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EXHIBIT 10.5
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT (this "Amendment") to the Loan and Security
Agreement is entered into as of the 3rd day of June, 1997, by and between
XxXxxxx Steel Company, Eballoy Glass Products Company, Erie Bronze & Aluminum
Company, XxXxxxx International, Inc. and Centrum Acquisition Corporation, to be
known as Xxxxxx Forge Company ("Xxxxxx Forge"), as borrowers (the foregoing
shall be referred to herein collectively as "Borrowers" and separately as a
"Borrower"), Centrum Industries, Inc. and XxXxxxx Services, Inc., as guarantors
(collectively the "Guarantors" and separately a "Guarantor"), and The
Huntington National Bank (the "Bank").
RECITALS:
A. As of February 29, 1996, the Borrowers (with the exception
of Xxxxxx Forge), the Guarantors and the Bank executed a certain Loan and
Security Agreement, which was amended by a certain First Amendment to Loan and
Security Agreement dated as of January 1, 1997 (collectively the "Loan
Agreement"), setting forth the terms of certain extensions of credit to the
Borrowers (with the exception of Xxxxxx Forge); and
B. As of February 29, 1996, the Borrowers (with the exception
of Xxxxxx Forge) executed and delivered to the Bank, inter alia, a revolving
note in the original principal sum of Fifteen Million Five Hundred Thousand
Dollars ($15,500,000.00) (hereinafter the "Revolving Note"); and
C. As of February 29, 1996, the Borrowers (with the exception
of Xxxxxx Forge) executed and delivered to the Bank, inter alia, a commercial
loan note in the original principal sum of Two Million Eight Hundred Fifty
Thousand Dollars ($2,850,000.00) (hereinafter the "Term Note") (the Revolving
Note and the Term Note are hereinafter referred to as the "Notes"); and
D. In connection with the Loan Agreement and the Notes, the
Borrowers (with the exception of Xxxxxx Forge) executed and delivered to the
Bank certain other loan documents, a reimbursement agreement, openend
mortgages, assignment of rents and security agreements, a second mortgage,
assignment of rents and security agreement, lockbox agreements, consents,
assignments, security agreements, agreements, instruments and financing
statements in connection with the indebtedness referred to in the Loan
Agreement (all of the foregoing, together with the Notes and the Loan
Agreement, are hereinafter collectively referred to as the "Loan Documents");
and
E. The Borrowers have requested that the Bank amend and
modify certain terms and covenants in the Loan Agreement, add Xxxxxx Forge as a
party thereto, and extend additional credit to the Borrowers, 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. As of the date this Amendment becomes effective, Xxxxxx
Forge shall be deemed to be a "Borrower," one of the "Borrowers," a "Company,"
and one of the "Companies," as those terms are defined in the Loan Agreement.
Xxxxxx Forge hereby agrees to be bound by each and every representation,
warranty, term and covenant of the Loan Agreement, hereby grants to the Bank a
security interest in the Collateral, and agrees to execute contemporaneously
herewith all such documents and agreements as the
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Bank shall require to become obligated under all of the obligations
evidenced by the Loan Documents, and to grant and perfect to the Bank a first
and exclusive security interest in all the business assets of Xxxxxx Forge.
3. The Preamble of the Loan Agreement is hereby amended to
recite in its entirety as follows:
This agreement (this "Agreement") is entered into
at Columbus, Ohio, between and among The Huntington
National Bank (the "Bank") as lender, XxXxxxx Steel
Company ("MSC"), Eballoy Glass Products Company
("Eballoy"), Erie Bronze & Aluminum Company ("EBA"),
XxXxxxx International, Inc. and Centrum Acquisition
Corporation, to be known as Xxxxxx Forge Company ("Xxxxxx
Forge"), as borrowers (the foregoing shall be referred to
herein collectively as "Borrowers" and separately as a
"Borrower"), and Centrum Industries, Inc. ("Centrum") and
XxXxxxx Services, Inc. ("MSI"), as guarantors
(collectively the "Guarantors" and separately a
"Guarantor") as of the 29th day of February, 1996. The
Borrowers and the Guarantors shall also be referred to
herein collectively as the "Companies" and separately as a
"Company."
4. Section 1.1, "The Loans," of the Loan Agreement is hereby
amended to recite in its entirety as follows:
1.1 The Loans. The Bank, subject to the terms and
conditions hereof, will make loans and advances and extend
credit to the Borrowers up to the aggregate sum of the
principal sum of loans plus the stated value of letters of
credit of $25,350,000.00 (collectively the "Loans").
Subject to the terms and conditions hereof, the Loans
shall be comprised of (a) revolving loans and advances to
the Borrowers, which shall not exceed the aggregate
principal sum of $18,500,000.00 (collectively the
"Revolving Loans" and individually a "Revolving Loan"),
(b) a direct pay letter of credit up to the maximum stated
value of $4,500,000.00 plus accrued interest of
$110,959.00 for the account of MSC (the "Letter of
Credit"), (c) a term loan facility to the Borrowers (with
the exception of Xxxxxx Forge) up to the principal sum of
$2,850,000.00 (the "Term Loan"), and (d) a term loan
facility to the Borrowers up to the principal sum of
$4,000,000.00 (the "Additional Term Loan"); provided,
however, that notwithstanding the individual limitations
set forth above with respect to the Revolving Loans and
the Letter of Credit, the aggregate principal balance of
the Revolving Loans, lus the stated value outstanding of
the Letter of Credit shall not exceed the sum of
$18,500,000.00.
5. Section 1.2, "Borrowing Base," of the Loan Agreement is
hereby amended to recite in its entirety as follows:
1.2 Borrowing Base. The principal balance of the
Revolving Loans made to any Borrower, plus the aggregate
stated value outstanding at any time of Letter of Credit
issued for such Borrower, shall not exceed such Borrower's
Borrowing Base. "Borrowing Base" shall mean, with respect
to any Borrower, the sum of the following with respect to
such Borrower (a) 70% of Eligible Raw
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Materials Inventory not to exceed the Consolidated
Eligible Raw Materials Inventory Cap; plus (b) 60%
of Eligible Material Content of WIP Inventory not to
exceed the Consolidated Eligible Material Content
WIP Inventory Cap, plus (c) the Eligible Equipment
Availability, plus (d) 85% of Eligible Accounts
(collectively the "Borrowing Base"). "Consolidated
Eligible Raw Materials Inventory Cap" means an amount not
to exceed $4,500,000.00 with respect to the Eligible Raw
Materials Inventory of all of the Borrowers in the
aggregate. "Consolidated Eligible Material Content of WIP
Inventory Cap" means an amount not to exceed $2,250,000.00
with respect to the Eligible Material Content of WIP
Inventory of all of the Borrowers in the aggregate. The
Bank, in its sole good faith discretion, reserves the
right upon notice to the Borrowers to increase or decrease
the foregoing percentages or the maximum dollar amount
attributable to the Consolidated Raw Materials Inventory
Cap or the Consolidated Eligible Material Content of WIP
Inventory Cap. "Eligible Equipment Availability" shall
mean with respect to Eligible Equipment the following
amounts with respect to the following periods:
(i) from the date of this Agreement through
and including December 30, 1996, with respect to
MSC, the sum of $3,700,000, with respect to EBA,
the sum of $767,000, and with respect to Eballoy,
the sum of $283,000,
(ii) beginning December 31, 1996, and continuing
through and including December 30, 1997, with
respect to MSC, the sum of $3,083,333,
with respect to EBA, the sum of $639,167, with
respect to Eballoy, the sum of $235,833,
(iii) beginning December 31, 1997, and continuing
through and including December 30,
1998, and with respect to MSC, the sum of
$2,466,667, with respect to EBA, the sum of
$406,000, with respect to Eballoy, the sum of
$188,667, and
(iv) beginning December 31, 1998, and continuing at
all times thereafter, with respect to MSC,
the sum of $1,849,791, with respect to EBA,
the sum of $383,500 with respect to Eballoy,
the sum of $141,500,
minus with respect to each applicable period, the
appraised value of any Equipment (other than equipment of
Xxxxxx Forge) that is sold, transferred or disposed of
pursuant to the terms of this Agreement or becomes
obsolete after December 27, 1995.
6. Section 2.3, "Eligible Material Content of WIP Inventory,"
of the Loan Agreement is hereby amended to recite in its entirety as follows:
2.3 Eligible Material Content of WIP Inventory. The
term "Eligible Material Content of WIP Inventory," with
respect to any Borrower, means that portion of such
Borrower's Eligible Inventory consisting of
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Work-In-Process -- Materials, as set forth in such
Borrower's general ledger account, which shall be
determined in the same manner as on the date of this
Agreement, and shall be valued at the lesser of cost (on a
FIFO basis) or market; provided, however, that no such
Work-in-Process--Materials of Xxxxxx Forge shall be
Eligible Inventory or Eligible Material Content of WIP
Inventory until such time as the Bank, in its sole and
absolute discretion, has determined that the books and
records of Xxxxxx Forge are fully integrated with those of
MSC and that an accurate perpetual inventory system has
been demonstrated to provide timely reporting of
Work-in-Process--Materials for both Xxxxxx Forge and MSC.
The terms Eligible Raw Materials Inventory and Eligible
Material Content of WIP Inventory shall be mutually
exclusive.
7. Section 3.1, "Interest Rates and Fees," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
3.1 Interest Rates and Fees. The Borrowers jointly
and severally agree to pay the Bank (a) each month
interest on the unpaid balance of the Loans at the rates
of interest set forth in the note or notes evidencing the
Loans; (b) beginning on June 1, 1997, and continuing on
the first of each month thereafter a collateral
administration fee in respect of the Revolving Loans equal
to $4,000.00; (c) on or before the execution of a certain
Second Amendment to Loan and Security Agreement dated as
of June 3, 1997 (the "Second Amendment"), an arrangement
fee of $25,000.00; (d) on February 28, 1998, the sum of
$76,666.67 as an annual facility fee; (e) beginning on
February 28, 1999, and continuing on each anniversary date
of this Agreement thereafter, an annual facility fee equal
to $85,000.00; and (f) beginning on the date of this
Agreement and continuing on each July 1, October 1, and
January 1 and April 1 thereafter the fees set in the
Reimbursement Agreement a equal to 3% per annum of the
stated amount of the Letter of Credit.
8. Section 3.2, "Terms and Advances," of the Loan Agreement
is hereby amended to recite in its entirety as follows:
3.2 Terms and Advances. The Loans shall be evidenced by
a note or by one or more notes or reimbursement
agreements subsequently executed in substitution
therefor, each in substantially the form set
forth in Exhibit X-0, X-0 and A-3 attached hereto and
Exhibits A-4 and A-5 attached to the Second Amendment.
Repayment of the Loans shall be made in accordance with
the terms of the promissory notes or reimbursement
agreement then outstanding pursuant to this Agreement.
9. Section 3.4, "Use of Proceeds," of the Loan Agreement is
hereby amended to recite in its entirety as follows:
3.4 Use of Proceeds. The net proceeds of the Loans
will be used to provide for working capital requirements
of the Borrowers, to finance the acquisition by Centrum
Acquisition Corporation of certain assets of Xxxxxx Forge
International, Inc., and for any other business purpose in
the Borrowers' businesses.
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10. Section 3.5, "Early Termination Fee," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
3.5 Early Termination Fee. The Borrowers jointly and
severally agree to pay to the Bank an early termination
fee of $255,500.00 if the Borrowers terminate or prepay in
full the Loans prior to the Maturity Date; provided,
however, that if the Borrowers notify the Bank at least 90
days prior to the Maturity Date of their intention to pay
the Loans in full, and such payment in full is made on the
Maturity Date, there shall be no early termination fee.
"Maturity Date" shall mean February 28, 1999, or any
extended maturity date of the Revolving Loans, as the same
may be extended from time to time by the Bank, in its sole
and absolute discretion. The Borrowers further agree that
any early termination fee set forth in this Section 3.5
shall be due and payable to the Bank regardless of whether
such prepayment results from the Borrowers' voluntary
prepayment or from the Bank's exercise of any of its
rights after an Event of Default hereunder; provided,
however, that if the Loans are paid in full solely as a
result of insurance proceeds resulting from the damage,
destruction, or condemnation of the Collateral, the Real
Estate Collateral, the Guarantor Collateral, the
Non-Recourse Guarantor Collateral, or the Other
Collateral, then the Bank agrees that the above early
termination fee shall be zero.
11. Section 3.6, "The Guarantors and Guarantor Collateral," of
the Loan Agreement is hereby amended to recite in its entirety as follows:
3.6 The Guarantors and Guarantor Collateral. Each of
the Guarantors shall unconditionally guarantee the full
and prompt payment of the Loans, shall evidence its
obligation by executing and delivering to the Bank a
Continuing Guaranty Unlimited (the "Guaranties") (the
guaranty agreement of Centrum shall include, inter alia, a
requirement that such Guarantor will maintain Tangible Net
Worth in accordance with the provisions of Section 6.14
below), and shall secure its obligations under each of the
Guaranties with a first and exclusive security interest,
assignment, pledge, and mortgage on all of its stock or
securities (except for the stock of Micafil, Inc.),
business assets, motor vehicles, and real estate, whether
now owned or hereafter acquired pursuant to security
agreements, assignments, pledges, and mortgages in form
satisfactory to the Bank (the "Guarantor Collateral"). In
addition, Xxxxxx Forge shall unconditionally guarantee the
full and prompt payment of the Term Loan and shall
evidence its obligation by executing and delivering to the
Bank a Continuing Guaranty Unlimited. In addition,
Micafil, Inc., and American Handling, Inc. shall each, on
a non-recourse basis, guaranty the Loans, shall evidence
its obligations by executing and delivering to the Bank a
Non-Recourse Guaranty (the "Non-Recourse Guaranties"), and
shall secure the obligations under the Non-Recourse
Guaranties, with a first and exclusive security interest,
assignment, pledge, and mortgage on all of their
respective business assets, motor vehicles and real
estate, whether now owned or hereafter acquired pursuant
to security agreements, pledges, and mortgages in form
satisfactory to the Bank
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subject to any liens or encumbrances permitted by the terms
of such documents (the "Non-Recourse Guarantor
Collateral"), provided, however, that if the Bank, in its
sole discretion, does not provide a credit facility in the
amount of $250,000.00 to Micafil, Inc., then the Bank
agrees to subordinate its security interests with respect
to the business assets of Micafil, Inc. to the extent of
$250,000.00 in favor of another senior lender.
12. Section 3.7, "Other Collateral Securing the Loans," of the
Loan Agreement is hereby amended to recite in its entirety as follows:
3.7 Other Collateral Securing the Loans. In addition
to the Collateral (as defined below), the Loans shall be
secured by (a) first and exclusive open-end mortgages,
assignments of rents and security agreements in all of the
real property interests whether now owned or hereafter
acquired, whether owned or leased of the Borrowers (the
"Real Estate Collateral"); provided, however, that the
Bank's mortgage interests in the Borrowers' real estate
interests shall be subject to the liens and encumbrances
set forth in Exhibit B attached hereto; and, provided
further, that Xxxxxx Forge shall not grant a negative
pledge with respect to its real property located in Shelby
County, Tennessee to any person or entity other than the
Bank; (b) a first and exclusive security interest in all
of the Borrowers' motor vehicles and interests in capital
stock; and (c) the life insurance referred to in Section
6.2 below (collectively the "Other Collateral").
13. Section 4.4, "Cash Collection Account," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
4.4 Cash Collection Account. The collections through
the lockbox arrangement shall be deposited into cash
collection accounts maintained with the Bank (the "Cash
Collection Account"), over which the Bank alone shall have
the power of withdrawal. If any of the Borrowers makes
collections on any of the Collateral, it shall hold in
trust for the Bank the proceeds received from collections,
and turn over all checks, drafts, cash and other
remittances and proceeds to the Bank each business day in
the exact form in which they are received, together with a
collection report in form acceptable to the Bank. Said
proceeds shall be deposited in the Cash Collection
Accounts. Prior to the occurrence of an Event of
Default, the Bank shall apply the whole or any part of the
collected funds on deposit in the Cash Collection Accounts
against the principal and/or interest of the Revolving
Loans, and after the occurrence of an Event of Default,
the Bank may apply such funds to the Term Loan, the
Additional Term Loan or any other indebtedness or
Obligations, and any portion of said funds on deposit in
the Cash Collection Accounts which the Bank elects not to
apply to the Obligations may be paid over and deposited by
Bank to the Borrowers' commercial accounts. The Bank, at
the Bank's sole discretion, may credit amounts deposited
in the Cash Collection Accounts to the Loans on the day of
deposit. To compensate the Bank for this arrangement, the
Bank charges, and each of the Borrowers agrees to pay a
fee which is calculated in accordance with
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the Bank's standard practices and procedures as if the
deposits in the Cash Collection Accounts were not applied
to the Revolving Loan until one business day after deposit
in the Cash Collection Accounts, with interest charged on
the daily deposits in the Cash Collection Account at the
interest rates applicable to the Revolving Loan. Such
amount is charged to the Borrowers monthly.
14. Section 5.4, "Capital Structure," of the Loan Agreement is
hereby amended to recite in its entirety as follows:
5.4 Capital Structure. Centrum owns 100% of the
capital stock of MSC. MSC owns 100% of the capital stock
of XxXxxxx Services, Inc. XxXxxxx Services, Inc. owns
100% of the stock of Eballoy, EBA, XxXxxxx International,
Inc. and Xxxxxx Forge. The corporate structure of each of
the Borrowers and MSI is set forth in Schedule 5.4
attached to the Second Amendment and accurately represents
to the Bank the following: (a) the classes of capital
stock of each of the Borrowers and MSI and par value of
each such class, all as authorized by the Articles of
Incorporation or Charter of each and the number of shares
of each such class of stock issued and outstanding, the
registered owner or holder (legally or beneficially)
thereof, and the certificate numbers evidencing the
foregoing. All shares of all classes of capital stock
issued are fully paid and nonassessable. The Borrowers
and MSI do not have outstanding any other stock or other
equity security, or any other instrument convertible to an
equity security of any of them, or any commitment,
understanding, agreement or arrangement to issue, sell or
have outstanding any of the foregoing.
15. Section 6.3, "Sale of Assets, Merger, Subsidiaries,
Tradenames and Conduct of Business," of the Loan Agreement is hereby amended to
recite in its entirety as follows:
6.3 Sale of Assets, Merger, Subsidiaries, Tradenames
and Conduct of Business. Such Company shall not (a)
except in the ordinary course of business, sell, lease,
transfer or otherwise dispose of, any of its assets,
provided, however, such Company shall be permitted to
dispose of equipment that is obsolete or no longer useful
in the ordinary course of such Company's business,
provided that such disposition is not in excess of the
aggregate sum of $100,000.00 in any fiscal year; provided,
further, that such Company provides notice to the Bank of
the sale of such equipment; and provided, further, if such
equipment is Eligible Equipment or is the Rolled Ring
Division Equipment or equipment of Xxxxxx Forge, such
Company obtains the prior written consent of the Bank, and
the proceeds of such disposition are applied first to the
Additional Term Loan, in inverse order of maturity of
installments, and then to the Term Loan, in inverse order
of maturity of installments, (b) except for the initial
capitalization of Centrum Acquisition Corporation by MSI,
consolidate with, merge into, enter into partnerships or
joint ventures with or make investments in any other
entity, or permit any other entity to consolidate with or
merge into it, provided, however, that Centrum shall be
permitted to
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make investments in MSC, (c) acquire all or substantially
all of the assets or business of any other person or
entity, provided, however, that Centrum Acquisition
Corporation, a Tennessee corporation and a wholly-owned
subsidiary of MSI, shall be permitted to acquire certain
of the assets of Xxxxxx Forge International, Inc.
pursuant to the terms of a certain Asset Purchase
Agreement by and among Centrum, Centrum Acquisition
Corporation and Xxxxxx Forge International, Inc. dated
as of April 29, 1997 (the "Asset Purchase Agreement") or
(d) create or acquire any subsidiaries or conduct
business under any other tradenames without the
prior written consent of the Bank, provided, however,
that MSI, shall be permitted to create Xxxxxx Forge
for the purpose of acquiring certain of the assets
of Xxxxxx Forge International, Inc. pursuant to the
terms of the Asset Purchase Agreement. Such Company has
no subsidiaries except as disclosed in Schedule 5.4
attached to the Second Amendment and conducts business
only in the name(s) of such Company and the tradenames set
forth in Schedule 6.3 attached to the Second Amendment.
None of the Borrowers or MSI shall engage in any business
other than the businesses engaged in by such Company on
the date hereof and any business or activities which are
substantially similar or related thereto.
16. Section 6.5, "Other Borrowings and Contingent
Liabilities," of the Loan Agreement is hereby amended to recite in its entirety
as follows:
6.5 Other Borrowings and Contingent Liabilities.
Except for the credit extensions set forth on Schedule 6.5
attached to the Second Amendment, intercompany loans and
advances obtained by Centrum from American Handling, Inc.,
which in the aggregate, shall not exceed the Maximum
Upstream Limit (as defined in Section 6.13 below), the
Loans, the IRB, and capitalized lease agreements and/or
purchase money financing transactions secured by the item
or items being purchased in an amount not to exceed the
purchase price of such item or items that, in the
aggregate, do not exceed the sum of $200,000.00 in any one
fiscal year; the Companies, in the aggregate, will not (a)
create or incur extensions of credit or indebtedness for
borrowed money, including without limitation, letters of
credit, or capitalized lease agreements or (b) guarantee,
indorse or otherwise become surety for or upon the
obligations of others, except by indorsement of negotiable
instruments for deposit or collection in the ordinary
course of business. For the purposes of this Agreement,
capitalized lease agreements shall be valued at the
purchase price of the item or items being purchased in
such fiscal year.
17. Section 6.9, "Acquisition of Capital Stock," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
6.9 Acquisition of Capital Stock. Without the prior
written consent of the Bank, such Company shall not redeem
or acquire any of its own capital stock or any warrants or
any securities relating to such capital stock or any debt
or debt securities of such Company except through (a) the
use of the net proceeds from the simultaneous sale
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of an equivalent amount of its capital stock for the same
purchase or redemption price, and (b) with respect to
Xxxxxx X. Xxxxx' stock in Centrum, through the use of any
life insurance proceeds on the life of Xx. Xxxxx which are
not collaterally assigned to secure the Loans; provided,
however, notwithstanding the foregoing, Centrum may pay
"Permitted Payments," as such term is defined in a certain
Subordination Agreement - Investors, dated of even date
herewith, entered into by, between and among, the Bank,
the Borrowers (with the exception of Xxxxxx Forge), the
Guarantors, Micafil, Inc., American Handling, Inc., First
New England Capital Limited Partnership, MorAmerica
Capital Corporation, and North Dakota Small Business
Investment Company.
18. Section 6.14, "Tangible Net Worth," of the Loan Agreement
is hereby amended to recite in its entirety as follows:
6.14 Tangible Net Worth. The Borrowers and MSI, on a
consolidated basis, shall maintain at all times a
consolidated Tangible Net Worth of not less than the
following amounts for the periods specified below:
(a) from the date of this Agreement
through and including May 30, 1996, not
less than $2,300,000.00,
(b) beginning May 31, 1996, and
continuing through and including the day
immediately preceding the date the Second
Amendment becomes effective, not less
than $2,500,000.00,
(c) beginning on the date the
Second Amendment becomes effective, and
continuing through and including December
30, 1997, not less than the sum of
$4,000,000.00,
(d) beginning December 31, 1997 and
continuing through and including June 29,
1998, not less than the sum of
$5,500,000.00, and
(e) beginning June 30, 1998 and
continuing at all times thereafter, not
less than the sum of $6,500,000.00.
"Tangible Net Worth" shall mean shareholders' equity,
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
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financing costs, (vi) loans or advances to and/or
accounts or notes receivable from Affiliates, (vii)
leasehold improvements, (viii) noncompete agreements,
and (ix) any other asset not directly related to the
operation of the business of the Borrowers.
19. Section 6.15, "Ratio of Total Liabilities to Tangible Net
Worth," of the Loan Agreement is hereby amended to recite in its entirety as
follows:
6.15 Ratio of Total Liabilities to Tangible Net Worth.
The Borrowers and MSI, on a consolidated basis, shall
maintain at all times a ratio of consolidated Total
Liabilities to consolidated Tangible Net Worth of not
greater than the following amounts for the periods
specified below:
(a) Not greater than 9.00 to 1.00
from the date of this Agreement through
and including May 30, 1996; and
(b) not greater than 8.50 to 1.00
beginning May 31, 1996, and continuing
through and including the day immediately
preceding the date the Second Amendment
becomes effective;
(c) not greater than 7.50 to 1.00,
beginning on the date the Second
Amendment becomes effective, and
continuing through and including December
30, 1997;
(d) Not greater than 6.00 to 1.00
beginning December 31, 1997 and
continuing through and including June 29,
1997; and
(e) Not greater than 5.00 to 1.00
beginning June 30, 1998 and continuing at
all times thereafter.
"Total Liabilities" shall mean with respect to the
Borrowers and MSI (a) all indebtedness for borrowed money
or for the deferred purchase price of property or
services, (b) any other indebtedness which is evidenced by
a note, bond, debenture or similar instrument, (c) all
obligations with respect to any letter of credit issued
for the account of the Borrowers or MSI, (d) all
obligations in respect of acceptances issued or created
for the account of the Borrowers or MSI, (e) lease
obligations which, in accordance with GAAP, should be
capitalized, (f) all liabilities (including lease
obligations) secured by any lien or encumbrance on any
property owned by any of the Borrowers or MSI even
though such Company has not assumed or otherwise become
liable for the payment thereof, (g) all obligations of
the Borrowers or MSI with
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respect to interest rate protection agreements (valued
at the termination value thereof computed in accordance
with a method approved by the International Swap Dealers
Association), and (i) all other obligations of the
Borrower or MSI which, in accordance with GAAP, would be
classified upon a balance sheet as liabilities (except
capital stock and surplus earned).
20. Section 6.17, "Capital Expenditures," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
6.17 Capital Expenditures. The Borrowers and MSI, on
a consolidated basis, will not make any expenditure for
fixed or capital assets, including by way of the
incurrence of capitalized lease obligations, expenditures
for maintenance and repairs which should be capitalized in
accordance with generally accepted accounting principles
or otherwise in excess of $1,600,000.00 in any fiscal
year. Centrum will not make any expenditure for fixed or
capital assets, including by way of the incurrence of
capitalized lease obligations, expenditures for
maintenance and repairs which should be capitalized in
accordance with generally accepted accounting principles
or otherwise in excess of $100,000.00 in any fiscal year.
21. Section 6.19, "Operating Lease Rentals," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
6.19 Operating Lease Rentals. The Borrowers and MSI
have entered into the operating leases as set forth in
Schedule 6.19 attached to the Second Amendment. The
Borrowers and MSI, on a consolidated basis, will not
without the prior written approval of the Bank enter into
operating leases providing in the aggregate for annual
rentals which exceed $350,000.00.
22. Section 6.21, "Maintenance of Accounts," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
6.21 Maintenance of Accounts. Each of the Borrowers
and the Guarantors shall provide the Bank with prior
written notice of the opening of any operating or deposit
accounts other than those maintained with the Bank.
Except for the operating and deposit accounts maintained
at the Bank, the payroll accounts set forth on Schedule
6.21 attached to the Second Amendment, and an operating
account at PNC Bank (Delaware) which, in the aggregate
shall not exceed $10,000.00 at any time, an operating
account of Centrum at Capital Bank, N.A., which account
shall not exceed $10,000.00 at any time, and an operating
account of Xxxxxx Forge at NationsBank of Tennessee, N.A.,
which account shall not exceed $10,000.00 at any time, the
Borrowers and the Guarantors do not maintain any
operating and deposit accounts.
23. A new subsection (s) is hereby added to Section 7,
"Financial Information and Reporting," of the Loan Agreement and shall recite
in its entirety as follows:
(s) within 90 days after the date
of the Second Amendment, an audited opening
balance
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sheet of Xxxxxx Forge, prepared in accordance
with GAAP and certified by independent
accountants satisfactory to the Bank.
24. Exhibit B, "Schedule of Permitted Encumbrances," of the
Loan Agreement is hereby amended to recite in its entirety as set forth in
Exhibit B attached to this Amendment.
25. Exhibit C, "Schedule of Business Locations," of the Loan
Agreement is hereby amended to recite in its entirety as set forth in Exhibit C
attached to this Amendment.
26. Schedules 5.13, 5.14, 5.15 and 6.11 to the Loan Agreement
are hereby amended to recite in their entirety as set forth in Schedules 5.13,
5.14, 5.15 and 6.11 to this Amendment.
27. Conditions of Effectiveness. This Amendment shall become
effective as of June 3, 1997, upon satisfaction of all of the following
conditions:
(a) The Bank shall have received two duly executed copies of
the Second Amendment to Loan and Security Agreement, the certificates,
instrument, documents, agreements and opinions of counsel set forth on Exhibit
D attached to this Amendment, 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 28 below shall
be true and accurate.
27. Representations. Each of the Borrowers 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 such 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, by the expressed terms thereof, solely to a date prior
hereto; (b) such 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 Pending Default.
28. Amendment to Loan Agreement. (a) Upon the effectiveness of
Section 2 through Section 26 hereof, each reference in the Loan Agreement to
"Loan and Security 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 Borrowers which would require the consent of the Bank,
including, without limitation, waivers of Events of Default which may exist
after giving effect hereto. Each of the Borrowers ratifies and confirms each
term, provision, condition and covenant set forth in the Loan Agreement and the
Loan Documents and
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acknowledges that the agreement set forth therein continue to be legal, valid
and binding agreements, and enforceable in accordance with their respective
terms.
29. Authority. Each of the Borrowers hereby represents and
warrants to the Bank that (a) such Borrower has legal power and authority to
execute and deliver the within Amendment; (b) the officer executing the within
Amendment on behalf of such Borrower has been duly authorized to execute and
deliver the same and bind such Borrower with respect to the provisions provided
for herein; (c) the execution and delivery hereof by such Borrower and the
performance and observance by such Borrower of the provisions hereof do not
violate or conflict with the articles of incorporation or charter, regulations
or bylaws of such Borrower or any law applicable to such 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 such Borrower; and
(d) this Amendment constitutes a valid and legally binding obligation upon such
Borrower in every respect.
30. 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.
31 Governing Law. This Amendment shall be governed by and
construed in accordance with the law of the State of Ohio.
IN WITNESS WHEREOF, the Borrowers, the Guarantors and the Bank
have hereunto set their hands as of the date first set forth above.
THE BORROWERS:
XXXXXXX STEEL COMPANY
By /s/ Xxxxxxx X. Xxxxxx
Its Treasurer
EBALLOY GLASS PRODUCTS COMPANY
By /s/ Xxxxxxx X. Xxxxxx
Its Treasurer
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ERIE BRONZE & ALUMINUM COMPANY
By /s/ Xxxxxxx X. Xxxxxx
Its Treasurer
XXXXXXX INTERNATIONAL, INC.
By /s/ Xxxxxxx X. Xxxxxx
Its Treasurer
CENTRUM ACQUISITION CORPORATION
TO BE KNOWN AS
XXXXXX FORGE COMPANY
By /s/ Xxxxxxx X. Xxxxxx
Its Treasurer
THE GUARANTORS:
CENTRUM INDUSTRIES, INC.
By /s/ Xxxxxxx X. Xxxxxx
Its Treasurer
XXXXXXX SERVICES, INC.
By /s/ Xxxxxxx X. Xxxxxx
Its Treasurer
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THE BANK:
THE HUNTINGTON NATIONAL BANK
By /s/ Xxxx X. Xxxxxxxx
Its Assistant Vice President
CONSENT OF NON-RECOURSE GUARANTORS
The undersigned, being non-recourse guarantors of the Borrowers'
indebtedness to the Bank pursuant to certain guaranty agreements with the Bank,
hereby consent and agree to be bound by the terms, conditions and execution of
the above Amendment and hereby further agree that their obligations shall be
continuing as provided in said guaranty agreements and said guaranty agreements
shall remain as written originally and continue in full force and effect in all
respects.
MICAFIL, INC.
By /s/ Xxxxxxx X. Xxxxxx
Its Treasurer
AMERICAN HANDLING, INC.
By /s/ Xxxxxxx X. Xxxxxx
Its Treasurer
