EXHIBIT 10(q)
THIRD AMENDMENT TO
CREDIT AGREEMENT
THIS THIRD AMENDMENT ("Amendment") dated as of December 2, 2002, 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
April 25, 2001 which was amended by two amendments ("Agreement").
B. Companies and Bank desire to amend the Agreement as hereinafter
set forth.
NOW, THEREFORE, the parties agree as follows:
1. The definitions of Lending Availability set forth in Section 1
of the Agreement is amended to read in its entirety as follows:
"'Lending Availability' shall mean as of any date of
determination thereof, the sum of (a) eighty five percent (85%) of
Eligible Accounts plus (b) fifty percent (50%) of Eligible Inventory;
provided, however, in no event shall the amount of Lending Availability
determined under clause (b) exceed Five Million Dollars ($5,000,000),
plus (c) the Overformula Amount, plus (d) until March 15, 2003, seventy
percent (70%) of the accrued royalty payment due from Red Spot Paint &
Varnish Company, less (e) the amount of the Reserve as of such date of
determination. For purposes of the determination of Lending
Availability, the Overformula Amount shall initially mean $2,000,000 and
shall reduce by $42,000 on the first day of each month commencing
January 1, 2003."
2. Section 8.2(c) is amended to read in its entirety as follows:
"On Thursday of each week, a Borrowing Base Report (in the form
attached as Exhibit 'A') calculating the Lending Availability as of the
end of the preceding week; provided that if the availability under the
Revolving Credit Note (calculated as Lending Availability less the
outstanding principal amount of Advances and less the undrawn amount of
Letters of Credit plus outstanding Letter of Credit Obligations) is less
than $1,000,000 for five (5) Business Days during any consecutive thirty
(30) day period, then thereafter updated Borrowing Base Reports shall be
provided each time Companies receive an Advance (but not less
frequently than weekly) and such reports shall be accompanied by sales
and receipts and such other detail as Bank may require;"
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3. Companies acknowledge that Bank intends to increase the
frequency of its collateral audits of Companies to not less than three (3) times
per year. This is not a limitation on the frequency of the audits.
4. If transactional reporting is required under Section 8.2(c),
Companies shall be obligated to pay to Bank monthly in advance a collateral
monitoring fee of $500 per month.
5. 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 8.1 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, as hereby amended, has occurred and is continuing as of the date
hereof.
6. Except as expressly provided herein, all of the terms and
conditions of the Agreement remain unchanged and in full force and effect.
7. This Amendment shall be effective upon (a) the payment by
Companies to Bank of a non-refundable amendment fee in the amount of $10,000,
(b) execution of this Agreement by Companies and the Bank and (c) execution and
delivery by S.O. Realty, Inc. to Bank of a Continuing Collateral Mortgage in the
form attached hereto as Exhibit "A" together with such evidence as the Bank may
require regarding priority of the Bank's lien on the real property to be
encumbered thereby.
IN WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK DETREX CORPORATION
By: By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Its: Its: Secretary
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THE ELCO CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Its: Secretary
XXXXXX PLASTICS, INC.
By: /s/ Xxxxx Xxxxxxx
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Its: Director
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S.O. REALTY, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Its: Secretary
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SCHEDULE 1
Detrex Corporation
The Elco Corporation
Xxxxxx Plastics, Inc.
S.O. Realty, Inc.
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