PERCEPTRON, INC. AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF NOVEMBER 16, 2010 COMERICA BANK
PERCEPTRON,
INC.
AMENDED
AND RESTATED CREDIT AGREEMENT
DATED
AS OF NOVEMBER 16, 2010
COMERICA
BANK
AMENDED AND RESTATED CREDIT
AGREEMENT
THIS
AMENDED AND RESTATED CREDIT AGREEMENT, made as of the 16th day of
November, 2010, by and between PERCEPTRON, INC., a Michigan corporation (herein
called “Company”) and COMERICA BANK (herein called “Bank”).
RECITALS:
A. Company
and Bank entered into a Credit Agreement dated October 24, 2002 (as amended,
modified or supplemented prior to the date hereof, the “Existing Credit
Agreement”).
B. Company
and Bank desire to amend and restate the Existing Credit Agreement in its
entirety.
C. Company
desires to obtain certain credit facilities from Bank.
D. Bank
is willing to extend such credit to Company on the terms and conditions herein
set forth.
NOW,
THEREFORE, Bank and Company agree as follows:
WITNESSETH:
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1.
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DEFINITIONS
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For the
purposes of this Agreement the following terms will have the following
meanings:
“Account”
shall have the meaning assigned to it in the Michigan Uniform Commercial Code on
the date of this Agreement.
“Account
Debtor” shall mean the party who is obligated on or under any
Account.
“Advance”
shall mean a borrowing requested by Company and made by Bank under Section 2 of
this Agreement.
“Affiliate”
shall mean, with respect to any Person, any other Person directly or indirectly
controlling (including but not limited to all directors and executive officers
of such Person), controlled by, or under direct or indirect common control with
such Person. A Person shall be deemed to control a corporation for the purposes
of this definition if such Person possesses, directly or indirectly, the power
(i) to vote 20% or more of the securities having ordinary voting power for the
election of directors of such corporation or (ii) to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
“Aggregate
Redemption Amount” shall mean the aggregate amount paid by Company to redeem
shares of its stock during the period beginning October 18, 2010 and ending
December 31, 2011, provided that in no event shall the Aggregate Redemption
Amount exceed $5,000,000.
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“Applicable
Commitment Fee” shall mean 0.15% per annum.
“Applicable
L/C Commission Rate” shall mean one percent (1%) per annum.
“Base
Tangible Net Worth” shall initially mean $36,500,000, minus the Aggregate
Redemption Amount. On June 30, 2011, the Base Tangible Net Worth shall decrease
to $35,500,000, minus the Aggregate Redemption Amount.
“Business
Day” shall mean any day on which commercial banks are open for domestic and
international business (including dealings in foreign exchange) in Detroit,
London and New York.
“Capital
Expenditure” shall mean, without duplication, any payment made directly or
indirectly for the purpose of acquiring or constructing fixed assets, real
property or equipment which in accordance with GAAP would be added as a debit to
the fixed asset account of Company, including, without limitation, amounts paid
or payable under any conditional sale or other title retention agreement or
under any lease or other periodic payment arrangement which is of such a nature
that payment obligations of Company or a Subsidiary, as applicable, thereunder
would be required by GAAP to be capitalized and shown as liabilities on the
balance sheet of Company and its consolidated Subsidiaries.
“Capital
Lease” shall mean any lease of any property (whether real, personal or mixed) by
Company or any Subsidiary as lessee which, in conformity with GAAP, is, or is
required to be accounted for as a capital lease on the balance sheet of Company
and its consolidated Subsidiaries.
“Consolidated”
or “Consolidating” shall mean, when used with reference to any financial term in
this Agreement, the aggregate for two or more Persons of the amounts signified
by such term for all such Persons determined on a consolidated or combined, as
applicable, basis in accordance with GAAP. Unless otherwise specified herein,
references to Consolidated financial statements or data of Company includes
consolidation with its Subsidiaries in accordance with GAAP.
“Domestic
Subsidiary” shall mean each Subsidiary of Company which is organized under the
laws of the United States of America or any state or other political subdivision
thereof.
“Environmental
Laws” shall mean all federal, state and local laws including statutes,
regulations, ordinances, codes, rules, and other governmental restrictions and
requirements, relating to environmental pollution, contamination or other
impairment of the environment or any hazardous or toxic substances of any
nature. These Environmental Laws shall include but not be limited to the Federal
Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water
Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
and the Federal Superfund Amendments and Reauthorization Act of
1986.
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“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended, or
any successor act or code.
“Event of
Default” shall mean any of the Events of Default specified in Section 10
hereof.
“Federal
Funds Effective Rate” shall mean, for any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by Bank
from three Federal funds brokers of recognized standing selected by
it.
“Foreign
Exchange Reserve” shall mean the amount as determined by Bank from time to time
in accordance with Bank’s credit policies to be the Bank’s credit exposure to
Company under foreign exchange transactions with Company.
“GAAP”
shall mean, as of any applicable date of determination, generally accepted
accounting principles consistently applied, as in effect on the date of this
Agreement.
“Guaranties”
shall mean the guaranties from each Subsidiary.
“Guarantors”
shall mean each Subsidiary of Company which is required to be a Guarantor in
accordance with the provisions of this Agreement.
“Indebtedness”
shall mean all loans, advances, indebtedness, obligations and liabilities of
Company to Bank under this Agreement, together with all other indebtedness,
obligations and liabilities whatsoever of Company to Bank arising under or in
connection with this Agreement, whether matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, joint or several, due
or to become due, now existing or hereafter arising.
“Inventory”
shall have the meaning assigned to it in the Michigan Uniform Commercial Code on
the date of this Agreement.
“Letter
of Credit” shall have the meaning set forth in Section 2.6.
“Letter
of Credit Reserve” shall mean as of any date of determination, an amount equal
to the aggregate principal amount of all undrawn Letters of Credit issued by
Bank for the account of Company under and pursuant to this Agreement and the
amount of all draws under Letters of Credit paid by Bank and not reimbursed by
Company.
“Loan
Documents” shall mean collectively, this Agreement, the Note, the Security
Agreement and any other instruments or agreements executed at any time pursuant
to or in connection with any such documents.
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“Net
Worth” shall mean as of any date of determination the stockholders’ equity of
Company and its consolidated Subsidiaries as of such date as determined in
accordance with GAAP.
“Permitted
Liens” shall mean with respect to any Person:
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(a)
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liens
for taxes not yet due and payable or which are being contested in good
faith by appropriate proceedings diligently pursued, provided that
provision for the payment of all such taxes has been made on the books of
such Person as may be required by generally accepted accounting
principles, consistently applied;
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(b)
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mechanics’,
materialmen’s, banker’s, carriers’, warehousemen’s and similar liens and
encumbrances arising in the ordinary course of business and securing
obligations of such Person that are not overdue for a period of more than
60 days or are being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such contest (i) any
proceedings commenced for the enforcement of such liens and encumbrances
shall have been duly suspended; and (ii) such provision for the payment of
such liens and encumbrances has been made on the books of such Person as
may be required by generally accepted accounting principles, consistently
applied;
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(c)
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liens
arising in connection with worker’s compensation, unemployment insurance,
old age pensions and social security benefits and similar statutory
obligations which are not overdue or are being contested in good faith by
appropriate proceedings diligently pursued, provided that in the case of
any such contest (i) any proceedings commenced for the enforcement of such
liens shall have been duly suspended; and (ii) such provision for the
payment of such liens has been made on the books of such Person as may be
required by generally accepted accounting principles, consistently
applied;
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(d)
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(i)
liens incurred in the ordinary course of business to secure the
performance of statutory obligations arising in connection with progress
payments or advance payments due under contracts with the United States
government or any agency thereof entered into in the ordinary course of
business and (ii) liens incurred or deposits made in the ordinary course
of business to secure the performance of statutory obligations, bids,
leases, fee and expense arrangements with trustees and fiscal agents and
other similar obligations (exclusive of obligations incurred in connection
with the borrowing of money, any lease-purchase arrangements or the
payment of the deferred purchase price of property), provided that full
provision for the payment of all such obligations set forth in clauses (i)
and (ii) has been made on the books of such Person as may be required by
generally accepted accounting principles, consistently applied;
and
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(e)
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minor
survey exceptions or minor encumbrances, easements or reservations, or
rights of others for rights-of-way, utilities and other similar purposes,
or zoning or other restrictions as to the use of real properties, which do
not materially interfere with the business of such
Person.
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“Person”
or “person” shall mean any individual, corporation, partnership, joint venture,
limited liability company, association, trust, unincorporated association, joint
stock company, government, municipality, political subdivision or agency, or
other entity.
“Prime
Rate” shall mean the per annum interest rate established by Bank as its prime
rate for its borrowers as such rate may vary from time to time, which rate is
not necessarily the lowest rate on loans made by Bank at any such
time.
“Revolving
Credit Maturity Date” shall mean November 1, 2012.
“Revolving
Credit Note”, “Note” or “Master Revolving Note” shall mean the Note described in
Section 2.1 hereof made by Company to Bank in the form annexed to this Agreement
as Exhibit
“A”.
“Security
Agreement” shall mean the Security Agreements in the form previously delivered
to Bank pursuant to which Company and each Subsidiary grants to Bank a first
priority security interest in all tangible and intangible personal property,
wherever located and whether now owned or hereafter acquired, together with all
replacements thereof, substitutions therefor, accessions thereto and all
proceeds and products of all the foregoing.
“Subsidiary”
shall mean a corporation or other entity of which more than fifty percent (50%)
of the outstanding voting stock or equivalent equity interests are owned by
Company, either direct or indirectly, through one or more
intermediaries.
“Tangible
Net Worth” shall mean as of any date Net Worth less the Intangible Assets of the
Company and its consolidated Subsidiaries, all determined as of such
date. For purposes of this Agreement, “Intangible Assets” means the
amount (to the extent reflected in determining such Net Worth) of (i) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of assets of a going concern business made within twelve months after
the acquisition of such business) in the book value of any asset owned by
Company and its consolidated Subsidiaries, (ii) loans or advances to Affiliates
and receivables from Affiliates, (iii) all investments in unconsolidated
Subsidiaries of the Company and all equity investments in Persons which are not
Subsidiaries of Company (provided that Company’s investments in auction rate
securities shall not be deducted from Net Worth) and (iv) all unamortized debt
discount and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights, organization or
developmental expenses, deferred taxes and other intangible assets.
“Uniform
Commercial Code” or “UCC” shall mean the Uniform Commercial Code of any
applicable state and unless specified otherwise shall mean the Uniform
Commercial Code as in effect in the State of Michigan.
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2.
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THE INDEBTEDNESS:
Revolving Credit
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2.1 Bank
agrees to make Advances to Company at any time and from time to time from the
effective date hereof until the Revolving Credit Maturity Date, not to exceed
Six Million Dollars ($6,000,000) in aggregate principal amount at any one time
outstanding; provided that the aggregate outstanding amount of Advances, plus
the Letter of Credit Reserve, plus the Foreign Exchange Reserve shall never
exceed Six Million Dollars ($6,000,000). All of the Advances under this Section
2 shall be evidenced by the Revolving Credit Note under which Advances,
repayments and readvances may be made, subject to the terms and conditions of
this Agreement and the Revolving Credit Note.
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2.2 The
Revolving Credit Note shall mature on the Revolving Credit Maturity Date and
each Advance from time to time outstanding thereunder shall bear interest as
provided in the Revolving Credit Note.
2.3 Company
may request an Advance under this Section 2 upon the delivery to Bank of a
request for advance as provided in the Revolving Credit Note, subject to the
following:
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(a)
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the
principal amount of such Advance, plus the sum of the amount of all other
outstanding Advances under this Section 2, and the Letter of Credit
Reserve and the Foreign Exchange Reserve shall not exceed Six Million
Dollars ($6,000,000);
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(b)
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a
request for an Advance, once delivered to Bank, shall not be revocable by
Company.
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2.4 Company
may prepay all or part of the outstanding balance of the Advance(s) as provided
in, and subject to the terms of, the Revolving Credit Note.
2.5 For
a period of thirty (30) days each calendar year (which days need not be
consecutive), the Advances under the Revolving Credit Note shall be
$0. Company shall make all payments necessary to comply with this
provision.
2.6 In
addition to Advances under the Revolving Credit Note to be provided to Company
by Bank under and pursuant to Section 2.1 of this Agreement, Bank further agrees
to issue, or commit to issue, from time to time, standby and commercial trade
letters of credit for the account of Company (herein individually called a
“Letter of Credit” and collectively “Letters of Credit”) in aggregate undrawn
amounts not to exceed Four Million Dollars ($4,000,000) at any one time
outstanding; provided, however that the sum of the aggregate amount of Advances
outstanding under the Revolving Credit Note plus the Letter of Credit Reserve
and the Foreign Exchange Reserve shall not exceed Six Million Dollars
($6,000,000) at any one time; and provided further that no Letter of Credit
shall, by its terms, have an expiration date which extends beyond the fifth
(5th) Business Day before the Revolving Credit Maturity Date or one (1) year
after issuance, whichever first occurs. In addition to the terms and conditions
of this Agreement, the issuance of any Letters of Credit shall also be subject
to the terms and conditions of any letter of credit applications and agreements
executed and delivered by Company to Bank with respect thereto. Company shall
pay to Bank annually in advance a per annum fee equal to the Applicable L/C
Commission Rate of the amount of each standby Letter of Credit and shall pay to
Bank with respect to commercial trade letters of credit such fees and
commissions as are agreed upon at the time of issuance thereof. In addition,
Company and Bank may from time to time enter into foreign exchange agreements.
The Foreign Exchange Reserve shall be the amount determined by the Bank from
time to time to be its credit exposure to Company under foreign exchange
transactions with Company.
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2.7 Company
agrees to pay to Bank a commitment fee on the average daily balance of the
unused portion of the revolving credit commitment at the rate of the Applicable
Commitment Fee per annum, computed on the actual number of days elapsed using a
year of 360 days. The commitment fee shall be payable quarterly in arrears on
the first day of each July, October, January and April (commencing January 1,
2011) and on the Revolving Credit Maturity Date. For purposes of calculating the
commitment fee, outstanding Letters of Credit shall be considered usage of the
commitment and foreign exchange transactions shall not be considered usage of
the commitment.
2.8 Proceeds
of Advances under the Revolving Credit Note shall be used solely for working
capital purposes and for Capital Expenditures.
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3.
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INTEREST.
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3.1 The
Revolving Credit Note and the Advances thereunder shall bear interest from the
date thereof on the unpaid principal balance thereof from time to time
outstanding as provided in the Revolving Credit Note. Interest shall be payable
as provided in the Revolving Credit Note
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4.
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[RESERVED]
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5.
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CONDITIONS
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5.1 Company
agrees to furnish Bank prior to the initial borrowing under this Agreement, in
form and substance to be satisfactory to Bank, with (i) certified copies of
resolutions of the Directors of Company evidencing approval of the borrowings
and transactions contemplated hereunder; (ii) a certificate of good standing
from the state of Company’s incorporation and from the state(s) in which it is
required to be qualified to do business; (iii) an opinion of Company’s and the
Guarantors’ legal counsel; and (iv) such other documents and instruments as Bank
may reasonably require.
5.2 As
security for all indebtedness of Company to Bank hereunder, Company agrees to
furnish, execute and deliver to Bank, or cause to be furnished, executed and
delivered to Bank, prior to or simultaneously with the initial borrowing
hereunder, in form to be satisfactory to Bank and supported by appropriate
resolution in certified form authorizing same, the following:
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(a)
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The
Security Agreements;
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(b)
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Financing
Statements required or requested by Bank to perfect all security interests
to be conferred upon Bank under this Agreement and to accord Bank a
perfected first priority security position under the Uniform Commercial
Code (subject only to the encumbrances permitted hereunder);
and
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(c)
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Such
other documents or agreements of security and appropriate assurances of
validity and perfected first priority of lien or security interest as Bank
may reasonably request at any
time.
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6.
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REPRESENTATIONS
AND WARRANTIES
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Company
represents and warrants and such representations and warranties shall be deemed
to be continuing representations and warranties during the entire life of this
Agreement:
6.1 Company
is a corporation duly organized and existing in good standing under the laws of
the State of Michigan; Company and each of its Subsidiaries is in good standing
in each jurisdiction in which it is required to be qualified to do business,
except where the failure to be so qualified would not have a material adverse
effect on the financial condition of Company and its Subsidiaries or their
ability to carry on their business; execution, delivery and performance of this
Agreement and other documents and instruments required under this Agreement, and
the issuance of the Note by Company are within its powers, have been duly
authorized, are not in contravention of law or the terms of Company’s Articles
of Incorporation or Bylaws, and do not require the consent or approval of any
governmental body, agency or authority; and this Agreement and other documents
and instruments required under this Agreement and Note, when issued and
delivered, will be valid and binding on the Company in accordance with their
terms.
6.2 The
execution, delivery and performance of this Agreement and any other documents
and instruments required under this Agreement, and the issuance of the Notes by
Company are not in contravention of the unwaived terms of any indenture,
agreement or undertaking to which Company is a party or by which it is
bound.
6.3 Except
as described in attached Schedule 6.3, no litigation or other proceeding before
any court or administrative agency is pending, or to the knowledge of the
officers of Company is threatened against Company or any of its Subsidiaries,
the outcome of which would reasonably be expected to materially impair Company’s
or any Subsidiary’s financial condition or the ability of Company or any
Subsidiary to carry on its business.
6.4 There
are no security interests in, liens, mortgages, or other encumbrances on any of
Company’s or any Subsidiary’s assets, except to Bank or as otherwise permitted
by this Agreement.
6.5 Neither
Company nor any Subsidiary maintains or contributes to any employee pension
benefit plan subject to title IV of the “Employee Retirement Income Security Act
of 1974” (herein called “ERISA”), except those set forth in attached Schedule 6.5. There
was no unfunded past service liability of any pension plan maintained by the
Company as of June 30, 2010, and there is no accumulated funding deficiency
within the meaning of ERISA, or any existing material liability with respect to
any pension plan owed to the Pension Benefit Guaranty Corporation (“PBGC”) or
any successor thereto, except any funding deficiency for which an application to
the PBGC for waiver is pending or for which a waiver has been granted by the
PBGC.
6.6 The
financial statements of the Company dated June 30, 2010, previously furnished to
Bank, fairly present in all material respects the financial condition of the
Company and its consolidated Subsidiaries as of such date; since said date there
has been no material adverse change in the financial condition of the Company
and its consolidated Subsidiaries; to the best of the knowledge of Company’s
officers, Company does not have any material contingent obligations (including
any liability for taxes) not disclosed by or reserved against in said balance
sheet, and at the present time there are no material unrealized or anticipated
losses from any present commitment of Company or any of its
Subsidiaries.
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6.7 To
the best knowledge of Company, the financial projections previously furnished by
Company to Bank were as of the date thereof and are as of the date of execution
of this Agreement reasonable in all material respects taking into account all
facts and information known or reasonably available to Company.
6.8 All
tax returns and tax reports of Company and its consolidated Subsidiaries
required by law to have been filed have been duly filed or extensions obtained,
and all taxes, assessments and other governmental charges or levies (other than
those presently payable without penalty and those currently being contested in
good faith for which adequate reserves have been established) upon
Company and its consolidated Subsidiaries (or any of its or their
properties) which are due and payable and for which the failure to pay would
materially adversely affect its business or the value of its property or assets
have been paid. The charges, accruals and reserves on the books of Company in
respect of the Federal income tax for all periods are adequate in the opinion of
Company.
6.9 Except
as set forth in Schedule 6.9, there are no Subsidiaries of Company.
6.10 Except
as set forth in Schedule
6.10:
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(a)
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Company
and each of its Subsidiaries, in the conduct of its business, is in
compliance in all material respects with all federal, state or local laws,
statutes, ordinances and regulations applicable to any of them, the
enforcement of which, if such Person were not in compliance, would
reasonably be expected to materially adversely affect its business or the
value of its property or assets. Company and its Subsidiaries have all
approvals, authorizations, consents, licenses, orders and other permits of
all governmental agencies and authorities, whether federal, state or
local, required to permit the operation of their business as presently
conducted, except such approvals, authorizations, consents, licenses,
orders and other permits with respect to which the failure to have would
not reasonably be expected to materially adversely affect their business
or the value of their property or assets (taken as a
whole).
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(b)
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Neither
Company nor any Subsidiary is a party to any litigation or administrative
proceeding, nor so far as is known by Company is any litigation or
administrative proceeding threatened against Company or any Subsidiary,
the outcome of which would reasonably be expected to have a material
adverse effect on the Company or any Subsidiary which in either case (i)
asserts or alleges that Company or any Subsidiary violated Environmental
Laws, (ii) asserts or alleges that Company or any Subsidiary is required
to clean up, remove, or take remedial or other response action due to the
disposal, depositing, discharge, leaking or other release of any hazardous
substances or materials, (iii) asserts or alleges that Company or any
Subsidiary is required to pay all or a portion of the cost of any past,
present, or future cleanup, removal or remedial or other response action
which arises out of or is related to the disposal, depositing, discharge,
leaking or other release of any hazardous substances or materials by
Company or any Subsidiary.
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(c)
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Neither
Company nor any Subsidiary is subject to any judgment, decree, order or
citation related to or arising out of applicable Environmental Laws which
would reasonably be expected to materially adversely affect its business
or the value of its property or assets and to the best knowledge of the
Company, neither Company nor any Subsidiary has been named or listed as a
potentially responsible party by any governmental body or agency in a
matter arising under any applicable Environmental Laws which would
reasonably be expected to materially adversely affect its business or the
value of its property or assets.
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(d)
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To
the best of Company’s knowledge, Company and its Subsidiaries have all
permits, licenses and approvals required under applicable Environmental
Laws, the failure of which to have would have a material adverse effect on
the operation of their business as presently conducted and as proposed to
be conducted.
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6.11 Company
is not an “investment company” within the meaning of the Investment Company Act
of 1940, as amended. Company is not engaged principally, or as one of its
important activities, directly or indirectly, in the business of extending
credit for the purpose of purchasing or carrying margin stock, and none of the
proceeds of any of the loans hereunder will be used, directly or indirectly, for
any purpose which would violate the provisions of Regulation U or X of the Board
of Governors of the Federal Reserve System. Terms for which meanings are
provided in Regulation U of the Board of Governors of the Federal Reserve System
or any regulations substituted therefor, as from time to time in effect, are
used in this paragraph with such meanings.
6.12 Company
and its Subsidiaries have good and valid title to the property pledged,
mortgaged or otherwise encumbered or to be encumbered by them under the Security
Agreements.
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7.
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AFFIRMATIVE
COVENANTS
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Company
covenants and agrees that it will, so long as Bank may make any advance under
this Agreement and thereafter so long as any indebtedness remains outstanding
under this Agreement:
7.1 Furnish
Bank:
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(a)
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within
one hundred twenty (120) days after and as of the end of each fiscal year
of Company and its consolidated Subsidiaries, a detailed consolidated
audit report of Company certified to by independent certified public
accountants satisfactory to Bank;
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(b)
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within
forty six (46) days after and as of the end of each fiscal quarter,
consolidated balance sheets and statements of profit and loss of Company
and its consolidated Subsidiaries, together with a report listing
investments in Subsidiaries;
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(c)
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within
thirty (30) days prior to July 1 of each year, financial projections for
the Company and its consolidated Subsidiaries in form satisfactory to
Bank;
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(d)
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as
soon as available, Company’s 8-K, 10-Q and 10-K reports filed with the
federal Securities and Exchange Commission, and in any event, with respect
to the 10-Q report, within forty six (46) days of the end of each of the
first three fiscal quarters of each of Company’s fiscal years, and with
respect to the 10-K report, within one hundred twenty (120) days after and
as of the end of each of Company’s fiscal years; and as soon as available,
copies of all material filings, reports or other documents filed by
Company or any of its Subsidiaries with the federal Securities and
Exchange Commission or other federal regulator or taxing agencies or
authorities in the United States, or comparable agencies or authorities in
foreign jurisdictions, or any stock exchanges in such
jurisdiction;
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(e)
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such
information as required by the terms and conditions of any security
agreements referred to in this
Agreement;
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(f)
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promptly,
and in form to be satisfactory to Bank, such other information as Bank may
reasonably request from time to
time.
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7.2 Pay
and discharge, and cause its Subsidiaries to pay and discharge, all taxes and
other governmental charges, and all contractual obligations calling for the
payment of money, before the same shall become overdue, unless and to the extent
only that such payment is being contested in good faith.
7.3 Maintain,
and cause its Subsidiaries to maintain, insurance coverage on their physical
assets and against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature, and in the event of
acquisition of additional property, real or personal, or of incurrence of
additional risks of any nature, increase such insurance coverage in such manner
and to such extent as prudent business judgment and present practice would
dictate; and in the case of all policies covering property mortgaged or pledged
to Bank or property in which Bank shall have a security interest of any kind
whatsoever, other than those policies protecting against casualty liabilities to
strangers, all such insurance policies shall provide that the loss payable
thereunder shall be payable to Company and Bank (as mortgagee) as their
respective interests may appear, all said policies or copies thereof, including
all endorsements thereon and those required hereunder, to be deposited with
Bank.
7.4 Permit
Bank, through its authorized attorneys, accountants and representatives, to
examine Company’s and each Subsidiary’s books, accounts, records, ledgers and
assets of every kind and description at all reasonable times upon oral or
written request of Bank, which shall include but shall not be limited to
collateral audits of Company conducted by Bank, at Company’s own cost and
expense.
7.5 Promptly
notify Bank of any condition or event which constitutes or with the running of
time and/or the giving of notice would constitute an event of default under this
Agreement, and promptly inform Bank of the existence or occurrence of any
condition or event (other than conditions having an effect on the economy in
general) which could have a material adverse effect upon Company’s or any
Subsidiary’s financial condition.
11
7.6 Maintain,
and cause its Subsidiaries to maintain, in good standing
all licenses required by the State of Michigan or any agency thereof, or other
governmental authority that may be necessary or required for Company and its
Subsidiaries to carry on its general business objects and purposes.
7.7 Comply,
and cause its Subsidiaries to comply, with all material requirements imposed by
ERISA as presently in effect or hereafter promulgated, including but not limited
to, the minimum funding requirements of any Pension Plan.
7.8 Promptly
notify Bank after the occurrence thereof in writing of any of the following
events:
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(a)
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the
termination of a Pension Plan pursuant to Subtitle C of Title IV of ERISA
or otherwise;
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(b)
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the
appointment of a trustee by a United States District Court to administer a
Pension Plan;
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(c)
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the
commencement by the Pension Benefit Guaranty Corporation, or any successor
thereto of any proceeding to terminate a Pension
Plan;
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(d)
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the
failure of a Pension Plan to satisfy the minimum funding requirements for
any plan year as established in Section 412 of the Internal Revenue Code
of 1954, as amended or any similar provision under the Internal Revenue
Code of 1986, as amended;
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(e)
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the
withdrawal of Company or any Subsidiary from a Pension Plan;
or
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(f)
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a
reportable event, within the meaning of Title IV of
ERISA.
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7.9 Furnish
Bank, upon Bank’s request, in form satisfactory to Bank with pledges,
assignments, mortgages, lien instruments or other security instruments covering
any or all of Company’s and each Domestic Subsidiary’s real and personal
property, of every nature and description, whether now owed or hereafter
acquired, to the extent that Bank may in its sole reasonable discretion
require.
7.10 Furnish
to the Bank concurrently with the delivery of each of the financial statements
required by Section 7.1(a) and Section 7.1(b), a statement prepared and
certified by the chief financial officer of Company (or in such officer’s
absence, a responsible senior officer of Company) (a) setting forth all
computations necessary to show compliance by Company with the financial
covenants contained in Section 7.11 hereof, (b) stating that as of the date
thereof, no condition or event which constitutes an event of default hereunder
or which with the running of time and/or the giving of notice would constitute
an event of default hereunder has occurred and is continuing, or if any such
event or condition has occurred and is continuing or exists, specifying in
detail the nature and period of existence thereof and any action with respect
thereto taken or contemplated to be taken by Company and (c) stating that the
signer has personally reviewed this Agreement and that such certificate is based
on an examination sufficient to assure that such certificate is
accurate.
12
7.11 Maintain
at all times Tangible Net Worth of not less than the Base Tangible Net
Worth.
7.12 Maintain
all domestic cash collection and general disbursement accounts with
Bank.
7.13 Cause
each person that is or becomes a Domestic Subsidiary of the Company from time to
time to execute and deliver a secured Guaranty to the Bank, together with such
other documentation as Bank may reasonable require.
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8.
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NEGATIVE
COVENANTS
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Company
covenants and agrees that, so long as Bank may make any Advances under this
Agreement and thereafter so long as any Indebtedness remains outstanding under
this Agreement, it will not, and will cause its Subsidiaries not
to, without the prior written consent of Bank:
8.1 Purchase,
acquire or redeem any of its stock or make any material change in its capital
structure, except redemptions of Company’s stock occurring after October 18,
2010 and on or before December 31, 2011 for an aggregate purchase price not to
exceed Five Million Dollars ($5,000,000); provided that at the time of each such
redemption and after giving effect thereto no Event of Default shall have
occurred and be continuing.
8.2 Enter
into any merger or consolidation or sell, lease, transfer, or dispose of all,
substantially all, or any part of its assets, except sales of inventory in the
ordinary course of its business and dispositions of machinery and equipment
which is obsolete or no longer used in the business of Company or a Subsidiary
to the extent such dispositions do not exceed $300,000 (based on market value)
during any single fiscal year.
8.3 Guarantee,
endorse, or otherwise become secondarily liable for or upon the obligations of
others, except by endorsement for deposit in the ordinary course of business and
guaranties in favor of Bank.
8.4 Purchase
or otherwise acquire or become obligated for the purchase of all or
substantially all of the assets or business interests of any person, firm or
corporation or any shares of stock of any corporation, trusteeship or
association or in any other manner effectuate or attempt to effectuate an
expansion of present business by acquisition without the prior written consent
of Bank.
8.5 Affirmatively
pledge or mortgage any of its assets, whether now owned or hereafter acquired,
or create, suffer or permit to exist any lien, security interest in, or
encumbrance thereon, except:
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(a)
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to
Bank;
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13
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(b)
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the
Permitted Liens;
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(c)
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liens
described in attached Schedule 8.5;
and
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(d)
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liens
and security interests upon fixed assets acquired by Company after the
date of this Agreement (including by virtue of a Capital Lease) provided
that (i) any such lien or security interest is created solely for the
purpose of securing indebtedness representing, or incurred to finance, the
cost of the item of property subject thereto; (ii) the principal amount of
the indebtedness secured by such lien does not exceed 100% of the fair
value of the property at the time it was acquired, and (iii) the lien or
security interest does not cover any property other than such item of
property.
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8.6 Sell,
assign, transfer or confer a security interest in any account, contract, note,
trade acceptance or other receivable, except to Bank.
8.7 Materially
alter the character of its business from that conducted as of the date of this
Agreement.
8.8 Declare
or pay any dividends or make any other distribution upon its stock except
dividends payable in the stock of Company.
8.9 Make
any Capital Expenditure during any fiscal year if after giving effect thereto
the aggregate amount of all Capital Expenditures made by Company and its
Subsidiaries during such fiscal year would exceed $2,500,000.
8.10 Enter
into any transaction or series of transactions with any Affiliate other than on
terms and conditions as favorable to Company as would be obtainable in a
comparable arms-length transaction with a Person other than an
Affiliate.
8.11 Make
or allow to remain outstanding any investment (whether such investment shall be
of the character of investment in shares of stock, evidence of indebtedness or
other securities or otherwise) in, or any loans or advances or extensions of
credit to, any person, firm, corporation or other entity or association,
except:
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(a)
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investments
of surplus cash in cash equivalents and short term
investments;
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(b)
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sales
on open account and in the ordinary course of
business;
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(c)
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deposits
made in the ordinary course of business in order to obtain goods or
services; and
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(d)
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Company’s
investments in its Subsidiaries existing as of the date of this Agreement
and additional tangible investments (cash and real property) in an amount
not exceeding $1,200,000 in the aggregate at any
time.
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8.12 Enter
into or become subject to any agreement (other than this Agreement) (i)
prohibiting the creation or assumption of any lien or encumbrance upon the
properties or assets of Company or (ii) requiring an obligation to become
secured (or further secured) if another obligation is secured or further
secured.
14
8.13 Become
or remain obligated for any indebtedness for borrowed money, or for any
indebtedness incurred in connection with the acquisition of any property, real
or personal, tangible or intangible, except:
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(a)
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indebtedness
to Bank;
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(b)
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current
unsecured trade payables and accrued liabilities arising in the ordinary
course of Company’s business (including, without limitation, obligations
under operating leases);
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(c)
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indebtedness
described in attached Schedule
8.13;
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(d)
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purchase
money indebtedness incurred in connection with the acquisition of fixed
assets in an aggregate amount not exceeding $500,000 incurred during any
single fiscal year of Company.
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9.
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ENVIRONMENTAL
PROVISIONS
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9.1 Company
shall comply, and shall cause its Subsidiaries to comply, with all applicable
Environmental Laws except for such non-compliance which would reasonably not be
expected to materially adversely affect its business or the value of its
property or assets.
9.2 Company
shall provide to Bank, promptly upon receipt, copies of any correspondence,
notice, pleading, citation, indictment, complaint, order, decree, or other
document from any source asserting or alleging a circumstance or condition which
requires or may require a financial contribution by Company or any Subsidiary to
a cleanup, removal, remedial action, or other response by or on the part of
Company or any Subsidiary under applicable Environmental Laws or which seeks
damages or civil, criminal or punitive penalties from Company for an alleged
violation of Environmental Laws, where such contribution, response or damages
would reasonably be expected to materially adversely affect its business or the
value of its property or assets.
9.3 Company
shall promptly notify Bank in writing as soon as Company becomes aware of the
occurrence or existence of any condition or circumstance which makes the
environmental warranties contained in this Agreement incomplete or inaccurate in
any material respect as of any date.
9.4 In
the event of any condition or circumstance that makes any environmental
warranty, representation and/or agreement incomplete or inaccurate in any
material respect as of any date, Company shall, at the reasonable request of
Bank, at its sole expense, retain an environmental consultant, reasonably
acceptable to Bank, to conduct a thorough and complete investigation regarding
the changed condition and/or circumstance. A copy of the environmental
consultant’s report will be promptly delivered to both Bank and Company upon
completion.
15
9.5 At
any time Company, directly or indirectly through any environmental consultant or
other representative, determines to undertake an environmental audit, assessment
or investigation relating to any fact, event or condition which would reasonably
be expected to materially adversely affect its business or the value of its
property or assets, Company shall promptly provide Bank with written notice of
the initiation of the environmental audit, fully describing the purpose and
intended scope of the environmental audit. Upon receipt, Company will promptly
provide to Bank copies of all final findings and conclusions of any such
environmental investigation.
9.6 Company
hereby indemnifies, saves and holds Bank and any of its past, present and future
officers, directors, shareholders, employees, representatives and consultants
harmless from any and all loss, damages, suits, penalties, costs, liabilities
and expenses (including but not limited to reasonable investigation,
environmental audit(s), and legal expenses) arising out of any claim, loss or
damage to any property, injuries to or death of persons, contamination of or
adverse affects on the environment, or any violation of any applicable
Environmental Laws, caused by or in any way related to any property owned or
operated by Company, or due to any acts of Company or such person’s, officers,
directors, shareholders, employees, consultants and/or representatives;
provided, however, that the foregoing indemnification shall not be applicable
when arising solely from events or conditions occurring while the Bank is in
sole possession (subject to the rights of any creditors of Company) of such
property or for which the Bank is otherwise solely responsible. In no
event shall Company be liable hereunder for any loss, damages, suits, penalties,
costs, liabilities or expenses arising from any act of gross negligence of Bank,
or its agents or employees.
It is
expressly understood and agreed that the indemnifications granted herein are
intended to protect Bank, its past, present and future officers, directors,
shareholders, employees, consultants and representatives from any claims that
may arise by reason of the security interest, liens and/or mortgages granted to
Bank, or under any other document or agreement given to secure repayment of any
indebtedness from Company, whether or not such claims arise before or after Bank
has foreclosed upon and/or otherwise become the owner of any such property. All
obligations of indemnity as provided hereunder shall be secured by the
collateral documents.
It is
expressly agreed and understood that the provisions hereof shall and are
intended to be continuing and shall survive the repayment of any indebtedness
from Company to Bank.
9.7 Company
shall maintain, and shall cause its Subsidiary to maintain, all permits,
licenses and approvals required under applicable Environmental Laws except such
permits, licenses and approvals the failure of which to have would reasonably
not be expected to materially adversely affect its business or the value of its
property or assets.
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10.
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EVENTS
OF DEFAULT
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10.1
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Upon
occurrence of any of the following events of
default:
|
|
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(a)
|
non-payment
of any installment of the principal of the Note when due or any
reimbursement obligation with respect to any Letter of Credit when
due;
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16
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(b)
|
non-payment
of any interest on the Notes when due in accordance with the terms
thereof, or upon non-payment of any other outstanding Indebtedness when
due in accordance with the terms
thereof;
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(c)
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default
in the observance or performance of any of the conditions, covenants or
agreements of Company set forth in Section 7 or set forth in Section
8;
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(d)
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default
in observance or performance of any of the other conditions, covenants or
agreements of Company herein set forth, and continuance thereof for thirty
(30) days after written notice to Company by
Bank;
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(e)
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any
material representation or warranty made by Company or any other Person
herein or in any instrument submitted pursuant hereto proves untrue in any
material respect when made or deemed
made;
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(f)
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default
in the observance or performance of any of the conditions, covenants or
agreements of Company or any other Person set forth in any collateral
document which may be given to secure the indebtedness hereunder or in any
other collateral document related to or connected with this Agreement or
the indebtedness hereunder and continuance for ten (10)
days;
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(g)
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default
in the payment of any other obligation of Company, any Subsidiary or any
Guarantor for borrowed money in an aggregate amount in excess of Fifty
Thousand Dollars ($50,000), or in the observance or performance of any
conditions, covenants or agreements related or given with respect to any
obligations for borrowed money in an aggregate amount in excess of Fifty
Thousand Dollars ($50,000) sufficient to permit the holder thereof to
accelerate the maturity of such
obligation;
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(h)
|
judgments
for the payment of money in excess of the sum of One Hundred Thousand
Dollars ($100,000) in the aggregate shall be rendered against Company, any
Subsidiary or any Guarantor and such judgments shall remain unpaid,
unvacated, unbonded or unstayed by appeal or otherwise for a period of
thirty (30) consecutive days from the date of its entry and such judgment
is not covered by insurance from a solvent insurer who is defending such
action without reservation of
rights;
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(i)
|
the
occurrence of any “reportable event”, as defined in the Employee
Retirement Income Security Act of 1974 and any amendments thereto, which
is determined to constitute grounds for termination by the Pension Benefit
Guaranty Corporation of any employee pension benefit plan maintained by or
on behalf of Company or any Subsidiary for the benefit of any of its
employees or for the appointment by the appropriate United States District
Court of a trustee to administer such plan and is reasonably likely that
the occurrence of such event would result in a material adverse effect on
Company, and such reportable event is not corrected and such determination
is not revoked within thirty (30) days after notice thereof has been given
to the plan administrator or Company; or the institution of proceedings by
the Pension Benefit Guaranty Corporation to terminate any such employee
benefit pension plan or to appoint a trustee to administer such plan; or
the appointment of a trustee by the appropriate United States District
Court to administer any such employee benefit pension
plan;
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17
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(j)
|
if
there shall be any change for any reason in the management, ownership or
control of Company or any Subsidiary which in the sole reasonable judgment
of Bank materially adversely affects
Company;
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(k)
|
if
any of the Guaranties is revoked;
|
then, or
at any time thereafter, unless such default is remedied, Bank may give notice to
Company declaring all outstanding indebtedness hereunder and under the Note to
be due and payable, whereupon all Indebtedness then outstanding hereunder and
under the Note and any Letters of Credit shall immediately become due and
payable without further notice and demand, and Bank shall not be obligated to
make further Advances or issue any Letter of Credit hereunder.
10.2 If
a creditors’ committee shall have been appointed for the business of Company,
any Subsidiary or any Guarantor in connection with any bankruptcy or insolvency;
or if Company, any Subsidiary or any Guarantor shall have made a general
assignment for the benefit of creditors or shall have been adjudicated bankrupt,
or shall have filed a voluntary petition in bankruptcy or for reorganization or
to effect a plan or arrangement with creditors; or shall file an answer to a
creditor’s petition or other petition filed against it, admitting the material
allegations thereof for an adjudication in bankruptcy or for reorganization; or
shall have applied for or permitted the appointment of a receiver, or trustee or
custodian for any of its property or assets; or such receiver, trustee or
custodian shall have been appointed for any of its property or assets (otherwise
than upon application or consent of Company, any Subsidiary or any Guarantor, as
applicable), and such receiver, trustee or custodian so appointed shall not have
been discharged within sixty (60) days after the date of his appointment or if
an order shall be entered and shall not be dismissed or stayed within sixty (60)
days from its entry, approving any petition for reorganization of Company, any
Subsidiary or any Guarantor, then the Note and all Indebtedness then outstanding
hereunder and under any Letters of Credit shall automatically become immediately
due and payable and Bank shall not be obligated to make further Advances or
issue any Letters of Credit under this Agreement.
10.3 Upon
the occurrence and during the continuance of an Event of Default, unless all of
the Indebtedness is then immediately fully paid, Bank shall have and may
exercise any one or more of the rights and remedies for which provision is made
for a secured party under the UCC, under the Security Agreements or under any
other document contemplated hereby or for which provision is provided by law or
in equity, including, without limitation, the right to take possession and sell,
lease or otherwise dispose of any or all of the collateral and to set off
against the Indebtedness any amount owing by Bank to Company and/or any property
of Company in possession of Bank. Company agrees, upon request of
Bank, to assemble the collateral and make it available to Bank at any place
designated by Bank which is reasonably convenient to Bank and
Company.
18
10.4 All
of the Indebtedness shall constitute one loan secured by Bank’s security
interest in the collateral and by all other security interests, mortgages,
liens, claims, and encumbrances now and from time to time hereafter granted from
Company to Bank. Upon the occurrence and during the continuance of an
Event of Default which is not cured within the cure period, if any, provided
hereunder, Bank may in its sole discretion apply the collateral to any portion
of the Indebtedness. The proceeds of any sale or other disposition of
the Collateral authorized by this Agreement shall be applied by Bank, first upon
all expenses authorized by the Michigan Uniform Commercial Code (or other
applicable law) or otherwise in connection with the sale and all reasonable
attorneys’ fees and legal expenses incurred by Bank; the balance of the proceeds
of such sale or other disposition shall be applied in the payment of the
Indebtedness, first to interest, then to principal, then to other Indebtedness
and the surplus, if any, shall be paid over to Company or to such other Person
or Persons as may be entitled thereto under applicable law. Company
shall remain liable for any deficiency, which Company shall pay to Bank
immediately upon demand.
10.5 The
remedies provided for herein are cumulative to the remedies for collection of
the Indebtedness as provided by law, in equity or by any mortgage, security
agreement or other document contemplated hereby. Nothing herein
contained is intended, nor shall it be construed, to preclude Bank from pursuing
any other remedy for the recovery of any other sum to which Bank may be or
become entitled for the breach of this Agreement by Company.
10.6 Upon
the occurrence and during the continuance of any Event of Default, Company shall
immediately upon demand by Bank deposit with Bank cash collateral in the amount
equal to the maximum amount available to be drawn at any time under any Letter
of Credit then outstanding.
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11.
|
MISCELLANEOUS
|
11.1 This
Agreement shall be binding upon and shall inure to the benefit of Company and
Bank and their respective successors and assigns, except that the credit
provided for under this Agreement and no part thereof and no obligation of Bank
hereunder shall be assignable or otherwise transferable by Company.
11.2 Company
shall pay all closing costs and expenses, including, by way of description and
not limitation, reasonable attorney fees, lien search fees, appraisal fees and
title policy fees incurred by Bank in connection with the commitment,
consummation and closing of this Agreement. All of said amounts required to be
paid by Company may, at Bank’s option, be charged by Bank as an advance against
the proceeds of the Note. All costs, including reasonable attorney fees incurred
by Bank in protecting or enforcing any of its or any of the Bank’s rights
against Company or any collateral or in defending Bank from any claims or
liabilities by any party or otherwise incurred by Bank in connection with an
event of default or the enforcement of this Agreement or the related documents,
including by way of description and not limitation, such charges in any court or
bankruptcy proceedings or arising out of any claim or action by any person
against Bank which would not have been asserted were it not for Bank’s
relationship with Company hereunder, shall also be paid by
Company.
19
11.3 Where
the character or amount of any asset or liability or item of income or expense
is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, it shall
be done in accordance with GAAP.
11.4 No
delay or failure of Bank in exercising any right, power or privilege hereunder
shall affect such right, power or privilege, nor shall any single or partial
exercise thereof preclude any further exercise thereof, or the exercise of any
other power, right or privilege. The rights of Bank under this Agreement are
cumulative and not exclusive of any right or remedies which Bank would otherwise
have.
11.5 Except
as expressly provided otherwise in this Agreement, all notices and other
communications provided to any party hereto under this Agreement shall be in
writing and shall be given by personal delivery, by mail, by reputable overnight
courier, by telex or by facsimile and addressed or delivered to it at its
address set forth below or at such other address as may be designated by such
party in a notice to the other parties that complies as to delivery with the
terms of this Section 11.5. Any notice, if personally delivered or if mailed and
properly addressed with postage prepaid and sent by registered or certified
mail, shall be deemed given when received; any notice, if given to a reputable
overnight courier and properly addressed, shall be deemed given two (2) Business
Days after the date on which it was sent, unless it is actually received sooner
by the named addressee; and any notice, if transmitted by telex or facsimile,
shall be deemed given when received (answerback confirmed in the case of telexes
and receipt confirmed in the case of telecopies). Bank may, but shall not be
required to, take any action on the basis of any notice given to it by
telephone, but Company shall promptly confirm such notice in writing or by telex
or facsimile, and such notice will not be deemed to have been received until
such confirmation is deemed received in accordance with the provisions of this
Section set forth above. If such telephonic notice conflicts with any such
confirmation, the terms of such telephonic notice shall control.
To
Company:
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇, III
Fax No.
(▇▇▇) ▇▇▇-▇▇▇▇
To
Bank:
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇
Fax No.
(▇▇▇) ▇▇▇-▇▇▇▇
11.6 This
Agreement and the Notes have been delivered at Detroit, Michigan, and shall be
governed by and construed and enforced in accordance with the laws of the State
of Michigan. Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
20
11.7 No
amendments or waiver of any provisions of this Agreement nor consent to any
departure by Company therefrom shall in any event be effective unless the same
shall be in writing and signed by the Bank, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No amendment, waiver or consent with respect to any
provision of this Agreement shall affect any other provision of this
Agreement.
11.8 All
sums payable by Company to Bank under this Agreement or the other documents
contemplated hereby shall be paid directly to Bank at its principal office set
forth in Section 11.5 hereof in immediately available United States funds,
without set off, deduction or counterclaim. In its sole discretion,
Bank may charge any and all deposit or other accounts (including without limit
an account evidenced by a certificate of deposit) of Company with Bank for all
or a part of any Indebtedness then due; provided, however, that this
authorization shall not affect Company’s obligation to pay, when due, any
Indebtedness whether or not account balances are sufficient to pay amounts
due.
11.9 Any
payment of the Indebtedness made by mail will be deemed tendered and received
only upon actual receipt by Bank at the address designated for such payment,
whether or not Bank has authorized payment by mail or any other manner, and
shall not be deemed to have been made in a timely manner unless received on the
date due for such payment, time being of the essence. Company
expressly assumes all risks of loss or liability resulting from non-delivery or
delay of delivery of any item of payment transmitted by mail or in any other
manner. Acceptance by Bank of any payment in an amount less than the
amount then due shall be deemed an acceptance on account only, and the failure
to pay the entire amount then due shall be and continue to be an Event of
Default, and at any time thereafter and until the entire amount then due has
been paid, Bank shall be entitled to exercise any and all rights conferred upon
it herein upon the occurrence of an Event of Default. Upon the occurrence and
during the continuance of an Event of Default, Company waives the right to
direct the application of any and all payments at any time or times hereafter
received by Bank from or on behalf of Company. Upon the occurrence and during
the continuance of an Event of Default, Company agrees that Bank shall have the
continuing exclusive right to apply and to reapply any and all payments received
at any time or times hereafter against the Indebtedness in such manner as Bank
may deem advisable, notwithstanding any entry by Bank upon any of its books and
records. Company expressly agrees that to the extent that Bank
receives any payment or benefit and such payment or benefit, or any part
thereof, is subsequently invalidated, declared to be fraudulent or preferential,
set aside or is required to be repaid to a trustee, receiver, or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then to the extent of such payment or benefit, the Indebtedness or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or benefit had not been made and, further, any such repayment
by Bank, to the extent that Bank did not directly receive a corresponding cash
payment, shall be added to and be additional Indebtedness payable upon demand by
Bank.
21
11.10 In
the event Company’s obligation to pay interest on the principal balance of the
Note is or becomes in excess of the maximum interest rate which Company is
permitted by law to contract or agree to pay, giving due consideration to the
execution date of this Agreement, then, in that event, the rate of interest
applicable shall be deemed to be immediately reduced to such maximum rate and
all previous payments in excess of such maximum rate shall be deemed to have
been payments in reduction of principal and not of interest.
11.11 COMPANY
AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE,
BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE
OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY,
AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED
TO, THIS AGREEMENT OR THE INDEBTEDNESS.
11.12 This
Agreement shall become effective upon the execution hereof by Bank and
Company.
11.13 This
Agreement constitutes an amendment to and restatement in its entirety of the
Existing Credit Agreement, which Existing Credit Agreement is fully superseded
and amended and restated in its entirety hereby without constituting a novation;
provided, however, that the Indebtedness governed by the Existing Credit
Agreement shall remain outstanding and in full force and effect (subject to the
terms hereof).
22
WITNESS
the due execution hereof as of the day and year first above
written.
|
COMERICA
BANK
|
PERCEPTRON,
INC.
|
|||
|
By:
|
/s/ ▇▇▇▇▇▇ ▇.
▇▇▇▇
|
By: :
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇,
III
|
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇
|
||||
|
Its:
|
Senior
Vice President
|
Its:
|
Vice
President and CFO
|
|
23
SCHEDULE
6.3.
Litigation
The
Company is a party to a suit filed by Industries GDS, Inc., Bois Granval GDS
Inc., and Centre de Preparation GDS, Inc. (collectively, “GDS”) on or about
November 21, 2002 in the Superior Court of the Judicial District of Quebec,
Canada against the Company, Carbotech, Inc. (“Carbotech”), and U.S. Natural
Resources, Inc. (“USNR”), among others. The suit alleges that the
Company breached its contractual and warranty obligations as a manufacturer in
connection with the sale and installation of three systems for trimming and
edging wood products. The suit also alleges that Carbotech breached
its contractual obligations in connection with the sale of equipment and the
installation of two trimmer lines, of which the Company’s systems were a part,
and that USNR, which acquired substantially all of the assets of the Forest
Products business unit from the Company, was liable for GDS’
damages. USNR has sought indemnification from the Company under the
terms of existing contracts between the Company and USNR. GDS seeks
compensatory damages against the Company, Carbotech and USNR of approximately
$6.4 million using a June 30, 2010 exchange rate. GDS and Carbotech
have filed for bankruptcy protection in Canada. The Company intends
to vigorously defend against GDS’ claims.
The
Company is a party to a suit filed by i-CEM Service, Inc. and 3CEMS Prime
(collectively “3CEMS”) on or about July 1, 2010 in the Federal Court for the
Northern District of Illinois. The suit alleges that the Company
breached its contractual and common law indemnification obligations by failing
to pay for component parts used to manufacture optical video
scopes. The suit seeks damages of not less than $4
million. The Company intends to vigorously defend against 3CEMS’
claims.
1
SCHEDULE
6.5
ERISA
PLANS
None as
of November 16, 2010
1
SCHEDULE
6.9
SUBSIDIARIES
The
following are first tier subsidiaries of Perceptron:
Perceptron
Europe B.V.
Perceptron
Korea Yuhan Hoesa
Perceptron
Global, Inc.
Perceptron
do Brasil, Ltda
The
following are second tier subsidiaries of Perceptron:
|
A.
|
Subsidiary
of Perceptron Europe B.V.
|
|
|
Perceptron
GmbH
|
|
B.
|
Subsidiaries
of Perceptron Global, Inc.
|
Perceptron
Asia Pte. Ltd.
Perceptron
Asia Pacific, Ltd.
Perceptron
Trading (Shanghai) Ltd
Perceptron
Non-Contact Metrology Solutions Pte. Ltd
The
following are third tier subsidiaries of Perceptron:
|
A.
|
Subsidiaries
of Perceptron GmbH
|
Perceptron
Iberica, S.L.
Perceptron
E.U.R.L.
1
SCHEDULE
6.10
NONCOMPLIANCE
WITH LAWS; LITIGATION;
JUDGMENTS;
ENVIRONMENTAL LICENSES
None as
of November 16, 2010
1
SCHEDULE
8.5
OTHER
PERMITTED ENCUMBRANCES
None as
of November 16, 2010
SCHEDULE
8.13
OTHER
PERMITTED DEBT
None as
of November 16, 2010
3