Exhibit 10.1

 

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Advance Formula Agreement

   

 

As of January 26, 2009, this Advance Formula Agreement (as amended, varied,
supplemented, restated, renewed or replaced at any time and from time to time,
this “Agreement”) is made by Manitex LiftKing, ULC, an Alberta corporation
(“Debtor”) in favour of COMERICA BANK (“Bank”), a Texas banking association and
authorized foreign bank under the Bank Act (Canada).

For and in consideration of the loans and other credit which Debtor may now or
hereafter obtain or request from Bank which are secured pursuant to a Security
Agreement dated as of the date herewith, executed and delivered by Debtor to and
in favour of Bank (as amended, varied, supplemented, restated, renewed or
replaced at any time and from time to time, the “Security Agreement”), and for
other good and valuable consideration, Debtor agrees as follows:

 

1. FORMULA LOANS. The credit which Bank may now or hereafter extend to Debtor
subject to the limitations of this Agreement and to the conditions and
limitations of any other agreement between Debtor and Bank is identified as
follows:

CDN$4,500,000 line of credit and U.S.$4,500,000 line of credit

and any extensions, renewals or substitutions thereof, whether in a greater or
lesser amount, including any letters of credit issued thereunder (“Formula
Loans”).

 

2. ADVANCE FORMULA. Debtor warrants and agrees that Debtor’s indebtedness to
Bank for the Formula Loans shall never exceed the sum of:

 

  (a) eighty percent (80%) of its Eligible Accounts (as hereinafter defined);
plus

 

  (b) the lesser of (i) thirty percent (30%) of its Eligible Inventory (as
hereinafter defined) which is properly classified under GAAP as work-in-process
Inventory, or (ii) Five Hundred Thousand Canadian Dollars (CDN$500,000); plus

 

  (c) the lesser of (i) fifty percent (50%) of its Eligible Inventory (as
hereinafter defined), or (ii) Three Million Canadian Dollars (CDN$3,000,000).

in each case less customary exclusions and reserves (the “Advance Formula”).

 

3. FORMULA COMPLIANCE. If the limitations in paragraph 2, above, are exceeded at
any time, Debtor shall immediately pay Bank sums sufficient to reduce the
Formula Loans by the amount of such excess.

 

4. ELIGIBLE ACCOUNT. “Eligible Account” shall mean an Account (as hereinafter
defined) arising in the ordinary course of Debtor’s business which meets each of
the following requirements:

 

  (a) it is not owing more than ninety (90) days after the date of the original
invoice or other writing evidencing such Account;

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  (b) it is not owing by an Account Debtor (as hereinafter defined) who has
failed to pay twenty-five percent (25%) or more of the aggregate amount of its
Accounts owing to Debtor within ninety (90) days after the date of the
respective invoices or other writings evidencing such Accounts;

 

  (c) it arises from the sale or lease of goods and such goods have been shipped
or delivered to the Account Debtor under such Account; or it arises from
services rendered and such services have been performed;

 

  (d) it is evidenced by an invoice, dated not later than the date of shipment
or performance, rendered to such Account Debtor or some other evidence of
billing acceptable to Bank;

 

  (e) it is not evidenced by any note, trade acceptance, draft or other
negotiable instrument or by any chattel paper, unless such note or other
document or instrument previously has been endorsed and delivered by Debtor to
Bank;

 

  (f) it is a valid, legally enforceable obligation of the Account Debtor
thereunder, and is not subject to any offset, counterclaim or other defense on
the part of such Account Debtor or to any claim on the part of such Account
Debtor denying liability thereunder in whole or in part;

 

  (g) it is subject to a first priority, properly perfected security interest in
favor of Bank, and it is not subject to any sale of accounts, any rights of
offset, assignment, lien or security interest whatsoever other than to Bank;

 

  (h) it is not owing by a subsidiary or affiliate of Debtor;

 

  (i) it is not owing by an Account Debtor which (i) does not maintain its chief
executive office in the United States of America or Canada, (ii) is not
organized under the laws of the United States of America or Canada, or any state
or province thereof, as applicable, or (iii) is the government of any foreign
country or sovereign state, or of any state, province, municipality or other
instrumentality or agency thereof;

 

  (j) it is not an Account owing by the United States of America or Canada or
any state, province or political subdivision thereof, or by any department,
agency, public body corporate or other instrumentality or agency of any of the
foregoing, unless all necessary steps are taken to comply with the Federal
Assignment of Claims Act of 1940, as amended, the Financial Administration Act
(Canada), as amended or with any comparable state or provincial law, as
applicable, and all other necessary steps are taken to perfect Bank’s security
interest in such Account;

 

  (k) it is not owing by an Account Debtor for which Debtor has received a
notice of (i) the death of the Account Debtor or any partner of the Account
Debtor, (ii) the dissolution, liquidation, termination of existence, insolvency
or business failure of the Account Debtor, (iii) the appointment of a receiver
for any part of the property of the Account Debtor, or (iv) an assignment for
the benefit of creditors, the filing of a petition in bankruptcy, or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against the Account Debtor;

 

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  (l) it is not an Account billed in advance, payable on delivery, for consigned
goods, for guaranteed sales, for unbilled sales, for progress billings, payable
at a future date in accordance with its terms, subject to a retainage or
holdback by the Account Debtor or insured by a surety company; and

 

  (m) it is not owing by any Account Debtor whose obligations Bank, acting in
its sole discretion, shall have notified Debtor are not deemed to constitute
Eligible Accounts.

An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account.

For purposes of this Agreement, an “Account” shall mean any right of Debtor to
payment for goods sold or leased or for services rendered, but shall not include
interest or service charges; and “Account Debtor” shall mean the person who is
obligated on or under an Account.

 

5. ELIGIBLE INVENTORY. Unless stated otherwise in paragraph 13 below, “Eligible
Inventory” (a) shall be valued at the lesser of the cost or present market value
of Debtor’s Inventory (as defined in the Personal Property Security Act
(Ontario), as amended and in effect from time to time) determined in accordance
with generally accepted accounting principles, consistently applied (“GAAP”),
and (b) shall mean all of Debtor’s Inventory which is in good and merchantable
condition, which is not obsolete or discontinued, which would be properly
classified as “raw materials”, “finished goods Inventory”, or “work-in-process
Inventory” under and in accordance with GAAP, and which is subject to a first
priority, properly perfected security interest in favor of Bank, but excluding
(1) consigned goods, Inventory located outside the United States of America or
Canada, (2) Inventory covered by or subject to a seller’s right to repurchase,
or any consensual or nonconsensual lien or security interest (including, without
limitation, purchase money security interests) other than in favor of Bank,
whether senior or junior to Bank’s security interest, (3) Inventory subject to
creditors’ rights under Section 81.1 of the Bankruptcy and Insolvency Act
(Canada), (4) Inventory stored, warehoused or located at a site for which Debtor
has not provided to Bank a landlord, bailee or mortgagee waiver or similar
agreement in form and substance acceptable to Bank, and (5) Inventory that Bank,
acting in its sole discretion, after having notified Debtor, excludes. Inventory
which is at any time Eligible Inventory, but which subsequently fails to meet
any of the foregoing requirements, shall forthwith cease to be Eligible
Inventory.

 

6.

CERTIFICATES, SCHEDULES AND REPORTS. Debtor will, within ten (10) days after and
as of the end of each month (and at such other times as Bank may request),
deliver to Bank agings of the Accounts and a schedule identifying each Eligible
Account (not previously so identified) and reports as to the amount of Eligible
Inventory. Debtor will from time to time deliver to Bank such additional
schedules, certificates and reports respecting all or any of the Collateral (as
defined in the Security Agreement), the items or amounts received by Debtor in
full or partial payment of any of the Collateral, and any goods (the sale

 

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or lease of which by Debtor shall have given rise to any of the Collateral)
possession of which has been obtained by Debtor, all and as to such extent as
Bank may request. Any such schedule, certificate or report shall be executed by
a duly authorized officer of Debtor and shall be in such form and detail as Bank
may specify. Any such schedule identifying any Eligible Account shall be
accompanied (if Bank so requests) by a true and correct copy of the invoice
evidencing such Eligible Account and by evidence of shipment or performance.

 

7. INSPECTIONS; COMPLIANCE. Debtor shall permit Bank and its designees from time
to time to make such inspections and audits, and to obtain such confirmations or
other information, with respect to any of the Collateral or any Account Debtor
as Bank is entitled to make or obtain under the Security Agreement, and shall
reimburse Bank on demand for all costs and expenses incurred by Bank in
connection with such inspections and audits. Debtor shall further comply with
all of the other terms and conditions of the Security Agreement.

 

8. DEFAULT. Any failure by Debtor to comply with this Agreement shall constitute
a default under the Formula Loans and under the Security Agreement and the
Indebtedness, as defined therein.

 

9. AMENDMENTS; WAIVERS. This Agreement may be amended, modified or terminated
only in writing duly executed by Debtor and Bank. No delay by Bank in requiring
Debtor’s compliance herewith shall constitute a waiver of such right. The rights
granted to Bank hereunder are cumulative, and in addition to any other rights
Bank may have by agreement or under applicable law. This Agreement shall
supersede and replace in their entirety any prior advance formula agreements in
effect between Bank and Debtor.

 

10. DEMAND BASIS FORMULA LOANS. Notwithstanding anything to the contrary set
forth in this Agreement, in the event that the Formula Loans are at any time on
a demand basis, Debtor hereby acknowledges and agrees that the formula set forth
in paragraph 2 hereof is merely for advisory and guidance purposes and Bank
shall not be obligated to make any loans or advances under the Formula Loans,
and, notwithstanding the terms of paragraph 3 above, Bank may at any time, at
its option, demand payment of any or all of the Formula Loans, whereupon the
same shall become due and payable.

 

11. DILUTION OF ACCOUNTS. In the event that Bank, at any time in its sole
discretion, determines that the dollar amount of Eligible Accounts collectable
by Debtor is reduced or diluted as a result of discounts or rebates granted by
Debtor to the respective Account Debtor(s), returned or rejected Inventory or
services, or such other reasons or factors as Bank deems applicable, Bank may,
in its sole discretion, upon five (5) business days’ prior written notice to
Debtor, reduce or otherwise modify the percentage of Eligible Accounts included
within the Advance Formula under paragraph 2(a) above and/or reduce the dollar
amount of Debtor’s Eligible Accounts by an amount determined by Bank in its sole
discretion.

 

12.

JURY WAIVER. DEBTOR 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

 

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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.

 

13. GOVERNING LAW. This Agreement shall be construed in accordance with and
governed by the laws of the Province of Ontario and of Canada applicable therein
and the parties attorn to the non-exclusive jurisdiction of the courts of the
Province of Ontario.

 

14. COUNTERPARTS. This Agreement may be signed in as many counterparts as may be
necessary and delivered by facsimile, each of which shall be deemed to be an
original and such counterparts together shall constitute one and the same
document.

 

15. MISCELLANEOUS. This Agreement amends and restates the Advance Formula
Agreement dated as of December 29, 2006, between the Debtor and the Bank. This
Agreement is subject to the terms and conditions of the Letter Agreement dated
as of June 30, 2008, between the Debtor and the Bank.

[signatures on following page]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.

 

    DEBTOR: Debtor’s Chief Executive Office Address:     3000 South Austin
Avenue     MANITEX LIFTKING, ULC Georgetown, Texas 78626           By:  

/s/ David H. Gransee

      SIGNATURE OF     Its:  

VP & CFO

      TITLE

 

Accepted and Approved: COMERICA BANK By:  

/s/ James Q. Goudie III

  SIGNATURE OF Its:  

VP & AGM

  TITLE

 

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