EXHIBIT 4
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FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT
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This Fourth 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 22nd day of January, 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. Section 1 of the Credit Agreement is hereby amended to recite
in its entirety as follows:
SECTION 1. COMMITMENT.
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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 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 the Company's
Eligible Inventory.
2. A new Section 1.4 is hereby added to the Credit Agreement, to
read as follows:
1.4 Collateral Audits. The Bank shall have the right,
in its sole discretion, to conduct audits of the Borrower, and
the Borrower will provide access to all of its books and
records and such other information which the Bank deems
necessary to evaluate the status of the Loans or of the
Collateral. In connection therewith, the Borrower will pay to
the Bank a fee equal to $650 per day per auditor, in addition
to all out-of-pocket expenses of such auditors. Such audit
fees and expenses shall be payable by the Borrower upon
demand.
3. A new Section 4.11 is hereby added to the Credit Agreement, to
read as follows:
4.11 Lockbox and Collection of Accounts. The Borrower
shall cause all its accounts to be collected through a lockbox
arrangement with the Bank and shall execute a lockbox
agreement in form and substance satisfactory to the Bank. The
Borrower shall notify all existing Account Debtors to remit
payments to the address specified in such lockbox agreement,
and all invoices rendered after the date of the Fourth
Amendment to Revolving Credit Agreement shall bear such
address. Upon any failure of the Borrower to cause payments to
be remitted to the address specified in such lockbox
agreement, the Bank may at any time notify Account Debtors on
any Collateral that the Collateral has been assigned to the
Bank and shall be paid to the Bank through the lockbox or
otherwise. Upon request of the Bank at any time following an
Event of Default, the Borrower agrees to notify such Account
Debtors and indicate on all xxxxxxxx that the accounts are
payable to the Bank.
4. A new Section 4.12 is hereby added to the Credit Agreement, to
read as follows:
4.12 Cash Collection and Controlled Disbursement
Accounts. The collections through the lockbox arrangement
shall be deposited into a cash collection account maintained
with the Bank (the "Cash Collection Account"), over which the
Bank alone shall have the power of withdrawal. If the Borrower
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 Account. The Bank in its sole
discretion may apply the whole or any part of the collected
funds on deposit in the
Cash Collection Account against the principal or interest of
the Loans or any other indebtedness to the Bank, and any
portion of said funds on deposit in the Cash Collection
Account that the Bank elects not to apply to the Loans or
other indebtedness shall be paid over and deposited by the
Bank to the Borrower's commercial account at the Bank. The
Borrower shall also maintain with the Bank a controlled
disbursement account.
5. 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, and a mortgage lien
against its real property located at 00000 Xxxxxxxx Xxxx,
X.X., Xxxxxxxxxxxx, Xxxx 00000 (the "Mortgage"). 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.
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.
The Borrower shall provide to the Bank by March 12,
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 12, 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.
6. Section 8.1 of the Credit Agreement is hereby amended to
recite in its entirety as follows:
8.1 Financial Statements and Other Information.
Furnish the Bank a copy of the report of the certified audit
of the Borrower and its Subsidiaries for each fiscal year
prepared by a certified public accountant of recognized
standing and a balance sheet and related statements of income
and retained earnings and cash flow of the Borrower and of the
Subsidiaries as of the end of and for each quarter certified
as to fairness of presentation by an officer of the Borrower
and/or the respective Subsidiaries. All financial statements
will be consolidated financial statements, and all annual and
quarterly financial statements will be prepared in accordance
with generally accepted accounting principles, and will be in
a form satisfactory to the Bank. The annual audits and
quarterly statements shall be in the format required for
filing with the Securities and Exchange Commission. The
Borrower will further furnish the Bank within 20 days of the
end of each fiscal month a balance sheet and related
statements of income and retained earnings of the Borrower and
of the Subsidiaries (but excluding Fargeot) as of the end of
and for such month certified as to fairness of presentation by
an officer of the Borrower and/or the respective Subsidiaries.
The Borrower will furnish to the Bank with such monthly
financial statements an accounts receivable aging, an accounts
receivable reconciliation, a detailed inventory listing and an
accounts payable aging, all certified by an officer of the
Borrower and/or the respective Subsidiaries.
The engagement of the certified public accountant
will require the reporting of any and all Defaults and Events
of Default as of the last day of the fiscal year of the
Borrower which have come to the attention of such accountant
or that no Defaults or Events of Default have come to its
attention as of such date. Quarterly financial statements will
be accompanied by an officer's compliance certificate, in the
form attached hereto as Exhibit D, which shall also indicate
whether a Default or Event of Default has occurred and, if so,
stating the facts with respect thereto and whether the same
has been cured prior to the date of such certificate. In the
event that any certificate furnished under this paragraph
shall state that a Default or Event of Default has occurred
and is continuing, such certificate shall be accompanied by a
statement executed by the chief financial officer of the
Borrower as to the action taken and proposed to be taken by
the Borrower to cure such Default or Event of Default. Annual
and quarterly statements shall, be delivered to the Bank
within 120 days and 60 days, respectively, after the close of
the fiscal period.
The Borrower will also furnish the Bank promptly
after sending or filing thereof, copies of all financial
statements and reports which it sends to its stockholders and
copies of all regular and periodic reports and registration
statements which it files with the Securities and Exchange
Commission. The Borrower will furnish the Bank within a
reasonable period of time such additional information and
financial statements as the Bank may from time to time
request.
The Borrower will furnish to the Bank weekly a
certificate in the form of Exhibit E signed by its chief
financial officer setting forth the calculation of the
Borrowing Base as of the end of the week most recently ended.
The Borrower will also furnish to the Bank weekly a sales
journal and cash receipts journal.
7. A new Section 8.14 is hereby added to the Credit Agreement, to
recite in its entirety as follows:
Section 8.14 Business Consultants. Permit the Bank to
communicate freely with all consultants retained by the
Borrower to assist in business planning, and cause the
consultants to deliver to the Bank a copy of every finding and
recommendation made by the consultants to the Borrower.
8. The Borrower represents and warrants that no Event of Default
has occurred and is continuing.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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 Borrower to the Bank of the written consent of
Metropolitan Life Insurance Company to the execution and delivery of the
Mortgage 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.
15. 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 22nd day of January, 2004.
X. X. XXXXX CORPORATION
By: /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx,
Chief Executive Officer and President
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
