licensed to do
business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or
licensing is required and in which the failure to so qualify or to
be so licensed could have a material adverse effect on Borrower.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement,
the Term Commitment Note, and each other document, contract and
instrument required hereby or at any time hereafter delivered to
Bank in connection herewith (collectively, the "Loan Documents")
have been duly authorized, and upon their execution and delivery
in accordance with the provisions hereof will constitute legal,
valid and binding agreements and obligations of Borrower or the
party which executes the same, enforceable in accordance with
their respective terms.
SECTION 2.3. NO VIOLATION. The execution, delivery and
performance by Borrower of each of the Loan Documents do not
violate any provision of any law or regulation, or contravene any
provision of the Articles of Incorporation or By-Laws of
Borrower, or result in any breach of or default under any
contract, obligation, indenture or other instrument to which
Borrower is a party or by which Borrower may be bound.
SECTION 2.4. LITIGATION. There are no pending, or to the
best of Borrower's knowledge threatened, actions, claims,
investigations, suits or proceedings by or before any
governmental authority, arbitrator, court or administrative
agency which could have a material adverse effect on the
financial condition or operation of Borrower other than those
disclosed by Borrower to Bank.
SECTION 2.5. FINANCIAL STATEMENT. The financial statement
of Borrower dated December 31, 1997, a true copy of which has been
delivered by Borrower to Bank prior to the date hereof, (a) is
complete and correct in all material respects and presents fairly the
financial condition of Borrower, (b) discloses all liabilities of
Borrower that are required to be reflected or reserved against
under generally accepted accounting principles, and (c) has been
prepared in accordance with generally accepted accounting
principles consistently applied. Since the date of such
financial statement there has been no material adverse change in
the financial condition of Borrower, nor has Borrower mortgaged,
pledged, granted a security interest in or otherwise encumbered
any of its assets or properties except in favor of Bank or as
otherwise permitted by Bank in writing.
<PAGE>
SECTION 2.6. INCOME TAX RETURNS. Borrower has no
knowledge of any pending assessments or adjustments of its income
tax payable with respect to any year.
SECTION 2.7. NO SUBORDINATION. There is no agreement,
indenture, contract or instrument to which Borrower is a party or
by which Borrower may be bound that requires the subordination in
right of payment of any of Borrower's obligations subject to this
Agreement to any other obligation of Borrower.
SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, all
permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names,
if any, necessary to enable it to conduct the business in which it is
now engaged in compliance with applicable law, except those which, if
not possessed, are not reasonably likely to have a material adverse
effect on Borrower's financial condition or operations.
SECTION 2.9. ERISA. Borrower is in compliance in all
material respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended or recodified
from time to time ("ERISA"); Borrower has not violated any
provision of any defined employee pension benefit plan (as
defined in ERISA) maintained or contributed to by Borrower (each,
a "Plan"); no Reportable Event as defined in ERISA has occurred
and is continuing with respect to any Plan initiated by Borrower;
Borrower has met its minimum funding requirements under ERISA
with respect to each Plan; and each Plan will be able to fulfill
its benefit obligations as they come due in accordance with the
Plan documents and under generally accepted accounting
principles.
SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in
default on any obligation for borrowed money, any purchase money
obligation or any other material lease, commitment, contract,
instrument or obligation.
SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed
by Borrower to Bank in writing prior to the date hereof, Borrower
is in compliance in all material respects with all applicable
federal or state environmental, hazardous waste, health and
safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations
and/or properties, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of
1986, the Federal Resource Conservation and Recovery Act of 1976,
and the Federal Toxic Substances Control Act, as any of the same
may be amended, modified or supplemented from time to time. None
of the operations of Borrower is the subject of any federal or
state investigation evaluating whether any remedial action
<PAGE>
involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the
environment. Borrower has no material contingent liability in
connection with any release of any toxic or hazardous waste or
substance into the environment.
ARTICLE III
CONDITIONS
SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT.
The obligation of Bank to extend any credit contemplated by this
Agreement is subject to the fulfillment to Bank's satisfaction of
all of the following conditions:
(a) Approval of Bank Counsel. All legal matters incidental
to the extension of credit by Bank shall be satisfactory to
Bank's counsel.
(b) Documentation. Bank shall have received, in form and
substance satisfactory to Bank, each of the following, duly
executed:
(i) This Agreement and the Notes.
(ii) Corporate Borrowing Resolution.
(iii) Corporate Resolution Authorizing Execution of Guaranty
from SDV and SST.
(iv) Continuing Guaranties from SDV and SST.
(v) Foreign Exchange Agreement.
(vi) Continuing Standby Letter of Credit Agreement.
(vii) Such other documents as Bank may require under any
other Section of this Agreement.
(c) Financial Condition. There shall have been no material
adverse change, as determined by Bank, in the financial condition
or business of Borrower or any guarantor hereunder, nor any
material decline, as determined by Bank, in the market value of
any collateral required hereunder or a substantial or material
portion of the assets of Borrower or any such guarantor.
SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The
obligation of Bank to make each extension of credit requested by
Borrower hereunder shall be subject to the fulfillment to Bank's
satisfaction of each of the following conditions:
(a) Compliance. The representations and warranties
contained herein and in each of the other Loan Documents shall be
true on and as of the date of the signing of this Agreement and
on the date of each extension of credit by Bank pursuant hereto,
with the same effect as though such representations and
warranties had been made on and as of each such date, and on each
such date, no Event of Default as defined herein, and no
<PAGE>
condition, event or act which with the giving of notice or the
passage of time or both would constitute such an Event of
Default, shall have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional
documents which may be required in connection with such extension
of credit.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that so long as Bank remains committed to
extend credit to Borrower pursuant hereto, or any liabilities
(whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of
Borrower subject hereto, Borrower shall, unless Bank otherwise
consents in writing:
SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all
principal, interest, fees or other liabilities due under any of
the Loan Documents at the times and place and in the manner
specified therein.
SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books
and records in accordance with generally accepted accounting
principles consistently applied.
SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of
the following, in form and detail satisfactory to Bank:
(a) not later than 120 days after and as of the end of each
fiscal year, an audited consolidated financial statement of Borrower
accompanied by the unqualified opionion of an independent certified
public accountant and a Borrower prepared consolidating financial
statement of Borrower, SDV and SST, each to include balance sheet,
income statement and statement of cash flow;
(b) not later than 60 days after and as of the end of each
fiscal quarter, a consolidated and consolidating financial
statement of Borrower, SDV and SST, prepared by Borrower, to
include balance sheet and income statement;
(c) from time to time such other information as Bank may
reasonably request.
SECTION 4.4. COMPLIANCE. Preserve and maintain all
licenses, permits, governmental approvals, rights, privileges and
franchises necessary for the conduct of its business; and comply
with the provisions of all documents pursuant to which Borrower
is organized and/or which govern Borrower's continued existence
<PAGE>
and with the requirements of all laws, rules, regulations and
orders of any governmental authority applicable to Borrower
and/or its business, except those which, if not preserved,
maintained or complied with, are not reasonably likely to have a
material adverse effect on Borrower's financial condition or
operations.
SECTION 4.5. INSURANCE. Maintain and keep in force
insurance of the types and in amounts customarily carried in
lines of business similar to that of Borrower.
SECTION 4.6. TAXES AND OTHER LIABILITIES. Pay and
discharge when due any and all indebtedness, obligations,
assessments and taxes, both real or personal, including without
limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower may
in good faith contest or as to which a bona fide dispute may
arise, and (b) for which Borrower has made provision, to Bank's
satisfaction, for eventual payment thereof in the event Borrower
is obligated to make such payment.
SECTION 4.7. FINANCIAL CONDITION. Maintain Borrower's
financial condition as follows using generally accepted
accounting principles consistently applied and used consistently
with prior practices (except to the extent modified by the
definitions herein):
(a) Tangible Net Worth not at any time less than
$100,000,000.00 plus, in each fiscal year commencing with fiscal
year beginning January 1, 1998, on a cumulative basis, an amount
equal to 50% of net profit after taxes in the immediately
preceding fiscal year, with no deductions for losses, with
"Tangible Net Worth" defined as the aggregate of total
stockholders' equity plus subordinated debt less any intangible
assets.
(b) Total Liabilities divided by Tangible Net Worth not at
any time greater than 1.5 to 1.0, with "Total Liabilities"
defined as the aggregate of current liabilities and non-current
liabilities (inclusive of all contingent liabilities) less
subordinated debt, and with "Tangible Net Worth" as defined
above.
(c) Net income after taxes not less than $1.00 on an annual
basis, determined as of each fiscal year end.
(d) EBITDA Coverage Ratio not less than 1.5 to 1.0 as of
each fiscal year end after the Conversion Date, with "EBITDA"
defined as net profit before tax plus interest expense (net of
capitalized interest expense), depreciation expense and amortization
expense and other non-cash expenses, and with "EBITDA Coverage
Ratio" defined as EBITDA divided by the aggregate of total
<PAGE>
interest expense plus the prior period current maturity of long-
term debt and the prior period current maturity of subordinated
debt.
SECTION 4.10. NOTICE TO BANK. Promptly (but in no event
more than five (5) days after the occurrence of each such event
or matter) give written notice to Bank in reasonable detail of:
(a) the occurrence of any Event of Default, or any condition,
event or act which with the giving of notice or the passage of
time or both would constitute an Event of Default; (b) any change
in the name or legal structure of Borrower; or (c) the
occurrence and nature of any material Reportable Event or
Prohibited Transaction, each as defined in ERISA, or any funding
deficiency with respect to any Plan.
SECTION 4.11. YEAR 2000 COMPLIANCE. Perform all acts
reasonably necessary to ensure that (a) Borrower and any business
in which Borrower holds a substantial interest, and (b) all
customers, suppliers and vendors that are material to Borrower's
business, become Year 2000 Compliant in a timely manner. As used
herein, "Year 2000 Compliant" shall mean, in regard to any
entity, that all software, hardware, firmware, equipment, goods
or systems material to the business operations or financial
condition of such entity, will properly perform date sensitive
functions before, during and after the year 2000. Borrower
shall, immediately upon request, provide to Bank such
certifications or other evidence of Borrower's compliance with
the terms hereof as Bank may from time to time require.
ARTICLE V
NEGATIVE COVENANTS
Borrower further covenants that so long as Bank remains
committed to extend credit to Borrower pursuant hereto, or any
liabilities (whether direct or contingent, liquidated or
unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's
prior written consent:
SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any
credit extended hereunder except for the purposes stated in
Article I hereof.
SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or
permit to exist any indebtedness or liabilities resulting from
borrowings, loans or advances, whether secured or unsecured,
matured or unmatured, liquidated or unliquidated, joint or
several, except (a) the liabilities of Borrower to Bank, (b) any
other liabilities of Borrower existing as of, and disclosed to
Bank prior to, the date hereof, (including liabilities incurred
after the date hereof under commitments in favor of Borrower in
existence as of, and disclosed to Bank prior to, the date hereof)
(c) unsecured liabilities incurred after the date hereof in an
aggregate amount, in addition to the liabilities described in
clause (b), not to exceed $10,000,000.00, and (c) liabilities
incurred to purchase or refinance real estate, not to exceed the
lessor of (i) 100% of purchase price or (ii) appraised value.
SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS.
Merge into or consolidate with any other entity; make any
substantial change in the nature of Borrower's business as
conducted as of the date hereof; acquire all or substantially all
of the assets of any other entity; except acquisitions with an
aggregate consideration not to exceed $20,000,000.00 per fiscal
year, on a consolidated basis with SHI, SDV and SST; nor sell,
lease, transfer or otherwise dispose of all or a substantial or
material portion of Borrower's assets except in the ordinary
course of its business.
SECTION 5.6. GUARANTIES. Guarantee or become liable in
any way as surety, endorser (other than as endorser of negotiable
instruments for deposit or collection in the ordinary course of
business), accommodation endorser or otherwise for, nor pledge or
hypothecate any assets of Borrower as security for, any
liabilities or obligations of any other person or entity in an
aggregate amount at any time in excess of $25,000,000.00, except
any of the foregoing in favor of Bank in favor of Union Bank of
California.
SECTION 5.9. PLEDGE OF ASSETS. Mortgage, pledge, grant or
permit to exist a security interest in, or lien upon, all or any
portion of Borrower's assets now owned or hereafter acquired,
except any of the foregoing in favor of Bank or which is existing
as of, and disclosed to Bank in writing prior to, the date
hereof and except for liens in real estate granted to secure
liabilities permitted in Section 5.2 (c).
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal,
interest, fees or other amounts payable under any of the Loan
Documents.
(b) Any financial statement or certificate furnished to
Bank in connection with, or any representation or warranty made
by Borrower or any other party under this Agreement or any other
Loan Document shall prove to be incorrect, false or misleading in
any material respect when furnished or made.
<PAGE>
(c) Any default in the performance of or compliance with
any obligation, agreement or other provision contained herein or
in any other Loan Document (other than those referred to in
subsections (a) and (b) above), and with respect to any such
default which by its nature can be cured, such default shall
continue for a period of twenty (20) days from its occurrence.
(d) Any default in the payment or performance of any
obligation, or any defined event of default, under the terms of
any contract or instrument (other than any of the Loan Documents)
pursuant to which Borrower or any guarantor hereunder has
incurred any debt or other liability to any person or entity,
including Bank.
(e) The filing of a notice of judgment lien against
Borrower or any guarantor hereunder; or the recording of any
abstract of judgment against Borrower or any guarantor hereunder
in any county in which Borrower or such guarantor has an interest
in real property; or the service of a notice of levy and/or of a
writ of attachment or execution, or other like process, against
the assets of Borrower or any guarantor hereunder; or the entry
of a judgment against Borrower or any guarantor hereunder; and
with respect to any of the foregoing, the amount in dispute
exceeds $5,000,000.00.
(f) Borrower or any guarantor hereunder shall become
insolvent, or shall suffer or consent to or apply for the
appointment of a receiver, trustee, custodian or liquidator of
itself or any of its property, or shall generally fail to pay its
debts as they become due, or shall make a general assignment for
the benefit of creditors; Borrower or any guarantor hereunder
shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement
with creditors or any other relief under the Bankruptcy Reform
Act, Title 11 of the United States Code, as amended or recodified
from time to time ("Bankruptcy Code"), or under any state or
federal law granting relief to debtors, whether now or hereafter
in effect; or any involuntary petition or proceeding pursuant to
the Bankruptcy Code or any other applicable state or federal law
relating to bankruptcy, reorganization or other relief for
debtors is filed or commenced against Borrower or any guarantor
hereunder (and such involuntary proceeding is not vacated or
dismissed within 60 days after its occurrence, provided that Bank
shall not be required to make advances during such period), or
Borrower or any such guarantor shall file an answer admitting the
jurisdiction of the court and the material allegations of any
involuntary petition; or Borrower or any such guarantor shall be
adjudicated a bankrupt, or an order for relief shall be entered
against Borrower or any such guarantor by any court of competent
jurisdiction under the Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or
other relief for debtors.
<PAGE>
(g) There shall exist or occur any event or condition which
Bank in good faith believes impairs, or is substantially likely
to impair, the prospect of payment or performance by Borrower of
its obligations under any of the Loan Documents.
(h) The dissolution or liquidation of Borrower or any
guarantor hereunder; or Borrower or any such guarantor shall take
action seeking to effect the dissolution or liquidation of
Borrower or such guarantor.
SECTION 6.2. REMEDIES. Upon the occurrence of any Event
of Default: (a) all indebtedness of Borrower under each of the
Loan Documents, any term thereof to the contrary notwithstanding,
shall at Bank's option and without notice become immediately due
and payable without presentment, demand, protest or notice of
dishonor, all of which are hereby expressly waived by each
Borrower; (b) the obligation, if any, of Bank to extend any
further credit under any of the Loan Documents shall immediately
cease and terminate; and (c) Bank shall have all rights, powers
and remedies available under each of the Loan Documents, or
accorded by law, including without limitation the right to resort
to any or all security for any credit accommodation from Bank
subject hereto and to exercise any or all of the rights of a
beneficiary or secured party pursuant to applicable law. All
rights, powers and remedies of Bank may be exercised at any time
by Bank and from time to time after the occurrence of an Event of
Default, are cumulative and not exclusive, and shall be in
addition to any other rights, powers or remedies provided by law
or equity.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NO WAIVER. No delay, failure or
discontinuance of Bank in exercising any right, power or remedy
under any of the Loan Documents shall affect or operate as a
waiver of such right, power or remedy; nor shall any single or
partial exercise of any such right, power or remedy preclude,
waive or otherwise affect any other or further exercise thereof
or the exercise of any other right, power or remedy. Any waiver,
permit, consent or approval of any kind by Bank of any breach of
or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.
SECTION 7.2. NOTICES. All notices, requests and demands
which any party is required or may desire to give to any other
party under any provision of this Agreement must be in writing
delivered to each party at the following address:
<PAGE>
BORROWER: SIMPSON MANUFACTURING CO., INC.
4637 Chabot Drive, Suite 200
Pleasanton, CA 94588-0789
BANK: WELLS FARGO BANK, NATIONAL ASSOCIATION
Mt. Diablo RCBO
1320 Willow Pass Road, Suite 440
Concord, CA 94520
or to such other address as any party may designate by written
notice to all other parties. Each such notice, request and
demand shall be deemed given or made as follows: (a) if sent by
hand delivery, upon delivery; (b) if sent by mail, upon the
earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent
by telecopy, upon receipt.
SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES.
Borrower shall pay to Bank immediately upon demand the full
amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel
fees and all allocated costs of Bank's in-house counsel),
expended or incurred by Bank in connection with (a) the
enforcement of Bank's rights and/or the collection of any amounts
which become due to Bank under any of the Loan Documents, and
(b) the prosecution or defense of any action in any way related
to any of the Loan Documents, including without limitation, any
action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to any Borrower or any affiliated
person or entity.
SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of
the parties; provided however, that Borrower may not assign or
transfer its interest hereunder without Bank's prior written
consent. Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any
interest in, Bank's rights and benefits under each of the Loan
Documents. In connection therewith, Bank may disclose all
documents and information which Bank now has or may hereafter
acquire relating to any credit extended by Bank to Borrower,
Borrower or its business, any guarantor hereunder or the business
of such guarantor, or any collateral required hereunder.
SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement
and the other Loan Documents constitute the entire agreement
<PAGE>
between Borrower and Bank with respect to any extension of credit
by Bank subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the
subject matter hereof. This Agreement may be amended or modified
only in writing signed by each party hereto.
SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement
is made and entered into for the sole protection and benefit of
the parties hereto and their respective permitted successors and
assigns, and no other person or entity shall be a third party
beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any other of the Loan
Documents to which it is not a party.
SECTION 7.7. TIME. Time is of the essence of each and
every provision of this Agreement and each other of the Loan
Documents.
SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision
of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the
remainder of such provision or any remaining provisions of this
Agreement.
SECTION 7.9. COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when executed and
delivered shall be deemed to be an original, and all of which
when taken together shall constitute one and the same Agreement.
SECTION 7.10. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State of California.
SECTION 7.11. ARBITRATION.
(a) Arbitration. Upon the demand of any party, any Dispute
shall be resolved by binding arbitration (except as set forth in
(e) below) in accordance with the terms of this Agreement. A
"Dispute" shall mean any action, dispute, claim or controversy of
any kind, whether in contract or tort, statutory or common law,
legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, any of the Loan
Documents, or any past, present or future extensions of credit
and other activities, transactions or obligations of any kind
related directly or indirectly to any of the Loan Documents,
including without limitation, any of the foregoing arising in
connection with the exercise of any self-help, ancillary or other
remedies pursuant to any of the Loan Documents. Any party may by
summary proceedings bring an action in court to compel
arbitration of a Dispute. Any party who fails or refuses to
submit to arbitration following a lawful demand by any other
<PAGE>
party shall bear all costs and expenses incurred by such other
party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be
administered by the American Arbitration Association ("AAA") or
such other administrator as the parties shall mutually agree upon
in accordance with the AAA Commercial Arbitration Rules. All
Disputes submitted to arbitration shall be resolved in accordance
with the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in
any of the Loan Documents. The arbitration shall be conducted at
a location in California selected by the AAA or other
administrator. If there is any inconsistency between the terms
hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to
any Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters
directly relevant to the Dispute being arbitrated. Judgment upon
any award rendered in an arbitration may be entered in any court
having jurisdiction; provided however, that nothing contained
herein shall be deemed to be a waiver by any party that is a bank
of the protections afforded to it under 12 U.S.C. Section 91 or any
similar applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and
Foreclosure. No provision hereof shall limit the right of any
party to exercise self-help remedies such as setoff, foreclosure
against or sale of any real or personal property collateral or
security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration,
attachment, garnishment or the appointment of a receiver, from a
court of competent jurisdiction before, after or during the
pendency of any arbitration or other proceeding. The exercise of
any such remedy shall not waive the right of any party to compel
arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers; Awards.
Arbitrators must be active members of the California State Bar or
retired judges of the state or federal judiciary of California,
with expertise in the substantive laws applicable to the subject
matter of the Dispute. Arbitrators are empowered to resolve
Disputes by summary rulings in response to motions filed prior to
the final arbitration hearing. Arbitrators (i) shall resolve all
Disputes in accordance with the substantive law of the state of
California, (ii) may grant any remedy or relief that a court of
the state of California could order or grant within the scope
hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award
recovery of all costs and fees, to impose sanctions and to take
such other actions as they deem necessary to the same extent a
judge could pursuant to the Federal Rules of Civil Procedure, the
California Rules of Civil Procedure or other applicable law. Any
<PAGE>
Dispute in which the amount in controversy is $5,000,000 or less
shall be decided by a single arbitrator who shall not render an
award of greater than $5,000,000 (including damages, costs, fees
and expenses). By submission to a single arbitrator, each party
expressly waives any right or claim to recover more than
$5,000,000. Any Dispute in which the amount in controversy
exceeds $5,000,000 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and
deliberations.
(e) Judicial Review. Notwithstanding anything herein to
the contrary, in any arbitration in which the amount in
controversy exceeds $25,000,000, the arbitrators shall be
required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the arbitrators
shall not have the power to make any award which is not supported
by substantial evidence or which is based on legal error, (ii) an
award shall not be binding upon the parties unless the findings
of fact are supported by substantial evidence and the conclusions
of law are not erroneous under the substantive law of the state
of California, and (iii) the parties shall have in addition to
the grounds referred to in the Federal Arbitration Act for
vacating, modifying or correcting an award the right to judicial
review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B)
whether the conclusions of law are erroneous under the
substantive law of the state of California. Judgment confirming
an award in such a proceeding may be entered only if a court
determines the award is supported by substantial evidence and not
based on legal error under the substantive law of the state of
California.
(f) Real Property Collateral; Judicial Reference.
Notwithstanding anything herein to the contrary, no Dispute shall
be submitted to arbitration if the Dispute concerns indebtedness
secured directly or indirectly, in whole or in part, by any real
property unless (i) the holder of the mortgage, lien or security
interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any
rights or benefits that might accrue to them by virtue of the
single action rule statute of California, thereby agreeing that
all indebtedness and obligations of the parties, and all
mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and
enforceable. If any such Dispute is not submitted to
arbitration, the Dispute shall be referred to a referee in
accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be
specifically enforceable in accordance with said Section 638. A
referee with the qualifications required herein for arbitrators
shall be selected pursuant to the AAA's selection procedures.
Judgment upon the decision rendered by a referee shall be entered
<PAGE>
in the court in which such proceeding was commenced in accordance
with California Code of Civil Procedure Sections 644 and 645.
(g) Miscellaneous. To the maximum extent practicable, the
AAA, the arbitrators and the parties shall take all action
required to conclude any arbitration proceeding within 180 days
of the filing of the Dispute with the AAA. No arbitrator or
other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of
information by a party required in the ordinary course of its
business, by applicable law or regulation, or to the extent
necessary to exercise any judicial review rights set forth
herein. If more than one agreement for arbitration by or between
the parties potentially applies to a Dispute, the arbitration
provision most directly related to the Loan Documents or the
subject matter of the Dispute shall control. This arbitration
provision shall survive termination, amendment or expiration of
any of the Loan Documents or any relationship between the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first written
above.
WELLS FARGO BANK,
SIMPSON MANUFACTURING CO., INC. NATIONAL ASSOCIATION
By: /s/Steve Lamson By: /s/Steve Bojkovic
--------------------------- ----------------------------
for Brian Phillips
Vice President
Title: Sec., Treas., & C.F.O.
------------------------
By: /s/Thomas J Fitzmyers
---------------------------
Title: C.E.O.
------------------------
<PAGE>
TERM COMMITMENT NOTE
$9,200,000.00 Concord, California
June 1, 1998
FOR VALUE RECEIVED, the undersigned SIMPSON MANUFACTURING
CO., INC. ("Borrower") promises to pay to the order of WELLS
FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at Mt.
Diablo RCBO, 1320 Willow Pass Road, Suite 440, Concord,
California, or at such other place as the holder hereof may
designate, in lawful money of the United States of America and in
immediately available funds, the principal sum of Nine Million
Two Hundred Thousand Dollars ($9,200,000.00), or so much thereof
as may be advanced and be outstanding, with interest thereon, to
be computed on each advance from the date of its disbursement as
set forth herein.
DEFINITIONS:
As used herein, the following terms shall have the meanings
set forth after each, and any other term defined in this Note
shall have the meaning set forth at the place defined:
(a) "Business Day" means any day except a Saturday, Sunday
or any other day on which commercial banks in California are
authorized or required by law to close.
(b) "Fixed Rate Term" means a period commencing on a
Business Day and continuing for one (1), two (2), three (3) or
six (6) months, as designated by Borrower, during which all or a
portion of the outstanding principal balance of this Note bears
interest determined in relation to LIBOR; provided however, that
no Fixed Rate Term may be selected for a principal amount less
than Five Hundred Thousand Dollars ($500,000.00); and provided
further, that no Fixed Rate Term shall extend beyond the
scheduled maturity date hereof. If any Fixed Rate Term would end
on a day which is not a Business Day, then such Fixed Rate Term
shall be extended to the next succeeding Business Day.
(c) "LIBOR" means the rate per annum (rounded upward, if
necessary, to the nearest whole 1/8 of 1%) and determined
pursuant to the following formula:
LIBOR = Base LIBOR
-------------------------------
100% - LIBOR Reserve Percentage
(i) "Base LIBOR" means the rate per annum for United States
dollar deposits quoted by Bank as the Inter-Bank Market Offered
Rate, with the understanding that such rate is quoted by Bank for
the purpose of calculating effective rates of interest for loans
making reference thereto, on the first day of a Fixed Rate Term
<PAGE>
for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term
and in an amount approximately equal to the principal amount to
which such Fixed Rate Term applies. Borrower understands and
agrees that Bank may base its quotation of the Inter-Bank Market
Offered Rate upon such offers or other market indicators of the
Inter-Bank Market as Bank in its discretion deems appropriate
including, but not limited to, the rate offered for U.S. dollar
deposits on the London Inter-Bank Market.
(ii) "LIBOR Reserve Percentage" means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for "Eurocurrency Liabilities" (as
defined in Regulation D of the Federal Reserve Board, as
amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable Fixed Rate Term.
(d) "Prime Rate" means at any time the rate of interest
most recently announced within Bank at its principal office as
its Prime Rate, with the understanding that the Prime Rate is one
of Bank's base rates and serves as the basis upon which effective
rates of interest are calculated for those loans making reference
thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank
may designate.
INTEREST:
(a) Interest. The outstanding principal balance of this
Note shall bear interest (computed on the basis of a 360-day
year, actual days elapsed) either (i) at a fluctuating rate per
annum one-half percent (.50%) below the Prime Rate in effect from
time to time, or (ii) at a fixed rate per annum determined by
Bank to be three-quarters percent (.75%) above LIBOR in effect on
the first day of the applicable Fixed Rate Term. When interest
is determined in relation to the Prime Rate, each change in the
rate of interest hereunder shall become effective on the date
each Prime Rate change is announced within Bank. With respect to
each LIBOR selection hereunder, Bank is hereby authorized to note
the date, principal amount, interest rate and Fixed Rate Term
applicable thereto and any payments made thereon on Bank's books
and records (either manually or by electronic entry) and/or on
any schedule attached to this Note, which notations shall be
prima facie evidence of the accuracy of the information noted.
(b) Selection of Interest Rate Options. At any time any
portion of this Note bears interest determined in relation to
LIBOR, it may be continued by Borrower at the end the Fixed Rate
Term applicable thereto so that all or a portion thereof bears
interest determined in relation to the Prime Rate or to LIBOR for
a new Fixed Rate Term designated by Borrower. At any time any
portion of this Note bears interest determined in relation to the
<PAGE>
Prime Rate, Borrower may convert all or a portion thereof so that
it bears interest determined in relation to LIBOR for a Fixed
Rate Term designated by Borrower. At such time as Borrower
requests an advance hereunder or wishes to select a LIBOR option
for all or a portion of the outstanding principal balance hereof,
and at the end of each Fixed Rate Term, Borrower shall give Bank
notice specifying: (i) the interest rate option selected by
Borrower; (ii) the principal amount subject thereto; and (iii)
for each LIBOR selection, the length of the applicable Fixed Rate
Term. Any such notice may be given by telephone so long as, with
respect to each LIBOR selection, (A) Bank receives written
confirmation from Borrower not later than three (3) Business Days
after such telephone notice is given, and (B) such notice is
given to Bank prior to 10:00 a.m., California time, on the first
day of the Fixed Rate Term. For each LIBOR option requested
hereunder, Bank will quote the applicable fixed rate to Borrower
at approximately 10:00 a.m., California time, on the first day of
the Fixed Rate Term. If Borrower does not immediately accept the
rate quoted by Bank, any subsequent acceptance by Borrower shall
be subject to a redetermination by Bank of the applicable fixed
rate; provided however, that if Borrower fails to accept any such
rate by 11:00 a.m., California time, on the Business Day such
quotation is given, then the quoted rate shall expire and Bank
shall have no obligation to permit a LIBOR option to be selected
on such day. If no specific designation of interest is made at
the time any advance is requested hereunder or at the end of any
Fixed Rate Term, Borrower shall be deemed to have made a Prime
Rate interest selection for such advance or the principal amount
to which such Fixed Rate Term applied.
(c) Additional LIBOR Provisions.
(i) If Bank at any time shall determine that for any reason
adequate and reasonable means do not exist for ascertaining
LIBOR, then Bank shall promptly give notice thereof to Borrower.
If such notice is given and until such notice has been withdrawn
by Bank, then (A) no new LIBOR option may be selected by
Borrower, and (B) any portion of the outstanding principal
balance hereof which bears interest determined in relation to
LIBOR, subsequent to the end of the Fixed Rate Term applicable
thereto, shall bear interest determined in relation to the Prime
Rate.
(ii) If any law, treaty, rule, regulation or determination
of a court or governmental authority or any change therein or in
the interpretation or application thereof (each, a "Change in
Law") shall make it unlawful for Bank (A) to make LIBOR options
available hereunder, or (B) to maintain interest rates based on
LIBOR, then in the former event, any obligation of Bank to make
available such unlawful LIBOR options shall immediately be
cancelled, and in the latter event, any such unlawful LIBOR-based
interest rates then outstanding shall be converted, at Bank's
<PAGE>
option, so that interest on the portion of the outstanding
principal balance subject thereto is determined in relation to
the Prime Rate; provided however, that if any such Change in Law
shall permit any LIBOR-based interest rates to remain in effect
until the expiration of the Fixed Rate Term applicable thereto,
then such permitted LIBOR-based interest rates shall continue in
effect until the expiration of such Fixed Rate Term. Upon the
occurrence of any of the foregoing events, Borrower shall pay to
Bank immediately upon demand such amounts as may be necessary to
compensate Bank for any fines, fees, charges, penalties or other
costs incurred or payable by Bank as a result thereof and which
are attributable to any LIBOR options made available to Borrower
hereunder, and any reasonable allocation made by Bank among its
operations shall be conclusive and binding upon Borrower.
(iii) If any Change in Law or compliance by Bank with any
request or directive (whether or not having the force of law)
from any central bank or other governmental authority shall:
(A) subject Bank to any tax, duty or other charge with
respect to any LIBOR options, or change the basis of
taxation of payments to Bank of principal, interest,
fees or any other amount payable hereunder (except for
changes in the rate of tax on the overall net income of
Bank); or
(B) impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for
the account of, advances or loans by, or any other
acquisition of funds by any office of Bank; or
(C) impose on Bank any other condition;
and the result of any of the foregoing is to increase the cost to
Bank of making, renewing or maintaining any LIBOR options
hereunder and/or to reduce any amount receivable by Bank in
connection therewith, then in any such case, Borrower shall pay
to Bank immediately upon demand such amounts as may be necessary
to compensate Bank for any additional costs incurred by Bank
and/or reductions in amounts received by Bank which are
attributable to such LIBOR options. In determining which costs
incurred by Bank and/or reductions in amounts received by Bank
are attributable to any LIBOR options made available to Borrower
hereunder, any reasonable allocation made by Bank among its
operations shall be conclusive and binding upon Borrower.
(d) Payment of Interest. Interest accrued on this Note
shall be payable on the first day of each month, commencing July
1, 1998.
<PAGE>
(e) Default Interest. From and after the maturity date of
this Note, or such earlier date as all principal owing hereunder
becomes due and payable by acceleration or otherwise, the
outstanding principal balance of this Note shall bear interest
until paid in full at an increased rate per annum (computed on
the basis of a 360-day year, actual days elapsed) equal to four
percent (4%) above the rate of interest from time to time
applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its
outstanding borrowings, and reborrow, subject to all of the
limitations, terms and conditions of this Note and of any
document executed in connection with or governing this Note;
provided however, that the outstanding principal balance of this
Note shall not exceed the principal amount stated above. The
unpaid principal balance of this obligation at any time shall be
the total amounts advanced hereunder by the holder hereof less
the amount of principal payments made hereon by or for any
Borrower, which balance may be endorsed hereon from time to time
by the holder. The outstanding principal balance of this Note
shall be due and payable in full on June 1, 2000, subject to
possible conversion to a term loan as set forth in the Credit
Agreement, defined below.
(b) Advances. Advances hereunder, to the total amount of
the principal sum stated above, may be made by the holder at the
oral or written request of (i) Thomas Fitzmyers or Steve Lamson
or Julie Fernandez, any one acting alone, who are authorized to
request advances and direct the disposition of any advances until
written notice of the revocation of such authority is received by
the holder at the office designated above, or (ii) any person,
with respect to advances deposited to the credit of any account
of any Borrower with the holder, which advances, when so
deposited, shall be conclusively presumed to have been made to or
for the benefit of each Borrower regardless of the fact that
persons other than those authorized to request advances may have
authority to draw against such account. The holder shall have no
obligation to determine whether any person requesting an advance
is or has been authorized by any Borrower.
(c) Application of Payments. Each payment made on this
Note shall be credited first, to any interest then due and
second, to the outstanding principal balance hereof. All
payments credited to principal shall be applied first, to the
outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to
the outstanding principal balance of this Note which bears
interest determined in relation to LIBOR, with such payments
applied to the oldest Fixed Rate Term first.
<PAGE>
PREPAYMENT:
(a) Prime Rate. Borrower may prepay principal on any
portion of this Note which bears interest determined in relation
to the Prime Rate at any time, in any amount and without penalty.
(b) LIBOR. Borrower may prepay principal on any portion of
this Note which bears interest determined in relation to LIBOR at
any time and in the minimum amount of Five Hundred Thousand
Dollars ($500,000.00); provided however, that if the outstanding
principal balance of such portion of this Note is less than said
amount, the minimum prepayment amount shall be the entire
outstanding principal balance thereof. In consideration of Bank
providing this prepayment option to Borrower, or if any such
portion of this Note shall become due and payable at any time
prior to the last day of the Fixed Rate Term applicable thereto
by acceleration or otherwise, Borrower shall pay to Bank
immediately upon demand a fee which is the sum of the discounted
monthly differences for each month from the month of prepayment
through the month in which such Fixed Rate Term matures,
calculated as follows for each such month:
(i) Determine the amount of interest which would have
accrued each month on the amount prepaid at the
interest rate applicable to such amount had it remained
outstanding until the last day of the Fixed Rate Term
applicable thereto.
(ii) Subtract from the amount determined in (i) above the
amount of interest which would have accrued for the
same month on the amount prepaid for the remaining term
of such Fixed Rate Term at LIBOR in effect on the date
of prepayment for new loans made for such term and in a
principal amount equal to the amount prepaid.
(iii) If the result obtained in (ii) for any month is greater
than zero, discount that difference by LIBOR used in
(ii) above.
Each Borrower acknowledges that prepayment of such amount may
result in Bank incurring additional costs, expenses and/or
liabilities, and that it is difficult to ascertain the full
extent of such costs, expenses and/or liabilities. Each
Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate
of the prepayment costs, expenses and/or liabilities of Bank. If
Borrower fails to pay any prepayment fee when due, the amount of
such prepayment fee shall thereafter bear interest until paid at
a rate per annum two percent (2.0%) above the Prime Rate in
effect from time to time (computed on the basis of a 360-day
year, actual days elapsed). Each change in the rate of interest
<PAGE>
on any such past due prepayment fee shall become effective on the
date each Prime Rate change is announced within Bank.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms
and conditions of that certain Credit Agreement between Borrower
and Bank dated as of June 1, 1998, as amended from time to time
(the "Credit Agreement"). Any default in the payment or
performance of any obligation under this Note, or any defined
event of default under the Credit Agreement, shall constitute an
"Event of Default" under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default,
the holder of this Note, at the holder's option, may declare all
sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, notice
of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by each Borrower, and
the obligation, if any, of the holder to extend any further
credit hereunder shall immediately cease and terminate. Each
Borrower shall pay to the holder immediately upon demand the full
amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel
fees and all allocated costs of the holder's in-house counsel),
expended or incurred by the holder in connection with the
enforcement of the holder's rights and/or the collection of any
amounts which become due to the holder under this Note, and the
prosecution or defense of any action in any way related to this
Note, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the
foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person)
relating to any Borrower or any other person or entity.
(b) Obligations Joint and Several. Should more than one
person or entity sign this Note as a Borrower, the obligations of
each such Borrower shall be joint and several.
(c) Governing Law. This Note shall be governed by and
construed in accordance with the laws of the State of California.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Note
as of the date first written above.
SIMPSON MANUFACTURING CO., INC.
By: /s/Steve Lamson
---------------------------------
Title: C.F.O., Sec. & Treas.
------------------------------
By: /s/Thomas J Fitzmyers
---------------------------------
Title: C.E.O.
------------------------------
<PAGE>
ADDENDUM TO PROMISSORY NOTE
(PRIME/LIBOR PRICING ADJUSTMENTS)
THIS ADDENDUM is attached to and made a part of that certain
promissory note executed by SIMPSON MANUFACTURING CO., INC.
("Borrower") and payable to WELLS FARGO BANK, NATIONAL
ASSOCIATION ("Bank"), or order, dated as of June 1, 1998, in the
principal amount of Nine Million Two Hundred Thousand Dollars
($9,200,000.00) (the "Note").
The following provisions are hereby incorporated into the
Note to reflect the interest rate adjustments agreed to by Bank
and Borrower:
INTEREST RATE ADJUSTMENTS:
(a) Initial Interest Rates. The initial interest rates
applicable to this Note shall be the rates set forth in the
"Interest" paragraph herein.
(b) Interest Rate Adjustments. In addition to any interest
rate adjustments resulting from changes in the Prime Rate, Bank
shall adjust the Prime Rate and LIBOR margins used to determine
the rates of interest applicable to this Note on a quarterly
basis, commencing with Borrower's fiscal quarter ending June 30,
1997, if required to reflect a change in Borrower's ratio of
Total Liabilities to Tangible Net Worth (as defined in the Credit
Agreement referenced herein), in accordance with the following
grid:
Applicable Applicable
Total Liabilities to Prime Rate LIBOR
Tangible Net Worth Margin Margin
- ------------------------ ---------- ----------
1.1 to 1.0 or greater -0.50% 1.0%
at least 0.5 to 1.0 but
less than 1.1 to 1.0 -0.50% 0.875%
less than 0.5 to 1.0 -0.50% 0.75%
Each such adjustment shall be effective on the first Business Day
of Borrower's fiscal quarter following the quarter during which
Bank receives and reviews Borrower's most current fiscal quarter-
end financial statements in accordance with any requirements
established by Bank for the preparation and delivery thereof.
<PAGE>
IN WITNESS WHEREOF, this Addendum has been executed as of
the same date as the Note.
SIMPSON MANUFACTURING CO., INC.
By: /s/Steve Lamson
---------------------------------
Title: C.F.O., Sec. & Treas.
------------------------------
By: /s/Thomas J Fitzmyers
---------------------------------
Title: C.E.O.
------------------------------
EXHIBIT 10.3
------------
5
LOAN AGREEMENT
BETWEEN
MISSISSIPPI BUSINESS FINANCE CORPORATION
AND
SIMPSON DURA-VENT COMPANY, INC.
DATED AS OF MAY 1, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1. Definitions 2
Section 1.2. Accounting Terms 14
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations of the Issuer 14
Section 2.2. Representations of Company 15
Section 2.3 Benefits Under the Act 17
ARTICLE III
COMPLETION OF PROJECT; ISSUANCE OF BONDS
Section 3.1. Completion of Project; Best Efforts 19
Section 3.2. Issuance of Bonds 20
Section 3.3. Loan; Disposition of Bond Proceeds 20
Section 3.4. Requisition for Project Funds 20
Section 3.5. Revisions to Plans and Specifications 20
Section 3.6 Notice of Borrowing and Rate Request 21
Section 3.7. Certificate of Completion 21
Section 3.8. Completion of Project if Bond Proceeds
Insufficient; Surplus Proceeds 21
Section 3.9. Default by Contractors 21
Section 3.10. Investment of Project Fund 22
ARTICLE IV
SECURITY; LOAN PAYMENTS; OTHER OBLIGATIONS
Section 4.1. Note/Guaranties 22
Section 4.2. Loan Payments 22
Section 4.3. Obligation to Make Payments Absolute 23
<PAGE>
Section 4.4. Sole Possession of Project by the Company 23
Section 4.5. Maintenance of Project 24
Section 4.6. Taxes and Assessments; Tax Indemnity 24
Section 4.7. Operation of Project 24
Section 4.8. Payment of Expenses 24
Section 4.9. Payments Continue Upon Destruction of Project 25
Section 4.10. Payment of Initial Administrative Fee 25
Section 4.11. Release and Indemnification of the Issuer 25
Section 4.12. Insurance 26
Section 4.13. Application of Insurance Proceeds 26
Section 4.14. Condemnation 27
ARTICLE V
SPECIAL COVENANTS
Section 5.1. No Warranty as to Suitability of
Project by the Issuer 28
Section 5.2. Continuation of Existence of Company 28
Section 5.3. Covenant by the Company to Leave Project
Free of Other Liens or Encumbrances 28
Section 5.4. Agreement to Cooperate 28
Section 5.5. Qualification in Mississippi 29
Section 5.6. Title Covenants 29
Section 5.7. Maintenance 29
Section 5.8. Environmental Law Compliance 29
Section 5.9. Financial Reporting 29
Section 5.10. Maintenance of Books and Records; Inspection 30
Section 5.11. Affirmative Covenants 30
Section 5.12. Negative Covenants 31
ARTICLE VI
ASSIGNMENT, LEASE AND SALE OF PROJECT
Section 6.1. Disposal of Project and Assets by Company 31
<PAGE>
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Default 33
Section 7.2. Remedies Upon Default 33
Section 7.3. No Remedy Exclusive 34
Section 7.4. Payment of Fees and Expenses 34
Section 7.5. Effect of Waiver 34
ARTICLE VIII
PREPAYMENT OF LOAN
Section 8.1. Obligations to Accelerate Loan Payments 34
ARTICLE IX
MISCELLANEOUS
Section 9.1. Notices 35
Section 9.2. Parties Interested 36
Section 9.3. Amendment to Agreement 37
Section 9.4. Counterparts 37
Section 9.5. Severability of Invalid Provisions 37
Section 9.6. Governing Law 37
Section 9.7. Tax Exemptions and Credits 37
Section 9.8. No Oral Argument 38
EXHIBIT A BUILDING DESCRIPTION
EXHIBIT B THE PROJECT SITE OWNED BY THE COMPANY
EXHIBIT C EQUIPMENT
EXHIBIT D PROMISSORY NOTE
<PAGE>
THIS LOAN AGREEMENT, dated as of May 1, 1998, between Mississippi
Business Finance Corporation, a public corporation of the State of
Mississippi (the "Issuer") and Simpson Dura-Vent Company, a California
corporation (the "Company"),
W I T N E S S E T H:
WHEREAS, the Issuer is authorized by the provisions of Title 57,
Chapter 10, Articles 7 and 11, of the Mississippi Code of 1972, as amended
and supplemented (the "Act"), to, among other things, provide and finance
economic development projects to eligible companies in the State;
WHEREAS, the Issuer has determined that the Company is an "eligible
company" as defined by the Act in need of assistance to permanently
finance the Cost (as hereinafter defined) of the Project (as hereinafter
defined);
WHEREAS, the Issuer is authorized pursuant to the Act to issue its
revenue bonds and to lend the proceeds thereof to enable eligible
companies to borrow to finance the Cost of said projects;
WHEREAS, the Company has requested the Issuer to issue its revenue
bonds and to lend the proceeds from the sale thereof to the Company to
finance a portion of the Cost of the Project (as hereinafter defined);
WHEREAS, the Issuer has, by due corporate action, authorized the
issuance, from time to time, of its Mississippi Business Finance
Corporation Taxable Industrial Development Revenue Bonds, Series 1998,
(Simpson Dura-Vent Company, Inc. Project) (the "Bonds") pursuant to the
Act in the aggregate principal amount of $3,000,000 in order to loan the
proceeds thereof to the Company (the "Loan") to finance a portion of the
Project, pursuant to a contractual arrangement whereby the amount of Loan
Payments (as hereinafter defined) to be made to the Issuer by the Company
shall be sufficient to pay the principal of, premium, if any, and interest
on such Bonds secured by such Loan Payments as and when the same shall
become due and payable; and
WHEREAS, the Bonds are to be issued pursuant to an Indenture (as
hereinafter defined) to provide monies for such Loan; and the Company will
execute a Note (as hereinafter defined) pursuant to the Indenture to
evidence and secure its obligations to repay said Loan.
<PAGE>
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
That the parties hereto, intending to be legally bound hereby and in
consideration of the mutual covenants hereinafter contained, do hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. The terms set forth below shall have the
following meanings in this Loan Agreement, unless the context clearly
otherwise requires. Except where the context otherwise requires, words
importing the singular number shall include the plural number and vice
versa. Capitalized terms used and not defined herein shall have the
meanings ascribed to them in the Indenture.
ACT:
"Act" shall mean Title 57, Chapter 10, Articles 7 and 11, of the
Mississippi Code of 1972, as amended and supplemented.
ADMINISTRATION EXPENSES:
"Administration Expenses" shall mean the reasonable and necessary
expenses incurred by the Issuer pursuant to this Agreement or the
Indenture, including the Initial Administrative Fee, and the compensation
and expenses paid to or incurred by the Trustee or any Paying Agent under
the Indenture.
AFFILIATE:
"Affiliate" shall mean any Person which, directly or indirectly, is
in control of, is controlled by, or is under common control with, the
Company. For purposes of this definition, control of a Person shall mean
the power, directly or indirectly:
(a) to vote more than 50% of the securities having ordinary
voting power for the election of directors or other
managers of such Person, or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
<PAGE>
AGREEMENT:
"Agreement" shall mean this Loan Agreement as amended or supplemented
from time to time in accordance with the terms hereof.
AUTHORIZED COMPANY REPRESENTATIVE:
"Authorized Company Representative" shall mean any person or persons
from time to time designated to act on behalf of the Company by a written
certificate, signed on behalf of the Company by its President or one of
its Vice Presidents or other duly authorized Person and its Secretary or
its Treasurer or other duly authorized Person and furnished to the Issuer
and the Trustee, containing the specimen signature of each such person.
BANK:
"Bank" shall mean Union Bank of California, N.A., a national banking
association with offices located in Oakland, California.
BANK ADJUSTED TREASURIES RATE:
"Bank Adjusted Treasuries Rate" shall mean the per annum rate of
interest based on the percentage yield of U.S. Treasury Securities, plus a
margin, set by the Bank, in its discretion, related to the general cost of
corporate borrowing for a term comparable to the term of Loan plus an
amount determined by the Bank, in its good faith judgment, equal to the
Bank's costs, including the costs, if any, of reserve requirements and
Federal Deposit Insurance Corporation assessments which would be incurred
by or imposed upon the Bank if the Loan were made directly from the Bank
to the Company.
BANK LOAN AGREEMENT:
"Bank Loan Agreement" shall mean that Amended and Restated Loan
Agreement dated as of June 1, 1998, by and between Simpson and the Bank
(which Bank Loan Agreement amends and restates that certain loan agreement
dated January 14, 1997 between Simpson and the Bank) as the same may be
amended, modified, replaced or superceded from time to time hereafter.
<PAGE>
BASE INTEREST RATE
"Base Interest Rate" shall mean a rate of interest based on either
the Bank Adjusted Treasuries Rate or the LIBOR Rate.
BASE RATE MATURITY DATE:
"Base Rate Maturity Date" shall mean the last day of the Interest
Period with respect to principal outstanding under a Base Interest Rate
Loan. (Undefined)
BANK REFERENCE RATE:
"Bank Reference Rate" shall mean the rate of interest announced by
the Bank from time to time at its corporate headquarters as its Reference
Rate. The effective date of any change in the Bank's Reference Rate shall
be the date of the public announcement of such change. The Reference Rate
is an index rate determined by the Bank from time to time as a means of
pricing certain extensions of credit and is neither directly tied to any
external rate of interest or index nor necessarily the lowest rate of
interest charged by the Bank at any given time.
BOND COUNSEL:
"Bond Counsel" shall mean Holcomb Dunbar, P.A., Jackson, Mississippi,
or an attorney-at-law or a firm of attorneys, designated by the Issuer, of
nationally recognized standing in matters pertaining to bonds issued by
states and their political subdivisions, duly admitted to the practice of
law before the highest court of any state of the United States of America.
BOND COUNSEL'S OPINION:
"Bond Counsel's Opinion" shall mean an opinion signed by Bond Counsel
and satisfactory to the Issuer, the Trustee, and the Purchaser.
BOND FUND:
"Bond Fund" shall mean the fund established pursuant to Section 6.1
of the Indenture.
BOND PURCHASE AGREEMENT:
"Bond Purchase Agreement" shall mean the Bond Purchase Contract dated
as of May 1, 1998, among the Issuer, the Company and the Purchaser.
BONDHOLDER:
"Bondholder" or "holder of the Bonds" or "holder" shall mean the
Registered Owner(s) of any fully registered Bond.
<PAGE>
BOND REGISTER AND BOND REGISTRAR:
"Bond Register" and "Bond Registrar" shall have the respective
meanings specified in Section 2.9 of the Indenture.
BONDS:
"Bonds" or "Bond" shall mean the Issuer's $3,000,000 aggregate
principal amount of Taxable Industrial Development Revenue Bonds, Series
1998, (Simpson Dura-Vent Company, Inc. Project), dated as of May 1, 1998,
issued under the Indenture and any Bonds thereafter authenticated and
delivered in lieu of or in substitution for such bonds, pursuant to the
provisions of the Indenture.
BUILDINGS:
"Building" or "Buildings" shall mean the construction of the
building located on the Project Site, as described in Exhibit A to this
Agreement, and all additions, modifications and improvements thereto, as
they may at any time exist.
BUSINESS DAY:
"Business Day" shall mean a day which is not a Saturday or Sunday on
which Bank is open for business in the State of California, and, with
respect to the rate of interest based on the LIBOR Rate, on which dealings
in U.S. dollar deposits outside of the United States may be carried on by
Bank.
COMPANY:
"Company" shall mean Simpson Dura-Vent Company, Inc., a California
corporation, or any person or entity which is the surviving, resulting or
transferee person in any merger, consolidation or transfer of assets
permitted under Section 5.2 of this Agreement and shall also mean, unless
the context otherwise requires, and any assignee of this Agreement as
permitted by Section 6.1 of this Agreement.
COMPLETION DATE:
"Completion Date" shall mean, with respect to the Bonds, the date of
completion of the Project, the date of completion of a Project, as that
date shall be certified pursuant to Section 5.3 of the Indenture.
<PAGE>
COST:
"Cost" or "Cost of the Project" shall mean and be deemed to include
to the extent permitted by the Act, incurred after October 15, 1997 (a)
obligations incurred for labor, Equipment and other expenses paid to
contractors, builders and materialmen in connection with the construction,
installation and equipping of the Project and improvements thereto
including, but not limited to, improvements to the Project Site; (b) the
cost of contract or performance bonds or of other bonds and of insurance
of all kinds that may be required or necessary prior to or during the
course of construction of the Project; (c) all costs of architectural and
engineering services, including the expenses of the Issuer and the Company
for test borings, surveys, test and pilot operations, estimates, plans and
specifications and preliminary investigations therefor, and for
supervising construction, as well as for the performance of all other
duties required by or consequent upon the proper completion of the
Project; (d) compensation and expenses of the Issuer and the Trustee,
legal, accounting, financial and printing expenses, fees and all other
expenses incurred in connection with the issuance of the Bonds, which are
not otherwise provided for under the terms of this Agreement; (e) all
other costs which the Issuer or the Company shall be required to pay under
the terms of any contract or contracts for the acquisition (by purchase,
lease or otherwise), construction, installation and equipping of the
Project; (f) any sums required to reimburse the Issuer or the Company for
advances made by either of them for any of the above items, or for any
other costs incurred and for work done by any of them, which are properly
chargeable to the Project; (g) Administration Expenses; and (h) any other
expenses or fees of the Issuer or the Trustee, which in the opinion of the
Issuer or the Trustee, are related to the Project or the Bonds, including
but not limited to, commitment and legal fees and the costs, fees and
expenses in connection with the initial issuance and sale of the Bonds.
DEBT SERVICE:
"Debt Service" shall mean interest expenses plus prior period current
portion of long term debt, including subordinated debt payments.
EQUIPMENT:
"Equipment" shall mean those items of machinery, equipment, fixtures
and other tangible personal property, which have been or are to be
acquired and installed in the Buildings or elsewhere at or on the Project
Site with the proceeds of the Bonds, if any, and which are generally
described in Exhibit C to this Agreement as the same may be changed from
time to time and any item of machinery, equipment, fixtures and other
tangible personal property which may be acquired and installed in the
Buildings or elsewhere at or on the Project Site in substitution thereof
or in addition thereto pursuant to the provisions of this Agreement, and
any renewals and replacements of any of the foregoing. At such time as the
Project is completed, a complete detailed list of Equipment and other
items of personalty acquired with the proceeds of the Bonds can be found
in the records of the Project Fund maintained by the Trustee.
<PAGE>
EVENT(S) OF DEFAULT:
"Event(s) of Default" shall mean any Event(s) of Default specified in
Section 7.1 of this Agreement.
GOVERNMENTAL AUTHORITY:
"Governmental Authority" means any federal, state, local, foreign or
other governmental or administrative body, instrumentality, department or
agency or any court, tribunal, administrative hearing body, arbitration
panel, commission, or other similar dispute-resolving panel or body.
GUARANTORS:
"Guarantors" shall mean Simpson and Simpson Strong Tie Company, Inc.,
a California corporation.
GUARANTY:
"Guaranty" shall mean either of the continuing guaranties from the
Guarantors to the Bank under which the Guarantors guaranteed the
obligations of the Company under this Loan Agreement. Guaranties shall
mean both such guaranties.
HAZARDOUS MATERIALS:
"Hazardous Materials" shall mean all materials defined as hazardous
wastes or substances under any local, state or federal environmental laws,
rules or regulations, and petroleum, petroleum products, oil and asbestos.
INDENTURE:
"Indenture" shall mean the Indenture dated as of May 1, 1998, between
the Issuer and the Trustee, as the same may be amended and supplemented
from time to time.
INITIAL ADMINISTRATIVE FEE:
"Initial Administrative Fee" shall mean the initial fee of the Issuer
with respect to the Bonds in the amount of $10,000 which fee is required
to be paid by the Company to the Issuer pursuant to this Loan Agreement.
<PAGE>
INTEREST PERIOD:
Interest Period shall mean (i) with respect to funds bearing interest
at a rate based on the Bank Adjusted Treasuries Rate, any period of not
less than 30 nor more than 270 days, or (ii) with respect to funds bearing
interest at a rate based on the LIBOR Rate, any calendar period of one,
three, six, nine or twelve months. In determining an Interest Period, a
month means a period that starts on one Business Day in a month and ends
on and includes the day preceding the numerically corresponding day in the
next month. For any month in which there is no such numerically
corresponding day, then as to that month, such day shall be deemed to be
the last calendar day of such month. Any Interest Period which would
otherwise end on a non-Business Day shall end on the next succeeding
Business Day unless that is the first day of a month, in which event such
Interest Period shall end on the next preceding Business Day.
INVESTMENT SECURITIES:
"Investment Securities" shall mean, only to the extent permitted by
State law, any of the following unless the Company has determined that the
same are not at the time legal investments of the Company's monies:
(a) savings accounts and certificates of deposit issued by a
commercial bank or savings and loan association incorporated under the
laws of the United States of America or any state thereof or the District
of Columbia having a capital stock and surplus of more than $50,000,000,
including the Trustee, or which are fully collateralized by investments of
the type described in (b) below or are rated either A-1 or A-2 by Standard
& Poor's Corporation or P-1 or P-2 by Moody's Investors Service, Inc.;
(b) bonds, notes and other evidences of indebtedness of the United
States of America or the State and any other security unconditionally
guaranteed as to the payment of principal and interest by the United
States of America or any agency thereof;
(c) repurchase agreements involving the purchase and resale of
investments described in (b) above; provided, that (i) the purchase price
of any such agreement shall at no time exceed the fair market value of the
investments underlying the same, (ii) each such agreement shall provide
for the payment of cash or deposit of additional investments at least
monthly so that the sum of the fair market value of investments and the
amount of cash underlying the same shall remain at least equal to the
purchase price thereof, (iii) the Trustee shall take physical possession
of such investments or the Trustee shall be named as the record owner of
such investments in the records of a Federal Reserve Bank, in each case no
later than the time the purchase price therefor is paid by the Trustee,
(iv) the other party to such repurchase agreement shall be a commercial
bank or savings and loan association incorporated under the laws of the
United States or any state thereof or the District of Columbia or a
securities firm registered under the Securities Exchange Act of 1934, in
either case having combined capital and surplus of at least $50,000,000
including the Trustee, and (v) the repurchase obligations are at the
demand of the Trustee or have a maturity of less than one year;
<PAGE>
(d) any money market fund rated "AAA" by Moody's Investors Service,
Inc. comprised of the investments of the type described in paragraph (b);
(e) any other investment or investment agreement as the Registered
Owner(s) of not less than fifty-one percent (51%) in the aggregate
principal amount of the Bonds then Outstanding may approve.
ISSUER:
"Issuer" shall mean the Mississippi Business Finance Corporation,
constituting a public body corporate and a political subdivision of the
State,its successors and assigns, and any public corporation resulting
from or surviving any consolidation or merger to which it or its
successors may be a party.
LIBOR RATE:
"LIBOR Rate" shall mean a per annum rate of interest (rounded upward,
if necessary, to the nearest 1/100 of 1%) at which dollar deposits, in
immediately available funds and in lawful money of the United States would
be offered to Bank, outside of the United States, for a term coinciding
with the Interest Period selected by the Company and for an amount equal
to the amount of principal covered by the Company's interest rate
selection, plus Bank's costs, including the cost, if any, of reserve
requirements.
LIEN:
Lien shall mean any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement, encumbrance
securing indebtedness (other than liens for taxes not delinquent)
(statutory or other), or preference, priority, or other security agreement
or preferential arrangement, charge, or encumbrance securing indebtedness
(other than liens for taxes not delinquent) of any kind or nature
whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction to evidence any of the foregoing).
LOAN:
"Loan" means the loan made by the Issuer to the Company from the
proceeds of the issuance of the Bonds.
<PAGE>
LOAN AGREEMENT:
"Loan Agreement" shall mean this Loan Agreement as amended or
supplemented from time to time in accordance with the terms hereof.
LOAN DOCUMENTS:
"Loan Documents" shall mean the Loan Agreement, the Indenture, the
Bond Purchase Agreement, the Note, the Bond, the Assignment of the Loan
Agreement, the Guaranties and the Assignment of the Note, and any and all
promissory notes executed by the Company in favor of the Issuer and all
other security agreements, documents, instruments, guarantees,
certificates and agreements executed and/or delivered by the Company, or
the Guarantor in connection with this Loan Agreement.
LOAN PAYMENTS:
"Loan Payments" shall mean the payments required to be made by the
Company pursuant to Section 4.2 hereof.
MBFC:
"MBFC" shall mean Mississippi Business Finance Corporation.
NOTE:
"Note" shall mean the promissory note of the Company issued by the
Company to the Issuer in accordance with Section 4.1 hereof, the form of
which is attached hereto as Exhibit D.
OUTSTANDING:
"Outstanding," when used with reference to Bonds, shall mean, at any
date as of which the amount of outstanding Bonds is to be determined, the
aggregate of all Bonds authorized, issued, authenticated and delivered
under the Indenture except:
(a) Bonds cancelled or surrendered to the Trustee for cancellation
pursuant to Section 2.12 of the Indenture prior to such date;
(b) Bonds in lieu of or in substitution for which other Bonds shall
have been authenticated and delivered pursuant to the Indenture unless
proof satisfactory to the Trustee and the Company is presented that any
such Bond is held by a bona fide holder in due course.
<PAGE>
In determining whether holders of a requisite aggregate principal
amount of Bonds outstanding have concurred in any request, demand,
authorization, direction, notice, consent or waiver under the Indenture,
Bonds which are owned by the Company or the Issuer shall be disregarded
and deemed not to be outstanding for the purpose of any such
determination; provided, however, that for the purpose of determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Bonds
which the Trustee knows to be so owned shall be so disregarded.
PERMITTED ENCUMBRANCES:
"Permitted Encumbrances" shall mean and include:
(a) any lien or charge incident to construction or maintenance other
than those then payable and filed of record unless such are being
contested as permitted by Section 4.6 of this Agreement;
(b) the lien of taxes and assessments which are not delinquent;
(c) the lien of taxes and assessments which are delinquent but the
validity of which is being contested as permitted by Section 4.6 of this
Agreement;
(d) any liens created under this Agreement, the Indenture, the Note
and the Security Agreement;
(e) easements, exceptions or reservations for the purpose of
pipelines, telephone lines, telegraph lines, power lines and substations,
roads, streets, alleys, highways, railroad purposes, drainage and sewerage
purposes, dikes, canals, laterals, ditches, the removal of oil, gas, coal
or other minerals, and other like purposes, or for the joint or common use
of real property, facilities and equipment, which, in the reasonable
opinion of the Issuer and the Purchaser do not in the aggregate materially
impair the value or the use of such property for the purposes for which it
is or may reasonably be expected to be held;
(f) rights reserved to or vested in any municipality or governmental
or other public authority to control or regulate or use in any manner any
portion of the Project which in the aggregate do not materially impair the
use of the Project for the purposes for which, in the reasonable opinion
of the Company, the Issuer and the Purchaser, it is or may reasonably be
expected to be held;
<PAGE>
(g) any obligations or duties affecting any portion of the Project
Site to any municipality or governmental or other public authority with
respect to any right, power, franchise, grant, license or permit;
(h) present or future valid zoning laws and ordinances, provided the
same do not, in the opinion of the Company, the Issuer and the Purchaser,
prohibit the carrying on of the business of the Company at the Project
Site;
(i) the rights of the Issuer and the Trustee under this Agreement,
the Indenture and the Note;
(j) any lien on the Project or any part thereof created or that may
be created pursuant to this Agreement from the Company to the Issuer, as
assigned to the Trustee pursuant to the Indenture including the Security
Agreement;
(k) such other encumbrances as the Purchaser may approve; and
(l) any lien or encumbrance permitted under the Bank Loan Agreement
or by the Bank in writing.
PERSON OR PERSON:
"Person" or "person" shall mean an individual, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority, or other entity of
whatever nature.
PLANS AND SPECIFICATIONS:
"Plans and Specifications" shall, to the extent applicable, mean the
plans and specifications prepared for the Project, certified by an
Authorized Company Representative, as the same may be implemented,
detailed and revised from time to time.
PROJECT:
"Project" shall mean an expansion to the building on the Project Site
and acquisition and installation of the Equipment financed with the
proceeds of the Loan, and as the same may become more detailed from time
to time, including any repair, replacement or modification thereof and
substitutions therefor and additions thereto and excluding deletions
therefrom, including personal property installed in accordance with
Section 4.5 of the Agreement, to be used for the purpose of facilitating
the relocation and expansion of an existing manufacturing facility for the
manufacturing processing, assembling and distribution of building material
products and other permissible products under the Act.
<PAGE>
PROJECT FUND:
"Project Fund" shall mean the fund created under Section 5.1 of the
Indenture.
PROJECT SITE:
"Project Site" shall mean the real property described in Exhibit B
attached hereto on which the Buildings and the Equipment acquired and
installed with the proceeds of the Bonds are or will be situated, which
property is owned by the Company.
PURCHASER:
"Purchaser" shall mean the Bank.
REDEMPTION PRICE:
"Redemption Price" shall mean the principal of and interest on the
Bonds to be redeemed at par, without premium, and all other amounts due
and owing in respect to the Bonds.
REGISTERED OWNER(S):
"Registered Owner(s)" shall mean the Person or Persons in whose name
or names the particular registered Bond or Bonds shall be registered on
the Bond Register.
REVENUES:
"Revenues" shall mean all payments, receipts and revenues payable by
the Company to the Issuer under this Loan Agreement (except payment of
Administration Expenses and indemnification payments pursuant to Sections
4.2 and 4.11, respectively, of this Loan Agreement) and any other
payments, receipts and revenues derived by the Issuer from the Company
under this Loan Agreement.
SIMPSON:
"Simpson" shall mean Simpson Manufacturing Co., Inc., a California
corporation.
<PAGE>
STATE:
"State" shall mean the State of Mississippi.
TRUSTEE:
"Trustee" shall have the meaning set forth in the Indenture.
SECTION 1.2. ACCOUNTING TERMS. All accounting terms not
specifically defined or otherwise specified herein shall have the meanings
generally attributed to such terms under generally accepted accounting
principles, as in effect from time to time, consistently applied, except
that for purposes of calculating any ratios hereunder, consolidated items
shall include those of each Affiliate whether or not such Affiliate would
otherwise be consolidated under such accounting principles.
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS OF THE ISSUER. The Issuer makes the
following representations as the basis for the undertakings on the part of
the Company herein contained:
(a) The Issuer is a public corporation of the State and is
authorized pursuant to the provisions of the Act to enter into the
transactions contemplated by this Agreement.
(b) The Issuer has full power and authority to enter into the
transactions contemplated by this Agreement and to carry out its
obligations hereunder.
(c) The Issuer is not in default under any provisions of the laws of
the State material to the performance of its obligations under this
Agreement.
(d) The Issuer has been duly authorized to execute and deliver this
Agreement and by proper corporate action has duly authorized the execution
and delivery hereof and as to the Issuer, this Agreement is valid and
legally binding and enforceable in accordance with its terms, except to
the extent that the enforceability thereof may be limited (1) by
bankruptcy, reorganization, or similar laws limiting the enforceability of
creditors' rights generally or (2) by the availability of any
discretionary equitable remedies.
<PAGE>
(e) The Loan for the Cost of the Project by the Company, as provided
by this Agreement, will further the purposes of the Act, to wit: to
induce the location or expansion of manufacturing facilities within the
State in order to advance the public purposes of relieving unemployment.
SECTION 2.2. REPRESENTATIONS OF COMPANY. The Company makes the
following representations as the basis for the issuance by the Issuer of
the Bonds and the undertakings on the part of the Issuer herein
contained:
(a) The Company is a corporation duly incorporated under the laws of
the State of California is in good standing and is duly qualified to
transact business in the State, has power to enter into the Loan
Documents, and by proper corporate action has duly authorized the
execution and delivery of the Loan Documents, and as to the Company, the
Loan Documents are valid and legally binding and enforceable in accordance
with their respective terms, except to the extent the enforceability
thereof may be limited (i) by bankruptcy, reorganization, or similar laws
limiting the enforceability of creditors' rights generally or (ii) by the
availability of any discretionary equitable remedies.
(b) The Company is not in violation of any provision of its
certificate of incorporation, its bylaws or any laws in any manner
material to its ability to perform its obligations under the Loan
Documents, has power to enter into the Loan Documents and has duly
authorized the execution and delivery of the Loan Documents by proper
corporate action.
(c) The Project consists of (1) the acquisition of certain real
property and the construction of a Building as more particularly described
in Exhibit A to this Agreement and in the Plans and Specifications, and
(2) the acquisition and installation of Equipment as more particularly
described in Exhibit C to this Agreement.
(d) The estimated Cost of the Project exceeds the principal amount
of the Loan.
(e) The Company is engaged in the building products industry and
other permissible products under the Act.
(f) That as a result of the construction of the Project, the Company
will provide gainful employment opportunities to the residents of the
State. The Company has been advised by the Issuer that it is an eligible
company as defined in the Act.
(g) Neither the execution and delivery of the Loan Documents, the
consummation of the transactions contemplated hereby or thereby, nor the
fulfillment of or compliance with the terms and conditions of the Loan
Documents, conflicts with or results in a breach of the terms, conditions
or provisions of any corporate restriction or any agreement or instrument
to which the Company is now a party or by which it, or any of its
property, is bound, or constitutes a default under any of the foregoing,
or results in the creation or imposition of any impermissible Lien, charge
or encumbrance whatsoever upon any of the property or assets of the
Company under the terms of any instrument or agreement.
<PAGE>
(h) Each of the Guarantors is duly organized and existing under the
laws of the jurisdiction of its incorporation, has full and adequate
corporate power to carry on its business as now conducted and is duly
licensed or qualified to do business in all jurisdictions where failure to
be so licensed or qualified would have a material adverse effect on the
Guarantors' business or financial condition.
(i) Neither the Company nor either of the Guarantors is a party to
any agreement, note, indenture or other instrument binding upon it which
contains a provision prohibiting the creation of a Lien upon any of its
property or assets, other than this Agreement, the Bank Loan Agreement,
the loan agreement currently in effect between Simpson and Wells Fargo
Bank, N.A., and the other Loan Documents.
(j) The Company and each of its Affiliates has filed or caused to be
filed all tax returns that to its knowledge are required to be filed
(except for returns not yet due), and has paid all taxes shown to be due
and payable on said returns and all other taxes, impositions, assessments,
fees or other charges imposed on it by governmental authority, agency or
instrumentality, prior to any delinquency with respect thereto (other than
taxes, impositions, assessments, fees, and charges currently being
contested in good faith by appropriate proceedings, for which appropriate
amounts have been reserved).
(k) Neither the business nor the properties of the Company or either
Guarantor are presently affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo,
act of God, or other casualty (whether nor not covered by insurance)
materially and adversely affecting such business or properties or the
operation of the Company or either Guarantor.
(l) All information furnished by the Company to the Issuer and the
Purchaser for the purpose of approving the Project and the financing of
the Loan through the issuance and sale of the Bonds including, but not
limited to, its application for the Loan is true, accurate and complete in
all material respects as of the date hereof and thereof.
(m) The Loan is not being made to finance any existing debt except
for the repayment of existing debt which qualifies as a Cost of the
Project, or any costs, expenses or other obligations incurred by the
Company or any other Person on behalf of the Company prior to October 15,
1997.
(n) There are no suits or proceedings pending or to the knowledge of
the Company threatened against or affecting the Company, which, if
adversely determined, would have a material adverse effect on the
financial condition or business or operations of the Company, and there
are no proceedings by or before any governmental commission, board, bureau
or other administrative agency pending or to the knowledge of the Company
threatened against or affecting the Company which, if adversely
determined, would have a material adverse effect on the financial
condition or business or operations of the Company.
<PAGE>
(o) The Company and each Affiliate is in substantial compliance in
all material respects with all applicable provisions of ERISA.
(p) The Company acknowledges the terms and provisions of the
Indenture and will comply with such terms of the Indenture to the extent
that such terms and provisions are applicable to the Company.
(q) No material advance change has occurred in the financial
condition, operation, business or prospects of the Company and its
Affiliates since March 31, 1998.
SECTION 2.3. BENEFITS UNDER THE ACT. (a) The parties hereto
acknowledge that the Company has been induced to proceed with the
acquisition and construction of the Project in part by the benefits
conferred by the Act. The Issuer hereby agrees that the Company shall be
permitted to take advantage of all of the benefits provided by the Act to
the fullest extent therein set forth subject to the rules and regulations
of the Issuer. The Issuer agrees that it will not take any action to
limit, curtail or otherwise make unavailable to the Company any of the
benefits available under the Act.
(b) With respect to benefits conferred by the Act referenced in (a)
above, the following shall apply:
(1) the maximum benefits accruing in any calendar year with
respect to the income tax credit (other than any credits
which may be carried forward to future years pursuant to
the Act) shall not exceed the payments of the principal of,
premium, if any and interest payments on the Building Bonds
during such year and the fees and expenses of the Trustee
and any other fees and expenses referenced herein.
(2) any benefit claimed or received by the Company for any Cost
shall not be used as a deduction under the laws of the
State of Mississippi in order to determine the taxable
income of the Company.
(3) the Company shall request the Trustee to provide the
Issuer, not later than ninety (90) days after the end of
each calendar year, with a certificate setting forth the
amount of all payments made to the Trustee with respect to
the Bonds whether for principal, premium, interest or the
fees and expenses of the Trustee.
<PAGE>
(4) the benefits accruing to the Company under this Section 2.3
shall cease in the event:
(A) a default should occur under this Agreement or the
Indenture; or
(B) the Company should fail to operate the Project for a
period of nine (9) consecutive months following the
initial start up of the Project except for force
majeure, strikes, lockouts, damage, destruction, act
of God or in general, reasons beyond the Company's
reasonable control excepting, however, general
economic conditions.
(5) the Company agrees to comply with the terms and provisions
of the Act in all respects with respect to the benefits
available under the Act.
(6) the benefits or credits available under the Act shall cease
to accrue on the date the principal and interest on the
Bonds are paid in full whether at maturity or by way of
redemption.
(7) the benefits accruing to the Company under this Section 2.3
shall be limited to the annual debt service payments on the
Bonds for qualified Cost of the Project and shall be
reduced by the amount of surplus funds remaining after
completion which shall be used to redeem Bonds as provided
for in Section 3.7 of this Agreement.
(8) the tax credits allowed as a benefit under the Act shall be
further limited so that the credits allowed in any year
shall not exceed eighty percent (80%) of the amount of
taxes due to the State prior to the application of the
credits (as directed in Section 27-7-22.3 of the
Mississippi Code of 1972, as amended). To the extent that
the payments of the principal of, premium, if any, and
interest payments on the Bonds during any year and the fees
and expenses of the Trustee and any other fees and expenses
referenced herein exceed the amount of the tax credit
authorized by Section 27-7-22.3, in any taxable year, such
excess payment may be recouped from excess credits in
succeeding years not to exceed three (3) years following
the date upon which the credit was earned.
<PAGE>
(9) the Company will report to the Mississippi Employment
Security Commission ("MESC") its employees as required by
law, and shall annually report to MBFC the average number
of employees reported for each year to the MESC. This
shall be done for each year after the year in which the
Project was induced for financing by the MBFC for so long
as the Bonds are outstanding.
With respect to the benefits that may accrue to the Company under
this Section 2.3, the Company acknowledges and agrees that the Issuer
makes no representation, warranty or covenant regarding the enforceability
of the Company's rights to receive the benefits, the extent that such
benefits may be received nor the term under which the Company may be
entitled to receive the benefits.
ARTICLE III
COMPLETION OF PROJECT; ISSUANCE OF BONDS
SECTION 3.1. COMPLETION OF PROJECT; BEST EFFORTS. The Company will
acquire, construct, install and equip the Project or cause the Project to
be acquired, constructed, installed and equipped in accordance with the
Plans and Specifications and as herein provided, will use its best efforts
to cause the acquisition, construction, installation and equipping thereof
to be completed with all reasonable dispatch, but if for any reason such
acquisition, construction, installation and equipping shall not be
completed there shall be no resulting diminution in or postponement of the
payments required in Section 4.2 hereof to be paid by the Company under
this Agreement and the Note.
Anything in this Agreement notwithstanding, the Issuer shall not be
obligated to complete the acquisition, construction, installation and
equipping of the Project upon acceleration of the payment of the unpaid
portion of the payments due pursuant to this Agreement and the Note, and
the making of all payments in the amount required by and in accordance
with the terms of this Agreement and the Note.
In order to effectuate the purposes of this Agreement, the Company
will make, execute, acknowledge and deliver, or cause to be made,
executed, acknowledged and delivered, all contracts, orders, receipts,
writings and instructions, in the name of the Company or otherwise, with
or to other persons, firms or corporations, and in general do or cause to
be done all such other things as may be requisite or proper for the
construction, installation and equipping of the Project and fulfillment of
the obligations of the Company under this Agreement.
<PAGE>
The Company will maintain such records in connection with the cost of
the construction, installation and equipping of the Project as to permit
ready identification thereof which records the Issuer, the Purchaser and
the Trustee shall have the right to inspect upon reasonable notice during
regular business hours.
The Company hereby grants to the Issuer, the Trustee and the
Purchaser the right, privilege and authority to take all actions and to do
all other things necessary to effectuate the purposes of this Agreement.
SECTION 3.2. ISSUANCE OF BONDS. The Issuer, concurrent with or as
soon as practical after the execution of this Agreement, will use its best
efforts to sell, issue and deliver the Bonds to the Purchaser thereof and
deposit the proceeds thereof, from time to time, with the Trustee in
accordance with Sections 5.1 and 6.1 of the Indenture.
SECTION 3.3. LOAN; DISPOSITION OF BOND PROCEEDS. The Issuer, as
issuer of the Bonds, hereby lends from the proceeds of the issuance and
sale of the Bonds, in the principal amount of $3,000,000 to the Company,
which is equal to the original face amount of the Bonds, paid by the
purchaser thereof, for the purposes and in accordance with the terms and
conditions set forth in the Indenture.
SECTION 3.4. REQUISITION FOR PROJECT FUNDS. The Issuer has, in the
Indenture, authorized and directed the Trustee to make payments from the
Project Fund to pay the Cost of the Project, upon receipt by the Trustee,
with a copy to the Purchaser, of (a) original executed requisitions (upon
which both the Issuer and the Trustee may rely conclusively and shall be
protected in relying) signed by an Authorized Company Representative, and
approved by the Purchaser stating with respect to each payment to be made:
(1) the requisition number, (2) the name and address of the Person to whom
payment is due or, in the event such payment is to reimburse the Issuer or
the Company, the name and address of the Person to whom payment previously
has been made (or, in the case of payments to the Bond Fund, instructions
to make such payments to the Bond Fund), (3) the amount to be paid, (4)
that there has been no "Event of Default" under Section 7.1 of this
Agreement by the Company under this Agreement, and (5) that each
obligation, item of cost or expense mentioned therein has been properly
incurred, is a proper charge against the Project Fund and has not been the
basis of any previous withdrawal; and (b) copies of all invoices or
statements from a contractor, vendor or other payee supporting each
requisition for payment from the Project Fund and clearly identifying the
property or service comprising the Cost of the Project to be paid or
reimbursed which shall be maintained by the Trustee.
If any contract provides for retention by the Company of a portion of
the contract price, there shall be paid from the Project Fund only the net
amount remaining after deduction of such portion, until such retainage
becomes due in accordance with the terms of the contract.
SECTION 3.5. PLANS AND SPECIFICATIONS; REVISIONS. Upon request, the
Company shall deposit a completed set of Plans and Specifications with the
Purchaser as soon as such Plans and Specifications are available. The
Company may revise the Plans and Specifications at any time and from time
to time prior to the Completion Date.
<PAGE>
SECTION 3.6. RATE REQUESTS. The Loan shall be funded and remain
outstanding pursuant to Section 2.2 of the Indenture. The Bonds shall
bear interest at either of the rates defined as Interest Rate A, Interest
Rate B or Interest Rate C, as defined in the Indenture.
SECTION 3.7. CERTIFICATE OF COMPLETION. When the Project is
completed and ready to be placed in service, the Trustee and the Issuer
shall receive a certificate of an Authorized Company Representative
stating, as applicable, that (a) the construction of the Building has been
completed substantially in accordance with the Plans and Specifications;
(b) the acquisition of the Equipment has been completed substantially in
accordance with the list of Equipment attached hereto as Exhibit C; (c)
the Project complies with all zoning, planning, building and all
regulations of any other governmental entities having jurisdiction over
the Project; and (d) payment, or provision therefor of the Cost of the
Building and the Equipment has been made except for any cost of the
Building and the Equipment not then due and payable or the liability for
payment of which is being contested or disputed by the Company.
Notwithstanding the foregoing, such certificate shall state that it is
given without prejudice to any rights against third parties which exist at
the date thereof or which may subsequently come into being. The Issuer
and the Company agree to cooperate in causing such certificates to be
furnished to the Trustee and the Issuer.
SECTION 3.8. COMPLETION OF PROJECT IF BOND PROCEEDS INSUFFICIENT;
SURPLUS PROCEEDS. If the moneys in the Project Fund available for payment
of the Cost of the Project are not sufficient to pay the Cost of the
Project in full, the Company will complete or cause to be completed the
Project and pay or cause to be paid all of that portion of the Cost of the
Project in excess of the moneys available therefor in the Project Fund.
The Issuer does not make any warranty, either express or implied, that the
moneys which will be paid into the Project Fund will be sufficient to pay
the Cost of the Project. If the Company shall pay any portion of the Cost
of the Project pursuant to the provisions of this Section 3.7, it shall
not be entitled to any reimbursement therefor from the Issuer, the Trustee
or the holders of any of the Bonds, nor shall it be entitled to any
diminution in or postponement of the Loan Payments required in Section 4.2
hereof to be paid by the Company.
If, upon the Completion Date, there shall be any surplus funds
remaining in the Project Fund not reserved to pay for the Cost of the
Project, such funds shall, (a) be deposited in the Bond Fund and used, at
the earliest date permissible under the terms of the Indenture without the
payment of a call premium or penalty, to pay principal on such Bonds
through redemption or retirement; and (b) be invested as provided for in
the Indenture until such time as such surplus funds are expended as
provided for in this Section 3.7.
SECTION 3.9. DEFAULT BY CONTRACTOR. In the event of default of any
supplier, contractor or subcontractor under any contract made by it in
connection with the Project or in the event of a breach of warranty with
respect to any materials, workmanship or performance guaranty, the Company
may proceed, either separately or in conjunction with others, to pursue
such remedies against the supplier, contractor or subcontractor so in
default and against each surety for the performance of such contract as it
<PAGE>
may deem advisable. The Company will advise the Issuer, the Purchaser and
the Trustee of the steps it intends to take in connection with any such
default. If the Company shall so notify the Issuer and the Trustee, the
Company may, in its own name or in the name of the Issuer, prosecute any
action or proceeding or take any other action involving any such supplier,
contractor, subcontractor or surety which the Company deems reasonably
necessary, and in such event the Issuer will cooperate fully with the
Company. Any amounts recovered by way of damages, refunds, adjustments or
otherwise in connection with the foregoing prior to the Completion Date
shall be paid into the Project Fund or, if recovered after the Completion
Date and full disposition of the Project Fund, shall be deposited in the
Bond Fund, or in such other manner as the Issuer shall reasonably
determine to be consistent with the Loan Agreement.
SECTION 3.10. INVESTMENT OF PROJECT FUND. Any moneys held as a part
of the Project Fund or any other fund created pursuant to the Indenture
shall, at the facsimile request of an Authorized Company Representative,
confirmed in writing within two (2) Business Days, be invested or
reinvested by the Trustee as provided in Article VII of the Indenture.
ARTICLE IV
SECURITY; LOAN PAYMENTS; OTHER OBLIGATIONS
SECTION 4.1. NOTE/GUARANTIES. Concurrently with the sale and
delivery by the Issuer of the Bonds, in order to secure the obligation of
the Company hereunder, (i) the Company will execute and deliver the Note
substantially in the form attached hereto as Exhibit D which shall be
dated the same date as the date of delivery of the Bonds and (ii) the
Guarantors will execute and deliver the Guaranties.
SECTION 4.2. LOAN PAYMENTS. As and for security for repayment of
the Loan made to Company by the Issuer pursuant to Section 3.3 hereof, the
Company agrees to the assignment of the Loan Documents to the Trustee for
the account of the Issuer and Purchaser. The Company agrees to pay or
cause to be paid to the Trustee a sum equal to the aggregate principal
amount of the Bonds issued under the Indenture, premium, if any, and
interest on the unpaid balance thereof at the rates payable by the Trustee
on such Bonds, in the amounts and on the Payment Dates as follows:
(a) for deposit in the Bond Fund, on the Business Day prior to each
Interest Payment Date, the amount which equals the interest to be paid on
the Bonds on such Interest Payment Date (computed in accordance with
Section 2.2 of the Indenture); provided, however, such deposits of
interest shall not be required to be made into the Bond Fund to the extent
that money on deposit therein is available for such purpose; and
(b) for deposit in the Bond Fund, on the Business Day prior to each
Principal Payment Date on which principal of the Bonds is due, the amount
which equals the sum of (1) the principal of the Bonds which will be due
and payable on such Principal Payment Date, and (2) the amount of the
Redemption Price due and payable on such Principal Payment Date, if any,
provided, however, that such deposits of principal shall not be required
<PAGE>
to be made into the Bond Fund to the extent that money on deposit therein
is available for such purpose; provided, however, that if the Bonds shall
theretofore have been deemed to have been paid pursuant to the Indenture
from amounts paid by the Company, but solely to the extent of amounts paid
by the Company, no further payments need be made under subsections (a) and
(b) of this Section provided however that:
(c) notwithstanding the foregoing, during only such periods when all
Outstanding Bonds are registered in the name of the Bank, payments by the
Company under this Section 4.2 shall be made directly to the Bank in
accordance with Section 6.3 of the Indenture.
In the event the Company shall fail to make or cause to be made any
of the payments required in this Section 4.2, the payment so in default
shall continue as an obligation of the Company until the amount in default
shall have been fully paid, and the Company will pay the same with
interest thereon until paid at the rate or rates per annum borne by the
Bonds.
The Company further agrees to pay, when due, to the party to whom
such payment is due, the Administration Expenses, all sums constituting a
Cost of the Project and all other amounts due in respect of the Bonds and
required under the terms and provisions of this Agreement as same shall
have become due and payable.
In addition, in the event the Company is obligated to make payments
which are accelerated hereunder upon the occurrence of certain events, all
as described in Article VII hereof, such payments to be made in an amount
sufficient (a) to redeem at the earliest date permitted under the
Indenture the Bonds to be redeemed at the Redemption Price, (b) to pay any
interest which will become due on such Bonds to such redemption date and
(c) to pay all Administration Expenses accrued and to accrue.
SECTION 4.3. OBLIGATION TO MAKE PAYMENTS ABSOLUTE. It is understood
and agreed that all payments by the Company under this Agreement and the
Note shall be absolute and unconditional and shall not be subject to any
defense (other than payment) or any right of set-off, counterclaim or
recoupment arising out of any breach by the Issuer or the Trustee of any
obligation to the Company, whether hereunder or otherwise, or out of any
indebtedness or liability at any time owing to the Company by the Issuer
or the Trustee.
So long as any Bonds are Outstanding, the Company will pay directly
to the Issuer or the Trustee when due, as the case may be, the amount of
Administration Expenses payable to them respectively not theretofore
provided for which have then accrued and become payable (except as
otherwise provided herein); provided, however, that before any such
payment is due and payable, the Issuer or the Trustee, as the case may be,
shall give notice to the Company, at least fifteen (15) days prior to such
Payment Date, of the amount and nature of such Administration Expenses.
SECTION 4.4 SOLE POSSESSION OF PROJECT BY THE COMPANY. The Company
is entitled to sole and exclusive possession of the Project subject to the
provisions of this Agreement.
<PAGE>
SECTION 4.5 MAINTENANCE OF PROJECT. The Company will use its best
efforts to maintain, preserve and keep the Project or cause the Project to
be maintained, preserved and kept, with the appurtenances and every part
and parcel thereof, in good repair, working order and condition and will
from time to time make or cause to be made all necessary and proper
repairs, replacements and renewals.
Subject to Section 6.1 of this Agreement, the Company shall have the
privilege, provided the value of the Project is not materially diminished,
of remodeling the Project or making substitutions, modifications and
improvements to the Project from time to time as it, in its discretion,
may deem to be desirable for its uses and purposes, the cost of which
remodeling, substitutions, modifications and improvements shall be paid by
the Company, and the same shall be included under the terms of this
Agreement as part of the Project.
SECTION 4.6. TAXES AND ASSESSMENTS; TAX INDEMNITY. The Company
shall:
(a) file all tax returns and appropriate schedules thereto that are
required to be filed under applicable law, prior to the date of
delinquency;
(b) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon by the Company, upon its income and profits
or upon any properties belonging to it, prior to the date on which
penalties attach thereto; and
(c) pay all taxes, assessments and governmental charges or levies
that, if unpaid, might become a Lien upon any of its properties; provided,
however, that the Company in good faith may contest any such tax,
assessment, governmental charge or levy described in the foregoing clauses
(b) and (c) so long as appropriate reserves are maintained with respect
thereto. If any tax is or may be imposed by any governmental entity in
respect of sales of the Company's inventory or the payment of compensation
to the Company's employees, or as a result of any other transaction of the
Company, which tax the Issuer is or may be required to withhold or pay,
the Company agrees to indemnify and hold harmless the Issuer in connection
with such taxes (including penalties and interest), and the Company shall
immediately reimburse the Issuer for any such amounts paid by the Issuer.
SECTION 4.7. OPERATION OF PROJECT. The Company agrees that so long
as any of the Bonds are Outstanding it will maintain the Project as an
eligible company in accordance with the Act, unless the Project is sold
pursuant to Section 6.1 hereof.
SECTION 4.8. PAYMENT OF EXPENSES. The Company will pay, or cause to
be paid, in addition to the payments provided for in Sections 4.2 and 4.3
hereof, all of the expenses of operation of the Project, including,
without limitation, the cost of all necessary and proper repairs,
replacements and renewals made pursuant to Section 4.5 hereof and any and
all taxes and assessments payable pursuant to Section 4.6 hereof.
<PAGE>
SECTION 4.9. PAYMENTS CONTINUE UPON DESTRUCTION OF PROJECT. It is
understood and agreed that the payments under Section 4.2 hereof and on
the Note and other charges payable hereunder shall continue to be payable
at the time and in the amounts herein specified, whether or not the
Project, or any portion thereof, shall have been condemned or taken by
eminent domain or destroyed, wholly or partially, by fire or other
casualty, and that there shall be no abatement or diminution of any such
payments and other charges by reason thereof.
SECTION 4.10. PAYMENT OF INITIAL ADMINISTRATIVE FEE. Concurrently
with the sale and delivery by the Issuer of the Bonds, the Company shall
pay to the Issuer an Initial Administrative Fee in the amount of $10,000.
SECTION 4.11. RELEASE AND INDEMNIFICATION OF THE ISSUER. The
Company hereby releases the Issuer from, and agrees that the Issuer and
its respective officers, directors, members, employees, attorneys, and
agents shall not be liable for, and agrees to defend, indemnify and hold
the Issuer and its respective officers, directors, members, employees,
attorneys, and agents harmless against:
(a) any liability, cost or expense in the administration of this
Agreement or the Indenture and the obligations imposed on the Issuer
thereby and hereby;
(b) any or all liability or loss, cost or expense, including
reasonable attorneys' fees, resulting from or arising out of any loss or
damage to property or any injury to or death of any person occurring on or
about the Project Site or resulting from any defect in the fixtures,
machinery, equipment or other property located on the Project Site or
arising out of, pertaining to, or having any connection with the Project
or the financing thereof (whether or not arising out of acts, omissions or
negligence of the Company);
(c) any or all liability or loss, cost or expense, including
attorneys' fees, arising out of or in connection with, or pertaining to
the issuance, sale or delivery of the Bonds, including, but not limited
to, liabilities arising under the Securities Act of 1933, the Securities
Exchange Act of 1934 or any applicable state securities laws;
(d) any and all claims, damages, judgments, penalties, costs, and
expenses (including attorneys' fees and court costs now or hereafter
arising from the aforesaid enforcement of this paragraph) arising directly
or indirectly from (i) the activities of the Company and its predecessors
in interest, (ii) third parties with whom it has a contractual
relationship, or (iii) the violation of any environmental protection,
health, or safety law, whether any such claims are asserted by any
Governmental Authority or any other Person which indemnity shall survive
the termination of this Agreement.
The indemnity specified in this Section 4.11 shall not be effective
to relieve the Issuer or its respective officers, directors, members,
employees, attorneys and agents from damages that result from negligence
or intentional misconduct on the part of the Issuer. This indemnification
covenant shall survive the termination of this Agreement with respect to
liability arising out of any event or act occurring prior to such
termination.
<PAGE>
The provisions of this Section 4.11 shall also apply in favor of the
Trustee, except to the extent that any liability, loss, cost or expense on
the part of the Trustee results from the Trustee's own willful misconduct
or gross negligence.
SECTION 4.12. INSURANCE. The Company shall maintain insurance with
responsible insurance companies on such of its properties, in such amounts
and against such risks as is customarily maintained by similar business
operating n the same vicinity, specifically to include fire and extended
coverage insurance covering all assets located at the Project Site,
business interruption insurance, workers compensation insurance and
liability insurance, all to be with such companies and in such amounts as
are satisfactory to the Issuer and with respect to insurance on the
collateral referred to in any of the Loan Documents, to contain a mortgage
clause naming the Purchaser and the Trustee as a loss payee or an
additional insured (as applicable) as its interest may appear and
providing for at least thirty (30) days prior notice to the Issuer of any
cancellation thereof. Satisfactory evidence of such insurance will be
supplied to the Purchaser and the Trustee prior to funding under the Loan
and thirty (30) days prior to each policy renewal. Risk of loss or damage
is the Company's to the extent of any deficiency in any effective
insurance coverage.
SECTION 4.13. APPLICATION OF INSURANCE PROCEEDS.
(a) Immediately after the occurrence of any damage or loss to the
Project in excess of $1,000,000 the Company shall notify the Issuer, the
Purchaser and the Trustee as to the nature and extent of such damage or
loss. If the Company shall determine that rebuilding, repairing or
restoring the Project is practicable and desirable, the Company shall
obtain written consent from the Purchaser and upon receiving such approval
the Company shall forthwith proceed with such rebuilding, repairing or
restoring the Project to its former condition and shall notify the Issuer,
the Purchaser and the Trustee upon the completion thereof. If the Company
determines to rebuild, repair or restore the Project, all net proceeds of
such insurance, if any, shall be delivered to the Trustee and all such
funds held by the Trustee for the rebuilding, repairing or restoring of
the Project shall be disbursed by the Trustee in accordance with the
procedures established for making payments from the Project Fund in
Section 5.2 of the Indenture. In the event the Company elects to rebuild,
repair or restore the Project, and the net proceeds of insurance, if any,
will be insufficient to pay in full the costs of rebuilding, repairing or
restoring the Project under this Section, the Company will nonetheless
perform such rebuilding, repairing or restoration. Prior to the
commencement thereof, the Company shall, upon written request of the
Purchaser, pay the deficiency to the Trustee for disbursement. The
Company shall not, by reason of the payment of any such deficiency, be
entitled to any reimbursement from the Trustee and the Purchaser or the
Issuer or any abatement or diminution of payments under this Agreement or
the Note. In the event the Company elects to rebuild, repair or restore
the Project, any insurance proceeds received in respect of such damage or
loss not expended in rebuilding, repairing or restoring the Project shall
be paid to the Company.
(b) If the Company chooses not to rebuild, repair or restore the
Project, the Company shall pay or cause to be paid to the Trustee, acting
for and on behalf of the Issuer, the net proceeds of such insurance, if
any, to be applied to the prepayment of the Loan as provided for in
Article VIII hereof.
<PAGE>
(c) Any provisions of this Agreement to the contrary
notwithstanding, the Company shall be entitled to receive, keep and retain
that portion of insurance proceeds received for damages to its own
property other than the Project. The Issuer and the Purchaser shall
cooperate fully with the Company in the handling and the conduct of any
prospective or pending insurance claims with respect to the Project or any
portion thereof.
SECTION 4.14. CONDEMNATION.
(a) In the event that title to or the temporary use of the Project,
or any portion thereof, shall be taken in condemnation or by the exercise
of the power of eminent domain by any governmental body or by any person,
firm or corporation acting under Governmental Authority in excess of
$1,000,000, the Company shall notify the Issuer, the Purchaser and the
Trustee as to the nature and extent of such condemnation or eminent domain
proceedings. If the Company deems it practicable and desirable to replace
or restore that portion of the Project taken in or affected by
condemnation or by the exercise of the power of eminent domain, the
Company shall obtain written consent from the Purchaser and upon receiving
such approval the Company shall forthwith proceed with such replacement or
restoration of the Project to a useful condition and shall notify the
Issuer, the Purchaser and the Trustee upon the completion thereof, and
such replaced or restored property shall become part of the Project
subject to the security interests granted herein. If the Company
determines to proceed with such replacement or restoration, all net
proceeds of such award or awards shall be delivered to the Trustee and all
such funds held by the Trustee for replacement or restoration of the
Project shall be disbursed by the Trustee in accordance with the
procedures established for making payments from the Project Fund in
Section 5.2 of the Indenture. In the event the Company elects to restore
or replace the Project, and the net proceeds of such condemnation award or
awards will be insufficient to pay in full the costs of restoration or
replacement of the portion of the Project taken in or affected by
condemnation or the power of eminent domain, the Company will nonetheless
perform such restoration or replacement. Prior to the commencement
thereof, the Company shall pay the deficiency to the Trustee for
disbursement. The Company shall not, by reason of the payment of any such
deficiency, be entitled to any reimbursement from the Trustee, the
Purchaser or the Issuer or any abatement or diminution of payments under
this Agreement or the Note. In the event the Company elects to restore
or replace the Project, any proceeds received from any award or awards in
respect of the Project or any portion thereof made in such condemnation or
eminent domain proceedings, after payment of all expenses incurred in the
collection thereof and not otherwise used by the Company for the
replacement or restoration by the Company of the portion of the Project
taken in or affected by condemnation or by the exercise of the power of
eminent domain, shall be paid to the Company.
(b) In the event the Company chooses not to replace or restore the
Project, the Company shall pay or cause to be paid to the Issuer the net
proceeds of the condemnation award or awards to be applied to the
prepayment of the Loan as provided for in Article VIII hereof.
(c) Any provisions of this Agreement to the contrary
notwithstanding, the Company shall be entitled to receive, keep and retain
that portion of the proceeds of any condemnation award made for damages to
or taking of its own property other than the Project. The Issuer shall
cooperate fully with the Company in the handling and the conduct of any
prospective or pending condemnation proceedings with respect to the
Project or any portion thereof.
<PAGE>
ARTICLE V
SPECIAL COVENANTS
SECTION 5.1. NO WARRANTY AS TO SUITABILITY OF PROJECT BY THE ISSUER.
The Issuer makes no warranty, either express or implied, as to the actual
or designed capacity of the Project, as to the suitability of the Project
for the purposes specified in this Agreement, as to the condition of the
Project, or that the Project will be suitable for the Company's purposes
or needs.
SECTION 5.2. CONTINUATION OF EXISTENCE OF COMPANY. The Company
covenants that it will maintain its existence in its present form, will
obtain, maintain and keep in full force and effect all governmental
approvals, consents, permits and licenses as may be necessary for
continued use of the Project, will not dissolve or otherwise dispose of
all or substantially all its assets and will not consolidate with or merge
into another Person or permit one or more other Persons (other than a
subsidiary) to consolidate with or merge into it without first obtaining
the prior written consent of the Purchaser and the Issuer. If written
approval of the Purchaser and the Issuer is obtained, upon any
consolidation or merger, or any conveyance or transfer of the assets of
the Company substantially as an entirety in accordance with this Section
5.2, the successor Company formed by such consolidation or into which the
Company is merged or to which such conveyance or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Agreement with the same effect as if such
successor Company had been named as the Company herein.
In the event of any such conveyance or transfer, the Company as the
predecessor person may be dissolved, wound up and liquidated (if
applicable) at any time thereafter.
If a consolidation, merger or sale or other transfer is made as
permitted by this Section 5.2, the provisions of this Section 5.2 shall
continue in full force and effect and no further consolidation, merger or
sale or other transfer shall be made except in compliance with the
provisions of this Section 5.2 and Section 6.1 hereof.
SECTION 5.3. COVENANT BY THE COMPANY TO LEAVE ASSETS, INCLUDING THE
PROJECT, FREE OF OTHER LIENS OR ENCUMBRANCES. The Company covenants that
it shall not create or suffer to be created any Lien on its assets,
including, without limitation, the Project or any part thereof, except
Permitted Encumbrances.
SECTION 5.4. AGREEMENT TO COOPERATE. In the event it may be
necessary for the proper performance of this Agreement, or for the
exercise of any rights hereunder, on the part of the Issuer or the Company
that any application or applications for any permit or license or
authorization to do or to perform certain things be made to any
governmental or other agency by the Company or the Issuer, or both, the
Company and the Issuer each agree to execute and prosecute upon the
request of the other such application or applications.
<PAGE>
SECTION 5.5. QUALIFICATION IN MISSISSIPPI. Subject to Section 5.2
hereof, the Company warrants that it is and throughout the term of this
Agreement will continue to be duly qualified to do business in the State.
SECTION 5.6. TITLE COVENANTS. The Company covenants that the
Project and, to the extent applicable, each component thereof, including
the Project Site and the Equipment, is free from all Liens except for
Permitted Encumbrances and that the Company has and will maintain
throughout the term of this Agreement a valid fee simple interest in the
Project Site described in Exhibit B attached hereto.
SECTION 5.7. MAINTENANCE. The Company will, if necessary in its
opinion, maintain all of its tangible property used in connection with its
business in good condition and repair and make all necessary replacements
thereof, and preserve and maintain all licenses, trademarks, privileges,
permits, franchises, certificates and the like necessary for the operation
of its business.
SECTION 5.8. ENVIRONMENTAL LAW COMPLIANCE. The conduct of the
Company's and each of the Guarantors' business operations do not and will
not violate any federal laws, rules or ordinances for environmental
protection, regulations of the Environmental Protection Agency and any
applicable local or state law, rule, regulation or rule of common law and
any judicial interpretation thereof relating primarily to the environment
or Hazardous Materials and the Company will not use or permit any other
party to use any Hazardous Materials at any of the Company's places of
business or at any other property owned by the Company except such
materials as are incidental to the Company's normal course of business,
maintenance and repairs and which are handled in compliance with all
applicable environmental laws. On or after (i) an event requiring the
Company to notify the Issuer under Section 5.12(e) hereof, (ii) Issuer
obtains a Lien on additional assets of the Company, or (iii) a default
under any of the Loan Documents, the Company agrees to permit the Issuer,
its agents, contractors and employees to enter and inspect any of the
Company's places of business or any other property of the Company at any
reasonable times upon three (3) days prior notice for the purposes of
conducting an environmental investigation and audit (including taking
physical samples) to insure that the Company is complying with this
covenant and the Company shall reimburse the Issuer on demand for the
costs of any such environmental investigation and audit. The Company
shall provide the Issuer, its agents, contractors, employees and
representatives with access to and copies of any and all data and
documents relating to or dealing with any Hazardous Materials used,
generated, manufactured, stored or disposed of by Company's business
operations within five (5) days of the request therefore.
SECTION 5.9. FINANCIAL REPORTING. The Company shall submit, and
shall cause the Guarantors to submit, financial information to the
Purchaser as required by Section 5(d) of the Bond Purchase Agreement.
<PAGE>
SECTION 5.10. MAINTENANCE OF BOOKS AND RECORDS; INSPECTION. The
Company shall maintain its books, accounts and records in accordance with
generally accepted accounting principles and permit the Issuer, the
Purchaser or the Trustee, their officers and employees and any
professionals designated by the Issuer, the Purchaser or the Trustee in
writing, at any time during regular business hours, to visit and inspect
any of its properties (including but not limited to the collateral
security described in the Loan Documents), corporate books and financial
records, and to discuss its accounts, affairs and finances with any
employee, officer, director, or shareholder of the Company. Unless written
notice of another location is given to the Issuer, the Purchaser or the
Trustee, the Company's books and records will be located at Company's
chief executive office set forth above.
SECTION 5.11. AFFIRMATIVE COVENANTS. Until full payment and
performance of all obligations of the Company under the Loan Documents,
the Company agrees to comply with the following covenants, unless the Bank
consents otherwise in writing (and without limiting any requirement of any
other Loan Document):
(a) Within sixty (60) days after the close of each fiscal quarter, a
financial statement, to include a balance sheet, income statement,
statement of cash flow and consolidating schedules for the Company;
(b) Within one hundred twenty (120) days after the close of each
fiscal year, a consolidated financial statement of the Company prepared by
the Company;
(c) Give notice to the Bank and the Trustee of occurrence of any
Event of Default or of any event, condition, or occurrence which, with the
giving of notice or the message of time or both, would constitute an Event
of Default;
(d) Give prompt written notice to Bank of all events of default
under any of the terms or provisions of this Agreement or of any other
agreement, contract, document or instrument entered, or to be entered into
with Bank; and of any litigation which, if decided adversely to the
Company or the Guarantors, would have a material adverse effect on the
Company's or the Guarantors' financial condition; and of any other matter
which has resulted in, or is likely to result in, a material adverse
change in its financial condition or operations;
(e) The Company shall pay promptly to Bank upon demand, reasonable
attorney's fees (including but not limited to the reasonable estimate of
the allocated costs and expenses of in-house legal counsel and legal
staff) and all costs and other expenses paid or incurred by Bank in
collecting, modifying or compromising this Loan Agreement or in enforcing
or exercising its rights or remedies created by, connected with or
provided for in this Loan Agreement or any of the Loan Documents, whether
or not an arbitration, judicial action or other proceedings is commenced.
If such proceeding is commenced, only the prevailing party shall be
entitled to attorneys' fees and court costs;
(f) The Company shall promptly, upon demand by Bank, take such
further action and execute all such additional documents and instruments
in connection with this Loan Agreement as Bank in its reasonable
discretion deems necessary, and promptly supply Bank with such other
information concerning its affairs as Bank may reasonably request from
time to time; and
<PAGE>
(g) The Company shall pay or reimburse Bank for all costs, expenses
and fees incurred by Bank in preparing and documenting this Loan Agreement
and the Loan Documents, and all amendments and modifications thereof,
including but not limited to all filing and recording fees, costs of
appraisals, insurance and attorneys' fees, including the reasonable
estimate of the allocated costs and expenses of in-house legal counsel and
legal staff.
SECTION 5.12. NEGATIVE COVENANTS. Until full payment and performance
of all obligations of the Company under the Loan Documents, the Company
will not, without the prior written consent of the Bank (and without limiting
any requirement of any other Loan Documents):
(a) create, assume or suffer to exist any mortgage, pledge, security
interest, encumbrance, or lien on any of its assets, other than Permitted
Encumbrances.
(b) create, incur, assume or permit to exist any indebtedness or
liabilities resulting from borrowings, loans or advances, whether secured
or unsecured, matured or unmatured, liquidated or unliquidated, joint or
several, except (a) the liabilities of Company to Bank; (b) trade debt
incurred by Company in the normal course of its business; or (c) the
existing liabilities of Company disclosed to Bank on its financial
statement referenced in Section 5.1 hereof.
(c) liquidate, dissolve, or enter into any consolidation, merger,
partnership or other combination, nor convey, nor sell, nor lease all or
the greater part of its assets or business; nor permit the dissolution,
merger, consolidation or sale of all or any greater part of the assets of
any of the Company's Affiliates or subsidiaries;
(d) become a guarantor or surety, pledge its credits or properties
in any manner to secure the indebtedness of another excess of $3,000,000
in the aggregate; and
(e) transfer the proceeds of any loan or advance hereunder, or any
other asset of Company to any Affiliate or the Guarantors, unless such
transfer is evidenced by a valid and enforceable instrument or statement
or account.
ARTICLE VI
ASSIGNMENT, LEASE AND SALE OF PROJECT
SECTION 6.1. DISPOSAL OF PROJECT AND ASSETS BY COMPANY.
(a) The Company will not sell, lease or otherwise dispose of or
encumber its interest in the Project, except for Permitted Encumbrances or
transactions permitted pursuant to Section 5.2 hereof and this Section
6.1, without the prior written consent of the Issuer and the Purchaser,
and with notice to the Trustee. Upon prior written consent of the Issuer
<PAGE>
and the Purchaser, this Agreement may be assigned in whole or in part, and
the interest of the Company in the Project may be sold or leased as a
whole or in part by the Company, provided, however, that any such
assignee, vendee or lessee shall, in writing, specifically assume the
obligations and affirm in its own capacity the representations, warranties
and covenants made by the Company in this Agreement, subject, however, to
the following conditions:
(1) No sale, assignment or leasing of the Project (other than
pursuant to Section 5.2 hereof), shall relieve the Company from liability
for any of its obligations hereunder, and in the event of any such sale,
assignment or leasing the Company shall continue to remain primarily
liable for the payments specified in Section 4.2 and Section 4.3 hereof
and for performance and observance of the other agreements on its part
herein provided, unless otherwise approved by the Issuer and the
Purchaser, in writing, in which case such vendee, assignee or lessee shall
assume the obligations of the Company hereunder and shall become liable
for the payments specified in Section 4.2 and Section 4.3 hereof and for
performance and observance of the other agreements of the Company herein
provided as to which the Company shall no longer be liable and the Issuer,
the Purchaser and the Trustee shall execute such release.
(2) The Company shall, no later than ten (10) days prior to the
effective date thereof, furnish or cause to be furnished to the Issuer,
the Purchaser and the Trustee a copy of each such proposed sale agreement,
assignment and lease, as the case may be.
(3) The Company shall, ten (10) days after the delivery
thereof, furnish or cause to be furnished to the Issuer, the Purchaser and
the Trustee, a true and complete copy of each such sale agreement,
assignment and lease, as the case may be, and before the execution thereof
furnish the form thereof to the Issuer.
(4) There shall be delivered to the Issuer, the Purchaser and
the Trustee a Bond Counsel's Opinion, addressed to the Issuer and the
Trustee, to the effect that such sale, assignment or leasing is not
prohibited by the Act.
(b) Notwithstanding any of the foregoing, except in the ordinary
course of business the Company may with the prior written consent of the
Purchaser (with notice to the Trustee and the Issuer) from time to time
sell or permit the sale of or lease or otherwise dispose of a portion of
the Equipment or its other assets without complying with the conditions of
Section 6.1(a) hereof if the aggregate fair market value of the Equipment
or other assets so sold, leased or otherwise disposed of does not exceed
$100,000 and if the Company shall certify, in writing, to the Issuer, the
Trustee and the Purchaser that such Equipment or other assets are no
longer needed or are no longer useful in its operation of the Project and
the proceeds thereof shall be applied to the replacement of or
substitution of Equipment or other assets of equal value or utility for
the Equipment or other assets so sold or disposed of, and such Equipment
or other assets purchased in replacement or substitution shall become part
of the Project, or the proceeds shall be paid to the Trustee for deposit
in the Bond Fund.
<PAGE>
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1. DEFAULT. Any of the following events shall constitute
a "default" or "event of default" under this Loan Agreement:
(a) the failure to pay any obligation, liability or indebtedness of
the Company or either of the Guarantors (i) to the Purchaser, or (ii) to
the Issuer or the Trustee under any of the Loan Documents, as and when due
(whether upon demand, at maturity or by acceleration) and such failure is
not cured within ten (10) days thereof;
(b) the failure to pay or perform any other obligation, liability or
indebtedness of the Company to the Purchaser under the Loan Documents or
Simpson under the Bank Loan Agreement, and such failure to pay a monetary
obligation is not cured within ten (10) days thereof, or the failure to
perform any other obligation is not cured within thirty (30) days
following written notice to the Company by the Purchaser;
(c) any default under any Loan Documents by the Company or the Bank
Loan Agreement by Simpson, subject to any cure period applicable thereto;
(d) the filing or commencement of a proceeding against the Company
for dissolution or liquidation, or the Company's voluntary or involuntary
termination or dissolution;
(e) insolvency of, business failure of, the appointment of a
custodian, trustee, liquidator or receiver of or for any of the property
of, or an assignment for the benefit of creditors by, or the filing of a
petition under bankruptcy, insolvency, debtor's relief law or for any
adjustment of indebtedness, composition or extension by or against the
Company or either of the Guarantors;
(f) an Event of Default shall have occurred and be continuing under
either of the Guaranties or the Bank Loan Agreement;
(g) the Company shall fail to maintain a net profit from operations,
as determined in accordance to generally accepted accounting principles,
of a positive amount for each fiscal year; or
(h) any representation or warranty made by the Company in any Loan
Documents or otherwise to the Purchaser was untrue or materially
misleading when made.
SECTION 7.2. REMEDIES UPON DEFAULT. Whenever any Event of Default
referred to in Section 7.1 hereof shall have occurred and be continuing,
any one or more of the following remedial steps may be taken.
The Issuer may and upon written request of the Purchaser shall:
<PAGE>
(a) declare all amounts due under any of the Loan Documents, at the
option of the Purchaser, to be immediately due and payable, and/or
(b) exercise all other rights, powers and remedies available under
each of the Loan Documents and well as all rights and remedies available
at law or in equity.
SECTION 7.3. NO REMEDY EXCLUSIVE. The failure at any time of the
Issuer, Trustee or Purchaser to exercise any of its options or any other
rights hereunder shall not constitute a waiver thereof, nor shall it be a
bar to the exercise of any of its options or rights at a later date. All
rights and remedies of the Issuer shall be cumulative and may be pursued
singly, successively or together, at the option of the Issuer. The
acceptance by the Issuer of any partial payment shall not constitute a
waiver or any default or of any of Issuer's rights under this Note. No
waiver of any of its rights hereunder and no modification or amendment of
this Agreement or the Note shall be deemed to be made by the Issuer unless
the same will be in writing, duly signed on behalf of the Purchaser; and
each such waiver shall apply only with respect to the specific instance
involved, and shall in no way impair the rights of the Purchaser or the
obligations of the Company to the Bank or the Issuer in any other respect
at any such time.
SECTION 7.4. PAYMENT OF FEES AND EXPENSES. If the Company shall
default under any of the provisions of this Agreement and the Issuer or
the Trustee shall employ attorneys or incur other expenses for the
collection of the Loan payments or to secure possession, or to resell the
Project or for the enforcement of performance or observance of any
obligation or agreement on the part of the Company contained in this
Agreement, the Company will on demand therefor pay the reasonable fees and
expenses of the issuer , the Purchaser or the Trustee and their attorneys
as they are incurred including all fees of counsel including those incurred
for negotiation, trial, appeals of ruling of any lower tribunals,
administrative hearings, bankruptcy and creditors' reorganization
proceedings.
SECTION 7.5. EFFECT OF WAIVER. The Trustee, after having first
received the prior written approval of the Purchaser, may waive any Event
of Default under this Agreement. In the event any agreement contained in
this Agement shall be breached and such breach shall thereafter be waived,
such waiver shall be limited to the particular breach so waived and shall
not be deemed to waive any other breach hereunder.
ARTICLE VIII
PREPAYMENT OF LOAN
SECTION 8.1. OBLIGATIONS TO ACCELERATE LOAN PAYMENTS. In the event
the Company makes provision for payment of all loan payments and any other
amounts payable pursuant to the Loan Documents in accordance with Article
VIII of the Indenture, following written notification thereof to the
Issuer, the Purchaser and the Trustee, the total amount due will be a sum,
payable in cash and/or Government Obligations, sufficient, together with
interest earned on such Government Obligations and other funds held by the
Trustee and available for such purpose, (a) to redeem at the earliest
redemption date or dates provided in the Indenture all Bonds then
<PAGE>
outstanding under the Indenture at a Redemption Price equal to the
principal amount thereof, (b) to pay in accordance with the Indenture the
interest which will become due on all such Bonds to the date fixed for
redemption, and (c) to pay all Administration Expenses accrued and to
accrue through the date fixed for redemption. Furthermore, loan payments
and amounts due under the Note shall be accelerated prior to the maturity
of the Bonds (or prior to making provision for payment thereof in
accordance with Article XIV of the Indenture) if the Bonds shall be
subject to redemption pursuant to Sections 2.3 or 2.4, as the case may be,
of the Indenture. In such case, the total amount due shall be the sums
required pursuant to Sections 2.3 or 2.4, as the case may be, of the
Indenture, on the dates required by Sections 2.3 or 2.4, as the case may
be, of the Indenture.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NOTICES. All notices, certificates, requests or other
communications hereunder shall be sufficiently given and shall be deemed
given when received by registered or certified mail, return receipt
requested (except as otherwise specified herein), postage prepaid; or when
received by overnight delivery; or when personally delivered; addressed as
follows:
IF TO THE ISSUER:
Mississippi Business Finance Corporation
1306 Walter Sillers Building
550 High Street
Jackson, Mississippi 39201
Post Office Box 849
Jackson, Mississippi 39205
Attention: Executive Director
Telephone Number: (601) 359-3047
Facsimile Number: (601) 359-2832
IF TO THE TRUSTEE:
Union Bank of California, N.A.
4750 Sansome Street, 12th Floor
San Francisco, California 94110
Attention: Corporate Trust Department
Telephone Number: (415) 296-6754
Facsimile Number: (415) 296-6757
<PAGE>
IF TO THE COMPANY:
Simpson Manufacturing Co., Inc.
4637 Chabot Road, Suite 200
Post Office Box 10789
Pleasanton, California 95488
Attention: Steve Lamson, Chief Financial Officer
Telephone Number: (510) 460-9912
Facsimile Number: (510) 847-9114
IF TO THE PURCHASER:
Union Bank of California, N.A.
1800 Harrison Street, Suite 1400
Oakland, California 94604
Attention: Joellen Ademski
Telephone Number: (510) 271-1747
Facsimile Number: (510) 271-1764
WITH A COPY TO:
Union Bank of California, N.A.
350 California Street - 10th Floor
San Francisco, California 94120
Attention: Lebbeus S. Case, Jr.
Telephone Number: (415) 705-7308
Facsimile Number: (415) 705-7111
A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Issuer, the Company, the Trustee or
the Purchaser shall also be given to the others. The Company, the Issuer,
the Trustee or the Purchaser and may, by notice given under Section 9.1,
designate any further or different addresses to which subsequent notices,
certificates, requests or other communications shall be sent.
SECTION 9.2. PARTIES INTERESTED. This Agreement shall inure to the
benefit of the Purchaser, the Issuer and the Company and shall be binding
upon the Issuer, the Company and their respective successors and assigns,
subject to the limitation that any obligation or liability of the Issuer
created by or arising out of this Agreement shall not be a general debt of
the Issuer or the State, but shall be payable by the Issuer solely out of
the proceeds derived from this Agreement or from the security interests
granted herein.
No covenant, stipulation, obligation or agreement contained in this
Agreement shall be deemed or construed to be a covenant, stipulation,
obligation or agreement of any present or future member, agent, employee
<PAGE>
or official of the Issuer in his individual capacity, and no present or
future member, agent, employee or official of the Issuer shall be liable
personally, for any breach or non-observance or failure to comply with the
above mentioned covenants, stipulations, obligations, or on the Bonds or
be subject to any personal liability or accountability by reason of the
issuance thereof or by reason of the said covenants, stipulations,
obligations or agreements, above mentioned. No present or future member,
agent, employee or official of the Issuer shall incur any personal
liability in acting or proceeding or in not acting or proceeding, in good
faith, reasonably, under the provisions of this Agreement. If in or by or
as a result of the execution of this Agreement or any other document in
connection with this transaction or any other related transaction, the
Issuer or any member, agent, employee or official thereof shall become
obligated in excess of or contrary to the provisions of the statutory
authority granted by the Act, then such excess or contrary obligation
shall not be binding on or enforceable against the Issuer or any present
or future member, agent, employee or official thereof.
SECTION 9.3. AMENDMENT TO AGREEMENT. Except as otherwise provided
in this Agreement, subsequent to the initial issuance of the Bonds and
prior to payment or provision for the payment of such Bonds in full
(including interest and premium, if any, thereon), in accordance with the
provisions of the Indenture, and payment or provisions for the payment of
other obligations incurred by the Issuer to pay the Cost of the Project
including interest, premiums and other charges, if any, thereon, and
payment or provision for the payment of Administration Expenses, this
Agreement may not be amended, changed, modified, altered or terminated
without the prior approval of the Purchaser and the Trustee. No
amendment, change, modification, or alteration of this Agreement shall be
made other than pursuant to a written instrument signed by the Issuer and
the Company and of an Opinion of Bond Counsel to the effect that such
amendment, change, modification or alteration of this Agreement is
authorized or permitted by the provisions of this Agreement.
SECTION 9.4. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which, when so executed and delivered,
shall be an original; but such counterparts shall together constitute but
one and the same Agreement.
SECTION 9.5. SEVERABILITY OF INVALID PROVISIONS. If any clause,
provision or section of this Agreement be held illegal or invalid by any
court, the invalidity of such clause, provision or section shall not
affect any of the remaining clauses, provisions or sections hereof, and
this Agreement shall be construed and enforced as if such illegal or
invalid clause, provision or section had not been contained herein.
SECTION 9.6. GOVERNING LAW. This Agreement shall be governed as to
validity, construction and performance by the laws of the State.
SECTION 9.7. TAX EXEMPTIONS AND CREDITS. The Company may take
action to secure certain ad valorem tax exemptions (other than school
taxes) available under Sections 57-10-439 and/or 27-31-101 of the
Mississippi Code of 1972, as amended, and income tax credits under Section
57-10-409 of the Act as well as other provisions of the Mississippi Code
of 1972, as amended. The Issuer will assist the Company in securing said
tax exemptions and credits.
<PAGE>
SECTION 9.8. NO ORAL ARGUMENT. This written Loan Agreement and the
other Loan Documents represent the final agreement between the parties and
may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written on the cover
page hereof.
MISSISSIPPI BUSINESS FINANCE CORPORATION
BY: /s/B. BARRY
------------------------------------
EXECUTIVE DIRECTOR
ATTEST:
/s/VERNON SMITH
- -----------------------------
SECRETARY
STATE OF MISSISSIPPI
COUNTY OF HINDS
Personally appeared before me, the undersigned notary public in and
for the jurisdiction aforesaid, the within named WILLIAM T. BARRY and
VERNON SMITH, to me known, who acknowledged they are the Executive
Director and Secretary, respectively, of the MISSISSIPPI BUSINESS FINANCE
CORPORATION, a public corporation organized and existing under the laws of
the State of Mississippi, and that for and on behalf of said corporation
and as its act and deed, they signed and delivered the foregoing LOAN
AGREEMENT as of the date therein mentioned with actual execution on the
date of this acknowledgment, after having been first duly authorized so to
do.
IN WITNESS WHEREOF, I hereunto set my hand and official seal, this the
day of June, 1998.
----------------------------------
NOTARY PUBLIC
MY COMMISSION EXPIRES:
- ----------------------
[ S E A L ]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written on the cover
page hereof.
SIMPSON DURA-VENT COMPANY, INC.
BY: /s/STEPHEN B. LAMSON
------------------------------
TITLE: C.F.O.
---------------------------
STATE OF CALIFORNIA
--------------------
COUNTY OF ALAMEDA
-------------------
Personally appeared before me, the undersigned notary public in and
for the jurisdiction aforesaid, the within named STEPHEN B. LAMSON,
to me known, who acknowledged he is the C.F.O. , of
SIMPSON DURA-VENT COMPANY, INC., a corporation organized and existing
under the laws of the State of California, and that for and on behalf of
said corporation and as its act and deed, he signed and delivered the
foregoing LOAN AGREEMENT as of the date therein mentioned with actual
execution on the date of this acknowledgment, after having been first duly
authorized so to do.
IN WITNESS WHEREOF, I hereunto set my hand and official seal, this
the 26th day of June, 1998.
/s/KATHLEEN M. KUWITZKY
----------------------------------
NOTARY PUBLIC
MY COMMISSION EXPIRES:
MAY 4, 2001
- ----------------------
[ S E A L ]
<PAGE>
EXHIBIT A
TO
LOAN AGREEMENT DATED AS OF MAY 1, 1998
BY AND BETWEEN
MISSISSIPPI BUSINESS FINANCE CORPORATION
AND
SIMPSON DURA-VENT COMPANY, INC.
BUILDING DESCRIPTIONS
---------------------
BUILDING
--------
Construction of a building consisting of approximately _______ sq.
ft. and located on the Project Site described in Exhibit B hereto.
<PAGE>
EXHIBIT B
TO
LOAN AGREEMENT DATED AS OF MAY 1, 1998
BY AND BETWEEN
MISSISSIPPI BUSINESS FINANCE CORPORATION
AND
SIMPSON DURA-VENT COMPANY, INC.
THE PROJECT SITE
----------------
WARRANTY DEED
IN CONSIDERATION of the sum of Ten ($10.00) Dollars cash in hand paid
and other good valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned, SIMPSON MANUFACTURING CO., INC.,
a California corporation, ("Grantor"), does hereby, subject to the terms
and conditions hereinafter stated, convey and warrant unto SIMPSON DURA-VENT
COMPANY, INC. ("Grantee"), that certain tract or parcel of land lying and
being situate in Warren County, State of Mississippi, more particularly
described as follows, to-wit:
A parcel of land lying in the Northwest One-Quarter (NW 1/4) of
the Southeast One-Quarter (SE 1/4) and in the Northeast One-
Quarter (NE 1/4) of the Southeast One-Quarter (SE 1/4) and in the
Southwest One-Quarter (SW 1/4) of the Southeast One-Quarter (SE
1/4) and in the Southeast One-Quarter (SE 1/4) of the Southeast
One-Quarter (SE 1/4) of Section 13, Township 16 North, Range 5
East, Warren County, Mississippi, more particularly described as
follows, to-wit:
Beginning at an iron pin marking the intersection of the Southerly
line of Road "B" Extended with the Easterly line of Road "C" of
the Industrial Complex, Phase I, E.D.A. Project No. 04-01-03490,
Contract 3, Site Development, said iron pin being 50 feet from the
centerline of Road "C" and 50 feet from the centerline of Road
"B", all being measured perpendicular to the centerline of each
roadway; said iron pin lying 5,645.65 feet South of and 3,454.40
feet East of an iron rail marking the Northwest corner of the
Southwest One-quarter of Section 12, Township 16 North, Range 5
East, Warren County, Mississippi; said iron pin lying South 05
degrees 46 minutes 09 seconds East, 100.11 feet from a recovered
iron pin marking the Southwest corner of that tract conveyed by
Warren County, Mississippi to McCarty Foods, Inc. by Warranty Deed
dated April 17, 1990 and recorded in Deed book 890 at Page 658 of
<PAGE>
the records of the Chancery Clerk at Vicksburg, Warren County,
Mississippi; run thence North 85 degrees 14 minutes 36 seconds
East, 30.0 feet along the Southerly line of Road "B" Extended;
thence leaving the Southerly line of Road "B" Extended, run South
05 degrees 59 minutes 24 seconds East, 38.15 fee; run thence North
85 degrees 01 minutes 06 seconds East, 38.0 feet; run thence North
05 degrees 59 minutes 24 seconds West, 38.0 feet to the Southerly
line of Road "B" Extended; run thence North 85 degrees 14 minutes
36 seconds East, 822.00 feet along the Southerly line of Road "B"
Extended; thence leaving the Southerly line of Road "B" Extended,
run South 04 degrees 45 minutes 24 seconds East, 1,160.77 feet;
run thence South85 degrees 14 minutes 36 seconds West, 870.21 feet
to the Easterly line of Road "C"; run thence North 05 degrees 44
minutes 00 seconds West, 1,160.94 feet along the Easterly line of
Road "C" to the Point of Beginning, containing 23.420 acres, more
or less, a plat of said property being attached hereto in aid of
this description.
The warranty of this conveyance is subject to all of the terms and
conditions set forth in that certain Warranty Deed from Warren County,
Mississippi and the Warren County Port Commission to Simpson Manufacturing
Co., Inc. dated November 6, 1997 and recorded in Book 1124 at Page 1 in the
office of the Chancery Clerk of Warren County, Mississippi.
It is Grantor's intention herein to convey to the Grantee herein all of
the property which Grantor acquired by deed from Warren County, Mississippi
and the Warren County Port Commission dated November 6, 1997 and recorded in
Book 1124 at Page 1 in the office of the Chancery Clerk of Warren County,
Mississippi.
<PAGE>
WITNESS the signature of the undersigned on this the 26th day of March
1998.
SIMPSON MANUFACTURING CO., INC.
BY: /s/STEPHEN B. LAMSON
---------------------------
STATE OF CALIFORNIA
--------------
COUNTY OF ALAMEDA
-------------
PERSONALLY appeared before me the undersigned authority, in and for
said County and State, within my jurisdiction, the within named, STEVE
LAMSON, who acknowledged that he is C.F.O. of Simpson Manufacturing Co.,
Inc., a California corporation, and that for and on behalf of said
corporation, and as its act and deed, he signed, sealed and delivered the
above and foregoing instrument of writing for the purposes mentioned on the
day and year therein mentioned, after first having been duly authorized by
said corporation so to do.
GIVEN under my hand and official seal of office this the 26th day of
MARCH, 1998.
/s/Kathleen M. Kuwitzky
---------------------------
MY COMMISSION EXPIRES:
May 4, 2001
- ----------------------
Grantor: Grantee:
Name: Simpson Manufacturing Name: Simpson Dura-Vent
Co., Inc. Company, Inc.
Add: 4637 Chabot Drive, Ste 200 Add: 2185 Haining Road
P.O. Box 10789 Vicksburg, MS
Pleasanton, CA 94588-0789
Bus. Phone:1-800-227-8446 Bus. Phone: 638-7130
Prepared by:
Ellis, Braddock & Dees, Ltd.
901 Belmont Street
P.O. Drawer 1099
Vicksburg, MS 39181
Telephone: 636-5433
Fax: 638-2938
<PAGE>
EXHIBIT C
TO
LOAN AGREEMENT DATED AS OF MAY 1, 1998
BY AND BETWEEN
MISSISSIPPI BUSINESS FINANCE CORPORATION
AND
SIMPSON DURA-VENT COMPANY, INC.
EQUIPMENT
---------
All items of machinery, equipment (including parts, accessories and
attachments thereto), fixtures and other personal property acquired with
the proceeds of the Bonds, including all substitutions and replacements of
such personal property and fixtures and the proceeds thereof, which are
acquired or are to be acquired by the Company with the proceeds of the
Loan and the Bonds. A complete detailed list of items of personalty
acquired with the proceeds of the Loan and the Bonds is on file in the
office of the Trustee in its corporate trust office in San Francisco,
California.
<PAGE>
EXHIBIT D
TO
LOAN AGREEMENT DATED AS OF MAY 1, 1998
BY AND BETWEEN
MISSISSIPPI BUSINESS FINANCE CORPORATION
AND
SIMPSON DURA-VENT COMPANY, INC.
PROMISSORY NOTE
---------------
DATE: JUNE 30, 1998 $3,000,000 MAXIMUM PRINCIPAL AMOUNT
FOR VALUE RECEIVED, Simpson Dura-Vent Company, Inc., a corporation
organized and existing under and pursuant to the laws of the State of
California and qualified to do business in the State of Mississippi (the
"Company"), hereby promises to pay to the order of Mississippi Business
Finance Corporation (the "Issuer") or its assigns, the principal amount of
$3,000,000 together with interest on the unpaid principal balance thereof
at the rates set forth in the hereinafter defined Loan Agreement and
Indenture until fully and finally paid, and all other amounts payable by
the Company under the Loan Agreement (as hereinafter defined). This Note
shall bear interest at the prevailing rate of interest on the Bonds (as
hereinafter defined) except as otherwise provided hereunder.
This Note has been executed under and pursuant to a Loan Agreement
dated as of May 1, 1998 between the Issuer and the Company (the "Loan
Agreement") and will be issued and secured by a Trust Indenture dated as
of May 1, 1998 between the Issuer and Union Bank of California, N.A., as
Trustee (the "Indenture"), which Loan Agreement and Indenture are
incorporated herein in their entirety by reference. This Note is issued
to evidence the obligation of the Company under the Loan Agreement to
repay the loan made by the Issuer from the proceeds of the Mississippi
Business Finance Corporation Taxable Industrial Development Revenue Bonds,
Series 1998, (Simpson Dura-Vent Company, Inc. Project) (the "Bonds"),
together with interest thereon at the interest rates as set forth in the
Loan Agreement, the Indenture and the Bonds, and all other payments of any
kind required to be paid by the Company under the Loan Agreement. The Loan
Agreement includes provisions for prepayment and acceleration of this
Note. In the event that the terms of this Note conflict with the terms of
the Loan Agreement, the Indenture and the Bonds, the terms of the Loan
Agreement, the Indenture and the Bonds shall control. The proceeds of the
Loan (and the Bond) will be funded at such time as the Bond and the Note
are executed and delivered.
As provided in the Loan Agreement and subject to the provisions
thereof including, without limitation, Section 4.2(c) thereof, payments
hereon are to be made at the principal office of the Trustee as shown in
the Loan Agreement in an amount which together with other monies available
therefor pursuant to the Loan Agreement, will equal the amount payable as
principal of, premium, if any, and interest on the Bonds Outstanding (as
defined in the Loan Agreement) on such due date. Each payment of
principal and interest on this Note shall constitute an equal and
corresponding payment under the Loan Agreement, the Indenture and the
Bond.
<PAGE>
The Company shall make principal payments on this Note in the amounts
on the dates and at the rates of interest, unless paid prior thereto
through redemption, all as set forth in the Loan Agreement and the
Indenture and in addition shall make such other payments as are required
pursuant to the Loan Agreement, the Indenture and the Bonds. Upon the
occurrence of an Event of Default, as defined in the Loan Agreement, the
principal of, premium, if any, and interest on this Note may be declared
immediately due and payable as provided in the Loan Agreement. Upon any
such declaration the Company shall pay all costs, disbursements, expenses
and reasonable counsel fees of the Issuer, the Purchaser and the Trustee
in seeking to enforce their rights under the Loan Agreement and this Note.
The Company (a) waives diligence, demand, presentment for payment,
notice of nonpayment, protest and notice of protest, notice of any
renewals or extension of this Note, and (b) agrees that the time for
payment of this Note may be extended at the sole discretion of the Issuer
without impairing the Company's liability hereon. Any delay on the part
of the Issuer in exercising any right hereunder shall not operate as a
waiver of any such right, and any waiver granted with respect to one
default shall not operate as a waiver in the event of any subsequent or
continuing default.
This Note shall be governed and construed in accordance with the laws
of the State of Mississippi.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed in its name and, if applicable, its corporate seal to be hereunto
affixed and attested to by its duly authorized officers all as of the day
and year first above written.
SIMPSON DURA-VENT COMPANY, INC.
BY: /s/STEPHEN B. LAMSON
------------------------------
TITLE: C.F.O.
---------------------------
<PAGE>
ASSIGNMENT OF PROMISSORY NOTE
FOR VALUE RECEIVED, the Mississippi Business Finance Corporation
hereby assigns and transfers, without recourse, to Union Bank of
California, N.A., as Trustee, the Promissory Note executed by Simpson
Dura-Vent Company, Inc., in favor of Mississippi Business Finance
Corporation in the principal amount of $3,000,000 on this the ____ day of
June, 1998.
MISSISSIPPI BUSINESS FINANCE CORPORATION
BY:
------------------------------
EXECUTIVE DIRECTOR
ATTEST:
- -------------------------
SECRETARY
EXHIBIT 10.4
------------
11
$3,000,000
MISSISSIPPI BUSINESS FINANCE CORPORATION
TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 1998
(SIMPSON DURA-VENT COMPANY, INC. PROJECT)
BOND PURCHASE AGREEMENT
Among
UNION BANK OF CALIFORNIA, N.A.
MISSISSIPPI BUSINESS FINANCE CORPORATION
And
SIMPSON DURA-VENT COMPANY, INC.
Dated as of May 1, 1998
<PAGE>
TABLE OF CONTENTS
1. Background 1
2. Joint Representation of the Issuer and the Company 3
3. Representations of the Issuer 3
4. Representations of the Company 4
5. Covenants of the Company 5
6. Purchase, Sale and Delivery of the Bonds 7
7. Documents 8
8. Conditions to Obligations of the Purchaser 9
9. Termination 12
10. Expenses 13
11. Condition of the Issuer's Obligations 13
12. Notices 13
13. Successors 14
14. Survival of Certain Representations and Warranties 15
15. Governing Law 15
16. Miscellaneous 15
17. Counterparts 15
18. Effective Date 16
19. Defined Terms 16
<PAGE>
May 1, 1998
Mississippi Business Finance Corporation
Jackson, Mississippi
Simpson Dura-Vent Company, Inc.
Pleasanton, California
Ladies and Gentlemen:
Union Bank of California, N.A., a national banking association
organized under the laws of the United States of America (the
"Purchaser"), offers to enter into this Bond Purchase Agreement (this
"Agreement") with the Mississippi Business Finance Corporation, a public
corporation organized and existing under the laws of the State of
Mississippi (the "State") the "Issuer") and Simpson Dura-Vent Company,
Inc., a corporation organized, validly existing under the laws of the
State of California and in good standing under the laws of the State of
Mississippi (the "Company"), which, upon your acceptance will be binding
upon the Issuer, the Company and the Purchaser.
1. BACKGROUND
(a) The Issuer will issue and sell its Taxable Industrial
Development Revenue Bonds, Series 1998 (Simpson Dura-Vent Company, Inc.
Project) in the aggregate principal amount of $3,000,000 (the "Bonds") to
provide for the permanent financing for a portion of the cost of the
Project (as defined in the Loan Agreement, as hereinafter defined) to be
located in the State and to be owned by the Company. The principal
proceeds of the Bonds will be funded upon execution and delivery of the
Bond and the Note as described in the Indenture and the Loan Agreement (as
hereinafter defined). The Issuer and the Company will enter into a Loan
Agreement (the "Loan Agreement") dated as of May 1, 1998 providing, among
other things, for payments at times and in amounts sufficient to pay when
due the principal of, premium, if any, and interest on the Bonds.
<PAGE>
(b) The Bonds will be issued pursuant to Title 57, Chapter 10,
Articles 7 and 11 of the Mississippi Code of 1972, as amended and
supplemented (the "Act"), resolutions of the Issuer dated October 15, 1997
and May 13, 1998 (collectively the "Resolution") and a trust indenture
(the "Indenture") dated as of May 1, 1998 between the Issuer and Union
Bank of California, N.A., as Trustee, a national banking association
organized and existing under the laws of the United States of America (the
"Trustee"). The Bonds are limited obligations of the Issuer, payable
solely from payments to be made by the Company pursuant to the Loan
Agreement, payments to be made by the Company pursuant to a promissory
note to the Issuer (the "Note") and payments made by Simpson Manufacturing
Company, Inc. and Simpson Strong Tie Company, Inc. pursuant to the
Guaranty.. Payment of the Bonds is secured by the lien of the Indenture
on the trust estate created thereunder which consists generally of money
deposited in the funds and accounts established under the Indenture and
income from the investment of such money as required by the Indenture, the
Loan Agreement and the Note.
(c) The Bonds will contain the terms and provisions as
described in the Indenture and will bear interest at the rates described
in the Indenture.
(d) The terms and provisions of the Bonds have been approved by
the Company which enters into this Agreement in order to induce the
Purchaser to purchase the Bonds and advances thereupon at the price set
forth in the Indenture.
(e) No preliminary official statement, final official statement
or other disclosure document will be distributed in connection with the
issuance and sale of the Bonds.
(f) It is intended that interest on the Bonds will be included
in the gross income of the holder thereof for federal income tax purposes.
(g) The Purchaser is purchasing the Bonds for its own account
and will, on the Closing Date (as hereinafter defined), execute a document
satisfactory to the Issuer agreeing not to sell or otherwise transfer or
dispose of the Bonds without complying with applicable disclosure and
registration requirements of federal and state securities laws.
(h) This Agreement, together with the Loan Agreement, the Note,
the Indenture and the Bond shall hereinafter sometimes be referred to as
the Loan Documents.
<PAGE>
2. JOINT REPRESENTATION OF THE ISSUER AND THE COMPANY
The Issuer and the Company represent that the Project will constitute
an "economic development project" within the meaning of the Act.
3. REPRESENTATIONS OF THE ISSUER
The Issuer makes the following representations, all of which will
survive the purchase and offering of the Bonds.
(a) The Issuer is a public corporation organized and existing
under the laws of the State.
(b) The Issuer is authorized by the provisions of the Act to
issue the Bonds, to loan the proceeds of the Bonds to the Company pursuant
to the Loan Agreement to be used for the permanent financing of the
Project, to pledge and assign the Loan Agreement and the Note, and the
payments to be received by the Issuer pursuant thereto and the funds
established pursuant to the Indenture and investment earnings and amounts
therein as security for the payment of the principal of, premium, if any,
and interest on the Bonds and to assign its interest in the Loan Agreement
and the Note to the Trustee, all pursuant to the Indenture.
(c) The Issuer has complied with all provisions of the
Constitution and the laws of the State pertaining to the issuance and sale
of the Bonds, including the Act, and has full power and authority to
authorize and thereafter consummate all transactions contemplated by the
Loan Documents and any and all other agreements relating thereto.
(d) The Issuer has duly adopted the Resolution and has duly
authorized the execution and delivery of the Loan Documents and the
issuance and sale of the Bonds, and taken all actions and obtained all
approvals necessary and appropriate to carry out the same.
(e) The Issuer has duly authorized all necessary actions to be
taken by the Issuer (i) for the issuance and sale of the Bonds upon the
terms set forth herein and in the Indenture, (ii) for the execution,
delivery, receipt and due performance of the Loan Documents, any and all
other agreements and documents as may be required to be executed,
delivered and received by the Issuer in order to carry out, give effect to
and consummate the transactions contemplated hereby and by the issuance
and sale of the Bonds, and (iii) for the carrying out, giving effect to,
and consummation of the transactions contemplated hereby, by the Indenture
and by the issuance and sale of the Bonds. Executed counterparts of the
Loan Documents will be delivered to the Purchaser by the Issuer on the
Closing Date (as hereinafter defined).
<PAGE>
(f) To the best of the Issuer's knowledge, there is no action,
suit, proceeding, inquiry, investigation at law or in equity or before or
by any court, public board or body pending or threatened against or
affecting the Issuer (or any basis therefor) wherein an unfavorable
decision, ruling or finding would adversely affect the transactions
contemplated hereby or the issuance and sale of the Bonds or the validity
of the Bonds, the Loan Documents or any agreement or instrument to which
the Issuer is or is expected to be a party and which is used or
contemplated for use in the consummation of the transactions contemplated
hereby.
(g) The execution and delivery by the Issuer of the Loan
Documents and other agreements contemplated hereby or by the issuance and
sale of the Bonds and compliance with the provisions thereof will not
conflict with or constitute, on the part of the Issuer, a breach of or a
default under any existing law, court or administrative regulation, decree
or order or any agreement, indenture, mortgage, lease or other instrument
to which the Issuer is subject or by which the Issuer is or may be bound.
(h) Any certificate signed by any of the Issuer's authorized
officers and delivered to the Purchaser shall be deemed a representation
and warranty by the Issuer to the Purchaser as to the statements made
therein.
(i) When an advance in respect of the Bonds is paid for by the
Purchaser at the direction of the Company in accordance with the terms of
this Agreement, the Bonds, including each such advance, will have been
duly authorized, executed and issued and will constitute legal, valid and
binding limited obligations of the Issuer enforceable in accordance with
their terms and entitled to the benefits of the Indenture.
4. REPRESENTATIONS OF THE COMPANY
The Company makes the following representations, all of which will
survive the purchase and offering of the Bonds:
(a) The Company is a corporation duly organized, validly
existing under the laws of the State of California and in good standing
under the laws of the State of Mississippi.
(b) The Company has full corporate power and authority to
authorize and thereafter consummate all transactions contemplated by this
Agreement, the Loan Documents and any and all other agreements relating
thereto.
(c) The Company has duly authorized all necessary actions to be
taken by the Company (i) for the execution, delivery, receipt and due
performance of the Loan Documents, (ii) for the consummation of the
transactions contemplated by the sale of the Bonds, the Loan Documents,
and (iii) for the Loan Documents to constitute valid and binding
obligations of the Company enforceable in accordance with their respective
<PAGE>
terms, as each may apply to the Company except to the extent that the
enforceability thereof may be limited (A) by bankruptcy, reorganization or
similar laws limiting the enforceability of creditors' rights generally or
(B) by the availability of any discretionary equitable remedies.
(d) The execution and delivery by the Company of the Loan
Documents and the other documents contemplated hereby and by the issuance
and sale of the Bonds and compliance with the provisions thereof will not
conflict with or constitute on the Company's part a breach of or default
under any existing law, court or administrative regulation, decree or
order or any agreement, indenture, mortgage, lease or other instrument to
which the Company is subject or by which the Company is or may be bound.
(e) Any certificate signed by any of the Company's authorized
officers and delivered to the Purchaser shall be deemed a representation
and warranty by the Company to the Purchaser as to the statements made
therein.
(f) The Company has obtained or will obtain as and when
required by applicable law all approvals required in connection with the
execution and delivery of and performance by the Company of its
obligations under the Loan Documents.
(g) To the best of the Company's knowledge, there is no action,
suit, proceeding, inquiry, investigation at law or in equity or before or
by any court, public board or body pending or threatened against or
affecting the Company (or any basis therefor) wherein an unfavorable
decision, ruling or finding would adversely affect the transactions
contemplated hereby or the issuance and sale of the Bonds or the validity
of the Bonds, the Loan Documents or any agreement or instrument to which
the Company is or is expected to be a party and which is used or
contemplated for use in the consummation of the transactions contemplated
hereby.
(h) The Company will have obtained all licenses, permits,
franchises or other governmental authorizations necessary for the
acquisition, construction, installation, equipping and permanent
financing, from time to time, of the Project and the use of the Project.
5. COVENANTS OF THE COMPANY
The Company covenants and agrees to the following covenants, all of
which will survive the purchase and offering of the Bonds and any
investigations made by or on behalf of the Purchaser:
(a) The Company agrees to indemnify and hold harmless the
Issuer, its counsel, Bond Counsel, the Purchaser, the Trustee, any
officer, agent or employee of the Issuer and each person, if any, who
controls any of the foregoing within the meaning of Section 15 of the
Securities Act of 1933, as amended, or Section 20 of the Securities
Exchange Act of 1934, as amended (collectively referred to herein as the
<PAGE>
"Indemnified Parties"), against any and all losses, claims, damages,
liabilities or expenses whatsoever arising out of or resulting from or in
any way related to the issuance and sale of the Bonds, any breach by the
Company of any of, or the inaccuracy of any of, its representations,
warranties and covenants set forth in this Agreement and the permanent
financing of the Project and the acquisition, installation, equipping and
the use of the Project; provided, however, that the Company shall not
indemnify and hold harmless any Indemnified Party from damages that result
from negligence or misconduct on the part of the Indemnified Party seeking
such indemnity.
In case any action shall be brought against one or more of the
Indemnified Parties based upon the information described in the preceding
paragraph and in respect of which indemnity may be sought against the
Company, the Indemnified Parties shall promptly notify the Company in
writing and the Company shall promptly assume the defense thereof,
including the employment of counsel reasonably acceptable to the
Indemnified Parties, the payment of all expenses, and the right to
negotiate and consent to settlement. Any one or more of the Indemnified
Parties has the right, at its own expense, to employ separate counsel in
any such action and to participate in the defense thereof. The Company
shall not be liable for any settlement of any such action effected without
its consent, but if settled with the consent of the Company, or if there
be a final judgment for the plaintiff in any such action with or without
its consent, the Company agrees to indemnify and hold harmless the
Indemnified Parties from and against any loss or liability by reason of
such settlement or judgment.
(b) The Company will not take or omit to take, as may be
applicable, any action which would, in any way, cause the proceeds of the
Bonds to be applied in a manner contrary to the requirements of the
Indenture and the Loan Agreement.
(c) Whether or not the sale of the Bonds by the Issuer to the
Purchaser is consummated, the Company agrees that the or Issuer or the
Purchaser shall have no obligation to pay any costs or expenses incident
to the performance of the obligations of the Issuer or the Purchaser under
this Agreement. All costs and expenses to effect the preparation,
issuance, sale and delivery of the Bonds and the Loan Documents and the
fees and expenses of the Issuer, its Agents, and of Bond Counsel, and of
the Purchaser and its counsel, shall be paid by the Company.
(d) The Company agrees to provide the Purchaser:
i. Unaudited financial statements of Company and Simpson
Strong Tie Company, Inc. ("SSTC"), prepared by the
Company and SSTC respectively for each fiscal year of
Company and SSTC, within 90 days after the close of
each such fiscal year.
<PAGE>
ii. Unaudited financial statements (including a balance
sheet and profit and loss statement) of Company and
SSTC for each quarter of each fiscal year of Company
and SSTC, within 60 days after the close of each such
period.
iii. A compliance certificate for (and executed by an
authorized representative of) the Company and the
Guarantors, concurrently with and dated as of the date
of delivery of each of the financial statements as
required under the Guaranties or in paragraphs (i) and
(ii) above, containing (a) a certification that the
financial statements of even date fairly present
Company's and Guarantors' consolidated financial
condition as of the date thereof and that the Company
and Guarantors are not in default under the terms of
this Agreement or any of the other Loan Documents or
the Guaranties, and (b) computations and conclusions,
in such detail as the Purchaser may request, with
respect to compliance with this Agreement, and the
other Loan Documents or the Guaranties, including
computations of all quantitative covenants.
iv. Such other additional information, reports and
statements respecting the business operations and
financial condition of Company and Guarantors, from
time to time, as the Purchaser may reasonably request.
6. PURCHASE, SALE AND DELIVERY OF THE BONDS
(a) On the basis of the representations, warranties and
covenants contained herein, and in the Loan Documents and other agreements
referred to herein, and subject to the terms and conditions herein and
therein set forth, on the Closing Date the Purchaser agrees to purchase
from the Issuer and the Issuer agrees to sell to the Purchaser the Bonds
in an agreed upon principal amount for a purchase price of one hundred
percent (100%) of the principal amount of the Bonds so issued as provided
for hereunder and in the Indenture.
(b) The Issuer will deliver the Bonds to or for the account of
the Purchaser against payment of the purchase price therefor on the
Closing Date in the principal amount of $3,000,000. The Bonds will be
dated the date of issuance and delivery thereof, will be delivered in the
form of one (1) fully registered Bond, in the denomination of $3,000,000,
and will be registered in the name of the Purchaser. The Bonds may be in
printed, engraved, typewritten or photocopied form and each such form
shall constitute "definitive form."
<PAGE>
(c) Subject to the terms and conditions contained herein and in
reliance on the representations, warranties and covenants herein set
forth, the Purchaser agrees to purchase from the Issuer the entire
aggregate principal amount of the Bonds issued under the Indenture and the
Issuer hereby agrees to sell to the Purchaser the entire aggregate
principal amount of the Bonds that are to be issued under the Indenture at
a price of 100% of the principal amount of the Bonds. The sale and
purchase of the Bonds will be accomplished in one payment as set forth in
the Indenture.
The outstanding principal amount of the Bond shall at all times
be determined by the records maintained by the Trustee and the Purchaser.
All Bonds issued by the Issuer are to be sold to the Purchaser
under and pursuant to this Agreement and shall not be sold to any other
purchaser, other than to the Guarantors, insurance companies or a
financial or banking institution or pursuant to any other agreement
without an agreement in writing signed by the Issuer, the Trustee, the
Purchaser and such other purchaser.
(d) The Purchaser agrees that it is purchasing the Bonds for
its own account and not with a view towards any resale or public
distribution thereof.
(e) The Bonds shall bear interest at the rates, mature on the
date or dates, be subject to optional and mandatory redemption prior to
maturity, and have such other terms as described in the Indenture.
7. DOCUMENTS
On or prior to the Closing Date, the Company and the Purchaser shall
have received a copy of each of the following documents in form and
substance satisfactory to the Purchaser in its sole discretion duly
executed by all parties thereto as certified to the satisfaction of the
Purchaser:
(a) the Resolution;
(b) the Indenture;
(c) the Loan Agreement;
(d) the Note;
(e) the Assignment of the Loan Agreement;
(f) the Assignment of the Note;
<PAGE>
(g) the written consent of Wells Fargo Bank, N.A. to the
execution, delivery and performance of (1) the Loan
Documents and (2) the Guaranties by the Guarantors;
(h) evidence of insurance as required by Section 4.12 of the
Loan Agreement; and
(i) the Guaranties.
The Issuer and the Company shall immediately upon their execution provide
the Purchaser with any amendments to the aforementioned documents.
8. CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to purchase and pay for the Bonds and
the obligation of the Issuer to sell the Bonds to the Purchaser shall be
subject to the following conditions precedent:
(a) The representations and warranties of the Company herein
and the representations and warranties made in each of the Loan Documents
and the Guaranties by the respective parties thereto shall be true,
correct and complete on the date hereof and on the Closing Date, and each
such party to the Loan Documents, including the Company, shall deliver a
certificate to such effect on the Closing Date. The Issuer and the
Company shall have performed all of their obligations hereunder, and the
statements made on behalf of the Issuer and the Company hereunder shall be
true and correct on the date hereof and on the Closing Date, and the
Issuer and the Company shall deliver certificates to such effect on the
Closing Date.
(b) Except as may have been agreed to by the Purchaser, as of
the Closing Date, each of the Loan Documents, the Resolution and all other
official action of the Issuer relating thereto shall be in full force and
effect and shall not have been amended, modified or supplemented without
the written approval of the Purchaser.
(c) The Issuer shall have received the approving opinion of
Bond Counsel in form and substance reasonably acceptable to the Purchaser,
and the Purchaser shall have received a letter from Bond Counsel dated the
Closing Date and addressed to the Purchaser, to the effect that the
Purchaser may rely upon such firm's opinion as if it were addressed to the
Purchaser.
(d) The Purchaser shall have received the opinion of counsel to
the Issuer, dated the Closing Date and addressed to the Purchaser in form
and substance reasonably acceptable to the Purchaser.
<PAGE>
(e) No default or event of default (as defined in any of the
Loan Documents or the Guaranties) shall have occurred and be continuing,
and no event shall have occurred and be continuing as of the Closing Date
which, with the lapse of time or the giving of notice or both, would
constitute such a default or event of default.
(f) (i) No material adverse change shall have occurred, nor
shall any development involving a prospective material and adverse change
in, or affecting the affairs, business, financial condition, result of
operations, prospects or properties (including the Project) of the Issuer,
the Company or the Guarantors have occurred, between the date hereof and
the Closing Date; and
(ii) The financial statements of the Company heretofore
delivered to the Purchaser have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout
the period involved and fairly present the Company's consolidated
financial condition as of the date or dates thereof, and there has been no
material adverse change in the Company's financial condition or operations
since December 31, 1997.
(g) On or prior to the Closing Date, all actions required to be
taken as of the Closing Date in connection with the Bonds and the Loan
Documents by the Issuer, the Company and the Guarantors shall have been
taken, and the Issuer, the Company and the Guarantors shall each have
performed and complied with all agreements, covenants and conditions
required to be performed or complied with it by this Agreement, the Bonds
and the Loan Documents, and each party shall deliver a certificate to such
effect insofar as the foregoing actions, agreements, covenants and
conditions apply to each such party, and each of such agreements shall be
in full force and effect and shall not have been amended, modified or
supplemented, except as has been agreed to in writing by the Purchaser.
(h) Each of the Loan Documents and the Guaranties shall have
been executed and delivered by each of the respective parties thereto, all
such documents shall be in forms exhibited to the Purchaser on the date
hereof with only such changes as the Purchaser may approve in writing, and
each of the Loan Documents and the Guaranties shall be in full force and
effect.
(i) None of the events referred to in Section 9 of this
Agreement shall have occurred.
(j) The Purchaser shall have received a certificate, dated the
Closing Date and signed on behalf of the Issuer, to the effect that:
(i) the Issuer has not received notice of any pending, nor
to the Issuer's knowledge is there any threatened, action, suit,
proceeding, inquiry or investigation against the Issuer, at law or in
equity, by or before any court, public board or body, nor to the Issuer's
knowledge is there any basis therefor, affecting the existence of the
<PAGE>
Issuer or the titles of its officials to their respective offices, or
seeking to prohibit, restrain or enjoin the sale, issuance or delivery of
the Bonds or the pledge of revenues or assets of the Issuer pledged or to
be pledged to pay the principal of and interest on the Bonds, or in any
way materially adversely affecting or questioning (A) the territorial
jurisdiction of the Issuer, (B) the use of the proceeds of the Bonds to
permanently finance the Project, (C) the validity or enforceability of the
Bonds, any proceedings of the Issuer taken with respect to the Bonds, or
any of the Loan Documents to which it is a party, (D) the execution and
delivery of this Agreement or the Bonds, or (E) the power of the Issuer to
carry out the transactions contemplated by this Agreement, the Bonds, the
Indenture or any of the Loan Documents which the Issuer is a party; and
(ii) the Issuer has complied with all the covenants and
satisfied all of the conditions on its part to be performed or satisfied
at or prior to the Closing Date, and the representations and warranties of
the Issuer contained herein and in each of the Loan Documents to which it
is a party are true and correct as of the Closing Date.
(k) The Purchaser shall have received an opinion of counsel to
the Company and the Guarantors, dated the Closing Date and addressed to
the Purchaser in form and substance reasonably acceptable to the
Purchaser.
(l) The Purchaser shall have received certificates dated the
Closing Date from the Company and the Guarantors to the effect that the
Company and the Guarantors have complied with all of the covenants and
satisfied all of the conditions to be performed or satisfied by it on or
prior to the Closing Date, and the representations and warranties of the
Company and the Guarantors contained in this Agreement and in each of the
Loan Documents to which it is a party are true, correct and complete as of
the Closing Date, and it has full legal right, power and authority to
enter into and carry out the transactions contemplated by the Loan
Documents and the Guaranties.
(m) The Purchaser shall have received a certificate, dated the
Closing Date and signed by an authorized officer of the Trustee, to the
effect that (i) he or she is an authorized officer of the Trustee, (ii)
the Indenture has been duly executed and delivered by the Trustee, (iii)
the Trustee has all necessary corporate and trust powers required to carry
out the trust created by the Indenture, (iv) to the best of his or her
knowledge, the acceptance by the Trustee of the duties and obligations of
the Trustee under the Indenture and compliance with the provisions thereof
will not conflict with or constitute a breach of or default under any law,
administrative regulation, consent decree or any agreement or other
instrument to which the Trustee is subject or by which the Trustee is
bound, and (v) the Trustee has duly authenticated the Bonds, and the
person signing the certificate of authentication on each Bond has been
duly authorized to do so.
<PAGE>
(n) Evidence, reasonably satisfactory in form and substance to
the Purchaser and Bond Counsel, of a satisfactory and favorable conclusion
to a bond validation proceeding under the laws of the State with respect
to the Bonds shall have been received.
(o) Such additional certificates, opinions and other documents
as the Purchaser or Bond Counsel may reasonably request to evidence
performance of or compliance with the provisions of this Agreement and the
transactions contemplated hereby and by the issuance and sale of the
Bonds, all such certificates and other documents to be reasonably
satisfactory in form and substance to the Purchaser, shall have been
received.
(p) If any conditions to the obligations of the Purchaser or
the Issuer contained in this Agreement are not satisfied and the
satisfaction of such conditions shall not be waived by the Purchaser,
then, at the option of the Purchaser (i) the Closing Date shall be
postponed for such period as may be deemed necessary for such conditions
to be satisfied or (ii) without limiting the generality of Section 14 of
this Agreement, the obligations of the Purchaser and the Issuer under this
Agreement shall terminate, neither the Purchaser nor the Issuer shall have
any further obligations or liabilities hereunder, and the Company shall
have no further obligations or liabilities hereunder other than its
obligations under Section 5 hereof.
(q) All of the legal opinions, certificates, proceedings,
instruments and other documents mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof
if, but only if, they are in form and substance reasonably satisfactory to
the Purchaser and the Issuer.
(r) As of the Closing Date, no event of default (as defined in
the Loan Documents) shall have occurred and be continuing, nor shall any
event have occurred and be continuing as of the Closing Date which, with
the lapse of time, would constitute such a default.
(s) The Purchaser shall have received, in immediately available
funds, payment of the $10,000 fee from the Company payable pursuant to the
commitment letter between the Purchaser and the Company.
9. TERMINATION
The Purchaser may terminate its obligations hereunder by written
notice to the Issuer if, at any time subsequent to the date hereof and on
or prior to the Closing Date:
(a) There shall have occurred any material change in the
business or affairs of the Issuer, the Company or either of the
Guarantors, or any material change in the Project which materially
adversely affects the financial condition, business, properties or
prospects of the Company or the Gurantors.
<PAGE>
(b) Any condition to the Purchaser's obligations hereunder is
not satisfied because of any refusal, inability or failure on the part of
the Company or the Issuer to comply with any of the terms or to fulfill
any of the conditions provided for or contemplated by this Agreement, or
if for any reason the Company, the Trustee, the Issuer or either of the
Guarantors shall be unable to perform all of their obligations or satisfy
conditions, respectively, provided for or contemplated in this Agreement,
the Loan Documents or the Guaranties.
10. EXPENSES
The Company shall cause to be paid out of its own funds, or the
proceeds of the Bonds, the costs of issuing the Bonds, including, but not
limited to, the fees and expenses described in Section 5 of this
Agreement, whether or not the sale of the Bonds by the Issuer to the
Purchaser is consummated.
11. CONDITION OF THE ISSUER'S OBLIGATIONS
The Issuer's obligations hereunder are subject to the Purchaser's
performance of its obligations hereunder.
12. NOTICES
Any notice or other communication to be given under this Agreement
may be given by delivering the same in writing and shall be deemed given,
unless otherwise required herein, when received by registered or certified
mail, return receipt requested, postage prepaid; or when received by
overnight delivery; or when personally delivered; addressed as follows:
If to the Issuer:
Mississippi Business Finance Corporation
1306 Walter Sillers Building
550 High Street
Jackson, Mississippi 39201
Post Office Box 849
Jackson, Mississippi 39205
Attention: Executive Director
Telephone Number: (601) 359-3047
Facsimile Number: (601) 359-2832
<PAGE>
If to the Purchaser:
Union Bank of California, N.A.
1800 Harrison Street, Suite 1400
Oakland, California 94604
Attention: Joellen Ademski
Telephone Number: (510) 271-1747
Facsimile Number: (510) 271-1764
With a copy to:
Union Bank of California, N.A.
350 California Street - 10th Floor
San Francisco, California 94120
Attention: Lebbeus S. Case, Jr.
Telephone Number: (415) 705-7308
Facsimile Number: (415) 705-7111
If to the Company:
Simpson Dura-Vent Company, Inc.
4637 Chabot Road, Suite 200
Pleasanton, California 94588
Attention: Steve Lamson, Chief Financial Officer
Telephone Number: (510) 460-9912
Facsimile Number: (510) 847-9114
If to the Trustee:
Union Bank of California, N.A.
4750 Sansome Street, 12th Floor
San Francisco, California 94110
Attention: Corporate Trust Department
Telephone Number: (415) 296-6754
Facsimile Number: (415) 296-6757
13. SUCCESSORS
This Agreement is made solely for the benefit of the Issuer, the
Purchaser and the Company (including their successor or assigns) and no
other person shall acquire or have any right hereunder by virtue hereof
(other than pursuant to Section 5 hereof).
<PAGE>
14. SURVIVAL OF CERTAIN REPRESENTATIONS AND WARRANTIES
All agreements, covenants, representations and warranties and all
other statements of the Issuer and the Company set forth in or made
pursuant to this Agreement shall remain in full force and effect and shall
survive the Closing Date and the delivery of the Bonds.
15. GOVERNING LAW
This Agreement shall be governed by the laws of the State.
16. MISCELLANEOUS
This Agreement constitutes the only agreement among the parties
hereto relating to the subject matter hereof, and it supersedes and
cancels any and all previous contracts, agreements or understandings with
respect thereto. This Agreement may not be amended or modified except in
writing executed by all parties hereto. Capitalized terms not otherwise
defined herein shall have the meaning assigned to them in the Indenture
and the Loan Agreement.
17. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute one and the same
instrument.
<PAGE>
18. EFFECTIVE DATE
This Bond Purchase Agreement shall be effective as of May 1, 1998,
although executed on the respective dates set forth below.
19. DEFINED TERMS
The terms defined herein shall have the meanings set forth in the
Loan Agreement and the Indenture.
Very truly yours,
UNION BANK OF CALIFORNIA, N.A.
By:
---------------------------------------
Title:
------------------------------
Date:
-------------------------------
<PAGE>
===========================================================
MISSISSIPPI BUSINESS FINANCE CORPORATION
By:
---------------------------------------
Executive Director
Accepted on June 30, 1998
<PAGE>
===========================================================
SIMPSON DURA-VENT COMPANY, INC.
By:
---------------------------------------
Title:
------------------------------------
Accepted on June 30, 1998
EXHIBIT 10.5
------------
BARCLAYS BANK PLC
Birmingham Corporate Banking Centre
P.O. Box No. 5960, 15 Colmore Row, Birmingham B3 2EP
Private & Confidential
The Directors Direct Dial: (0121)480 5531
Simpson Strong-Tie International Inc. Fax. No: (0121)480 5506
Winchester Road Ext. No:
Cardinal Point SCB/KH/hbh
TAMWORTH
Staffordshire B73 3HG 1st July 1998
Dear Sirs
SIMPSON STRONG-TIE INTERNATIONAL INC.
- -------------------------------------
We are writing to confirm that we have agreed facilities for the above
company as described below. The facilities are repayable upon demand at
any time, but subject to this overriding condition, the limits have been
marked forward for review by 15th June 1999.
FACILITIES
- ----------
Overdraft GBP250,000 (two hundred and fifty
thousand pounds
Rental Guarantee to Royal GBP442,000 (four hundred and forty-two
London thousand pounds
HM Customs & Excise
Guarantee GBP10,000 (2 x GBP5,000)
Company Barclaycard GBP15,000 (fifteen thousand pounds)
BACs GBP70,000(seventy thousand pounds)
Purpose To assist with the working capital
requirements of the company
Interest/Commission/Fees Interest will charged at a rate of 2%
above Barclays Bank's Base Rate current
from time to time.
No amounts may be drawn in excess of the
agreed facility but if exceptionally the
Bank pays amounts which are not agreed
in advance and which create an excess
position, then a borrowing margin of 15%
will apply to the unauthorised amounts
calculated daily.
Interest will be charged quarterly in
arrears in March, June, September and
December, or at such other intervals as
the Bank may notify to you.
Base Rate is currently 7.5% and
variations in Base Rate are published in
the press.
Commission will be charged in line with
the Bank tariff current from time to
time, a copy of which is in your
possession. The tariff is usually
reviewed annually in May.
Commission in respect of the Rental
Guarantee will be charged at a reate of
0.45% per annum.
The commission and management time
charge will be debited quarterly in
arrears in March, June, September and
December.
A renewal fee of GBP500 will be charged
on acceptance of this letter.
Security The facility will be secured/guaranteed
by:
1. Standby Letter of Credit in the sum
of GBP442,000 from the Union Bank re
the Rental Guarantee to Royal
London.
2. A Guarantee from Simpson
Manufacturing Inc in respect of the
remaining facilities
and any other security which is now
held or hereinafter may be held by the
Bank, all of which security is to be
available as cover for all liabilities
of the Borrower whether actual or
contingent to the Bank at any time.
Condition Precedent The facility is conditional upon the
Standby Letter of Credit being renewed
at its expiry dates.
Information The Borrower will provide the Bank with:
Copies of its audited, trading and
consolidated profit and loss account and
balance sheet as soon as they are
available, and not later than 180 days
from the end of each accounting
reference period.
Acceptance This offer will be available for
acceptance until 30th July 1998 after
which date, the offer will lapse unless
extended in writing by the Bank.
Acceptance will be signified by signing
and returning the attached copy letter
Yours faithfully,
/s/S C Brettell
- ----------------------
S C BRETTELL
CORPORATE MANAGER
<TABLE>
<CAPTION>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(UNAUDITED)
EXHIBIT 11
--------------
BASIC EARNINGS PER SHARE
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 11,561,786 11,457,312 11,546,329 11,458,580
============ ============ ============ ============
Net income $ 8,373,468 $ 7,020,993 $ 14,034,243 $ 11,778,267
============ ============ ============ ============
Basic net income per share $ 0.72 $ 0.61 $ 1.22 $ 1.03
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(UNAUDITED)
EXHIBIT 11
--------------
DILUTED EARNINGS PER SHARE
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 11,561,786 11,457,312 11,546,329 11,458,580
Shares issuable pursuant to employee
stock option plans, less shares
assumed repurchased at the average
fair value during the period 514,046 439,146 508,423 429,102
Shares issuable pursuant to the
independent director stock option
plan, less shares assumed repurchased
at the average fair value during
the period 5,194 4,870 4,985 4,805
------------ ------------ ------------ ------------
Number of shares for computation of
diluted net income per share 12,081,026 11,901,328 12,059,737 11,892,487
============ ============ ============ ============
Net income $ 8,373,468 $ 7,020,993 $ 14,034,243 $ 11,778,267
============ ============ ============ ============
Diluted net income per share $ 0.69 $ 0.59 $ 1.16 $ 0.99
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet at June 30, 1998, (Unaudited)
and the Condensed Consolidated Statement of Operations for the three
and six months ended June 30, 1998, (Unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 20,624,535
<SECURITIES> 0
<RECEIVABLES> 43,707,675
<ALLOWANCES> 1,823,216
<INVENTORY> 55,150,127
<CURRENT-ASSETS> 122,950,507
<PP&E> 97,242,374
<DEPRECIATION> 46,182,977
<TOTAL-ASSETS> 177,614,624
<CURRENT-LIABILITIES> 30,146,099
<BONDS> 0
0
0
<COMMON> 33,519,125
<OTHER-SE> 110,543,567
<TOTAL-LIABILITY-AND-EQUITY> 177,614,624
<SALES> 130,041,019
<TOTAL-REVENUES> 130,041,019
<CGS> 79,089,853
<TOTAL-COSTS> 79,089,853
<OTHER-EXPENSES> 27,636,877
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0<F1>
<INCOME-PRETAX> 23,635,243
<INCOME-TAX> 9,601,000
<INCOME-CONTINUING> 14,034,243
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,034,243
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.16
<FN>
<F1>Interest income for the six months ended June 30, 1998,
was $320,954.
</FN>
</TABLE>
