HomeMy WebLinkAboutResolutions - 1989.07.20 - 17175MISCELLANEOUS RESOLUTION NO. 89221 September 14, 1989
RE: ECONOMIC DEVELOPMENT DIVISION
RESOLUTION APPROVING PROJECT PLAN
(RYKEN TUBE MANUFACTURING, INC. PROJECT)-COMMERCE TOWNSHIP
BY: PUBLIC SERVICES COMMITTEE, RICHARD D. KUHN, JR , CHAIRMAN
TO: THE OAKLAND COUNTY BOARD OF COMMISSIONERS
Mr. Chairman, Ladies and Gentlemen:
WHEREAS, The Economic Development Corporation of the
County of Oakland (the "EDC") has recommended that this Board
of Commissioners approve the Project Plan required by the
Economic Development Corporations Act, Act No. 338 of the
Michigan Public Acts of 1974, as amended (the "Act") for the
Ryken Tube Manufacturing, Inc. Project, a copy of which Project
Plan is attached hereto as Exhibit A (the "Project Plan"); and
WHEREAS, the EDC's recommendation to this Board of
Commissioners was based upon its determinations that the
Project is reasonable and necessary to effectuate the purposes
of the Act, that the Project Plan prepared in connection with
the Project satisfies all of the requirements of Section 8 of
the Act regarding project plans, that the persons who will be
active in the management of the project for at least one (1)
year after the projected date of the County Board of
Commissioner's approval of the Project Plan will have
sufficient ability and experience to manage the Plan properly,
and that the proposed method of financing the Project is
feasible and a bond purchaser's commitment has been obtained;
and
WHEREAS, on August 8 1989, the governing body
of Commerce Township, Oakland County, Michigan, also approved
the Project Plan; and
(RLS -2032)
PUBLIZ-S;ERVICES COMMITTEE
Richard D. Kuhn, Jr.
WHEREAS, on August 17 , 1989, this Board of
Commissioners held a public hearing to consider whether the
Project Plan constitutes a public purpose as contemplated by
the Act; and
WHEREAS, this Board of Commissioners, following such
public hearing and its review of the Project Plan, concurs in
the determinations of the EDC with respect thereto;
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF
COMMISSIONERS OF THE COUNTY OF OAKLAND, as follows:
1. The Project Plan, in the form attached hereto as
Exhibit A, is hereby determined to constitute a public
purpose as contemplated by the Act.
2. The Project Plan is hereby approved.
3. The EDC is hereby authorized to take such
steps as are necessary to implement the Project and the
financing thereof by the issuance of revenue bonds or notes.
4. The County Clerk As hereby directed ,to :
provide four certified copies of this resolution to the
Assistant Secretary of the Board of the EDC.
The Public Services Committee, by Richard D. Kuhn,
Jr., Chairman, moves for adoption of the foregoing resolution.
Chairman
Moved by Richard Kuhn supported by Gosling the resolution be adopted.
YEAS: Members: Skarritt, Wolf, Aaron, Bishop, Calandro, Chester,
Crake, Gosling, Hobart, Jensen, Johnson, R. Kuhn, Law, Luxon, McConnell, McCulloch,
McPherson, Moffitt, Oaks, _Olsen, P&ppageorge, _Remick, Price, Rewold. (24)
NAYS: Members: None ( 0)
ABSENT: Members: Caddell, Ferrens, S. Kuhn. (3)
ABSTENTIONS: Members: None. (0)
RESOLUTION DECLARED ADOPTED.
-2-
yin/D. Allen
County Clerk
STATE OF MICHIGAN
). SS.
COUNTY OF OAKLAND
I hereby certify that the foregoing is a true and
complete copy of a resolution adopted at a regular meeting of
the Board of Commissioners of the County of Oakland, Michigan
held on the 14th day of September , 1989, the original of
which is on file in my office. Public notice of said meeting
was given pursuant to and in compliance with Act No. 267 of the
Michigan Public Acts of 1976, as frrn-e-Aded.
Allen
County Clerk
Dated: September 14 , 1989
THE ECONOMIC DEVELOPMENT CORPORATION
OF THE COUNTY OF OAKLAND
Oakland County, Michigan
Ryken Development Company/
Ryken Tube Manufacturing, Inc. Project
PROJECT PLAN
CONTENTS
1. Summary Description of Project (Page 2)
2. Project Plan Certification by Company (Page 3)
3. Statutorily Required Information (Page 4)
4. Exhibits
Project Area Legal Description
HE" - Bond Purchaser's Commitment Letter
- Company Certificate Regarding "Prevailing
Wages"
"D" - Narrative Description of the Project
PROJECT PLAN
SUMMARY DESCRIPTION OF
IVIgn Development Carpany/Rykem be Manufacturing, Inc. PROJECT
OWNER OF PROJECT: Ryken Development Company - land, land
improvements, building and building improvements
Ryken Tube Manufacturing, Inc. - machinery, equipment and
furniture
CONTACT PERSON: (Name, address, telephone number)
Kenneth Magill 3171 Ridgeway Court (313) 669-3232
My Le Ngo P.O. Box 515
Walled Lake, Michigan 48088
LOCATION OF PROJECT: (Local municipality)
Commerce Township, Michigan
PROJECT AREA/DISTRICT AREA: See Exhibit A
NATURE OF PROJECT: Acquisition of 11.3 acres of land; construction
of a 150,000-200,000 sq. ft. office, manufacturing and distribution
facility; equipping of the facility with tubular product manufacturing
equipment and furniture.
EMPLOYMENT CREATED OR RETAINED:
TOTAL PROJECT COST:
BONDS TC BE ISSUED:
Retained - 121
Created - 120
$9,735,000 (approx.)
$9,500,000
BOND PURCHASER: Bonds will be marketed publicly backed by a
Comerica Bank - Detroit Letter of Credit.
DATE AND EXPIRATION DATE OF BOND PURCHASE COMMITMENT:
Commitment Date: May 30, 1989
Expiration Date: August 31, 1989
2
By
l'enneth Magill
Its: President
By :
Knneth Magill
Its: President
PROJECT PLAN CERTIFICATION
Dated:
THIS PROJECT PLAN WAS PREPARED FOR THE
ECONOMIC DEVELOPMENT CORPORATION OF THE COUNTY
OF OAKLAND IN ACCORDANCE WITH THE REQUIREMENTS
OF THE ECONOMIC DEVELOPMENT CORPORATIONS ACT,
ACT NO. 338 OF THE MICHIGAN PUBLIC ACTS OF
1974, AS AMENDED.
THE UNDERSIGNED HAS PROVIDED ALL OF THE
INFORMATION CONTAINED HEREIN AND HEREBY
CERTIFIES AS TO THE ACCURACY AND VALIDITY OF
SUCH INFORMATION AS OF THIS DATE.
THE UNDERSIGNED UNDERSTANDS THAT THIS PROJECT
PLAN IS STATUTORILY REQUIRED AND, IF IT
CONTAINS ANY MATERIAL MISREPRESENTATION OR
INACCURACY, COULD RESULT IN THE INVALIDATION
OF THE ECONOMIC DEVELOPMENT CORPORATION
PROCEEDINGS REGARDING THE PROJECT TO WHICH THE
PROJECT PLAN PERTAINS.
RYKEN DEVELOPMENT COMPANY
June 14, 1989
RYKEN TUBE MANUFACTURINC, INC.
PROJECT PLAN
STATUTORILY REQUIRED INFORMATION REGARDING
RykenEevelopmemt OxTen.y/Ryken Tube Manufacturing, Inc. PROJECT
I. THE LOCATION AND EXTENT OF EXISTING STREETS AND
OTHER PUBLIC FACILITIES WITHIN THE PROJECT DISTRICT AREA; THE
LOCATION, CHARACTER, AND EXTENT OF THE CATEGORIES OF PUBLIC AND
PRIVATE LAND USES NOW EXISTING AND PROPOSED FOR THE PROJECT
AREA, INCLUDING RESIDENTIAL, RECREATIONAL, COMMERCIAL,
INDUSTRIAL, EDUCATIONAL, AND OTHER USES; AND A LEGAL
DESCRIPTION OF THE PROJECT AREA:
Currently, there are no existing streets or other public facilities within
the project district area. The project district area is bounded by Dallavo Drive
on the north and private property on the north, east, south and west. When the
project is completed, a street called Dallavo Court will be created and will
extend into the project district area. Currently, the project area consists of
vacant land. The private land uses proposed for the project area are set forth
in EXhibit D attached.
Legal description of Project Area attached as Exhibit
A .
II. A DESCRIPTION OF EXISTING IMPROVEMENTS IN THE
PROJECT AREA TO BE DEMOLISHED, REPAIRED, OR ALTERED; A
DESCRIPTION OF REPAIRS AND ALTERATIONS; AND AN ESTIMATE OF THE
TIME REQUIRED FOR COMPLETION:
Not applicable.
III. THE LOCATION, EXTENT, CHARACTER, AND ESTIMATED
COST OF THE IMPROVEMENTS, INCLUDING REHABILITATION CONTEMPLATED
FOR THE PROJECT AREA, AND AN ESTIMATE OF THE TIME REQUIRED FOR
COMPLETION:
A narrative description of the project is attached as
EXhibit D.
4
IV. A DESCRIPTION OF THE CONSTRUCTION OR STAGES OF
CONSTRUCTION PLANNED, AND THE ESTIMATED TIME OF COMPLETION OF
EACH STAGE:
The construction of the project is planned in two phases. The first
phase, involving the construction of 82,000 sq. ft. of office and
manufacturing space, will begin in the Spring of 1989 and is anticipated to
be completed by September 30, 1989.
The second and third phases, involving the construction of 68,000 -
108,000 sq. ft. of office and manufacturing space, will begin in the Spring or
Summer of 1991and are anticipated to be completed in late 1992.
V. A DESCRIPTION OF THE PARTS OF THE PROJECT AREA TO
BE LEFT AS OPEN SPACE AND THE USE CONTEMPLATED FOR THE SPACE:
Virtually none of the project area (other than the portions required
by local ordinance to be devoted to landscaping) will be left as open space.
The remaining land area will be covered by the office and manufacturing
building and paved parking area.
VI. A DESCRIPTION OF PORTIONS OF THE PROJECT AREA
WHICH THE ECONOMIC DEVELOPMENT CORPORATION OR THE COMPANY
DESIRES TO SELL, DONATE, EXCHANGE OR LEASE TO OR FROM THE
MUNICIPALITY AND THE PROPOSED TERMS:
Not applicable.
5
VII. A DESCRIPTION OF DESIRED ZONING CHANGES AND
CHANGES IN STREET, STREET LEVELS, INTERSECTIONS AND UTILITIES:
A new street, Dallavo Court, will be created and will be extended 300-400
feet from the existing cul-de-sac on Dallavo Drive.
Otherwise, there are no zoning changes or changes in streets, street levels,
intersections or utilities required by the project.
VIII. A DESCRIPTION OF THE PROPOSED METHOD OF
FINANCING THE PROJECT, INCLUDING ATTACHMENT OF A COPY OF THE
BOND PURCHASER'S COMMITMENT LETTER:
Ryken Development Company and pyken TUbe Manufacturing, Inc. intend to
finance the project with the infusion of equity and the issuance of Oakland
County E.D.C. bonds in the amount of $9,500,000.00 . These bonds will be
marketed publicly through a public offering underwritten by an investment
banking firm. Credit enhancement for the issuance of the bonds will be
provided by Comerica Bank-Detroit through the issuance of a letter of credit
in the amount of $10,000,000.00.
Copy of bond purchaser's commitment letter attached as
Exhibit B.
IX. A STATEMENT REGARDING THE PAYMENT OF PREVAILING
WAGE AND FRINGE BENEFIT RATES AS DETERMINED PURSUANT TO ACT NO.
166 OF THE MICHIGAN PUBLIC ACTS OF 1965, AS AMENDED (REGARDING
WAGES ON STATE CONTRACTS):
See Exhibit C.
6
X. A LIST OF PERSONS WHO WILL MANAGE OR BE ASSOCIATED
WITH THE MANAGEMENT OF THE PROJECT FOR A PERIOD OF NOT LESS
THAN 1 (ONE) YEAR FROM THE DATE OF APPROVAL OF THE PROJECT PLAN:
Kenneth Magill, President
My Le Ngo, Controller
c/o Ryken Tube Manufacturing, Inc.
3171 Ridgeway Ct., P.O. Box 515
Walled Lake, Michigan 48088
XI. DESIGNATION OF THE PERSON OR PERSONS, NATURAL OR
CORPORATE, TO WHOM THE PROJECT IS TO BE LEASED, SOLD OR
CONVEYED AND FOR WHOSE BENEFIT THE PROJECT IS BEING UNDERTAKEN,
TO THE EXTENT THAT INFORMATION IS PRESENTLY AVAILABLE:
The project is being undertaken for the benefit of Ryken Development Company
and Ryken Tube Manufacturing, Inc.. Ryken Development Company will own the land
and building comprising a part of the project and will lease the land and building
to Ryken Mbe Manufacturing, Inc. for use in its operations.
Ryken Manufacturing, Inc. will purchase and use all of the machinery,
equipment and furniture used in the office and manufacturing building.
XII. IF THERE IS NOT AN EXPRESS OR IMPLIED AGREEMENT
WITH A PERSON OR PERSONS, NATURAL OR CORPORATE, THAT THE
PROJECT WILL BE LEASED, SOLD, OR CONVEYED TO THOSE PERSONS, THE
PROCEDURES FOR BIDDING FOR THE LEASING, PURCHASING OR CONVEYING
OF THE PROJECT UPON ITS COMPLETION:
Not Applicable.
XIII. ESTIMATES OF THE NUMBER OF PERSONS RESIDING IN
THE PROJECT AREA AND THE NUMBER OF FAMILIES AND INDIVIDUALS TO
BE DISPLACED. IF OCCUPIED RESIDENCES ARE DESIGNATED FOR
ACQUISITION AND CLEARANCE, INCLUDE A SURVEY OF THE FAMILIES AND
INDIVIDUALS TO BE DISPLACED, INCLUDING THEIR INCOME AND RACIAL
COMPOSITION, A STATISTICAL DESCRIPTION OF THE HOUSING SUPPLY IN
THE COMMUNITY, INCLUDING THE NUMBER OF PRIVATE AND PUBLIC UNITS
IN EXISTENCE OR UNDER CONSTRUCTION, THE CONDITION OF THOSE IN
EXISTENCE, THE NUMBER OF OWNER-OCCUPIED AND RENTER-OCCUPIED
7
UNITS, THE ANNUAL RATE OF TURNOVER OF THE VARIOUS TYPES OF
HOUSING AND THE RANGE OF RENTS AND SALE PRICES, AN ESTIMATE OF
THE TOTAL DEMAND FOR HOUSING IN THE COMMUNITY, AND THE
ESTIMATED CAPACITY OF PRIVATE AND PUBLIC HOUSING AVAILABLE TO
DISPLACED FAMILIES AND INDIVIDUALS:
Not applicable. No people presently reside in the
Project Area, no families or individuals will be displaced by
the Project, and no residences are located in the Project Area.
XIV. A PLAN FOR ESTABLISHING PRIORITY FOR THE
RELOCATION OF PERSONS DISPLACED BY THE PROJECT IN NEW HOUSING
IN THE PROJECT AREA:
Not applicable.
XV. PROVISION FOR THE COSTS OF RELOCATING PERSONS
DISPLACED BY THE PROJECT AND FINANCIAL ASSISTANCE AND
REIMBURSEMENT OF EXPENSES, INCLUDING LITIGATION EXPENSES AND
EXPENSES INCIDENT TO THE TRANSFER OF TITLE, IN ACCORDANCE WITH
THE STANDARDS AND PROVISIONS OF THE FEDERAL UNIFORM RELOCATION
ASSISTANCE AND REAL PROPERTY ACQUISITION POLICIES ACT OF 1970,
42 U.S.C. 4601 TO 4655:
Not applicable.
8
XVI. A PLAN FOR COMPLIANCE WITH ACT NO. 227 OF THE
MICHIGAN PUBLIC ACTS OF 1972, WHICH PERTAINS TO PROVIDING
FINANCIAL ASSISTANCE, ADVISORY SERVICES AND REIMBURSEMENT OF
CERTAIN EXPENSES TO DISPLACED PERSONS:
Not applicable.
XVII. OTHER MATERIAL AS THE ECONOMIC DEVELOPMENT
CORPORATION, LOCAL PUBLIC AGENCY, OR GOVERNING BODY CONSIDERS
PERTINENT:
Not applicable.
9
EKRIBIT A
PARCEL 8A AfeorrI b;rta416N.
. A part of the NW 1/4 of Section 24, T.2N,, R.8E„, Commerce Township, Oakland
County, Michigan, being more particularly described as follows:
Beginning It s point located 586'52'41 °W 1146,24 feet along the north
centerline of Section 24 (nominal centerline of Oakley Perk goad) end
602'3321"W 540.02 feet from the Pi 1/4 corner of Section 24; thence
NB66 5241E 249.27 feet; thence along an art of 4 curve to the left 183,26
feet, said curve having a radius of 70.00 feet, a central angle of 150°0002'
end a chord bearing and distance of S78°07'206 135.23 feet; thence
N86"52 1 41"E 439.23 feet; thence 602°52 1 381 802.00 feet; thence 586°52'41W
407.36 feet; thence NO2c52'38N 415.65 feet; thence 586'52'41W 414.28 feet;
thence NO2°31 .21°W 421.36 feet to the point of beginning. Containing 11.298
acres of land and being subject to all easements of record.
,2 4r J.
L1Kie
SeC TON 24 Vt* C,Og Peg
Or:6PN 24 a
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1546.24
DALLAVO COURT s1/41 IbZ' 4 1 "
249,21' N.154' 51' 4 I a
PARCEL NS ;() 044 Jekaze %
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EXHIBIT B
May 30, 1989
17." : crt: LIT TUBE 11F 1:=
COMOCa Bank-Deret
Dena. Michigan 48275
Mx. Kenneth Magill, President
Ms. MyLe Ng°, Controller
Ryken Tube Manufacturing, Inc.
3171 Ridgeway Court
Walled Lake, MI 48088
Dear Ken and MyLe:
On behalf of Comerica Bank-Detroit ("Bank"), I am very
'mlazmAlaA +'n nrPconf t-'hic rmmimcn$ 1r Vnli with racnabot tn the financial accommodations that we have discussed.
Attached to this letter is the statement of loan terms
dated May 10, 1989 (the "Loan Terms"), which by this
reference are hereby incorporated in this commitment, except
as modified hereby. I believe that the credit facilities
offered hereby will provide Ryken Tube Manufacturing, Inc.
("Tube"), Ryken Development Corporation ("Development") and
Ryken Distributing Company ("Distributing") the financial
flexibility necessary to keep pace with current and future
financing needs, as well as expansion plans for the next
three years. I believe this commitment offers a number of
advantages to the Companies.
Letters of Credit to Secure Industrial Development
Bonds.
As provided in the Loan Terms the Hank is committed to
provide a letter of credit to support industrial development
revenue bonds ("IDB's") issued for the benefit of Tube in an
amount not in excess of $1,100,000 to finance phased
acquisitions of machinery and equipment (described as Credit
Facility I in the Loan Terms) and a second letter of credit
for Development in an amount not in excess of $8,900,000 to
support IDB's for phased construction of a new facility in
Commerce Township (described as Credit Facility /IX in the
Loan Terms). The letters of credit will support the IDB's
maturing as described in the Loan Terms and will be
documented pursuant to a Reimbursement Agreement or
Reimbursement Agreements, wIlloh areto be negotiated.
Mr. Kenneth Magill
Ms. MyLe Ngo -2. May 30, 1969
3,- IT -171 Ei TL2EiE FNFELL. r;r:T11-717 e..`5.* 7.0Z , 0 7
The Reimbursement Agreementfs) will be secured by the
collateral described in the Loan Terms and will contain
indemnification provisions and yield protection provisions
which are usual and customary in transactions of this type
and which are familiar to your counsel, Thomas Martin, Esq.
The Reimbursement Agreement(s) also contain representations,
warranties and covenants usually found in similar
agreements, including, specifically, covenants with respect
to the financial matters described in the Loan Terms, In
addition, the Reimbursement Agreement(s) will require that
Tube and Distributing each have financial statements
prepared by a certifiefi .public accountant acceptable to the
Bank on a review basis7iallfull inventory audit for year
end 1989 and each provide a full audit for year end 1990 and
years thereafter.
The Reimbursement Agreement(s) will be supported by the
unlimited, unconditional joint and several guaranteea of Ken
Magill, President of Tube, Development and Distributing, as
well as the cross guarantees of the respective Companies.
The personal guarantee of Ken Magill will be secured by an
assignment of his land contract vendee interest with respect
to property known as 3171 Ridgeway Court, Walled Lake,
Michigan, and by a pledge of the $100,000 certificate of
deposit (to be in place by 12-31-89), as well as an
assignment to the Bank for security of a life insurance
policy in the face amount of $1,000,000 on the life of Ken
Magill from a life insurance company._and in form acceptable
to the Bank.
In all other respects, the letters of credit and
Reimbursement Agreement(s) shall be issued and secured as
described in the Loan Terms.
Interim Construction Financing.
Pending the funding of the IDB's described above, the
Bank will loan up to $4,100,000 to Development to fund the
initial 82,000 square foot phase of the new building project
(described as Credit Facility II in the Loan Terms). The
construction loan shall be documented by an agreement to be
negotiated and mutually satisfactory to Development and the
Bank and shall contain the terms and conditions set forth in
the Loan Terms, as well as those customarily found in
construction financing loan documents of the Bank.
Working Capital Loans to Tube and Distribttt1n2.
The Bank agrees to make the loans described as Credit
Facility IV and V in the Loan Terms on the basis therein
t.141 . TUBE inI•E; P 4- 17
Mr. Kenneth Magill
Ms. MyLe Ngo -3° May 30, 1989
described subject to documentation to be mutually negotiated
by the respective borrower and the Bank.
eral • Requirements.
All documentation shall be subject to the approval by
the Bank in its sole discretion and to the approval of its
counsel, Miller, Canfield, Paddock and Stone. All documents
shall contain covenants, warranties and representations/as --
the Bank may require. All real estate collateral shall be
subject to receipt by the Bank prior to closing of a
mortgage title insurance policy, without standard
exceptions, in form and substance satisfactory to the Bank,
insuring the Bank's liens in the real property and also
presentation of satisfactory surveys and other documentation
customarily received by the Bank with respect to real estate
loan transactions. Al]. advances shall be approved by the
Bank's real estate department and shall be subject to
inspections and title policy endorsements. As noted in the
Loan Terms, environmental inspections shall be required of
the real property securing the Bank's obligations hereunder.
At the closing of the construction loan transaction, as
well as the other closings contemplated hereby, the
companies shall be responsible for paying the reasonable
fees and expenses of the Bank's attorneys, as well as the
other out-of-pocket costs incurred with respect to the
closings. In particular, all expenses associated with the
issuance of the IDB's are to borne by the respective
Companies, including the fees payable to Ehrlich Bober &
Co., Inc. and Comerica Bank-Detroit, 95 basis points, plus
$5,000 per discussion letter of Gary Kostrewa of Comerica
Bank-Detroit dated February 18, 1989.
If the foregoing and incorporated terms and conditions
are acceptable to you, I would ask that you sign and return
one copy of this commitment letter to me with a $10,000
commitment fee. When the described transactions close, this
fee will be applied to .5% commitment fee due at closing.
/f the transactions do not close within the time provided,
then the Bank may retain the $10,000 to pay its expenses and
as earned compensation for this coMmitment. Upon receipt of
the signed letter and commitment fee, the commitments hereby
eStablished shall be available until August 31, 1989. If
the conditions to the various credit extensions outlined
above and in the attached have not been met on or prior to
such date, all unfunded or unfulfilled commitments hereunder
shall expire.
---"7-=
EUEN TUBE F1FG
Mr. Kenneth Magill
M. MyLe Ngo -4- may 30, 1989
comerica Bank-Detroit greatly looks forward to working
with you on these exciting financings. We are proud to be
part of the growth and prosperity of your Companies and look
forward to a long, continuing relationship with you.
Yours very truly,
Comerica Bank-Detroit
By
--Wirrrii74, Osbach
Vice President
Corporate Banking Department
Accepted and agreed as provided.
Ryken
Ryken
Ryken
Tube Manufacturing, Inc.
Development Corporation
Distributing Company
By
Kenneth magill
ot/twl/dtw11085
[11:1'3 ' Zr ::3 P',1-,EH TUBE MFG F.1 -17
comerca Bank-De,troit
34119 Wesi Twelve Mite Road
Sue 390
Farrnirigton Hills, Michigan 48018
" G Osbach
Vice President
Corporate Banking Department
comen.cA Bank-Detroit .tlay 10, 1989
Mr. Ken Magill, President
Ms. MyLe Ngo, Controller
Ryken Tube Manufacturing, Inc.
3171 Ridgeway Ct.
Walled Lake, Michigan 4emse
Dear Ken & MyLe
I am pleased to present this revised loan proposal for
Ryken Tube Manufacturing, Inc., Ryken Development
Corporation, and Ryken Distributing Company. This document
replaces the previous loan proposal dated April 24, 1989.
The following does not represent a commitment to loan on
the part of Comerica Bank-Detroit. Final terms and
conditions are subject to approval by the appropriate bank
committee(s).
CREDIT FACILITY I
Borrower; Ryken Tube Manufacturing, Inc.
Amount/Purposet Issue a standby letter of
credit in an amount up to
approximately $1,100,000 to
support up to a $1 1 000,000
Industrial Revenue Bond issued
by the Economic Development
Corporation of Commerce
Township, Michigan. Proceeds
to be utilized to purchase
eligible machinery and
equipment (excluding furniture,
fixtures and computer related
equipment). To be disbursed in
three (3) phases as follows:
Phase I Up to $300,000
Phase II Up to $300,000
Phase III Up to $400,000
Phase II to be disbursed
subject to negotiated financial
covenantS relating to the
December 31, 1990 year end
audited financial statement.
Mr. Magill & Ms. No - May 10, 1989 - Page 2
Phase III to be disbursed
subject to negotiated financial
covenants relating to the
December 31, 1991 year end
audited financial statement.
Term:
Collateral:
Advance Rate:
A total term of 7.5 years (30
quarters) with each individual
phase amortizing quarterly
after the first five (5)
quarters which will be interest
only as follows:
Phase I Quarters 6 - 25
Phase II Quarters 7 - 26
Phase III Quarters 11 - 30
A first security interest in
the machinery and equipment to
be acquired plus existing
machinery and equipment,
accounts receivable and
inventory.
- Phase I 100% of hard costs of
eligible.Atwel4ipment subject
to a minfMu6Aappraisal Eby an
appraiser satisfactory to the
Bank (see list attached)) of
$2,200,000 on property owned by
Ken Magill listed below under
Personal Quaranty. Also
subject to a satisfactory
Environmental Audit Eby an
environmental consultant
satisfactory to the Bank (see
list attached)J,
- Or -
957. of hard costs of eligible
new equipment subject to a
minimum appraisal Eby an
appraiser satisfactory to the
Bank (see list attached)] of
$1,900,000 on property owned by
Ken Magill listed below under
Personal
'S 9 1:3:1.7.11 RYKE• TUEE MFG P.:1 17
Mr. Magill & Ms. Ngo - May 10, 1989 - Page 3
Guaranty. Also subject to a
satisfactory Environmental
Audit Eby an environmental
consultant satisfactory to the
Bank (see list attached)],
- Phase II The lesser of 100% of
the hard cost of eligible new
equipment or all long term debt
(including debt of Ryken Tube,
and Ryken Development owed to
Comerica Sank and personal land
contract debt of Ken Magill on
building located on Ridgeway
Court) not to exceed the sum of
85% of the then current
appraised value of all existing
eligible machinery and
equipment and real estate of
the entities listed above plus
85X of the cost of Phase II
eligible equipment.
- Phase Iii The lesser of 1007.
of the hard cost of eligible
new equipment or all long term
debt (including debt of yken
Tube, and Ryken Development
owed to Comerica Bank and
personal land contract debt ef
Ken Magill on building located
on Ridgeway Court) not to
exceed the sum of 85% of the
then current appraised value of
all existing eligible
machinery and equipment and
real estate of the entities
listed above plus 85% of the
cost of Phase III eligible
equipment.
Corporate Guarantees: Ryken Development Coporation
secured by commercial property
to be constructed in Walled
Lake, Michigan.
Ryken Distributing Company
secured by accounts receivable,
inventory and machinery and
equipment.
31 PH.kEN TUBE MEC;
Mr. Magill & Ms. Ngo - May 10, 1989 - Page 4
Personal euaranty:
Letter of Credit Fee:
Facility Fee:
Other Pees:
Agreement:
Reporting:
Ken Magill secured by a second
position on commercial property
located at 3171 Ridgeway Court,
Walled Lake, Michigan and by
the pledge of a $100,000
certificate of deposit (CD
pledge to take place by 12-31,-
89).
1.5% per annum payable
quarterly in advance based on
the average outstanding
principal balance of the bond.
We will agree to lower the
letter of credit fee to 1.4%
upon disbursal of Phase II but
no sooner than April 1, 1991
and to 1.25% upon disbursal of
Phase III but no sooner than
April 1, 1992. Rate change is
subject to no violations of
covenants in the Reimbursement
and Guaranty Agreement.
A one time fee of 1/2% of the
bond issue amount payable at
closing.
Refer to Gary Kostrawars letter
dated 2-17-89 (copy attached at
the end of this proposal).
Reimbursement and Guaranty
Agreement with covenants
including but not limited tot
a) Change of ownership.
b) Maximum debt to worth
ratio.
c) Minimum working capital
level.
d) Minimum net worth level.
e) Minimum annual cash flow
requirements.
f) Maximum fixed asset
acquisition.
Same as Credit Facility IV
below but excluding receivable
and inventory reports.
P.9 TuEE
Mr. Magill & Ms. Ngo - May lo, 1989 - Page 5
CREDIT FACILITY II
Borrower: Ryken Development Corporation.
Amount/Purpose:
Repayment:
Term:
Construction Draws:
Collateral:
Interest Rate:
Advance Rate:
Corporate Guarantees:
Personal Guaranty:
Refinance Fee:
Up to $4,100,000 to provide
construction -financing for an
B2,000 sq. ft. building to be
constructed in Walled Lake,
Michigan.
Upon closing of Industrial
Revenue Bond in Credit Facility
III below.
Not to exceed ISO days.
To be monitored by the Bank
with a 1007. of cost to complete
holdback.
A first mortgage on commercial
property to be constructed in
Walled Lake, Michigan.
comerica Prime 4- 1/2%.
Same as Phase I in Credit
Facility /II below.
Same as Credit Facility III
below.
Same as Credit Facility III
below.
IX of commitment amount only in
the event that take out
financing is obtained from a
source(s) other than Comerica.
Real Estate Related
Fees: Same as Credit Facility III
below.
Subject To: - Satisfactory review of the
builders contract.
- Appraisal of real estate by an
appraiser satisfactory to the
Bank and reviewed by the Bank's
Real Estate Department.
13:03 PO EN TUBE MFG tli.1 ) 31 'S
Mr. Magill Ms. Ngo - May 10, 1989 - Page 6
CREDIT FACILITY III
Borrower: Ryken Development Corporation
Amount/Purpose:
Term:
Issue a standby letter of
credit in an amount up to
approximately $9,900,000 to
support up to a $8,5exi,m0
Industrial Revenue Bond issued
by the Economic Development
Corporation of Commerce
Township, Michigan. Proceeds
to be utilized to purchase
land, payoff the outstanding
balance of Credit Facility II
and construct approximately a
190,000 sq. ft. building in
Walled Lake, Michigan, and to
be disbursed in three (a'",)
phases as follows:
Phase I Up to *40vga,mica
Phase II Up to S2,000,000
Phase III Up to $2,400,000
Phase II to be disbursed
subject to negotiated financial
covenants relating to the
December 31, 1990 year end
reviewed financial statement
with inventory audits.
Phase III to be disbursed
subject to negotiated financial
covenants relating to the
December 31, 1991 year end
reviewed financial statement
with inventory audits.
A total term of 17.5 years (70
quarters) with each individual
phase amortizing quarterly
after the first five (5)
quarters which shall be
interest only (allowing for the
initial construction period) as
follows:
Phase I Quarters 6 - 65
Phase II Quarters 7 - 66
Phase III Quarters 11 - 70 -
`B9 FE,r-7) Eri TUBE MP; P. 9.
Mr. Magill & Ms. No - May 10, 1989 - Page 7
Construction Draws:
Collateral:
Advance Rate:
To be monitored by tha bank
with first draw to payoff
Credit Facility I/ above.
A first mortgage on commercial
property to be constructed in
Walled Lake, Michigan,
supported by an assignment of
lease income from all tenants.
Phase I - The lesser of 1007. of
cost or appraised value subject
to a minimum appraisal Eby an
appraiser satisfactory to the
Bank and reviewed by the Bank
(see list attached)3 of
$2,200,000 on property owned by
Ken Magill listed below under
Personal Guaranty. Also
subject to a satisfactory
Environmental Audit Eby an
environmental consultant
satisfactory to the Bank (see
list attached)),
- Cr -
the lesser of 95% of cost or-
appraised value subject to a
minimum appraisal Eby an
appraiser satisfactory to the
Bank and reviewed by the Bank
(see list attached)3 of
$1,900,000 on property owned by
ken Magill listed below under
Personal guaranty. Also
subject to a satisfactory
Environmental Audit Eby an
environmental consultant
satisfactory to the Sank (see
list attached)),
Phase II - The lesser of 100%
of cost or all long term debt
(including debt of Ryken Tube,
and Ryken Development owed to
Comerica Bank and personal land
contract debt of Ken Magill on
building located on Ridgeway
Court) not to exceed 857. of the
then current appraised value of
Mr. Magill & Ms. Ngo - May 10, 1989 - Page 8
all eligible machinery and
equipment and real estate of
the entities listed above plus
857. of the cost of Phase II
eligible equipment. Appraisals
subject to review by the Bank.
Phase III - The lesser of 1007.
of cost or all long term debt
(including debt of Ryken Tube,
and Ryken Development owed to
Comerica Bank and personal land
contract debt of Ken Magill on
building located on Ridgeway
Court) not to exceed 857. of the
then current appraised value of
all eligible machinery and
equipment and real estate of
the entities listed above plus
85% of the cost of Phase III
eligible equipment. Appraisals
subject to review by the Bank.
Corporate Guarantees:
Personal Guaranty:
Latter of Credit Fee:
Facility Fee:
Real Estate Related
Fees:
Ryken Tube Manufacturing, Inc.
secured by accounts receivable,
inventory and machinery and
equipment.
Ryken Distributing Company
secured by accounts receivable,
inventory and machinery and
equipment.
Same as Facility I.
Same as Facility I.
Same as Facility I.
- Borrower responsible for all
out of pocket expenses related
to the mortgage(s) including
title search and policy, hazard
insurance, survey and filing
fees.
- $1,500 per real estate
appraisal if Bank appraiser
used.
Other Fees: Same as Facility I.
Ln$ wurrcawer an as IA
A qrecnidir:
Other Fecza Same as Facility I.
Re ,.• ; y
insurance, survey and filing
fees.
- $1,500 per real estate
,appraisal if Bank appraiser
used.
Borrower:
Amount;
Purpose:
Term:
Collateral;
Advance Rate%
Corporate Guaranty:
Personal Suaranty%
Interest Rate;
Repayment:
Reporting;
AL .41 -07 ult wurruwOr ano as in
Credit Facility I.
CREDIT rAcILITy Iv
Ryken Tube Manufacturing, Inc.
Up to *1,500,000 (currently
$2,000,000).
Provide ongoing working
capital.
Master demand note with
telephone borrowings.
Accounts receivable, inventory
and machinery and equipment.
Formula - en: of eligible A/R
under 90 days
Over-formula - The lesser of
$500,000 or 50% of raw material
and finished goods inventory.
Same as in Credit Facility I.
Same as in Credit Facility I.
Comerica Prime plus 1/27
- Monthly interest charged
automatically against company's
checking account.
- Quarterly company or CPA
prepared financial statements.
- Year end CPA reviewed financial
statements with audits of
inventory beginning 12-31-89.
- Annual personal financial
statement submitted with the
annual corporate statement.
- Weekly accounts receivable and
monthly inventory reports.
7: i 1 ""! R THEE
Mr. Magill & Ms. Ngo - May 10, 1989 - Page 10
Borrower:
Amount:
Purpose:
- Monthly accounts receivable
agings.
- Periodic audits by Comerica
Bank personnel.
CREDIT FACILITY V
Ryken Distributing Company
Up to $1,000,000 (currently
$750,000).
Provide ongoing working
capital.
Term: Master demand note with
telephone borrowings.
Collateral: Accounts receivable, inventory
and machinery and equipment.
Advance Rate:
Corporate Guaranty:
Personal Suarantyl
Interest Rates
Repayment:
Reporting:
Formula - 857- 04 eligible
accounts receivable under 90
days billed by Ryken Tube on
behalf of Ryken Distributing.
Over-formula - 80% of Direct
Ship inventory evidenced by
3086 purchase orders from Ford
Motor Company.
- Ryken Tube Manufacturing, Inc.
secured by accounts receivable,
inventory and machinery and
equipment.
- Ryken Development Corporation
secured by commercial, property
to be constructed in Walled
Lake, Michigan.
Same as in Credit Facility I.
Comerica Prime plus 3/47.;
'Ls sialo 1", =7,
Monthly interest charged
automatically against company's
checking account..
Same as in Facility IV.
2(3 : ETA TI_IBE MFG
Mr. Magill & Ms. Ngo - May 10, 1989 - Page 11
TERM LOAN FACILITIES
F . 4.9
Existing term debt currently amortizes as follows:
Note 1
Note 2
$11,725 Per Month
24167 Per Month
$13,892 Total Per Month
This debt shall be reset to have a total monthly payment of
Z42,000 with the extra $29,108 ($337,296 annually) being
the theoretical principal payment on Facility I and II
which we have set at interest only for the first fifteen
(15) months. In effect this allows the company to trade
higher for lower rate debt with a substantial interest
savings.
The existing loan agreement will be amended to reflect the
changes occurring as the result of the new financing and
will be cross-defaulted to the Reimbursement and Guaranty
Agreement for the bonds.
Information Required
For Real Estate
Appraisals:
Additional Information
Needed:
- Legal description of existing
building.
- Plans and specification for new
building.
- Detailed budget of construction
costs.
- Copy of contract with builder
(fixed bid contract is
required).
- Environmental audits on new and
existing real estate.
CoPY of land contract on
existing real estate.
- Articles of Incorporation for
Ryken Development.
- List 04 corporate officers for
Ryken Development.
-; 1 : 011; P': E14 TI_SE
Mr. Magill & Ms. Ngo - May 10, 1989 - Page 12
14 the loan proposal is acceptable, please sign below where
indicated and return the copy to my attention by May 15,
1989- Thank you for considering Comerica ior your ongoing
banking needs.
Sincerely
William G. Osbach
Vice President
Accepted and Agreed
Ryken Tube Manu4acturing, Inc.
Kenneth Magill, President
Accepted and Agreed
Ryken Development Corporation
Kenneth Magill, President
Accepted and Agreed
Rykan Distributing Company
Kenneth Magill, President
P.2/5 JUN 05 '89 1E: 40 RYKEN TUBE t•FG
Comerica Bank-Detrort
Detroit, Michigan 41( •-1057
Gary A Kostrewa
Vice President
Funds Management
Forl at Washington Boulevard
ewe/
comenqk Bank-Detroit February 17. 1989
Ms, My Le Ngo, Controller
Ryken Tube Manufacturing, Inc.
2760 Ridgeway Court
Walled leake„ Mich. 48088
Dear Ms. Ngo;
It was a pleasure meeting you r and I have enjoyed working with
you to begin the process for arranging a tax-exempt industrial
development bond (IDB) financing for Ryken Tube.
As we have discussed, Comerica Bank-Detroit would be pleased to
act as agent to work to place with final investors the proposed
bond issue.
The issuance of a Comerica letter-of -credit to guarantee repay-
ment of the bonds will be dependent upon a formal credit review
and approval process. Mr. William Osbach of our commercial len-
ding area will provide you with information regarding terms and
conditions and with the fees associated with the issuance of a
letter of credit.
Please note that Comerica can commit only to letter of credit,
placement, and administrative fees. Other fees are established
by third parties. Such fees are normally a function of the size
of a bond issue, ite complexity, and the number of hours worked
and out-of-pocket expenses incurred by the third party providers.
As your placement agent, we would assemble the appropriate team
for your transaction except for your company counsel. Company
counsel is not required but is recommended because of the com-
plexity of the transaction. fees of the course: would be nego-
tiated by you.
The interest rate -lot the bond issue would be a function of the
level of interest rates in the tax-exempt market at the time the
bonds are actually sold. Eowever, it is possible to obtain an
advance rate commitment for a fixed rate bond issue after a con-
mitment to issue a letter of credit has been given and the pre-
cise terms of the financing are known.
Attached is a discussion memorandum outlining the possible tran-
saction.
„JUN 05 '89 12:40 RYKEN TUBE MFG "E
Ms. My Le Ngo - February 17, 1989 — Page 2
We look forward to working with you on this
Ma. Ngo. Please do not hesitate to call me
you may have; my phone number is 222-3748.
Sincerely,
exciting transaction,
with any questions
./0 6
cc: William Osbach
Placement Agent
Counsel required, approx. $5,000.
Usually not required; if Approx. $10,000
P.1/2
,TUNYT '29 1242 PYKEH TUBE MEG.
- •
DISCUSSION MEMORANDUM
Site
Maturity
Amortization
Letter of Credit
Interest Rates
Outline of Fees
Ryken Tube Manufacturing, Inc.
Tax-Exempt /DB Bond Issue
i0
- Approx....1K million
- Up to 15 years
- Not to exceed 15 years.
- Issuance of a Comerica letter of credit is
dependent upon credit review and approval.
Fees, terms and conditions are to be outlined
separately from this mAmorandum.
- Fixed: approximately(8i)under present market
conditions
Variable: approximate1y(6.$%\under present market
conditions
- (Estimates only except for placement and
administrative fees):
Bond Placement
Fee • f-+Y-
Administrative Fee
Company Counsel
Bond Counsel
Fixed Rate Bends
1.0% of principal; fee may be
included in the interest
rate and effectively amortized
over life of the issue.
Waived.
As ne&otiated.
$15,000 to $20,000 plus
out-of-pocket expenses.
Variable Rate Bonds
0.95% of principal.
$5,000.
As negotiated.
$15,000 to $20,000
plus out-of-pocket
expenses.
Approx. $10,000 plus
out-of-pocket
expenses.
Bank Counsel Approx. $10,000 plus out-of-
pocket expenses.
Rating Not required. Rating is obtained
if cost is expected to
be more that offset
by a lower interest
rate.
Remarketing Agent Not required. 'Ns.112,..) of I% of principal
bond balance per year.
Trustee Normally not required.
Trustee Counsel Normally not required.
Acceptance fee of
approx. $3,000 plus
annual fel—Cf.-approx.
$3,000.
Approx. $4,000.
p.a JUN 05 '89 12:4: RYKEN TUBE MFG
DISCUSSION MEMORANDUM (continued)
e
Tender/Paying
Agent/Registrar
Letter of Credit
Commitment Fee
Real Estate
Related Fees
(appraisals,
surveys, title
insurance,
filing fees, etc.)
Fixed Rate Bonds
Normally not required.
As determined by
lendins officer.
Varies, depending
on size of
transaction.
Variable Rate Bonds
Acceptance fee of
approx. $3,000 plus
annual fee of about
As determined by
lending officer.
As determined by
lending officer.
Varies, depending
on size of
transaction.
Letter of Credit vi As determined by
Rate lending officer.
By:
It s :
Kenneth Magill President
Exhibit C
COMPANY CERTIFICATE REGARDING
PAYMENT OF PREVAILING WAGES
,Ryken Development Company/
tRyken Tube ManufacturIng, IncA Project)
The undersigned, RficenDevelogrent Garpany ,
a Michigan Corporation (the "Company"), hereby
certifies to The Economic Development Corporation of the County
of Oakland (the "EDC") as follows:
1. This Certificate is made and based upon the best
of the Company's knowledge and belief, only after thorough
investigation and discussion with all owners of the Company and
others who might have knowledge regarding the subject matter.
2. The Company understands that this Certificate is a
statutory requirement under the Economic Development
Corporations Act, Act No. 338 of the Michigan Public Acts of
1974, as amended (the "Act") which, if improperly made or based
upon any material misrepresentation or inaccuracy, might
invalidate the proceedings regarding the .71c_Em Evelqmlent Clarpamyken
Tube Manufacturing, Inc. Project (the "Project") pursuant to which the EDC
expects ultimately to issue its limited obligation economic
development revenue bonds to finance all or part of the Project.
3. Within the meaning and intent of Section 8(4)(h)
of the Act, all persons performing work on the construction of
the Project will be paid the prevailing wage and fringe benefit
rates for the same or similar work in the locality in which the
work is to be performed, as determined pursuant to Act No. 166
of the Michigan Public Acts of 1965, as amended.
Rvken Development Company
Michigan corporation
, a
Dated: June 14, 1989
Ryken Tube Manufacturing, Inc.,
a Michigan corporation
Aarzz,
Ketineth Magill
Its: President
10
By:
EXHIBIT D
Narrative Description of the Project
Ryken Development Company ("Ryken Development") is a Michigan
corporation formed in March of 1989 primarily for the purposes of
purchasing, developing and leasing real property.
The Applicant intends to purchase an 11.298 acre site on
Dallavo Drive in Commerce Township, Michigan and to construct a
150,0000-200,000 sq. ft. office and manufacturing building on the
site. The Applicant intends to lease all of the space in the new
building to either Ryken Tube Manufacturing, Inc. ("Ryken Tube"), a
Michigan corporation involved in the fabrication and manufacture of
tubular products (catalytic converter assemblies, exhaust pipes,
engine tubes and sports appearance parts for light trucks) or Ryken
Distributing Company ("Ryken Distributing"), a Michigan corporation
affiliated with Ryken Tube which ships the catalytic converters and
exhaust pipes produced by Ryken Tube to various Ford Motor Company
dealerships across the country.
After the proposed building is completed, Ryken Tube will
purchase the machinery, equipment, furniture and fixtures necessary
for Ryken Tube and Ryken Distributing to operate their respective
businesses and will use this equipment itself or lease certain items
to Ryken Distributing.
EXHIBIT D
Narrative Description of the Project (Continued)
The anticipated costs of the project are the following:
$ 715,000
7,000,000
400,000
Land
Building Construction
Site Work (incl land
preparation, utilities,
parking, landscaping)
Machinery, Equipment, 1,300,000
Furniture & Fixtures
Legal Fees
Financing Fees & Costs
Construction Period Interest
60,000
265,000
235,000
.0.2.35_,..anD (est.)