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EXHIBIT 10.5.6
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT (this "Amendment") to Loan and Security Agreement
is entered into as of the 30th day of June, 1997, by and between CA Short
Company (the "Borrower") and The Huntington National Bank (the "Bank").
RECITALS:
A. As of December 31, 1996, the Borrower and the Bank executed a
certain Loan and Security Agreement (the "Loan Agreement"), setting forth the
terms of a certain extension of credit to the Borrower; and
B. As of December 31, 1996, the Borrower executed and delivered
to the Bank, inter alia, a Revolving Note in the original principal sum of Four
Million Five Hundred Thousand Dollars ($4,500,000.00) (hereinafter the "Note");
and
C. In connection with the Loan Agreement and the Note, the
Borrower executed and delivered to the Bank certain other loan documents, a
lockbox agreement, consents, assignments, security agreements, an open-end deed
of trust and security agreement, agreements, instruments and financing
statements in connection with the indebtedness referred to in the Loan
Agreement (all of the foregoing, together with the Note and the Loan Agreement,
are hereinafter collectively referred to as the "Loan Documents"); and
D. The Borrower has requested that the Bank amend and modify
certain terms and covenants in the Loan Agreement and extend the maturity of
the Note, and the Bank is willing to do so upon the terms and conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and promises contained herein, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties hereto for
themselves and their successors and assigns do hereby agree, represent and
warrant as follows:
1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in the Loan Agreement.
2. Section 1.1, "The Revolving Loan and Borrowing Base," of the
Loan Agreement is hereby amended to recite in its entirety as follows:
1.1 The Revolving Loan and Borrowing Base. The Loan shall be
comprised of a revolving credit facility under which the Bank shall
make, subject to the terms and conditions hereof, loans and advances
on a revolving basis up to the principal sum of $4,500,000.00 (the
"Revolving Loan"). The principal balance of the Revolving Loan plus
the aggregate stated value of all issued and outstanding Letters of
Credit
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shall not exceed an amount equal to the sum of (i) the lesser of up to
60% of Eligible Inventory or the Inventory Cap, plus (ii) up to 80% of
Eligible Accounts, plus (iii) up to 75% of Eligible Real Estate
(collectively the "Borrowing Base"). The Bank, in its sole discretion,
reserves the right upon 30 days prior written notice to the Borrower
to increase or decrease the foregoing percentages or the Inventory
Cap. "Inventory Cap" shall mean up to the sum of $3,500,000.00 for the
months of January through and including May each calendar year and
$4,500,000.00 for the months June through and including December of
each calendar year.
3. Section 6.12, "Adjusted Tangible Net Worth," of the Loan
Agreement is hereby redesignated "Adjusted Tangible Capital Base," and is
amended to recite in its entirety as follows:
6.12 Adjusted Tangible Captial Base. The Borrower shall maintain
as of the following specified dates an Adjusted Tangible Capital Base
of not less than (a) $6,000,000.00 as of June 30, 1997, (b)
$5,000,000.00 as of September 30, 1997, and (c) $6,200,000.00 as of
December 31, 1997 and continuing at all times thereafter. In addition
to the foregoing requirements, the Borrower shall maintain at all
times an "Adjusted Tangible Capital Base" of not less than
$5,000,000.00. "Adjusted Tangible Capital Base" shall mean as of the
time of determination the Borrower's Tangible Capital Base, plus the
principal sum outstanding of the Subordinated Debt.
"Tangible Capital Base" shall mean the Borrower's shareholders' equity
(excluding treasury stock), minus the sum of all of the following: (i)
the excess of cost over the value of net assets of purchased
businesses, rights, and other similar intangibles, (ii) organizational
expenses, (iii) intangible assets (to the extent not reflected in the
foregoing), (iv) goodwill, (v) deferred charges or deferred financing
costs, (vi) loans or advances to and/or accounts or notes receivable
from Affiliates, (vii) leasehold improvements, (viii) non-compete
agreements, and (ix) any other asset not directly related to the
operation of the business of the Borrower.
4. Section 6.13, "Minimum Pretax Operating Profit or Maximum
Pretax Operating Loss," of the Loan Agreement is hereby amended to recite in
its entirety as follows:
6.13 Minimum Pretax Operating Profit or Maximum Pretax Operating
Loss. Beginning with the fiscal quarter ending December 31, 1996, and
continuing as of the end of each fiscal quarter thereafter, the
Borrower shall, as the case may be, either (a) achieve an Accumulated
Operating Profit during any fiscal year on a year-to-date basis of not
less than the amount set forth below, or (b) not incur an Accumulated
Operating Loss during any fiscal year on a year-to-date basis in
excess of the amount set forth below:
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As of June 30, 1997, Accumulated Operating Loss not to exceed
$200,000.00;
As of September 30, 1997, Accumulated Operating Loss not to
exceed $1,000,000.00; and
As of December 31, 1997 Accumulated Operating Profit of not
less than $200,000.00.
Accumulated Operating Loss and Accumulated Operating Profit shall be
determined on a fiscal year-to-year basis, beginning on the first day
of each fiscal year and shall be calculated through the date of
determination. "Accumulated Operating Loss" shall mean, with respect
to the period of determination, the following calculation, provided
that such calculation results in a number less than zero: (a) the sum
of the Borrower's net income (or loss) after taxes as determined in
accordance with GAAP, plus, the sum of all extraordinary losses (and
any unusual losses arising outside the ordinary course of business not
included in extraordinary losses determined in accordance with GAAP),
minus (b) the sum of all extraordinary gains (and any unusual gains
arising outside the ordinary course of business not included in
extraordinary gains determined in accordance with GAAP). "Accumulated
Operating Profit" shall mean, with respect to the period of
determination, the following calculation, provided that such
calculation results in a number greater than zero: (a) the sum of the
Borrower's net income (or loss) after taxes as determined in
accordance with GAAP, plus, the sum of all extraordinary losses (and
any unusual losses arising outside the ordinary course of business not
included in extraordinary losses determined in accordance with GAAP),
minus (b) the sum of all extraordinary gains (and any unusual gains
arising outside the ordinary course of business not included in
extraordinary gains determined in accordance with GAAP).
5. Conditions of Effectiveness. This Amendment shall become
effective as of June 30, 1997, upon satisfaction of all of the following
conditions precedent:
(a) The Bank shall have received two duly executed copies of the
First Amendment to Loan and Security Agreement and a certain First Note
Modification Agreement, and such other certificates, instruments, documents,
agreements, and opinions of counsel as may be required by the Bank, each of
which shall be in form and substance satisfactory to the Bank and its counsel;
and
(b) The representations contained in paragraph 6 below shall be
true and accurate.
5. Representations. The Borrower represents and warrants that
after giving effect to this Amendment (a) each and every one of the
representations and warranties made by or on behalf of the Borrower in the Loan
Agreement or the Loan Documents is true and correct in all respects on and as
of the date hereof, except to the extent that any of such representations and
warranties related,
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by the expressed terms thereof, solely to a date prior hereto; (b) the Borrower
has duly and properly performed, complied with and observed each of its
covenants, agreements and obligations contained in the Loan Agreement and Loan
Documents; and (c) no event has occurred or is continuing, and no condition
exists which would constitute an Event of Default or a Pending Default.
6. Amendment to Loan Agreement. (a) Upon the effectiveness of
Section 2 and Section 3 hereof, each reference in the Loan Agreement to "Second
Amended and Restated Loan Agreement," "Loan Agreement," "Agreement," the prefix
"herein," "hereof," or words of similar import, and each reference in the Loan
Documents to the Loan Agreement, shall mean and be a reference to the Loan
Agreement as amended hereby. (b) Except as modified herein, all of the
representations, warranties, terms, covenants and conditions of the Loan
Agreement, the Loan Documents and all other agreements executed in connection
therewith shall remain as written originally and in full force and effect in
accordance with their respective terms, and nothing herein shall affect,
modify, limit or impair any of the rights and powers which the Bank may have
thereunder. The amendment set forth herein shall be limited precisely as
provided for herein, and shall not be deemed to be a waiver of, amendment of,
consent to or modification of any of the Bank's rights under or of any other
term or provisions of the Loan Agreement, any Loan Document, or other agreement
executed in connection therewith, or of any term or provision of any other
instrument referred to therein or herein or of any transaction or future action
on the part of the Borrower which would require the consent of the Bank,
including, without limitation, waivers of Events of Default which may exist
after giving effect hereto. The Borrower ratifies and confirms each term,
provision, condition and covenant set forth in the Loan Agreement and the Loan
Documents and acknowledges that the agreement set forth therein continue to be
legal, valid and binding agreements, and enforceable in accordance with their
respective terms.
7. Authority. The Borrower hereby represents and warrants to the
Bank that (a) the Borrower has legal power and authority to execute and deliver
the within Amendment; (b) the officer executing the within Amendment on behalf
of the Borrower has been duly authorized to execute and deliver the same and
bind the Borrower with respect to the provisions provided for herein; (c) the
execution and delivery hereof by the Borrower and the performance and
observance by the Borrower of the provisions hereof do not violate or conflict
with the articles of incorporation, regulations or by-laws of the Borrower or
any law applicable to the Borrower or result in the breach of any provision of
or constitute a default under any agreement, instrument or document binding
upon or enforceable against the Borrower; and (d) this Amendment constitutes a
valid and legally binding obligation upon the Borrower in every respect.
8. Counterparts. This Amendment may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which together shall constitute one and the same document.
Separate counterparts may be executed with the same effect as if all parties
had executed the same counterparts.
9. Governing Law. This Amendment shall be governed by and
construed in accordance with the law of the State of Ohio.
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IN WITNESS WHEREOF, the Borrower and the Bank have hereunto set their
hands as of the date first set forth above.
THE BORROWER:
CA SHORT COMPANY
By: /s/ S. Xxxxxx Xxxxx
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Its: Chairman
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THE BANK:
THE HUNTINGTON NATIONAL BANK
By: /s/ Xxxxxx Xxxxx
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Its: Vice President
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