EXHIBIT 4
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FIFTH AMENDMENT TO REVOLVING CREDIT AGREEMENT
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This Fifth Amendment to Revolving Credit Agreement (this "Amendment")
is entered into at Columbus, Ohio, by and between The Huntington National Bank,
as lender (the "Bank"), and X.X. Xxxxx Corporation, as borrower (the
"Borrower"), as of the 10th day of March, 2004, in order to amend the Revolving
Credit Agreement entered into by and among the Bank and the Borrower as of the
27th day of December, 2002 (the "Credit Agreement").
Whereas, the parties to this Amendment desire to amend certain of the
provisions of the Credit Agreement, the Credit Agreement is hereby amended as
follows:
1. Subsections 1.1, 1.2 and 1.3 of the Credit Agreement are
hereby amended to recite in their entirety as follows:
SECTION 1. COMMITMENT.
1.1. Basic Commitment Terms. The Borrower has applied
to the Bank for revolving credit loans up to an aggregate
principal amount of $32,000,000, the proceeds of which are to
be used by the Borrower for general corporate purposes,
including, without limitation, seasonal financing of inventory
and accounts receivable. The Bank is willing to make such
loans to the Borrower upon the terms and subject to the
conditions hereinafter set forth up to a maximum aggregate
principal amount not in excess of $32,000,000 (said amount
being hereinafter called the "Commitment" of the Bank).
Notwithstanding anything to the contrary contained in any Note
evidencing the Loan, the principal amount advanced by the Bank
pursuant to the Note held by the Bank shall not exceed the
amount of the Bank's Commitment.
1.2. Commitment Limitations. Notwithstanding the
foregoing, during the following periods in each year occurring
during the term of this Agreement, the aggregate Commitment of
the Bank shall be in an amount equal to the lesser of the
following amounts or the amount to which the Commitment has
been reduced pursuant to Section 4.6 hereof:
Period Commitment
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From 1/1 through 1/31 $ 9,000,000
From 2/1 through 2/29 $12,000,000
From 3/1 through 3/31 $13,800,000
From 4/1 through 4/30 $12,000,000
From 5/1 through 10/31 $32,000,000
From 11/1 through 12/31 $27,000,000
1.3 Borrowing Base. Notwithstanding the foregoing
provisions of Sections 1.1 and 1.2, the aggregate principal
balance of the Loans at any time outstanding shall not exceed
the lesser of (a) the Commitment of the Bank, reduced as
provided in Section 1.2 and (b) the Borrowing Base (as
hereinafter defined). As used herein, "Borrowing Base" shall
mean the sum of (i) 80% of the Company's Eligible Accounts
plus (ii) 40% of Eligible Inventory, minus (iii) $2,100,000.
2. A new Section 3.19 is hereby added to the Credit Agreement, is
hereby amended to recite in its entirety as follows:
3.19 Eligible Inventory means that portion of the
Borrower's inventory, including finished goods and raw
materials related to its principal product lines, subject to
no Liens, and that the Bank determines in its sole discretion
from time to time, based on credit policies, market
conditions, the Borrower's business and other matters, is
eligible for use in calculating the Borrowing Base. For
purposes of determining the Borrowing Base, Eligible Inventory
shall not include tooling, work in process, slow moving,
obsolete or discontinued inventory, supply items, packaging,
or the freight portion of raw materials, inventory in the
control of a third Person for processing or storage, consigned
inventory or inventory in transit, or any inventory located
outside of the territorial limits of the United States of
America. All inventory shall be valued at the lesser of cost
(on a FIFO basis) or market.
3. Section 5 of the Credit Agreement is hereby amended to recite
in its entirety as follows:
SECTION 5. SECURITY.
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As security for the Loan, the Borrower shall grant to
the Bank a first security interest in all its accounts,
inventory, equipment, fixtures and other personal property of
every kind and description, whether now owned or hereafter
acquired or created by the Borrower, a mortgage lien against
its real property located at 00000 Xxxxxxxx Xxxx, X.X.,
Xxxxxxxxxxxx, Xxxx 00000 (the "Mortgage") and an assignment of
and lien upon a life insurance policy issued by Pacific Life
Insurance Company, owned by the Borrower, insuring the life of
Xxxxxx X. Zacks as the named insured, in the face amount of
$5,000,000 (the "Life Insurance"). At the request of the Bank,
the Borrower shall authorize and cause to be executed a
security agreement (the "Security Agreement"), a mortgage deed
(the "Mortgage") and any and all other
documents that the Bank shall require in order to effect the
foregoing, including all documents necessary to effect the
assignment of and perfection of the lien upon the Life
Insurance (the "Life Insurance Security Documents'). The
Borrower will deliver the Mortgage to the Bank no later than
January 27, 2004. The Borrower will also deliver to the Bank
not later than that date such agreements and documents as may
be required or desirable to permit the Bank to perfect a
security interest in all the Borrower's intellectual property
located or registered in the United States and will deliver as
soon as practicable thereafter such agreements and documents
as may be required or desirable to permit the Bank to perfect
a security interest in all the Borrower's intellectual
property located or registered in foreign countries. The
failure of the Borrower to provide the Mortgage and the
agreements and documents respecting U.S. intellectual property
referenced herein by January 27, 2004, shall constitute an
Event of Default. Notwithstanding the Commitment of the Bank,
no advances shall be made by the Bank to the Borrower
hereunder in excess of $12,000,000 until the Bank has received
the Life Insurance Security Documents in a form and in
substance satisfactory to it in its sole discretion, provided
that the signature of Pacific Life Insurance Company shall not
be required prior to making such advances.
The Borrower shall provide to the Bank by March 26,
2004, a current "Phase One" environmental report regarding
hazardous wastes, toxic materials and other environmental
hazards on the Property, which report shall be certified by an
environmental consultant and shall conform in all respects
with the Bank's Phase One Environmental Report Requirements.
If warranted by the Phase One environmental report, the
Borrower shall provide a detailed audit of the same matters.
Such consultant must appear on the Bank's list of approved
environmental consultants or be specifically approved in
writing by the Bank. The Borrower will provide to the Bank all
cooperation required for the Bank to procure from an
independent appraiser selected by the Bank by March 26, 2004,
an appraisal of the Property. The appraisal and environmental
reports shall be procured at the Borrower's expense and shall
be in accordance with the most recent regulations of the
Comptroller of the Currency.
The Borrower will provide to the Bank all cooperation
required for the Bank to perfect in accordance with the
requirements of Mexican law, at the Borrower's expense and at
the earliest practicable date, the Bank's security interest in
all Collateral located in Mexico.
4. Notwithstanding anything in the Credit Agreement to the
contrary, the Bank hereby consents to the Borrower's borrowing of the principal
amount of (a) $1,750,000 on the
Life Insurance and (b) $450,000 on a life insurance policy in the original face
amount of $1,350,000, issued by Pacific Life Insurance Company, owned by the
Borrower, insuring the life of Xxxxxx X. Zacks as the named insured.
5. Each reference to the Credit Agreement, whether by use of the
phrase "Credit Agreement," "Agreement," the prefix "herein" or any other term,
and whether contained in the Credit Agreement itself, in this Amendment, in any
document executed concurrently herewith or in any loan documents executed
hereafter, shall be construed as a reference to the Credit Agreement as amended
by this Amendment.
6. Except as previously amended and as modified herein, the
Credit Agreement and the Loan Documents shall remain as written originally and
in full force and effect in all respects, and nothing herein shall affect,
modify, limit or impair any of the rights and powers which the Banks may have
thereunder.
7. The Borrower agrees to perform and observe all the covenants,
agreements, stipulations and conditions to be performed on its part under the
Credit Agreement, the promissory note executed and delivered in connection
herewith, the Loan Documents, and all other related agreements, as amended by
this Amendment.
8. This Amendment and a letter as to fees delivered
contemporaneously herewith embody the entire agreement and understanding between
the Borrower and the Bank, and supersede all prior agreements, communications
and understandings, relating to the subject matter hereof, and there exists no
agreement or commitment by the Bank further to amend the Agreement or to waive
any of the Borrower's obligations thereunder.
9. 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 respective 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 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, subject to applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally, to
general equitable principles and to applicable doctrines of commercial
reasonableness.
10. This Amendment shall become effective only upon the occurrence
of all the following: (a) the execution by the Borrower and the Bank of this
Amendment; (b) delivery by the Metropolitan Life Insurance Company to the Bank
of the executed Third Amendment to Intercreditor Agreement, consenting to the
execution and delivery of the Life Insurance Security Documents as provided in
this Amendment; and (c) delivery by the Borrower to the Bank of a certified
resolution of the Board of Directors authorizing the execution and performance
of this
Amendment and the additional borrowing provided for herein. Execution of this
Amendment by the parties hereto may be in any number of counterparts, but all of
such counterparts when taken together shall constitute one and the same
document.
11. Prior to the execution of this Agreement, the Bank has had
information delivered to it which would cause it to believe the Borrower is in
default under the terms of the Credit Agreement. Any advances, previously or
hereafter made by the Bank to the Borrower based upon any borrowing certificate
submitted by the Borrower, shall not be construed as or constitute a waiver,
amendment or modification of any term or condition set forth in the Credit
Agreement, or the waiver of any right or remedy which may be available to the
Bank. Additionally, such advances shall not be construed as or constitute a
course of dealings between the Bank and the Borrower, with all rights and
remedies of the Bank being fully and specifically reserved.
12. Except as otherwise specifically provided herein, the
capitalized terms used herein shall have the same meanings as the capitalized
terms used in the Credit Agreement.
IN WITNESS WHEREOF, the Borrower and the Bank have hereunto set their
hands as of the 10th day of March, 2004.
X. X. XXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx,
Senior Vice President - Finance,
Chief Financial Officer
WARNING-BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL.
IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR
PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU
REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED
GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY
OTHER CAUSE.
THE HUNTINGTON NATIONAL BANK
By: /s/ R. Xxxxx Xxxxxx
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R. Xxxxx Xxxxxx,
Executive Vice President
