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EXHIBIT 10(j)
FIRST AMENDMENT TO
CREDIT AGREEMENT AND WAIVER
THIS FIRST AMENDMENT ("Amendment") dated as of December 31, 1994, by
and among the borrowers listed on Schedule 1 (collectively "Companies") and
Comerica Bank, a Michigan banking corporation and NBD Bank (formerly known as
NBD Bank, N.A.), a Michigan banking corporation (individually "Bank" and
collectively "Banks") and Comerica Bank, as agent for the Banks (in such
capacity "Agent").
RECITALS:
A. Companies, Agent and Banks entered into a Credit Agreement
("Agreement") dated as of March 11, 1994.
B. Companies and Banks desire to amend the Agreement as hereinafter
set forth.
NOW, THEREFORE, the parties agree as follows:
1. The definition of "Applicable Additional Margin" set forth in
Section 1.8 of the Agreement is amended to read in its entirety as follows:
"1.8 'Applicable Additional Margin' shall mean as of any date
of determination thereof, (a) one quarter of one percent (1/4%) if as
of such date of determination, the Revolving Credit Aggregate
Commitment is equal to or less than Eight Million Dollars ($8,000,000)
or if the aggregate outstanding principal amount of the Advances plus
the outstanding amount of Letters of Credit is equal to or greater than
Eight Million Dollars ($8,000,000) and less than Nine Million Dollars
($9,000,000), (b) three eighths of one percent (3/8%) if as of such date
of determination, the aggregate outstanding principal amount of the
Advances plus the outstanding amount of Letters of Credit is equal to
or greater than Nine Million Dollars ($9,000,000), and (c) shall mean
zero percent (0%) at all other times."
2. The definition of "Applicable Increase" set forth in Section 1.11
of the Agreement is amended to read in its entirety as follows:
"1.11 'Applicable Increase' shall for purposes of the
provisions of Section 11.4 mean for any given fiscal quarter an amount
(rounded to the nearest $1,000) equal to one hundred percent (100%) of
Consolidated Net Income for the fiscal quarter ending on such date (but
in any event not less than zero)."
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3. The definition of "Consolidated Adjusted Net Income" set forth in
Section 1.25 of the Agreement is amended to read in its entirety as follows:
"1.25 'Consolidated Adjusted Net Income' shall mean as of any date of
determination thereof net income from continuing operations of Detrex and
its consolidated Subsidiaries for the applicable Measuring Period,
determined in accordance with GAAP, as consolidated in accordance with
GAAP, less to the extent added in calculating such net income, the amount
of any recoveries in environmental reserves (net of applicable taxes) and
plus to the extent deducted in calculating such net income, the amount of
any deductions related to increases in environmental reserves (net of
applicable taxes)."
4. The definition of "Consolidated Cash Flow Coverage Ratio" set forth in
Section 1.26 of the Agreement is amended to read in its entirety as follows:
"1.26 'Consolidated Cash Flow Coverage Ratio' shall mean as of any
date of determination thereof, a ratio, the numerator of which is
Consolidated Adjusted Net Income for the applicable Measuring Period, plus
depreciation and amortization expenses for such period, of Detrex and its
consolidated Subsidiaries and the denominator of which is the sum of
Capital Expenditures, payments on capital leases and dividends paid or
payable during such period, of Detrex and its consolidated Subsidiaries,
plus and amount of payments of principal due during such period with
respect to long-term indebtedness of Detrex and its consolidated
Subsidiaries (excluding balloon payments), plus, to the extent not
reflected in the calculation of Consolidated Adjusted Net Income, the
amount of any cash expenditures during such period by Detrex and its
consolidated Subsidiaries which are deductions from long term or short term
environmental reserves, all as determined in accordance with GAAP, as
consolidated in accordance with GAAP."
5. The definition of "Lending Availability" set forth in Section 1.60 of
the Agreement is amended to read in its entirety as follows:
"1.60 'Lending Availability' shall mean as of any date of
determination thereof, an amount equal to eighty percent (80%) of Eligible
Accounts."
6. The definition of "Measuring Period" set forth in Section 1.71 of the
Agreement is amended to read in its entirety as follows:
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"1.71 'Measuring Period' shall mean (a) with respect to the
calculation of the Consolidated Cash Flow Coverage Ratio for the fiscal
quarter (i) ending March 31, 1995, the period beginning January 1, 1995 and
ending March 31, 1995, (ii) ending June 30, 1995, the period beginning
January 1, 1995 and ending June 30, 1995, (iii) ending September 30, 1995,
the period beginning January 1, 1995 and ending September 30, 1995, (iv)
ending December 31, 1995 and each fiscal quarter thereafter the four
immediately preceding fiscal quarters ending on such date, and
(b) with respect to the calculation of the Consolidated Interest Coverage
Ratio the four immediately preceding fiscal quarters ending on the
applicable date of determination."
7. The definition of "Minimum Amount" set forth in Section 1.72 of
the Agreement is amended to read in its entirety as follows:
"1.72 'Minimum Amount' shall mean $17,000,000 plus an amount equal to
the Applicable Increase for each fiscal quarter of Detrex ending on or after
March 31, 1995."
8. Section 4.4 of the Agreement is amended to change the words "one and
one half percent (1 1/2%)" in the fifth line thereof to "one and five eighths
percent (1 5/8%)."
9. Section 11.1 of the Agreement is amended to read in its entirety as
follows:
"11.1 Leverage Ratio. Permit the Consolidated Leverage Ratio at any
time to exceed the following amounts during the periods specified below:
December 31, 1994 through December 30, 1995 2.5 to 1.0
December 31, 1995 through December 30, 1996 2.25 to 1.0
December 31, 1996 and thereafter 2.20 to 1.0"
10. Section 11.2 of the Agreement is amended to read in its entirety as
follows:
"11.2 Cash Flow Coverage Ratio. Permit the Consolidated Cash Flow
Coverage Ratio at any time to be less than the amounts specified below
during the periods specified below:
January 1, 1995 through December 31, 1995 .50 to 1.0
January 1, 1996 through December 31, 1996 .65 to 1.0
January 1, 1997 and thereafter .85 to 1.0"
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11. Section 11.3 is amended to read in its entirety as follows:
"11.3 Current Ratio. Permit the ratio of Consolidated
Current Assets to Consolidated Current Liabilities at any time to be
less than 1.25 to 1.0 through December 31, 1995 and thereafter, to be
less than 1.35 to 1.0. For purposes of calculation of this ratio, all
Indebtedness of Companies to Bank outstanding under the Revolving
Credit Notes shall be treated as a part of Consolidated Current
Liabilities."
12. The following subsection (1) is hereby added to Section 12.1 of
the Agreement and the period at the end of subsection (k) of Section 12.1 is
deleted and a semi-colon substituted therefor:
"(1) If Lending Availability is less than $10,000,000 as of
December 31, 1994 (as determined on the basis of the results of the
Agent's collateral audit of Companies as of December 31, 1994 and
without regard to any Eligible Inventory)."
13. The Banks hereby waive any default under the Agreement arising
from the failure of Companies to comply with the provisions of Sections 11.1,
11.2, 11.3 and 11.4 of the Agreement for the period ended December 31, 1994 to
the extent resulting solely from the addition by the Companies as of December
31, 1994 of $8,500,000 to their environmental reserves. This waiver shall not
act as a consent or waiver of any other transaction, act or omission, whether
related or unrelated thereto. This waiver shall not extend to or affect any
obligation, covenant, agreement or default not expressly waived hereby.
14. Upon execution of this Amendment, Companies shall pay to
the Agent, for pro-rata distribution to the Banks, an amendment fee in the
amount of $12,000. The amendment fee is non-refundable. Following receipt
thereof, the Agent shall promptly remit to each Bank its pro-rata share of the
amendment fee. The Agent shall use diligent good faith efforts to complete the
collateral audit before March 10, 1995.
15. Companies hereby represent and warrant that, after giving
effect to the amendments and waivers contained herein, (a) execution, delivery
and performance of this Amendment and any other documents and instruments
required under this Amendment or the Agreement are within each Company's
corporate powers, have been duly authorized, are not in contravention of law
or the terms of any Company's Articles of Incorporation or Bylaws, and do not
require the consent or approval of any governmental body, agency, or authority;
and this Amendment and any other documents and instruments required under this
Amendment or the Agreement, will be valid and binding in accordance with their
terms; (b) the
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continuing representations and warranties of each Company set forth in Sections
9.1 through 9.15 of the Agreement are true and correct on and as of the date
hereof with the same force and effect as made on and as of the date hereof; (c)
the continuing representations and warranties of each Company set forth in
Section 9.16 of the Agreement are true and correct as of the date hereof with
respect to the most recent financial statements furnished to the Bank by
Companies in accordance with Section 10.1 of the Agreement; and (d) no Event of
Default (as defined in the Agreement) or condition or event which, with the
giving of notice or the running of time, or both, would constitute an Event of
Default under the Agreement, has occurred and is continuing as of the date
hereof.
16. Except as expressly provided herein, all of the terms and conditions
of the Agreement remain unchanged and in full force and effect.
17. This Amendment shall be effective as of the date first above written.
IN WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK, as Agent DETREX CORPORATION
By: /s/ Michael Banks By: /s/ Gerald J. Israel
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Michael Banks Gerald J. Israel
Its: Vice President Its: Vice President-Finance and
Chief Financial Officer
THE ELCO CORPORATION
By: /s/ Gerald J. Israel
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Gerald J. Israel
Its: Treasurer
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HARVEL PLASTICS, INC.
By: /s/ Gerald J. Israel
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Gerald J. Israel
Its: Director
SEIBERT-OXIDERMO, INC.
By: /s/ Gerald J. Israel
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Gerald J. Israel
Its: Treasurer
COMERICA BANK
By: /s/ Michael Banks
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Michael Banks
Its: Vice President
NBD BANK
By: /s/ Teresa Kalil Schuster
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Teresa Kalil Schuster
Its: Second Vice President
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SCHEDULE 1
Detrex Corporation
The Elco Corporation
Harvel Plastics, Inc.
Seibert-Oxidermo, Inc.
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[Comerica Letterhead]
March 9, 1995
Gerald J. Israel
Vice President of Finance
Detrex Corporation
24901 Northwestern Hwy. #500
Southfield, MI 48075
Dear Jerry:
Comerica Bank, as Agent, has completed its collateral audit of the Companies as
of December 31, 1994. We have concluded that the Lending Availability
requirement of $10,000,000 as of December 31, 1994 was adequately satisfied.
Our determination that an account is an eligible account for purposes of this
collateral audit shall not limit Comerica Bank's right to deem the same or
similar types of accounts as ineligible for the purposes of subsequent
Borrowing Base Reports.
Sincerely,
/s/ Michael Banks
Vice President
Comerica Bank, As Agent
P.O. Box 75000
Detroit, MI 48275-3268
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