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Exhibit 10.5
SECOND AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (the "Second
Amendment") dated as of the 8th day of September, 1995, 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 (the "Agreement");
WHEREAS, Borrower, in addition to other credit facilities provided for in
the Agreement, desires to borrow up to $5,000,000 (subject to restrictions
provided herein) from the Bank from time to time for the acquisition financing
needs of the Borrower; and
WHEREAS, the Borrower and the Bank now desire to amend certain of the
covenants and restrictions 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 Paragraph 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:
"Approved Borrower Acquisition(s)" shall mean business
acquisitions prepared by the Borrower, which are approved in
writing by the Bank, which approval
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shall not be unreasonably withheld, provided that Borrower has met
the special conditions outlined in the Bank's letter dated August
9, 1995, as accepted by Borrower on August 28, 1995.
"Acquisition Commitment Amount" shall mean the lesser of
$5,000,000 or 30% of the NASDAQ National Markets daily stock value
of the Medar, Inc. shares owned by Borrower.
"Borrowing Base" shall mean the sum of (a) 75 percent of the
aggregate outstanding principal balance of the Borrower's and the
Guarantors' Eligible Accounts, plus (b) the market value of the
capital stock of Finishmaster pledged to the Bank by the Borrower
or any Subsidiary, based on the most recent bid price for the
capital stock of Finishmaster quoted in the NASDAQ OTC Market
multiplied by the Finishmaster Loan Percentage and less (c) the
aggregate amounts of Letters of Credit then outstanding.
"Commitment Amount" shall mean $20,000,000 (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).
"Eurodollar-based Rate" shall mean the Eurodollar-based Rate
as defined and determined in the Note.
"Finishmaster Loan Percentage" shall mean thirty (30%) percent.
"Guarantors" shall mean Akemi, CMC, Ersco, Pacer, Pak-Sak and
Wisconsin.
"Note" shall mean the Revolving Credit Note, the Revolving
Acquisition Note or the Term Note and "Notes" shall mean each of
the Revolving Credit Note, the Revolving Acquisition Note and the
Term Note.
"Pacer" shall mean Pacer Tool & Mold, Inc., a Michigan
corporation.
"Revolving Acquisition Note" shall mean a promissory note
conforming to Section 2.3(c) of this Agreement and in the form of
Exhibit A-3 to this Agreement.
"Revolving Acquisition Loan" shall mean an advance made by the
Bank to the Borrower under Section 2.1(d) of this Agreement on a
Disbursement Date.
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"Termination Date" shall mean, as to the Revolving Credit Loan
and the Revolving Acquisition Loan, August 1, 1997 (or such earlier
date on which the Borrower shall permanently terminate the Bank's
commitment under Section 2.8.1 of this Agreement).
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 shall be replaced by a new promissory note conforming with Section 2.3(a)
of the Agreement and in the form of Exhibit A-1 to this Second Amendment.
3. Paragraph 2.1(a) of Section 2 is hereby deleted in its entirety and
replaced by the following:
2.1 Commitment. (a) Subject to the terms and conditions of
this Agreement, the Bank agrees to make loans to the Borrower on a
revolving basis of such amount as the Borrower shall request
pursuant to Section 2.2 of this Agreement at any time from the date
of this Agreement until the Termination Date, up to an aggregate
principal amount outstanding at any time not to exceed the lesser
of the Commitment Amount or the Borrowing Base, provided that each
Disbursement Date under this Agreement must be a Business Day, and
the principal amount of each Revolving Loan made under this
Agreement shall be in the aggregate amount of $10,000 or an
integral multiple thereof, and provided further, that the principal
amount of each Revolving Loan made under this Agreement, for which
Borrower elects to pay interest at the Eurodollar-based Rate, shall
be in the aggregate amount of $1,000,000 or greater in $500,000
increments thereafter.
4. There shall be added a new Paragraph 2.1(d) to Section 2 which
shall read as follows:
2.1 Commitment. (d) Subject to the terms and conditions of
this Agreement, the Bank agrees to make loans to the Borrower for
Approved Borrower Acquisitions on a revolving basis of such amount
as the Borrower shall request pursuant to Section 2.2 of this
Agreement at any time from the date of this Agreement until the
Termination Date, up to an aggregate principal amount outstanding
at any time not to exceed the Acquisition Commitment Amount,
provided that each Disbursement Date under this Agreement must be a
Business Day, and the principal amount of each Revolving
Acquisition Loan made under this Agreement shall be in the
aggregate amount of
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$10,000 or an integral multiple thereof, and provided further, that
the principal amount of each Revolving Acquisition Loan made under
this Agreement, for which Borrower elects to pay interest at the
Eurodollar-based Rate, shall be in the aggregate amount of
$1,000,000 or greater in $500,000 increments thereafter.
5. Sub-paragraph 2.2.1 of Sub-Section 2.2 of Section 2 is hereby
deleted in its entirety and replaced by the following:
2.2.1 Notice of Request for Loan and Letters of Credit. The
Borrower may with the consent of the Bank request a Revolving Loan,
a Revolving Acquisition Loan, a Term Loan or a Letter of Credit and
make payments thereon by telephonic authorization to the Bank in
accordance with such terms and procedures as the Bank shall from
time to time establish or may give the Bank at least two Business
Days' prior written notice of the Borrower's desire for a Revolving
Loan, a Revolving Acquisition Loan, a Term Loan or a Letter of
Credit. Such notice shall be signed by an authorized officer of
the Borrower and shall specify the proposed Disbursement Date and
the principal amount of the proposed advance for such Revolving
Loan, Revolving Acquisition Loan, Term Loan or the amount of such
Letter of Credit.
6. Sub-paragraph 2.2.2(e) of Sub-Section 2.2 of Section 2 is hereby
deleted in its entirety and replaced by the following:
2.2.2 Bank Obligation to Make Loans or to Issue Letters of
Credit. The Bank agrees to make the Revolving Loan, the Revolving
Acquisition Loan or the Term Loan, or to issue the Letter of
Credit, on the Disbursement Date as set forth in a notice to the
Bank from the Borrower conforming to the requirements of Section
2.2.1 by crediting the Borrower's general deposit account with the
Bank in the amount of such Revolving Loan or Term Loan, or by
delivering the Letter of Credit to the Borrower, provided, however,
that the Bank shall not be so obligated if:
. . .
(e) Any such proposed Revolving Acquisition Loan would cause
the aggregate unpaid principal amount of the Revolving Acquisition
Loans outstanding under this Agreement to exceed the Acquisition
Commitment Amount.
7. There shall be added a new Paragraph (c) to Sub-Section 2.3 to
Section 2 which shall read as follows:
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(c) Revolving Acquisition Note. The Revolving Acquisition
Loans shall be evidenced by the Revolving Acquisition Note,
executed by the Borrower, dated the date of this Agreement, payable
to the Bank on the Termination Date (unless sooner accelerated
pursuant to the terms of this Agreement), and in the principal
amount of the original Acquisition Commitment Amount. The date and
amount of each Revolving Acquisition Loan made by the Bank and of
each repayment of principal thereon received by the Bank shall be
recorded by the Bank in its records. The aggregate unpaid
principal amount so recorded by the Bank shall constitute the best
evidence of the principal amount owing and unpaid on the Note,
provided, however, that the failure by the Bank so to record any
such amount or any error in so recording any such amount (whether
on the schedule attached to the Revolving Acquisition Note or
otherwise) shall not limit or otherwise affect the obligations of
the Borrower under this Agreement or the Revolving Acquisition Note
to repay the principal amount of all the Revolving Acquisition
Loans together with all interest accrued or accruing thereon.
8. Paragraph 2.4(c) to Section 2 is hereby deleted in its entirety and
replaced by the following:
(a) The Revolving Credit Note shall bear interest on the
outstanding principal balance from time to time outstanding at a
rate equal to the Prime Rate, less one-half of one percent (.5%),
or the Eurodollar-based Rate, as elected by the Borrower under the
terms of the Revolving Credit Note, until maturity, whether by
acceleration or otherwise, and thereafter at a rate equal to three
percent (3%) per annum plus the rate otherwise prevailing
hereunder. Interest shall be payable in accordance with the terms
of the Revolving Credit Note.
9. There shall be added a new Paragraph 2.4(c) to Section 2 which
shall read as follows:
(c) The Revolving Acquisition Note shall bear interest on the
outstanding principal balance from time to time outstanding at a
rate equal to the Prime Rate, less one-half of one percent (.5%),
or the Eurodollar-based Rate, as elected by the Borrower under the
terms of the Revolving Acquisition Note, until maturity, whether by
acceleration or otherwise, and thereafter at a rate equal to three
percent (3%) per annum plus the rate otherwise prevailing
hereunder. Interest shall be
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payable in accordance with the terms of the Revolving Acquisition
Note.
10. There shall be added a new Sub-Sub-Section 2.6.1.1 to Section 2
which shall read as follows:
2.6.1.1 Revolving Acquisition Credit Commitment Fee. The
Borrower agrees to pay to the Bank a revolving credit commitment
fee for the period from and including the date of this Agreement to
the Termination Date equal to one-half of one percent (.5%) of the
principal amount of each Revolving Acquisition Loan. Such
commitment fee shall be payable on the date each Revolving
Acquisition Loan.
11. Sub-Section 2.8 of Section 2 is hereby deleted in its entirety and
replaced by the following:
2.8 Changes in Commitment and Prepayments.
2.8.1 Termination or Reduction in Commitment. The Borrower
may, at any time and from time to time, upon at least five (5)
Business Days' prior written notice received by the Bank,
permanently terminate the Bank's commitments under this Agreement
or permanently reduce the Commitment Amount by an integral multiple
of $500,000, provided, however, that the Borrower, on the effective
date of such termination or reduction, (a) shall pay to the Bank,
in the case of a termination, the aggregate unpaid principal amount
of all Revolving Loans, Revolving Acquisition Loans and Term Loans
(together with, in the case of Term Loans, any prepayment penalty
or premium provided by the Term Notes or otherwise required by the
Bank) and shall deposit with the Bank in cash an amount (adjusted,
as deemed necessary by the Bank, for any applicable reserve or
other requirements) equal to the Bank's maximum liability under all
Letters of Credit then outstanding, or (b) shall pay to the Bank,
in the case of a reduction, the amount, if any, by which the
aggregate unpaid principal amount of all Revolving Loans exceeds
the then reduced Commitment Amount, together in either case with
all interest accrued and unpaid on the principal amounts so
prepaid. After any such reduction, the commitment fee provided
under Section 2.6.1 of this Agreement shall be calculated on the
Commitment Amount as so reduced and the Commitment Amount may not
be increased or otherwise reinstated without the express written
agreement of the Bank.
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2.8.2 Mandatory Prepayments. In addition to the mandatory
prepayment required under Section 2.8.1 of this Agreement, the
Borrower shall pay to the Bank the amount, if any, by which the
aggregate unpaid principal amount of all Revolving Loans from time
to time exceeds the lesser of the Commitment Amount or the
Borrowing Base, together with all interest accrued and unpaid on
the amount of such excess, but without other premium or penalty.
Such prepayment shall be immediately due and owing upon the
occurrence of any such excess, provided, however, that any
mandatory prepayment made under this Section 2.8.2 shall not reduce
the Commitment Amount.
2.8.3 Optional Prepayments. (a) The Borrower may, at any
time and from time to time, upon at least one (1) Business Day's
prior written notice received by the Bank, prepay the unpaid
principal amount of the Revolving Loans or Revolving Acquisition
Loans for which Borrower has elected the Prime-based Rate, in whole
or in part without premium or penalty, provided, however, that any
such optional prepayment shall be made in an integral multiple of
$10,000 and provided, further, that any optional prepayment made
under this Section 2.8.3 shall not reduce the Commitment Amount.
Prepayments of any Revolving Loans or Revolving Acquisition Loans
for which the Borrower has elected the Eurodollar-based Rate shall
be governed by the Note.
(b) The Borrower may prepay the unpaid principal amount of the
Term Loans only if permitted by, and on the terms of, the Term
Notes.
2.8.4 Payments Under Revolving Acquisition Loans. Principal
payments required under a Revolving Acquisition Loan will be
predicated on the amounts outstanding and will be defined prior to
any Revolving Acquisition Loan and shall provide for an
amortization period of up to seven (7) years, as determined by the
Bank.
12. Paragraphs 6.5, 6.6, 6.7 and 6.8 of Section 6 are hereby deleted in
their entirety and are replaced by the following:
6.5 Maintain Tangible Net Worth. On a Consolidated
Statement Basis, maintain a Tangible Net Worth of not less than
$7,000,000.
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
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rolling four quarters basis) ("EBITDA") of not more than (a) 4.30
to 1.0 from the date of this Agreement to ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) 3.80
to 1.0 from April 1, 1996 through March 31, 1997, and (c) 3.50 to
1.0 from April 1, 1997 and thereafter. On a Consolidated Basis,
but specifically excluding Finishmaster and Medar, maintain the
ratio of Consolidated Funded Debt to EBITDA of not more than (a)
12.80 to 1.0 from the date of this Agreement to ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇)
8.00 to 1.0 from April 1, 1996 through March 31, 1997, and (c) 5.00
to 1.0 from April 1, 1997 and thereafter.
6.7 Maintain Current Ratio. On a Consolidated Statement
Basis, maintain the ratio of Current Assets to Current Liabilities
of not less than 1.10 to 1.0.
6.8 Maintain Net Current Assets. On a Consolidated
Statement Basis, maintain Net Current Assets of not less than
$9,500,000.
13. Paragraphs 7.14 of Section 7 are hereby deleted in their entirety
and are replaced by the following:
7.14 Omitted Intentionally.
14. 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.
15. Neither the extension of this Second 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 Second
Amendment to be executed by their duly authorized officers as of the day and
year first written above.
MAXCO, INC.
BY /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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ITS VICE PRESIDENT
COMERICA BANK
BY /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
ITS VICE PRESIDENT
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The Undersigned Guarantors hereby acknowledge and consent to the above
Second Amendment.
Akemi Plastics, Inc.
BY /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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ITS TREASURER
ERSCO OF MICHIGAN, INC. PAK-SAK INDUSTRIES, INC.
BY /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ BY /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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ITS TREASURER ITS TREASURER
WISCONSIN WIRE & STEEL, INC. CMC, INC.
BY /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ BY /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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ITS TREASURER ITS PRESIDENT
PACER TOOL & MOLD, INC.
BY /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ITS TREASURER
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