Exhibit 10.04
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of October 29, 2001
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
BANK OF AMERICA, N.A.
as the Agent
and
WOODWORKERS WAREHOUSE, INC.
as the Borrower
TABLE OF CONTENTS
SECTION PAGE
1. DEFINITIONS..............................................................................................2
2. LOANS AND LETTERS OF CREDIT.............................................................................25
2.1 Total Facility.................................................................................25
2.2 Revolving Loans................................................................................25
2.3 Letters of Credit..............................................................................32
3. INTEREST AND OTHER CHARGES..............................................................................37
3.1 Interest.......................................................................................37
3.2 Conversion and Continuation Elections..........................................................38
3.3 Maximum Interest Rate..........................................................................39
3.4 Closing Fee....................................................................................40
3.5 Collateral Management Fee......................................................................40
3.6 [Intentionally Left Blank].....................................................................40
3.7 Letter of Credit Fee...........................................................................40
4. PAYMENTS AND PREPAYMENTS................................................................................41
4.1 Revolving Loans................................................................................41
4.2 [Intentionally Left Blank].....................................................................41
4.3 Mandatory Prepayments..........................................................................41
4.4 [Intentionally Omitted]........................................................................41
4.5 Place and Form of Payments; Extension of Time..................................................41
4.6 Payments as Revolving Loans....................................................................42
4.7 Apportionment, Application and Reversal of Payments............................................42
4.8 INDEMNITY FOR RETURNED PAYMENTS................................................................43
5. AGENT'S AND LENDER'S BOOKS AND RECORDS; MONTHLY STATEMENTS..............................................43
6. TAXES, YIELD PROTECTION AND ILLEGALITY..................................................................43
6.1 Taxes..........................................................................................43
6.2 Illegality.....................................................................................45
6.3 Increased Costs and Reduction of Return........................................................46
6.5 Inability to Determine Rates...................................................................47
6.6 Certificates of Lenders........................................................................47
6.7 Survival.......................................................................................47
7. COLLATERAL..............................................................................................47
7.1 Grant of Security Interest.....................................................................47
7.2 Perfection and Protection of Security Interest.................................................49
7.3 Location of Collateral.........................................................................49
7.4 Title to, Liens on, and Sale and Use of Collateral.............................................50
7.5 Appraisals.....................................................................................50
7.6 Access and Examination.........................................................................50
7.7 Insurance......................................................................................51
7.8 Collateral Reporting...........................................................................52
7.9 [Intentionally Left Blank].....................................................................52
7.10 Collection of Accounts; Payments...............................................................52
7.11 Inventory......................................................................................53
7.12 Equipment......................................................................................54
7.13 Assigned Contracts.............................................................................54
7.14 Documents, Instruments, and Chattel Paper......................................................55
7.15 Right to Cure..................................................................................55
7.16 Power of Attorney..............................................................................55
7.17 The Agent's and Lender's Rights, Duties, and Liabilities.......................................56
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TABLE OF CONTENTS
(cont'd)
SECTION PAGE
8. BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.......................................................56
8.1 Books and Records..............................................................................56
8.2 Financial Information..........................................................................56
8.3 Notices to Lenders.............................................................................58
9. GENERAL WARRANTIES AND REPRESENTATIONS..................................................................60
9.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents...........60
9.2 Validity and Priority of Security Interest.....................................................60
9.3 Organization and Qualification.................................................................60
9.4 Corporate Name; Prior Transactions.............................................................61
9.5 Subsidiaries and Affiliates....................................................................61
9.6 [Financial Statements and Projections].........................................................61
9.7 Capitalization.................................................................................61
9.8 Solvency.......................................................................................61
9.9 Debt...........................................................................................61
9.10 Distributions..................................................................................62
9.11 Title to Property..............................................................................62
9.12 Adequate Assets................................................................................62
9.13 Real Property; Leases..........................................................................62
9.14 Proprietary Rights.............................................................................62
9.15 Trade Names and Terms of Sale..................................................................62
9.16 Litigation.....................................................................................62
9.17 Restrictive Agreements.........................................................................62
9.18 Labor Disputes.................................................................................63
9.19 Environmental Laws.............................................................................63
9.20 No Violation of Law............................................................................64
9.21 No Default.....................................................................................64
9.22 ERISA Compliance...............................................................................64
9.23 Taxes..........................................................................................65
9.24 Use of Proceeds................................................................................65
9.25 Private Offerings..............................................................................65
9.26 Broker's Fees..................................................................................65
9.27 No Material Adverse Change.....................................................................65
9.28 Disclosure.....................................................................................65
ii
TABLE OF CONTENTS
(cont'd)
SECTION PAGE
10. AFFIRMATIVE AND NEGATIVE COVENANTS......................................................................66
10.1 Taxes and Other Obligations....................................................................66
10.2 Corporate Existence and Good Standing..........................................................66
10.3 Compliance with Law and Agreements.............................................................66
10.4 Maintenance of Property and Insurance..........................................................66
10.5 Environmental Laws.............................................................................67
10.6 ERISA..........................................................................................67
10.7 Mergers, Consolidations, Acquisitions, or Sales................................................67
10.8 Distributions; Capital Changes.................................................................67
10.9 Transactions Affecting Collateral or Obligations...............................................67
10.10 Guaranties.....................................................................................68
10.11 Debt...........................................................................................68
10.12 Prepayment.....................................................................................68
10.13 Transactions with Affiliates...................................................................68
10.14 Plan of Reorganization.........................................................................68
10.15 Business Conducted.............................................................................68
10.16 Liens..........................................................................................68
10.17 Sale and Leaseback Transactions................................................................68
10.18 New Subsidiaries...............................................................................69
10.19 Restricted Investments.........................................................................69
10.21 [Intentionally Left Blank].....................................................................69
10.23 [Intentionally Left Blank].....................................................................69
10.24 [Intentionally Left Blank].....................................................................69
10.25 [Intentionally Left Blank].....................................................................69
10.26 [Intentionally Left Blank].....................................................................69
10.28 Cash Management System.........................................................................70
10.30 Further Assurances.............................................................................70
iii
TABLE OF CONTENTS
(cont'd)
SECTION PAGE
11. CONDITIONS PRECEDENT....................................................................................70
11.1 Conditions Precedent to Effectiveness..........................................................70
11.2 Conditions Precedent to Each Loan..............................................................73
12. DEFAULT; REMEDIES.......................................................................................74
12.1 Events of Default..............................................................................74
13. REMEDIES................................................................................................76
14. TERM AND TERMINATION....................................................................................78
15.1 AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS.............................................78
15.1 No Waivers; Cumulative Remedies...............................................................78
15.2 Amendments and Waivers.........................................................................78
15.3 Assignments; Participations....................................................................79
16. THE AGENT...............................................................................................81
16.1 Appointment and Authorization..................................................................81
16.2 Delegation of Duties...........................................................................82
16.3 Liability of Agent.............................................................................82
16.4 Reliance by Agent..............................................................................82
16.5 Notice of Default..............................................................................83
16.6 Credit Decision................................................................................83
16.7 Indemnification................................................................................83
16.8 Agent in Individual Capacity...................................................................84
16.9 Successor Agent................................................................................84
16.10 Withholding Tax................................................................................85
16.11 [Intentionally Left Blank].....................................................................86
16.12 Collateral Matters.............................................................................86
16.13 Restrictions on Actions by Lenders; Sharing of Payments........................................87
16.14 Agency for Perfection..........................................................................87
16.15 Payments by Agent to Lenders...................................................................88
16.16 Concerning the Collateral and the Related Loan Documents.......................................88
16.17 Field Audit and Examination Reports; Disclaimer by Lenders.....................................89
16.18 Relation Among Lenders.........................................................................89
17. MISCELLANEOUS...........................................................................................89
17.1 Cumulative Remedies; No Prior Recourse to Collateral...........................................89
17.2 No Implied Waivers.............................................................................90
17.3 Severability...................................................................................90
17.4 Governing Law..................................................................................90
17.5 Consent to Jurisdiction and Venue; Service of Process..........................................90
17.6 Waiver of Jury Trial...........................................................................90
17.7 [Intentionally Left Blank].....................................................................90
17.8 Survival of Representations and Warranties.....................................................91
17.9 Other Security and Guaranties..................................................................91
17.10 Fees and Expenses..............................................................................91
17.11 Notices........................................................................................92
17.12 Indemnification................................................................................92
17.13 Waiver of Notices..............................................................................93
17.14 Binding Effect; Assignment.....................................................................93
17.15 Indemnity of the Agent and the Lenders by the Borrower.........................................94
17.16 Counterparts...................................................................................94
17.17 Captions.......................................................................................94
17.18 Right of Set-Off...............................................................................94
iv
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of
October 29, 2001, by and among the financial institutions listed on the
signature pages hereof (such financial institutions, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), Bank of America, N.A., a
national banking association ("BA") with an office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, as agent for the Lenders (in its capacity as agent, the
"Agent"), and WOODWORKERS WAREHOUSE, INC. (successor by merger to Trend-Lines,
Inc.), a Delaware corporation with offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Woodworkers" or "Borrower").
W I T N E S E T H
WHEREAS, Trend-Lines, Inc., Post-Tool, Inc. and Lenders are parties to
an Amended and Restated Loan and Security Agreement dated as of February 23,
1999 and amended as of June 9, 2000 (as so amended, the "Existing Agreement").
WHEREAS, on August 11, 2000 (the "Petition Date"), Trend-Lines, Inc.
and Post-Tool, Inc. filed voluntary petitions for relief under the Federal
Bankruptcy Code with the United States Bankruptcy Court for the District of
Massachusetts, Eastern Division (the "Bankruptcy Court") and on February 27,
2001, the Chapter 11 cases of Trend-Lines, Inc. and Post-Tool, Inc., pursuant to
an order of the Bankruptcy Court were substantively consolidated such that
Trend-Lines, Inc. is the remaining consolidated entity (such proceeding being
administered under Case No. 00-15431-CJK is hereinafter referred to as the
"Bankruptcy Case"); and
WHEREAS, on October 17, 2001, the Bankruptcy Court confirmed the Plan
of Reorganization (as hereinafter defined) which provides for, among other
things, the merger of Trend-Lines, Inc. with and into Borrower; and
WHEREAS, Borrower was formed on October 19, 2001 solely for the purpose
of merging Trend-Lines, Inc. with and into Borrower (the "Merger") and, prior to
the Merger, Borrower had conducted no operations and entered into no agreements
other than the agreements related to the Merger; and
WHEREAS, pursuant to the Merger Agreement entered into by Trend-Lines,
Inc. and Borrower, the Plan of Reorganization, the Confirmation Order and the
relevant provisions of Massachusetts and Delaware General Corporation Law,
Borrower, as the surviving entity in the Merger, became liable for all debts,
duties and obligations under the Existing Agreement; and
WHEREAS, pursuant to the Plan of Reorganization and the Confirmation
Order, the Agent shall retain its continuing, replacement and additional liens
and security interests in the property of Trend-Lines, Inc., Post-Tool, Inc. and
the Borrower; and
WHEREAS, the continuing, replacement and additional liens and security
interests of Agent are, pursuant to the Plan of Reorganization and Confirmation
Order, automatically deemed perfected on the Effective Date (as hereinafter
defined) without the necessity of the Agent taking possession, filing financing
statements, mortgages, leasehold mortgages or other documents; and
WHEREAS, the Borrower has requested the Lenders to amend further the
Existing Agreement and make available to the Borrower a revolving line of credit
for loans and letters of credit in an amount not to exceed $30,000,000
subsequent to the effective date of Borrower's first amended joint
reorganization plan, as modified and confirmed by order of the Bankruptcy Court
on October 17, 2001, (the "Plan of Reorganization") under the Bankruptcy Case on
the terms and conditions set forth herein and, for the purpose of convenience
only, to restate in its entirety the Existing Agreement; and
WHEREAS, Lenders are willing to restate the Existing Agreement and to
provide such financing upon the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Borrower, the Lenders and the
Agent hereby agree as follows:
1. DEFINITIONS.
As used herein:
"Accounts" means all of the Borrower's now owned or hereafter acquired
or arising accounts, as defined in the UCC, including any rights to payment for
the sale or lease of goods or rendition of services, whether or not they have
been earned by performance.
"Account Debtor" means each Person obligated in any way on or in
connection with an Account, Chattel Paper or General Intangibles (including a
payment intangible).
"ACH Transactions" means any cash management or related services
including the automatic clearing house transfer of funds by Bank of America for
the account of the Borrower pursuant to agreement or overdrafts.
"Additional Availability Amount" means, for the Availability Increase
Period specified, (a) $3,000,000 from the Effective Date through and including
the date which is the 60th day after the Effective Date, (b) $2,500,000 during
the period from the date which is the 61st day after the Effective Date through
and including the date which is the 90th day after the Effective Date and (c)
$2,000,000 from the 91st day after the Effective Date through and including the
Stated Termination Date; provided, however, that the Additional Availability
Amount shall be reduced by $166,667 each month end commencing February 28, 2002
until it is zero.
"Additional Availability Reference Rate Revolving Loan" means a
Reference Rate Loan advanced from an Additional Availability Amount.
"Affiliate" means: (a) a Person which, directly or indirectly,
controls, is controlled by, or is under common control with, the Borrower; (b) a
Person which beneficially owns or holds, directly or indirectly, ten percent or
more of any class of voting stock of the Borrower or (c) a Person in which five
percent of any class of the voting stock is beneficially owned or held, directly
or indirectly, by the Borrower. The term control (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of the Person in question.
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"Agent" means Bank of America, N.A., solely in its capacity as agent
for the Lenders, and any successor agent.
"Agent Advances" has the meaning specified in Section 2.2(i).
"Agent's Liens" means the Liens in the Collateral granted to the Agent,
for the ratable benefit of the Lenders, BA, and Agent pursuant to this Agreement
and the other Loan Documents.
"Agent-Related Persons" means the Agent and any successor agent,
together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Agreement" means this Second Amended and Restated Loan and Security
Agreement and all amendments, modifications and supplements hereto which may
from time to time become effective in accordance with the provisions of Section
15.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means (i) with respect to Reference Rate Loans and
all other obligations (other than LIBOR Rate Loans and Additional Availability
Reference Rate Loans) one percent (1.00%), (ii) with respect to Additional
Availability Reference Rate Loans, three percent (3.00%) and (iii) with respect
to LIBOR Rate Loans, three and one-quarter percent (3.25%).
"Assigned Contracts" means, collectively, all of the Borrower's rights
and remedies under, and all moneys and claims for money due or to become due to
the Borrower under, any material contracts and any and all amendments,
supplements, extensions, and renewals thereof, including, without limitation,
all rights and claims of the Borrower now or hereafter existing: (a) under any
insurance, indemnities, warranties, and guarantees provided for or arising out
of or in connection with the foregoing agreements; (b) for any damages arising
out of or for breach or default under or in connection with the foregoing
agreements; (c) to all other amounts from time to time paid or payable under or
in connection with the foregoing agreements; or (d) to exercise or enforce any
and all covenants, remedies, powers and privileges thereunder.
"Assignee" has the meaning specified in Section 15.3(a).
"Assignment and Acceptance" has the meaning specified in Section
15.3(a).
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"Availability" means, at any time, with respect to the Borrower:
(a) the lesser of (i) the Maximum Revolver Amount or (ii) the Borrowing
Base, provided, however, Availability shall be increased by the Additional
Availability Amount provided no Event or Event of Default exists or is
continuing at the commencement of or during such Availability Increase
Period; minus
(b) the sum of (i) Outstanding Credit to the Borrower at such time,
(ii) reserves for accrued interest on the Obligations of the Borrower,
(iii) the Environmental Compliance Reserve for the Borrower, (iv) at
Agent's discretion, the Rental Reserve for the Borrower, and (v) all other
reserves which the Agent deems necessary in the exercise of its reasonable
credit judgment to maintain with respect to the Borrower's account,
including, without limitation, reserves for any amounts which the Agent or
any Lender may be obligated to pay in the future for the account of the
Borrower.
"Availability Increase Period" means each of the following periods (a)
the Effective Date through and including the date which is the 60th day after
the Effective Date, (b) the date which is the 61st day after the Effective Date
through and including the date which is the 90th day after the Effective Date
and (c) the date which is the 91st day after the Effective Date through and
including the Stated Termination Date. The foregoing periods may be respectively
referred to herein as the first, second and final Availability Increase Periods.
"BA" means Bank of America, N.A.
"BA Loan" and "BA Loans" have the meaning specified in Section 2.2(h).
"Bank of America" means Bank of America, N.A., a National Banking
Association, or any successor entity thereto.
"Bank Products" means any one or more of the following types of
services or facilities extended to the Borrower by Bank of America or any
affiliate of Bank of America in reliance on Bank of America's agreement to
indemnify such affiliate: (i) credit cards; (ii) ACH Transactions; (iii) cash
management, including controlled disbursement services; and (iv) Hedge
Agreements.
"Bank Product Reserves" means all reserves which the Agent from time to
time establishes in its reasonable discretion for the Bank Products then
provided or outstanding.
"Borrower" means Woodworkers.
"Borrowing" means a borrowing hereunder consisting of Revolving Loans
made on the same day by the Lenders to the Borrower (or by BA in the case of a
Borrowing funded by BA Loans) or by the Agent in the case of a Borrowing
consisting of an Agent Advance, or the issuance of Letters of Credit hereunder.
- 4 -
"Borrowing Base" means with respect to the Borrower (i) at any time
through and including March 31, 2002, the sum of (a) sixty-five percent (65%) of
the value, at the lower of cost (on a weighted average cost basis) or market, of
all Eligible Inventory of the Borrower, plus (b) eighty-five percent (85%) of
the Net Amount of Eligible Accounts, plus (c) until December 31, 2002 and so
long as the Borrower is the fee owner of the Seabrook Premises, $500,000;
provided, however, that after March 1, 2002, the Agent shall have the right to
request an appraisal of the Seabrook Premises and reduce the Availability by an
amount equal to the difference between (x) $500,000 and (y) the amount equal to
75% of the fair market value of such property as determined in such appraisal,
plus (d) without duplication, 50% of the undrawn face amount of Letters of
Credit issued or caused to be issued by the Agent for the account of the
Borrower for the purchase of goods which will become Eligible Inventory; or (ii)
from April 1, 2002 through and including the Stated Termination Date, the sum of
(a) the lesser of (x) sixty-five percent (65%) of the value, at the lower of
cost (on a weighted average cost basis) or market, of all Eligible Inventory or
(y) eighty-five percent (85%) of the Net Recovery Percentage for Inventory
multiplied by the Value of Eligible Inventory, plus (b) eighty-five percent
(85%) of the Net Amount of Eligible Accounts, plus (c) so long as the Borrower
is the fee owner of the Seabrook Premises, the sum equal to the lesser of (x)
$500,000 or (y) the amount equal to 75% of the fair market value of such
property as determined in such appraisal, plus (d) without duplication, 50% of
the undrawn face amount of Letters of Credit issued or caused to be issued by
the Agent for the account of the Borrower for the purchase of goods which will
become Eligible Inventory.
"Business Day" means (a) any day that is not a Saturday, Sunday, or a
day on which banks in New York, New York or Charlotte, North Carolina, are
required or permitted to be closed, and (b) with respect to all notices,
determinations, fundings and payments in connection with the LIBOR Rate or LIBOR
Rate Loans, any day that is a Business Day pursuant to clause (a) above and that
is also a day on which trading in Dollars is carried on by and between banks in
the London interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Public Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid
during a Fiscal Year) in respect of the cost of any fixed asset or improvement,
or replacement, substitution, or addition thereto, which has a useful life of
more than one year, including, without limitation, those arising in connection
with the direct or indirect acquisition of such assets by way of increased
product or service charges or offset items or in connection with Capital Leases.
"Capital Lease" means any lease of Property by the Borrower that, in
accordance with GAAP, should be reflected as a liability on the balance sheet of
the Borrower.
"Cash Management System" means the blocked concentration account with
Fleet National Bank (or any other bank acceptable to Agent) which is subject to
a blocked account agreement in form and substance satisfactory to Agent.
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"Change of Control" means (a) the transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Borrower to any Person or group (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934); (b) the liquidation or dissolution of the
Borrower or the adoption of a plan by the stockholders of Borrower relating to
the dissolution or liquidation of the Borrower; (c) the acquisition by any
Person or group (as such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934) ) other than any of the Principal Unsecured Creditors, of
beneficial ownership, directly or indirectly, of thirty-five (35%) percent or
more of the voting power of the total outstanding voting stock of the Borrower;
(d) during any period of two (2) years, individuals who at the beginning of such
period constituted the Board of Directors of the Borrower (together with any new
directors whose nomination for election was approved by a vote of at least a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of Borrower, then still in office.
"Chattel Paper" means all of the Borrower's now owned or hereafter
acquired chattel paper, as defined in the UCC, including electronic chattel
paper.
"Closing Date" means the date of this Agreement, which shall not be
earlier than the Effective Date.
"Closing Fee" has the meaning specified in Section 3.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all of the Borrower's real and personal property and
all other assets of any Person from time to time subject to Agent's Liens
securing payment or performance of the Obligations.
"Collateral Management Fee" has the meaning specified in Section 3.5.
"Commitment" means, at any time with respect to a Lender, the principal
amount set forth beside such Lender's name under the heading "Commitment" on the
signature pages of this Agreement or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of Section 15.3, as such Commitment may be adjusted from
time to time in accordance with the provisions of Section 2.1 or Section 15.3,
and "Commitments" means, collectively, the aggregate amount of the commitments
of all of the Lenders.
"Confirmation Order" means the final order of the Bankruptcy Court
entered on October 17, 2001 confirming the Plan of Reorganization, a copy of
which is attached hereto as Exhibit E.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or other substance or material, the handling, release, or possession
of which is regulated to protect health, safety, or environment, or any
constituent of any such substance or waste.
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"Conversion/Continuation Date" has the meaning given to such term in
Section 3.2(b).
"Debt" means, without duplication, all liabilities, obligations and
indebtedness of the Borrower to any Person, of any kind or nature, now or
hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, and including, without limitation, (a) the Borrower's
liabilities and obligations to trade creditors; (b) all Obligations; (c) all
obligations and liabilities of any Person secured by any Lien on the Borrower's
Property, even though the Borrower shall not have assumed or become liable for
the payment thereof; provided, however, that all such obligations and
liabilities which are limited in recourse to such Property shall be included in
Debt only to the extent of the book value of such Property as would be shown on
a balance sheet of the Borrower prepared in accordance with GAAP; (d) all
obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to Property
used or acquired by the Borrower, even if the rights and remedies of the lessor,
seller or lender thereunder are limited to repossession of such Property;
provided, however, that all such obligations and liabilities which are limited
in recourse to such Property shall be included in Debt only to the extent of the
book value of such Property as would be shown on a balance sheet of the Borrower
prepared in accordance with GAAP; (e) all accrued pension fund and other
employee benefit plan obligations and liabilities; (f) all obligations and
liabilities under Guaranties; and (g) deferred taxes.
"Defaulting Lender" has the meaning specified in Section 2.2(g)(ii).
"Distribution" means, in respect of any corporation: (a) the payment or
making of any dividend or other distribution of property in respect of capital
stock (or any options or warrants for, or other rights with respect to, such
stock) of such corporation, other than distributions in capital stock (or any
options or warrants for such stock) of the same class; or (b) the redemption or
other acquisition by such corporation of any capital stock (or any options or
warrants for such stock) of such corporation.
"Documents" means all documents as such term is defined in the UCC,
including bills of lading, warehouse receipts or other documents of title, now
owned or hereafter acquired by the Borrower.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" means dollars in the lawful currency of the United
States. Unless otherwise specified, all payments under the Agreements shall be
made in Dollars.
"EBITDA" means, with respect to any period of Woodworkers and its
Subsidiaries, the sum of:
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(i) the net income (or net loss) of Woodworkers and its
Subsidiaries (determined in accordance with GAAP) for such period,
without giving effect to any GAAP extraordinary gains or extraordinary
losses (including, without limitation, any store closing or
restructuring expenses); plus (or minus)
(ii) to the extent that any of the items referred to in any of
clauses (A) through (C) below were deducted or added in calculating
such net income:
(A) interest expense of Woodworkers and its
Subsidiaries for such period;
(B) federal and state income tax expense of
Woodworkers and its Subsidiaries for such period; and
(C) the amount of all depreciation and amortization
for such period.
"Effective Date" means the Business Day, but in any event not later
than the earlier of November 12, 2001 or ten days after confirmation of the Plan
of Reorganization, on which the Agent and the Lenders shall be satisfied that
the conditions precedent set forth in Section 11.1 have been fulfilled or waived
in a manner satisfactory to Agent.
"Eligible Accounts" means those Accounts not ineligible as the basis
for Revolving Loans, based on the following criteria and on such other criteria
as the Agent may from time to time establish in its reasonable commercial
discretion. Without intending to limit the Agent's discretion to establish other
criteria of eligibility, Eligible Accounts shall not include any Account:
(a) (i) that is a trade account and with respect to which more than 90
days have elapsed since the date of the original invoice therefor or if it is
more than 60 days past the due date specified in such invoice and (ii) that is a
credit card receivables account and with respect to which is more than 5 days
past due;
(b) with respect to which any of the representations, warranties,
covenants, and agreements contained in this Agreement or the Security Agreement
are not or have ceased to be complete and correct or have been breached;
(c) with respect to which, in whole or in part, a check, promissory
note, draft, trade acceptance or other instrument for the payment of money has
been received, presented for payment and returned uncollected for any reason;
(d) which represents a progress billing (as hereinafter defined) or as
to which the Borrower has extended the time for payment without the consent of
the Agent; for the purposes hereof, "progress billing" means any invoice for
goods sold or leased or services rendered under a contract or agreement pursuant
to which the Account Debtor's obligation to pay such invoice is conditioned upon
the Borrower's completion of any further performance under the contract or
agreement;
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(e) as to which any one or more of the following events has occurred
with respect to the Account Debtor on such Account: death or judicial
declaration of incompetency of an Account Debtor who is an individual; the
filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or otherwise) or of
any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account Debtor;
the sale, assignment, or transfer of all or any material part of the assets of
the Account Debtor where the purchaser or assignee has not assumed Account
Debtor's obligation to pay the Borrower with respect to such Account; the
nonpayment generally by the Account Debtor of its debts as they become due; or
the cessation of the business of the Account Debtor as a going concern;
(f) owed by an Account Debtor if the aggregate dollar amount of all
Accounts owed by such Account Debtor exceeds a credit limit determined by Agent
in its sole discretion, but only to the extent such Accounts exceed such limit;
(g) owed by an Account Debtor which: (i) does not maintain its chief
executive office in the United States; or (ii) is not organized under the laws
of the United States of America; or (iii) is the government of any country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof; except, in each case, to the extent that the Agent
otherwise determines in its reasonable discretion the Account to be eligible on
an account-by-account basis based on, among other things, compliance with all
applicable laws, including the Assignment of Claims Act of 1940, as amended, in
order to obtain a valid and enforceable assignment (in the case of clause (iii))
or the existence of any letter of credit (and the Security Interest thereon has
been perfected) and a credit review of the Account Debtor satisfactory to the
Agent in its sole discretion;
(h) owed by an Account Debtor which is an Affiliate, employee or
supplier of the Borrower or which is an Intercompany Account;
(i) except as provided in (j) below, as to which either the perfection,
enforceability, or validity of the Security Interest in such Account, or the
Agent's right or ability to obtain direct payment to the Agent of the Proceeds
of such Account, is governed by any federal, state or local statutory
requirements other than those of the UCC;
(j) which is owed by the government of the United States of America, or
any department, agency, public corporation, or other instrumentality thereof,
unless the Federal Assignment of Claims Act of 1940, as amended, and any other
steps necessary to perfect the Security Interest and protect the Agent's rights
therein, have been complied with to the Agent's satisfaction with respect to
such Account;
- 9 -
(k) which is owed by any state, municipality, province or other
political subdivision of the United States of America, or any department,
agency, public corporation, or other instrumentality thereof and as to which the
Agent reasonably determines that its Security Interest therein is not or cannot
be perfected;
(l) which arises out of a sale to an Account Debtor on a ▇▇▇▇-and-hold,
guaranteed sale, sale and return, sale on approval, consignment, or other
repurchase or return basis;
(m) which is evidenced by a promissory note or other instrument or by
Chattel Paper;
(n) if fifty percent (50%) or more of the aggregate dollar amount of
outstanding Accounts owed at such time by the Account Debtor thereon is
classified as ineligible under the other criteria set forth herein;
(o) with respect to which the Account Debtor is located in any state
requiring the filing of a Notice of Business Activities Report or similar report
in order to permit the Borrower to seek judicial enforcement in such state of
payment of such Account, unless the Borrower has qualified to do business in
such state or has filed a Notice of Business Activities Report or equivalent
report for the then current year.
(p) which arises out of a sale not made in the ordinary course of the
Borrower's business;
(q) with respect to which the goods giving rise to such Account have
not been shipped and delivered to and accepted by the Account Debtor or the
services giving rise to such Account have not been performed by the Borrower,
and, if applicable, accepted by the Account Debtor, or the Account debtor
revokes its acceptance of such goods or services;
(r) which is not subject to a first priority and perfected security
interest in favor of the Agent for the benefit of the Lenders;
(s) which is owed by an Account Debtor to which the Borrower is
indebted in any way, or which is subject to any right of setoff, counterclaim,
offset, discount, allowance, charge-back, rebate payable or contra claim by the
Account Debtor, unless the Account Debtor has entered into an agreement
acceptable to the Agent in its sole discretion to waive all such rights; or if
the Account Debtor thereunder has disputed liability or made any claim with
respect to any other Account due from such Account Debtor; but in each such case
only to the extent of such indebtedness, setoff, charge-back, counterclaim,
offset, discount, allowance, rebate, dispute, or claim or any Accounts to the
extent of any unapplied credits;
(t) if representing a cash sale or cash on delivery sale;
- 10 -
(u) which represents a rebate owed to or claimed by the Borrower or a
re-billed or redated Account;
(v) which is payable in a currency other than U.S. Dollars;
(w) for goods not shipped and delivered and accepted by the Account
Debtor or otherwise not representing a final sale or otherwise representing a
pre-billed Account or Accounts for unshipped or incomplete goods or services;
(x) if the sale giving rise thereto was not made in compliance in all
material respects with all applicable laws;
(y) if not representing a trade receivable or credit card receivable;
(z) if Agent believes in its reasonable credit judgment that the
prospect of collection of such Account is impaired or that the Account may not
be paid by reason of the Account Debtor's financial inability to pay; or
(aa) which is owed by an Account Debtor which the Agent, in its
reasonable credit judgment, otherwise deems to be uncreditworthy.
If any Account at any time ceases to be an Eligible Account by reason
of any of the foregoing exclusions or any failure to meet any other eligibility
criteria established by the Agent in the exercise of its reasonable discretion
then such Account shall promptly be excluded from the calculation of Eligible
Accounts.
"Eligible Inventory" means store or warehouse Inventory of the
Borrower, valued at the lower of cost (on a first-in, first-out basis) or
market, that constitutes first quality finished goods and that: (a) is owned by
the Borrower and with respect to which the Borrower has good and marketable
title; (b) is not, in the Agent's reasonable opinion, slow moving, excess,
obsolete or unmerchantable; (c) is located at Premises owned or leased by the
Borrower or on Premises otherwise reasonably acceptable to the Agent; (d) is
subject to the Agent's first priority perfected security interest; (e) is not
work-in-process, spare parts, packaging and shipping materials, supplies,
▇▇▇▇-and-hold Inventory, returned or defective Inventory, or Inventory delivered
to the Borrower on consignment; (f) is goods in transit through December 31,
2001 up to a cost or market value of $2,500,000 and goods in transit from
January 1, 2001 through January 31, 2002 up to a cost or market value of
$500,000, but only to the extent such goods are paid for in advance (except as
otherwise acceptable to Agent); and (g) the Agent, in the exercise of its
reasonable discretion, deems eligible as the basis for Revolving Loans based on
such collateral and credit criteria as the Agent may from time to time
establish, provided, however, that the Agent shall give the Borrower at least 5
days' written notice prior to establishing such additional criteria and the
reason(s) therefor. There shall in any event be excluded from Eligible Inventory
any goods returned by the Borrower's customers that are determined by the
Borrower or the Agent to be unsalable in the ordinary course of business or held
for return to vendors. If any Inventory at any time ceases to be Eligible
Inventory, such Inventory shall promptly be excluded from the calculation of
Eligible Inventory.
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"Environmental Compliance Reserve" means all reserves which the Agent
from time to time establishes for amounts that are reasonably required to be
expended in order for the Borrower and the Borrower's operations and Property to
comply with Environmental Laws or in order to correct any violation by the
Borrower or the Borrower's operations or Property of Environmental Laws.
"Environmental Laws" means all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidance, orders and consent decrees
relating to health, safety, hazardous substances, and environmental matters
applicable to the Borrower's business and facilities (whether or not owned by
it). Such laws and regulations include but are not limited to the Resource
Conservation and Recovery Act, 42 ▇.▇.▇.▇▇. 6901 et seq., as amended; the
Comprehensive Environmental Response Compensation and Liability Act, 42
▇.▇.▇.▇▇. 9601 et seq., as amended; the Toxic Substances Control Act, 15
▇.▇.▇.▇▇. 2601 et seq., as amended; the Clean Water Act, 33 ▇.▇.▇.▇▇. 466 et
seq., as amended; the Clean Air Act, 42 ▇.▇.▇.▇▇. 7401 et seq., as amended;
state and federal lien and environmental cleanup programs; and U.S. Department
of Transportation regulations.
"Environmental Lien" means a Lien in favor of any Public Authority for
(a) any liability under any Environmental Laws, or (b) damages arising from, or
costs incurred by such Public Authority in response to, a Release or threatened
Release of a Contaminant into the environment.
"Equipment" means all of the Borrower's now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including, without limitation,
data processing hardware and software (embedded or otherwise), motor vehicles,
aircraft, dies, tools, jigs, and office equipment, as well as all of such types
of property leased by the Borrower and all of the Borrower's rights and
interests with respect thereto under such leases (including, without limitation,
options to purchase); together with all present and future additions and
accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Woodworkers within the meaning of
Section 414(b) or Section 414(c) of the Code (and Sections 414(m) and (o) of the
Code for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means, with respect to the Borrower, any ERISA Affiliate
or any Pension Plan, the occurrence of any of the following: (a) a Reportable
Event; (b) a withdrawal by a substantial employer (as defined in Section 4001
(a)(12) of ERISA) subject to Section 4063 of ERISA; (c) a cessation of
operations which is treated as a withdrawal under Section 4062(e) of ERISA; (d)
a complete or partial withdrawal by the Borrower or any ERISA Affiliate under
Section 4203 or Section 4205 of ERISA from a Multiemployer Plan; (e) a
notification that a Multiemployer Plan is in reorganization under Section 4242
of ERISA; (f) the filing of a notice of intent to terminate a Pension Plan under
4041 of ERISA; (g) the treatment of an amendment of a Pension Plan as a
termination under 4041 of ERISA; (h) the termination of a Multiemployer Plan
under Section 4041A of ERISA; (i) the commencement of proceedings by the PBGC to
terminate a Pension Plan under 4042 of ERISA; (j) an event or condition which
could reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, a Pension
Plan; or (k) the imposition of any liability under Title IV of ERISA, other than
PBGC premiums due but not delinquent under Section 4007 of ERISA.
- 12 -
"Event" means any event or condition which, with notice, the passage of
time, the happening of any other condition or event, or any combination thereof,
would constitute an Event of Default.
"Event of Default" has the meaning specified in Section 12.1.
"Existing Agreement" shall have the meaning set forth in the first
WHEREAS Clause of this Agreement.
"Existing Debt" means all Debt owing under or in connection with the
Amended and Restated Loan and Security Agreement dated February 23, 1999 among
the Borrower, Post-Tool, Inc., and the Agent and Lenders, as amended.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to BA on such day on
such transactions as determined by the Agent.
"Final Order" means an order, judgment or other decree of the
Bankruptcy Court or any other court or judicial body with proper jurisdiction,
as the case may be, which is in full force and effect and has not been reversed,
stayed, modified or amended and as to which (i) any right to appeal or seek
certiorari, review or rehearing has been waived or (ii) the time to appeal or
seek certiorari, review or rehearing has expired and as to which no appeal or
petition for certiorari, review or rehearing is pending.
"Financial Statements" means, according to the context in which it is
used, the financial statements attached hereto as Exhibit ▇-▇, and the pro forma
balance sheet attached hereto as Exhibit B-2 or any financial statements
required to be given to the Agent pursuant to Section 8.2(a), Section 8.2(b),
and Section 8.2(c), or any combination thereof.
- 13 -
"Fiscal Year" means the Borrower's fiscal year for financial accounting
purposes. The current Fiscal Year of the Borrower will end on March 2, 2002.
"Fixed Charges Ratio" means, for any Rolling Period or period described
in Section 10.27, EBITDA for such Rolling Period or period described in Section
10.27 divided by the sum of Capital Expenditures, interest expense of the
Borrower, federal and state income tax expense of the Borrower, principal
payments which the Borrower was required to make for borrowed money and Cash
Distribution Amounts (as defined in the Plan of Reorganization) pursuant to the
Plan of Reorganization, for such Rolling Period.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means at any particular time generally accepted accounting
principles as in effect at such time.
"General Intangibles" means all of the Borrower's now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of the Borrower of every kind and
nature (other than Accounts), including, without limitation, all contract
rights, interest in leases (including, without limitation, the interest in the
lease of ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, as more
particularly described in a collateral assignment of tenant's interest in lease
from Borrower to Agent dated October 29, 2001) payment intangibles, Proprietary
Rights, corporate or other business records, inventions, designs, blueprints,
plans, specifications, patents, patent applications, trademarks, service marks,
trade names, trade secrets, goodwill, copyrights, computer software, customer
lists, registrations, licenses, franchises, tax refund claims, any funds which
may become due to the Borrower in connection with the termination of any Plan or
other employee benefit plan or any rights thereto and any other amounts payable
to the Borrower from any Plan or other employee benefit plan, rights and claims
against carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar type of
insurance and any proceeds thereof, proceeds of insurance covering the lives of
key employees on which the Borrower is beneficiary, rights to receive dividends,
distributions, cash, Instruments and other property in respect of or in exchange
for pledged equity interests or Investment Property and any letter of credit,
guarantee, claim, security interest or other security held by or granted to the
Borrower.
"Goods" means all "goods" as defined in the UCC, now owned or hereafter
acquired by Borrower, wherever located, including embedded software to the
extent included in "goods" as defined in the UCC, manufactured homes, standing
timber that is cut and removed for sale and unborn young of animals.
"Guaranty" by any Person means all obligations of such Person which in
any manner directly or indirectly guarantee or assure, or in effect guarantee or
assure, the payment or performance of any indebtedness, dividend or other
obligation of any other Person (the "guaranteed obligations"), or to assure or
in effect assure the holder of the guaranteed obligations against loss in
respect thereof, including, without limitation, any such obligations incurred
through an agreement, contingent or otherwise: (a) to purchase the guaranteed
obligations or any Property constituting security therefor; (b) to advance or
supply funds for the purchase or payment of the guaranteed obligations or to
maintain a working capital or other balance sheet condition; or (c) to lease
Property or to purchase any debt or equity securities or other Property or
services.
- 14 -
"Hedge Agreements" means any and all transactions, agreements or
documents now existing or hereafter entered into, which provides for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging the Borrower's exposure to fluctuations in interest
or exchange rates, loan, credit exchange, security or currency valuations or
commodity prices.
"Instruments" means all instruments as such term is defined in the UCC,
now owned or hereafter acquired by the Borrower.
"Intercompany Accounts" means all assets and liabilities, however
arising, which are due to the Borrower from, which are due from the Borrower to,
or which otherwise arise from any transaction by the Borrower with, any
Affiliate.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Conversion/Continuation
Date on which a Reference Rate Loan is converted into a LIBOR Rate Loan or a
LIBOR Rate Loan is continued as such a LIBOR Rate Loan, and ending on the date
one, two, or three months thereafter as selected by the Borrower in its Notice
of Borrowing or Notice of Conversion/Continuation; provided, however, that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of the calendar month at the end of such Interest Period;
(iii) there shall be no more than five different Interest
Periods in effect at any one time; and
(iv) no Interest Period shall extend beyond the Stated
Termination Date or any renewal term.
"Interest Rate" means each or any of the interest rates, including the
default rate, set forth in Section 3.1(b).
- 15 -
"Investment Property" means all of the Borrower's right title and
interest in and to any and all: (a) securities whether certificated or
uncertificated; (b) securities entitlements; (c) securities accounts; (d)
commodity contracts; or (e) commodity accounts.
"Inventory" means all of the Borrower's now owned and hereafter
acquired inventory, goods, merchandise, and other personal property, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work-in-process, finished goods (including embedded
software), returned goods, and materials and supplies of any kind, nature or
description which are or might be used or consumed in Borrower's business or
used in connection with the manufacture, packing, shipping, advertising, selling
or finishing of such goods, such merchandise and such other personal property,
and all documents of title or other Documents representing them.
"IRS" means the Internal Revenue Service or any successor agency.
"Latest Projections" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to Section 8.2(j), the
projections of the Borrower's monthly financial condition, results of
operations, and cash flow that were included in the Plan of Reorganization and
are attached hereto as Exhibit B-3; and (b) thereafter, the projections most
recently received by the Agent pursuant to Section 8.2(f);
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof and shall include the Agent to the extent of any Agent Advance
outstanding and BA to the extent of any BA Loan outstanding; provided that no
such Agent Advance or BA Loan shall be taken into account in determining any
Lender's Pro Rata Share.
"Letter of Credit" has the meaning specified in Section 2.3.
"Letter of Credit Fee" has the meaning specified in Section 3.7.
"Letter-of-Credit Rights" means "letter-of-credit rights" as such term
is defined in the UCC, now owned or hereafter acquired by Borrower, including
rights to payment or performance under a letter of credit, whether or not
Borrower, as beneficiary, has demanded or is entitled to demand payment or
performance.
"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate Loan,
the last day of each Interest Period applicable to such Loan.
"LIBOR Interest Rate Determination Date" means each date of calculating
the LIBOR Rate for purposes of determining the interest rate with respect to an
Interest Period. The LIBOR Interest Rate Determination Date for any LIBOR Rate
Loan shall be the second Business Day prior to the first day of the related
Interest Period for such LIBOR Rate Loan.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate
Loans comprising part of the same Borrowing, the rate of interest per annum
(rounded upward to the next 1/100th of 1.0%) determined as follows:
- 16 -
LIBOR Rate = LIBOR
----------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1.0%) in effect on such day applicable to the relevant
Lender (whether or not applicable to such Lender) under regulations issued from
time to time by the Federal Reserve Board for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum (rounded upward to the
next 1/16 of 1%) notified to the Agent by Bank of America as the rate of
interest at which United States Dollar deposits in the approximate amount of the
Loan to be made or continued as, or converted into, a LIBOR Rate Loan and having
a maturity comparable to such Interest Period would be offered by Bank of
America's applicable lending office to major banks in the London interbank
market at their request at approximately 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest Period.
"LIBOR Rate Loan" means a Loan during any period in which it bears
interest based on the LIBOR Rate.
"LIBOR Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute, or contract, and including,
without limitation, a security interest, charge, claim, or lien arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; (b) the filing of or
agreement to give any financing statement under the UCC of any jurisdiction; and
(c) to the extent not included under clause (a), any reservation, exception,
encroachment, easement, right-of-way, covenant, condition, restriction, lease or
other title exception or encumbrance affecting Property.
"Loan Account" means the loan account of the Borrower, which account
shall be maintained by the Agent.
"Loan and Loans" means all loans and advances provided for in Section
2. The terms Loans and Revolving Loans are used herein interchangeably.
"Loan Documents" means this Agreement, the Security Agreement, the
Trademark Security Agreement, the Seabrook Mortgage and all other agreements,
instruments, and documents heretofore, now or hereafter evidencing, securing,
guaranteeing or otherwise relating to the Obligations, the Collateral, the
Security Interest, or any other aspect of the transactions contemplated by this
Agreement, as any of them may be amended, supplemented, waived or otherwise
modified from time to time.
- 17 -
"Majority Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 662/3% of the Commitments or, if no Commitments shall then
be in effect, Lenders who hold more than 662/3% of the aggregate principal
amount of the Loans then outstanding but shall in no event be fewer than two
Lenders.
"Maximum Revolver Amount" means $30,000,000.
"Merger Agreement" means the Agreement and Plan of Merger by and
between Trend-Lines, Inc. and Borrower, pursuant to which Trend-Lines, Inc. is
to merge with and into Borrower, dated as of October 29, 2001.
"Mortgages" means: (a) each mortgage, security agreement, and
assignments of leases and rents between the Borrower and the Agent or BA and
delivered to the Agent; (b) all other real property mortgages, leasehold
mortgages, assignments of leases, mortgage deeds, deeds of trust, deeds to
secure debt, security agreements, and other similar instruments hereafter
entered into which provide the Agent a lien on or other interest in any portion
of the Premises or which relate to any such lien or interest; and (c) any of the
foregoing as they may be amended, supplemented, waived or otherwise modified
from time to time.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which Woodworkers or any ERISA Affiliate makes, is
making, made, or was at any time during the current year or the immediately
preceding six years obligated to make contributions.
"Net Amount of Eligible Accounts" means, at any time, the gross amount
of Eligible Accounts representing credit card and trade receiveables less sales,
excise or similar taxes, and less returns, discounts, claims, credits and
allowances, accrued rebates, offsets, deductions, counterclaims, disputes and
other defenses of any nature at any time issued, owing, granted, outstanding,
available or claimed.
"Net Recovery Percentage" shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the amount of
recovery in respect of the Inventory at such time on an orderly value basis as
set forth in the most recent acceptable appraisal of Inventory received by Agent
in accordance with Section 7.5, net of operating expenses, liquidation expenses
and commissions, and (b) the denominator of which is the original cost of the
aggregate amount of the Inventory subject to such appraisal.
"Notice of Borrowing" has the meaning specified in Section 2.2(b).
"Notice of Conversion/Continuation" has the meaning specified in
Section 3.2(b).
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and Debt owing by Borrower to the
Agent and/or any Lender, whether or not arising under this Agreement, whether or
not evidenced by any note, or other instrument or document, whether arising from
an extension of credit, opening of a letter of credit, acceptance, loan,
guaranty, indemnification or otherwise, whether direct or indirect (including,
without limitation, those acquired by assignment from others, and any
participation by any Lender in Borrower's debts owing to others), absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including, without limitation, all interest, charges, expenses,
fees, attorneys' fees, filing fees enforcement costs and other sums chargeable
to Borrower hereunder, under another Loan Document, or under any other agreement
or instrument with the Agent and/or any Lender. "Obligations" includes, without
limitation, (a) all debts, liabilities, and obligations now or hereafter arising
from or in connection with the Letters of Credit and (b) all debts, liabilities
and obligations now or hereafter arising from or in connection with Bank
Products.
- 18 -
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan Documents.
"Outstanding Credit" means, at any time with respect to Borrower, the
sum of (a) the aggregate outstanding principal amount of the Loans at such time
made to Borrower plus (b) the aggregate undrawn amount of all outstanding
Letters of Credit at such time issued for the account of Borrower plus (c) the
aggregate amount of all unpaid reimbursement obligations of the Borrower in
respect of Letters of Credit issued for the account of Borrower.
"Participant Lender" means any Person who shall have been granted the
right by any Lender to participate in the financing provided by such Lender
under this Agreement, and who shall have entered into a participation agreement
in form and substance satisfactory to Lenders.
"Payment Account" means each blocked bank account or bank account
associated with a lock box, established pursuant to Section 7.10, to which the
funds of Borrower (including, without limitation, Proceeds of Accounts and other
Collateral) are deposited or credited, and which is maintained in the name of
the Agent or Borrower, as the Agent may determine, on terms acceptable to the
Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to the functions thereof.
"Pending Loans" means, at any time, the aggregate principal amount of
all Loans requested in any Notice(s) of Borrowing received by the Agent which
have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which Woodworkers or an ERISA
Affiliate sponsors or maintains or to which it makes, is making, or is obligated
to make contributions or, in the case of a Multiemployer Plan, has made
contributions at any time during the current year or the immediately preceding
six plan years.
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"Permitted Liens" means: (a) Liens for taxes not yet delinquent or
Liens for taxes in an amount not to exceed $100,000 being contested in good
faith by appropriate proceedings diligently pursued, provided that a reserve or
other appropriate provision, if any, as shall be required by GAAP shall have
been made therefor on the applicable Financial Statements and that a stay of
enforcement of any such Lien is in effect; (b) Liens in favor of the Agent and
Lenders; (c) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, employees or suppliers,
incurred in the ordinary course of business of Woodworkers or any of its
Subsidiaries and not in connection with the borrowing of money, for sums not yet
delinquent or which are being contested in good faith and by proper proceedings
diligently pursued, provided that a reserve or other appropriate provision, if
any, required by GAAP shall have been made therefor on the applicable Financial
Statements and a stay of enforcement of any such Lien is in effect; (d) Liens in
connection with worker's compensation or other unemployment insurance incurred
in the ordinary course of the Borrower's business; (e) Liens created by deposits
of cash to secure performance of bids, tenders, leases (to the extent permitted
under this Agreement), or trade contracts, incurred in the ordinary course of
business of the Borrower and not in connection with the borrowing of money; (f)
Liens arising by reason of cash deposit for surety or appeal bonds in the
ordinary course of business of the Borrower; (g) Liens of or resulting from any
judgment or award, the time for the appeal or petition for rehearing of which
has not yet expired, or in respect of which the Borrower is in good faith
prosecuting an appeal or proceeding for a review, and in respect of which a stay
of execution pending such appeal or proceeding for review has been secured; (h)
Liens with respect to the real estate which are exceptions to the commitments
for title insurance issued in connection with the Mortgages, as accepted by the
Agent; (i) with respect to any Premises: easements, rights of way, zoning and
similar covenants and restrictions and similar encumbrances which customarily
exist on properties of corporations engaged in similar activities and similarly
situated and which in any event do not materially interfere with or impair the
use or operation of the Collateral by the Borrower or the value of the Agent's
Security Interest therein, or materially interfere with the ordinary conduct of
the business of the Borrower; (j) purchase money security interests and liens of
lessors under capital leases to the extent that the security interest or lien
only encumbers the asset purchased or leased, and so long as the security
interest or lien only secures the purchase price of the asset.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, limited liability company,
association, corporation, Public Authority, or other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which Borrower or any ERISA Affiliate sponsors or maintains or to which
Borrower or any ERISA Affiliate makes, is making, or is obligated to make
contributions and includes any Pension Plan.
"Plan Effective Date" means the date on which the conditions specified
in Article X.B. of the Plan of Reorganization have been satisfied or waived as
provided in Article X.C. thereof.
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"Plan of Reorganization" has the meaning specified in the eighth
WHEREAS clause of this Agreement.
"Premises" means the land identified by addresses on Schedule 9.13
together with all buildings, improvements, and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging or in any way appertaining
thereto, and which constitutes all of the real property in which Borrower has
any interests on the Closing Date.
"Principal Unsecured Creditors" means any of Delta International
Machinery Corp., ▇▇▇▇▇▇-Cable Corporation and any of their affiliates.
"Proceeds" means all products and proceeds of any Collateral, and all
proceeds of such products and proceeds, including, without limitation, all cash
and credit balances, all payments under any indemnity, warranty, or guaranty
payable with respect to any Collateral, all awards for taking by eminent domain,
all proceeds of fire or other insurance, and all money and other Property
obtained as a result of any claims against third parties or any legal action or
proceeding with respect to Collateral.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Proprietary Rights" means all of Borrower's now owned and hereafter
arising or acquired: licenses, franchises, permits, patents, patent rights,
copyrights, works which are the subject matter of copyrights, trademarks,
service marks, trade names, trade styles, patent, trademark and service
applications and all licenses and rights thereunder, including, without
limitation, those patents, trademarks and copyrights set forth on Schedule 9.14,
and all other rights under any of the foregoing, all extensions, renewals,
reissues, divisions, continuations, and continuations-in-part of any of the
foregoing, and all rights to ▇▇▇ for past, present, and future infringement of
any of the foregoing; inventions, trade secrets, formulae, processes, compounds,
drawings, designs, blueprints, surveys, reports, manuals, and operating
standards; goodwill; customer and other lists in whatever form maintained; and
trade secret rights, copyright rights, rights in works of authorship, and
contract rights relating to computer software programs, in whatever form created
or maintained.
"Pro Rata Share" means, with respect to a Lender, a fraction (expressed
as a percentage), the numerator of which is the amount of such Lender's
Commitment and the denominator of which is the sum of the amounts of all of the
Lenders' Commitments, or if no Commitments are outstanding, a fraction
(expressed as a percentage), the numerator of which is the amount of Obligations
owed to such Lender and the denominator of which is the aggregate amount of the
Obligations owed to the Lenders.
"Public Authority" means the government of any country or sovereign
state, or of any state, province, municipality, or other political subdivision
thereof, or any department, agency, public corporation or other instrumentality
of any of the foregoing.
"Receivables" means all of the Borrower's now owned and hereafter
arising or acquired: Accounts (whether or not earned by performance), including,
without limitation, Accounts owed to the Borrower by any of its Subsidiaries or
Affiliates, together with all interest, late charges, penalties, collection
fees, and other sums which shall be due and payable in connection with any
Account; proceeds of any letters of credit naming the Borrower as beneficiary;
contract rights, chattel paper, instruments, documents, general intangibles
(including, without limitation, chooses in action, causes of action, tax
refunds, tax refund claims, and Reversions and other amounts payable to the
Borrower from or with respect to any Plan) and all forms of obligations owing to
the Borrower (including, without limitation, in respect of loans, advances, and
extensions of credit by the Borrower to its Subsidiaries and Affiliates);
guarantees and other security for any of the foregoing; goods represented by or
the sale, lease or delivery of which gave rise to any of the foregoing;
merchandise returned to or repossessed by the Borrower and rights of stoppage in
transit, replevin, and reclamation; and other rights or remedies of an unpaid
vendor, lienor, or secured party.
- 21 -
"Reference Rate" means the rate of interest publicly announced from
time to time by Bank of America as its reference rate. It is a rate set by Bank
of America based upon various factors including Bank of America's costs and
desired return, general economic conditions, and other factors, and is used as a
reference point for pricing some loans. However, Bank of America may price loans
at, above, or below such announced rate. Any changes in the Reference Rate shall
take effect on the day specified in the public announcement of such change.
"Reference Rate Loans" means the Reference Rate Revolving Loans.
"Reference Rate Revolving Loans" means a Revolving Loan (including an
Additional Availability Reference Rate Revolving Loan) during any period in
which it bears interest based on the Reference Rate.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any real
estate or other property, including, without limitation, the movement of
Contaminants through or in the air, soil, surface water, groundwater or real
estate or other property.
"Rental Reserve", with respect to any lease of real estate by Borrower,
shall mean, as of any date, an amount equal to the next three months of Rental
that would be payable by the Borrower under such lease.
"Rental" means all payments due from the lessee or sublessee under a
lease, including, without limitation, basic rent, percentage rent, prepaid
taxes, utility and maintenance costs, and insurance premiums.
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
"Required Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 66 2/3% of the Commitments or, if no Commitments shall then
be in effect, Lenders who hold more than 66 2/3% of the aggregate principal
amount of the Loans then outstanding.
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"Requirement of Law" means any law (statutory or common), treaty, rule
or regulation or determination of an arbitrator or of a Public Authority.
"Restricted Investment" means any acquisition of Property by Borrower
or any of its Subsidiaries in exchange for cash or other Property, whether in
the form of an acquisition of stock, debt security, or other indebtedness or
obligation, or the purchase or acquisition of any other Property, or a loan,
advance, capital contribution, or subscription, except acquisitions of the
following: (a) fixed assets to be used in the business of Borrower, so long as
the acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (b) current assets arising from the sale or lease of goods or
rendition of services in the ordinary course of business of Borrower; (c) direct
obligations of the United States of America, or any agency thereof, or
obligations guaranteed by the United States of America, provided that such
obligations mature within one year from the date of acquisition thereof and
Agent receives a perfected security interest and lien in such obligations; (d)
certificates of deposit maturing within one year from the date of acquisition,
bankers acceptances, Eurodollar bank deposits, or overnight bank deposits, in
each case issued by, created by, or with, a bank or trust company organized
under the laws of the United States or any state thereof having capital and
surplus aggregating at least $100,000,000, provided that Agent receives a
perfected security interest and lien in such obligations; and (e) commercial
paper given the highest rating by a national credit rating agency and maturing
not more than 90 days from the date of creation thereof, provided that Agent
receives a perfected security interest and lien in such obligations.
"Reversions" means any funds which may become due to Borrower in
connection with the termination of any Plan or other employee benefit plan.
"Revolving Loans" has the meaning specified in Section 2.2 and includes
each Agent Advance and BA Loan.
"Rolling Period" means each period of 4 consecutive fiscal quarters
ended the last day of February, 2003 and each fiscal quarter thereafter.
"Seabrook Mortgage" means a Mortgage in form and substance satisfactory
to the Agent on the Seabrook Premises, as it may be amended, supplemented,
waived or otherwise modified from time to time.
"Seabrook Premises" shall mean the real estate owned by Woodworkers
located at ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ at ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇.
"Security Agreement" means the Security Agreement of even date herewith
between Borrower and Agent for the benefit of Agent and the Lenders.
"Security Interest" means collectively the Liens granted to the Agent
on behalf of the Lenders in the Collateral pursuant to this Agreement, the
Security Agreement, the other Loan Documents, or any other agreement or
instrument.
"Settlement" and "Settlement Date" have the meanings specified in
Section 2.2(j)(i).
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"Solvent" means, when used with respect to any Person, that at the time
of determination:
(a) the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including contingent liabilities); and
(b) the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
(c) it is then able and expects to be able to pay its debts (including
contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as conducted and
as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of
any contingent liability shall be computed as the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"Stated Termination Date" means October 29, 2003.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than fifty percent (50%) of the voting stock or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Borrower.
"Taxes" means any and all present or future taxes, assessments, levies,
imposts, impositions, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Lender and the Agent, such
taxes (including, without limitation, income taxes or franchise taxes) as are
imposed on or measured by each Lender's or the Agent's, as the case may be, net
income by the jurisdiction (or any political subdivision thereof) under the laws
of which such Lender or the Agent, as the case may be, is organized or maintains
a lending office.
"Termination Event" has the meaning described in Section 12.1.
"Total Facility" has the meaning specified in Section 2.1.
"Trademark Security Agreement" means the Amended and Restated Trademark
Security Agreement, dated as of the date hereof, executed and delivered by the
Borrower to the Agent to evidence and perfect the Agent's Security Interest in
the Borrower's present and future trademarks and related licenses and rights, as
it may be amended, restated, supplemented, waived or otherwise modified from
time to time.
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"UCC" means the Uniform Commercial Code, as in effect from time to
time, of the State of New York or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests; provided, that to the extent that the UCC is
used to define any term herein or in any other documents and such term is
defined differently in different Articles or Divisions of the UCC, the
definition of such term contained in Article or Division 9 shall govern.
"Unused Line Fee" has the meaning specified in Section 3.1(c).
"Value" shall mean, as determined by Agent in good faith, with respect
to Inventory, the lower of (a) cost computed on an average cost basis in
accordance with GAAP (and consistent with the current practices of Borrower) or
(b) market value as determined in accordance with GAAP, provided, that, for
purposes of the calculation of the Borrowing Base, (i) the Value of the
Inventory shall not include (A) the portion of the value of Inventory equal to
the profit earned by any Affiliate on the sale thereof to Borrower or (B)
write-ups or write-downs in value with respect to currency exchange rates and
(ii) notwithstanding anything to the contrary contained herein, the cost of the
Inventory shall be computed in the same manner and consistent with the appraisal
of the Inventory conducted by an appraiser acceptable to Agent and furnished to
Agent prior to the date hereof.
Accounting Terms. Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as is
used in the preparation of the Financial Statements.
Other Terms. All other undefined terms contained in this Agreement
shall, unless the context indicates otherwise, have the meanings provided for by
the UCC to the extent the same are used or defined therein. Wherever appropriate
in the context, terms used herein in the singular also include the plural, and
vice versa, and each masculine, feminine, or neuter pronoun shall also include
the other genders. Unless the context indicates otherwise, all section and
schedule references herein are to Sections hereof and Schedules hereto,
respectively.
2. LOANS AND LETTERS OF CREDIT.
2.1 Total Facility. Subject to all of the terms and conditions of this
Agreement, the Lenders severally agree to make available a total credit facility
of up to $30,000,000 in the aggregate (the "Total Facility") for the Borrower's
use from time to time during the term of this Agreement. The Total Facility
shall be comprised of: a revolving line of credit up to the limits of the
Availability, consisting of revolving loans and letters of credit as described
in Sections 2.2 and 2.3.
2.2 Revolving Loans.
(a) Each Lender severally agrees, upon the Borrower's request from
time to time, to make revolving loans (the "Revolving Loans") to the Borrower in
amounts not to exceed (except for BA with respect to BA Loans or Agent Advances)
such Lender's Pro Rata Share of the Availability of the Borrower. The Lenders,
in their discretion, may elect to make Revolving Loans or participate (as
provided for in Section 2.3) in the credit support or enhancement provided
through the Agent to the issuers of Letters of Credit in excess of the limits of
the Availability for Borrower on one or more occasions, but, if they do so,
neither the Agent nor the Lenders shall be deemed thereby to have changed the
limits of the Availability for Borrower or to be obligated to exceed the limits
of the Availability for Borrower on any other occasion. If the sum of the
outstanding Revolving Loans, the undrawn amount of outstanding Letters of Credit
and any unpaid reimbursement obligations in respect of Letters of Credit exceeds
the Availability (determined for this purpose as if the amount of the Revolving
Loans were zero), then the Lenders may refuse to make or otherwise restrict the
making of Revolving Loans on such terms as the Lenders determine until such
excess has been eliminated, subject to the Agent's authority, in its sole
discretion, to make Agent Advances pursuant to the terms of Section 2.2(i).
Borrower may request Revolving Loans either telephonically or in writing. Each
oral request for a Revolving Loan shall be conclusively presumed to be made by a
person authorized by Borrower to do so and the crediting of a Revolving Loan to
Borrower's deposit account, or transmittal to such Person as the Borrower shall
direct, shall conclusively establish the obligation of Borrower to repay such
Revolving Loan as provided herein. The Agent will charge all Revolving Loans to
and other Obligations of Borrower to a loan account of Borrower maintained with
the Agent. All fees, commissions, costs, expenses, and other charges under or
pursuant to the Loan Documents, and all payments made and out-of-pocket expenses
incurred by the Agent and/or Lenders pursuant to the Loan Documents, will be
charged as Revolving Loans to Borrower's loan account as of the date due from
Borrower or the date paid or incurred by the Agent and/or Lenders, as the case
may be.
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(b) Procedure for Borrowing. (i) Each Borrowing shall be made upon
Borrower's irrevocable written notice delivered to the Agent in the form of a
Notice of Borrowing (which notice must be received by the Agent prior to 11:00
a.m. (New York City time) (1) four Business Days prior to the requested Funding
Date, in the case of LIBOR Rate Loans, and (2) on the requested Funding Date, in
the case of Reference Rate Loans, specifying:
(A) the amount of the Borrowing;
(B) the requested Funding Date, which shall be a Business Day;
(C) whether the Revolving Loans requested are to be Reference
Rate Revolving Loans (other than Additional Availability Reference Rate
Revolving Loans), Additional Availability Reference Rate Revolving Loans or
LIBOR Revolving Loans; and
(D) the duration of the Interest Period if the requested
Revolving Loans are to be LIBOR Revolving Loans. If the Notice of Borrowing
fails to specify the duration of the Interest Period for any Borrowing comprised
of LIBOR Rate Loans, such Interest Period shall be three months; provided,
however, that, with respect to the Borrowings to be made on the Closing Date,
such Borrowings will consist of Reference Rate Revolving Loans only.
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(ii) After giving effect to any Borrowing, there may not be more than
five different Interest Periods in effect.
(iii) With respect to any request for Reference Rate Revolving Loans,
in lieu of delivering the above-described Notice of Borrowing Borrower may give
the Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice, but the Agent shall be entitled to rely on the telephonic notice in
making such Revolving Loans.
(iv) A Reference Rate Loan consisting of all or a portion of an
Additional Availability Amount shall be an Additional Availability Reference
Rate Loan.
(c) Reliance upon Authority. On or prior to the Closing Date, and
thereafter prior to any change with respect to any of the information contained
in the following clauses (i) and (ii), Borrower shall deliver to the Agent a
writing setting forth (i) the account of the Borrower to which the Agent is
authorized to transfer the proceeds of the Revolving Loans requested pursuant to
this Section 2.2, and (ii) the names of the persons authorized to request
Revolving Loans on behalf of Borrower, and shall provide the Agent with a
specimen signature of each such person. The Agent shall be entitled to rely
conclusively on such person's authority to request Revolving Loans on behalf of
Borrower, the proceeds of which are to be transferred to any of the accounts
specified by Borrower pursuant to the immediately preceding sentence, until the
Agent receives written notice to the contrary. The Agent shall have no duty to
verify the identity of any individual representing him or herself as one of the
persons authorized by Borrower to make such requests on its behalf.
(d) No Liability. The Agent shall not incur any liability to Borrower
as a result of acting upon any notice referred to in Sections 2.2(b) and (c),
which notice the Agent believes in good faith to have been given by a person
duly authorized by Borrower to request Revolving Loans on its behalf or for
otherwise acting in good faith under this Section 2.2, and the crediting of
Revolving Loans to the Borrower's deposit account, or transmittal to such Person
as Borrower shall direct, shall conclusively establish the obligation of
Borrower to repay such Revolving Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic notice
in lieu thereof) made pursuant to Section 2.2(b) shall be irrevocable and the
Borrower shall be bound to borrow the funds requested therein in accordance
therewith.
(f) Agent's Election. Promptly after receipt of a Notice of Borrowing
(or telephonic notice in lieu thereof) pursuant to Section 2.2(b), the Agent
shall elect, in its discretion, (i) to have the terms of Section 2.2(g) apply to
such requested Borrowing, or (ii) to request BA to make a BA Loan pursuant to
the terms of Section 2.2(h) in the amount of the requested Borrowing; provided,
however, that if BA declines in its sole discretion to make a BA Loan pursuant
to Section 2.2(h), the Agent shall elect to have the terms of Section 2.2(g)
apply to such requested Borrowing.
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(g) Making of Revolving Loans. (i) In the event that the Agent shall
elect to have the terms of this Section 2.2(g) apply to a requested Borrowing as
described in Section 2.2(f), then promptly after receipt of a Notice of
Borrowing or telephonic notice pursuant to Section 2.2(b), the Agent shall
notify the Lenders by telecopy, telephone or other similar form of transmission,
of the requested Borrowing. Each Lender shall make the amount of such Lender's
Pro Rata Share of the requested Borrowing available to the Agent in same day
funds, to such account of the Agent as the Agent may designate, not later than
2:00 p.m. (New York City time) on the Funding Date applicable thereto. After the
Agent's receipt of the proceeds of such Revolving Loans, upon satisfaction of
the applicable conditions precedent set forth in Section 11, the Agent shall
make the proceeds of such Revolving Loans available to the Borrower on the
applicable Funding Date by transferring same day funds equal to the proceeds of
such Revolving Loans received by the Agent to a general operating account of
Borrower, designated in writing by Borrower; provided, however, that the amount
of Revolving Loans so made on any date shall in no event exceed the Availability
of Borrower on such date.
(ii) Unless the Agent receives notice from a Lender on or prior to the
Closing Date or, with respect to any Borrowing after the Closing Date, at least
one Business Day prior to the date of such Borrowing, that such Lender will not
make available as and when required hereunder to the Agent for the account of
the Borrower the amount of that Lender's Pro Rata Share of the Borrowing, the
Agent may assume that each Lender has made such amount available to the Agent in
immediately available funds on the Funding Date and the Agent may (but shall not
be so required), in reliance upon such assumption, make available to Borrower on
such date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to the Agent in immediately available funds and
the Agent in such circumstances has made available to Borrower such amount, that
Lender shall on the Business Day following such Funding Date make such amount
available to the Agent, together with interest at the Federal Funds Rate for
each day during such period. A notice of the Agent submitted to any Lender with
respect to amounts owing under this subsection shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the Agent
shall constitute such Lender's Loan on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to the Agent on the
Business Day following the Funding Date, the Agent will notify the Borrower of
such failure to fund and, upon demand by the Agent, Borrower shall pay such
amount to the Agent for the Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to
the Interest Rate applicable at the time to the Loans comprising such Borrowing.
The failure of any Lender to make any Loan on any Funding Date (any such Lender,
prior to the cure of such failure, being hereinafter referred to as a
"Defaulting Lender") shall not relieve any other Lender of any obligation
hereunder to make a Loan on such Funding Date, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on any Funding Date.
(iii) The Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrower to the Agent for the Defaulting Lender's
benefit; nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid
to or retained by the Agent. The Agent may hold and, in its discretion, re-lend
to Borrower the amount of all such payments received or retained by the Agent
for the account of such Defaulting Lender. Any amounts so re-lent to Borrower
shall for all purposes of this Agreement be treated as if they were Revolving
Loans, provided, however, that, for purposes of voting or consenting to matters
with respect to the Loan Documents and determining Pro Rata Shares, such
Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero (-0-). Until a Defaulting Lender cures its
failure to fund its Pro Rata Share of any Borrowing (1) such Defaulting Lender
shall not be entitled to any portion of the Unused Line Fee and (2) the Unused
Line Fee shall accrue in favor of the Lenders which have funded their respective
Pro Rata Shares of such requested Borrowing, shall be allocated among such
performing Lenders ratably based upon their relative Commitments, and shall be
calculated based upon the average amount by which the aggregate Commitments of
such performing Lenders exceeds the sum of outstanding Revolving Loans and the
undrawn face amount of all outstanding Letters of Credit. This section shall
remain effective with respect to such Lender until such time as the Defaulting
Lender shall no longer be in default of any of its obligations under this
Agreement. The terms of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender or to relieve or excuse the
performance by the Borrower of its duties and obligations hereunder.
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(h) Making of BA Loans. (i) In the event the Agent shall elect, with
the consent of BA, to have the terms of this Section 2.2(h) apply to a requested
Borrowing as described in Section 2.2(f), BA shall make a Revolving Loan in the
amount of such Borrowing (any such Revolving Loan made solely by BA pursuant to
this Section 2.2(h) being referred to as a "BA Loan" and such Revolving Loans
being referred to collectively as "BA Loans") available to Borrower on the
Funding Date applicable thereto by transferring same day funds to a general
operating account of Borrower, designated in writing by Borrower. Each BA Loan
is a Revolving Loan hereunder and shall be subject to all the terms and
conditions applicable to other Revolving Loans except that all payments thereon
shall be payable to BA solely for its own account (and for the account of the
holder of any participation interest with respect to such Revolving Loan). The
Agent shall not request BA to make any BA Loan if (i) the Agent shall have
received written notice from any Lender, or otherwise has actual knowledge, that
one or more of the applicable conditions precedent set forth in Section 11 will
not be satisfied on the requested Funding Date for the applicable Borrowing, or
(ii) the requested Borrowing would exceed the Availability of Borrower on such
Funding Date. BA shall not otherwise be required to determine whether the
applicable conditions precedent set forth in Section 11 have been satisfied or
the requested Borrowing would exceed the Availability of the Borrower on the
Funding Date applicable thereto prior to making, in its sole discretion, any BA
Loan. The Agent agrees that on any date that BA Loans exceed $5,000,000, the
Agent shall request Settlement of all outstanding BA Loans on the Business Day
following such date.
(ii) The BA Loans shall be secured by the Collateral, shall constitute
Revolving Loans and Obligations hereunder, and shall bear interest at the rate
applicable to the Revolving Loans from time to time.
(i) Agent Advances. (i) Subject to the limitations set forth in the
provisos contained in this Section 2.2(i), the Agent is hereby authorized by
Borrower and the Lenders, from time to time in the Agent's sole discretion, (1)
after the occurrence of an Event or an Event of Default, or (2) at any time that
any of the other applicable conditions precedent set forth in Section 11 have
not been satisfied, to make Revolving Loans to Borrower on behalf of the Lenders
which the Agent, in its reasonable business judgment, deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion thereof, (B)
to enhance the likelihood of, or maximize the amount of, repayment of the Loans
and other Obligations, or (C) to pay any other amount chargeable to Borrower
pursuant to the terms of this Agreement, including, without limitation, costs,
fees and expenses as described in Section 17.10 (any of the advances described
in this Section 2.2(i) being hereinafter referred to as "Agent Advances");
provided, that the Majority Lenders may at any time revoke the Agent's
authorization contained in this Section 2.2(i) to make Agent Advances, any such
revocation to be in writing and to become effective prospectively upon the
Agent's receipt thereof, and provided, further, that at no time shall the Agent
make an Agent Advance in an amount that would result in Availability at such
time being exceeded.
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(ii) The Agent Advances shall be secured by the Collateral, shall
constitute Revolving Loans and Obligations hereunder, and shall bear interest at
the rate applicable to the Revolving Loans from time to time. The Agent shall
notify each Lender in writing of each such Agent Advance.
(j) Settlement. It is agreed that each Lender's funded portion of the
Revolving Loan is intended by the Lenders to be equal at all times to such
Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding such
agreement, the Agent, BA, and the other Lenders agree (which agreement shall not
be for the benefit of or enforceable by Borrower) that in order to facilitate
the administration of this Agreement and the other Loan Documents, settlement
among them as to the Revolving Loans, the BA Loans and the Agent Advances shall
take place on a periodic basis in accordance with the following provisions:
(i) The Agent shall request settlement ("Settlement") with the Lenders
on a weekly basis, or on a more frequent basis if so determined by the Agent,
(1) on behalf of BA, with respect to each outstanding BA Loan, (2) for itself,
with respect to each Agent Advance, and (3) with respect to collections
received, in each case, by notifying the Lenders of such requested Settlement by
telecopy, telephone or other similar form of transmission, of such requested
Settlement, no later than 1:00 p.m. (New York City time) on the date of such
requested Settlement (the "Settlement Date"). Each Lender (other than BA, in the
case of BA Loans) shall make the amount of such Lender's Pro Rata Share of the
outstanding principal amount of the BA Loans and Agent Advances with respect to
which Settlement is requested available to the Agent, for itself or for the
account of BA, in same day funds, to such account of the Agent as the Agent may
designate, not later than 4:00 p.m. (New York City time), on the Settlement Date
applicable thereto, regardless of whether the applicable conditions precedent
set forth in Section 11 have then been satisfied. Such amounts made available to
the Agent shall be applied against the amounts of the applicable BA Loan or
Agent Advance and, together with the portion of such BA Loan or Agent Advance
representing BA's Pro Rata Share thereof, shall constitute Revolving Loans of
such Lenders. If any such amount is not made available to the Agent by any
Lender on the Settlement Date applicable thereto, the Agent shall be entitled to
recover such amount on demand from such Lender together with interest thereon at
the Federal Funds Rate for the first three days from and after the Settlement
Date and thereafter at the Interest Rate then applicable to the Revolving Loans.
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(ii) Notwithstanding the foregoing, not more than one Business Day
after demand is made by the Agent (whether before or after the occurrence of an
Event or an Event of Default and regardless of whether the Agent has requested a
Settlement with respect to a BA Loan or Agent Advance), each other Lender shall
irrevocably and unconditionally purchase and receive from BA or the Agent, as
applicable, without recourse or warranty, an undivided interest and
participation in such BA Loan or Agent Advance to the extent of such Lender's
Pro Rata Share thereof by paying to the Agent, in same day funds, an amount
equal to such Lender's Pro Rata Share of such BA Loan or Agent Advance. If such
amount is not in fact made available to the Agent by any Lender, the Agent shall
be entitled to recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Rate for the first three (3) days from and
after such demand and thereafter at the Interest Rate then applicable to the
Revolving Loans.
(iii) From and after the date, if any, on which any Lender purchases an
undivided interest and participation in any BA Loan or Agent Advance pursuant to
subsection (ii) above, the Agent shall promptly distribute to such Lender at
such address as such Lender may request in writing, such Lender's Pro Rata Share
of all payments of principal and interest and all proceeds of Collateral
received by the Agent in respect of such BA Loan or Agent Advance.
(iv) Between Settlement Dates, the Agent, to the extent no Agent
Advances or BA Loans are outstanding, may pay over to BA any payments received
by the Agent, which in accordance with the terms of this Agreement would be
applied to the reduction of the Revolving Loans, for application to BA's other
outstanding Revolving Loans. If, as of any Settlement Date, collections received
since the then immediately preceding Settlement Date have been applied to BA's
other outstanding Revolving Loans other than to BA Loans or Agent Advances, as
provided for in the previous sentence, BA shall pay to the Agent for the
accounts of the Lenders, to be applied to the outstanding Revolving Loans of
such Lenders, an amount such that each Lender shall, upon receipt of such
amount, have, as of such Settlement Date, its Pro Rata Share of the Revolving
Loans. During the period between Settlement Dates, BA with respect to BA Loans,
the Agent with respect to Agent Advances, and each Lender with respect to the
Revolving Loans other than BA Loans and Agent Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement on the
actual average daily amount of funds employed by BA, the Agent and the other
Lenders.
(k) Notation. The Agent shall record on its books the principal amount
of the Revolving Loans owing to each Lender, including the BA Loans owing to BA,
and the Agent Advances owing to the Agent, from time to time. In addition, each
Lender is authorized, at such Lender's option, to note the date and amount of
each payment or prepayment of principal of such Lender's Revolving Loans in its
books and records, including computer records, such books and records
constituting rebuttably presumptive evidence, absent manifest error, of the
accuracy of the information contained therein.
(l) Lenders' Failure to Perform. All Loans (other than BA Loans and
Agent Advances) shall be made by the Lenders simultaneously and in accordance
with their Pro Rata Shares. It is understood that (a) no Lender shall be
responsible for any failure by any other Lender to perform its obligation to
make any Loans hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its
obligation to make any Loans hereunder, (b) no failure by any Lender to perform
its obligation to make any Loans hereunder shall excuse any other Lender from
its obligation to make any Loans hereunder, and (c) the obligations of each
Lender hereunder shall be several, not joint and several.
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2.3 Letters of Credit. (a) Subject to the terms and conditions of this
Agreement, the Agent on behalf of the Lenders shall, upon Borrower's request
from time to time, cause merchandise or standby letters of credit to be issued
for Borrower's account by Bank of America or another issuer reasonably
acceptable to Borrower and the Agent (the "Letters of Credit"). The Agent will
not cause to be issued any Letter of Credit if: (i) the maximum face amount of
the requested Letter of Credit, plus the aggregate undrawn face amount of all
outstanding Letters of Credit would exceed $2,000,000; (ii) the maximum face
amount of the requested Letter of Credit, and all commissions, fees, and charges
due from Borrower to Lenders in connection with the opening thereof, would cause
the Availability to be exceeded at such time; or (iii) the expiration date of
the Letter of Credit would exceed the Stated Termination Date or any renewal
term or be greater than (A) 12 months from the date of issuance if such Letter
of Credit is a standby Letter of Credit or (B) 180 days from the date of
issuance if such Letter of Credit is a merchandise Letter of Credit. All
payments made and expenses incurred by the Agent and/or Lenders pursuant to or
in connection with the Letters of Credit will be charged to Borrower's loan
account as Reference Rate Loans.
(b) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Section 11, the
obligation of the Agent to cause to be issued any Letter of Credit is subject to
the following conditions precedent having been satisfied in a manner
satisfactory to the Agent:
(1) The Borrower shall have delivered to the proposed issuer of
such Letter of Credit, at such times and in such manner as such proposed issuer
may prescribe, an application in form and substance satisfactory to such
proposed issuer and the Agent for the issuance of the Letter of Credit and such
other documents as may be required pursuant to the terms thereof, and the form
and terms of the proposed Letter of Credit shall be satisfactory to the Agent
and such proposed issuer; and
(2) As of the date of issuance, no order of any court,
arbitrator or Public Authority shall purport by its terms to enjoin or restrain
money center banks generally from issuing letters of credit of the type and in
the amount of the proposed Letter of Credit, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Public Authority with jurisdiction over
money center banks generally shall prohibit, or request that the proposed issuer
of such Letter of Credit refrain from, the issuance of letters of credit
generally or the issuance of such Letters of Credit.
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(c) Issuance of Letters of Credit.
(1) Request for Issuance. The Borrower shall give the Agent two
Business Days' prior written notice of Borrower's request for the issuance of a
Letter of Credit. Such notice shall be irrevocable and shall specify the
original face amount of the Letter of Credit requested, the effective date
(which date shall be a Business Day) of issuance of such requested Letter of
Credit, whether such Letter of Credit may be drawn in a single or in partial
draws, the date on which such requested Letter of Credit is to expire (which
date shall be a Business Day), the purpose for which such Letter of Credit is to
be issued, and the beneficiary of the requested Letter of Credit. Borrower shall
attach to such notice the proposed form of the Letter of Credit that the Agent
is requested to cause to be issued.
(2) No Extensions or Amendment. The Agent shall not be
obligated to cause any Letter of Credit to be extended or amended unless the
requirements of this Section 2.3 are met as though a new Letter of Credit were
being requested and issued.
(3) Notice of Issuance. On each Settlement Date the Agent shall
give notice to each Lender of the issuance of all Letters of Credit issued since
the last Settlement Date.
(d) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations. The Borrower
agrees to reimburse the issuer, in the manner set forth in Section 2.3(d)(2),
for any draw under any Letter of Credit and, without duplication, the Agent for
the account of the Lenders upon any payment pursuant to any credit support
immediately upon demand, and to pay the issuer of the Letter of Credit,
respectively, the amount of all other obligations and other amounts payable to
such issuer under or in connection with any Letter of Credit immediately when
due, irrespective of any claim, setoff, defense or other right which the
Borrower may have at any time against such issuer or any other Person.
(2) Reference Rate Loans to Satisfy Reimbursement Obligations.
In the event that the issuer of any Letter of Credit honors a draw under such
Letter of Credit, the Agent shall, upon receiving notice of such draw, notify
each Lender of such draw, and each Lender shall unconditionally pay to the
Agent, for the account of such issuer or the Agent, as applicable, as and when
provided hereinbelow, an amount equal to such Lender's Pro Rata Share of the
amount of such draw in same day funds. If the Agent so notifies the Lenders
prior to 1:00 p.m. (New York City time) on any Business Day, each Lender shall
make available to the Agent the relevant amount, as provided in the immediately
preceding sentence, on such Business Day. Such amounts paid by the Lenders to
the Agent shall constitute Revolving Loans which shall be deemed to have been
requested by the Borrower pursuant to Section 2.2.
(e) Participations.
(1) Purchase of Participations. Immediately upon issuance of
any Letter of Credit in accordance with Section 2.3(c), each Lender shall be
deemed to have irrevocably and unconditionally purchased and received without
recourse or warranty to the Agent or issuer, an undivided interest and
participation in the Letter of Credit provided through the Agent to such issuer
in connection with the issuance of such Letter of Credit, equal to such Lender's
Pro Rata Share of the face amount of such Letter of Credit (including, without
limitation, all obligations of the Borrower with respect thereto, and any
security therefor or guaranty pertaining thereto).
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(2) Sharing of Reimbursement Obligation Payments. Whenever the
Agent receives a payment from Borrower on account of reimbursement obligations
in respect of a Letter of Credit as to which the Agent has previously received
for the account of the issuer thereof payment from a Lender pursuant to Section
2.3(d)(2), the Agent shall promptly pay to such Lender such Lender's Pro Rata
Share of such payment from Borrower in Dollars. Each such payment shall be made
by the Agent on the Business Day on which the Agent receives immediately
available funds paid to such Person pursuant to the immediately preceding
sentence, if received prior to 4:00 p.m. (New York City time) on such Business
Day and otherwise on the next succeeding Business Day.
(3) Documentation. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit, reimbursement
agreements executed in connection therewith, application for any Letter of
Credit and credit support or enhancement provided through the Agent in
connection with the issuance of any Letter of Credit, and such other
documentation as may reasonably be requested by such Lender.
(4) Obligations Irrevocable. The obligations of each Lender to
make payments to the Agent with respect to any Letter of Credit or with respect
to any credit support provided through the Agent with respect to a Letter of
Credit, and the obligations of the Borrower to make payments to the Agent, for
the account of the Lenders, shall be irrevocable, not subject to any
qualification or exception whatsoever, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), any Lender, the Agent, the issuer of such Letter
of Credit, or any other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between the Borrower or any
other Person and the beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents; or
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(v) the occurrence of any Event or Event of Default.
(f) Recovery or Avoidance of Payment. In the event any payment by
or on behalf of Borrower received by the Agent with respect to any Letter of
Credit (or any guaranty by Borrower or reimbursement obligation of Borrower
relating thereto) and distributed by the Agent to the Lenders on account of
their respective participations therein is thereafter set aside, avoided or
recovered from the Agent in connection with any receivership, liquidation or
bankruptcy proceeding, the Lenders shall, upon demand by the Agent, pay to the
Agent their respective Pro Rata Shares of such amount set aside, avoided or
recovered, together with interest at the rate required to be paid by the Agent
upon the amount required to be repaid by it.
(g) Compensation for Letters of Credit.
(1) Letter of Credit Fee. The Borrower agrees to pay to the
Agent for the account of the Lenders, with respect to each Letter of Credit, the
Letter of Credit Fee specified in, and in accordance with the terms of, Section
3.7.
(2) Issuer Fees and Charges. The Borrower shall pay to the
issuer of any Letter of Credit, or to the Agent for the account of the issuer of
any such Letter of Credit, solely for such issuer's account, such fees and other
charges as are charged by such issuer for letters of credit issued by such
issuer, including, without limitation, its standard fees for issuing,
administering, amending, renewing, paying and canceling letters of credit and
all other fees associated with issuing or servicing letters of credit, as and
when assessed.
(h) Indemnification; Exoneration; Power of Attorney.
(1) Indemnification. In addition to amounts payable as
elsewhere provided in this Section 2.3, the Borrower hereby agrees to protect,
indemnify, pay and save the Lenders and the Agent harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including, without limitation, reasonable attorneys' fees) which any
Lender or the Agent may incur or be subject to as a consequence, direct or
indirect, of the issuance of any Letter of Credit or the provision of any credit
support or enhancement in connection therewith. The agreement in this Section
2.3(h)(1) shall survive payments of all Obligations.
(2) Assumption of Risk by the Borrower. As among the Borrower,
the Lenders, and the Agent, the Borrower assumes all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit other than risks arising from the gross
negligence or willful misconduct of the Lenders or the Agent. In furtherance and
not in limitation of the foregoing, the Lenders and the Agent shall not be
responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any Person in connection with the
application for and issuance of and presentation of drafts with respect to any
of the Letters of Credit, even if it should prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) the failure of the beneficiary of any Letter of
Credit to comply duly with conditions required in order to draw upon such Letter
of Credit; (D) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit or of the proceeds thereof;
(G) the misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing under such Letter of Credit; or (H) any consequences
arising from causes beyond the control of the Lenders or the Agent, including,
without limitation, any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto Public Authority. None of the foregoing
shall affect, impair or prevent the vesting of any rights or powers of the Agent
or any Lender under this Section 2.3.
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(3) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, no action taken or
omitted by the Agent or any Lender under or in connection with any of the
Letters of Credit or any related certificates, if taken or omitted in the
absence of gross negligence or willful misconduct, shall put the Agent or any
Lender under any resulting liability to the Borrower or relieve the Borrower of
any of their obligations hereunder to any such Person.
(4) Power of Attorney. In connection with all Inventory
financed by Letters of Credit, Borrower hereby appoints the Agent, or the
Agent's designee, as Borrower's attorney, with full power and authority: (a) to
sign and/or endorse Borrower's name upon any warehouse or other receipts; (b) to
sign Borrower's name on bills of lading and other negotiable and non-negotiable
documents; (c) to clear Inventory through customs in the Agent's or Borrower's
name, and to sign and deliver to customs officials powers of attorney in
Borrower's name for such purpose; (d) to complete in Borrower's or the Agent's
name, any order, sale, or transaction, obtain the necessary documents in
connection therewith and collect the proceeds thereof; and (e) to do such other
acts and things as are necessary in order to enable the Agent to obtain
possession of the Inventory and to obtain payment of the Obligations. Neither
the Agent nor its designee, as Borrower's attorney, shall be liable for any acts
or omissions, nor for any error of judgment or mistakes of fact or law. This
power, being coupled with an interest, is irrevocable until all Obligations have
been paid and satisfied.
(5) Account Party. Borrower hereby authorizes and directs any
issuer of a Letter of Credit to name Borrower as the "account party" therein, to
deliver to the Agent all instruments, documents and other writings and property
received by the issuer pursuant to the Letter of Credit, and to accept and rely
upon the Agent's instructions and agreements with respect to all matters arising
in connection with the Letter of Credit or the application therefor.
(6) Control of Inventory. In connection with all Inventory
financed by Letters of Credit, Borrower shall, at the Agent's request, instruct
all suppliers, carriers, forwarders, warehouses or others receiving or holding
cash, checks, Inventory, documents or instruments in which the Agent holds a
security interest to deliver them to the Agent and/or subject to the Agent's
order and, if they shall come into Borrower's possession, Borrower shall deliver
them, upon request, to the Agent in their original form. Borrower shall also, at
the Agent's request, designate the Agent as the consignee on all bills of lading
and other negotiable and non-negotiable documents.
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(i) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of this Section 2.3 and Section 14, any Letter of
Credit is outstanding upon the termination of this Agreement, then upon such
termination the Borrower shall deposit with the Agent, for the ratable benefit
of the Agent and the Lenders, with respect to each Letter of Credit then
outstanding, a standby letter of credit (a "Supporting Letter of Credit") in
form and substance satisfactory to the Agent, issued by an issuer satisfactory
to the Agent in an amount equal to the greatest amount for which such Letter of
Credit may be drawn plus any fees and expenses associated with such Letter of
Credit, under which Supporting Letter of Credit the Agent is entitled to draw
amounts necessary to reimburse the Agent and the Lenders for payments to be made
by the Agent and the Lenders under such Letter of Credit and any fees and
expenses associated with such Letter of Credit. Such Supporting Letter of Credit
shall be held by the Agent, for the ratable benefit of the Agent and the
Lenders, as security for, and to provide for the payment of, the aggregate
undrawn amount of such Letters of Credit remaining outstanding.
2.4 Bank Products. The Borrower may request and the Agent may, in its
sole and absolute discretion, arrange for the Borrower to obtain from Bank of
America or its Affiliates, Bank Products although the Borrower is not required
to do so. If Bank Products are provided by an Affiliate of Bank of America, the
Borrower agrees to indemnify and hold the Agent, Bank of America and the Lenders
harmless from any and all costs and obligations now or hereafter incurred by the
Agent, Bank of America or any of the Lenders which arise from any indemnity
given by the Agent to its Affiliates related to such Bank Products; provided,
however, nothing contained herein is intended to limit the Borrower's rights,
with respect to Bank of America or its Affiliates, if any, which arise as a
result of the execution of documents by and between the Borrower and Bank of
America which relate to Bank Products. The agreement contained in this Section
shall survive termination of this Agreement. The Borrower acknowledges and
agrees that the obtaining of Bank Products from Bank of America or its
Affiliates (a) is in the sole and absolute discretion of Bank of America or its
Affiliates, and (b) is subject to all rules and regulations of Bank of America
or its Affiliates.
3. INTEREST AND OTHER CHARGES.
3.1 Interest.
(a) All outstanding Obligations shall bear interest on the unpaid
principal amount thereof (including, to the extent permitted by law, on interest
thereon not paid when due) from the date made until paid in full in cash at a
rate determined by reference to the Reference Rate or the LIBOR Rate and Section
3.1 (a)(i) or Section 3.1(a)(ii), as applicable, but not to exceed the Maximum
Rate referred to in Section 3.3. Subject to the provisions of Section 3.2, any
of the Loans may be converted into, or continued as, Reference Rate Loans or
LIBOR Rate Loans in the manner provided in Section 3.2. If at any time Loans are
outstanding with respect to which notice has not been delivered to the Agent in
accordance with the terms of this Agreement specifying the basis for determining
the interest rate applicable thereto, then those Loans shall be Reference Rate
Loans and shall bear interest at a rate determined by reference to the Reference
Rate until notice to the contrary has been given to the Agent and such notice
has become effective. Except as otherwise provided herein, the Obligations shall
bear interest as follows:
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(i) For all Reference Rate Loans and other Obligations (other
than LIBOR Rate Loans), at a fluctuating per annum rate equal to the Reference
Rate plus the Applicable Margin; and
(ii) For all LIBOR Rate Loans, at a per annum rate for each
Interest Period therefor equal to the LIBOR Rate for such Interest Period plus
the Applicable Margin.
Each change in the Reference Rate shall be reflected in the interest
rate described in (i) above as of the effective date of such change. All
interest charges shall be computed on the basis of a year of 360 days and actual
days elapsed. All interest shall be payable to the Agent for the ratable account
of the Lenders on the first day of each month hereafter.
(b) If any Event or Event of Default occurs, then, from the date
such Event or Event of Default occurs until it is cured, or, if not cured, until
all Obligations are paid and performed in full, the Borrower shall pay interest
on the unpaid principal balances of the Revolving Loans at a per annum rate 3%
greater than the rate of interest otherwise specified herein, and the Letter of
Credit Fee shall be increased to four percent (4.00%) per annum.
(c) Unused Line Fee. For every month during the term of this
Agreement, the Borrower agrees to pay the Agent for the ratable account of the
Lenders a fee (the "Unused Line Fee") in an amount equal to one-half of one
percent per annum, multiplied by the average daily amount by which the Total
Facility exceeds the sum of (i) the average daily outstanding amount of
Revolving Loans and (ii) the undrawn face amount of all outstanding Letters of
Credit during such month, with the unpaid balance calculated for this purpose by
applying payments immediately upon receipt. Such a fee, if any, shall be
calculated on the basis of a year of 360 days and actual days elapsed and shall
be payable to the Agent on the first day of each month with respect to the prior
month.
3.2 Conversion and Continuation Elections.
(a) Borrower may, upon irrevocable written notice to the Agent in
accordance with Subsection 3.2(b):
(i) elect, as of any Business Day, in the case of Reference
Rate Loans to convert any such Loans (or any part thereof) into LIBOR Rate
Loans; or
(ii) elect, as of the last day of any Interest Period
applicable thereto, to continue to maintain as LIBOR Rate Loans any LIBOR Rate
Loans to Borrower having Interest Periods expiring on such day;
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provided that Borrower may not make such election if any LIBOR Rate Loans
resulting from such election would be in an amount less than $3,000,000 or an
integral multiple of $1,000,000 in excess thereof; provided further that, if at
any time the aggregate amount of LIBOR Rate Loans in respect of any Borrowing is
reduced, by payment, prepayment, or conversion of part thereof to be less than
$1,000,000, such LIBOR Rate Loans shall automatically convert into Reference
Rate Loans, and on and after such date the right of Borrower to continue such
Loans as, and convert such Loans into, LIBOR Rate Loans, as the case may be,
shall terminate.
(b) Borrower shall deliver a notice ("Notice of
Conversion/Continuation") to be received by the Agent not later than 11:00 a.m.
(New York City time) at least three Business Days in advance of the date of
conversion or continuation (the "Conversion/Continuation Date") if the Loans are
to be converted into or continued as LIBOR Rate Loans, and specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or continued;
(C) the type of Loans resulting from the proposed conversion or
continuation; and
(D) the duration of the requested Interest Period.
(c) If, upon the expiration of any Interest Period applicable to
LIBOR Rate Loans, the Borrower has failed to select, in a timely manner, a new
Interest Period to be applicable to such LIBOR Rate Loans or if any Event or
Event of Default then exists, the Borrower shall be deemed to have elected to
convert such LIBOR Rate Loans into Reference Rate Loans effective as of the
expiration date of such Interest Period.
(d) During the existence of an Event or Event of Default, Borrower
may not elect to have a Loan converted into or continued as a LIBOR Rate Loan.
(e) After giving effect to any conversion or continuation of Loans,
there may not be more than five different Interest Periods in effect.
(f) The Agent will promptly notify each Lender of its receipt of a
Notice of Conversion/Continuation. All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Lender.
3.3 Maximum Interest Rate. In no event shall any interest rate provided
for hereunder exceed the maximum rate permissible for corporate borrowers under
applicable law for loans of the type provided for hereunder (the "Maximum
Rate"). If, in any month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month shall be the
Maximum Rate, and, if in future months, that interest rate would otherwise be
less than the Maximum Rate, then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals the amount
of interest that would have been paid if the same had not been limited by the
Maximum Rate. In the event that, upon payment in full of the Obligations under
this Agreement, the total amount of interest paid or accrued by Borrower under
the terms of this Agreement is less than the total amount of interest which
would, but for this Section 3.3, have been paid or accrued if the interest rates
otherwise set forth in this Agreement had at all times been in effect, then the
Borrower shall, to the extent permitted by applicable law, pay the Agent for the
account of the Lenders, an amount equal to the difference between (a) the lesser
of (i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect or (ii) the amount of interest which would
have accrued had the interest rates otherwise set forth in this Agreement, at
all times, been in effect and (b) the amount of interest actually paid or
accrued under this Agreement. In the event that a court determines that the
Agent and/or any Lender has received from Borrower interest and other charges
hereunder in excess of the Maximum Rate, such excess shall be deemed received on
account of, and shall automatically be applied to reduce, the Obligations of
Borrower other than interest, in the inverse order of maturity, and, if there
are no Obligations outstanding, the Agent and/or such Lender shall refund to
Borrower such excess.
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3.4 Closing Fee. The Borrower agrees, to pay to the Agent, for the
account of the Lenders, a closing fee in the amount of $500,000 (the "Closing
Fee") (which Closing Fee shall be fully earned as of the date hereof and payable
on December 15, 2001; provided, that, (i) the Closing Fee shall be reduced to
$300,000 if on or before the Effective Date the Borrower pays or makes
arrangements satisfactory to Agent to pay, the Agent's Professional Fees and
Expenses incurred during the Bankruptcy Case and in connection with this
facility, which shall for fees and expenses incurred through July 31, 2001 not
exceed $709,000 (of which the parties have agreed that (a) $428,000 shall be
added to the loan balance and (b) $281,000 shall be paid no later than December
31, 2001); and (ii) the entire amount of such Closing Fee shall become
immediately due and payable, without notice or demand, at Agent's option, upon
the occurrence of an Event or Event of Default or upon the termination of this
Agreement prior to the payment of such Closing Fee.
3.5 Collateral Management Fee. Borrower agrees to pay to Agent solely
for its account, a collateral management fee in an amount equal to $50,000 per
annum, which shall be fully earned as of the date hereof and payable in equal
monthly installments during each 12 month period while this Agreement remains in
effect and for so long thereafter as any of the Obligations are outstanding,
provided, that, the entire amount of such fee shall become immediately due and
payable, without notice or demand, at Agent's option, upon the occurrence of and
Event or Event of Default or upon the termination of this Agreement. The first
such installment shall be payable on the date agreed to between the Agent and
the Borrower, but in no event later than November 30, 2001 and thereafter each
such installment shall be payable on the first day of each month.
3.6 [Intentionally Left Blank].
3.7 Letter of Credit Fee. The Borrower agrees, to pay to the Agent, for
the ratable account of the Lenders, a fee (the "Letter of Credit Fee") equal to
three percent (3.00%) per annum of the undrawn face amount of each Letter of
Credit issued for Borrower's account at Borrower's request, plus all
out-of-pocket costs, fees and expenses incurred by the Agent in connection with
the application for, issuance of, or amendment to any Letter of Credit, which
costs, fees and expenses could include a "fronting fee" required to be paid by
the Agent to such issuer for the assumption of the settlement risk in connection
with the issuance of such Letter of Credit. The Letter of Credit Fee shall be
payable monthly in arrears on the first day of each month following any month in
which a Letter of Credit was issued and/or in which a Letter of Credit remains
outstanding. The Letter of Credit Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed.
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4. PAYMENTS AND PREPAYMENTS.
4.1 Revolving Loans. The Borrower shall repay the outstanding principal
balance of the Revolving Loans, plus all accrued but unpaid interest thereon,
upon the termination of this Agreement for any reason. In addition, and without
limiting the generality of the foregoing, the Borrower shall pay to the Agent,
for account of the Lenders, on demand, the amount by which the unpaid principal
balance of the Revolving Loans, the aggregate undrawn amounts of all outstanding
Letters of Credit and the amount of all unpaid reimbursement obligations with
respect to the Letters of Credit at any time exceeds the Availability at such
time (determined for this purpose as if the amount of the Revolving Loans were
zero).
4.2 [Intentionally Left Blank].
4.3 Mandatory Prepayments. Upon the date of sale of the Seabrook
Premises, Borrower shall prepay the outstanding Loans in an amount equal to all
of the net proceeds from such sale. "Net Proceeds" means all proceeds from the
sale less the reasonable closing expenses in connection with such sale.
4.4 [Intentionally Omitted].
4.5 Place and Form of Payments; Extension of Time. (a) All payments by
the Borrower of principal, interest, premium, and other sums due to the Agent
and/or Lenders shall be made at the Agent's address set forth in Section 17.11.
Except for Proceeds received directly by the Agent, all such payments shall be
made in immediately available funds. Subject to the provisions set forth in the
definition of "Interest Period", if any payment by the Borrower of principal,
interest, premium, or other sum to be made hereunder becomes due and payable on
a day other than a Business Day, the due date of such payment shall be extended
to the next succeeding Business Day and interest thereon shall be payable at the
applicable interest rate during such extension.
(b) Unless the Agent receives notice from Borrower prior to the
date on which any payment is due to the Lenders that Borrower will not make such
payment in full as and when required, the Agent may assume that Borrower has
made such payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower has not made such
payment in full to the Agent, each Lender shall repay to the Agent on demand
such amount distributed to such Lender, together with interest thereon at the
Federal Funds Rate for each day from the date such amount is distributed to such
Lender until the date repaid.
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4.6 Payments as Revolving Loans. All payments of principal, interest,
reimbursement obligations in connection with Letters of Credit, fees, premiums
and other sums payable hereunder, including, without limitation, all
reimbursement for expenses pursuant to Section 17.10, may, at the option of the
Agent, in its sole discretion, subject only to the terms of this Section 4.6, be
paid from the proceeds of Revolving Loans made hereunder, whether made following
a request by Borrower pursuant to Section 2.2 or a deemed request as provided in
this Section 4.6. The Borrower hereby irrevocably authorizes the Agent to charge
the Loan Account for the purpose of paying principal, interest, reimbursement
obligations in connection with Letters of Credit, fees, premiums and other sums
payable hereunder, including, without limitation, reimbursing expenses pursuant
to Section 17.10, and agrees that all such amounts charged shall constitute
Revolving Loans (including, without limitation, BA Loans and Agent Advances),
that all such Revolving Loans so made shall be deemed to have been requested by
the Borrower pursuant to Section 2.2, and that the Agent may charge the Loan
Account for such reimbursable obligations immediately upon their becoming due,
regardless of whether the Agent has received the payments from the Lenders
required by Section 2.3(d)(2).
4.7 Apportionment, Application and Reversal of Payments. Aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Loans to which such payments
relate held by each Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the Lenders. All payments shall be remitted to the
Agent and all such payments not relating to principal or interest of specific
Loans, or not constituting payment of specific fees, and all proceeds of
Accounts or other Collateral received by the Agent, shall be applied, ratably,
subject to the provisions of this Agreement, first, to pay any fees, indemnities
or expense reimbursements then due to the Agent from the Borrower; second, to
pay any fees or expense reimbursements then due to the Lenders from the
Borrower; third, to pay interest due in respect of all Revolving Loans,
including BA Loans and Agent Advances; fourth, to pay or prepay principal of the
BA Loans and Agent Advances; fifth, to pay or prepay principal of the Revolving
Loans (other than BA Loans and Agent Advances) and unpaid reimbursement
obligations in respect of Letters of Credit; and sixth, to the payment of any
other Obligation including any amount relating to Bank Products due to the Agent
or any Lender by the Borrower. Notwithstanding anything to the contrary
contained in this Agreement, unless so directed by the Borrower, or unless an
Event of Default is outstanding, neither the Agent nor any Lender shall apply
any payments which it receives to any LIBOR Revolving Loan except (a) on the
expiration date of the Interest Period applicable to any such LIBOR Rate Loan,
or (b) in the event, and only to the extent, that there are no outstanding
Reference Rate Revolving Loans and Borrower has not given a Notice of Borrowing
with respect to such payments or requested that such payments be held by or on
behalf of Lenders in a cash collateral account on terms and conditions
acceptable to the Agent. The Agent shall promptly distribute to each Lender,
pursuant to the applicable wire transfer instructions received from each Lender
in writing, such funds as it may be entitled to receive, subject to a Settlement
delay as provided for in Section 2.2(j). The Agent and the Lenders shall have
the continuing and exclusive right to apply and reverse and reapply any and all
such proceeds and payments to any portion of the Obligations.
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4.8 INDEMNITY FOR RETURNED PAYMENTS. IF, AFTER RECEIPT OF ANY PAYMENT
WHICH IS APPLIED TO THE PAYMENT OF ALL OR ANY PART OF THE OBLIGATIONS, THE AGENT
OR ANY LENDER IS FOR ANY REASON COMPELLED TO SURRENDER SUCH PAYMENT TO ANY
PERSON BECAUSE SUCH PAYMENT IS INVALIDATED, DECLARED FRAUDULENT, SET ASIDE,
DETERMINED TO BE VOID OR VOIDABLE AS A PREFERENCE, AN IMPERMISSIBLE SETOFF, OR A
DIVERSION OF TRUST FUNDS, OR FOR ANY OTHER REASON, THEN: THE OBLIGATIONS OR PART
THEREOF INTENDED TO BE SATISFIED SHALL BE REVIVED AND CONTINUE, THIS AGREEMENT
SHALL CONTINUE IN FULL FORCE AS IF SUCH PAYMENT HAD NOT BEEN RECEIVED BY THE
AGENT OR ANY LENDER, AND THE BORROWER SHALL BE LIABLE TO PAY TO THE AGENT OR ANY
LENDER AND HEREBY DO JOINTLY AND SEVERALLY INDEMNIFY THE AGENT AND THE LENDERS
AND HOLD THE AGENT AND THE LENDERS HARMLESS FOR THE AMOUNT OF SUCH PAYMENT
SURRENDERED. The provisions of this Section 4.8 shall be and remain effective
notwithstanding any contrary action which may have been taken by the Agent or
any Lender in reliance upon such payment, and any such contrary action so taken
shall be without prejudice to the Agent's and the Lenders' rights under this
Agreement and shall be deemed to have been conditioned upon such payment having
become final and irrevocable. The provisions of this Section 4.8 shall survive
the termination of this Agreement.
5. AGENT'S AND LENDER'S BOOKS AND RECORDS; MONTHLY STATEMENTS..
Borrower agrees that the Agent's and each Lender's books and records
showing the Obligations and the transactions pursuant to this Agreement and the
other Loan Documents shall be admissible in any action or proceeding arising
therefrom and shall constitute prima facie proof thereof, irrespective of
whether any Obligation is also evidenced by a promissory note or other
instrument. The Agent shall provide to Woodworkers a monthly statement of Loans,
payments, and other transactions pursuant to this Agreement. Such statement
shall be deemed correct, accurate, and binding on the Borrower and as an account
stated (except for reversals and reapplications of payments made as provided in
Section 4.7 and corrections of errors discovered by the Agent), unless
Woodworkers notifies the Agent in writing to the contrary within 30 days after
such statement is rendered. In the event a timely written notice of objections
is given by Woodworkers, only the items to which exception is expressly made
will be considered to be disputed.
6. TAXES, YIELD PROTECTION AND ILLEGALITY.
6.1 Taxes.
(a) Any and all payments by Borrower to each Lender or the Agent
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for, any Taxes. In addition, the
Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each Lender
and the Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by Lenders or the Agent and any liability
(including, without limitation, penalties, interest, additions to tax, and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date any Lender or the
Agent makes written demand therefor.
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(c) If Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including, without
limitation, deductions and withholdings applicable to additional sums payable
under this Section) such Lender or the Agent receives an amount equal to the sum
it would have received had no such deductions or withholdings been made;
(ii) Borrower shall make such deductions and withholdings;
(iii) Borrower shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) Borrower shall also pay to each Lender or the Agent for
the account of such Lender, at the time interest is paid, all additional amounts
which the respective Lender specifies as being necessary to preserve the
after-tax yield Lenders would have received if such Taxes or Other Taxes had not
been imposed.
(d) Within 30 days after the date of any payment by Borrower of
Taxes or Other Taxes, Borrower shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(e) If Borrower is required to pay additional amounts to any Lender
or the Agent pursuant to subsection (c) of this Section, then such Lender shall
use reasonable efforts (consistent with legal and regulatory restrictions),
including reasonable efforts to change the jurisdiction of its lending office,
so as to eliminate any such additional payment by Borrower which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
(f) Except as the Borrower shall otherwise consent, each Lender
hereby severally (but not jointly) represents that under applicable law and
treaties in effect on the date of this Agreement no United States federal taxes
will be required to be withheld by the Agent or the Borrower with respect to any
payments to be made to such Lender in respect of this Agreement. Each Lender
which is a Lender on the date of this Agreement hereby severally (not jointly)
represents that it is incorporated under the laws of the United States of
America or a State thereof and is lending from an office that is incorporated
under the laws of the United States of America or a State hereof.
- 44 -
(g) Unless the Borrower shall otherwise consent, if, pursuant to
Section 15.3 any interest in this Agreement or any Loan or Letter of Credit
transferred to any Assignee or Participant (a "Transferee") which is organized
under the laws of any jurisdiction other than the United States or any State
thereof or which is lending from an office which is incorporated under the laws
of any jurisdiction other than the United States of America or any State
thereof, the transferor Lender shall cause such Transferee, concurrently with
the effectiveness of such transfer, (i) to represent to the transferor Lender
(for the benefit of the transferor Lender, the Agent and the Borrower) that
under applicable law and treaties at the time in effect no Taxes will be
required to be withheld by the Agent, the Borrower or the transferor Lender with
respect to any payments to be made to such Transferee in respect of the Loans
and other amounts owing under this Agreement, (ii) to furnish to the transferor
Lender, the Agent and the Borrower either U.S. Internal Revenue Service Form
4224 or U.S. Internal Revenue Service Form 1001, or any successor applicable
form, as the case may be (wherein such Transferee claims entitlement to complete
exemption from U.S. federal withholding tax on all interest payments hereunder),
(iii) to agree (for the benefit of the transferor Lender, the Agent and the
Borrower) to provide the transferor Lender, the Agent and the Borrower a new
Form 4224 or Form 1001 upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such Transferee,
and to comply from time to time with all applicable U.S. laws and regulations
with regard to such withholding tax exemption and (iv) to agree (for the benefit
of the transferor Lender, the Agent and the Borrower) to be bound by the
provisions of Section 6.1 as if such Transferee were a Lender hereunder.
6.2 Illegality. (a) If any Lender determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Public Authority has asserted that
it is unlawful, for such Lender or its applicable lending office to make LIBOR
Rate Loans, then, on notice thereof by Lender to the Borrower through the Agent,
any obligation of that Lender to make LIBOR Rate Loans shall be suspended until
the Lender notifies the Agent and Borrower that the circumstances giving rise to
such determination no longer exists.
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Borrower shall, upon their receipt of notice of such fact
and demand from the Lender (with a copy to the Agent), prepay in full such LIBOR
Rate Loans then outstanding, together with interest accrued thereon and amounts
required under Section 6.4, either on the last day of the Interest Period
thereof, if the Lender may lawfully continue to maintain such LIBOR Rate Loans
to such day, or immediately, if the Lender may not lawfully continue to maintain
such LIBOR Rate Loan. If Borrower is required so to prepay any LIBOR Rate Loan,
then, concurrently with such prepayment, Borrower shall borrow from the affected
Lender, in the amount of such repayment, a Reference Rate Loan.
(c) Notwithstanding any other provision herein, if the introduction
of any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law has made it unlawful
for a Lender or its applicable lending office to make LIBOR Rate Loans, such
Lender agrees to use reasonable efforts (including reasonable efforts to change
the office in which it is booking the Loan) to avoid such prohibition; provided,
however, that such efforts shall not cause the imposition on such Lender of any
additional costs or legal regulatory burdens deemed by such Lender to be
material or otherwise deemed by such Lender to be disadvantageous to it or
contrary to its policies.
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6.3 Increased Costs and Reduction of Return. (a) If any Lender
determines that, due to either (i) the introduction of or any change in the
interpretation of any law or regulation or (ii) the compliance by that Lender
with any guideline or request from any central bank or other Public Authority
(whether or not having the force of law), there shall be any increase in the
cost to such Lender of agreeing to make or making, funding or maintaining any
LIBOR Rate Loans, then the Borrower shall be liable for, and shall from time to
time, upon demand (with a copy to the Agent), pay to the Agent for the account
of such Lender, such additional amounts as are sufficient to compensate the
Lender for such increased costs.
(b) If any Lender shall have determined that (i) the introduction
of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Public Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Lender or any corporation controlling the Lender with any Capital Adequacy
Regulation, affects or would affect the amount of capital, reserves, or special
deposits required or expected to be maintained by the Lender or any corporation
controlling the Lender and (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy and such Lender's
desired return on capital) determines that the amount of such capital, reserves,
or special deposits is increased as a consequence of its loans, credits or
obligations under this Agreement, then, upon demand of such Lender to the
Borrower through the Agent, the Borrower shall pay to the Lender, from time to
time as specified by the Lender, additional amounts sufficient to compensate the
Lender for such increase. Notwithstanding the foregoing, all such amounts shall
be subject to the provisions of Section 3.3.
6.4 Funding Losses. Borrower shall reimburse each Lender and hold each
Lender harmless from any loss or expense which the Lender may sustain or incur
as a consequence of:
(a) the failure of Borrower to make on a timely basis any payment
of principal of any LIBOR Rate Loan;
(b) the failure of Borrower to borrow, continue or convert a Loan
after Borrower has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Conversion/Continuation;
(c) the prepayment or other payment (including, without limitation,
after acceleration thereof) by Borrower of any LIBOR Rate Loan on a day that is
not the last day of the relevant Interest Period;
- 46 -
including, without limitation, any such loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain its LIBOR Rate
Loans or from fees payable to terminate the deposits from which such funds were
obtained.
6.5 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Rate Loan, or
that the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, the Agent will promptly so notify the Borrower and each
Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate
Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, the Borrower may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by Borrower. If
Borrower does not revoke such Notice, the Lenders shall make, convert or
continue the Loans, as proposed by Borrower, in the amount specified in the
applicable notice submitted by Borrower, but such Loans shall be made, converted
or continued as Reference Rate Loans instead of LIBOR Rate Loans.
6.6 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Section 6 shall deliver to the Borrower (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to such Lender hereunder.
6.7 Survival. The agreements and obligations of the Borrower in this
Section 6 shall survive the payment of all other Obligations.
7. COLLATERAL.
7.1 Grant of Security Interest.
(a) As security for the Obligations, Borrower hereby grants to the
Agent for the ratable benefit of the Agent and the Lenders, a continuing
security interest in, lien on, assignment of and right of set-off against, all
of the following property of Borrower, whether now owned or existing or
hereafter acquired or arising, regardless of where located: (i) all Receivables,
Inventory, Equipment, all contract rights, including Assigned Contracts,
Documents, Proprietary Rights, all General Intangibles (including payment
intangibles and software), Goods and Proceeds and other property and assets
described in the Security Agreement, wherever located and whether now existing
or hereafter arising or acquired, Chattel Paper, Instruments, Investment
Property; (ii) all moneys, securities and other property and the Proceeds
thereof, now or hereafter held or received by, or in transit to, the Agent or
any Lender from or for Borrower, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, including, without limitation, all of
Borrower's deposit accounts, credits, and balances with Agent or any Lender and
all claims of Borrower against the Agent or any Lender at any time existing;
(iii) all of Borrower's deposit accounts with any financial institutions with
which Borrower maintains deposits; and (iv) all books, records and other
Property relating to or referring to any of the foregoing, including, without
limitation, all books, records, ledger cards, data processing records, computer
software and other property and general intangibles at any time evidencing or
relating to the Receivables, Inventory, Equipment, Assigned Contracts,
Documents, Proprietary Rights, General Intangibles, Goods and Proceeds, and
other property referred to above (all of the foregoing, together with the real
estate covered by the Mortgages and all other property in which the Agent or any
Lender may at any time be granted a Lien, being herein collectively referred to
as the "Collateral"). The Agent and the Lenders shall have all of the rights of
a secured party with respect to the Collateral under the UCC and other
applicable laws.
- 47 -
(b) As additional security for the Obligations, the Borrower shall
simultaneously herewith execute and deliver to the Agent an amendment to the
Mortgage of the Seabrook Premises given to Bank of America, N.A. by Trend-Lines,
Inc., reflecting the change of the mortgagor from Trend-Lines, Inc. to
Woodworkers Warehouse, Inc. and Trend-Lines, Inc.'s re-incorporation as a
Delaware corporation and otherwise satisfactory to the Agent.
(c) As additional security for the Obligations, Borrower, under the
Plan of Reorganization and the Confirmation Order, hereby grants to Agent, for
the ratable benefit of the Agent and the Lenders, first priority perfected liens
and security interests in and to all leases with respect to which the Borrower
is a tenant and all leasehold interests of the Borrower and all proceeds thereof
(the "Leased Premises"); provided, however, with respect to the River Plaza
Lease, Agent's security interest is limited to the Borrower's interest in the
proceeds of such lease in the event of a future sale or assignment. Borrower
will take such actions as may be reasonably requested by Agent from time to time
with respect to such liens and security interests. The liens and security
interests granted pursuant to the Plan of Reorganization and Confirmation Order
are automatically deemed perfected upon entry of the Confirmation Order without
the necessity of the Agent taking possession, filing financing statements,
mortgages, leasehold mortgages, or other documents. No person, as defined in
Section 101(41) of the Federal Bankruptcy Code, will be permitted to secure a
lien or security interest which is equal to or senior to the liens and security
interests of Agent. Any title, landlord's lien, right of distraint or levy,
security interest or other interest that any landlord or mortgagee may have in
any personalty of the Borrower located on such Leased Premises, to the extent
that same is not void or voidable under Section 545 of the Federal Bankruptcy
Code, is hereby expressly subordinated to the lien of Agent in such personalty.
(d) All Obligations shall be secured by all of the Collateral. The
Borrower agrees that the Agent and the Lenders may, in their sole discretion,
(i) exchange, waive, or release any of the Collateral, (ii) apply Collateral and
direct the order or manner of sale thereof as the Agent and the Lenders may
determine, and (iii) settle, compromise, collect, or otherwise liquidate any
Collateral in any manner, all without affecting the Obligations or the Agent and
the Lenders' right to take any other action with respect to any other Collateral
(e) Pursuant to the Plan of Reorganization and the Confirmation
Order, the Agent shall retain its continuing, replacement and additional liens
and security interests in the property of Trend-Lines, Inc. and the Borrower. In
addition, the continuing, replacement and additional liens and security
interests of Agent are, pursuant to the Plan of Reorganization and Confirmation
Order, automatically deemed perfected on the Effective Date without the
necessity of the Agent taking possession, filing financing statements,
mortgages, leasehold mortgages or other documents.
- 48 -
7.2 Perfection and Protection of Security Interest. Borrower shall, at
its expense, perform all steps requested by the Agent at any time to perfect,
maintain, protect, and enforce the Security Interest, including, without
limitation: (a) executing and recording of the Mortgages and the Trademark
Security Agreement and executing and filing financing or continuation
statements, and amendments thereof, in form and substance satisfactory to the
Agent; (b) delivering to the Agent upon request the original certificates of
title for motor vehicles with the Security Interest properly endorsed thereon;
(c) delivering to the Agent the originals of all instruments, documents, and
chattel paper, and all other Collateral of which the Agent determines it should
have physical possession in order to perfect and protect the Security Interest
therein, duly endorsed or assigned to the Agent without restriction; (d)
delivering to the Agent upon request warehouse receipts covering any portion of
the Collateral located in warehouses and for which negotiable warehouse receipts
are issued; (e) placing notations on Borrower's books of account to disclose the
Security Interest; (f) executing and delivering to the Agent upon request a
security agreement relating to the Reversions in form and substance satisfactory
to the Agent; (g) delivering to the Agent upon request all letters of credit on
which Borrower is named beneficiary; and (h) taking such other steps as are
deemed necessary or desirable by the Agent to maintain and protect the Security
Interest. The Agent may file, without Borrower's signature, one or more
financing statements disclosing the Security Interest. The Borrower agrees that
a carbon, photographic, photostatic, or other reproduction of this Agreement or
of a financing statement is sufficient as a financing statement. If any
Collateral is at any time in the possession or control of any warehouseman, any
bailee or any of Borrower's agents or processors, then the Borrower shall notify
the Agent thereof and shall notify such Person of the Security Interest in such
Collateral and, upon the Agent's request, instruct such Person to hold all such
Collateral for the Agent's account subject to the Agent's instructions. If at
any time any Collateral is located on any Premises that are not owned by
Borrower, then the Borrower shall obtain written waivers, in form and substance
satisfactory to the Agent, of all present and future Liens to which the owner or
lessor or any mortgagee of such Premises may be entitled to assert against the
Collateral. From time to time, the Borrower shall, upon the Agent's request,
execute and deliver confirmatory written instruments pledging to the Agent for
the ratable benefit of the Agent and the Lenders the Collateral, but Borrower's
failure to do so shall not affect or limit the Security Interest or the Agent's
other rights in and to the Collateral. So long as this Agreement is in effect
and until all Obligations have been fully satisfied, the Security Interest shall
continue in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Availability or as the basis for any
advance, loan, extension of credit, or other financial accommodation).
7.3 Location of Collateral. Borrower represents and warrants to the
Agent that: (a) Schedule 7.3 hereto is a correct and complete list of Borrower's
chief executive office, the location of its books and records, the locations of
the Collateral, and the locations of all of its other places of business and (b)
Schedule 7.3 correctly identifies any of such facilities and locations that are
not owned by Borrower and sets forth the names of the owners and lessors or
sub-lessors of, and, to the best of Borrower's knowledge, the holders of any
mortgages on, such facilities and locations. Borrower covenants and agrees that
it will not maintain any Collateral at any location other than (a) those listed
on Schedule 7.3 and (b) those with respect to which Borrower has given notice to
the Agent, has executed any and all financing statements, has obtained landlord
waivers in favor of the Agent (in accordance with Section 11.1(o)), and in form
and substance satisfactory to the Agent and other documents that the Agent has
required in connection therewith, and has filed same in the appropriate places
and within the time periods indicated by the Agent. Within 30 days after the end
of each month, the Borrower shall give the Agent written notice of the opening
of any new store, the closing of any store, and any other event that resulted in
a change of location of any Collateral, during the previous month.
- 49 -
7.4 Title to, Liens on, and Sale and Use of Collateral. Borrower
represents and warrants to the Agent and the Lenders with respect to Collateral
owned by Borrower that: (a) all Collateral is and will continue to be owned by
Borrower free and clear of all Liens whatsoever, except for the Security
Interest and other Permitted Liens; (b) the Security Interest will not be
subject to any prior Lien except for the Liens described in (b), (c), (e), (f),
(h), (i) and (j) of the definition of Permitted Liens; (c) Borrower will use,
store, and maintain such Collateral with all reasonable care and will use such
Collateral for lawful purposes only; and (d) Borrower will not, without the
Agent's prior written approval, sell, lease, or dispose of or permit the sale or
disposition of such Collateral or any portion thereof, except for sales of
Inventory in the ordinary course of business and as permitted by Section 7.12.
The inclusion of Proceeds in the Collateral shall not be deemed the Agent's
consent to any sale or other disposition of the Collateral except as expressly
permitted herein.
7.5 Appraisals. Whenever an Event or Event of Default exists, and at
such other times as the Agent requests (but not more often than quarterly),
Borrower shall, at its expense and upon the Agent's request, provide the Lender
with appraisals or updates thereof of any or all of the Collateral owned by
Borrower from an appraiser acceptable to Agent.
7.6 Access and Examination. (a) The Agent, accompanied by any Lender
which so elects, may at all reasonable times have access to, examine, audit,
make extracts from or copies of and inspect Borrower's records, files, and books
of account and the Collateral and may discuss Borrower's affairs with Borrower's
officers and management. Borrower shall deliver to the Agent any instrument
necessary for the Agent to obtain records from any service bureau maintaining
records for Borrower. The Agent may, at any time when an Event of Default exists
and at Borrower's expense, make copies of all of the Borrower's books and
records, or require the Borrower to deliver such copies to the Agent. The Agent
may, without expense to the Agent, use such of Borrower's personnel, supplies,
and Premises as may be reasonably necessary for maintaining or enforcing the
Security Interest. The Agent shall have the right, at any time, in the Agent's
name or in the name of a nominee of the Agent, to verify the validity, amount or
any other matter relating to the Accounts, by mail, telephone, or otherwise.
(b) Borrower agrees that, subject to Borrower's prior consent for
uses other than in a traditional tombstone, which consent shall not be
unreasonably withheld or delayed, the Agent and each Lender may use the
Borrower's name in advertising and promotional material and in conjunction
therewith disclose the general terms of this Agreement. The Agent and each
Lender agree to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Borrower and provided to the Agent or such Lender by or on
behalf of the Borrower, under this Agreement or any other Loan Document, and
neither the Agent nor such Lender nor any of their respective Affiliates shall
use any such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents, except to the extent that such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Agent or such Lender, or (ii) was or becomes
available on a nonconfidential basis from a source other than the Borrower,
provided that such source is not bound by a confidentiality agreement with the
Borrower known to the Agent or such Lender; provided, however, that the Agent
and any Lender may disclose such information (1) at the request or pursuant to
any requirement of any Governmental Authority to which the Agent or such Lender
is subject or in connection with an examination of the Agent or such Lender by
any such Governmental Authority; (2) pursuant to subpoena or other court
process; (3) when required to do so in accordance with the provisions of any
applicable requirement of law; (4) to the extent reasonably required in
connection with any litigation or proceeding (including any bankruptcy
proceeding) to which the Agent, any Lender or their respective Affiliates may be
a party; (5) to the extent reasonably required in connection with the exercise
of any remedy hereunder or under any other Loan Document; (6) to the Agent's or
such Lender's independent auditors, accountants, attorneys and other
professional advisors, provided that such auditors, accountants, attorneys and
other advisors agree to keep such information confidential to the same extent
required of the Agent and the Lenders hereunder; (7) to any Affiliate of the
Agent or such Lender, or to any prospective Participating Lender or assignee
under any Assignment and Acceptance, actual or potential, provided that such
Affiliate, prospective Participating Lender or assignee agrees to keep such
information confidential to the same extent required of the Agent and the
Lenders hereunder; and (8) as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower is a party
or is a deemed a party with the Agent or such Lender.
- 50 -
7.7 Insurance. The Borrower shall insure the Collateral against loss or
damage by fire with extended coverage, theft, burglary, pilferage, loss in
transit, and such other hazards as the Agent shall specify, in amounts, under
policies and by insurers acceptable to the Agent. The Borrower shall also
maintain flood insurance for real estate covered by the Mortgages and for any
Equipment and Inventory located on such real estate, in the event of a
designation of the area in which real estate is located as a "flood prone" or a
"flood risk area" (hereinafter "SFHA") as defined by the Flood Disaster
Protection Act of 1973, in an amount to be reasonably determined by the Agent,
and shall comply with the additional requirements of the National Flood
Insurance Program as set forth therein. Upon the Agent's request, the Borrower
shall also maintain flood insurance for such Inventory and Equipment as is
located at any time in an SFHA. The Borrower shall cause the Agent to be named
in each such policy as a secured party or mortgagee and loss payee or additional
insured, in a manner acceptable to the Agent. Each policy of insurance shall
contain a clause or endorsement requiring the insurer to give not less than 30
days' prior written notice to the Agent in the event of cancellation of the
policy for any reason whatsoever and a clause or endorsement stating that the
interest of the Agent shall not be impaired or invalidated by any act or neglect
of Borrower or the owner of any premises where Collateral is located nor by the
occupation of such premises for purposes more hazardous than are permitted by
such policy. The Borrower shall pay, upon the Agent's request, all fees incurred
by the Agent to determine whether any of the real estate and other Collateral is
located in an SFHA. The Borrower shall also pay all premiums for such insurance
when due and shall deliver to the Agent certificates of insurance and, if
requested, photocopies of the policies. If the Borrower fails to pay such fees
or to procure such insurance or the premiums therefor when due, the Agent may
(but shall not be required to) do so and charge the costs thereof to Borrower's
loan account as a Reference Rate Loan. The Borrower shall promptly notify the
Agent of any loss, damage, or destruction to the Collateral or arising from its
use, whether or not covered by insurance. The Agent is hereby authorized to
collect all insurance proceeds directly. After deducting from such proceeds the
expenses, if any, incurred by the Agent in the collection or handling thereof,
the Agent may apply such proceeds to the reduction of the Obligations in such
order as the Agent determines or at the Agent's option may permit or require the
Borrower to use such money, or any part thereof, to replace, repair, restore or
rebuild the Collateral in a diligent and expeditious manner with materials and
workmanship of substantially the same quality as existed before the loss, damage
or destruction.
- 51 -
7.8 Collateral Reporting. The Borrower shall provide the Agent with the
following documents at the following times in form satisfactory to the Agent:
(a) on Tuesday and Friday of each week, the aging summary of the Borrower's
Accounts as summarized on Borrower's daily business status report, together with
a reconciliation to the corresponding Borrowing Base and, on a monthly basis, a
detailed aging of the Borrower's Accounts with a reconciliation to the
Borrower's general ledger and the Borrower's daily business status report as of
the month end; (b) on a monthly basis by the 10th day of the following month, or
more frequently if requested by the Agent, an aging of the Borrower's accounts
payable; (c) on Tuesday and Friday of each week, a detailed calculation of
Eligible Accounts and Eligible Inventory (current as of the previous Business
day); (d) on Tuesday and Friday of each week, Inventory reports by location as
indicated on the Borrower's daily business status reports and, on a monthly
basis, Inventory reports by category, together with a reconciliation of
Inventory reported on the last Borrowing Base Certificate (the form of which is
attached as Exhibit C) and to the Borrower's general ledger; (e) upon request,
copies of invoices in connection with the Borrower's Accounts, customer
statements, credit memos, remittance advices and reports, deposit slips,
shipping and delivery documents in connection with the Borrower's Accounts and
for Inventory and Equipment acquired by the Borrower, purchase orders and
invoices; (f) upon request, a statement of the balance of each of the
Intercompany Accounts; (g) such other reports as to the Collateral of the
Borrower as the Agent shall reasonably request from time to time; and (h) with
the delivery of each of the foregoing, a certificate of the Borrower executed by
an officer thereof certifying as to the accuracy and completeness of the
foregoing. If any of the Borrower's records or reports of the Collateral are
prepared by an accounting service or other agent, the Borrower hereby authorizes
such service or agent to deliver such records, reports, and related documents to
the Agent, for distribution to the Lenders.
7.9 [Intentionally Left Blank].
7.10 Collection of Accounts; Payments.
(a) Until the Agent notifies the Borrower to the contrary, the
Borrower shall make collection of all Accounts and other Collateral for the
Agent, shall receive all payments as the Agent's trustee, and shall immediately
deliver all payments to the Agent in their original form duly endorsed in blank
or deposit them into a Payment Account established at the Agent's request, as
the Agent may direct. If the Agent requests, Borrower shall establish a lock-box
service for collections of Accounts at a bank mutually acceptable to the Agent
and the Borrower and pursuant to documentation satisfactory to the Agent. If
such lock-box service is established, Borrower shall instruct all Account
Debtors to make all payments directly to the address established for such
service. If, notwithstanding such instructions, Borrower receives any Proceeds
of Accounts, it shall receive such payments as the Agent's trustee and shall
immediately deliver such payments to the Agent in their original form duly
endorsed in blank or deposit them into a Payment Account, as the Agent may
direct. All collections received in any such lock box or Payment Account or
directly by Borrower or the Agent, and all funds in any Payment Account or other
account to which such collections are deposited, shall be the sole property of
the Agent and subject to the Agent's sole control. The Agent or the Agent's
designee may, at any time, notify obligors that the Accounts have been assigned
to the Agent and of the Security Interest therein, collect them directly, and
charge the collection costs and expenses to the Borrower's loan account as a
Revolving Loan. At the Agent's request, the Borrower shall execute and deliver
to the Agent such documents as the Agent shall require to grant the Agent access
to any post office box in which collections of Accounts are received.
- 52 -
(b) If sales of Inventory are made for cash, the Borrower shall
immediately deliver to the Agent or cause to be deposited into a Payment Account
the identical checks, cash, or other forms of payment which Borrower receives.
(c) All payments received by the Agent on account of Accounts or
as Proceeds of other Collateral shall be the Agent's sole property. Collected
funds received in the Agent's account by 1:00 p.m. (New York City time) on any
day shall be credited to the Borrower's loan account on such day.
(d) In the event the Borrower repays all of the Obligations upon
the termination of this Agreement or upon acceleration of the Obligations, other
than through the Agent's receipt of payments on account of Accounts or Proceeds
of other Collateral, such payment will be credited (conditional upon final
collection) to the Borrower's loan account one Business Day after the Agent's
receipt thereof.
7.11 Inventory. The Borrower represents and warrants to the Agent and
the Lenders and agrees with the Agent and Lenders that all of the Inventory is
and will be held for sale or lease, or to be furnished in connection with the
rendition of services in the ordinary course of the Borrower's respective
business, and is and will be fit for such purposes. The Borrower shall keep the
Inventory in good and marketable condition, at its own expense. The Borrower
shall not, without prior written consent of the Agent, acquire or accept any
Inventory on consignment or approval. The Borrower agrees that all Inventory
will be produced in accordance with the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations, and orders thereunder. Borrower
shall maintain a perpetual inventory reporting system at all times. Borrower
shall conduct a physical count of the Inventory at least once per Fiscal Year,
and at such other times as the Agent requests, and shall promptly supply the
Agent with a copy of such count accompanied by a report of the value of such
Inventory (valued at the lower of cost, on a first-in, first-out basis, or
market value). Borrower shall not, without the Agent's prior written consent,
sell any Inventory on a ▇▇▇▇-and-hold, guaranteed sale, sale on approval,
consignment, or other repurchase or return basis. In addition, the Borrower
represents and warrants that it shall not change its standard business practice
with respect to this Section 7.11 without the prior written consent of the
Agent.
- 53 -
7.12 Equipment. The Borrower represents and warrants to the Agent that
all of the Equipment is and will be used or held for use in the Borrower's
business and is and will be fit for such purposes. The Borrower shall keep and
maintain the Equipment in good operating condition and repair (ordinary wear and
tear excepted) and shall make all necessary replacements thereof. The Borrower
shall promptly inform the Agent of any material additions to or deletions from
the Equipment. Borrower shall not permit any Equipment to become a fixture to
real property or an accession to other personal property, unless the Agent has a
valid, perfected, and first priority Security Interest in such real or personal
property. The Borrower shall not, without the Agent's prior written consent,
alter or remove any identifying symbol or number on the Equipment. The Borrower
shall not, without the Agent's prior written consent, sell, lease as a lessor,
or otherwise dispose of any of the Equipment, other than in the ordinary course
of business. Nothing herein, however, shall preclude the Borrower from selling
obsolete, worn-out or surplus Equipment no longer necessary or useful in the
ordinary course of business as conducted by Borrower or its Subsidiaries. No
later than the 10th day of each month (in conjunction with the collateral
reporting under Section 7.8), the Borrower shall provide notice to the Agent as
to any Equipment that was sold, leased as a lessor or otherwise disposed of in
the preceding month. All proceeds from any sale of Equipment shall be applied to
pay down the Loan.
7.13 Assigned Contracts. Borrower shall fully perform all of its
obligations under each of the Assigned Contracts and shall enforce all of its
rights and remedies thereunder as it deems appropriate in its business judgment,
provided, however, that Borrower shall not take any action or fail to take any
action with respect to the Assigned Contracts that would result in a waiver or
other loss of any material right or remedy of Borrower thereunder. Without
limiting the generality of the foregoing, the Borrower shall take all action
necessary or appropriate to permit, and shall not take any action which would
have any adverse effect upon, the full enforcement of all indemnification rights
under the Assigned Contracts. Except in the ordinary course of business,
Borrower shall not, without the Agent's and the Majority Lenders' prior written
consent, modify, amend, supplement, compromise, satisfy, release, or discharge
any of the Assigned Contracts, any collateral securing the same, any Person
liable directly or indirectly with respect thereto, or any agreement relating to
any of the Assigned Contracts or the collateral therefor. Borrower shall notify
the Agent in writing, promptly after Borrower becomes aware thereof, of any
event or fact which could give rise to a claim by Borrower for indemnification
under any of the Assigned Contracts and shall diligently pursue such right and
report to the Agent on all further developments with respect thereto. Borrower
shall remit directly to the Agent, for application to the Obligations in such
order as the Majority Lenders shall determine, all amounts received by Borrower
as indemnification or otherwise pursuant to the Assigned Contracts. If Borrower
shall fail after the Agent's demand to pursue diligently any right under the
Assigned Contracts, or if an Event of Default exists, then the Agent may, and at
the direction of the Majority Lenders, shall directly enforce such right in its
own or Borrower's name and may enter into such settlements or other agreements
with respect thereto as the Agent or the Majority Lenders, as applicable, shall
determine. All amounts thereby recovered by the Agent or any Lender, after
deducting the Agent's or such Lender's costs and expenses in connection
therewith, shall be applied to the Obligations in such order as the Agent
determines. In any suit, proceeding or action brought by the Agent for the
benefit of the Lenders under any Assigned Contract for any sum owing thereunder
or to enforce any provision thereof, the Borrower shall indemnify and hold the
Agent and Lenders harmless from and against all expense, loss or damage suffered
by reason of any defense, setoff, counterclaim, recoupment, or reduction of
liability whatsoever of the obligor thereunder arising out of a breach by
Borrower of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing from Borrower to or in favor of such
obligor or its successors. All such obligations of Borrower shall be and remain
enforceable only against Borrower and shall not be enforceable against the Agent
or any Lender. Notwithstanding any provision hereof to the contrary, the
Borrower shall at all times remain liable to observe and perform all of its
respective duties and obligations under the Assigned Contracts and the Agent's
or any Lender's exercise of any of its rights with respect to the Collateral
shall not release Borrower from any of such duties and obligations. Neither the
Agent nor any Lender shall be obligated to perform or fulfill any of the
Borrower's duties or obligations under the Assigned Contracts or to make any
payment thereunder or to make any inquiry as to the nature or sufficiency of any
payment or Property received by it thereunder or the sufficiency of performance
by any party thereunder, or to present or file any claim, or to take any action
to collect or enforce any performance or payment of any amounts due.
- 54 -
7.14 Documents, Instruments, and Chattel Paper. The Borrower represents
and warrants to the Agent and the Lenders that: (a) all documents, instruments,
and chattel paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and
genuine; and (b) all goods evidenced by such documents, instruments, and chattel
paper are and will be owned by the Borrower free and clear of all Liens other
than Permitted Liens.
7.15 Right to Cure. The Agent may, in its sole discretion and at any
time, and shall, at the direction of the Majority Lenders, pay any amount or do
any act required of Borrower hereunder to preserve, protect, maintain or enforce
the Obligations, the Collateral or the Security Interest, and which Borrower
fails to pay or do, including, without limitation, payment of any judgment
against Borrower, any insurance premium, any warehouse charge, any finishing or
processing charge, any landlord's claim, and any other Lien upon or with respect
to the Collateral. All payments that the Agent makes under this Section 7.15 and
all out-of-pocket costs and expenses that the Agent pays or incurs in connection
with any action taken by it hereunder shall be charged to the Borrower's loan
account as a Reference Rate Loan. Any payment made or other action taken by the
Agent under this Section 7.15 shall be without prejudice to any right to assert
an Event of Default hereunder and to proceed thereafter as herein provided.
7.16 Power of Attorney. Borrower hereby appoints the Agent and the
Agent's designees as Borrower's attorney, with power: (a) to endorse Borrower's
name on any checks, notes, acceptances, money orders, or other forms of payment
or security that come into the Agent's or any Lender's possession; (b) to sign
Borrower's name on any invoice, ▇▇▇▇ of lading, or other document of title
relating to any Collateral, on drafts against customers, on assignments of
Accounts, on notices of assignment, financing statements and other public
records, on verifications of Accounts and on notices to Account Debtors; (c) to
notify the post office authorities, when an Event of Default exists, to change
the address for delivery of Borrower's mail to an address designated by the
Agent and to receive, open and dispose of all mail addressed to Borrower; (d) to
send requests for verification of Accounts to customers or Account Debtors; and
(e) to do all things necessary to carry out this Agreement. The Borrower
ratifies and approves all acts of such attorney. None of the Lenders or the
Agent nor their attorneys shall be liable for any acts or omissions or for any
error of judgment or mistake of fact or law. This power, being coupled with an
interest, is irrevocable until this Agreement has been terminated and the
Obligations have been fully satisfied.
- 55 -
7.17 The Agent's and Lender's Rights, Duties, and Liabilities. The
Borrower assumes all responsibility and liability arising from or relating to
the use, sale, or other disposition of the Collateral. Neither the Agent or any
Lender nor any of their officers, directors, employees, and agents shall be
liable or responsible in any way for the safekeeping of any of the Collateral,
for any act or failure to act with respect to the Collateral, for any loss or
damage thereto, for any diminution in the value thereof, or for any act of
default of any warehouseman, carrier, forwarding agency or other person
whomsoever, all of which shall be at the Borrower's sole risk. The Obligations
shall not be affected by any failure of the Agent or any Lender to take any
steps to perfect the Security Interest or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release Borrower from
any of the Obligations. The Agent may (but shall not be required to), without
notice to or consent from the Borrower, ▇▇▇ upon or otherwise collect, extend
the time for payment of, modify or amend the terms of, compromise or settle for
cash, credit, or otherwise upon any terms, grant other indulgences, extensions,
renewals, compositions, or releases, and take or omit to take any other action
with respect to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable directly or
indirectly in connection with any of the foregoing, without discharging or
otherwise affecting the liability of the Borrower for the Obligations or under
this Agreement or any other agreement now or hereafter existing between the
Agent and/or any Lender and the Borrower.
8. BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.
8.1 Books and Records. The Borrower shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are made of its transactions in accordance with GAAP consistent
with those applied in the preparation of the Financial Statements. The Borrower
shall, by means of appropriate entries, reflect in such accounts and in all
Financial Statements proper liabilities and reserves for all taxes and proper
provision for depreciation and amortization of Property and bad debts, all in
accordance with GAAP. The Borrower shall maintain at all times books and records
pertaining to the Collateral in such detail, form, and scope as the Agent or any
Lender shall reasonably require, including, but not limited to, records of: (a)
all payments received and all credits and extensions granted with respect to the
Accounts; (b) the return, rejection, repossession, stoppage in transit, loss,
damage, or destruction of any Inventory; and (c) all other dealings affecting
the Collateral.
8.2 Financial Information. The Borrower shall promptly furnish to the
Lender or its agents all such financial information as the Agent or any Lender
shall reasonably request. Without limiting the foregoing, Woodworkers and its
Subsidiaries shall furnish to the Agent, in sufficient copies for distribution
by the Agent to each Lender, in such detail as the Agent or the Lenders shall
request, the following:
- 56 -
(a) As soon as available, but in any event not later than 90 days
after the close of each Fiscal Year, consolidated and consolidating audited
balance sheets, and statements of income and expense, retained earnings, and
cash flows and stockholders equity for Woodworkers and its consolidated
Subsidiaries for such Fiscal Year, and the accompanying notes thereto, setting
forth in each case in comparative form figures for the previous Fiscal Year, all
in reasonable detail, fairly presenting the financial position and the results
of operations of Woodworkers and its consolidated Subsidiaries as at the date
thereof and for the Fiscal Year then ended, and prepared in accordance with
GAAP. Such statements shall be examined in accordance with generally accepted
auditing standards by and accompanied by a report thereon unqualified as to
scope by independent certified public accountants selected by Woodworkers and
reasonably satisfactory to the Agent.
(b) As soon as available, but in any event not later than 30 days
after the end of each month, consolidated and consolidating unaudited balance
sheets of Woodworkers and its consolidated Subsidiaries as at the end of such
month, and consolidated and consolidating unaudited statements of income and
expenses and cash flows for Woodworkers and its consolidated Subsidiaries for
such month and for the period from the beginning of the Fiscal Year to the end
of such month, all in reasonable detail, fairly presenting the financial
position and results of operation of Woodworkers and its consolidated
Subsidiaries as at the date thereof and for such periods, and prepared in
accordance with GAAP consistent with the audited Financial Statements required
pursuant to Section 8.2(a), along with a calculation of the Fixed Charges Ratio
for the Rolling Period as of such fiscal quarter end and a comparison of actual
results to the projected results previously delivered to Agent. Such statements
shall be certified to be correct by the chief financial or accounting officer of
Woodworkers, subject to normal year-end adjustments.
(c) With each of the audited Financial Statements delivered
pursuant to Section 8.2(a), a certificate of the independent certified public
accountants that examined such statements to the effect that they have reviewed
and are familiar with the Loan Documents and that, in examining such Financial
Statements, they did not become aware of any fact or condition which then
constituted an Event or Event of Default, except for those, if any, described in
reasonable detail in such certificate.
(d) With each of the annual audited and quarterly unaudited
Financial Statements delivered pursuant to Sections 8.2(a) and 8.2(b), a
certificate of the chief executive or chief financial officer of Woodworkers (i)
setting forth in reasonable detail the calculations required to establish that
Woodworkers was in compliance with its covenants set forth in Section 10.27
during the period covered in such Financial Statements, and (ii) stating that,
except as explained in reasonable detail in such certificate, (A) all of the
representations and warranties of the Borrower contained in this Agreement and
the other Loan Documents are correct and complete as at the date of such
certificate as if made at such time, (B) no Event or Event of Default then
exists or existed during the period covered by such Financial Statements and
(iii) describing and analyzing in reasonable detail all material trends, changes
and developments in such Financial Statements. If such certificate discloses
that a representation or warranty is not correct or complete, that a covenant
has not been complied with, or that an Event or Event of Default existed or
exists, such certificate shall set forth what action the Borrower has taken or
proposes to take with respect thereto.
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(e) No sooner than 90 days and no later than 30 days prior to the
beginning of each Fiscal Year, consolidated and consolidating projected balance
sheets, statements of income and expense, and statements of cash flow for
Woodworkers and its Subsidiaries as at the end of and for each month of such
Fiscal Year.
(f) Within 45 days after the end of each fiscal quarter, a report
of the Capital Expenditures of Woodworkers and its Subsidiaries for such quarter
and a statement of cash flow for Woodworkers and its Subsidiaries for the period
from the beginning of the then current Fiscal Year to the end of such quarter,
prepared in accordance with GAAP consistent with the audited Financial
Statements required pursuant to Section 8.2(a).
(g) Promptly after their preparation, copies of any and all proxy
statements, financial statements, and reports which Woodworkers makes available
to its stockholders.
(h) Promptly after filing with the PBGC, DOL, or IRS, a copy of
each annual report or other reasonably material filing or notice filed with
respect to each Plan of Woodworkers or any ERISA Affiliate and, within 10 days
(in conjunction with its reporting under Section 7.8) after the end of each
month, a list of all other filings and notices so filed.
(i) As promptly as practicable with respect to the period
commencing on and at all times after the Closing Date, Borrower shall promptly
furnish copies to the Agent of all motions, applications, pleadings, notices and
other documents filed by any party in interest with the Bankruptcy Court, all
orders, judgments, opinions, rulings and other notices entered by the Bankruptcy
Court, in connection with the Bankruptcy Case.
(j) On Tuesday and Friday of each week, the aging summary of the
Borrower's Accounts as summarized on Borrower's daily business status report,
together with a reconciliation to the corresponding Borrowing Base and, on a
monthly basis, a detailed aging of the Borrower's Accounts with a reconciliation
to the Borrower's general ledger and the Borrower's daily business status report
as of the month end;
(k) Such additional information as the Agent and/or any Lender may
from time to time reasonably request regarding the financial and business
affairs of Woodworkers or any Subsidiary, including, without limitation,
projections of future operations on both a consolidated and consolidating basis.
8.3 Notices to Lenders. The Borrower shall notify the Agent in writing
of the following matters at the following times:
(a) Promptly, but in no event later than three Business Days, after
becoming aware of the existence of any Event or Event of Default.
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(b) Promptly, but in no event later than three Business Days, after
becoming aware that the holder of any capital stock of Borrower or of any Debt
has given notice or taken any action with respect to a claimed default.
(c) Promptly, but in no event later than three Business Days, after
becoming aware of any material adverse change in Borrower's Property, business,
operations, or condition (financial or otherwise).
(d) Promptly, but in no event later than three Business Days, after
becoming aware of any pending or threatened action, suit, proceeding, or
counterclaim by any Person, or any pending or threatened investigation by a
Public Authority, which could be projected reasonably to result in the Borrower,
having to pay $250,000 or more.
(e) Promptly, but in no event later than three Business Days, after
becoming aware of any pending or threatened strike, work stoppage, material
unfair labor practice claim, or other material labor dispute affecting Borrower
or any of its Subsidiaries.
(f) Immediately upon becoming aware of any violation of any law,
statute, regulation, or ordinance of a Public Authority applicable to Borrower,
any Subsidiary, or their respective Properties which may materially and
adversely affect the Collateral, the repayment of the Obligations, the Agent or
any Lender's rights under the Loan Documents, or Borrower's Property, business,
operations, or condition (financial or otherwise).
(g) Promptly, but in no event later than three Business Days, after
becoming aware of any violation by Borrower of Environmental Laws or immediately
upon receipt of any notice that a Public Authority has asserted that Borrower is
not in compliance with Environmental Laws or that its compliance is being
investigated.
(h) Any change in the Borrower's name as it appears in the state of
its incorporation or other organization, state of incorporation or organization,
type of entity, organizational identification number, locations of Collateral,
or form of organization, trade names under which the Borrower will sell
Inventory or create Accounts, or to which instruments in payment of Accounts may
be made payable, in each case at least thirty (30) days prior thereto;
(i) Promptly, but in no event later than three Business Days, after
becoming aware of any ERISA Event, accompanied by any materials required to be
filed with the PBGC with respect thereto; immediately after Borrower's receipt
of any notice concerning the imposition of any withdrawal liability under
Section 4042 of ERISA with respect to a Plan; immediately upon the establishment
of any Pension Plan not existing at the Closing Date or the commencement of
contributions by Borrower to any Pension Plan to which Borrower was not
contributing at the Closing Date; and immediately upon becoming aware of any
other event or condition regarding a Plan or Borrower's or an ERISA Affiliate's
compliance with ERISA, which may materially and adversely affect Borrower's
Property, business, operations, or condition (financial or otherwise).
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Each notice given under this Section 8.3 shall describe the subject matter
thereof in reasonable detail and shall set forth the action that the Borrower
has taken or proposes to take with respect thereto.
9. GENERAL WARRANTIES AND REPRESENTATIONS.
The Borrower continuously warrants and represents to the Agent and the
Lenders, at all times during the term of this Agreement and until all
Obligations have been satisfied, that, except as hereafter disclosed to and
accepted by the Agent and the Majority Lenders in writing:
9.1 Authorization, Validity, and Enforceability of this Agreement and
the Loan Documents. Borrower has the corporate power and authority to execute,
deliver and perform this Agreement and the other Loan Documents, to incur the
Obligations, and to grant the Security Interest. Borrower has taken all
necessary corporate action (including, without limitation, obtaining approval of
its stockholders) to authorize its execution, delivery, and performance of this
Agreement and the other Loan Documents. No consent, approval, or authorization
of, or declaration or filing with, any Public Authority, and no consent of any
other Person, is required in connection with Borrower's execution, delivery, and
performance of this Agreement and the other Loan Documents, except for those
already duly obtained. This Agreement and the other Loan Documents have been
duly executed and delivered by Borrower and constitutes the legal, valid and
binding obligation of Borrower, enforceable against it in accordance with its
terms without defense, setoff, or counterclaim. Borrower's execution, delivery,
and performance of this Agreement and such other Loan Documents do not and will
not conflict with, or constitute a violation or breach of, or constitute a
default under, or result in the creation or imposition of any Lien upon the
Property of Borrower or any of its Subsidiaries (except as contemplated by this
Agreement and the other Loan Documents) by reason of the terms of (a) any
mortgage, lease, agreement, or instrument to which Borrower or any of its
Subsidiaries is a party or which is binding upon it, (b) any judgment, law,
statute, rule or governmental regulation applicable to Borrower or any of its
Subsidiaries, or (c) the corporate charter or By-Laws of Borrower or any of its
Subsidiaries.
9.2 Validity and Priority of Security Interest. The provisions of this
Agreement, the Mortgages, and the other Loan Documents create legal and valid
Liens on all the Collateral in favor of the Agent, for the ratable benefit of
the Agent and the Lenders, and, when the Mortgages have been recorded in the
places indicated in Schedule 9.2, such Liens will constitute perfected and
continuing Liens on all the Collateral, having priority over all other Liens on
the Collateral except for the Permitted Liens identified in Section 7.4,
securing the Obligations, and enforceable against Borrower and all third
parties.
9.3 Organization and Qualification. Borrower: (a) is duly incorporated
and organized and validly existing in good standing under the laws of Delaware;
(b) is qualified to do business as a foreign corporation and is in good standing
in each State in which qualification is necessary in order for it to own or
lease its Property and conduct its business; and (c) has all requisite power and
authority to conduct its business and to own its Property.
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9.4 Corporate Name; Prior Transactions. The Borrower has not during the
five years ending on the Closing Date been known by or used any other corporate
or fictitious name, or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
Property out of the ordinary course of business, except for the Merger and as
set forth on Schedule 9.4.
9.5 Subsidiaries and Affiliates. Schedule 9.5 is a correct and complete
list of the name and relationship to Woodworkers of each and all of Woodworkers'
Subsidiaries and other Affiliates. Each Subsidiary is (a) duly incorporated and
organized and validly existing in good standing under the laws of its state of
incorporation set forth on Schedule 9.5, and (b) qualified to do business as a
foreign corporation and in good standing in the states set forth opposite its
name on Schedule 9.5, which are the only states in which such qualification is
necessary in order for it to own or lease its Property and conduct its business.
Post Tool is a wholly-owned subsidiary of Woodworkers.
9.6 Financial Statements and Projections.
(a) Woodworkers has delivered to the Agent and the Lenders the
unaudited balance sheet and related statements of income, retained earnings,
cash flows, and changes in stockholders equity for Woodworkers as of February
24, 2001 and for the Fiscal Year then ended, accompanied by the report thereon
of Woodworkers' independent certified public accountants, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP.
Woodworkers has also delivered to the Agent and the Lenders the unaudited
balance sheet and related statements of income and cash flows for Woodworkers,
as at September 29, 2001 and for the 7 months then ended. Such financial
statements are attached hereto as Exhibit B-4. All such financial statements
have been prepared in accordance with GAAP and present accurately and fairly
Woodworkers' financial position as at the dates thereof and its results of
operations for the periods then ended.
(b) The Latest Projections represent Woodworkers' best estimate of
Woodworkers' future financial performance for the periods set forth therein. The
Latest Projections have been prepared on the basis of the assumptions set forth
therein, which Woodworkers believes are fair and reasonable in light of current
and reasonably foreseeable business conditions.
9.7 Capitalization. Borrower represents (based on Schedule 9.7) that
the only Persons who own beneficially (as such term is used under the securities
law of the United States) 10% or more of any class of stock or the voting power
of Borrower are Delta International Machinery Corp. and ▇▇▇▇▇▇-Cable Corporation
together with any of their affiliates.
9.8 Solvency. Borrower is Solvent prior to and after giving effect to
the making of each Revolving Loan and the issuance of Letters of Credit.
9.9 Debt. Borrower has no Debt, except (a) the Obligations (b) Debt set
forth in the most recent Financial Statements delivered to the Agent, or the
notes thereto, (c) trade payables and other contractual obligations arising in
the ordinary course of business since the date of such Financial Statements, and
(d) Debt incurred since the date of such Financial Statements to finance Capital
Expenditures permitted hereby.
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9.10 Distributions. Since September 7, 2001, no Distribution (other
than distributions pursuant to the Plan of Reorganization) has been declared,
paid, or made upon or in respect of any capital stock or other securities of
Trend-Lines, Inc. or Woodworkers.
9.11 Title to Property. Except for Property which Borrower leases,
Borrower has good and marketable title in fee simple (subject to Permitted
Liens) to the Premises indicated on Schedule 9.13 belonging to it and good,
indefeasible, and merchantable title to all of its other Property, including,
without limitation, the assets reflected on the most recent Financial Statements
delivered to the Agent and the Lenders, except as disposed of since the date
thereof in the ordinary course of business.
9.12 Adequate Assets. Borrower possesses adequate assets for the
conduct of its business.
9.13 Real Property; Leases. Schedule 9.13 is a correct and complete
list of all real property owned by Borrower, all leases and subleases of real or
personal property by Borrower as lessee or sublessee, and all leases and
subleases of real or personal property by Borrower as lessor or sublessor. Each
of such leases and subleases is valid and enforceable in accordance with its
terms and is in full force and effect, and no material default by any party to
any such lease or sublease exists.
9.14 Proprietary Rights. Schedule 9.14 is a correct and complete list
of Borrower's Proprietary Rights. None of the Proprietary Rights is subject to
any licensing agreement or similar arrangement except as set forth on Schedule
9.14. None of the Proprietary Rights infringes on or conflicts with any other
Person's Property, and no other Person's Property infringes on or conflicts with
the Proprietary Rights. The Proprietary Rights described on Schedule 9.14 as
belonging to Borrower constitute all of the Property of such type necessary to
the current and anticipated future conduct of Borrower's business.
9.15 Trade Names and Terms of Sale. All trade names or styles under
which Borrower will sell Inventory or create Accounts, or to which instruments
in payment of Accounts may be made payable, are listed on Schedule 9.15.
9.16 Litigation. Except as set forth on Schedule 9.16, there is no
pending or, to the best of Borrower's knowledge, threatened action, suit,
proceeding, or counterclaim by any Person, or investigation by any Public
Authority, or any basis for any of the foregoing, which may materially and
adversely affect the Collateral, the repayment of the Obligations, the Agent
and/or each Lender's rights under the Loan Documents, or Borrower's Property,
business, operations, or condition (financial or otherwise).
9.17 Restrictive Agreements. Borrower is not a party to any contract or
agreement, and is not subject to any charter or other corporate restriction,
which affects Borrower's ability to execute, deliver, and perform the Loan
Documents and repay the Obligations or which materially and adversely affects
Borrower's Property, business, operations, or condition (financial or
otherwise).
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9.18 Labor Disputes. Except as set forth on Schedule 9.18: (a) there is
no collective bargaining agreement or other labor contract covering employees of
Borrower or any of its Subsidiaries; (b) no such collective bargaining agreement
or other labor contract is scheduled to expire during the term of this
Agreement; (c) no union or other labor organization is seeking to organize, or
to be recognized as, a collective bargaining unit of employees of Borrower or
any of its Subsidiaries or for any similar purpose; and (d) there is no pending
or, to the best of Borrower's knowledge, threatened strike, work stoppage,
material unfair labor practice claim, or other material labor dispute against or
affecting Borrower or any of its Subsidiaries or their respective employees.
9.19 Environmental Laws.
(a) Borrower has complied in all material respects with all
Environmental Laws applicable to its Premises and business, and Borrower nor any
of its present Premises or operations, nor its past property or operations, is
not subject to any enforcement order from or liability agreement with any Public
Authority or private Person respecting (i) compliance with any Environmental Law
or (ii) any potential liabilities and costs or remedial action arising from the
Release or threatened Release of a Contaminant.
(b) Borrower has obtained all permits necessary for its current
operations under Environmental Laws, all such permits are in good standing, and
Borrower is in compliance in all material respects with all terms and conditions
of such permits.
(c) Borrower, nor, to the best of Borrower's knowledge, any of its
predecessors in interest has stored, treated or disposed of any hazardous waste
on any Premises, as defined pursuant to 40 CFR Part 261 or any equivalent
Environmental Law.
(d) Borrower has not received any summons, complaint, order or
similar written notice that it is not currently in compliance with, or that any
Public Authority is investigating its compliance with, any Environmental Laws or
that it is or may be liable to any other Person as a result of a Release or
threatened Release of a Contaminant.
(e) None of the present or past operations of Borrower is the
subject of any investigation by any Public Authority evaluating whether any
remedial action is needed to respond to a Release or threatened Release of a
Contaminant.
(f) There is not now, nor to the best of Borrower's knowledge has
there ever been, on or in the Premises:
(i) any underground storage tanks or surface impoundments,
(ii) any asbestos containing material, or
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(iii) any polychlorinated biphenyls (PCB's) used in hydraulic
oils, electrical transformers or other equipment.
(g) Borrower has not filed any notice under any requirement of
Environmental Law reporting a spill or accidental and unpermitted release or
discharge of a Contaminant into the environment.
(h) Borrower has not entered into any negotiations or settlement
agreements with any Person (including, without limitation, the prior owner of
its property) imposing material obligations or liabilities on Borrower with
respect to any remedial action in response to the Release of a Contaminant or
environmentally related claim.
(i) None of the products manufactured, distributed or sold by
Borrower contains asbestos material.
(j) No Environmental Lien has attached to any Premises of Borrower.
9.20 No Violation of Law. Borrower is not in violation of any law,
statute, regulation, ordinance, judgment, order, or decree applicable to it
which violation would in any respect materially and adversely affect the
Collateral, the repayment of the Obligations, the Agent and/or each Lender's
rights under the Loan Documents, or Borrower's Property, business, operations,
or condition (financial or otherwise).
9.21 No Default. Borrower is not in default with respect to any note,
indenture, loan agreement, mortgage, lease, deed, or other agreement to which
Borrower is a party or bound, which default could reasonably be expected to
materially and adversely affect the Collateral, the repayment of the
Obligations, the Agent and/or each Lender's rights under the Loan Documents, or
Borrower's Property, business, operations, or condition (financial or
otherwise).
9.22 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other applicable federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and, to the best
knowledge of Woodworkers, nothing has occurred which would cause the loss of
such qualification. Borrower and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the
Borrower, threatened claims, actions or lawsuits, or actions by any Public
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a material adverse effect on Borrower's business or
operations. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted or
could reasonably be expected to result in a material adverse effect on
Borrower's business or operations.
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(c) Except as set forth on Schedule 9.22(c), (i) No ERISA Event
has occurred or is reasonably expected to occur; (ii) no Pension Plan has any
unfunded pension liability; (iii) Borrower nor any ERISA Affiliate has not
incurred, or reasonably expects to incur, any liability under Title IV of ERISA
with respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (iv) Borrower nor any ERISA Affiliate has not
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or Section 4243 of ERISA with
respect to a Multiemployer Plan; and (v) Borrower nor any ERISA Affiliate has
not engaged in a transaction that could subject any Person to Section 4069 or
Section 4212(c) of ERISA.
9.23 Taxes. Borrower and its Subsidiaries have filed all tax returns
and other reports required to be filed and have paid all Taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets that are otherwise due and payable.
9.24 Use of Proceeds. None of the transactions contemplated in this
Agreement (including, without limitation, the use of proceeds from the Loans)
will violate or result in the violation of Section 7 of the Securities Exchange
Act of 1934, as amended, or any regulations issued pursuant thereto, including,
without limitation, Regulations G,T,U and X of the Board of Governors of the
Federal Reserve System, 12 CFR, Chapter II. Borrower neither owns or intends to
carry or purchase any "margin stock" within the meaning of said Regulation U or
G and none of the proceeds of the loans will be used, directly or indirectly, to
purchase or carry (or refinance any borrowing, the proceeds of which were used
to purchase or carry) any "security" within the meaning of the Securities
Exchange Act of 1934, as amended.
9.25 Private Offerings. Borrower has not, directly or indirectly,
offered the Loans for sale to, or solicited offers to buy part thereof from, or
otherwise approached or negotiated with respect thereto with any prospective
purchaser other than the Agent and the Lenders. Borrower hereby agrees that
neither it nor anyone acting on its behalf has offered or will offer the Loans
or any part thereof or any similar securities for issue or sale to or solicit
any offer to acquire any of the same from anyone so as to bring the issuance
thereof within the provisions of Section 5 of the Securities Act of 1933, as
amended.
9.26 Broker's Fees. No Person is entitled to any brokerage or finder's
fee with respect to the transactions described in this Agreement.
9.27 No Material Adverse Change. No material adverse change has
occurred in Borrower's Property, business, operations, or conditions (financial
or otherwise) since the date of the Financial Statements delivered to the Agent
and the Lenders.
9.28 Disclosure. Neither this Agreement nor any document or statement
furnished to the Agent by or on behalf of Borrower hereunder contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
- 65 -
9.29 Reorganization Matters. The Borrower has delivered to the Agent a
copy certified by an officer of Borrower of the order of the Bankruptcy Court
confirming the Plan of Reorganization together with the Plan of Reorganization,
and such Plan of Reorganization and the order of confirmation entered pursuant
thereto have not been amended or modified prior to the Closing Date and no
conditions contained therein have been waived by Borrower without prior notice
to the Agent and such order has become a Final Order. The Plan of Reorganization
has become effective pursuant to Article X thereof.
10. AFFIRMATIVE AND NEGATIVE COVENANTS.
The Borrower covenants that, so long as any of the Obligations remains
outstanding or this Agreement is in effect:
10.1 Taxes and Other Obligations. Woodworkers and each of its
Subsidiaries shall: (a) file when due all tax returns and other reports which it
is required to file, pay, or provide for the payment, when due, of all Taxes,
fees, assessments and other governmental charges against it or upon its
Property, income, and franchises, make all required withholding and other tax
deposits, and establish adequate reserves for the payment of all such items, and
shall provide to the Agent, upon request, satisfactory evidence of its timely
compliance with the foregoing; and (b) pay when due all Debt owed by it and
perform and discharge in a timely manner all other obligations undertaken by it;
provided, however, that Woodworkers and its Subsidiaries need not pay any tax,
fee, assessment, governmental charge, or Debt, or perform or discharge any other
obligation, that it is contesting in good faith by appropriate proceedings
diligently pursued and such tax, fee, assessment, governmental charge or Debt
has been stayed by appropriate court proceedings.
10.2 Corporate Existence and Good Standing. Woodworkers and each of its
Subsidiaries shall maintain its corporate existence and its qualification and
good standing in all states necessary to conduct its business and own its
Property and shall obtain and maintain all licenses, permits, franchises and
governmental authorizations necessary to conduct its business and own its
Property.
10.3 Compliance with Law and Agreements. Woodworkers and each of its
Subsidiaries shall comply with the terms and provisions of each judgment, law,
statute, rule, and governmental regulation applicable to it and each contract,
mortgage, lien, lease, indenture, order, instrument, agreement, or document to
which it is a party or by which it is bound.
10.4 Maintenance of Property and Insurance. Woodworkers and each of its
Subsidiaries shall: (a) maintain all of its Property necessary and useful in its
business in good operating condition and repair, ordinary wear and tear excepted
(nothing herein, however, shall preclude the Borrower from selling obsolete,
worn-out or surplus Equipment no longer necessary or useful in the ordinary
course of business as conducted by Borrower or its Subsidiaries); and (b) in
addition to the insurance required by Section 7.7, maintain with financially
sound and reputable insurers such other insurance with respect to its Property
and business against casualties and contingencies of such types (including,
without limitation, business interruption, environmental liability, public
liability, product liability, and larceny, embezzlement or other criminal
misappropriation) and in such amounts as is customary for Persons of established
reputation engaged in the same or a similar business and similarly situated,
naming the Agent, at its request, as additional insured under each such policy.
- 66 -
10.5 Environmental Laws. Woodworkers and each of its Subsidiaries shall
conduct its business in full compliance with all Environmental Laws applicable
to it, including, without limitation, those relating to Woodworkers' generation,
handling, use, storage, and disposal of hazardous and toxic wastes and
substances. Woodworkers shall take prompt and appropriate action to respond to
any non-compliance with Environmental Laws and shall regularly report to the
Agent on such response. Without limiting the generality of the foregoing,
whenever Borrower gives notice to the Agent pursuant to Section 8.3(g)
Woodworkers shall, at the Agent's request and Woodworkers' expense: (a) cause an
independent environmental engineer acceptable to the Agent to conduct such tests
of the site where Woodworkers' noncompliance or alleged non-compliance with
Environmental Laws has occurred and prepare and deliver to the Agent a report
setting forth the results of such tests, a proposed plan for responding to any
environmental problems described therein, and an estimate of the costs thereof;
and (b) provide to the Agent a supplemental report of such engineer whenever the
scope of the environmental problems, or Woodworkers' response thereto or the
estimated costs thereof, shall change.
10.6 ERISA. Woodworkers and each of its Subsidiaries shall cause each
Plan, which has been designated to be so, to be qualified within the meaning of
Section 401(a) of the Code and to be administered in all respects in material
compliance with Section 401(a) of the Code. Woodworkers and each of its
Subsidiaries shall cause each Plan to be administered in all respect in material
compliance with ERISA.
10.7 Mergers, Consolidations, Acquisitions, or Sales. Neither
Woodworkers nor any of its Subsidiaries shall enter into any transaction of
merger, reorganization, or consolidation, or transfer, sell, assign, lease, or
otherwise dispose of all or any part of its Property, or wind up, liquidate or
dissolve, or agree to do any of the foregoing, except, sales of Inventory in the
ordinary course of business, sales of obsolete, worn-out or surplus Equipment no
longer necessary or useful in the ordinary course of business as conducted by
Borrower or its Subsidiaries, any sale-leaseback transaction permitted under
Section 10.17 below, or any other transaction specifically permitted under the
terms of this Agreement.
10.8 Distributions; Capital Changes. Neither Woodworkers nor any of its
Subsidiaries shall: (a) directly or indirectly declare or make, or incur any
liability to make, any Distribution, except (i) Distributions to Woodworkers by
a Subsidiary wholly-owned by Woodworkers, (ii) Distributions of 4,500,000 shares
of New Common Stock or (iii) Distributions payable to unsecured creditors under
the Plan of Reorganization; provided, that, after giving effect to such cash
distribution amounts, Availability is not less than $3,000,000 (b) make any
change in its capital structure which could adversely affect the repayment of
the Obligations.
10.9 Transactions Affecting Collateral or Obligations. Neither
Woodworkers nor any of its Subsidiaries shall enter into any transaction which
materially and adversely affects the Collateral or Borrower's ability to repay
the Obligations.
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10.10 Guaranties. Neither Woodworkers nor any of its Subsidiaries shall
make, issue, or become liable on any Guaranty, except Guaranties in favor of the
Lenders and endorsements of instruments for deposit.
10.11 Debt. Neither Woodworkers nor any of its Subsidiaries shall incur
or maintain any Debt, other than: (a) the Obligations (b) trade payables and
contractual obligations to suppliers and customers incurred in the ordinary
course of business; (c) debts, liabilities and obligations subject to purchase
money security interests and liens of lessors under capital leases to the extent
that the security interest or lien only encumbers the asset purchased or leased
and so long as the security interest or lien only secures the purchase price of
the asset; and (d) other Debt existing on the Closing Date and reflected in the
Financial Statements attached as Exhibit ▇-▇.
10.12 Prepayment. Neither Woodworkers nor any of its Subsidiaries shall
voluntarily prepay any Debt, except trade payables and contractual obligations
to suppliers incurred in the ordinary course of business within applicable trade
credit commitments or discounts and purchases of Inventory paid for in advance,
the Existing Debt and the Obligations in accordance with their terms.
10.13 Transactions with Affiliates. Except as set forth below or in
Schedule 10.13, neither Woodworkers nor any of its Subsidiaries shall: sell,
transfer, distribute, or pay any money or Property to any Affiliate, or lend or
advance money or Property to any Affiliate, or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness
or any Property of any Affiliate, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate. Notwithstanding
the foregoing, if no Event of Default has occurred and is continuing,
Woodworkers and its Subsidiaries may engage in transactions with Affiliates in
the ordinary course of business in amounts and upon terms fully disclosed to the
Agent and no less favorable to Woodworkers or such Subsidiary than would obtain
in a comparable arm's length transaction with a third party who is not an
Affiliate.
10.14 Amendment of Plan of Reorganization. Without the prior written
consent of the Agent and the Majority Lenders, Borrower shall not, and shall not
permit any of its Subsidiaries to, cause or permit the Plan of Reorganization to
be amended or modified after the Closing Date, or to waive without prior written
approval of the Agent any of the conditions named therein in any material
respect.
10.15 Business Conducted. Woodworkers and its Subsidiaries shall not
engage, directly or indirectly, in any line of business other than the
businesses in which the Borrower and its Subsidiaries are engaged on the Closing
Date.
10.16 Liens. Neither Woodworkers nor any of its Subsidiaries shall
create, incur, assume, or permit to exist any Lien on any Property now owned or
hereafter acquired by any of them, except Permitted Liens.
10.17 Sale and Leaseback Transactions. Neither Woodworkers nor any of
its Subsidiaries shall, directly or indirectly, enter into any arrangement with
any Person providing for Woodworkers or a Subsidiary to lease or rent Property
that Woodworkers or a Subsidiary has or will sell or otherwise transfer to such
Person; provided, however, that notwithstanding any provision herein to the
contrary, the Borrowers may enter into sale and leaseback transactions in the
ordinary course of the Borrowers' business as conducted on the Closing Date with
respect to Borrowers' Equipment which does not exceed $50,000 in aggregate in
any Fiscal Year.
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10.18 New Subsidiaries. Woodworkers shall not, directly or indirectly,
organize or acquire any Subsidiary other than those listed on Schedule 10.18.
10.19 Restricted Investments. Neither Woodworkers nor any of its
Subsidiaries shall make any Restricted Investment.
10.20 Compliance with Plan of Reorganization. Borrower shall comply
with all the terms and conditions under, and perform all of its obligations
under, the Plan of Reorganization, including all payment obligations thereunder.
10.21 Store Openings. As long as an Additional Availability Amount is
available to be drawn or is outstanding, Borrower shall not open any new stores
without the consent of the Agent; provided, that an existing store relocated to
a new location shall not be treated as a new store for purposes hereof.
10.22 Availability. After (i) giving effect to the $2,000,000 cash
dividend payment to Borrower's unsecured creditors under the Plan of
Reorganization and (ii) taking into account, on such cash dividend payment date,
all Revolving Loans and Letters of Credit outstanding on such date and with all
obligations of the Borrower being current, Availability shall not be less than
$3,000,000.
10.23 [Intentionally Left Blank].
10.24 [Intentionally Left Blank].
10.25 [Intentionally Left Blank].
10.26 [Intentionally Left Blank].
10.27 Fixed Charges Ratio. For the fiscal quarters indicated below,
Borrower on a consolidated basis shall maintain a Fixed Charges Ratio,
determined as of the last day of such fiscal quarter, of not less than the
amount set forth below:
Ratio
-----
One Fiscal Quarter ending February, 2002 .65 : 1.00
Two Fiscal Quarters ending May, 2002 .70 : 1.00
Three Fiscal Quarters ending August, 2002 .75 : 1.00
Four Fiscal Quarters ending November, 2002 .90 : 1.00
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Thereafter, Borrower on a consolidated basis shall maintain a Fixed
Charges Ratio, determined as of the last day of each fiscal quarter set forth
below for the preceding four fiscal quarters ending on such last day, of not
less than the amount set forth below:
February, 2003 and each fiscal quarter thereafter 1.00 : 1.00
10.28 Cash Management System. The Borrower shall maintain the Cash
Management System.
10.29 Reports. The Borrower shall deliver to the Agent any reports that
the Borrower prepares and submits for filing with the U.S. Trustee or the
Bankruptcy Court.
10.30 Further Assurances. The Borrower shall execute and deliver, or
cause to be executed and delivered, to the Agent such documents and agreements,
and shall take or cause to be taken such actions, as the Agent may, from time to
time, request to carry out the terms and conditions of this Agreement and the
other Loan Documents.
11. CONDITIONS PRECEDENT.
11.1 Conditions Precedent to Effectiveness. This Agreement shall become
effective when, and only when (i) the Agent shall have received the following
documents each dated the Closing Date unless otherwise indicated, and (ii) the
other conditions specified below shall have been satisfied or waived in a manner
satisfactory to the Agent.
(a) Representations and Warranties; Covenants. The Borrower's
representations and warranties contained in this Agreement and the other Loan
Documents shall be correct and complete and the Borrower shall have performed
and complied with all covenants, agreements, and conditions contained herein and
in the other Loan Documents which are required to have been performed or
complied with.
(b) Delivery of Documents. The Borrower shall have delivered, or
caused to be delivered, to the Agent executed Loan Documents and such documents,
instruments, schedules, exhibits, agreements, Merger documents, financing
statements, consents, evidence of corporate authority, certificates, landlord
and/or mortgagee waivers, insurance certificates and loss payee endorsements,
opinions of counsel and other writings and covenants as the Agent shall request
in connection herewith, duly executed by all parties thereto other than the
Agent, and in form and substance satisfactory to the Agent and its counsel.
(c) Intentionally Omitted.
(d) Payment of Fees and Expenses. The Borrower shall have paid or
have made arrangements satisfactory to Agent to pay, all fees and expenses of
the Lenders' outside counsel, including, without limitation, ▇▇▇▇▇▇▇▇ Ingersoll,
P.C., and all other fees and expenses of the Lenders incurred in connection with
the Bankruptcy Case and any of the Loan Documents and the transactions
contemplated thereby ("Professional Fees and Expenses"); provided, however, that
the fees and expenses incurred through July 31, 2001 shall not exceed $709,000,
of which (a) $428,000 shall be added to the loan balance and (b) $281,000 shall
have been paid no later than December 31, 2001.
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(e) Required Approvals. The Agent shall have received certified
copies of all consents or approvals of any Public Authority or other Person
which the Agent determines is required in connection with the transactions
contemplated by this Agreement.
(f) No Material Adverse Change. There shall have occurred no
material adverse change in Woodworkers' business, operations, profits, prospects
or financial condition or in the Collateral since September 7, 2001, and the
Agent shall have received a certificate of Woodworkers' chief executive officer
to such effect.
(g) Proceedings. All proceedings to be taken in connection with
the transactions contemplated by this Agreement, and all documents contemplated
in connection herewith, shall be satisfactory in form and substance to the
Lenders and their counsel.
(h) Reorganization Matters. (i) The Agent and the Lenders shall
have received a certified copy of any order of the Bankruptcy Court in form,
scope and substance acceptable to the Agent and the Lenders, (A) authorizing and
approving each of the commitment letter from the Lenders to Trend-Lines, Inc.
dated August 28, 2001 and this Agreement and the other Loan Documents, and (B)
confirming the Plan of Reorganization, and such order shall have become a Final
Order (the "Confirmation Order") and shall be in full force and effect and shall
have not been stayed, vacated, reversed, revoked, amended or modified in any
material respect by the Bankruptcy Court or any court having jurisdiction, (ii)
on or prior to the total credit facility being made available under Section 2.1
on the Closing Date, the Plan of Reorganization will become effective in
accordance with Article X thereof, (iii) the aggregate amount of all cash
payments payable under the Plan of Reorganization in satisfaction of all allowed
claims (other than the claims of the Agent or any Lender) is currently estimated
to be $6,200,000, (iv) the Plan of Reorganization confirmed by the Bankruptcy
Court shall not contain any material changes from (including changes in senior
management of Borrower) or material amendments or modifications to the Plan of
Reorganization dated as of September 7, 2001 and filed with the Bankruptcy Court
on September 10, 2001, that are not reasonably acceptable to the Agent and the
Majority Lenders and (v) no material condition to the effectiveness of the Plan
of Reorganization shall have been waived without notice to the Agent.
(i) Intentionally Omitted.
(j) Existing Debt. The Existing Debt shall have been refinanced on
the Effective Date in accordance with the Plan of Reorganization and the Plan of
Reorganization shall treat the Existing Debt as a Class 1 approved claim. The
Borrower also shall have acknowledged that Borrower has no defenses against such
approved claim.
(k) Existing Litigation. The Agent and the Lenders shall have
received satisfactory evidence that all existing litigation among the Borrower,
Borrower's Affiliates, the Agent and Lenders has been withdrawn or dismissed
with prejudice.
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(l) Availability. On the Effective Date, after (i) taking into
account all Revolving Loans and Letters of Credit issued on such date and with
all obligations of the Borrower being current and (ii) giving effect to the
trade credit commitments (in form and substance satisfactory to the Agent)
granted to the Borrower by Borrower's trade creditors, Availability is not less
than $4,000,000.
(m) Payment Schedule. The Borrower shall have delivered to the
Agent a certificate from the officer of the Borrower stating that the Borrower
is making and will continue to make payments in compliance with the Plan of
Reorganization, including, but not limited to payments scheduled to be made on
the Effective Date.
(n) Litigation. On the Effective Date, there shall exist no
action, suit, investigation, litigation, or proceeding pending or threatened in
any court or before any arbitrator or governmental instrumentality that in the
Agent's reasonable judgment (i) could reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), operations,
performance, or properties of the Borrower or which could impair the Borrower's
ability to perform under the Loan Documents or Plan of Reorganization or (ii)
could reasonably be expected to materially and adversely affect the transaction.
(o) Waivers. The Agent shall, within 150 days of the Effective
Date, have received with respect to each real property on which Inventory is
located against which Inventory the relevant lessor may assert a statutory,
common law, or contractual lien (as reasonably determined by the Agent), (A) a
copy of a current and legally valid, binding and enforceable lease agreement
containing a waiver with respect to such lien in form and substance satisfactory
to the Agent or (B) a waiver of such lien in form and substance satisfactory to
the Agent; provided, however, that the failure of the Borrower to comply with
this Section 11.1(o) shall not constitute an Event of Default or Default but the
Agent may, in its sole and absolute discretion, establish a Rental Reserve with
respect to the relevant property until such time as the Agent receives such
waiver. With respect to each new store opened after the date hereof, the Agent
shall have received a landlord waiver executed by the relevant landlord in favor
of the Agent in form and substance acceptable to the Agent in a form of which is
attached as Exhibit F.
(p) Mortgage. The Borrower shall have caused to be delivered to
the Agent written affirmation from Commonwealth Land Title Insurance Company in
form and substance acceptable to Lender, with respect to the continued validity
of the title policy for the Seabrook Premises., insuring the lien of the
Seabrook Mortgage as a first Lien on the Seabrook Premises in such amounts and
subject only to such exceptions and exclusions as are acceptable to the Agent
and insuring unconditionally against all possible contractors', suppliers' and
mechanics' lien claims, such commitment to contain a complete copy of each
easement, restriction, limitation, or condition of title which is referred to
therein that burdens or benefits the Seabrook Premises.
(q) Continued Employment of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall
be employed as Chief Executive Officer of the Borrower on the Effective Date.
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(r) Certain Bankruptcy Court Orders. The Bankruptcy Court shall
have issued an order (i) subsequent to August 28, 2001 and prior to the
Effective Date, in form and substance satisfactory to the Agent, authorizing
repayment by the Borrower of $7,500,000 of the Existing Debt and (ii) allowing
the payment of Professional Fees and Expenses incurred by Agent during the
Bankruptcy Case and Professional Fees and Expenses incurred by Agent in
connection with the Loan Documents.
(s) Cash Management System. The Cash Management System shall have
been instituted and acceptable to Agent.
(t) Proceedings. All proceedings taken in connection with the
transactions contemplated by this Agreement, all other Loan Documents, the Plan
of Reorganization and all documents, instruments and other matters incident
hereto or thereto shall be satisfactory in form, scope, and substance to the
Agent, the Lenders and their respective counsel.
(u) Execution and delivery to the Agent by a Lender of a
counterpart of this Agreement shall be deemed confirmation by such Lender that
(i) all conditions precedent in this Section 11.1 have been fulfilled to the
satisfaction of such Lender and (ii) the decision of such Lender to execute and
deliver to the Agent an executed counterpart of this Agreement was made by such
Lender independently and without reliance on the Agent or any other Lender as to
the satisfaction of any condition precedent set forth in this Section 11.1.
11.2 Conditions Precedent to Each Loan. The obligation of the Lenders
to make each Loan, including the initial Loan on the Closing Date or to provide
for the issuance of any Letter of Credit shall be subject to further conditions
precedent that on and as of the date of any such extension of credit:
(a) The Borrower shall have complied and shall then be in
compliance with all terms, covenants, conditions and provisions of this
Agreement and the other Loan Documents that are binding upon it.
(b) There shall exist no Event or Event of Default hereunder.
(c) The representations and warranties of the Borrower contained
in this Agreement shall be true and with the same effect as though such
representations and warranties had been made at the time of the making of the
advance of the Loan or the issuance of the Letter of Credit except that the
representation and warranty pertaining to financial statements shall refer to
the latest financial statements furnished to the Lenders pursuant to the
provisions of this Agreement.
(d) No adverse change shall have occurred in the financial
condition of the Borrower that would, in the good faith judgment of the Agent,
have a material adverse effect on the business condition (financial or
otherwise), operations, performance or properties of the Borrower or which could
impair the Borrower's ability to perform under the Loan Documents.
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(e) All legal matters incident to the Loan shall be satisfactory
to counsel for the Lender.
(f) On and after the Plan Effective Date, the Borrower is solvent.
(g) No such Borrowing shall exceed Availability; provided,
however, that the foregoing conditions are not conditions to each Lender
participating in or reimbursing BA or the Agent or such Lender's pro rata share
of any BA Loan or Agent advance.
12. DEFAULT; REMEDIES.
12.1 Events of Default. It shall constitute an event of default ("Event
of Default") if any one or more of the following shall occur for any reason:
(a) failure to make payment of principal, interest, fees or
premium on any of the Obligations when due;
(b) any representation or warranty made or deemed made by Borrower
in this Agreement, any of the other Loan Documents, any Financial Statement, or
any certificate furnished by Borrower or any Subsidiary at any time to the Agent
or any Lender shall prove to be untrue in any material respect as of the date
when made, deemed made, or furnished;
(c) the Borrower shall (i) fail to comply with any of the
covenants set forth in Article 10 (other than Sections 10.1, 10.2, 10.3, 10.4,
10.5 or 10.6) or Article 8 or (ii) fail to comply with any of the covenants set
forth in Sections 10.1, 10.2, 10.3, 10.5 or 10.6 if such failure shall have
existed for more than 30 (or 10 days for Section 10.4) after the date that
Borrower discovers, or reasonably should have discovered, such failure;
provided, however, that, to the extent that any covenant in Section 8 specifies
the number of days within which Borrower must comply with any reporting
requirement therein, such failure shall have existed for the number of days
specified in such covenant.
(d) except as provided in Section 12.1(c), default shall occur in
the observance or performance of any of the covenants and agreements contained
in this Agreement, the Security Agreement, the Mortgages, the other Loan
Documents, or any other agreement entered into at any time to which Borrower and
the Agent and/or Lenders are a party, or if any such agreement or document shall
terminate (other than in accordance with its terms or with the written consent
of the Agent and the Majority Lenders) or become void or unenforceable without
the written consent of the Agent and the Majority Lenders or any event of
default as defined therein shall occur.
(e) default shall occur in the payment of any principal or
interest on any indebtedness for borrowed money (other than the Obligations)
beyond any period of grace provided with respect thereto;
(f) Woodworkers or any Subsidiary shall (i) file a voluntary
petition in bankruptcy or file a voluntary petition or an answer or otherwise
commence any action or proceeding seeking reorganization, arrangement or
readjustment of its debts or for any other relief under the Federal Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency act or law, state
or federal, now or hereafter existing, or consent to, approve of, or acquiesce
in, any such petition, action or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator, custodian,
trustee or similar officer for it or for all or any part of its Property; (iii)
make an assignment for the benefit of creditors; or (iv) be unable generally to
pay its debts as they become due;
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(g) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement or
readjustment of Woodworkers' or any Subsidiary's debts or for any other relief
under the Federal Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing and such
petition, action or proceeding shall not be dismissed within 60 days from such
filing or commencement, provided that the Lenders shall have no obligation to
make any Revolving Loans or obtain any Letters of Credit during such 60-day
grace period;
(h) a receiver, assignee, liquidator, sequestrator, custodian,
trustee or similar officer for Woodworkers or any Subsidiary or for all or any
part of their Property shall be appointed involuntarily; or a warrant of
attachment, execution or similar process shall be issued against any part of the
Property of Woodworkers or any Subsidiary and such waiver, execution or process
shall not be released or fully bonded within 30 days of its issuance, provided
that the Lenders shall have no obligation to make any Revolving Loans or obtain
any Letters of Credit during such 30-day grace period;
(i) Woodworkers or any Subsidiary shall file a certificate of
dissolution under applicable state law or shall be liquidated, dissolved or
wound-up or shall commence or have commenced against it any action or proceeding
for dissolution, winding-up or liquidation, or shall take any corporate action
in furtherance thereof;
(j) all or any part of the Property of Borrower shall be
nationalized, expropriated or condemned, seized or otherwise appropriated, or
custody or control of such Property or of Borrower shall be assumed by any
Public Authority or any court of competent jurisdiction at the instance of any
Public Authority, except where contested in good faith by proper proceedings
diligently pursued where a stay of enforcement is in effect;
(k) any guaranty of the Obligations shall be terminated, revoked
or declared void or invalid;
(l) one or more final judgments for the payment of money
aggregating in excess of $500,000 (whether or not covered by insurance) shall be
rendered against Woodworkers or any Subsidiary and Woodworkers or such
Subsidiary shall fail to discharge the same within 30 days from the date of
notice of entry thereof or to appeal therefrom;
(m) any loss, theft, damage or destruction of any item or items of
Collateral occurs which: (i) materially and adversely affects the operation of
Borrower's business or (ii) is material in amount and is not adequately covered
by insurance;
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(n) A Change of Control shall occur or if ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (or other
person reasonably acceptable to Lenders) is no longer the Chief Executive
Officer;
(o) any event or condition shall occur or exist with respect to a
Plan that could, in the Agent's reasonable judgment, subject Woodworkers or any
Subsidiary to any tax, penalty or liability under ERISA, the Code or otherwise
which in the aggregate is material in relation to the business, operations,
Property or financial or other condition of Borrower;
(p) there occurs any material adverse change in Borrower's
Property, business, operations, or condition (financial or otherwise);
(q) one or more defaults shall occur under the Plan of
Reorganization, and such default(s) shall continue for more than the grace
period, if any, therein specified; or
(r) the Cash Management System shall fail to be acceptable to
Agent.
13. REMEDIES.
(a) If an Event of Default exists, the Agent may, in its
discretion, and shall, at the direction of the Majority Lenders, do one or more
of the following at any time or times and in any order, without notice to or
demand on the Borrower: (i) reduce the Total Facility and/or the Maximum
Revolver Amount, or the advance rates against Eligible Inventory, Eligible
Accounts and the Seabrook Premises used in computing the Availability, or reduce
one or more of the other elements used in computing the Availability; (ii)
restrict the amount of or refuse to make Revolving Loans; and (iii) restrict or
refuse to arrange for or provide Letters of Credit. If an Event of Default
exists, the Agent shall, at the direction of the Majority Lenders, do one or
more of the following, in addition to the actions described in the preceding
sentence, at any time or times and in any order, without notice to or demand on
the Borrower: (a) terminate the Commitments and this Agreement; (b) declare any
or all Obligations to be immediately due and payable; provided, however, that
upon the occurrence of any Event of Default described in Sections 12.1(f), (g),
(h) or (i), the Commitments shall automatically and immediately expire and all
Obligations shall automatically become immediately due and payable without
notice or demand of any kind; and (c) pursue its other rights and remedies under
the Loan Documents and applicable law.
(b) If an Event of Default exists: (i) the Agent shall have for
the benefit of the Lenders, in addition to all other rights of the Agent and
Lenders, the rights and remedies of a secured party under the UCC; (ii) the
Agent may, at any time, take possession of the Collateral and keep it on
Borrower's premises, at no cost to Agent, or remove any part of it to such other
place or places as the Agent may desire, or Borrower shall, upon the Agent's
demand, at Borrower's cost, assemble the Collateral and make it available to the
Agent at a place reasonably convenient to the Agent; and (iii) the Agent may
sell and deliver any Collateral at public or private sales, for cash, upon
credit or otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion, and may, if the Agent deems it reasonable,
postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale or of such postponed or adjourned sale without giving a new
notice of sale. Without in any way requiring notice to be given in the following
manner, the Borrower agrees that any notice by the Agent of sale, disposition or
other intended action hereunder or in connection herewith, whether required by
the UCC or otherwise, shall constitute reasonable notice to the Borrower if such
notice is mailed by registered or certified mail, return receipt requested,
postage prepaid, or is delivered personally against receipt, at least ten days
prior to such action to the Borrower's address specified in or pursuant to
Section 17.11. If any Collateral is sold on terms other than payment in full at
the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receives payment, and if the buyer defaults in payment, the
Agent may resell the Collateral without further notice to Borrower. In the event
the Agent seeks to take possession of all or any portion of the Collateral by
judicial process, the Borrower irrevocably waives: (a) the posting of any bond,
surety or security with respect thereto which might otherwise be required; (b)
any demand for possession prior to the commencement of any suit or action to
recover the Collateral; and (c) any requirement that the Agent retain possession
and not dispose of any Collateral until after trial or final judgment. The
Borrower agrees that the Agent has no obligation to preserve rights to the
Collateral or marshal any Collateral for the benefit of any Person. The Agent is
hereby granted a license or other right to use, without charge, Borrower's
labels, patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production of,
advertising or selling any Collateral, and Borrower's rights under all licenses
and all franchise agreements shall inure to the Agent's benefit. The proceeds of
sale shall be applied first to all expenses of sale, including, without
limitation, attorneys' fees and second, in whatever order the Agent elects, to
all Obligations. The Agent will return any excess to Borrower or such other
Person as shall be legally entitled thereto and the Borrowers shall remain
liable for any deficiency.
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(c) If an Event of Default occurs, the Borrower hereby waives (i)
all rights to notice and hearing prior to the exercise by the Agent of the
Agent's rights to repossess the Collateral without judicial process or to
replevy, attach or levy upon the Collateral without notice or hearing, and (ii)
all rights of set-off and counterclaim against Agent.
(d) If an Event of Default exists, Agent may peacefully enter upon
premises owned or leased by Borrower and take possession of all Property and
Collateral in which Agent has a lien or security interest and exercise any
remedy under applicable law with respect to such Property and Collateral without
interference; provided, however, with respect to the leased premises in the
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ for which ▇▇▇▇▇ Properties,
L.P. is the landlord, Agent's security interest is limited to the Borrower's
interest in the proceeds of such lease in the event of a future sale or
assignment. Borrower agrees that after an Event of Default and after being given
3 days prior notice by Agent of such Event of Default, or in event of any
bankruptcy case or insolvency proceeding commenced by or against (and in the
event of any bankruptcy case or insolvency proceeding commenced against the
Borrower, after being given 3 days prior notice by Agent of such event)
Borrower, Agent may peacefully enter any or all of the Leased Premises,
including without limitation any premises leased after the Effective Date with
respect to which Borrower is a tenant and may enter any or all of the premises
owned by Borrower and, in each instance, take possession of all Property and
Collateral and Borrower agrees and shall permit and consent to Agent remaining
on such premises for a period of time not to exceed 90 days in order to
dismantle, prepare for disposition or removal, disposal of, including conducting
a "going out of business" sale or similar sale of any or all of the Property and
Collateral, or otherwise to deal with the Property and Collateral, with the
payment by Agent to the relevant landlord of a reasonable use and occupancy fee
prorated for each day the Agent remains on the premises.
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14. TERM AND TERMINATION.
This Agreement shall expire on the Stated Termination Date unless
terminated as provided in this Section. The Agent and the Borrower shall have
the right to terminate this Agreement, without premium or penalty, at the end of
the initial term or at the end of any renewal term by giving the other written
notice not less than 60 days prior to the end of such term by registered or
certified mail. The Borrower may also terminate this Agreement at any time
during its initial term if: (a) they give the Agent 60 days' prior written
notice of termination by registered or certified mail; and (b) they pay and
perform all Obligations on or prior to the effective date of termination. The
Agent may also terminate this Agreement without notice upon an Event of Default.
Upon the effective date of termination of this Agreement for any reason
whatsoever, all Obligations shall become immediately due and payable and the
Borrower shall immediately arrange for the cancellation of Letters of Credit
then outstanding. Notwithstanding the termination of this Agreement, until all
Obligations are paid and performed in full, the Agent shall retain all its
rights and remedies hereunder (including, without limitation, in all then
existing and after-arising Collateral).
15. AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS.
15.1 No Waivers; Cumulative Remedies. No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or among
the Borrower and the Agent and/or any Lender, or delay by the Agent or any
Lender in exercising the same, will operate as a waiver thereof. No waiver by
the Agent or any Lender will be effective unless it is in writing, and then only
to the extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Borrower of any provision of
this Agreement. The Agent's and each Lender's rights under this Agreement will
be cumulative and not exclusive of any other right or remedy which the Agent or
any Lender may have.
15.2 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower therefrom, shall be effective unless the same shall be
in writing and signed by the Majority Lenders (or by the Agent at the written
request of the Majority Lenders) and the Borrower and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Lenders and the Borrower
and acknowledged by the Agent, do any of the following:
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(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under any
other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Lenders or any of
them to take any action hereunder;
(e) increase any of the percentages set forth in the definition of
Availability, Borrowing Base and sub-facility;
(f) amend this Section or any provision of the Agreement providing
for consent or other action by all Lenders;
(g) release Collateral other than as permitted by Section 16.12;
(h) change the definitions of "Majority Lenders" or "Required
Lenders";
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document.
15.3 Assignments; Participations.
(a) Any Lender may, with the written consent of the Agent (which
will not be unreasonably held), assign and delegate to one or more assignees
(provided that no written consent or processing fee of the Agent shall be
required in connection with any assignment and delegation by a Lender to an
Affiliate of such Lender) (each an "Assignee") all, or any ratable part of all,
of the Loans, the Commitments and the other rights and obligations of such
Lender hereunder, in a minimum amount of $7,500,000 or, if less, the entire
amount of such Lender's Commitment; provided, however, that the Borrower and the
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Borrower
and the Agent by such Lender and the Assignee; (ii) such Lender and its Assignee
shall have delivered to the Borrower and the Agent an Assignment and Acceptance
in the form of Exhibit D ("Assignment and Acceptance") together with any Note or
Notes subject to such assignment and (iii) the assignor Lender or Assignee has
paid to the Agent a processing fee in the amount of $3,000.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and Credit
Support have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
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(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (4) such Assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (5) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (6) such Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Within five Business Days after its receipt of notice by the
Agent that it has received an executed Assignment and Acceptance and payment of
the processing fee, the Borrower shall execute and deliver to the Agent, new
Notes evidencing such Assignee's assigned Loans and, if the assignor Lender has
retained a portion of its Loans and its Commitment, replacement Notes in the
principal amount of the Loans retained by the assignor Lender (such Notes to be
in exchange for, but not in payment of, the Notes held by such Lender).
Immediately upon each Assignee's making its processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of the Borrower
(a "Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrower and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
and subject to the same limitation as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.
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(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and any Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR "203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.
16. THE AGENT.
16.1 Appointment and Authorization. Each Lender hereby designates and
appoints Bank of America, N.A. as the Agent under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. The
Agent agrees to act as such on the express conditions contained in this Section
16. The provisions of this Section 16 are solely for the benefit of the Agent
and the Lenders and the Borrower shall have no rights as a third party
beneficiary of any of the provisions contained herein. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties. Except as expressly
otherwise provided in this Agreement, the Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which the
Agent is expressly entitled to take or assert under this Agreement and the other
Loan Documents, including, without limitation, (a) the determination of the
applicability of ineligibility criteria with respect to the calculation of the
Availability, (b) the making of Agent Advances pursuant to Section 2.2(i), and
(c) the exercise of remedies pursuant to Section 13, and any action so taken or
not taken shall be deemed consented to by the Lenders.
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16.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by the Borrower or any Subsidiary or
Affiliate of the Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower or any of the
Borrower's Subsidiaries or Affiliates.
16.4 Reliance by Agent. (a) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Borrower), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Majority Lenders and such request and any action taken
or failure to act pursuant thereto shall be binding upon all of the Lenders.
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(b) For purposes of determining compliance with the conditions
specified in Section 11.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Lender.
16.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Lenders, unless the Agent shall have
received written notice from a Lender or the Borrower referring to this
Agreement, describing such Event or Event of Default and stating that such
notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Event or Event of Default as may be requested by the Majority Lenders in
accordance with Section 13; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such Event
or Event of Default as it shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrower and its Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Affiliates, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Affiliates. Except for notices, reports
and other documents expressly herein required to be furnished to the Lenders by
the Agent, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Borrower and its Affiliates which may come into the possession of any of the
Agent-Related Persons.
16.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities as such term is
defined in Section 17.12; provided, however, that no Lender shall be liable for
the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Borrower. The undertaking in this Section shall survive the payment of
all Obligations hereunder and the resignation or replacement of the Agent.
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16.8 Agent in Individual Capacity. BA and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrower and its
Subsidiaries and Affiliates as though BA were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, BA or its Affiliates may receive information
regarding the Borrower or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Borrower or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BA shall have the
same rights and powers under this Agreement as any other Lender and may exercise
the same as though it were not the Agent, and the terms "Lender" and "Lenders"
include BA in its individual capacity.
16.9 Successor Agent. The Agent may resign as Agent upon 30 days'
notice to the Lenders and the Borrower. In the event ▇▇ ▇▇▇▇▇ all of its
Commitments and Revolving Loans as part of a sale, transfer or other disposition
by BA of substantially all of its loan portfolio, BA shall resign as Agent and
such purchaser or transferee shall become the successor Agent hereunder. If the
Agent resigns under this Agreement, subject to the proviso in the preceding
sentence, the Majority Lenders shall appoint from among the Lenders a successor
agent for the Lenders. If no successor agent is appointed prior to the effective
date of the resignation of the Agent, the Agent may appoint, after consulting
with the Lenders and the Borrower, a successor agent from among the Lenders.
Upon the acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 16 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor agent
has accepted appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Agent hereunder until such time, if any, as the Majority Lenders
appoint a successor agent as provided for above. Notwithstanding any provision
in this Agreement to the contrary, (i) BA may assign or transfer its Commitments
and Revolving Loans and other interests to Bank of America, (ii) Bank of America
may become successor agent under this Agreement, and (iii) in the event that BA
assigns all of its Loans to an Affiliate, such Affiliate shall automatically
become the successor agent hereunder upon the effective date of such assignment,
in each case, without the consent of the Lenders, the Majority Lenders or the
Borrower.
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16.10 Withholding Tax. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver
to the Agent:
(i) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS Forms
1001 and W-8 before the payment of any interest in the first calendar year and
before the payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively connected
with a United States trade or business of such Lender, two properly completed
and executed copies of IRS Form 4224 before the payment of any interest is due
in the first taxable year of such Lender and in each succeeding taxable year of
such Lender during which interest may be paid under this Agreement, and IRS Form
W-9; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Borrower to such Lender, such Lender
agrees to notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrower to such Lender. To the extent of
such percentage amount, the Agent will treat such Lender's IRS Form 1001 as no
longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrower to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Agent.
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16.11 Intentionally Left Blank.
16.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Lien upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by the Borrower of all Loans and reimbursement obligations
in respect of Letters of Credit and Credit Support, and the termination of all
outstanding Letters of Credit (whether or not any of such obligations are due)
and all other Obligations; (ii) constituting property being sold or disposed of
if the Borrower certifies to the Agent that the sale or disposition is made in
compliance with Section 10.7 (and the Agent may rely conclusively on any such
certificate, without further inquiry); (iii) constituting property in which the
Borrower owned no interest at the time the Lien was granted or at any time
thereafter; or (iv) constituting property leased to the Borrower under a lease
which has expired or been terminated in a transaction permitted under this
Agreement. Except as provided above, the Agent will not release any of the
Agent's Liens without the prior written authorization of the Lenders; provided
that the Agent may, in its discretion, release the Agent's Liens on Collateral
valued in the aggregate not in excess of $500,000 in any one-year period without
the prior written authorization of the Lenders. Upon request by the Agent or the
Borrower at any time, the Lenders will confirm in writing the Agent's authority
to release any Agent's Liens upon particular types or items of Collateral
pursuant to this Section 16.12.
(b) If authorized, and upon at least five Business Days' prior
written request by the Borrower, the Agent shall (and is hereby irrevocably
authorized by the Lenders to) execute such documents as may be necessary to
evidence the release of the Agent's Liens upon such Collateral; provided,
however, that (i) the Agent shall not be required to execute any such document
on terms which, in the Agent's opinion, would expose the Agent to liability or
create any obligation or entail any consequence other than the release of such
Liens without recourse or warranty, and (ii) such release shall not in any
manner discharge, affect or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of the Borrower in respect
of) all interests retained by the Borrower, including (without limitation) the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by the Borrower or is
cared for, protected or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent pursuant to any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it may deem
appropriate, in its sole discretion given the Agent's own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.
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16.13 Restrictions on Actions by Lenders; Sharing of Payments. (a) Each
of the Lenders agrees that it shall not, without the express consent of all
Lenders, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of all Lenders, set off against the Obligations, any amounts owing
by such Lender to the Borrower or any accounts of the Borrower now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it shall
not, unless specifically requested to do so by the Agent, take or cause to be
taken any action to enforce its rights under this Agreement or against the
Borrower, including, without limitation, the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations of the Borrower to such Lender arising
under, or relating to, this Agreement or the other Loan Documents, except for
any such proceeds or payments received by such Lender from the Agent pursuant to
the terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender's ratable portion of all such distributions by the Agent, such Lender
shall promptly (1) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
16.14 Agency for Perfection. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Lenders' security interest in
assets which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
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16.15 Payments by Agent to Lenders. All payments to be made by the
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to:
if to BA:
Bank: Bank of America, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA Number: ▇▇▇▇▇▇▇▇▇
Account Number: 12353-03848
Account Name: BankAmerica Business Credit, Inc.
Attention: Operations Manager
Reference: Woodworkers
if to Foothill Capital Corporation:
Bank: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Account Number: 323-266193
ABA Number: ▇▇▇▇▇▇▇▇▇
Credit: Foothill Capital Corporation
Reference: Woodworkers
if to Transamerica Business Capital Corporation:
Bank: First National Bank of Chicago
Account Number: 52-97184
ABA Number: ▇▇▇▇▇▇▇▇▇
Account Name: Transamerica Business Capital Corp.
Attention: ▇. ▇▇▇▇▇▇▇
Reference: Woodworkers
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans or otherwise.
16.16 Concerning the Collateral and the Related Loan Documents. Each
Lender authorizes and directs the Agent to enter into this Agreement and the
other Loan Documents relating to the Collateral, for the ratable benefit of the
Agent and the Lenders. Each Lender agrees that any action taken by the Agent,
Majority Lenders or Required Lenders, as applicable, in accordance with the
terms of this Agreement or the other Loan Documents relating to the Collateral,
and the exercise by the Agent, the Majority Lenders, or the Required Lenders, as
applicable, of their respective powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders.
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16.17 Field Audit and Examination Reports; Disclaimer by Lenders. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by the
Agent;
(b) expressly agrees and acknowledges that neither BA nor the
Agent (i) makes any representation or warranty as to the accuracy of any Report,
or (ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party performing
any audit or examination will inspect only specific information regarding the
Borrower and will rely significantly upon the Borrower's books and records, as
well as on representations of the Borrower's personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from any
Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to the Borrower, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of the Borrower; and (ii) to pay and protect, and indemnify, defend and
hold the Agent and any such other Lender preparing a Report harmless from and
against, the claims, actions, proceedings, damages, costs, expenses and other
amounts (including, without limitation attorney costs) incurred by the Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
16.18 Relation Among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
17. MISCELLANEOUS.
17.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Agent's rights and remedies is not intended to be
exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies that the Agent may have under the UCC
or other applicable law. The Agent shall have the right, in its sole discretion,
to determine which rights and remedies are to be exercised and in which order.
The exercise of one right or remedy shall not preclude the exercise of any
others, all of which shall be cumulative. The Agent may, without limitation,
proceed directly against the Borrower to collect the Obligations without any
prior recourse to the Collateral.
- 89 -
17.2 No Implied Waivers. No act, failure or delay by the Agent shall
constitute a waiver of any of its rights and remedies. No single or partial
waiver by the Agent of any provision of this Agreement or any other Loan
Document, or of breach or default hereunder or thereunder, or of any right or
remedy which the Agent may have, shall operate as a waiver of any other
provision, breach, default, right or remedy or of the same provision, breach,
default, right or remedy on a future occasion. No waiver by the Agent shall
affect its rights to require strict performance of this Agreement.
17.3 Severability. If any provision of this Agreement shall be
prohibited or invalid, under applicable law, it shall be ineffective only to
such extent, without invalidating the remainder of this Agreement.
17.4 Governing Law. This Agreement shall be deemed to have been made in
the State of New York and shall be governed by and interpreted in accordance
with the laws of such state, except that no doctrine of choice of law shall be
used to apply the laws of any other state or jurisdiction.
17.5 Consent to Jurisdiction and Venue; Service of Process. The
Borrower agrees that, in addition to any other courts that may have jurisdiction
under applicable laws, any action or proceeding to enforce or arising out of
this Agreement or any of the other Loan Documents may be commenced in the
Supreme Court of the State of New York for New York County, or in the United
States District Court for the Southern District of New York, and the Borrower
consents and submits in advance to such jurisdiction and agrees that venue will
be proper in such courts on any such matter. The Borrower hereby waives personal
service of process and agrees that a summons and complaint commencing an action
or proceeding in any such court shall be properly served and shall confer
personal jurisdiction if served by registered or certified mail to the Borrower.
Should Borrower fail to appear or answer any summons, complaint, process or
papers so served within 30 days after the mailing or other service thereof,
Borrower shall be deemed in default and an order or judgment may be entered
against it as demanded or prayed for in such summons, complaint, process or
papers. The choice of forum set forth in this section shall not be deemed to
preclude the enforcement of any judgment obtained in such forum, or the taking
of any action under this Agreement to enforce the same, in any appropriate
jurisdiction.
17.6 Waiver of Jury Trial. BORROWER HEREBY WAIVES TRIAL BY JURY, RIGHTS
OF SETOFF, AND THE RIGHT TO IMPOSE COUNTERCLAIMS IN ANY LITIGATION IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL, OR ANY INSTRUMENT OR DOCUMENT
DELIVERED PURSUANT HERETO OR THERETO, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER
ARISING, BETWEEN BORROWER AND/OR AGENT AND THE LENDERS. BORROWER CONFIRMS THAT
THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
17.7 Intentionally Left Blank.
- 90 -
17.8 Survival of Representations and Warranties. All of Borrower's
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.
17.9 Other Security and Guaranties. The Agent may, without notice or
demand and without affecting Borrower's obligations hereunder, from time to
time: (a) take from any Person and hold collateral (other than the Collateral)
for the payment of all or any part of the Obligations and exchange, enforce or
release such collateral or any part thereof; and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
17.10 Fees and Expenses. The Borrower shall pay to the Agent for its
benefit on demand all costs and expenses that the Agent pays or incurs in
connection with the negotiation, preparation, consummation, administration,
enforcement, and termination of this Agreement and the other Loan Documents,
including, without limitation: (a) attorneys' and paralegal's fees and
disbursements of counsel to the Agent (including, without limitation, a
reasonable estimate of the allocable cost of in-house counsel and staff); (b)
costs and expenses, including, without limitation, attorneys' and paralegals'
fees and disbursements (including, without limitation, a reasonable estimate of
the allocable cost of in-house counsel and staff) for any amendment, supplement,
waiver, consent, or subsequent closing in connection with the Loan Documents and
the transactions contemplated thereby or in connection with any matter in any
bankruptcy or insolvency proceeding or case; (c) costs and expenses of lien and
title searches and title insurance; (d) Taxes, fees and other charges for
recording the mortgages, filing financing statements and continuations, and
other actions to perfect, protect, and continue the Security Interest; (e) sums
paid or incurred to pay any amount or take any action required of Borrower under
the Loan Documents that Borrower fails to pay or take; (f) costs of appraisals,
inspections, and verifications of the Collateral, including, without limitation,
travel, lodging, and meals together with an allocated charge equal to its then
customary per diem fee (currently $750) per day for each auditor employed by the
Lender for inspections of the Collateral and the Borrower's operations; (g)
costs and expenses of forwarding loan proceeds, collecting checks and other
items of payment, and establishing and maintaining Payment Accounts and lock
boxes; (h) costs and expenses of preserving and protecting the Collateral; (i)
fees, costs and expenses with respect to attorneys, paralegals, accountants,
advisors and consultants in connection with any workouts, restructuring or
bankruptcy; and (j) costs and expenses, including, without limitation,
attorneys' and paralegals' fees and disbursements (including, without
limitation, a reasonable estimate of the allocable cost of in-house counsel and
staff) paid or incurred to obtain payment of the Obligations, enforce the
Security Interest, sell or otherwise realize upon the Collateral, and otherwise
enforce the provisions of the Loan Documents, or to defend any claims made or
threatened against the Agent of any Lender arising out of the transactions
contemplated hereby (including, without limitation, preparations for and
consultations concerning any such matters). The foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding costs and expenses
to be paid by the Borrower. All of the foregoing costs and expenses shall be
charged to the Borrower's loan account as Reference Rate Loans.
- 91 -
17.11 Notices. Except as otherwise provided herein, all notices,
demands, and requests that either party is required or elects to give to the
other shall be in writing, shall be delivered personally against receipt, or
sent by recognized overnight courier services, or mailed by registered or
certified mail, return receipt requested, postage prepaid, and shall be
addressed to the party to be notified as follows:
If to the Lender: Bank of America, N.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Division Manager
with a copy to: Bank of America, N.A., Legal Department
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
"and"
▇▇▇▇▇▇▇▇ Ingersoll, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to Woodworkers: Woodworkers Warehouse, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or to such other address as each party may designate for itself by like notice.
Any such notice, demand, or request shall be deemed given when received if
personally delivered or sent by overnight courier, or when deposited in the
United States mails, postage paid, if sent by registered or certified mail.
17.12 Indemnification. BORROWER HEREBY INDEMNIFIES, DEFENDS AND HOLDS
THE AGENT AND EACH LENDER, AND ITS DIRECTORS, OFFICERS, AGENTS, EMPLOYEES AND
COUNSEL, HARMLESS FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES,
LIABILITIES, DEFICIENCIES, JUDGMENTS, PENALTIES OR EXPENSES IMPOSED ON, INCURRED
BY OR ASSERTED AGAINST ANY OF THEM, WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL,
ARISING OUT OF OR BY REASON OF ANY LITIGATION, INVESTIGATIONS, CLAIMS, OR
PROCEEDINGS (WHETHER BASED ON ANY FEDERAL, STATE OR LOCAL LAWS OR OTHER STATUTES
OR REGULATIONS, INCLUDING, WITHOUT LIMITATION, SECURITIES, ENVIRONMENTAL, OR
COMMERCIAL LAWS AND REGULATIONS, UNDER COMMON LAW OR AT EQUITY, OR IN CONTRACT
OR OTHERWISE) COMMENCED OR THREATENED, WHICH ARISE OUT OF OR ARE IN ANY WAY
BASED UPON THE NEGOTIATION, PREPARATION, EXECUTION, DELIVERY, ENFORCEMENT,
PERFORMANCE OR ADMINISTRATION OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY
UNDERTAKING OR PROCEEDING RELATED TO ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
OR ANY ACT, OMISSION TO ACT, EVENT OR TRANSACTION RELATED OR ATTENDANT THERETO,
INCLUDING, WITHOUT LIMITATION, AMOUNTS PAID IN SETTLEMENT, COURT COSTS, AND THE
FEES AND EXPENSES OF COUNSEL REASONABLY INCURRED IN CONNECTION WITH ANY SUCH
LITIGATION, INVESTIGATION, CLAIM OR PROCEEDING AND FURTHER INCLUDING, WITHOUT
LIMITATION, ALL LOSSES, DAMAGES (INCLUDING, WITHOUT LIMITATION, CONSEQUENTIAL
DAMAGES), EXPENSES OR LIABILITIES SUSTAINED BY THE LENDERS IN CONNECTION WITH
ANY ENVIRONMENTAL INSPECTION, MONITORING, SAMPLING, OR CLEANUP OF THE ENCUMBERED
REAL ESTATE REQUIRED OR MANDATED BY ANY ENVIRONMENTAL LAW (ALL OF THE FOREGOING,
COLLECTIVELY, THE "INDEMNIFIED LIABILITIES"); PROVIDED, HOWEVER, THAT BORROWER
SHALL NOT INDEMNIFY THE AGENT OR LENDERS OR ITS DIRECTORS, OFFICERS, AGENTS,
EMPLOYEES AND COUNSEL FROM SUCH INDEMNIFIED LIABILITIES RESULTING FROM THEIR
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Without limiting the foregoing, if, by
reason of any suit or proceeding of any kind, nature, or description against
Borrower, or by Borrower or any other party against the Agent, which in the
Agent's sole discretion makes it advisable for the Agent to seek counsel for
protection and preservation of its liens and security assets, or to defend its
own interest, such expenses and counsel fees shall be allowed to the Agent. To
the extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section 17.12 may be unenforceable because it is violative of any law or
public policy, the Borrower shall contribute the maximum portion which they are
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all indemnified matters incurred by Agent. The foregoing
indemnity shall survive the payment of the Obligations and the termination of
this Agreement. All of the foregoing costs and expenses shall be part of the
Obligations and secured by the Collateral.
- 92 -
17.13 Waiver of Notices. Unless otherwise expressly provided herein,
the Borrower waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, as well as any and all other notices to which they
might otherwise be entitled. No notice to or demand on Borrower which the Agent
or any Lender may elect to give shall entitle Borrower to any or further notice
or demand in the same, similar or other circumstances.
17.14 Binding Effect; Assignment. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective
representatives, successors and assigns of the parties hereto; provided,
however, that no interest herein may be assigned by Borrower without the prior
written consent of the Agent and each Lender. The rights and benefits of the
such persons hereunder shall, if the Agent so agrees, inure to any party
acquiring any interest in the Obligations or any part thereof.
- 93 -
17.15 Indemnity of the Agent and the Lenders by the Borrower. This
Agreement is intended by the Borrowers and the Agent and each Lender to be the
final, complete, and exclusive expression of the agreement among them. This
Agreement supersedes any and all prior oral or written agreements relating to
the subject matter hereof and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no oral
agreements between the parties. No modification, rescission, waiver, release, or
amendment of any provision of this Agreement shall be made, except by a written
agreement signed by the Borrower and a duly authorized officer of the Agent and
each Lender.
17.16 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent and the Borrower in separate counterparts, each
of which shall be an original, but all of which shall together constitute one
and the same agreement.
17.17 Captions. The captions contained in this Agreement are for
convenience only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.
17.18 Right of Set-Off. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Borrower, any such notice being waived by the
Borrower to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender to or for
the credit or the account of the Borrower against any and all Obligations owing
to such Lender, now or hereafter existing, irrespective of whether or not the
Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Borrower and the Agent after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT
OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY
OF THE BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN
UNANIMOUS CONSENT OF THE LENDERS.
17.19 Intentionally Omitted.
17.20 Release. As additional consideration for the Agent's and the
Lenders' entering into this Agreement, the Borrower hereby fully and
unconditionally releases and forever discharges the Agent and the Lenders, their
agents, employers, directors, officers, attorneys, branches, affiliates,
subsidiaries, successors and assigns and all persons, firms, corporations and
organizations acting on any of their behalves (the "Released Parties") of and
from any and all claims, liabilities, demands, obligations, damages, losses,
actions and causes of action whatsoever which the Borrower, or any of its
predecessors, may now have or claim to have on account of or in any way
affecting, concerning or arising out of or founded upon this Agreement or any or
all of the Loan Documents or the Existing Agreement against the Agent or any
Lender or any other Released Parties as of the date hereof, whether presently
known or unknown and of any nature and extent whatsoever, including, without
limitation, all such loss or damage of any kind heretofore sustained or that may
arise as a consequence of the dealings, discussions or negotiations between or
among the parties up to and including the date hereof, including but not limited
to, the administration or enforcement of the Existing Agreement, the Loans, the
notes, the Obligations or any of the Loan Documents. The obligations of the
Borrower under the Loan Documents and this Agreement shall be absolute and
unconditional and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected, except as otherwise
expressly provided by this Agreement, by:
- 94 -
(a) any exercise or nonexercise by the Agent or any Lender of any
right, remedy, power or privilege under or in respect of this Agreement, the
Existing Agreement, any Loan Document, any document relating to or evidencing
any of the Agent's or Lenders' Liens or applicable law, including, without
limitation, any waiver, consent, extension, indulgence or other action or
inaction in respect thereof; or
(b) any other act or thing or omission or delay to do any other
act or thing which could operate to or as a discharge of the Borrower, as a
matter of law, other than payment in full of all Obligations including but not
limited to all Obligations under the Loan Documents and this Agreement.
[Signatures on following page]
- 95 -
IN WITNESS WHEREOF, the parties have entered into this Agreement on the date
first above written.
"BORROWER"
WOODWORKERS WAREHOUSE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President and CEO
"AGENT"
BANK OF AMERICA, N.A.,
as the Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
"LENDERS"
Commitment: $15,000,000 BANK OF AMERICA, N.A.,
as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Commitment: $7,500,000 FOOTHILL CAPITAL CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President
Commitment: $7,500,000 TRANSAMERICA BUSINESS CAPITAL
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President