EXHIBIT 4-A
EXECUTION COPY
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Second Amendment")
is made as of the 31st day of October, 2004 by and among TruServ Corporation, a
Delaware corporation ("TruServ"), TruServ Acceptance Company, an Illinois
corporation ("TruServ Acceptance"), TruServ Logistics Company, an Illinois
corporation ("TruServ Logistics"), General Paint & Manufacturing Company
("General Paint") and True ▇▇▇▇▇.▇▇▇ Corporation, a Delaware corporation ("True
▇▇▇▇▇.▇▇▇"), Bank of America N.A., as Syndication Agent ("Syndication Agent")
and Congress Financial Corporation (Central), ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital, a Division
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial Services, Inc., and LaSalle Business Credit,
LLC as Co-Documentation Agents ("Co-Documentation Agents"), the lenders who are
signatories hereto ("Lenders"), and Fleet Capital Corporation, a Rhode Island
corporation ("FCC"), as agent for Lenders hereunder (FCC, in such capacity,
being "Agent"). TruServ, TruServ Acceptance, TruServ Logistics, General Paint
and True ▇▇▇▇▇.▇▇▇ are sometimes hereinafter referred to individually as a
"Borrower" and collectively as "Borrowers."
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrowers, Syndication Agent, Co-Documentation Agents, Agent and
Lenders entered into a certain Loan and Security Agreement dated as of August
29, 2003, as amended by a certain First Amendment to Loan and Security Agreement
dated as of March 19, 2004 entered into by Borrowers, Syndication Agent,
Co-Documentation Agents, Agent and Lenders (said Loan and Security Agreement, as
so amended, is hereinafter referred to as the "Loan Agreement"); and
WHEREAS, Borrowers desire to amend and modify certain provisions of the
Loan Agreement and, subject to the terms hereof, Agent and Lenders are willing
to agree to such amendments and modifications;
NOW THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein contained, and any extension of credit heretofore, now or
hereafter made by Agent and Lenders to Borrowers, the parties hereto hereby
agree as follows:
1. Definitions. All capitalized terms used herein without definition shall
have the meaning given to them in the Loan Agreement.
2. Amended Definitions. The definitions of "Borrowing Base" and
"Obligations" contained in Appendix A to the Loan Agreement are hereby deleted
and the following are inserted in their stead:
"Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(i) the Revolving Credit Maximum Amount; or
(ii) an amount equal to the sum of
(a) 85% of the net amount of Eligible Accounts outstanding at
such date; plus
(b) the least of
(1) $160,000,000,
(2) 65% of the value of Eligible Inventory (other than that
portion of Eligible Inventory consisting of Eligible On-Water
Inventory) on such date plus the lesser of (x) the "Maximum
On-Water Amount" (as defined below) or (y) 65% of the value of
Eligible On-Water Inventory on such date and
(3) 85% (90% during the Seasonal Advance Months) of the Net
Appraised Orderly Liquidation Value of Eligible Inventory at such
date plus
(c) an amount (the "Fixed Asset Sublimit") the lesser of (i)
$25,000,000 reduced by $218,774.18 on October 1, 2003 and the first
day of each month thereafter (added language underscored) or (ii) the
sum of (x) the product of the Equipment Percentage multiplied by 80%
multiplied by the Net Appraisal Orderly Liquidation Value of
Borrowers' Equipment plus (y) the product of the Real Property
Percentage multiplied by 65% of the Net Appraised Fair Market Value of
Borrowers' real Property.
For purposes hereof, (1) the net amount of Eligible Accounts at any
time shall be the face amount of such Eligible Accounts less any and all
returns, rebates, discounts (which may, at Agent's option, be calculated on
shortest terms), credits, allowances or excise taxes of any nature at any
time issued, owing, claimed by Account Debtors, granted, outstanding or
payable in connection with such Accounts at such time, (2) the amount of
Eligible Inventory shall be determined on a first-in, first-out, lower of
cost or market basis in accordance with GAAP and (3) the Maximum On-Water
Amount shall be equal to (i) $20,000,000 from the date of this Agreement
until December 31, 2003, (ii) $27,000,000 from January 1, 2004 to December
31, 2004, (iii) $34,000,000 from January 1, 2005 to December 31, 2005 and
(iv) $40,000,000 from January 1, 2006 until the last day of the Term.
* * *
Obligations - all Loans, all LC Obligations and all other advances,
debts, liabilities, obligations, covenants and duties, together with all
interest, fees and other charges thereon, owing, arising, due or payable
from any Borrower to Agent, for its own benefit, from any Borrower to Agent
for the benefit of any Lender, from any Borrower to any Lender or from any
Borrower to Bank or any other Affiliate of Agent, of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other
instrument, in each case arising under the Agreement or any other Loan
Document,
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whether direct or indirect (including those acquired by assignment),
absolute or contingent, primary or secondary, due or to become due, now
existing or hereafter arising and however acquired, any Product Obligations
owing to Agent, Bank, any Lender or any Affiliate of Bank, Agent or any
Lender and any letter of credit reimbursement obligations owed by Borrower
to Syndication Agent, a Documentation Agent or any of their Affiliates.
Reimbursement obligations owing with respect to the B of A LCs shall be
included within Obligations."
3. Effectiveness. Upon the execution of this Second Amendment by Borrowers,
Agent and Majority Lenders, Lenders or Agent shall endeavor to cause the
cancellation and return of the Letters of Credit issued in support of the B of A
LCs to be returned to Bank, and it is understood that: (i) from April 1, 2004 no
fees or other charges shall accrue pursuant to Section 2.4 for any Letter of
Credit or LC Guaranty issued in support of the B of A LCs and (ii) such letter
of credit fees shall be payable, however, with respect to the B of A LCs
pursuant to Section 2.4 of the Loan Agreement.
4. Reliance Letters. Section 2.10 of the Loan Agreement is hereby deleted
and the following is inserted in its stead:
"2.10 Collateral Protection Expenses; Appraisals. All out-of-pocket
expenses incurred in protecting, storing, warehousing, insuring, handling,
maintaining and shipping the Collateral, and any and all excise, property,
sales, and use taxes imposed by any state, federal, or local authority on
any of the Collateral or in respect of the sale thereof shall be borne and
paid by Borrowers. If Borrowers fail to promptly pay any portion thereof
when due, Agent may, at its option, but shall not be required to, pay the
same and charge Borrowers therefor. Additionally, Agent may, from time to
time, at Borrowers' expense, obtain appraisals from appraisers (who may not
be personnel of Agent), stating the then current Net Appraised Fair Market
Value of all or any portion of the real Property or the fair market value
or Net Orderly Liquidation Value of all or any other Property of any
Borrower or any of its Restricted Subsidiaries, including without
limitation the Inventory or Equipment of any Borrower and its Restricted
Subsidiaries. Borrowers shall reimburse Agent for the reasonable cost of
any such appraisal, which reimbursement amounts shall be due and payable as
provided in Section 2.11; provided that unless an Event of Default has
occurred and is continuing, Borrowers shall not be required to reimburse
Agent for the cost of any appraisal of any Property not included in the
Borrowing Base. To the extent not obtained prior to the Closing Date,
Borrowers shall cooperate with Agent in obtaining reliance letters in form
and substance reasonably acceptable to Agent, from the appraisers who
issued the appraisals of Borrowers' real Property and Equipment most recent
to the Closing Date. In the event that such reliance letters are not
obtained prior to November 1, 2003, then Borrowers agree that Agent may
obtain new appraisals of such real Property and Equipment at Borrowers'
expense." ["WHICH ACTION AGENT SHALL TAKE" DELETED.]
5. Updated Environmental Surveys. Subsection 8.2.19 of the Loan Agreement
is hereby deleted and the following is inserted in its stead:
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"8.2.19 Updated Environmental Surveys. Borrowers shall comply
with the recommendations of the consultants that prepared the Phase I
environmental surveys for Borrowers' owned Properties delivered to
Agent prior to the Closing Date and any further recommendations
resulting from the additional testing, investigations or actions
recommended in such surveys to the extent such compliance is necessary
to insure that Borrowers remain in compliance with subsection 7.1.18.
Borrowers acknowledge and agree that Agent may establish reserves in
accordance with subsection 1.1.1 with respect to the cost of any
environmental remediation action that is required to comply with
subsection 7.1.18. Upon request by Agent, Borrowers shall deliver
updated Phase I, or if applicable, because of the recommendations of
Borrowers' environmental consultants, Phase II environmental surveys
for said Properties."
6. No Default or Event of Default. Agent and Borrowers agree that no
Default or Event of Default resulted from the failure of Borrowers to comply
with the provisions of subsection 8.2.19 prior to the date of this Second
Amendment. The provisions contained in this Section 5 of this Second Amendment
shall not apply to any other section of the Loan Agreement other than subsection
8.2.19 or any other period other than the period from the Closing Date until the
date hereof.
7. Execution in Counterparts. This Second Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
8. Continuing Effect. Except as otherwise specifically set out herein, the
provisions of the Loan Agreement shall remain in full force and effect.
9. Successors and Assigns. This Second Amendment shall be binding upon and
inure to the benefit of the successors and assigns of each Borrower, Agent and
each Lender permitted under Section 11.9 of the Loan Agreement.
10. Governing Law. This Second Amendment shall be governed by and construed
in accordance with the laws of the State of Illinois.
(SIGNATURE PAGE FOLLOWS)
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(SIGNATURE PAGE TO SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT)
IN WITNESS WHEREOF, this Second Amendment has been duly executed as of the
day and year specified at the beginning hereof.
TRUSERV CORPORATION, as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
TRUSERV ACCEPTANCE COMPANY, as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
TRUSERV LOGISTICS COMPANY, as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
GENERAL PAINT & MANUFACTURING COMPANY, as
a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
TRUE ▇▇▇▇▇.▇▇▇ CORPORATION, as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
(SIGNATURE PAGE TO SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT)
FLEET CAPITAL CORPORATION, as
Agent and as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
(SIGNATURE PAGE TO SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT)
CONGRESS FINANCIAL CORPORATION
(CENTRAL), as Co-Documentation Agent
and as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: First Vice President
(SIGNATURE PAGE TO SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT)
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL, a Division of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial
Service, Inc., as Co-Documentation
Agent and as a Lender
By:
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Name:
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Title:
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(SIGNATURE PAGE TO SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT)
LASALLE BUSINESS CREDIT, LLC, as
Co-Documentation Agent and as a Lender
By:
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Name:
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Title:
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(SIGNATURE PAGE TO SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT)
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By:
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Name:
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Title:
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(SIGNATURE PAGE TO SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT)
M & I ▇▇▇▇▇▇▇▇ & ILSLEY BANK, as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President