1
Exhibit 4.1(a)
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT ("Amendment No.
1"), dated as of January 31, 2001, by and among Payless Cashways, Inc.
("Borrower"), Congress Financial Corporation (Central), an Illinois corporation
("Congress"; and together with any other signatory hereto designated as a
"Lender" or any assignee of any Lender, each individually, a "Lender" and,
collectively, "Lenders"), and Congress, as agent for Lenders (in such capacity
"Agent"). All capitalized terms used herein (including the recitals hereto)
shall have the respective meanings assigned thereto in the Loan Agreement unless
otherwise defined herein.
W I T N E S S E T H:
WHEREAS, Agent, Lenders and Borrower have entered into certain
financing arrangements pursuant to the Loan and Security Agreement ("Agreement")
dated November 17, 1999 by and among Lenders, Agent and Borrower (and as amended
hereby, and as the same may have heretofore been or may hereafter be further
amended, modified, supplemented, extended, renewed, restated or replaced, the
"Loan Agreement"); and
WHEREAS, Borrower has requested that (a) Congress, in its
capacity as a Lender, agree to make a certain Supplemental Loan to Borrower, and
(b) Agent and Lenders amend and modify certain provisions set forth in the Loan
Agreement in addition to the Loans to which Borrower would otherwise be entitled
pursuant to the Loan Agreement; and
WHEREAS, Agent and Lenders are, subject to the terms and
conditions contained herein, willing to agree to make such Supplemental Loan to
Borrower, and to effect such amendments; and
WHEREAS, by this Amendment No. 1, Agent and Required Lenders
desire and intend to evidence such amendments.
NOW, THEREFORE, in consideration of the foregoing, and the
respective agreements, warranties and covenants contained herein, the parties
hereto agree, covenant and warrant as follows:
SECTION 1. AMENDMENTS. Subject to the conditions to effectiveness of
this Amendment No. 1 set forth in Section 3 hereof, the parties hereto agree as
follows:
1.1 The definition of "Loans" in Section 1 of the Loan Agreement is
hereby amended to add the words "and the Supplemental Loan" immediately after
the words "Revolving Loans" appearing at the end of such definition.
1.2 Section 1 of the Loan Agreement is hereby amended to include each of
the following new definitions in alphabetical order:
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(a) "Amendment No. 1" shall mean Amendment No.1 to Loan and Security Agree-
ment, dated as of January 31, 2001, by and among Borrower, Agent and Supplemen-
tal Loan Lender.
(b) "Applicable Recovery Percentage" shall be equal to the following per-
centages during the following periods:
Period Percentage
------ ----------
Supplemental Loan Effective
Date to March 10, 2001..................... 90.95%
March 11, 2001 to March 25, 2001........... 90.60%
March 26, 2001 to June 15, 2001............ 90.00%
June 16, 2001 to June 29, 2001............. 89.30%
June 30, 2001 to July 13, 2001............. 88.30%
July 14, 2001 to July 31, 2001............. 87.30%
August 1, 2001 and thereafter.............. 86.00%
(c) "Bankruptcy Code" shall mean the United States Bankruptcy Code, being
Title 11 of the United States Code as enacted in 1978, as the same has
heretofore been amended, recodified, modified or supplemented
(d) "EBITDA" shall mean, for any period, the net income (loss) of Borrower
and its Subsidiaries on a consolidated basis for such period determined in
accordance with GAAP, plus interest expense, income tax expense, amortization
expense, depreciation expense and any non-cash extraordinary losses and minus
any extraordinary gains, in each case, of Borrower and its Subsidiaries on a
consolidated basis for such period determined in accordance with GAAP to the
extent included in the determination of such net income (loss).
(e) "Enforcement Action" shall mean the commencement by Agent, on behalf of
the Lenders, of any action to foreclose on the security interests or liens of
Agent, on behalf of the Lenders, in all or any material portion of the
Collateral, or the commencement of any action to take possession of all or any
material portion of the Collateral or the commencement of any legal proceedings
or actions against or with respect to all or any portion of the Collateral.
(f) "Excluded Portion" shall have the meaning set forth in Section 2A.3(c)
herein.
(g) "Financing Order" shall mean any financing order and such other orders
relating thereto or authorizing the granting of credit by Agent and Lenders to
Borrower, as a debtor in possession or the use of cash collateral, on an
emergency, interim or final basis pursuant to Sections 363 and/or 364 of the
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Bankruptcy Code as may be issued or entered by any court of competent
jurisdiction in any Insolvency Case. with respect to the Borrower.
(h) "Insolvency Case" shall mean, as to any person, any of the following:
(i) any case or proceeding with respect to such person under the U.S. Bankruptcy
Code, or any other Federal, State or other bankruptcy, insolvency,
reorganization or other law affecting creditors' rights or any other or similar
proceedings seeking any stay, reorganization, arrangement, composition or
readjustment of all or substantially all of the obligations and indebtedness of
such person or (ii) any proceeding seeking the appointment of any receiver,
trustee, administrator, liquidator, custodian or other insolvency official with
similar powers with respect to such person or all or substantially all of its
assets or (iii) any proceeding for liquidation, dissolution or other winding up
of the business of such person or (iv) any general assignment for the benefit of
creditors or any general marshaling of all or substantially all of the assets of
such person.
(i) "Insolvency Event" shall mean the commencement of an Insolvency Case by
or against the Borrower.
(j) "July 13th Mandatory Prepayment" shall mean $2,000,000 if Supplemental
Loan Lender makes the First Installment and $4,000,000 if the Supplemental Loan
Lender makes the First Installment and the Second Installment.
(k) "June 15th Mandatory Prepayment" shall mean $1,000,000 if Supplemental
Loan Lender makes the First Installment and $2,000,000 if the Supplemental Loan
Lender makes the First Installment and the Second Installment.
(l) "June 29th Mandatory Prepayment" shall mean $1,500,000 if Supplemental
Loan Lender makes the First Installment and $3,000,000 if the Supplemental Loan
Lender makes the First Installment and the Second Installment.
(m) "Net Availability" shall mean the amount, as determined by Agent,
calculated at any time, equal to: (i) an amount equal the Revolving Loans and
Letter of Credit Accommodations which would be available to the Borrower based
on the lending formulas (subject to the deduction from availability of any
Availability Reserves then in effect as determined by Agent) set forth in
Section 2.1 of the Loan Agreement as amended by Amendment No. 1 minus (ii) the
sum of the amount of all then outstanding and unpaid Revolving Loans and Letter
of Credit Accommodations.
(n) "Net Recovery Value" shall mean the appraised value of Eligible
Inventory, with such appraised value determined on a "going out of business"
basis, net of liquidation expenses, by an appraiser acceptable to each of Agent,
Supplemental Loan Lender and its financial participant. The appraised value
shall be based on the most recent such appraisal obtained by Agent, Supplemental
Loan Lender and/or its financial participant, or by Borrower, at the request of
Agent or Supplemental Loan Lender, from time to time during the term of this
Agreement.
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(o) "Priority Event" shall mean (i) prior to the occurrence of an
Insolvency Event, the occurrence of any one or more of the following: (A) an
Event of Default and the acceleration by Agent, on behalf of the Lenders, of all
of the Obligations by demanding payment therefor or (B) an Event of Default and
the taking of any Enforcement Action by Agent, on behalf of the Lenders
(provided that any Priority Event occurring prior to an Insolvency Event shall
cease constituting a Priority Event as of the occurrence of any Insolvency Event
if any or all of Agent or the Lenders continue funding Loans or providing Letter
of Credit Accommodations or other financial accommodations (whether pursuant to
the Financing Agreements or otherwise) or consent to the use of cash collateral
after the occurrence of an Insolvency Event); or (ii) after the occurrence of an
Insolvency Event, the occurrence of any one or more of the following: (A) the
failure of the Agent and/or the Lenders to provide any Loans, Letter of Credit
Accommodations or any other financial accommodations to the Borrower after such
Insolvency Event, whether pursuant to the Financing Agreements or otherwise or
pursuant to a consensual cash collateral arrangement with the Borrower, (B) the
termination or nonrenewal pursuant to a Financing Order of (1) any commitment of
the Agent and/or the Lenders to provide Loans, Letter of Credit Accommodations
or other financial accommodations (whether pursuant to the Financing Agreements
or otherwise) or (2) any consensual cash collateral arrangement between the
Borrower and the Lenders, (C) the entry of an order of the Bankruptcy Court
pursuant to Section 363 of the Bankruptcy Code authorizing the sale of all or
substantially all of Borrower's assets and properties, or (D) the entry of an
order of the Bankruptcy Court pursuant to Section 362 of the Bankruptcy Code
vacating the automatic stay and authorizing Agent to commence foreclosure or
enforcement proceedings against substantially all of Borrower's assets and
properties.
(p) "Second Installment Funding Date" shall have the meaning set forth in
Section 2A.1 herein.
(q) "Supplemental Loan" shall have the meaning set forth in Section 2A.1
herein.
(r) "Supplemental Loan Effective Date" shall have the meaning set forth in
Section 3.1 herein.
(s) "Supplemental Loan Event of Default" shall have the meaning set forth
in Section 2A.6 herein.
(t) "Supplemental Loan Lender" shall mean Congress Financial Corporation
(Central), as a Lender in its individual capacity, together with its successors
and assigns. "Supplemental Loan Lender" shall not include any Lender other than
Congress Financial Corporation (Central). Supplemental Loan Lender shall be
deemed to be a Lender under the Loan Agreement but Supplemental Loan Lender (i)
will have no commitments, obligations, interests or any rights whatsoever with
respect to any (A) Revolving Loans under Section 2.1 herein or otherwise or
Letter of Credit Accommodations under Section 2.2 herein or otherwise or (B)
interest or fees, except for the interest, fees and other amounts owing to
Supplemental Loan Lender under any circumstances under the terms of the
Supplemental Loan Letter Agreement and (ii) will not be a Lender under the
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definitions of "Commitment Percentage", "Pro-Rata Share", or "Required Lenders"
or under the provisions of Section 2.4 or Section 6.8 herein.
(u) "Supplemental Loan Obligations" shall mean all Obligations with respect
to the Supplemental Loan, whether arising under this Agreement, under the
Supplemental Loan Letter Agreement or any other Financing Agreement relating to
the Supplemental Loan.
(v) "Supplemental Loan Rate" shall have the meaning as set forth in the
Supplemental Loan Letter Agreement.
(w) "Supplemental Loan Repayment Date" shall mean July 31, 2001.
(x) "Supplemental Loan Letter Agreement" shall mean that certain
Supplemental Loan Letter Agreement dated as of January 31, 2001 among
Supplemental Loan Lender, Agent and Borrower.
1.3 Section 2.1(a) of the Loan Agreement is hereby amended to add the
following proviso immediately before the period appearing at the end of such
section:
; provided, however, that while any Supplemental Loan
Obligations shall be outstanding, in no event shall the
aggregate amount of outstanding Revolving Loans and Letter of
Credit Accommodations when added to the aggregate amount of
the Supplemental Loan then outstanding exceed at any given
time the lesser of (i) the difference of (A) 71.3% of the Cost
of Eligible Inventory minus (B) any Availability Reserves, and
(ii) the difference of (A) the Applicable Recovery Percentage
of the Net Recovery Value of Eligible Inventory minus (B) any
Availability Reserves.
1.4 The Loan Agreement is hereby amended by adding immediately after Sec-
tion 2 thereof, the following new Section 2A thereto:
SECTION 2A. SUPPLEMENTAL LOAN.
2A.1 Supplemental Loan. Subject to the terms and
conditions contained herein, in addition to the Revolving
Loans under Section 2.1 of the Loan Agreement, as a one time
financial accommodation to Borrower, Supplemental Loan Lender
shall make, subject to the terms and conditions contained
herein, a supplemental loan to Borrower in the principal
amount of $15,000,000 (the "Supplemental Loan"). At the option
of the Supplemental Loan Lender, the Supplemental Loan shall
be made in two (2) installments as follows: the first (1st)
installment in the principal amount of $7,500,000 (the "First
Installment") shall be made on the Supplemental Loan Effective
Date and the second (2nd) installment in the principal amount
of $7,500,000 (the "Second Installment") shall be made on or
before the date which is seven (7) Business Days after the
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Supplemental Loan Effective Date (the "Second Installment
Funding Date"). Borrower shall have no right to receive, and
Supplemental Loan Lender shall have no obligation to make
whatsoever, the Second Installment if, as of the Second
Installment Funding Date, an Event of Default exists. The
Supplemental Loan shall constitute part of the Obligations and
shall be secured by all of the Collateral. Except for the
making of the Supplemental Loan as set forth in this Section
2A.1, Borrower shall have no right to request and Supplemental
Loan Lender shall have no obligation to make any additional
loans or advances to Borrower under this Section 2A.1 and any
repayments of the Supplemental Loan shall not be subject to
any readvance to or reborrowing by Borrower. For the purposes
of Section 2.1 of the Loan Agreement, the aggregate principal
amount of the Loans, the aggregate outstanding principal
amount of the Supplemental Loan and the Letter of Credit
Accommodations outstanding at any time shall not exceed the
Maximum Credit.
2A.2 Interest. The Supplemental Loan shall bear
interest at the Supplemental Loan Rate and shall be payable in
accordance with the terms of the Supplemental Loan Letter
Agreement.
2A.3 Repayment.
(a) Subject to the provisions of Section 2A.3 (b) below, Borrower
shall repay the principal amount of the Supplemental Loan,
together with all accrued but unpaid interest, fees and other
Supplemental Loan Obligations, in full, in immediately
available funds on the Supplemental Loan Repayment Date.
(b) Notwithstanding anything to the contrary contained in Section
2A.3 (a) above or any other section of this Loan Agreement,
from and after the occurrence and during the continuance of a
Priority Event, Agent, for itself and the other Lenders, and
the Supplemental Loan Lender hereby agree that the Obligations
shall be repaid as follows: first, all Obligations (other than
(i) the Supplemental Loan Obligations, (ii) any Excluded Por-
tion and (iii) and any early termination fee payable in accor-
dance with Section 13.1 (c) of the Loan Agreement) shall be
repaid in full, in cash or other immediately available funds,
in such order and manner as Agent shall elect in its discre-
tion (including cash collateral for Letter of Credit Accommo-
dations in an amount equal to one hundred five (105%) percent
of the aggregate undrawn face amount thereof); second, the
Supplemental Loan, together with all accrued and unpaid inter-
est, fees, charges, costs and expenses payable hereunder and
under the Supplemental Loan Letter Agreement, shall be repaid;
and third, any Excluded Portion then outstanding and any early
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termination fee payable in accordance with Section 13.1(c) of
the Loan Agreement shall be repaid.
(c) Excluded Portion. During the period while any Supplemental
Loan Obligations remain outstanding, Agent will not, without
the prior written consent of each of the Lenders, make any
Loan, Letter of Credit Accommodation or other financial
accommodation which would constitute an Excluded Portion.
As used this Section 2A.3, the following capitalized terms
shall have the following meanings:
"Excluded Portion" shall mean at any time (i) the portion of
the Aggregate Revolving Debt Exposure in excess of the Maximum
Revolving Availability (such excess, the "Excluded
Principal"); provided, that, the amount set forth in this
clause (i) shall not include that portion of the Aggregate
Revolving Debt Exposure that exceeds the Maximum Revolving
Availability solely as a result of (A) a decline in the value
of any Collateral, (B) any act or omission of the Borrower in
violation of any Financing Agreement, (C) any other similar
circumstance not caused by Agent or any Lender, (D) the
imposition of any Availability Reserve by Agent, and (E) the
charging to any loan account of Borrower maintained pursuant
to this Agreement of regularly scheduled interest, fees,
costs, expenses and other charges (provided that if any of the
events described in clauses (A) through (E) above result in
negative Net Availability, any additional Loans or Letter of
Credit Accommodations provided by Agent and/or Lenders during
such period while Agent has actual knowledge of negative Net
Availability shall not be deemed excluded from the calculation
of Excluded Principal); and (ii) any interest, charges, fees,
costs, indemnities and expenses with respect to the Excluded
Principal described in clause (i) of this definition.
"Aggregate Revolving Debt Exposure" means, with respect to the
Obligations owing to the Agent and Lenders (other than the
Supplemental Loan Obligations), the sum of the aggregate
principal amount of Revolving Loans outstanding under the
Financing Agreements, all Letter of Credit Accommodations
(including the face amount of all undrawn letters of credit
plus all unpaid reimbursement obligations) under the Financing
Agreements and all other financial accommodations under the
Financing Agreements (other than in respect of the
Supplemental Loan).
"Maximum Revolving Availability" means the lesser of (a) the
difference of (i) the Maximum Credit minus (ii) the
outstanding principal balance of the Supplemental Loan and (b)
an amount equal the Revolving Loans and Letter of Credit
Accommodations which would be available to the Borrower based
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on the lending formulas (subject to the deduction from
availability of any Availability Reserves then in effect as
determined by Agent) set forth in Section 2.1 of the Loan
Agreement as amended by Amendment No. 1.
2A.4 Mandatory Prepayments; Availability Short-
falls; Excluded Portion.
(a) Mandatory Prepayments. In addition to,
and not in limitation of, anything to the contrary contained
herein, subject to the provisions of Section 2.3 below,
Borrower shall make a mandatory prepayment in respect of the
Supplemental Loan on June 15, 2001 in the amount of the June
15th Mandatory Prepayment, on June 29, 2001 in the amount of
the June 29th Mandatory Prepayment, and on July 13, 2001 in
the amount of July 13th Mandatory Prepayment (each such
payment a "Mandatory Prepayment" and all such payments,
collectively, the "Mandatory Prepayments").
(b) Availability Shortfalls. Notwithstanding
anything to the contrary contained in Section 2A.4(a) above
but without limiting any of the rights of Supplemental Lender
under the Supplemental Loan Letter Agreement to charge default
rate interest arising as a result of any failure to timely
fund any Supplemental Loan Obligation, if as of the date any
Mandatory Prepayment or other Supplemental Loan Obligation is
due and owing, Borrower will not have Net Availability of at
least $1.00 after giving effect to such payments (an
"Availability Shortfall"), Borrower shall pay such Mandatory
Prepayment as follows: Borrower shall be required to fund that
portion of the Mandatory Prepayment or other Supplemental Loan
Obligation in an amount equal to the lesser of (i) the
Mandatory Prepayment or other Supplemental Loan Obligation
required to be paid and (ii) the amount of Net Availability
determined as of the date that the applicable Mandatory
Prepayment or other Supplemental Loan Obligation is due less
$1.00 (such amount being referred to as a "Partial Required
Payment"). With respect to the difference between the
applicable Mandatory Prepayment or other Supplemental Loan
Obligation and the Partial Required Payment (such amount being
referred to as the "Unpaid Required Payment"), Borrower shall
repay the Unpaid Required Payment at any time that the
Borrower has Net Availability of greater than $1.00 until such
Unpaid Required Payment has been paid in full. Failure to pay
any Unpaid Required Payment in full within seven (7) days from
the initial due date shall constitute an immediate
Supplemental Loan Event of Default.
2A.5 Supplemental Loan Availability Reserves. In
addition to, and not in limitation of, Agent's right to
establish Availability Reserves under Section 2.3) of the Loan
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Agreement, Agent shall have the right to establish an
Availability Reserve in respect of the Supplemental Loan (the
"Supplemental Loan Reserve") in an amount determined by Agent
and, to adjust such Supplemental Loan Reserve from time to
time, in Agent's discretion exercised on a basis consistent
with the imposition and adjustment of any other Availability
Reserves. Agent agrees to provide Borrower with one (1)
Business Day's notice prior to the establishment of any
Supplemental Loan Reserve. Once so established, the
Supplemental Loan Reserve shall constitute an additional
Availability Reserve for all purposes under this Agreement.
2A.6 Supplemental Loan Event of Default. In addition
to, and not in limitation of, the Events of Default as set
forth in Section 10.1 of this Agreement, Borrower acknowledges
and agrees that the occurrence of any "Supplemental Loan Event
of Default" under the Supplemental Loan Letter Agreement shall
constitute an Event of Default under this Agreement for all
purposes (each such event, a "Supplemental Loan Event of
Default").
1.5 Section 9 of the Loan Agreements is hereby amended by adding at the end
thereof, the following new Section 9.20:
9.20 Fixed Charge Coverage Ratio. So long as the Supplemental
Loan remains outstanding, Borrower shall not permit the ratio
of (i) the sum of (a) EBITDA, less (b) capital expenditures,
less (c) cash taxes, to (ii) the sum of payments made or
required to be made by Borrower during such period for (a)
interest, fees and scheduled principal payments/availability
reductions due under the Loan Agreement, (b) fees due and
payable under the Supplemental Loan Letter Agreement, (c)
interest, fees and scheduled principal payments due on any and
all other indebtedness of the Borrower (including, without
limitation, the Fortress Credit Agreement and CIBC Credit
Agreement and related agreements), and (d) regularly scheduled
payments under any lease agreement which is or should be
capitalized in accordance with GAAP, to be less than the
ratios set forth on the attached Schedule 3.1 on a fiscal
monthly basis for the fiscal monthly period then ended.
1.6 Section 10.1(m) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
"(m) any Supplemental Loan Event of Default shall have
occurred or there shall have occurred any event of default
under any of the other Financing Agreements."
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1.7 The Loan Agreement is hereby amended by adding Schedule 3.1 hereto as a
new Schedule 3.1 thereto.
1.8 The Loan Agreement is hereby amended by inserting Schedule 8.8
hereto in place of the existing Schedule 8.8 to the Loan Agreement.
1.9 Exhibit A {Information Certificate} to Loan Agreement is hereby amend-
ed by deleting Schedule 9 {Locations of Collateral} thereto and adding in
place thereof Schedule 9 {Locations of Collateral} attached hereto.
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS
Borrower hereby represents, warrants and covenants with and to
Agent and Lenders as follows:
2.1 Representations in Financing Agreements. Each of the representations and
warranties made by or on behalf of Borrower to Agent and Lenders in any of the
Financing Agreements was true and correct when made and in all material respects
is true and correct on and as of the date of this Amendment No. 1 with the same
full force and effect as if each of such representations and warranties had been
made by Borrower on the date hereof and in this Amendment No. 1.
2.2 No Event of Default. No Default or Event of Default exists on the date
of this Amendment No. 1 (after giving effect to the amendments to the Financing
Agreements made by this Amendment No. 1)
2.3 Binding Effect of Documents. This Amendment No. 1 and the other Financ-
ing Agreements have been duly executed and delivered to Agent and Lenders by
Borrower, and are in full force and effect, as modified hereby and the agree-
ments and obligations of the Borrower contained herein constitutes the legal,
valid and binding obligations of Borrower enforceable against Borrower in accor-
dance with their terms.
2.4 No Conflict, Etc.The execution, delivery and performance of this Amend-
ment No.1, the Supplemental Loan Letter Agreement and the other Financing Agree-
ments contemplated by this Amendment No. 1 by Borrower will not violate any
requirement of law or contractual obligation of Borrower, and will not result
in, or require, the creation or imposition of any lien or encumbrance on any of
Borrower's properties or revenues, except in favor of Agent and Lenders.
SECTION 3. CONDITIONS TO EFFECTIVENESS OF CERTAIN PROVISIONS OF THIS
AMENDMENT NO. 1
3.1 The effectiveness of Section 1 of this Amendment No. 1 shall be subject
to the satisfaction of the following conditions and/or receipt by Agent of eac
of the following, in form and substance satisfactory to Agent (the date tha
Agent receives each of the foregoing being referred to herein as the "Supple-
mental Loan Effective Date"):
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(a) an original of this Amendment No. 1, duly authorized, executed and de-
livered by Borrower and Agent on behalf of itself and the Required Lenders;
(b) an original Participation Agreement duly executed and delivered by Hil-
co Capital LP in favor of the Supplemental Loan Lender and Agent;
(c) an original Supplemental Loan Letter Agreement duly executed and deliv-
ered by Borrower, Agent, Supplemental Loan Lender and Hilco Capital LP;
(d) an opinion letter, in form and substance satisfactory to Agent, from
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ with respect to this Amendment No. 1 and the
transactions contemplated hereunder which shall expressly permit Hilco Capital
LP to rely on such opinion and the opinion issued by such counsel at the time of
the closing of the Loan Agreement;
(e) a Secretary's Certificate of Borrower certifyin and/or attaching (a)
articles of incorporation, (b) bylaws, (c) resolutions and (d) incumbency of of-
ficers;
(f) no Overadvance (as defined in the Supplemental Loan Letter Agreement)
shall be outstanding on the date prior to the Supplemental Loan Effective Date;
(g) the Agent, Supplemental Loan Lender and Hilco Capital LP shall have re-
ceived and found acceptable, in their sole discretion, the results of a final
field examination of the Collateral; and
(h) any and all such further instruments and documents as Agent may require
to obtain the full benefits of this Amendment No. 1 and to protect, preserve an
maintain Agent's and Lenders' rights in the Collateral.
SECTION 4. PROVISIONS OF GENERAL APPLICATION
4.1 Effect of this Amendment No. 1. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreements are intended or im-
plied and in all other respects the Financing Agreements are hereby specifically
ratified, restated and confirmed by all parties hereto as of the effective date
hereof. To the extent of conflict between the terms of this Amendment No. 1 and
the other Financing Agreements, the terms of this Amendment No. 1 shall control.
The Loan Agreement and this Amendment No. 1 shall be read and construed as one
agreement.
4.2 Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or de-
sirable to effectuate the provisions and purposes of this Amendment No. 1.
4.3 Binding Effect. This Amendment No. 1 shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and
assigns.
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4.4 Survival of Representations and Warranties. All representations and
warranties made in this Amendment No. 1 or any other document furnished in con-
nection with this Amendment No. 1 shall survive the execution and delivery of
this Amendment No. 1 and the other documents, and no investigation by Agent or
any Lender or any closing shall affect the representations and warranties or the
right of Agent or Lenders to rely upon them.
4.5 Expenses. Borrower agrees to pay on demand all out of pocket costs and
expenses of Agent and Lenders in connection with the preparation, execution and
delivery of this Amendment No. 1 and all other agreements, documents and
instruments executed and/or delivered in connection therewith or related
thereto, including, without limitation, the fees and out-of-pocket expenses of
counsel for Agent and Lenders with respect thereto.
4.6 Severability. Any provision of this Amendment No. 1 held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or inval-
idate the remainder of this Amendment No. 1 and the effect thereof shall be con-
fined to the provision so held to be invalid or unenforceable.
4.7 Governing Law. This Amendment No. 1 shall be governed by, construed and
enforced in accordance with the laws of the State of New York, without regard to
conflicts of laws principles thereof.
4.8 Counterparts. This Amendment No. 1 may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment No. 1, it shall not be
necessary to produce or account for more than one.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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[Signature Page to Amendment No. 1]
IN WITNESS WHEREOF, this Amendment No. 1 is executed and de-
livered as of the day and year first above written.
PAYLESS CASHWAYS, INC.
By:
Title:
CONGRESS FINANCIAL CORPORATION (CENTRAL),
as Agent on behalf of the Required
Lenders and as Supplemental Loan Lender
By:
Title:
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[Guarantor's Acknowledgement and Consent to Amendment No. 1]
Acknowledgment and Consent
The undersigned hereby acknowledges receipt of the attached
Amendment No. 1 and consents to the execution and performance thereof by Payless
Cashways, Inc. The undersigned hereby also reaffirms that the guarantee of such
undersigned in favor of Agent remains in full force and effect and acknowledges
and agrees that there is no defense, setoff or counterclaim of any kind, nature
or description to obligations arising under such guarantee.
LUMBERJACK STORES, INC.
By:
Name:
Title:
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SCHEDULE 3.1
FIXED CHARGE COVERAGE RATIO
Fiscal Monthly Period Ended 1 Ratio
February 24, 2001..................... 0.05 to 1.0
March 31, 2001........................ 1.0 to 1.0
April 28, 2001........................ 1.0 to 1.0
May 26, 2001.......................... 0.7 to 1.0
[FN]
1 The dates set forth on this Schedule 3.1 correspond to the last day of
each fiscal monthly accounting period maintained by Borrower.