Exhibit (b)(4)
SUPPLEMENT TO REVOLVING LINE OF CREDIT AGREEMENT
The following constitutes the special provisions and/or
special covenants and/or modifications referred to in the
Revolving Line of Credit Agreement dated October 15, 1998 (the
"Credit Agreement") covering the Loans (as that term is defined
in the Credit Agreement) of the undersigned (the "Borrower") from
Mellon Bank, N.A. ("Bank"). The following shall supersede any
special provision or covenant contained in any prior Supplement
To Revolving Line of Credit Agreement and shall be applicable to
all Loans in existence on the date hereof or incurred hereafter.
1. The provisions of this Supplement shall, as of the date
hereof, be deemed to be fully incorporated by reference in,
constitute a part of, and supplement the provisions of, the
Credit Agreement, which, except as supplemented hereby, shall
continue in full force and effect in accordance with its terms
and conditions. Capitalized terms not defined herein shall have
the meaning given them in the Credit Agreement.
2. Borrower hereby covenants and decrees that, so long as
any Loans are outstanding, Borrower shall, except as Bank may
grant its prior written consent:
(a) Negative Pledge. Not incur, create, assume or
permit to exist, any mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on the accounts receivable
and inventory of Borrower other than: (i) security interests
granted in favor of Bank, (ii) pledges or deposits under workers'
compensation, unemployment insurance and social security laws, or
to secure the performance of bids, tenders, contracts (other than
for the repayment of borrowed money) or leases or to secure
statutory obligations or surety or other similar bonds used in
the ordinary course of business, (iii) tax liens which are being
contested in good faith and by appropriate proceedings diligently
conducted (unless and until foreclosure, sale or other similar
proceedings have been commenced) and provided that such reserve
or other appropriate provisions, if any, as shall be required by
generally accepted accounting principles shall have been made
therefor, and (iv) any unfiled materialmen's, mechanic's,
workmen's and repairmen's liens (provided, that if such a lien
shall be perfected, it shall be discharged of record immediately
by payment, bond or otherwise).
(b) Restrictions on Investments. Notwithstanding
Paragraph 3(r) of the Credit Agreement, investments shall be
permitted in an amount not to exceed, in the aggregate, the lower
of (i) $8,000,000; or (ii) ten percent (10%) of Borrower's total
stockholders' equity.
(c) Restrictions on Indebtedness. Borrower's
subsidiaries shall not create, incur, assume or suffer to exist
any indebtedness including, without limitation, obligations for
borrowed money and extended credit (except for indebtedness
extended by an affiliated entity), whether or not such
indebtedness is evidenced by an instrument, bond, note, debenture
or other instrument, in an amount greater than $250,000 in the
aggregate, per subsidiary.
(d) Most Favored Nations Status. Borrower shall give
notice in writing to Bank of the occurrence of any default under
any debt instruments or under any material contractual
obligations or agreements with governmental authorities, and of
the incurrence of new or additional debt obligations and the
terms thereof, and of any change, whether by addition or
modification in the terms or covenants of any debt obligation. In
the event that the terms or covenants of debt obligation of
Borrower existing on the date hereof or incurred hereafter are
more restrictive than the terms and covenants of the Credit
Agreement, such terms and covenants shall be deemed to be
incorporated in the Credit Agreement for the benefit of Bank and
shall be enforceable by Bank hereunder, at its discretion, as if
such more restrictive terms and conditions were herein fully set
forth.
(e) Year 2000 Considerations. (i) Borrower has (A)
undertaken a detailed inventory, review and assessment of all
areas within its business and operations that could be adversely
affected by the failure of Borrower to be Year 2000 Compliant on
a timely basis, (B) developed a detailed plan and timeline for
Borrower to become Year 2000 Compliant on a timely basis and (C)
to date, implemented that plan in accordance with that timetable
in all material respects. Borrower reasonably anticipates that it
will be Year 2000 Compliant on a timely basis.
(f) Financial Information. Furnish to Bank, the
following financial statements within the requisite time period:
(i) Annual Reporting. Within 120 days of fiscal
year-end, a consolidated statement of profit and loss and cash
flow of Borrower and its subsidiaries for such period and a
consolidated balance sheet for Borrower and its subsidiaries as
of the end of such period, in each case setting forth in
comparative form the corresponding figures from the preceding
fiscal year, all in reasonable detail, in accordance with GAAP,
and audited by a certified public accountant satisfactory to
Bank.
(ii) Quarterly Reporting. Within sixty (60) days
of each fiscal quarter, a consolidated statement of profit and
loss and cash flow of Borrower and its subsidiaries for such
period and a consolidated balance sheet for Borrower and its
subsidiaries as of the end of such period, in each case setting
forth in comparative form the corresponding figures from the
preceding fiscal quarter, all in reasonable detail, prepared on
an unaudited basis in accordance with GAAP, and certified by the
principal financial officer of Borrower.
(iii) Compliance Certificate. Together with the
quarterly financial statements, furnish to Bank an Officer's
Compliance Certificate, signed by the Chief Financial Officer of
Borrower, certifying that no default or Event of Default has
occurred as of the date of such certificate and setting forth in
reasonable detail the calculations required to establish whether
Borrower was in compliance with the applicable requirements of
the financial covenants hereof, on the date of such financial
statement.
(iv) Additional Information. Upon request, such
other financial information, documentation or certifications to
Bank, in form and content satisfactory to Bank;
(g) Financial Covenants. Comply with the following
financial covenants which shall be tested on Borrower on a
quarterly basis in accordance with GAAP:
(i) Minimum Fixed Charges Coverage. The
Borrower's ratio of (a) Cash Flow to (b) interest expense plus
operating lease expense as determined in accordance with GAAP,
shall not be less than 1.25 to 1.00 as measured as of the end of
each fiscal quarter.
(ii) Minimum Consolidated Stockholders' Equity.
The Borrower's consolidated stockholders' equity shall not fall
below the following levels:
Date Amount
Through 6/30/96 $45,000,000
9/30/96 and adjusted $45,000,000 plus 50% of
quarterly thereafter future quarterly net income
beginning with 9/30/96
(iii) Maximum Funded Debt Ratio. The Borrower's
ratio of (a) Funded Debt to (b) Funded Debt plus total
stockholders' equity shall not exceed 0.55 to 1.00.
(iv) Adjusted Maximum Funded Debt Ratio. For a
period of at least 30 consecutive days during each fiscal year,
the Borrower's ratio of (a) Funded Debt plus current maturities
on long-term debt plus outstandings under the Note to (b) Funded
Debt plus total stockholders' equity shall not exceed 0.55 to
1.00.
(v) Maximum Secured Debt Ratio. The Borrower's
ratio of (a) Secured Funded Debt to (b) total stockholders'
equity shall not exceed 0.10 to 1.00.
(h) Fees and Expenses. Borrower shall pay on demand
any and all costs, fees and expenses including, without
limitation, attorneys' fees reasonably incurred by Bank in
connection with the closing and any subsequent documentation or
enforcement of the Loans.
(i) Definitions.
"Cash Flow" means net income plus interest expense
plus taxes plus operating lease expense, each as determined in
accordance with GAAP.
-2-
"Funded Debt" means any obligations not maturing in
the next 365 day period evidenced by notes, bonds, debentures or
similar instruments and all obligations under capital leases not
maturing in the next 365 day period, as determined in accordance
with GAAP.
"GAAP" means generally accepted accounting principles.
"Secured Funded Debt" means any obligations, secured
by any asset(s) of the borrower and not maturing in the next 365
day period, evidenced by notes, bonds, debentures or similar
instruments and all obligations under capital leases not maturing
in the next 365 day period, as determined in accordance with
GAAP.
"Year 2000 Compliant" means, with regard to any
entity, that all software, embedded microchips, and other
processing capabilities utilized by, and material to the business
operations or financial condition of, such entity are able to
interpret and manipulate data on and involving all calendar dates
correctly and without causing any abnormal ending scenario,
including in relation to dates in and after the year 2000.
Witness the due execution hereof intending to be legally
bound the day first above written.
Attest: XXXXXXX CORPORATION
/s/ Xxxxxx Xxxxxxx /s/ Xxxxxx X. Xxxxxxxx
--------------------------- -----------------------------
By: Xxxxxx X. Xxxxxxxx
(CORPORATE SEAL) Title: Senior Vice President
/s/ Xxxxxx Xxxxxxxx, III
-----------------------------
By: Xxxxxx Xxxxxxxx, III
Title: President
MELLON BANK, N.A.
/s/ Xxxxxx Xxxxx
-----------------------------
By: Xxxxxx X. Xxxxx
Title: Vice President
-3-
