Maxco, Inc.



 



EXHIBIT 10.28



ASSIGNMENT AGREEMENT



     This ASSIGNMENT AGREEMENT (“Assignment”) dated November 13, 2002 (the
“Effective Date”) is made among COMERICA BANK, a Michigan banking corporation
(“Bank”), CONTRACTOR SUPPLY INCORPORATED, an Indiana corporation (“Contractor
Supply”), MAXCO, INC., a Michigan corporation (“Maxco”), ERSCO CORPORATION, a
Michigan corporation (“Ersco”), PAK-SAK, INC., a Michigan corporation
(“Pak-Sak”), MAX A. COON (“Mr. Coon”) and AMBASSADOR STEEL CORPORATION, an
Indiana corporation (“Ambassador”).





RECITALS:






     A.     Maxco is the obligor under certain promissory notes payable to the
order of Bank which are listed and detailed on Exhibit A attached hereto (the
“Assigned Notes”). Maxco is also the obligor under other promissory notes
payable to the order of Bank which are listed and detailed on Exhibit B
attached hereto (the “Retained Notes”).





     B.     The Assigned Notes and the Retained Notes are guaranteed by Ersco,
Pak-Sak, and Mr. Coon (the “Guarantors”) pursuant to (i) a Guaranty dated as of
April 1, 1999 executed by Ersco in favor of Bank (the “Ersco Guaranty”), (ii) a
Guaranty dated as of December 19, 1991 executed by Pak-Sak in favor of Bank
(the “Pak-Sak Guaranty”), and (iii) a Guaranty dated as of February 15, 2002
executed by Mr. Coon in favor of the Bank (the “Coon Guaranty”).





     C.     The Ersco Guaranty is secured by, among other things, security
interests granted by Ersco to Bank in certain of Ersco’s assets pursuant to a
Security Agreement (All Assets) dated as of March 30, 1999 (the “Ersco Security
Agreements”). Bank has filed UCC financing statements with the Michigan
Secretary of State on September 22, 1999, file number D568470, on August 5,
1999, file number D550719, and on October 8, 1999, file number D574934, plus
any prior UCC financing statements in favor of Bank in the debtor name of Ersco
Corporation (the “Ersco UCC Financing Statements”).





     D.     The Ersco Guaranty, the Ersco Security Agreement and the Ersco UCC
Financing Statements are herein referred to as the “Assigned Documents.”





     E.     The outstanding principal balance due under each of the Assigned Notes
as of November 13, 2002 is set forth on Exhibit A and the outstanding principal
balance due under each of the Retained Notes is set forth on Exhibit B.





     F.     Each of Maxco, Contractor Supply and each of the Guarantors has asked
Bank to sell and assign the Assigned Notes and the other Assigned Documents to
Contractor





-1-







 


Supply, and has asked Contractor Supply to accept and purchase the
Assigned Notes and the other Assigned Documents from Bank, which Bank is
willing to do but only upon the terms and conditions set forth below.





     In consideration of the premises and the mutual promises contained herein
the parties agree as follows:





     1.     Subject to the terms and conditions of this Assignment:





          (a)     Effective upon Bank’s receipt of the Purchase Price (as defined
below), Bank hereby sells and assigns to Contractor Supply, and Contractor
Supply hereby purchases and accepts from Bank, all of the Bank’s right, title
and interest in and to the Assigned Notes and the other Assigned Documents.





          (b)     Contractor Supply assumes all of Bank’s rights, obligations and
duties, if any, with regard to the Assigned Notes and the Assigned Documents as
of the Effective Date of the Assignment.





          (c)     In consideration of the assignment of the Assigned Notes and the
Assigned Documents, Contractor Supply shall pay to Bank the sum of Eleven
Million Five Hundred Fifty One Thousand Three Hundred Seventy Five and 34/100
($11,073,375.72) Dollars, in immediately available funds (the “Purchase
Price”), and shall otherwise comply with the terms of this Assignment.





          (d)     The Assignment of the Assigned Notes and the Assigned Documents is
made by Bank on a quit claim basis and without recourse of any type or kind to
Bank, and, except as expressly provided in Section 6 of this Assignment,
without any representation or warranty of any kind by Bank, whether express or
implied, in fact or in law. This disclaimer of representations and warranties
includes, but is not limited to, the waiver and disclaimer of any warranty
relating to title, possession, or quiet enjoyment, or the like in this
disposition. Recitals A through F set forth above do not constitute
representations or warranties of any kind or nature by Bank.





     2.     The parties hereby acknowledge and agree that the Retained Notes and
all documents (other than the Assigned Documents and Assigned Notes) between,
among or otherwise involving Bank, Maxco, Pak-Sak and Mr. Coon (the “Retained
Documents”) shall not be affected by this Assignment; provided, however,
notwithstanding anything contained in the Retained Notes or the Retained
Documents to the contrary or otherwise, the obligations of Ersco under the
Retained Notes and Retained Documents are hereby fully and completely released
and discharged, it being the intention of the parties that the Assigned
Documents shall, as of the Effective Date, serve to guaranty and secure the
Assigned Notes only and not the Retained Notes.





-2-







 


     3.     Notwithstanding anything contained in the Assigned Notes or the
Assigned Documents to the contrary or otherwise, the obligations of Pak-Sak and
Mr. Coon under the Assigned Notes and Assigned Documents are hereby fully and
completely released , it being the intention of the parties that the Retained
Documents shall, as of the Effective Date, serve to guaranty and secure only
the Retained Notes. Each of Maxco, Pak-Sak and Mr. Coon acknowledges and
confirms the indebtedness and obligations represented by the Retained Notes and
the Retained Documents, as applicable, and confirms the rights of the Bank
provided thereunder.





     4.     Notwithstanding anything contained in the Assigned Notes or the
Assigned Documents to the contrary or otherwise, Contractor Supply hereby
acknowledges and agrees that, until such time as all of the obligations of
Maxco to Bank under the Retained Notes and the Retained Documents (“Retained
Maxco Obligations”) are fully paid, satisfied and discharged and Bank has
notified Contractors Suppliers in writing of that fact, (i) all of the
obligations of Maxco under the Assigned Notes shall be (a) non-recourse against
Maxco and (b) subordinate, in all respects, to the Retained Maxco Obligations,
including, by way of example only, in respect of the right and timing of
payment and with respect to the enforceability and priority of any security
interest or other lien granted under Assigned Documents, to the security
interest and other liens granted under the Retained Documents, (ii) Contractor
Supply shall look solely to the Ersco Guaranty, the Ersco Security Agreements
and the Ersco UCC Financing Statements for payment of any amounts due or to
become due under the Assigned Notes and (iii) all other obligations or
indebtedness, if any, due from Maxco to Contractor Supply shall be subordinate
(“Other Maxco Indebtedness”), in all respects, to the Retained Maxco
Obligations.





     5.     Promptly after the execution and delivery of this Assignment and
Contractor Supply’s payment of the Purchase Price in same day funds, Bank shall
deliver to Contractor Supply: (a) the original Assigned Notes (expressly
endorsed by Bank to Contractor Supply without recourse, representation or
warranty) and (b) a copy of each of the Assigned Documents.





     6.     Bank represents to Contractor Supply that:





          (a)     Bank is a Michigan banking corporation, incorporated and validly
existing under the laws of the State of Michigan and has all requisite power
and authority to execute and deliver, and to perform all of its obligations
under, this Assignment;





          (b)     The execution, delivery and performance of this Assignment has been
duly authorized by all necessary action and does not and will not (i) require
any consent or approval of shareholders, or (ii) violate any law, rule,
regulation, order, writ, judgment, injunction, determination or award presently
in effect having applicability to the Bank or any provision of Bank’s articles
or by-laws; and





-3-







 


          (c)     This Assignment constitutes a legal, valid and binding obligation of
Bank enforceable against it in accordance with its terms.





     7.     Contractor Supply represents to Bank that:





          (a)     Contractor Supply is a corporation, validly existing under the laws of
the State of Indiana and has all requisite power and authority to execute and
deliver, and to perform all of its obligations under, this Assignment





          (b)     The execution, delivery and performance of this Assignment will not
(i) violate any law, rule, regulation, order, writ, judgment, injunction,
determination or award presently in effect having applicability to Contractor
Supply, or (ii) result in a breach or constitute a default under any agreement
to which Contractor Supply is a party or by which it is bound;





          (c)     This Assignment constitutes a legal, valid and binding obligation of
Contractor Supply enforceable against it in accordance with its terms; and





          (d)     Contractor Supply (i) has such knowledge and experience in financial
matters that it is capable of evaluating the merits and risks of the purchase
of the Assigned Notes and the Assigned Documents; (ii) is knowledgeable
regarding the financial status of Maxco, Ersco and the property subject to the
Assigned Documents; (iii) has agreed to purchase the Assigned Notes and the
Assigned Documents on the basis of its own independent investigation,
evaluation and credit determination and has not sought or relied upon any
representation or warranty from Bank (except those representations expressly
stated in Section 6 of this Assignment) or information provided by or
statements made by Bank or its representatives; (iv) is purchasing the Assigned
Notes and the Assigned Documents for Contractor Supply’s own account and not
with a view to, or for sale in connection with, any public distribution thereof
which would violate applicable securities laws; and (v) the purchase and sale
of the Assigned Notes and the Assigned Documents are exempt from registration
under applicable Blue Sky or securities law.





     8.     Contractor Supply agrees to pay for the defense of Bank (Bank shall
have the right to approve legal counsel, which approval shall not be
unreasonably withheld) and indemnify Bank against and hold Bank harmless from
any and all liability, claim, cost, loss, damage or expense (including
reasonable attorneys’ fees) which Bank may incur or suffer as a result of or
arising out of or in connection with (i) any breach by Contractor Supply of any
representation or warranty of Contractor Supply contained in this Assignment,
(ii) any failure by Contractor Supply to carry out any of its obligations under
this Assignment, (iii) any act or omission of Contractor Supply occurring after
the Effective Date, and (iv) any claim or damages of any kind arising out of,
or relating to the enforcement by Contractor Supply of the Assigned Notes or
any of the Assigned Documents or the assignment to Contractor Supply of the
Assigned Notes and the Assigned Documents.





-4-







 


     9.     Ambassador hereby unconditionally guarantees the payment and
performance of Contractor Supply under this Assignment, including but not
limited to the commitments and indemnities set forth in Section 8 of this
Assignment.





     10.     Maxco, Pak-Sak and Mr. Coon are parties to this Assignment for the
purpose of acknowledging and approving the transactions contemplated by this
Assignment, and the acknowledgments, waivers and releases contained in this
Assignment.





     11.     The agreements, representations and warranties of the parties shall
survive the consummation of the Assignment.





     12.     This Assignment shall be governed by and construed in accordance with
the laws of the State of Michigan without reference to conflicts of laws.





     13.     This Assignment sets forth the entire agreement and understanding of
the parties, and supersedes all prior agreements and understandings between the
parties with respect to the assignment of the Assigned Notes, Assigned
Documents and other matters reflected herein. This Assignment shall be binding
on, and inure to the benefit of, the parties and their successors and assigns;
provided, however, that any obligations or undertakings owing to the Bank
hereunder may not be assigned without Bank prior written consent.





     14.     EACH OF MAXCO, ERSCO, CONTRACTOR SUPPLY, AMBASSADOR, PAK-SAK, MR. COON
AND BANK ACKNOWLEDGE AND AGREE 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 ASSIGNMENT, THE ASSIGNED NOTES OR THE ASSIGNED
DOCUMENTS.





     15.     EACH OF MAXCO, ERSCO, PAK-SAK AND MR. COON, IN EVERY CAPACITY, HEREBY
WAIVES, DISCHARGES AND FOREVER RELEASES BANK, BANK’S EMPLOYEES, OFFICERS,
DIRECTORS, ATTORNEYS, STOCKHOLDERS AND SUCCESSORS AND ASSIGNS, FROM AND OF ANY
AND ALL CLAIMS, CAUSES OF ACTION, DEFENSES, COUNTERCLAIMS OR OFFSETS AND/OR
ALLEGATIONS THAT EACH SUCH PARTY MAY HAVE OR MAY HAVE MADE OR WHICH ARE BASED
ON FACTS OR CIRCUMSTANCES ARISING DIRECTLY OR INDIRECTLY OUT OF THE ASSIGNED
NOTES, THE ASSIGNED DOCUMENTS, THE RETAINED NOTES, OR THE RETAINED DOCUMENTS OR
MATTERS OR RELATIONSHIPS RELATED THERETO, AT ANY TIME UP THROUGH AND INCLUDING
THE DATE OF THIS





-5-







 


ASSIGNMENT, WHETHER KNOWN OR UNKNOWN, AGAINST ANY OR ALL OF
BANK, BANK’S EMPLOYEES, OFFICERS, DIRECTORS, ATTORNEYS, STOCKHOLDERS AND
SUCCESSORS AND ASSIGNS, PROVIDED, HOWEVER, THAT THIS RELEASE DOES NOT WAIVE,
DISCHARGE OR RELEASE BANK FOR ANY BREACH OF THE AGREEMENTS, REPRESENTATIONS AND
WARRANTIES OF BANK UNDER THIS AGREEMENT.





     16.     This Assignment may be signed by facsimile signatures and in
counterparts, each of which shall be an original and all of which taken
together shall constitute one agreement.





     17.     This Assignment may not be amended, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.





     IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the Effective Date.






	 	 	 	 	 	 	 
	
COMERICA BANK
	 	CONTRACTOR SUPPLY INCORPORATED
	 
	 	 	 	 	 	 	 
	 
	By:	 	
/s/ David Grantham



Its Vice President
	 	By:
	 	/s/ Daryle L. Doden



Its President
	 
	 	 	 	 	 	 	 
	 
	
MAXCO, INC.
	 	ERSCO CORPORATION
	 
	 	 	 	 	 	 	 
	 
	By:	 	
/s/ Max A. Coon



Its President
	 	By:
	 	/s/ Max A. Coon



Its Secretary
	 
	 	 	 	 	 	 	 
	 
	
PAK-SAK, INC.	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	By:	 	
/s/ Max A. Coon



Its Secretary
	 	 	 	/s/ Max A. Coon



Max A. Coon
	 
	 	 	 	 	 	 	 
	 
	
AMBASSADOR STEEL CORPORATION	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	By:	 	
/s/ Daryle L. Doden



Its President	 	 	 	 





-6-







 


EXHIBIT A


ASSIGNED NOTES




	 	 	 	 	 	 	 	 	 
	Note #	 	Note Description	 	Date	 	Balance 11/11/02	 
	
	 	
	 	
	 	
	 
	Split 703	 	
Amended and Restated Revolving
Credit Note
	 	6/22/1999
	 	$	9,580,535.34	 
	
	 	


	 	

	 	
	 
	299	 	
Variable Rate — Installment Note
	 	7/19/1999
	 	$	234,700.00	 
	
	 	


	 	

	 	
	 
	307	 	
Variable Rate — Installment Note
	 	9/01/1999
	 	$	333,080.00	 
	
	 	


	 	

	 	
	 
	737	 	
Variable Rate — Installment Note
	 	7/12/2000
	 	$	896,000.00	 
	
	 	


	 	

	 	
	 



EXHIBIT B



RETAINED NOTES







	 	 	 	 	 	 	 	 	 
	Note #	 	Note Description	 	Date	 	Balance 11/11/02	 
	
	 	
	 	
	 	
	 
	Split 703	 	
Revolving Credit Note
	 	6/22/1999
	 	$	1,175,000.00	 
	
	 	


	 	

	 	
	 
	729	 	
Variable Rate — Installment Note
	 	7/12/2000
	 	$	5,024,692.29	 
	
	 	


	 	

	 	
	 
	638	 	
Variable Rate — Installment Note
	 	9/01/1999
	 	$	269,274.21	 
	
	 	


	 	

	 	
	 
	687	 	
Letters of Credit
	 	9/01/1999
	 	$	475,000.00	 
	
	 	


	 	

	 	
	 





-7-