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EXHIBIT 10.7
FOURTH AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
THIS FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (the "Fourth
Amendment") dated as of the 9th day of July, 1996, by and among Maxco, Inc.,
a Michigan Corporation (hereinafter referred to as the "Borrower"), and
Comerica Bank (formerly known as Comerica Bank-Detroit), a Michigan banking
corporation (hereinafter referred to as the "Bank").
W I T N E S S E T H
WHEREAS, Borrower and Bank entered into a certain Amended and Restated
Loan Agreement dated October 31, 1994, as amended by First Amendment to Amended
and Restated Loan Agreement dated May 9th, 1995; as further amended by Second
Amendment to Amended and Restated Loan Agreement dated September 8, 1995; and,
as further amended by Third Amendment to Amended and Restated Loan Agreement
dated May 15, 1996 (the "Agreement");
WHEREAS, Borrower desires to decrease the Commitment Amount from
$24,000,000 to $14,000,000 and modify certain other terms and conditions of the
Agreement; and
WHEREAS, the Borrower and the Bank desire to amend certain of the
covenants set forth in the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Borrower and the Bank hereby agree as follows:
1. In Sub-Section 1.1 of Section 1 of the Agreement, the following
definitions are hereby deleted in their entirety and replaced by the following
or added entirely:
"Borrowing Base" shall mean the sum of 75 percent of the
aggregate outstanding principal balance of the Borrower's and the
Guarantors' Eligible Accounts, less the aggregate amounts of
Letters of Credit then outstanding.
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"Commitment Amount" shall mean $14,000,000 (or such lesser
amount to which the Commitment Amount may be reduced by the
Borrower from time to time under Section 2.8.1 of this Agreement).
"Consolidated Funded Debt" shall mean, as of any applicable
date of determination, that portion of consolidated Debt which
consists of (a) indebtedness for borrowed money, including
indebtedness for borrowed money which is evidenced by notes, bonds,
debentures or other similar instruments or (b) obligations under
installment sales contracts or capital leases, less cash and cash
equivalents of Borrower and/or the Guarantors as of the applicable
date. For purposes of this Agreement, as applied to Borrower,
Consolidated Funded Debt shall be determined without using the
indebtedness and obligation data from Medar.
The term "Finishmaster" is hereby deleted.
The term "Finishmaster Loan Percentage" is hereby deleted.
"Securities" shall mean (i) all of the issued and outstanding
capital stock of the Subsidiaries and (ii) all of the shares of
capital stock of Medar owned by the Borrower or any Subsidiary.
2. The Revolving Credit Note dated October 31, 1994, (the "Note") in the
original face amount of Fourteen Million Dollars ($14,000,000), as amended by
the First Amendment to Amended and Restated Loan Agreement dated May 9th, 1995,
as replaced by a Revolving Credit Note dated September 8, 1995, as amended by
Third Amendment to Amended and Restated Loan Agreement dated May 15, 1996, is
hereby amended such that the face amount is Fourteen Million Dollars
($14,000,000), and the reference in the first paragraph of the Note is amended
to read Fourteen Million Dollars ($14,000,000).
3. Sub-Section 5.5 Section 5 is hereby deleted in its entirety and
replaced by the following:
5.5 Subsidiaries. The Guarantors are the only wholly owned
Subsidiaries of the Borrower. The Borrower also owns approximately 20%
of the capital stock of Medar, a 25% general partnership interest in CJF
and a 2% limited partnership interest in Riverview Associates.
4. Sub-Section 5.14 of Section 5 is hereby deleted in its entirety and
replaced by the following:
5.14 Margin Stock. Neither the Borrower nor any of the Subsidiaries
is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying
any "margin stock" within the meaning
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of Regulation U of the Board of Governors of the Federal Reserve System,
and no part of the proceeds of any loan hereunder will be used, directly or
indirectly, to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock or for
any other purpose which might violate the provisions of Regulation G, T, U
or X of the said Board of Governors. The Borrower does not own any margin
stock other than the shares of capital stock of Medar pledged to the Bank
hereunder.
5. Sub-Section 5.19 of Section 5 is hereby deleted in its entirety and
replaced by the following:
5.19 Shares and Shareholders. The Borrower's entire authorized
capital stock consists of 10,000,000 shares of common stock, $1.00 par
value, and 100,000 shares of Preferred Stock, of which 18,000 shares of
Series Two Preferred Stock are issued and outstanding, and of which
16,219 shares of Series Three Preferred Stock are issued and outstanding.
The Guarantors' entire outstanding capital stock is owned both
beneficially and of record by the Borrower, and the Guarantors'
authorized and outstanding capital stock consists of the following:
Authorized Outstanding
Guarantor: Capital Stock: Par Value: Capital Stock
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Akemi 50,000 $ 1.00 1,000
CMC ______ $ ____ ___
Ersco of Michigan, Inc. 50,000 $ 1.00 300
Pak-Sak 5,000 $ 10.00 3,768
Wisconsin Common 1,250 no par 290
Preferred 250 $100.00 250
The Borrower owns 1,737,405 shares of the outstanding capital stock of
Medar, which constitutes approximately 20% of the aggregate outstanding
capital stock of Medar. Except as disclosed on Schedule 5.19, there are no
outstanding options, warrants or rights to purchase, nor any agreement for
the subscription, purchase or acquisition of, any shares of the capital
stock of the Borrower or any Subsidiary.
6. Sub-Sub-Section 6.1.4 of Sub-Section 6.1 of Section 6 is hereby deleted
in its entirety and replaced by the following:
6.1.4 Aging and Borrowing Base Certificate. Furnish to
the Bank (a) by Wednesday of each week (as of the end of the
prior week) (i) a report in such form as the Bank shall from
time to time require as to the Accounts of Borrower and the
Subsidiaries and (ii) a Borrowing Base Certificate confirming
that the aggregate unpaid principal amount of all Revolving
Loans does not exceed the lesser of the Commitment Amount
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or the Borrowing Base as then in effect (or, if such is not
the case, accompanied by a prepayment of the Revolving Credit
Note in accordance with Section 2.8.2 of this Agreement),
(b) by the 25th of each month (as of the end of the prior
month) (i) an aging of the Accounts of Borrower and the
Subsidiaries in a form satisfactory to the Bank and (ii) a
report in such form as the Bank shall from time to time
require as to the Inventory of the Borrower and the
Subsidiaries and (c) by the 30th day of each calendar
quarter (as of the end of the prior quarter) an aging of the
Accounts of Borrower and the Subsidiaries in a form
satisfactory to the Bank.
7. Sub-Sections 6.5, 6.7 and 6.8 of Section 6 are hereby deleted in their
entirety and each is replaced with the phrase "Intentionally Omitted."
8. Sub-Section 6.6 of Section 6 is hereby deleted in its entirety and
replaced by the following:
6.6 Maintain Consolidated Funded Debt to EBITDA. On a
Consolidated Basis, maintain the ratio of Consolidated Funded Debt
to earnings before interest, taxes, depreciation and amortization
(determined on a rolling four quarters basis) ("EBITDA") of not
more than 5.00 to 1.0.
9. The introductory paragraph and Sub-Section 7.1 of Section 7 are hereby
deleted in their entirety and replaced by the following:
From the date hereof until the later of the Termination Date or the
date when the principal of and interest on the Notes and other
Indebtedness is paid in full and the Bank's commitment hereunder
terminated, the Borrower covenants that and agrees that it will not, and
will not permit any Subsidiary to:
7.1 Dividends. Declare or pay any dividend (other than
dividends payable solely in shares of its capital stock) on, or
make any other distribution with respect to (whether by reduction
of capital or otherwise), any shares of its capital stock, except
that (i) dividends from any Subsidiary to the Borrower are
permitted, (ii) dividends of up to $110,000 annually on Borrower's
Series Two Preferred Stock are permitted, (iii) dividends of up to
$300,000 annually on the Borrower's Series Three Preferred Stock
are permitted.
10. Sub-Section 7.10 of Section 7 is hereby deleted in its entirety and
replaced by the following:
7.10 Acquire Securities. Purchase or hold beneficially any
stock or other securities of, or make any investment or acquire any
interest whatsoever in, any other person except for the common
stock of the Guarantors, Medar and the
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partnership interests in Riverview Associates and CJF, in each case
limited to the interest owned by the Borrower on the date of this
Agreement, and except for certificates of deposit with maturities of
one year or less of United States commercial banks with capital,
surplus and undivided profits in excess of $100,000,000, direct
obligations of the United States Government maturing within one year
from the date of acquisition thereof, and high grade commercial paper
and high grade fixed-income securities (e.g., corporate bonds).
11. Sub-Sections 7.14 and 7.15 of Section 7 are hereby deleted in their
entirety.
12. Paragraph 8.1.10 of Sub-Section 8.1 of Section 8 is hereby deleted in
its entirety.
13. Except as specifically modified hereby, the terms and conditions of
the Agreement and the Notes remain in full force and effect and the undersigned
hereby ratify and agrees to be bound by the terms of the Agreement as hereby
amended.
14. Neither the extension of this Fourth Amendment by the Bank, nor any
other act or omission by the Bank in connection herewith, shall be deemed a
waiver by the Bank of any default under the Agreement.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this Fourth
Amendment to be executed by their duly authorized officers as of the day and
year first written above.
MAXCO, INC.
By Vincent Shunsky
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Vincent Shunsky
Its Vice President
COMERICA BANK
By David G. Grantham
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David G. Grantham
Its Vice President
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The Undersigned Guarantors hereby acknowledge and consent to the above
Fourth Amendment.
Akemi Plastics, Inc.
By Vincent Shunsky
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Vincent Shunsky
Its Treasurer
Ersco of Michigan, Inc. Pak-Sak Industries, Inc.
By Vincent Shunsky By Vincent Shunsky
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Vincent Shunsky Vincent Shunsky
Its Treasurer Its Treasurer
Wisconsin Wire & Steel, Inc. CMC, Inc.
By Vincent Shunsky By Vincent Shunsky
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Vincent Shunsky Vincent Shunsky
Its Treasurer Its President
Pacer Tool & Mold, Inc.
By Vincent Shunsky
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Vincent Shunsky
Its Treasurer
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