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EXHIBIT 10(q)
SECOND AMENDMENT TO
CREDIT AGREEMENT
THIS SECOND AMENDMENT ("Amendment") dated as of March 31, 1997, by and
among the borrowers listed on Schedule 1 (collectively "Companies") and Comerica
Bank, a Michigan banking corporation ("Bank").
RECITALS:
A. Companies and Bank entered into a Credit Agreement dated as of June 13,
1996, which was amended by a First Amendment dated December 5, 1996 (as amended,
"Agreement").
B. Companies and Bank desire to amend the Agreement as hereinafter set
forth.
NOW, THEREFORE, the parties agree as follows:
1. The following definitions are hereby added to Section 1 of the
Agreement in alphabetical order:
"'Equipment Line Maturity Date' shall mean May 1, 1998.
"'Equipment Notes' shall mean the Notes described in Section 2.A.1
hereof made by Companies to Bank in the form annexed hereto as Exhibit 'I'.
"'Notes' shall mean the Revolving Credit Note and each of the
Equipment Notes."
2. The definition of Revolving Credit Maturity Date set forth in Section 1
of the Agreement is amended to read in its entirety as follows:
"'Revolving Credit Maturity Date' shall mean May 1, 1998."
3. The following Section 2.A is hereby added to the Agreement:
"2.A.1 THE INDEBTEDNESS: EQUIPMENT LINE OF CREDIT
2.A.1 Bank may lend to Companies at any time and from time to time
from the date hereof until the Equipment Line Maturity Date, sums not to
exceed Two Million Dollars ($2,000,000) in aggregate principal amount. Each
of the borrowings hereunder shall be evidenced by an Equipment Note. Bank
shall not be obligated to make any advance under this Section 2.A.
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2.A.2 The indebtedness represented by each Equipment Note shall be
payable in equal monthly principal installments equal to the amount necessary to
amortize the original amount of the Equipment Note over a five year term
commencing on the first day of the first month after such loan is made and on
the first day of each month thereafter until the maturity date thereof, when the
entire unpaid balance of principal and interest thereon shall be due and
payable. The maturity date for each Equipment Note shall be the Equipment Line
Maturity Date. In addition to the above required payments on principal, Company
agrees to pay interest on the unpaid principal balance of each Equipment Note
from time to time outstanding at a per annum rate equal to one and one half
percent (1 1/2%) above the Prime Rate, provided, however, upon the occurrence of
any Event of Default hereunder, interest shall be payable at a per annum rate of
four and one half percent (4 1/2%) above the Prime Rate. Interest payments shall
be made monthly, commencing on the first day of the first month following the
advance under the applicable Equipment Note and on the first day of each month
thereafter. Interest shall be computed on a daily basis using a year of 360 days
for the actual number of days elapsed, and in such computation effect shall be
given to any change in the interest rate resulting from a change in the Prime
Rate on the date of such change in the Prime Rate.
2.A.3 Bank shall mot make advances under this Section 2.A unless Companies
shall have first filed with Bank a request for draw in form acceptable to
Bank executed by an authorized officer of Companies. Each such request for an
advance shall be submitted to Bank not less than ten (10) days prior to the
requested date of disbursement of the advance. At the time each advance is made,
Companies shall pay to Bank a funding fee equal to one percent (1%) of the
amount of such advance.
2.A.4 Bank will approve requests for draws upon presentation by Company of
such documents, instruments or opinions, in form and substance satisfactory to
the Bank, as the Bank may require.
2.A.5 Companies may prepay such Equipment Note in whole or in part without
penalty. Any prepayments shall be applied to principal payments due under an
Equipment Note in the inverse order of their maturities.
2.A.6 Proceeds of each Equipment Note shall be used solely to finance the
acquisition of new [or used] machinery and equipment which is acceptable to
Bank.
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2.A.7 The aggregate amount of advances available under this Section
2.A shall not exceed $2,000,000. Each advance shall be in an amount not
less than $600,000."
4. Section 5.1(a) of the Agreement is amended to change the reference to
"Revolving Credit Note" to "the Notes".
5. Section 5.3 and Section 6.2 and Section 7.2 are amended to change each
reference to "Revolving Credit Note" to "the Notes".
6. Section 9.1 of the Agreement is amended to read in its entirety as
follows:
"9.1 Leverage Ratio. Permit the Consolidated Leverage Ratio at any
time to be more than 2.75 to 1.0."
7. Section 9.2 of the Agreement is amended to read in its entirety as
follows:
"9.2 Cash Flow Coverage Ratio. Permit the Consolidated Cash Flow
Coverage Ratio at any time to be less than the amounts specified below for
the determination date specified below:
March 31, 1997 .35 to 1.0
June 30, 1997 .45 to 1.0
September 30, 1997 .55 to 1.0
December 31, 1997 .60 to 1.0
March 31, 1998 and as of the last
day of each fiscal quarter thereafter .75 to 1.0"
8. Section 9.3 of the Agreement is amended to read in its entirety as
follows:
"9.3 Current Ratio. Permit the ratio of Consolidated Current Assets
to Consolidated Current Liabilities at any time to be less than 1.20 to
1.0. For purposes of calculation of this ratio, all Indebtedness of
Companies to Bank outstanding under the Revolving Credit Note shall be
treated as a part of Consolidated Current Liabilities."
9. The definition of "Measuring Period" is amended to read in its
entirety as follows:
"'Measuring Period' shall mean for the determination date referred to
below the applicable period shown opposite such determination date:
Determination Date Measuring Period
March 31, 1997 January 1, 1997 through March 31, 1997
June 30, 1997 January 1, 1997 through June 30, 1997
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September 30, 1997 January 1, 1997 through September 30, 1997
December 31, 1997 The four preceding fiscal quarters ending
and the last day on such determination date
of each fiscal
quarter thereafter"
10. The attached Exhibit "I" is hereby added to the Agreement.
11. Section 10.1 (a), Section 10.1 (f), Section 10.2, Section 10.4 and
Section 11.4 of the Agreement are amended to change each reference to
"Revolving Credit Note" to "the Notes".
12. Companies hereby represent and warrant that, after giving effect
to the amendments 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
continuing representations and warranties of each Company set forth in Sections
7.1 through 7.15 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 7.16 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.
13. Except as expressly provided herein, all of the terms and
conditions of the Agreement remain unchanged and in full force and effect.
14. This Amendment shall be effective as of the date first above
written and the payment by Companies to Bank of a non-refundable amendment fee
in the amount of $50,000.
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IN WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK DETREX CORPORATION
By: Mark A. Reifel By: Gerald J. Israel
-------------------------- -------------------------------
Gerald J. Israel
Its: Vice President Its: Vice President-Finance and
------------------------- Chief Financial Officer
THE ELCO CORPORATION
By: Gerald J. Israel
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Gerald J. Israel
Its: Treasurer
HARVEL PLASTICS, INC.
By: Gerald J. Israel
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Gerald J. Israel
Its: Director
SEIBERT-OXIDERMO, INC.
By: Gerald J. Israel
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Gerald J. Israel
Its: Treasurer
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SCHEDULE 1
Detrex Corporation
The Elco Corporation
Harvel Plastics, Inc.
Seibert-Oxidermo, Inc.
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EXHIBIT "I"
EQUIPMENT NOTE
$__________________ Detroit, Michigan
_______________, 199__
FOR VALUE RECEIVED, the undersigned (collectively "Companies" jointly and
severally promise to pay to the order of Comerica Bank, a Michigan banking
corporation ("Bank") at 500 Woodward Avenue, Detroit, Michigan, in lawful money
of the United States of America the principal sum of _________________________
Dollars ($_________) in lawful money of the United States of America payable in
monthly principal installments each in the amount of $___________ commencing on
_______________, ____________, and on a like day of each month thereafter until
May 1, 1998, when the entire unpaid balance of principal and interest thereon
shall be due and payable, together with interest thereon as hereinafter set
forth.
The principal balance from time to time outstanding hereunder shall bear
interest at a per annum interest rate equal to one and one half percent (1 1/2%)
above Bank's Prime Rate or as otherwise determined under the Agreement (as
defined below), and interest shall be computed, assessed and payable as set
forth in the Agreement.
This Note evidences borrowing under, is subject to, and may be accelerated
or matured under, the terms of the Credit Agreement dated as of June 13, 1996,
made by and between Companies and Bank ("Agreement"), to which reference is
hereby made.
Companies agree that in the event of a default hereunder or any default or
Event of Default under the Agreement, Bank shall be entitled to liquidate and
collect all property or assets (including deposits and other credits) whether
presently owned or hereafter acquired, of Companies in possession or control of
(or owing by) the Bank for any purpose, and to apply the proceeds of such
liquidations and collections, and offset any amounts owing by Bank, against
Companies' obligations hereunder and under the Agreement.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan.
Companies hereby waive presentment for payment, demand, protest and notice of
dishonor and nonpayment of this Note and agree that no obligation hereunder
shall be discharged by reason of any extension, indulgence, release, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal,
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which is now or hereafter security for this Note. Any transferees of, or
endorser, guarantor or surety paying this Note in full share succeed to all
rights of Bank, and Bank shall be under no further responsibility for the
exercise thereof or the loan evidenced hereby.
Nothing herein shall limit any right granted Bank by any other
instrument or by law.
DETREX CORPORATION
By:
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Gerald J. Israel
Its: Vice President-Finance and
Chief Financial Officer
THE ELCO CORPORATION
By:
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Gerald J. Israel
Its: Treasurer
HARVEL PLASTICS, INC.
By:
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Gerald J. Israel
Its: Director
SEIBERT-OXIDERMO, INC.
By:
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Gerald J. Israel
Its: Treasurer