1
EXHIBIT 10(JJ)
FOURTH AMENDMENT TO LOAN AGREEMENT
AND OTHER LOAN DOCUMENTS
THIS FOURTH AMENDMENT TO LOAN AGREEMENT AND OTHER LOAN DOCUMENTS
(this "Amendment") dated as of January 1, 2000 (the "Effective Date"), is
entered into by XXXXXX INDUSTRIES, INC., a Delaware corporation which is the
successor by merger to Xxxxxx Industries, Inc., an Alabama corporation (the
"Borrower"), and AMSOUTH BANK, an Alabama banking corporation formerly doing
business as AmSouth Bank, N.A., a national banking association, and AmSouth Bank
of Alabama, an Alabama banking corporation (the "Lender").
RECITALS
A. The Borrower and the Lender are parties to a certain Loan Agreement
dated as of January 7, 1993, as amended by letter of April 5, 1994, and as
assumed and modified by an Assumption and Modification Agreement dated February
17, 1995, and as further modified and amended by a First Amendment to Loan
Agreement and other Loan Documents dated as of March 15, 1995, and as further
modified and amended by a Second Amendment to Loan Agreement and Other Documents
dated as of March 28, 1996, and as further modified and amended by a Third
Amendment to Loan Agreement and Other Loan Documents dated as of August 28, 1997
(the "Loan Agreement").
B. The Borrower and the Lender wish further to amend the Loan Agreement
to make the changes set forth in this Amendment.
C. The Borrower and Lender are parties to a certain General Security
Agreement dated as of January 7, 1993 (the "Security Agreement").
D. The Borrower and the Lender wish to amend the Security Agreement to
make the changes set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and in
further consideration of the mutual agreements set forth herein, effective as of
the Effective Date, the Borrower and the Lender hereby agree as follows:
1. DEFINITIONS. Capitalized terms used in this Agreement and not
otherwise defined herein have the meanings defined for them in the Loan
Agreement.
-1-
2
2. REPRESENTATIONS AND WARRANTIES OF BORROWER. The Borrower represents
and warrants to the Lender that as of the Effective Date no Event of Default
(nor any event that upon notice or lapse of time or both would constitute an
Event of Default) exists under the Loan Agreement or any of the other Loan
Documents.
3. AMENDMENTS TO LOAN AGREEMENT AS OF EFFECTIVE DATE. Effective as of
the Effective Date, the Loan Agreement is amended as follows:
(A) The following new definitions are added in alphabetical
order in Section 1.02:
ACCOUNTS shall have the meaning assigned to that term
in the Security Agreement.
BORROWING BASE shall mean the sum of (a) 20% of the
collateral value of Eligible Inventory, plus (b) 80%
of the Net Outstanding Amount of Eligible Accounts.
ELIGIBLE ACCOUNT shall mean and include only Accounts
that are not more than 30 days past due, in each case
according to the terms shown on the invoice (or the
date of the invoice where terms are not specifically
stated) and represent sums payable for services
rendered or goods sold or leased by the Borrower in
the ordinary course of business, as the Lender, in
its sole credit judgment, shall deem eligible based
on such credit and collateral considerations as the
Lender shall deem appropriate. Without limiting the
generality of the foregoing, the Lender may exclude
any Account from Eligible Accounts if:
(i) the subject goods have been shipped or
delivered to a Purchaser on a xxxx-and-hold,
guaranteed sale, consignment, approval or sale-or-
return basis or subject to any other repurchase or
return agreement; or
(ii) any material part of the subject
goods has been returned, rejected, lost or damaged;
or
(iii) the Purchaser is located outside the
United States and Canada, and the subject goods have
not been shipped on the security of a domestic
banker's acceptance or domestic letter of credit
acceptable to the Lender and pledged to the Lender,
or the Account is not payable in United States
dollars; or
-2-
3
(iv) the Purchaser is also the Borrower's
Affiliate, supplier or creditor; or
(v) the Account is not evidenced by an
invoice in form acceptable to the Lender; or
(vi) more than 25% in amount of the other
Accounts of the Purchaser are more than 90 days past
due; or
(vii) such Account is from a Purchaser
located in Canada and after taking such Account into
consideration, such Canadian Accounts in the
aggregate would constitute more than 20% of the
outstanding Accounts; or
(viii) the Account arises out of
transactions with an employee, officer, agent,
director, stockholder or Affiliate of the Borrower;
or
(ix) the general creditworthiness and
financial condition of the Purchaser are not
acceptable to the Lender; or
(x) the Lender believes, in its sole
judgment, that the collection of such Account is
insecure or that such Account may not be paid by
reason of the Purchaser's financial ability to repay;
or
(xi) the Borrower has disclosed to the
Lender that it does not make any of the
representations or warranties set forth in the
Security Agreement with respect to such Account or if
any of such representations or warranties are not
true and correct with respect to such Account.
ELIGIBLE INVENTORY shall mean and include only
Inventory of raw materials, finished goods and
purchased parts that is located at one of the
locations specified in the Security Agreement as the
places at which Inventory is to be maintained, that
is usable or saleable in the ordinary course of the
Borrower's business and that meets all standards
imposed by any Governmental Authority having
regulatory authority over such goods or over their
use or sale, as the Lender, in its sole judgment,
shall deem eligible, based on such credit and
collateral considerations as the Lender shall deem
appropriate. Without limiting the generality of the
foregoing, the Lender may exclude any Inventory from
Eligible Inventory if the Borrower has disclosed to
the Lender that it does not make any of the
representations or warranties set forth in the
Security Agreement with respect to such Inventory or
any of such representations and warranties are not
true and correct with respect to such Inventory. The
collateral value of
-3-
4
Eligible Inventory shall be computed at the lower of
cost or market and on a "first-in, first-out" (FIFO)
basis.
FOURTH AMENDMENT shall mean the Fourth Amendment to
Loan Agreement and Other Loan Documents between the
Borrower and the Lender as of _____________, ____,
which document amends certain of the provisions of
this Agreement.
INVENTORY shall have the meaning assigned to that
term in the Security Agreement.
NET OUTSTANDING AMOUNT OF ELIGIBLE ACCOUNTS shall
mean the net outstanding amount of all then Eligible
Accounts after eliminating from the aggregate face
amount thereof all payments, adjustments, discounts,
credits and allowances applicable thereto and all
amounts due thereon considered by the Lender
difficult to collect or uncollectible by reason of
return, rejection, repossession or loss of, or damage
to, the merchandise covered thereby, disputes,
financial difficulty of the Purchaser or otherwise,
all as determined by the Lender in its sole
discretion.
TANGIBLE NET WORTH shall mean Borrower's consolidated
net worth plus subordinated debt less (i) any and all
loans and other advances to affiliates, subsidiaries,
owners, parent, employees, officers, stockholders,
directors or other related entities of Borrower; (ii)
notes, notes receivable, accounts, accounts
receivable, inter-company receivables, and other
amounts owing from affiliates, subsidiaries, owners,
parent, employees, officers, stockholders, directors
or other related entities of Borrower; and (iii) any
and all intangibles of Borrower.
(B) The following definitions are amended as follows:
MAXIMUM LINE OF CREDIT shall mean the lesser of (i)
the Borrowing Base then in effect or (ii)
$10,000,000.
LIBOR-BASED RATE shall mean a fixed rate of one
hundred twenty-five (125) basis points in excess of
the average offered rate in the London interbank
market for deposits in U.S. dollars for thirty (30)
days (the "LIBOR Rate") as published in the Wall
Street Journal or such other comparable financial
information reporting service used by the Bank at the
time such rate is determined.
SECURITY AGREEMENT shall mean that certain General
Security Agreement dated January 7, 1993 and that
certain Security Agreement of even date
-4-
5
herewith executed by the Borrower in favor of the
Lender to secure the Liabilities, as each may be
amended from time to time.
(C) The date "May 31, 1993" in the definition of "Line of
Credit Termination Date" in Section 1.02, which was previously extended
to July 31, 1999, is further amended to read "January 1, 2001."
(D) The figure $15,000,000" that appears in the fourth line of
Section 3.02, which was previously amended to $30,000,000", is further
amended to read "$10,000,000".
(E) Section 3.06 is amended to change the rate of the
Availability Fee in the third line from "fourteen (14)" to "twenty
(20)" basis points.
(F) The following new Section 7.17, previously deleted, shall
be added:
SECTION 7.17. ANNUAL SIXTY-DAY LINE OF CREDIT
CLEAN-UP PERIOD. The Borrower will for a period of at
least sixty (60) consecutive days during each
calendar year cause the outstanding advances under
the Line of Credit to be paid in full and shall
maintain the principal balance of the Line of Credit
at zero.
(G) Section 8.02 shall be amended to read as follows:
SECTION 8.02. DEBT. The Borrower will not incur,
create, assume or permit to exist any Debt other than (a) Debt to the Lender,
(b) trade payables and other current liabilities incurred or accrued by the
Borrower in the ordinary course of business, (c) the extension or receipt of
normal trade terms with respect to customers and suppliers, (d) any specific
Debt in connection with a special transaction for which advance approval is
sought and obtained from the Lender, (e) leases of equipment incurred in the
ordinary course of the Borrower's business, (f) unsecured Debt incurred in the
ordinary course of the Borrower's business not exceeding $125,000 in aggregate
principal amount at any one time outstanding, (g) Debt that is subordinated, in
writing, to Borrower's Debt to the Lender, and (h) Debt incurred solely for the
purchase of assets held or acquired by the Borrower in the ordinary course of
business.
(H) Section 8.03 shall be amended to read as follows:
SECTION 8.03. LIENS. The Borrower will not incur,
create, assume or suffer to exist any Lien on any of its properties or
assets, now or hereafter owned, other than:
(a) deposits under workmen's 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
-5-
6
or appeal bonds, or to secure indemnity, performance or other similar
bonds in the ordinary course of business;
(b) Liens imposed by law, such as carriers',
warehousemen's or mechanics' liens, incurred in good faith in the
ordinary course of business, and any lien arising out of a judgment or
award not exceeding $150,000 with respect to which an appeal is being
prosecuted, a stay of execution pending such appeal having been
secured, or which is fully covered by valid and collectible insurance;
(c) Permitted Encumbrances;
(d) Liens not listed above that are the subject of
Permitted Contests; and
(e) purchase money liens or purchase money security
interests upon or in any property acquired or held by the Borrower in
the ordinary course of its business.
(I) Section 8.04 shall be amended to read as follows:
SECTION 8.04. GUARANTIES. (a) The Borrower will not
guarantee, endorse, become surety for, or otherwise in any way become or be
responsible for obligations of any other Person, whether by agreement to
purchase the indebtedness of any other Person, or agreement for the furnishing
of funds to any other Person (directly or indirectly, through the purchase of
goods, supplies or services or by way of stock purchase, capital contribution,
working capital maintenance agreement, advance or loan) or for the purpose of
paying or discharging the indebtedness of any other Person, or otherwise, or (b)
enter into or be a party to any contract for the purchase of merchandise,
materials, supplies or other property if such contract provides that payment for
such merchandise, materials, supplies or other property shall be made regardless
of whether delivery of such merchandise, materials, supplies or other property
is ever made or tendered; except for the endorsement of negotiable instruments
by the Borrower in the ordinary course of business for collection.
(J) Section 8.05 shall be amended to read as follows:
SECTION 8.05. SALE OF ASSETS, CONSOLIDATION, MERGER,
ETC. Without the prior written consent of Lender, the Borrower will not (a)
sell, lease, transfer or otherwise dispose of its properties and/or assets to
any Person, (b) consolidate with or merge into any corporation, or permit
another corporation to merge into it, or acquire all or substantially all the
properties or assets of any other Person, or (c) enter into any arrangement,
directly or indirectly, with any Person whereby the Borrower shall sell or
transfer any property, real, personal or mixed, and used and useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property that the Borrower intends to use for
substantially the same purpose or purposes as the property being sold or
transferred.
-6-
7
(K) Section 8.06 shall be amended to read as follows:
SECTION 8.06. INVESTMENTS, ETC. The Borrower will not
purchase or hold beneficially any stock, other securities or evidences of
indebtedness of, make or permit to exist any loans or advances to, or make any
investment or acquire any interest whatsoever in, any other Person, except that
the Borrower may invest in Permitted Investments, so long as at all times the
instruments evidencing all such Permitted Investments are in the possession of
the Lender or the Lender's security interest therein under the Security
Agreement is otherwise effectively perfected. Notwithstanding anything to the
contrary contained in this Section, the Borrower may (a) extend normal trade
terms to customers in the ordinary course of its business, and (b) make loans to
employees not exceeding $50,000 in principal amount for all such loans
outstanding at any one time, in the aggregate.
(L) Section 8.09 shall be amended to read as follows:
SECTION 8.09 DEBT SERVICE COVERAGE RATIO. The
Borrower will not permit its ratio of Net Cash Flow Before Interest Expense to
Debt Service to be less than:
(i) as of December 31, 2000 - 1.25 to 1; and
(ii) as of December 31, 2001 and each year
thereafter - 1.5 to 1.
(M) Section 8.11 is amended by deleting the figure "1.5" and
substituting therefor the figure "2.0".
(N) Section 8.12 is amended by deleting the figure "1.0" and
substituting therefor the figure "1.25".
(O) Section 8.13 shall be amended to read as follows:
SECTION 8.13. TANGIBLE NET WORTH. The Borrower will
not permit its Tangible Net Worth to be less than $37,000,000.00.
(P) Section 8.15 shall be amended to read as follows:
SECTION 8.15. CAPITAL EXPENDITURES. The Borrower will
not make Capital Expenditures in an aggregate amount exceeding $5,000,000 in
any fiscal year.
(Q) The following new Section 8.17 is added:
SECTION 8.17. COMPLIANCE WITH LAWS AND REGULATIONS.
The Borrower shall comply in all material respects with all applicable laws,
ordinances and regulations relating to its business operations.
-7-
8
(R) The following new Section 8.19 is added:
SECTION 8.19. ADVANCES. Borrower shall not extend any
loans or advances to any other Person, except as
authorized by Section 8.02.
(S) subparagraphs (c) and (k) of IX. EVENTS OF DEFAULT;
ACCELERATION shall be amended to read as follows:
(c) default shall be made in the payment of the
principal of or interest on any of the Liabilities,
as and when due and payable; or
(k) any default or event of default shall occur
under any of the other Loan Documents;
4. MODIFIED LINE OF CREDIT NOTE. To evidence certain of the changes
effected by this Amendment, the Borrower shall execute and deliver to the Lender
a Modified, Amended and Restated Line of Credit Note substantially in the form
attached hereto as Exhibit A (the "Modified Line of Credit Note"). Commencing on
the Effective Date the Modified, Amended and Restated Line of Credit Note shall
be the "Line of Credit Note" referred to in the Loan Agreement and other Loan
Documents. The Lender may retain the original Line of Credit Note dated January
7, 1993, the Modified, Amended and Restated Line of Credit Note dated March 15,
1995, and the Modified, Amended and Restated Line of Credit Note dated August
28, 1997, in its file along with the Modified, Amended and Restated Line of
Credit Note of even date until the indebtedness evidenced thereby has been paid
in full and the Line of Credit has been terminated as set forth in the Loan
Agreement.
5. AMENDMENTS TO SECURITY AGREEMENT AS OF EFFECTIVE DATE.
Effective as of the Effective Date, the Security Agreement is amended as
follows:
Subparagraph (e) of Article 6, Events of Default, is deleted in its
entirety.
6. REFERENCES IN LOAN DOCUMENTS. Effective as of the Effective Date,
all references in the Loan Documents to the "Loan Agreement" shall mean the Loan
Agreement, as heretofore modified and amended and as further modified and
amended by this Amendment, all references to the "Line of Credit Note" shall
mean the Modified, Amended and Restated Line of Credit Note of even date
referred to in this Amendment and all references in the Loan Documents to the
"Security Agreement" shall mean the Security Agreement as modified and amended
by the Amendment. Effective as of the Effective Date, the words "fifteen million
dollars" and figure "15,000,000" as used in any of the Loan Documents to refer
to the maximum principal amount of the Line of Credit Master Note, amended to
"ten million dollars" and $10,000,000", as further amended to read "thirty
million dollars" and $30,000,000" are further amended to read "ten million
dollars" and "$10,000,000", respectively.
-8-
9
7. ADDITIONAL SECURITY AGREEMENT. As additional security for the Notes,
Borrower shall execute an additional security agreement of even date granting to
Lender a security interest in the Accounts and Inventory of the Borrower as an
additional Security Document as defined in the Loan Agreement.
8. LOAN DOCUMENTS TO REMAIN IN EFFECT. Except as specifically modified
by this Amendment, the Loan Agreement and the other Loan Documents are
incorporated herein by reference as if fully set out and shall remain and/or be
reaffirmed in full force and effect in accordance with their respective terms.
9. FINANCIAL MONITORING. Unless an Event of Default has occurred,
notwithstanding anything to the contrary herein or in the Agreement, Borrower
shall provide Lender the following financial information:
(a) The Financial Statements and Reports required under the
Agreement in Section 7.04 (a), (b), (d) and (e) and such other
information as Lender may reasonably request to verify the Borrowing
Base; and
(b) At the Lender's request, the Borrower will submit
monthly or weekly borrowing base certification.
10. NO NOVATION, ETC. Nothing contained in this Amendment shall be
deemed to constitute a novation of the terms of the Loan Documents, or impair
any Liens granted to the Lender thereunder, or affect any of the rights, powers
or remedies of the Lender thereunder or constitute a waiver of any provision
thereof, except as specifically set forth in this Amendment.
11. GOVERNING LAW, SUCCESSORS AND ASSIGNS, ETC. This Amendment shall be
governed by and construed in accordance with the laws of the State of Alabama
and shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
12. DATE. The date of this Amendment is intended as and for a date for
the convenient identification of this Amendment and for determining the
Effective Date hereof, and is not intended to indicate that this Amendment was
executed and delivered on said date.
13. SEVERABILITY. If any provision of this Amendment shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
14. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which so executed shall be deemed an original, but all
counterparts shall together constitute but one and the same instrument.
-9-
10
15. NO WAIVER. Nothing contained herein shall be construed as a waiver,
acknowledgment or consent to any breach of or Event of Default under the
Agreement and the Loan Documents not specifically mentioned herein, and the
consents granted herein are effective only in the specific instance and for
the purposes for which given.
16. $5,000,000 TERM LOAN. On or about the date of execution, the
$5,000,000 Term Loan shall be paid in full and all or part of said payment shall
be made with proceeds from the Line of Credit.
IN WITNESS WHEREOF, the Borrower and the Lender have caused this
Amendment to be executed and delivered by their duly authorized representatives,
effective as of the date first set forth above.
XXXXXX INDUSTRIES, INC.,
a Delaware corporation
By: /S/ XXXXXXXX X. XXXXXXXXX
---------------------------------------
Its: Vice President and CFO
---------------------------
AMSOUTH BANK,
an Alabama banking corporation
By: /S/ J. S. P. XXXXXXXX
---------------------------
Its: Vice President
--------------------
-10-
