EXHIBIT
10.7
SECOND MODIFICATION TO REVOLVING PROMISSORY NOTE AND
REVOLVING CREDIT AND SECURITY AGREEMENT,
AND REAFFIRMATION OF GUARANTY
Acme United Corporation
60 Round Hill Road
Fairfield, Connecticut 06824-5172
(Hereinafter referred to as "Borrower")
Acme United Limited
351 Foster Street
Mount Forest, Ontario, Canada, NOG 2LO
(Individually and collectively "Guarantor")
Wachovia Bank, National Association
50 Main Street
White Plains, New York 10606
(Hereinafter referred to as "Bank")
THIS AGREEMENT is entered into as of March 6, 2006 by and between
Bank, Borrower
and Guarantor.
RECITALS
Bank is the holder of a certain Revolving Promissory Note in the
original
principal amount of up to $10,000,000.00 (the "Note"), which is
dated August 2,
2002, and which evidences a certain revolving loan from Bank to
Borrower (the
"Loan");
The Loan is made pursuant to the terms of a certain Revolving
Credit And
Security Agreement dated August 2, 2002 (the "Loan Agreement");
The Note and Loan Agreement were modified pursuant to the terms of
a certain
Modification to Revolving Promissory Note and Revolving Credit and
Security
Agreement and Reaffirmation of Guaranty dated September 30, 2004
(the "First
Modification Agreement", and collectively with this Agreement, the
Note, the
Loan Agreement, the Guaranty as hereafter defined, and all of the
other
documents which evidence or secure the Loan, the "Loan
Documents");
Borrower has requested a modification of the interest rate payable
under the
Note, an extension of the maturity date of the Note, and certain
other changes
to the Loan Documents and Bank has agreed to such
modifications;
Pursuant to its Unconditional Guaranty dated August 2, 2002 (the
"Guaranty"),
Guarantor unconditionally agreed to the full payment and
performance of all
Guaranteed Obligations, as defined in the Guaranty, and has agreed
to the
modifications set forth herein and to reaffirm its Guaranty;
In consideration of Bank's agreement to such modifications and the
other
agreements contained herein, the parties agree as follows:
(1)
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AGREEMENT
ACKNOWLEDGMENT OF BALANCE. Borrower acknowledges that the most
recent Commercial
Loan Invoice sent to Borrower with respect to the Indebtedness, as
that term is
defined in the Loan Agreement, is correct.
MODIFICATIONS.
1. The Note is hereby modified as follows:
a. The stated original principal amount of $10,000,000.00 set forth
in the
caption and in the first paragraph of the Note is hereby modified
to be
$15,000,000.00.
Any other reference in the Note or in any other Loan Document to
the original
principal amount of the Note shall be deemed to refer to
$15,000,000.00.
b. The first sentence of the paragraph entitled "LIBOR Market Index
Rate" is
hereby deleted in its entirety and the following is substituted
therefor: "LIBOR
Market Index plus 1.00% per annum, as LIBOR Market Index may change
from day to
day (`LIBOR Market Index-Based Rate')." Any other reference in the
Note or in
any other Loan Documents to the LIBOR Market Index-Based Rate shall
be deemed to
refer to such rate of interest as modified hereby.
c. The maturity date of the Note of June 30, 2007, set forth in the
paragraph
entitled "Repayment Terms" as modified by the First Modification
Agreement, is
hereby amended to be June 30, 2009. Any other reference in the Note
or in any
other Loan Documents to the maturity date of the Note shall be
deemed to refer
to June 30, 2009.
2. The Loan Agreement is hereby modified as follows:
a. Section 5.6(a) of the Loan Agreement, as modified by the First
Modification
Agreement, entitled "Summary Reports" is hereby deleted in its
entirety and the
phrase "Intentionally Deleted" shall be substituted therefor.
b. The dollar amount of $9,000,000.00 set forth in the first
sentence of Section
7.2 of the Loan Agreement, entitled "Tangible Net Worth", as
modified by the
First Modification Agreement, is hereby modified to be
$10,000,000.00.
c. Section 7.5 of the Loan Agreement, entitled "Capital
Expenditures" is hereby
deleted in its entirety and the phrase "Intentionally Deleted"
shall be
substituted therefor.
d. The addresses of Bank and Borrower set forth in Section 10.4 of
the Loan
Agreement are hereby modified as follows:
Bank:
Wachovia Bank, National Association
50 Main Street
White Plains, New York 10606
Attn: Annette Herber, Vice President
Borrower:
Acme United Corporation
60 Round Hill Road
Fairfield, Connecticut 06824-5172
Attn: Walter C. Johnsen, President
Any reference in any other Loan Document to the addresses of Bank
and Borrower
to which notices shall be provided shall be deemed to refer to the
addresses set
forth herein.
(2)
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e. The definition of "Maximum Loan Amount" set forth in Exhibit
1
to the Loan Agreement is hereby deleted in its entirety and the
following is
substituted therefor:
"'Maximum Loan Amount' means $15,000,000.00."
f. The definition of "Termination Date" set forth in Exhibit 1 to
the Loan
Agreement is hereby deleted in its entirety, and the following is
substituted
therefor:
"'Termination Date' means June 30, 2009.
3. Except as modified herein, all other terms, covenants and
conditions set
forth in any Loan Document shall remain unmodified and in full
force and effect.
ACKNOWLEDGMENTS AND REPRESENTATIONS. Borrower and Guarantor
acknowledge and
represent that the Note, the Loan Agreement, the Guaranty and all
other Loan
Documents, as amended hereby, are in full force and effect without
any defense,
counterclaim, right or claim of set-off; that, after giving effect
to this
Agreement, no default or
