Exhibit 10
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For Bank Use Only Reviewed by
Due MAY 31, 2002
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Customer # 5314071 Loan # 0101
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REVOLVING CREDIT NOTE
$ 1,000,000.00 MARCH 1, 2002
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FOR VALUE RECEIVED, the undersigned borrower (the "Borrower"), promises to
pay to the order of FIRSTAR BANK, N.A. (the "Bank"), the principal sum of ONE
MILLION AND NO/100 Dollars($ 1.000.000.00), payable MAY 31, 2002.
Interest.
The unpaid principal balance will bear interest at an annual rate equal to
the prime rate announced by the Bank.
The interest rate hereunder will be adjusted each time that the prime rate
changes.
Payment Schedule.
Interest is payable beginning MARCH 15, 2002, and on the same date of each
CONSECUTIVE month thereafter (except that if a given month does not have
such a date, the last day of such month), plus a final interest payment with
the final payment of principal.
Interest will be computed for the actual number of days principal is unpaid,
using a daily factor obtained by dividing the stated interest rate by 360.
Principal amounts remaining unpaid after the maturity thereof, whether at
fixed maturity or by reason of acceleration of maturity, shall bear interest
from and after maturity until paid at a rate of 5% per annum plus the rate
otherwise payable hereunder.
In no event will the interest rate hereunder exceed that permitted by
applicable law. If any interest or other charge is finally determined by a court
of competent jurisdiction to exceed the maximum amount permitted by law, the
interest or charge shall be reduced to the maximum permitted by law, and the
Bank may credit any excess amount previously collected against the balance due
or refund the amount to the Borrower.
Subject to applicable law, if any payment is not made on or before its due
date, the Bank may collect a delinquency charge of 5.00 % of the unpaid amount.
Collection of the late payment fee shall not be deemed to be a waiver of the
Bank's right to declare a default hereunder.
Without affecting the liability of any Borrower, endorser, surety or
guarantor, the Bank may, without notice, renew or extend the time for payment,
accept partial payments, release or impair any collateral security for the
payment of this Note, or agree not to sue any party liable on it.
This Revolving Credit Note constitutes the Note issued under a Revolving
Credit Agreement dated as of the date hereof between the Borrower and the Bank,
to which Agreement reference is hereby made for a statement of the terms and
conditions under which loans evidenced hereby were or may be made and a
description of the terms and conditions upon which the maturity of this Note may
be accelerated, and for a description of the collateral securing this Note.
CONFESSION OF JUDGMENT. ▇▇▇▇▇▇▇▇ hereby irrevocably authorizes and empowers
any attorney-at-law to appear for Borrower in any action upon or in connection
with this Revolving Credit Note at any time after the obligations under this
Revolving Credit Note become due, as herein provided, in any court in or of the
State of Ohio or elsewhere, and waives the issuance and service of process with
respect thereto, and irrevocably authorizes and empowers any such
attorney-at-law to confess judgment in favor of Bank against ▇▇▇▇▇▇▇▇, the
amount due thereon or hereon, plus interest as herein provided, and all costs of
collection, and waives and releases all errors in any said proceedings and
judgments and all rights of appeal from the judgment rendered. The Borrower
agrees and consents that the attorney confessing judgment on behalf of the
Borrower hereunder may also be counsel to the Bank and/or any of the Bank's
affiliates, and the Borrower hereby further waives any conflict of interest
which might otherwise arise and consents to the Bank paying such confessing
attorney a legal fee or allowing such attorneys' fees to be paid from proceeds
of collection of this Revolving Credit Note and/or any and all collateral and
security for the obligations.
WARNING - - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF THE COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
The Borrower hereby acknowledges the
receipt of a copy of this Note.
HMI INDUSTRIES, INC.
(Individual Borrower) -------------------------------------------
Borrower Name (Organization)
(SEAL) a DELAWARE Corporation
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Borrower Name N/A By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name and Title ▇▇▇▇▇ ▇▇▇▇▇▇, CFO
(SEAL)
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By
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Borrower Name N/A Name and Title
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BUSINESS SECURITY AGREEMENT
This Business Security Agreement ("AGREEMENT") is made and entered into by the
undersigned borrower, guarantor and/or other obligor/pledgor (the "DEBTOR") in
favor of FIRSTAR BANK, N.A. (the "BANK") as of the date set forth on the last
page of this Agreement.
ARTICLE I. SECURITY INTEREST
1.1 GRANT OF SECURITY INTEREST. Debtor hereby grants a security interest in
and collaterally assigns the Collateral (defined below) to Bank to secure all of
Debtor's Obligations (defined below) to Bank. The intent of the parties hereto
is that the Collateral secures all Obligations of Debtor to Bank, whether or not
such Obligations exist under this Agreement or any other agreements, whether now
or hereafter existing, between Debtor and Bank or in favor of Bank, including,
without limitation, any note, any loan or security agreement, any lease, any
mortgage, deed of trust or other pledge of an interest in real or personal
property, any guaranty, any letter of credit or banker's acceptance, any
agreement for any other services or credit extended by Bank to Debtor even
though not specifically enumerated herein, and any other agreement with Bank
(together and individually, the "LOAN DOCUMENTS").
1.2 "COLLATERAL" means all of the following whether now owned or existing or
hereafter acquired by Debtor (or by Debtor with spouse), wherever located
(including all documents, general intangibles, additions and accessions, spare
and repair parts, special tools, replacements, returned or repossessed goods and
books and records relating to the following; and all proceeds, supporting
obligations and products of the following) [CHECK ALL THAT APPLY]:
[X] All accounts, instruments, documents, chattel paper, general intangibles,
contract rights, investment property (including any securities entitlements
and/or securities accounts held by Debtor), securities and certificates of
deposit, deposit accounts, and letter of credit rights;
[X] All inventory;
[X] All equipment;
[X] All fixtures; and
[ ] Specific Collateral (the following, whether constituting equipment,
inventory, fixtures, or other collateral):
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In the event the first four boxes are checked, Debtor acknowledges and agrees
that, in applying the law of any jurisdiction that at any time enacts all or
substantially all of the uniform provisions of Revised Article 9 of the Uniform
Commercial Code (1999 Official Text), the foregoing collateral description
covers all assets of Debtor. Bank may at any time and from time to time file
financing and continuation statements and amendments thereto reflecting the
same. Unless otherwise defined, the terms set forth in this Agreement shall have
the meanings set forth in the Uniform Commercial Code as adopted in the Loan
Documents and as amended from time to time. The defined terms hereunder shall be
interpreted in a manner most favorable to Bank.
1.3 "OBLIGATIONS" means all Debtor's debts (except for consumer credit if
Debtor is a natural person), liabilities, obligations, covenants, warranties,
and duties to Bank (plus its affiliates including any credit card debt, but
specifically excluding any type of consumer credit), whether now or hereafter
existing or incurred, whether liquidated or unliquidated, whether absolute or
contingent, whether arising out of the Loan Documents or otherwise, and all
other debts and obligations due Bank under any lease, agricultural, real estate
or other financing transaction and regardless of whether such financing is
related in time or type to the financing provided at the time of grant of this
security interest, and regardless of whether such Obligations arise out of
existing or future credit granted by Bank to any Debtor, to any Debtor and
others, to others guaranteed, endorsed or otherwise secured by any Debtor or to
any debtor-in-possession or other successor-in-interest of any Debtor, and
including principal, interest, fees, expenses and charges relating to any of the
foregoing.
ARTICLE II. WARRANTIES AND COVENANTS
In addition to all other warranties and covenants of Debtor under the Loan
Documents which are expressly incorporated herein as part of this Agreement and
while any part of the credit granted Debtor under the Loan Documents is
available or any Obligations of Debtor to Bank are unpaid or outstanding, Debtor
continuously warrants and agrees as follows:
2.1 DEBTOR'S NAME, LOCATION; NOTICE OF LOCATION CHANGES. Except as indicated
in the ARTICLE 9 CERTIFICATE executed by ▇▇▇▇▇▇ and made a part hereof, ▇▇▇▇▇▇'s
name and organizational structure has remained the same during the past five (5)
years. Debtor will continue to use only the name set forth with ▇▇▇▇▇▇'s
signature unless ▇▇▇▇▇▇ gives Bank prior written notice of any change.
Furthermore, Debtor shall not do business under another name nor use any trade
name without giving ten (10) days prior written notice to Bank. Debtor will not
change its status or organizational structure without the prior written consent
of Bank. Debtor will not change its location or registration (if Debtor is a
registered organization) to another state without prior written notice to Bank.
The address appearing in the ARTICLE 9 CERTIFICATE is ▇▇▇▇▇▇'s chief executive
office (or residence if Debtor is a sole proprietor).
2.2 STATUS OF COLLATERAL. All Collateral is genuine and validly existing.
Except for items of insignificant value or as otherwise reflected in writing by
Debtor to Bank under a borrowing base or otherwise, (i) Collateral constituting
inventory, equipment and fixtures is in good condition, not obsolete and is
either currently saleable or usable; and (ii) Collateral constituting accounts,
contract rights, notes, chattel paper and other third-party obligations to pay
is fully enforceable in accordance with its terms and not subject to return,
dispute, setoff, credit allowance or adjustment, except for discounts for prompt
payment. Unless Debtor provides Bank with written notice to the contrary, Debtor
has no notice or knowledge of anything that would impair the ability of any
third-party obligor to pay any debt to Debtor when due.
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2.3 OWNERSHIP; MAINTENANCE OF COLLATERAL; RESTRICTIONS ON LIENS AND
DISPOSITIONS. Debtor is the sole owner of the Collateral free of all liens,
claims, other encumbrances and security interests except as permitted in writing
by Bank. Debtor shall: (i) maintain the Collateral in good condition and repair
(reasonable wear and tear excepted), and not permit its value to be impaired;
(ii) not permit waste, removal or loss of identity of the Collateral; (iii) keep
the Collateral free from all liens, executions, attachments, claims,
encumbrances and security interests (other than Bank's paramount security
interest and those permitted in writing by Bank); (iv) defend the Collateral
against all claims and legal proceedings by persons other than Bank; (v) pay and
discharge when due all taxes, levies and other charges or fees upon the
Collateral except for payment of taxes contested by Debtor in good faith by
appropriate proceedings so long as no levy or lien has been imposed upon the
Collateral; (vi) not lease, sell or transfer the Collateral to any party nor
move it to any new location outside of the ordinary course of business; (vii)
not permit the Collateral, without the consent of Bank, to become a fixture or
an accession to other goods; (viii) not permit the Collateral to be used in
violation of any applicable law, regulation or policy of insurance; and, (ix) as
to the Collateral consisting of instruments and chattel paper, preserve Bank's
rights in it against all other parties. Notwithstanding the above, Debtor may
sell, lease or transfer inventory in the ordinary course of its business
provided that no sale, lease or transfer shall include any transfer or sale in
satisfaction (partial or complete) of a debt owed by Debtor; title will not pass
to buyer until Debtor physically delivers the goods to buyer or Debtor ships the
goods F.O.B. to buyer's destination; and sales and/or leases to Debtor's
affiliates shall be for fair market value, cash on delivery, with the proceeds
remitted to Bank.
2.4 MAINTENANCE OF SECURITY INTEREST; PURCHASE MONEY SECURITY INTERESTS.
Debtor shall take any action requested by Bank to preserve the Collateral and to
establish the value of, the priority of, to perfect, to continue the perfection
of or to enforce Bank's interest in the Collateral and Bank's rights under this
Agreement; and shall pay all costs and expenses related thereto. Debtor shall
also cooperate with Bank in obtaining control (for purposes of perfection under
the Uniform Commercial Code) of Collateral consisting of deposit accounts,
investment property, letter of credit rights, electronic chattel paper and any
other collateral where Bank may obtain perfection through control. Debtor hereby
authorizes Bank to take any and all actions described above and in place of
Debtor with respect to the Collateral and hereby ratifies any such actions Bank
has taken prior to the date of this Agreement and hereafter, which actions may
include, without limitation, filing UCC financing statements and obtaining or
attempting to obtain control agreements from holders of the Collateral. Debtor
and Bank intend to maintain the full effect of any purchase money security
interest granted in favor of Bank notwithstanding the fact that the Collateral
so purchased is also pledged as security for other Obligations under the Loan
Documents.
2.5 COLLATERAL INSPECTIONS; MODIFICATIONS AND CHANGES IN COLLATERAL. At
reasonable times, Bank may examine the Collateral and ▇▇▇▇▇▇'s records
pertaining to it, wherever located, and make copies of such records at Debtor's
expense; and Debtor shall assist Bank in so doing. Without Bank's prior written
consent, Debtor shall not alter, modify, discount, extend, renew or cancel any
Collateral, except for ordinary discounts for prompt payment on accounts,
physical modifications to the inventory occurring in the manufacturing process
or alterations to equipment which do not materially affect its value. Debtor
shall promptly notify Bank in writing of any material change in the condition of
the Collateral and of any change in location of the Collateral.
2.6 COLLATERAL RECORDS, REPORTS AND STATEMENTS. Debtor shall keep accurate
and complete records respecting the Collateral in such form as Bank may approve.
At such times as Bank may require, Debtor shall furnish to Bank any
records/information Bank might require, including, without limitation, a
statement certified by Debtor and in such form and containing such information
as may be prescribed by Bank showing the current status and value of the
Collateral.
2.7 CHATTEL PAPER, INSTRUMENTS, ETC. Chattel paper, instruments, drafts,
notes, acceptances, and other documents which constitute Collateral shall be on
forms satisfactory to Bank. Debtor shall promptly mark chattel paper to indicate
conspicuously Bank's security interest therein, shall not deliver any chattel
paper or negotiable instruments to any other entity and, upon request, shall
deliver all original chattel paper, instruments, drafts, notes, acceptances and
other documents which constitute Collateral to Bank.
2.8 UNITED STATES GOVERNMENT CONTRACTS. If any accounts or contract rights
arose out of contracts with the United States or any of its departments,
agencies or instrumentalities, Debtor shall promptly notify Bank and execute any
writings required by Bank so that all money due or to become due under such
contracts shall be assigned to Bank under the Federal Assignment of Claims Act.
2.9 ENVIRONMENTAL MATTERS. Except as disclosed in a written schedule
attached to this Agreement (if no schedule is attached, there are no
exceptions), there exists no uncorrected violation by Debtor of any federal,
state or local laws (including statutes, regulations, ordinances or other
governmental restrictions and requirements) relating to the discharge of air
pollutants, water pollutants or process waste water or otherwise relating to the
environment or Hazardous Substances as hereinafter defined, whether such laws
currently exist or are enacted in the future (collectively "ENVIRONMENTAL
LAWS"). The term "HAZARDOUS SUBSTANCES" shall mean any hazardous or toxic
wastes, chemicals or other substances, the generation, possession or existence
of which is prohibited or governed by any Environmental Laws. Debtor is not
subject to any judgment, decree, order or citation, or a party to (or threatened
with) any litigation or administrative proceeding, which asserts that Debtor (i)
has violated any Environmental Laws; (ii) is required to clean up, remove or
take remedial or other action with respect to any Hazardous Substances
(collectively "REMEDIAL ACTION"); or (iii) is required to pay all or a portion
of the cost of any Remedial Action, as a potentially responsible party. There
are not now, nor to Debtor's knowledge after reasonable investigation have there
ever been, any Hazardous Substances (or tanks or other facilities for the
storage of Hazardous Substances) stored, deposited, recycled or disposed of on,
under or at any real estate owned or occupied by Debtor during the periods that
Debtor owned or occupied such real estate, which if present on the real estate
or in soils or ground water, could require Remedial Action. To Debtor's
knowledge, there are no proposed or pending changes in Environmental Laws which
would adversely affect Debtor or its business, and there are no conditions
existing currently or likely to exist while the Loan Documents are in effect
which would subject Debtor to Remedial Action or other liability. Debtor
currently complies with and will continue to timely comply with all applicable
Environmental Laws; and will provide Bank, immediately upon receipt, copies of
any correspondence, notice, complaint, order or other document from any source
asserting or alleging any circumstance or condition which requires or may
require a financial contribution by Debtor or Remedial Action or other response
by or on the part of Debtor under Environmental Laws, or which seeks damages or
civil, criminal or punitive penalties from Debtor for an alleged violation of
Environmental Laws.
2.10 INSURANCE. Debtor will maintain insurance to such extent, covering such
risks and with such insurers as is usual and customary for businesses operating
similar properties, and as is satisfactory to Bank, including insurance for fire
and other risks insured against by extended or comprehensive coverage, public
liability insurance and workers' compensation insurance; and will designate Bank
as loss payee with a "Lender's Loss Payable" endorsement on any casualty
policies and take such other action as Bank may reasonably request to ensure
that Bank will receive (subject to no other interests) the insurance proceeds of
the Collateral. Debtor hereby assigns all insurance proceeds to and irrevocably
directs, while any Obligations remain unpaid, any insurer to pay to Bank the
proceeds of all such
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insurance and any premium refund; and authorizes Bank to endorse Debtor's name
to effect the same, to make, adjust or settle, in Debtor's name, any claim on
any insurance policy relating to the Collateral; and, at the option of Bank, to
apply such proceeds and refunds to the Obligations or to restoration of the
Collateral, returning any excess to Debtor. In the event of any failure of the
Debtor to obtain or maintain any insurance required hereunder, the Bank shall
have the authority, but not the obligation, to obtain any such insurance
coverage, and the Debtor shall immediately reimburse the Bank for the cost
thereof, together with interest on such amount at the highest rate of interest
then accruing on any of the Obligations.
ARTICLE III. COLLECTIONS
3.1 DEPOSIT WITH BANK. At any time Bank may require that all proceeds of
Collateral received by Debtor shall be held by Debtor upon an express trust for
Bank, shall not be commingled with any other funds or property of Debtor and
shall be turned over to Bank in precisely the form received (but endorsed by
▇▇▇▇▇▇, if necessary for collection) not later than the business day following
the day of their receipt. All proceeds of Collateral received by Bank directly
or from Debtor shall be applied against the Obligations in such order and at
such times as Bank shall determine.
ARTICLE IV. RIGHTS AND DUTIES OF BANK
In addition to all other rights (including setoff) and duties of Bank under
the Loan Documents which are expressly incorporated herein as a part of this
Agreement, the following provisions shall also apply:
4.1 AUTHORITY TO PERFORM FOR DEBTOR. Debtor presently appoints any officer
of Bank as Debtor's attorney-in-fact (coupled with an interest and irrevocable
while any Obligations remain unpaid) to do any of the following upon default by
Debtor hereunder (notwithstanding any notice requirements or grace/cure
periods under this or other agreements between Debtor and Bank): (i) to file,
endorse or place the name of Debtor on any invoice or document of title relating
to accounts, drafts against customers, notices to customers, notes, acceptances,
assignments of government contracts, instruments, financing statements, checks,
drafts, money orders, insurance claims or payments or other documents evidencing
payment or a security interest relating to the Collateral; (ii) to receive, open
and dispose of all mail addressed to Debtor and to notify the Post Office
authorities to change the address for delivery of mail addressed to Debtor to an
address designated by Bank; (iii) to do all such other acts and things necessary
to carry out ▇▇▇▇▇▇'s duties under this Agreement and the other Loan Documents;
and (iv) to perfect, protect and/or realize upon Bank's interest in the
Collateral. If the Collateral includes funds or property in depository accounts,
Debtor authorizes each of its depository institutions to remit to Bank, without
liability to Debtor, all of Debtor's funds on deposit with such institution upon
written direction by Bank after default by Debtor hereunder. All acts by Bank
are hereby ratified and approved, and Bank shall not be liable for any acts of
commission or omission, nor for any errors of judgment or mistakes of fact or
law.
4.2 VERIFICATION AND NOTIFICATION; BANK'S RIGHTS. Bank may verify Collateral
in any manner, and Debtor shall assist Bank in so doing. Upon the occurrence of
a default hereunder, Bank may at any time and Debtor shall, upon request of
Bank, notify the account debtors to make payment directly to Bank; and Bank may
enforce collection of, sell, settle, compromise, extend or renew the
indebtedness of such account debtors; all without notice to or the consent of
Debtor. Until account debtors are so notified, Debtor, as agent of Bank, shall
make collections on the Collateral. Bank may at any time notify any bailee
possessing Collateral to turn over the Collateral to Bank.
4.3 COLLATERAL PRESERVATION. Bank shall use reasonable care in the custody
and preservation of any Collateral in its physical possession but in determining
such standard of reasonable care, Debtor expressly acknowledges that Bank has no
duty to: (i) insure the Collateral against hazards; (ii) ensure that the
Collateral will not cause damage to property or injury to third parties; (iii)
protect it from seizure, theft or conversion by third parties, third parties'
claims or acts of God; (iv) give to Debtor any notices received by Bank
regarding the Collateral; (v) perfect or continue perfection of any security
interest in favor of Debtor; (vi) perform any services, complete any
work-in-process or take any other action in connection with the management or
maintenance of the Collateral; or (vii) sue or otherwise effect collection
upon any accounts even if Bank shall have made a demand for payment upon
individual account debtors. Notwithstanding any failure by Bank to use
reasonable care in preserving the Collateral, Debtor agrees that Bank shall not
be liable for consequential or special damages arising therefrom.
ARTICLE V. DEFAULTS AND REMEDIES
Bank may enforce its rights and remedies under this Agreement upon default.
A default shall occur if Debtor fails to comply with the terms of any Loan
Documents (including this Agreement or any guaranty by Debtor), a demand for
payment is made under a demand loan, or any other obligor fails to comply with
the terms of any Loan Documents for which Debtor has given Bank a guaranty or
pledge.
5.1 CUMULATIVE REMEDIES; NOTICE; WAIVER. In addition to the remedies for
default set forth in the Loan Documents, Bank upon default shall have all other
rights and remedies for default provided by the Uniform Commercial Code, as well
as any other applicable law and this Agreement, INCLUDING, WITHOUT LIMITATION,
THE RIGHT TO REPOSSESS, RENDER UNUSABLE AND/OR DISPOSE OF THE COLLATERAL WITHOUT
JUDICIAL PROCESS. The rights and remedies specified herein are cumulative and
are not exclusive of any rights or remedies which Bank would otherwise have.
With respect to such rights and remedies:
(a) ASSEMBLING COLLATERAL; STORAGE; USE OF DEBTOR'S NAME/OTHER PROPERTY.
Bank may require Debtor to assemble the Collateral and to make it
available to Bank at any convenient place designated by Bank. Debtor
recognizes that Bank will not have an adequate remedy in Law if this
obligation is breached and accordingly, Debtor's obligation to assemble
the Collateral shall be specifically enforceable. Bank shall have the
right to take immediate possession of said Collateral and Debtor
irrevocably authorizes Bank to enter any of the premises wherever said
Collateral shall be located, and to store, repair, maintain, assemble,
manufacture, advertise and sell, lease or dispose of (by public sale or
otherwise) the same on said premises until sold, all without charge or
rent to Bank. Bank is hereby granted an irrevocable license to use,
without charge, Debtor's equipment, inventory, labels, patents,
copyrights, franchises, names, trade secrets, trade names, trademarks
and advertising matter and any property of a similar nature; and
Debtor's rights under all licenses and franchise agreements shall inure
to Bank's benefit. Further, Debtor releases Bank from obtaining a bond
or surety with respect to any repossession and/or disposition of the
Collateral.
(b) NOTICE OF DISPOSITION. Written notice, when required by law, sent to any
address of Debtor in this Agreement, at least five (5)
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calendar days (counting the day of sending) before the date of a
proposed disposition of the Collateral is reasonable notice but less
notice may be reasonable under the circumstances. Notification to
account debtors by Bank shall not be deemed a disposition of the
Collateral. Notice of any record shall be deemed delivered when the
record has been (a) deposited in the United States Mail, postage
pre-paid, (b) received by overnight delivery service, (c) received by
telex, (d) received by telecopy, (e) received through the internet, or
(f) when personally delivered.
(c) POSSESSION OF COLLATERAL/COMMERCIAL REASONABLENESS. Bank shall not, at
any time, be obligated to either take or retain possession or control of
the Collateral. With respect to Collateral in the possession or control
of Bank, Debtor and Bank agree that as a standard for determining
commercial reasonableness, Bank need not liquidate, collect, sell or
otherwise dispose of any of the Collateral if Bank believes, in good
faith, that disposition of the Collateral would not be commercially
reasonable, would subject Bank to third-party claims or liability, that
other potential purchasers could be attracted or that a better price
could be obtained if Bank held the Collateral for up to 2 years. Bank
may sell Collateral without giving any warranties and may specifically
disclaim any warranties of title or the like. Furthermore, Bank may sell
the Collateral on credit (and reduce the Obligations only when payment
is received from the buyer), at wholesale and/or with or without an
agent or broker; and Bank need not complete, process, repair, clean-up
or otherwise prepare the Collateral prior to disposition. If the
purchaser fails to pay for the Collateral, Bank my resell the Collateral
and Debtor shall be credited with the cash proceeds of the sale. Bank
may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not
be considered to adversely affect the commercial reasonableness of any
sale of the Collateral.
(d) WAIVER BY DEBTOR. Bank has no obligation and Debtor waives any
obligation to attempt to satisfy the Obligations by collecting the
obligations from any third parties and Bank may release, modify or waive
any collateral provided by any third party to secure any of the
Obligations, all without affecting Bank's rights against Debtor. Debtor
further waives any obligation on the part of Bank to marshal any assets
in favor of Debtor or in payment of the Obligations. Notwithstanding any
provisions in this Agreement or any other agreement between Debtor and
Bank, Debtor does not waive any statutory rights except to the extent
that the waiver thereof is permitted by law.
(e) WAIVER BY BANK. Bank may permit Debtor to attempt to remedy any default
without waiving its rights and remedies hereunder, and Bank may waive
any default without waiving any other subsequent or prior default by
Debtor. Furthermore, delay on the part of Bank in exercising any right,
power or privilege hereunder or at law shall not operate as a waiver
thereof, nor shall any single or partial exercise of such right, power
or privilege preclude other exercise thereof or the exercise of any
other right, power or privilege. NO WAIVER OR SUSPENSION SHALL BE DEEMED
TO HAVE OCCURRED UNLESS BANK HAS EXPRESSLY AGREED IN WRITING SPECIFYING
SUCH WAIVER OR SUSPENSION.
ARTICLE VI. MISCELLANEOUS
All other provisions in the Loan Documents are expressly incorporated as a
part of this Agreement.
ALL DOCUMENTS ATTACHED HERETO, INCLUDING ANY APPENDICES, SCHEDULES, RIDERS,
AND EXHIBITS TO THIS AGREEMENT, ARE HEREBY EXPRESSLY INCORPORATED BY REFERENCE.
IN WITNESS WHEREOF, the undersigned has/have executed this BUSINESS SECURITY
AGREEMENT as of MARCH 1, 2002.
(Individual Debtor) HMI INDUSTRIES, INC.
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Debtor Name (Organization)
(SEAL) a DELAWARE Corporation
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Debtor Name N/A By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name and Title ▇▇▇▇▇ ▇▇▇▇▇▇, CFO
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(SEAL)
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By
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Debtor Name N/A Name and Title
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5314071-0101
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement (the "AGREEMENT") is made and entered into by
and between the undersigned borrower (the "BORROWER") and the undersigned bank
(the "BANK") as of the date set forth on the last page of this Agreement.
ARTICLE 1. LOANS
1.1 REVOLVING CREDIT LOANS. From time to time prior to MAY 31, 2002 (the
"MATURITY DATE") or the earlier termination hereof, the Borrower may borrow from
the Bank for working capital purposes up to the aggregate principal amount
outstanding at any one time of the lesser of (i) $ 1,000,000.00 (the "LOAN
AMOUNT"), less letters of credit issued by the Bank, or (ii) if applicable, the
BORROWING BASE (defined below). All revolving loans hereunder will be evidenced
by a single promissory note of the Borrower payable to the order of the Bank in
the principal amount of the Loan Amount (the "NOTE"). Although the Note will be
expressed to be payable in the full Loan Amount, the Borrower will be obligated
to pay only the amounts actually disbursed hereunder, together with accrued
interest on the outstanding balance at the rates and on the dates specified
therein and such other charges provided for herein. In the event that the
principal amount outstanding under the Note exceeds the Borrowing Base at any
time, the Borrower will immediately, without request, prepay an amount
sufficient to eliminate such excess.
1.2 BORROWING BASE. The Borrowing Base will be an amount equal to the sum of
(i) 80.00 % of the face amount of Eligible Accounts, and (ii) the lesser of
$ n/a or 50.00 % of the Borrower's cost of Eligible Inventory, as such cost may
be diminished as a result of any event causing loss or depreciation in value of
Eligible Inventory less (iii) the current outstanding loan balance on note(s) in
the original amount(s) of $ n/a and less (iv) undrawn amounts of outstanding
letters of credit issued by Bank or any affiliate thereof. The Borrower will
provide the Bank with information regarding the Borrowing Base in such form and
at such times as the Bank may request. The terms used in this Section 1.2 will
have the meanings set forth in a supplement entitled "Financial Definitions," a
copy of which the Borrower acknowledges having received with this Agreement and
which is incorporated herein by reference.
1.3 ADVANCES AND PAYING PROCEDURE. The Bank is authorized and directed to
credit any of the Borrower's accounts with the Bank (or to the account the
Borrower designates in writing) for all loans made hereunder, and the Bank is
authorized to debit such account or any other account of the Borrower with the
Bank for the amount of any principal or interest due under the Note or other
amount due hereunder on the due date with respect thereto. Each advance shall
be in the minimum amount of $5,000.
1.4 CLOSING FEE. The Borrower will pay the Bank a one-time closing fee of
$1,000.00 contemporaneously with execution of this Agreement. This fee is in
addition to all other fees, expenses and other amounts due hereunder.
1.5 LOAN FACILITY FEE. The Borrower will pay a loan facility fee equal to:
[ ] $ n/a per annum, payable annually in advance; (or)
-------------
[ ] n/a % per annum of the Loan Amount, payable annually in advance; (or)
-------------
[ ] n/a % per annum of the difference between the Loan Amount and the
------------- actual daily unpaid principal amount of the Note outstanding from
time to time, payable quarterly, in arrears, on the last business day of each
third calendar month, and at maturity; (or)
[ ] n/a % per annum of the actual daily unpaid principal amount of the Note
------------- outstanding from time to time, payable quarterly, in arrears, on the last
business day of each third calendar month, and at maturity.
The loan facility fee is payable for the entire period that this Agreement is in
effect, regardless of whether any amounts are outstanding hereunder at any given
time.
1.6 EXPENSES AND ATTORNEYS' FEES. The Borrower will reimburse the Bank and
any Participant (defined below) for all attorneys' fees and all other costs,
fees and out-of-pocket disbursements incurred by the Bank or any Participant in
connection with the preparation, execution, delivery, administration, defense
and enforcement of this Agreement or any of the other Loan Documents (defined
below), including attorneys' fees and all other costs and fees (a) incurred
before or after commencement of litigation or at trial, on appeal or in any
other proceeding, (b) incurred in any bankruptcy proceeding and (c) related to
any waivers or amendments with respect thereto (examples of costs and fees
include but are not limited to fees and costs for: filing, perfecting or
confirming the priority of the Bank's lien, title searches or insurance,
appraisals, environmental audits and other reviews related to the Borrower, any
collateral or the loans, if requested by the Bank). The Borrower will also
reimburse the Bank and any Participant for all costs of collection, including
all attorneys' fees, before and after judgment, and the costs of preservation
and/or liquidation of any collateral.
1.7. COMPENSATING BALANCES. The Borrower will maintain on deposit with the
Bank in non-interest bearing accounts average daily collected balances, in
excess of that required to support account activity and other credit facilities
extended to the Borrower by the Bank, an amount at least equal to the sum of
(i) $ n/a and (ii) n/a % of the Loan Amount as computed on a monthly basis. If
the Borrower fails to keep and maintain such balances, it will pay a deficiency
fee, payable within five days after receipt of a statement therefor calculated
on the amount by which the Borrower's average daily balances are less than the
requirements set forth above, computed at a rate equal to the rate set forth in
the Note.
1.8 CONDITIONS TO BORROWING. The Bank will not be obligated to make (or
continue to make) advances hereunder unless (i) the Bank has received executed
originals of the Note and all other documents or agreements applicable to the
loans described herein, including but not limited to the documents specified in
Article III (collectively with this Agreement the "Loan Documents" ), in form
and content satisfactory to the Bank; (ii) if the loan is secured, the Bank has
received confirmation satisfactory to it that the Bank has a properly perfected
security interest, mortgage or lien, with the proper priority; (iii) the Bank
has received certified copies of the Borrower's Articles of Incorporation and
By-Laws, or its Partnership Agreement (as appropriate), certification of
corporate or partnership status satisfactory to the Bank and all other relevant
documents; (iv) the Bank has received a certified copy of a resolution or
authorization in form and content
satisfactory to the Bank authorizing the loan and all acts contemplated by this
Agreement and all related documents, and confirmation of proper authorization of
all guaranties and other acts of third parties contemplated hereunder; (v) if
required by the Bank, the Bank has been provided with an Opinion of the
Borrower's counsel in form and content satisfactory to the Bank confirming the
matters outlined in Section 2.2 and such other matters as the Bank requests;
(vi) no default exists under this Agreement or under any other Loan Documents,
or under any other agreements by and between the Borrower and the Bank; and
(vii) all proceedings taken in connection with the transactions contemplated by
this Agreement (including any required environmental assessments), and all
instruments, authorizations and other documents applicable thereto, are
satisfactory to the Bank and its counsel.
ARTICLE II. WARRANTIES AND COVENANTS
While any part of the credit granted to the Borrower under this Agreement or the
other Loan Documents is available or any obligations under any of the Loan
Documents are unpaid or outstanding, the Borrower continuously warrants and
agrees as follows:
2.1 ACCURACY OF INFORMATION. All information, certificates or statements
given to the Bank pursuant to this Agreement and the other Loan Documents will
be true and complete when given.
2.2 ORGANIZATION AND AUTHORITY; LITIGATION. If the Borrower is a corporation
or partnership, the Borrower is a validly existing corporation or partnership
(as applicable) in good standing under the laws of its state of organization,
and has all requisite power and authority, corporate or otherwise, and possesses
all licenses necessary, to conduct its business and own its properties. The
execution, delivery and performance of this Agreement and the other Loan
Documents (i) are within the Borrower's power; (ii) have been duly authorized by
proper corporate or partnership action (as applicable); (iii) do not require the
approval of any governmental agency, other entity or person; and (iv) will not
violate any law, agreement or restriction by which the Borrower is bound. This
Agreement and the other Loan Documents are the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their terms. There is no litigation or administrative proceeding threatened or
pending against the Borrower which would, if adversely determined, have a
material adverse effect on the Borrower's financial condition or its property.
2.3 EXISTENCE; BUSINESS ACTIVITIES; ASSETS. The Borrower will (i) preserve
its corporate or partnership (as applicable) existence, rights and franchises;
(ii) not make any material change in the nature or manner of its business
activities; (iii) not liquidate, dissolve, merge or consolidate with or into
another entity; and (iv) not sell, lease, transfer or otherwise dispose of all
or substantially all of its assets.
2.4 USE OF PROCEEDS; MARGIN STOCK; SPECULATION. Advances by the Bank
hereunder will be used exclusively by the Borrower for working capital and other
regular and valid purposes. The Borrower will not, without the prior written
consent of the Bank, redeem, purchase, or retire any of the capital stock or
declare or pay any dividends, or make any other payments or distributions of a
similar type or nature. The Borrower will not use any of the loan proceeds to
purchase or carry "margin" stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System). No part of any of the proceeds will be
used for speculative investment purposes, including, without limitation,
speculating or hedging in the commodities and/or futures market.
2.5 ENVIRONMENTAL MATTERS. Except as disclosed in a written schedule
attached to this Agreement (if no schedule is attached, there are no
exceptions), there exists no uncorrected violation by the Borrower of any
federal, state or local laws (including statutes, regulations, ordinances or
other governmental restrictions and requirements) relating to the discharge of
air pollutants, water pollutants or process waste water or otherwise relating to
the environment or Hazardous Substances as hereinafter defined, whether such
laws currently exist or are enacted in the future (collectively "ENVIRONMENTAL
LAWS"). The term "HAZARDOUS SUBSTANCES" will mean any hazardous or toxic wastes,
chemicals or other substances, the generation, possession or existence of which
is prohibited or governed by any Environmental Laws. The Borrower is not subject
to any judgment, decree, order or citation, or a party to (or threatened with)
any litigation or administrative proceeding, which asserts that the Borrower (i)
has violated any Environmental Laws; (ii) is required to clean up, remove or
take remedial or other action with respect to any Hazardous Substances
(collectively "REMEDIAL ACTION"); or (iii) is required to pay all or a portion
of the cost of any Remedial Action, as a potentially responsible party. Except
as disclosed on the Borrower's environmental questionnaire provided to the Bank,
there are not now, nor to the Borrower's knowledge after reasonable
investigation have there ever been, any Hazardous Substances (or tanks or other
facilities for the storage of Hazardous Substances) stored, deposited, recycled
or disposed of on, under or at any real estate owned or occupied by the Borrower
during the periods that the Borrower owned or occupied such real estate, which
if present on the real estate or in soils or ground water, could require
Remedial Action. To the Borrower's knowledge, there are no proposed or pending
changes in Environmental Laws which would adversely affect the Borrower or its
business, and there are no conditions existing currently or likely to exist
while the Loan Documents are in effect which would subject the Borrower to
Remedial Action or other liability. The Borrower currently complies with and
will continue to timely comply with all applicable Environmental Laws; and will
provide the Bank, immediately upon receipt, copies of any correspondence,
notice, complaint, order or other document from any source asserting or alleging
any circumstance or condition which requires or may require a financial
contribution by the Borrower or Remedial Action or other response by or on the
part of the Borrower under Environmental Laws, or which seeks damages or civil,
criminal or punitive penalties from the Borrower for an alleged violation of
Environmental Laws.
2.6 COMPLIANCE WITH LAWS. The Borrower has complied with all laws applicable
to its business and its properties, and has all permits, licenses and approvals
required by such laws, copies of which have been provided to the Bank.
2.7 RESTRICTION ON INDEBTEDNESS. The Borrower will not create, incur, assume
or have outstanding any indebtedness for borrowed money (including capitalized
leases) except (i) any indebtedness owing to the Bank and its affiliates, and
(ii) any other indebtedness outstanding on the date hereof, and shown on the
Borrower's financial statements delivered to the Bank prior to the date hereof,
provided that such other indebtedness will not be increased.
2.8 RESTRICTION ON LIENS. The Borrower will not create, incur, assume or
permit to exist any mortgage, pledge, encumbrance or other lien or levy upon or
security interest in any of the Borrower's property now owned or hereafter
acquired, except (i) taxes and assessments which are either not delinquent or
which are being contested in good faith with adequate reserves provided; (ii)
easements, restrictions and minor title irregularities which do not, as a
practical matter, have an adverse effect upon the ownership and use of the
affected property; (iii) liens in favor of the Bank and its affiliates; and (iv)
other liens disclosed in writing to the Bank prior to the date hereof.
2.9 RESTRICTION ON CONTINGENT LIABILITIES. The Borrower will not guarantee
or become a surety or otherwise contingently liable for any obligations of
others, except pursuant to the deposit and collection of checks and similar
matters in the ordinary course of business.
Page 2 of 6
2.10 INSURANCE. The Borrower will maintain insurance to such extent,
covering such risks and with such insurers as is usual and customary for
businesses operating similar properties, and as is satisfactory to the Bank,
including insurance for fire and other risks insured against by extended
coverage, public liability insurance and workers' compensation insurance; and
will designate the Bank as loss payee with a "Lender's Loss Payable" endorsement
on any casualty policies and take such other action as the Bank may reasonably
request to ensure that the Bank will receive (subject to no other interests) the
insurance proceeds on the Bank's collateral.
2.11 TAXES AND OTHER LIABILITIES. The Borrower will pay and discharge, when
due, all of its taxes, assessments and other liabilities, except when the
payment thereof is being contested in good faith by appropriate procedures which
will avoid foreclosure of liens securing such items, and with adequate reserves
provided therefor.
2.12 FINANCIAL STATEMENTS AND REPORTING. The financial statements and other
information previously provided to the Bank or provided to the Bank in the
future are or will be complete and accurate and prepared in accordance with
generally accepted accounting principles. There has been no material adverse
change in the Borrower's financial condition since such information was provided
to the Bank. The Borrower will (i) maintain accounting records in accordance
with generally recognized and accepted principles of accounting consistently
applied throughout the accounting periods involved; (ii) provide the Bank with
such information concerning its business affairs and financial condition
(including insurance coverage) as the Bank may request; and (iii) without
request, provide the Bank with management-prepared financial statements:
[X] quarterly within 45 days of the end of each quarter;
------------
[ ] monthly within n/a days of the end of each month;
------------
and annual audited financial statements prepared by an accounting firm
-----------------------------------------------------------
acceptable to the bank within 90 days of the end of each fiscal year.
---------------------- --
2.13 INSPECTION OF PROPERTIES AND RECORDS; FISCAL YEAR. The Borrower will
permit representatives of the Bank to visit and inspect any of the properties
and examine any of the books and records of the Borrower at any reasonable time
and as often as the Bank may reasonably desire. The Borrower will not change its
fiscal year.
2.14 FINANCIAL STATUS. The Borrower will maintain at all times:
(i) Net Working Capital in the amount of at least (v) Capital Expenditures not to exceed $ n/a per
$ n/a . fiscal year. ----------
-------------------------
(ii) Tangible Net Worth in the amount of at least (vi) Cash Flow Coverage Ratio of at least n/a
$ n/a ----------
-------------------------.
(iii) Debt to Worth Ratio of not more than (vii) Officers, Directors, Partners, and Management Salaries
n/a and Other Compensation not to exceed $ n/a per fiscal year.
--------------------------. ---------
(iv) Current Ratio of at least n/a .
------------------
The terms used in this Section 2.14 will have the meanings set forth in a
supplement entitled "Financial Definitions," a copy of which the Borrower hereby
acknowledges having received with this Agreement and which is incorporated
herein by reference.
2.15 PAID-IN-FULL PERIOD. [ ] If checked here, all revolving loans under
this Agreement and the Note must be paid in full for a period of at least n/a
consecutive days during each fiscal year. -----
ARTICLE III. COLLATERAL AND GUARANTIES
3.1 COLLATERAL. This Agreement and the Note are secured by any and all
security interests, pledges, mortgages/deeds of trust or liens now or hereafter
in existence granted to the Bank to secure indebtedness of the Borrower to the
Bank, including without limitation as described in the following documents:
[ ] Real Estate Mortgage(s)/Deed(s) of Trust dated
----------------------------
covering real estate located at
--------------------------------------------
---------------------------------------------------------------------------
[X] Security Agreement(s) dated 03/01/02
-----------------------------------------------
[ ] Collateral Pledge Agreement(s) dated
--------------------------------------
[ ] Other
---------------------------------------------------------------------
---------------------------------------------------------------------------
3.2 GUARANTIES. This loan is guaranteed by
---------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
.
-------------------------------------------------------------------------------
3.3 CREDIT BALANCES; SETOFF. As additional security for the payment of the
obligations described in the Loan Documents and any other obligations of the
Borrower to the Bank of any nature whatsoever (collectively the "OBLIGATIONS"),
the Borrower hereby grants to the Bank a security interest in, a lien on and an
express contractual right to set off against all depository account balances,
cash and any other property of the Borrower now or hereafter in the possession
of the Bank and the right to refuse to allow withdrawals from any account
(collectively "SETOFF"). The Bank may, at any time upon the occurrence of a
default hereunder (notwithstanding any notice requirements or grace/cure periods
under this or other agreements between the Borrower and the Bank) Setoff against
the Obligations WHETHER OR
Page 3 of 6
NOT THE OBLIGATIONS (INCLUDING FUTURE INSTALLMENTS) ARE THEN DUE OR HAVE BEEN
ACCELERATED, ALL WITHOUT ANY ADVANCE OR CONTEMPORANEOUS NOTICE OR DEMAND OF ANY
KIND TO THE BORROWER, SUCH NOTICE AND DEMAND BEING EXPRESSLY WAIVED.
The information in this Article III is for information only and the omission of
any reference to an agreement will not affect the validity or enforceability
thereof. The rights and remedies of the Bank outlined in this Agreement and the
documents identified above are intended to be cumulative.
ARTICLE IV. DEFAULTS
4.1 DEFAULTS. NOTWITHSTANDING ANY CURE PERIODS DESCRIBED BELOW, THE BORROWER
WILL IMMEDIATELY NOTIFY THE BANK IN WRITING WHEN THE BORROWER OBTAINS KNOWLEDGE
OF THE OCCURRENCE OF ANY DEFAULT SPECIFIED BELOW. Regardless of whether the
Borrower has given the required notice, the occurrence of one or more of the
following will constitute a default:
(a) NONPAYMENT. The Borrower shall fail to pay (i) any interest due on the Note
or any fees, charges, costs or expenses under the Loan Documents by 5 days
after the same becomes due; or (ii) any principal amount of the Note when
due.
(b) NONPERFORMANCE. The Borrower or any guarantor of Borrower's Obligations to
the Bank ("Guarantor") shall fail to perform or observe any agreement, term,
provision, condition, or covenant (other than a default occurring under (a),
(c), (d), (e), (f) or (g) of this Section 4.1) required to be performed or
observed by the Borrower or any Guarantor hereunder or under any other Loan
Document or other agreement with or in favor of the Bank.
(c) MISREPRESENTATION. Any financial information, statement, certificate,
representation or warranty given to the Bank by the Borrower or any
Guarantor (or any of their representatives) in connection with entering into
this Agreement or the other Loan Documents and/or any borrowing thereunder,
or required to be furnished under the terms thereof, shall prove untrue or
misleading in any material respect (as determined by the Bank in the
exercise of its judgment) as of the time when given.
(d) DEFAULT ON OTHER OBLIGATIONS. The Borrower or any Guarantor shall be in
default under the terms of any loan agreement, promissory note, lease,
conditional sale contract or other agreement, document or instrument
evidencing, governing or securing any indebtedness owing by the Borrower or
any Guarantor to the Bank or any indebtedness in excess of $10,000 owing by
the Borrower to any third party, and the period of grace, if any, to cure
said default shall have passed.
(e) JUDGMENTS. Any judgment shall be obtained against the Borrower or any
Guarantor which, together with all other outstanding unsatisfied judgments
against the Borrower (or such Guarantor), shall exceed the sum of $10,000
and shall remain unvacated, unbonded or unstayed for a period of 30 days
following the date of entry thereof.
(f) INABILITY TO PERFORM; BANKRUPTCY/INSOLVENCY. (i) The Borrower or any
Guarantor shall die or cease to exist; or (ii) any Guarantor shall attempt
to revoke any guaranty of the Obligations described herein, or any guaranty
becomes unenforceable in whole or in part for any reason; or (iii) any
bankruptcy, insolvency or receivership proceedings, or an assignment for the
benefit of creditors, shall be commenced under any Federal or state law by
or against the Borrower or any Guarantor; or (iv) the Borrower or any
Guarantor shall become the subject of any out-of-court settlement with its'
creditors; or (v) the Borrower or any Guarantor is unable or admits in
writing its inability to pay its debts as they mature.
(g) ADVERSE CHANGE; INSECURITY. (i) There is a material adverse change in the
business, properties, financial condition or affairs of the Borrower or any
Guarantor, or in any collateral securing the Obligations; or (ii) the Bank
in good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure.
4.2 TERMINATION OF LOANS; ADDITIONAL BANK RIGHTS. Upon the Maturity Date or
the occurrence of any of the events identified in Section 4.1, the Bank may at
any time (notwithstanding any notice requirements or grace/cure periods under
this or other agreements between the Borrower and the Bank) (i) immediately
terminate its obligation, if any, to make additional loans to the Borrower; (ii)
Setoff; and/or (iii) take such other steps to protect or preserve the Bank's
interest in any collateral, including without limitation, notifying account
debtors to make payments directly to the Bank, advancing funds to protect any
collateral and insuring collateral at the Borrower's expense; all without demand
or notice of any kind, all of which are hereby waived.
4.3 ACCELERATION OF OBLIGATIONS. Upon the Maturity Date or the occurrence of
any of the events identified in Sections 4.1(a) through 4.1(e) and 4.1(g), and
the passage of any applicable cure periods, the Bank may at any time thereafter,
by written notice to the Borrower, declare the unpaid principal balance of any
Obligations, together with the interest accrued thereon and other amounts
accrued hereunder and under the other Loan Documents, to be immediately due and
payable; and the unpaid balance will thereupon be due and payable, all without
presentation, demand, protest or further notice of any kind, all of which are
hereby waived, and notwithstanding anything to the contrary contained herein or
in any of the other Loan Documents. Upon the occurrence of any event under
Section 4.1(f), the unpaid principal balance of any Obligations, together with
all interest accrued thereon and other amounts accrued hereunder and under the
other Loan Documents, will thereupon be immediately due and payable, all without
presentation, demand, protest or notice of any kind, all of which are hereby
waived, and notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents. Nothing contained in Section 4.1, Section 4.2 or
this section will limit the Bank's right to Setoff as provided in Section 3.3 or
otherwise in this Agreement.
4.4 OTHER REMEDIES. Nothing in this Article IV is intended to restrict the
Bank's rights under any of the Loan Documents or at law, and the Bank may
exercise all such rights and remedies as and when they are available.
Page 4 of 6
ARTICLE V. OTHER TERMS
5.1 FINANCIAL DEFINITIONS SUPPLEMENT. If a Borrowing Base or covenants
regarding financial status apply to this loan, the "FINANCIAL DEFINITIONS"
Supplement identified in Sections 1.2 and 2.14 of this Agreement is hereby
incorporated into this Agreement. The Borrower acknowledges receiving a copy of
such Supplement.
5.2 ADDITIONAL TERMS; ADDENDUM/SUPPLEMENTS. The warranties, covenants,
conditions and other terms described in this Section and/or in the Addendum
and/or other attached document(s) referenced in this Section are incorporated
into this Agreement:
SEE ATTACHED ADDENDUM
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ARTICLE VI. MISCELLANEOUS
6.1 DELAY; CUMULATIVE REMEDIES. No delay on the part of the Bank in
exercising any right, power or privilege hereunder or under any of the other
Loan Documents will operate as a waiver thereof, nor will any single or partial
exercise of any right, power or privilege hereunder preclude other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein specified are cumulative and are not exclusive of any
rights or remedies which the Bank would otherwise have.
6.2 RELATIONSHIP TO OTHER DOCUMENTS. The warranties, covenants and other
obligations of the Borrower (and the rights and remedies of the Bank) that are
outlined in this Agreement and the other Loan Documents are intended to
supplement each other. In the event of any inconsistencies in any of the terms
in the Loan Documents, all terms will be cumulative so as to give the Bank the
most favorable rights set forth in the conflicting documents, except that if
there is a direct conflict between any preprinted terms and specifically
negotiated terms (whether included in an addendum or otherwise), the
specifically negotiated terms will control.
6.3 PARTICIPATIONS; GUARANTORS. The Bank may, at its option, sell all or any
interests in the Note and other Loan Documents to other financial institutions
(the "PARTICIPANT"), and in connection with such sales (and thereafter) disclose
any financial information the Bank may have concerning the Borrower to any such
Participant or potential Participant. From time to time, the Bank may, in its
discretion and without obligation to the Borrower, any Guarantor or any other
third party, disclose information about the Borrower and this loan to any
Guarantor, surety or other accommodation party. This provision does not obligate
the Bank to supply any information or release the Borrower from its obligation
to provide such information, and the Borrower agrees to keep all Guarantors
advised of its financial condition and other matters which may be relevant to
the Guarantors' obligations to the Bank.
6.4 SUCCESSORS. The rights, options, powers and remedies granted in this
Agreement and the other Loan Documents will extend to the Bank and to its
successors and assigns, will be binding upon the Borrower and its successors and
assigns and will be applicable hereto and to all renewals and/or extensions
hereof.
6.5 INDEMNIFICATION. Except for harm arising from the Bank's willful
misconduct, the Borrower hereby indemnifies and agrees to defend and hold the
Bank harmless from any and all losses, costs, damages, claims and expenses of
any kind suffered by or asserted against the Bank relating to claims by third
parties arising out of the financing provided under the Loan Documents or
related to any collateral (including, without limitation, the Borrower's failure
to perform its obligations relating to Environmental Matters described in
Section 2.5 above). This indemnification and hold harmless provision will
survive the termination of the Loan Documents and the satisfaction of the
Obligations due the Bank.
6.6 NOTICE OF CLAIMS AGAINST BANK; LIMITATION OF CERTAIN DAMAGES. In order
to allow the Bank to mitigate any damages to the Borrower from the Bank's
alleged breach of its duties under the Loan Documents or any other duty, if any,
to the Borrower, the Borrower agrees to give the Bank immediate written notice
of any claim or defense it has against the Bank, whether in tort or contract,
relating to any action or inaction by the Bank under the Loan Documents, or the
transactions related thereto, or of any defense to payment of the Obligations
for any reason. The requirement of providing timely notice to the Bank
represents the parties' agreed-to standard of performance regarding claims
against the Bank. Notwithstanding any claim that the Borrower may have against
the Bank, and regardless of any notice the Borrower may have given the Bank, THE
BANK WILL NOT BE LIABLE TO THE BORROWER FOR CONSEQUENTIAL AND/OR SPECIAL DAMAGES
ARISING THEREFROM, EXCEPT THOSE DAMAGES ARISING FROM THE BANK'S WILLFUL
MISCONDUCT.
6.7 NOTICES. Notice of any record shall be deemed delivered when the record
has been (a) deposited in the United States Mail, postage pre-paid, (b) received
by overnight delivery service, (c) received by telex, (d) received by telecopy,
(e) received through the internet, or (f) when personally delivered.
6.8 PAYMENTS. Payments due under the Note and other Loan Documents will be
made in lawful money of the United States, and the Bank is authorized to charge
payments due under the Loan Documents against any account of the Borrower. All
payments may be applied by the Bank to principal, interest and other amounts due
under the Loan Documents in any order which the Bank elects.
Page 5 of 6
6.9 APPLICABLE LAW AND JURISDICTION; INTERPRETATION; JOINT LIABILITY;
SEVERABILITY. This Agreement and all other Loan Documents will be governed by
and interpreted in accordance with the internal laws of the State of OHIO,
except to the extent superseded by Federal law. Invalidity of any provisions of
this Agreement will not affect any other provision. THE BORROWER HEREBY CONSENTS
TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN THE
COUNTY OR FEDERAL JURISDICTION OF THE BANK'S BRANCH WHERE THE LOAN WAS
ORIGINATED, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD
TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE
NOTE, THE COLLATERAL, ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING
THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING. Nothing
herein will affect the Bank's rights to serve process in any manner permitted by
law, or limit the Bank's right to bring proceedings against the Borrower in the
competent courts of any other jurisdiction or jurisdictions. This Agreement, the
other Loan Documents and any amendments hereto (regardless of when executed)
will be deemed effective and accepted only upon the Bank's receipt of the
executed originals thereof. If there is more than one Borrower, the liability of
the Borrowers will be joint and several, and the reference to "Borrower" will be
deemed to refer to all Borrowers. Invalidity of any provision of this Agreement
shall not affect the validity of any other provision.
6.10. COPIES; ENTIRE AGREEMENT; MODIFICATION. The Borrower hereby
acknowledges the receipt of a copy of this Agreement and all other Loan
Documents.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING, EXPRESSING CONSIDERATION AND
SIGNED BY THE PARTIES ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT
CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. THE TERMS OF THIS
AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE SHALL
ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS NOW IN EFFECT
BETWEEN BORROWER AND THE BANK. A MODIFICATION OF ANY OTHER CREDIT AGREEMENTS
NOW IN EFFECT BETWEEN BORROWER AND THE BANK, WHICH OCCURS AFTER RECEIPT BY
BORROWER OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN INSTRUMENT. ORAL OR
IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD
NOT BE RELIED UPON.
6.11 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY JOINTLY AND
SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, ANY
COLLATERAL SECURING THEM OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR
CONNECTED THERETO. THE BORROWER AND THE BANK EACH REPRESENTS TO THE OTHER THAT
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
6.12 ATTACHMENTS. ALL DOCUMENTS ATTACHED HERETO, INCLUDING ANY APPENDICES,
SCHEDULES, RIDERS, AND EXHIBITS TO THIS AGREEMENT, ARE HEREBY EXPRESSLY
INCORPORATED BY REFERENCE.
IN WITNESS WHEREOF, the undersigned have executed this REVOLVING CREDIT
AGREEMENT as of MARCH 1, 2002.
(Individual Borrower) HMI INDUSTRIES, INC.
-------------------------------------------
Borrower Name (Organization)
(SEAL) a DELAWARE Corporation
--------------------------- -------------------------------------------
Borrower Name N/A By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------- ----------------------------------------
Name and Title ▇▇▇▇▇ ▇▇▇▇▇▇, CFO
----------------------------
(SEAL)
---------------------------
By
-----------------------------------------
Borrower Name N/A Name and Title
------------- -----------------------------
FIRSTAR BANK, N.A. (Bank)
-------------------------------------------
By ▇▇▇▇▇▇ ▇▇▇▇▇▇, VP
----------------------------------------
Name and Title ▇▇▇▇▇▇ ▇▇▇▇▇▇, VICE PRESIDENT
-----------------------------
Borrower Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-6910
-------------------------------------------------------------
-------------------------------------------------------------
Borrower Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
--------------------------------------------------------
Page 6 of 6
EXHIBIT A
---------
HMI INDUSTRIES COVENANTS
------------------------
TANGIBLE NET WORTH: Borrower shall maintain a Tangible Net Worth at all times of
not less than $7,400,000; calculated at the end of each quarter, increasing at
the end of each fiscal year by 50% of positive net income.
EBITDA/INTEREST: Borrower shall maintain an interest coverage ratio of greater
than or equal 5:1.0:1 calculated on a rolling 4 quarter basis.
INDEBTEDNESS: Restriction on other indebtedness other than vendor financing.
Vendor financing not to exceed $l.7MM for the term of the Revolver and to be
unsecured or secured by specific tool & die. Other borrowings not to exceed
$300,000.
MAXIMUM CAPITAL EXPENDITURES: Not to exceed $4,100,000 in 2001 and $
2,400,000.00 in 2002 and $1,000,000 every year thereafter.
DIVIDENDS: Restriction on payment of dividends unless written permission from
Bank.
EMPLOYEE ADVANCES: Employee advances/loans not to exceed $5,000.00.
ADVANCES: Advances under the Revolving Line of Credit will be limited to 80% of
eligible accounts receivable less than 90 days olds, plus 50% inventory subject
to a 50% cap for inventory. Monthly Borrowing Base and monthly statements will
be required once a minimum of $500,000 is outstanding on the Revolver. See
attached Exhibit A.
Per Legal Add to section 2.2: The Borrower's current accounting firm is
acceptable to Bank. After words acceptable to Bank.
Add to section 6.5: gross negligence after words arising from the Banks.
5314071-0101
ADDENDUM TO REVOLVING CREDIT AGREEMENT
This Addendum is made part of the Revolving Credit Agreement (the
"AGREEMENT ") made and entered into by and between the undersigned borrower (the
"BORROWER ") and the undersigned bank (the "BANK ") as of the date identified
below. The warranties, covenants and other terms described below are hereby
added to the Agreement.
ADDITIONAL TERMS: HMI INDUSTRIES COVENANTS
BORROWER SHALL MAINTAIN OR PROVIDE TO LENDER THE FOLLOWING AT ALL TIMES:
- TANGIBLE NET WORTH: BORROWER SHALL MAINTAIN A TANGIBLE NET WORTH AT
ALL TIMES OF NOT LESS THAN $7,400,000.00; CALCULATED AT THE END OF
EACH QUARTER, INCREASING AT THE END OF EACH FISCAL YEAR BY 50% OF
POSITIVE NET INCOME.
- EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION/INTEREST: BORROWER SHALL MAINTAIN AN INTEREST
COVERAGE RATIO OF GREATER THAN OR EQUAL 5:1.0:1 CALCULATED ON A
ROLLING 4 QUARTER BASIS.
- INDEBTEDNESS: RESTRICTION ON OTHER INDEBTEDNESS OTHER THAN VENDOR
FINANCING. VENDOR FINANCING NOT TO EXCEED $1,700,000.00 FOR THE
TERM OF THE REVOLVER AND TO BE UNSECURED OR SECURED BY SPECIFIC TOOL
& DIE. OTHER BORROWINGS NOT TO EXCEED $300,000.00.
- MAXIMUM CAPITAL EXPENDITURES: NOT TO EXCEED $4,100,000.00 IN 2001 AND
$2,400,000.00 in 2002 & $1,000,000.00 EVERY YEAR THEREAFTER.
- DIVIDENDS: RESTRICTION ON PAYMENT OF DIVIDENDS UNLESS WRITTEN
PERMISSION FROM BANK.
- EMPLOYEE ADVANCES: EMPLOYEE ADVANCES/LOANS NOT TO EXCEED $5,000.00.
- ADVANCES: ADVANCES UNDER THE REVOLVING LINE OF CREDIT WILL BE
LIMITED TO 80% OF ELIGIBLE ACCOUNTS RECEIVABLE LESS THAN 90 DAYS
OLD, PLUS 50% INVENTORY SUBJECT TO A 50% CAP FOR INVENTORY. MONTHLY
BORROWING BASE AND MONTHLY STATEMENTS WILL BE REQUIRED ONCE A MINIMUM
OF $500,000.00 IS OUTSTANDING ON THE REVOLVER. SEE ATTACHED EXHIBIT
A.
NOT WITHSTANDING THE RESTRICTIONS IN SECTION 2.2: THE BORROWER'S
CURRENT ACCOUNTING FIRM IS ACCEPTABLE TO BANK. AFTER WORDS
ACCEPTABLE TO BANK.
NOT WITHSTANDING THE RESTRICTIONS IN SECTION 6.5: GROSS NEGLIGENCE
AFTER WORDS ARISING FROM THE BANKS.
Dated as of: MARCH 1, 2002
-------------
(Individual Borrower) HMI INDUSTRIES, INC.
--------------------------------------------
Borrower Name (Organization)
(SEAL) a DELAWARE Corporation
--------------------------- --------------------------------------------
Borrower Name N/A By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------- -----------------------------------------
Name and Title ▇▇▇▇▇ ▇▇▇▇▇▇, CFO
-----------------------------
(SEAL)
---------------------------
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Borrower Name N/A Name and Title ▇▇▇▇▇▇ ▇▇▇▇▇▇, VP
------------- ------------------------------
FIRSTAR BANK, N.A. (Bank)
--------------------------------------------
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name and Title - ▇▇▇▇▇▇ ▇▇▇▇▇▇, VICE PRESIDENT
------------------------------