SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
TREND-LINES, INC.
EXHIBITS TO CURRENT REPORT ON
FORM 8-K DATED MARCH 1, 1999
Commission File Number 0-24390
EXHIBIT 10.01
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Dated as of February 23, 1999
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
BANKAMERICA BUSINESS CREDIT, INC.
as the Agent
and
TREND-LINES, INC.
POST TOOL, INC.
as the Borrowers
TABLE OF CONTENTS
SECTION PAGE
1. DEFINITIONS......................................................... .......1
2. LOANS AND LETTERS OF CREDIT................................................21
2.1 Total Facility.......................................................21
2.2 Revolving Loans......................................................21
2.3 Letters of Credit....................................................28
3. INTEREST AND OTHER CHARGES.................................................33
3.1 Interest.............................................................33
3.2 Conversion and Continuation Elections................................34
3.3 Maximum Interest Rate................................................35
3.4 Facility Fee.........................................................36
3.5 Collateral Management Fee............................................36
3.6 Additional Accommodation Fee.........................................36
3.7 Letter of Credit Fee.................................................36
4. PAYMENTS AND PREPAYMENTS...................................................36
4.1 Revolving Loans......................................................37
4.2 [Intentionally Left Blank]...........................................37
4.3 [Intentionally Left Blank]...........................................37
4.4 [Intentionally Left Blank]...........................................37
4.5 Place and Form of Payments; Extension of Time........................37
4.6 Payments as Revolving Loans..........................................37
4.7 Apportionment........................................................38
4.8 INDEMNITY FOR RETURNED PAYMENTS......................................38
5. AGENT'S AND ▇▇▇▇▇▇'S BOOKS AND RECORDS; MONTHLY STATEMENTS.................39
6. TAXES, YIELD PROTECTION AND ILLEGALITY.....................................39
6.1 Taxes................................................................39
6.2 Illegality...........................................................41
6.3 Increased Costs and Reduction of Return..............................42
6.4 Funding Losses.......................................................42
6.5 Inability to Determine Rates.........................................43
6.6 Certificates of Lenders..............................................43
6.7 Survival.............................................................43
7. COLLATERAL.................................................................43
7.1 Grant of Security Interest...........................................43
7.2 Perfection and Protection of Security Interest.......................44
7.3 Location of Collateral...............................................45
7.4 Title to, Liens on, and Sale and Use of Collateral...................45
7.5 Appraisals...........................................................46
7.6 Access and Examination...............................................46
7.7 Insurance............................................................47
7.8 Collateral Reporting.................................................47
7.9 [Intentionally Left Blank]...........................................48
7.10 Collection of Accounts; Payments.....................................48
7.11 Inventory............................................................49
7.12 Equipment............................................................49
7.13 Assigned Contracts...................................................50
7.14 Documents, Instruments, and Chattel Paper............................51
7.15 Right to Cure........................................................51
7.16 Power of Attorney....................................................51
7.17 The Agent's and ▇▇▇▇▇▇'s Rights, Duties, and Liabilities.............51
8. BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.................... .....52
8.1 Books and Records....................................................52
8.2 Financial Information................................................52
8.3 Notices to Lenders...................................................54
9. GENERAL WARRANTIES AND REPRESENTATIONS.....................................55
9.1 Authorization, Validity, and Enforceability of
this Agreement and the Loan Documents................................56
9.2 ▇▇▇▇▇▇▇▇ and Priority of Security Interest...........................56
9.3 Organization and Qualification.......................................56
9.4 Corporate Name; Prior Transactions...................................56
9.5 Subsidiaries and Affiliates..........................................57
9.6 Financial Statements and Projections.................................57
9.7 Capitalization.......................................................57
9.8 Solvency.............................................................57
9.9 Debt.................................................................57
9.10 Distributions........................................................58
9.11 Title to Property....................................................58
9.12 Adequate Assets......................................................58
9.13 Real Property; Leases................................................58
9.14 Proprietary Rights...................................................58
9.15 Trade Names and Terms of Sale........................................58
9.16 Litigation...........................................................58
9.17 Restrictive Agreements...............................................59
9.18 Labor Disputes.......................................................59
9.19 Environmental Laws...................................................59
9.20 No Violation of Law..................................................60
9.21 No Default...........................................................60
9.22 ERISA Compliance.....................................................60
9.23 Taxes................................................................61
9.24 Use of Proceeds......................................................61
9.25 Private Offerings....................................................61
9.26 Broker's Fees........................................................62
9.27 No Material Adverse Change...........................................62
9.28 Disclosure...........................................................62
9.29 Year 2000............................................................62
10 AFFIRMATIVE AND NEGATIVE COVENANTS.........................................62
10.1 Taxes and Other Obligations..........................................62
10.2 Corporate Existence and Good Standing................................62
10.3 Compliance with Law and Agreements...................................63
10.4 Maintenance of Property and Insurance................................63
10.5 Environmental Laws...................................................63
10.6 ERISA................................................................63
10.7 ▇▇▇▇▇▇▇, Consolidations, Acquisitions, or Sales......................63
10.8 Distributions; Capital Changes.......................................64
10.9 Transactions Affecting Collateral or Obligations.....................64
10.10 Guaranties...........................................................64
10.11 Debt.................................................................64
10.12 Prepayment...........................................................64
10.13 Transactions with Affiliates.........................................64
10.14 [Intentionally Left Blank]...........................................65
10.15 Business Conducted...................................................65
10.16 Liens................................................................65
10.17 Sale and Leaseback Transactions......................................65
10.18 New Subsidiaries.....................................................65
10.19 Restricted Investments...............................................65
10.20 Capital Expenditures.................................................65
10.21 [Intentionally Left Blank]...........................................65
10.22 Interest Coverage Ratio..............................................65
10.23 Intentionally Left Blank.............................................66
10.24 Intentionally Left Blank.............................................66
10.25 Intentionally Left Blank.............................................66
10.26 New Store Openings...................................................66
10.27 Adjusted Tangible Net Worth..........................................66
10.28 Buy-Back of Common Stock.............................................67
10.29 Post-Closing Matters.................................................67
10.30 Further Assurances...................................................67
11 CONDITIONS PRECEDENT.......................................................68
11.1 Conditions Precedent to Effectiveness................................68
(a) Representations and Warranties; Covenants................68
(b) Delivery of Documents....................................68
(c) Fees.....................................................68
(d) Payment of Fees and Expenses.............................68
(e) Required Approvals.......................................68
(f) No Material Adverse Change...............................68
(g) Proceedings..............................................68
11.2 Conditions Precedent to Each Loan....................................69
12 DEFAULT; REMEDIES..........................................................69
12.1 Events of Default....................................................69
13 REMEDIES...................................................................71
14 TERM AND TERMINATION.......................................................73
15 AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS................73
15.1 No Waivers; Cumulative Remedies......................................73
15.2 Amendments and Waivers...............................................74
15.3 Assignments; Participations..........................................74
16 THE AGENT..................................................................76
16.1 Appointment and Authorization........................................76
16.2 Delegation of Duties.................................................77
16.3 Liability of Agent...................................................77
16.4 Reliance by Agent....................................................78
16.5 Notice of Default....................................................78
16.6 Credit Decision......................................................78
16.7 Indemnification......................................................79
16.8 Agent in Individual Capacity.........................................79
16.9 Successor Agent......................................................79
16.10 Withholding Tax......................................................80
16.11 [Intentionally Left Blank]...........................................81
16.12 Collateral Matters...................................................81
16.13 Restrictions on Actions by Lenders; Sharing of Payments..............82
16.14 Agency for Perfection................................................83
16.15 Payments by Agent to Lenders.........................................83
16.16 Concerning the Collateral and the Related Loan Documents.............84
16.17 Field Audit and Examination Reports..................................84
16.18 Relation Among Lenders...............................................85
17 MISCELLANEOUS..............................................................85
17.1 Cumulative Remedies; No Prior Recourse to Collateral.................85
17.2 No Implied Waivers...................................................85
17.3 Severability.........................................................86
17.4 Governing Law........................................................86
17.5 Consent to Jurisdiction and Venue; Service of Process................86
17.6 Waiver of Jury Trial.................................................86
17.7 [Intentionally Left Blank]...........................................86
17.8 Survival of Representations and Warranties...........................86
17.9 Other Security and Guaranties........................................87
17.10 Fees and Expenses....................................................87
17.11 Notices..............................................................87
17.12 Indemnification......................................................89
17.13 Waiver of Notices....................................................90
17.14 Binding Effect; Assignment...........................................90
17.15 Indemnity of the Agent and the Lenders by the Borrowers..............90
17.16 Counterparts.........................................................90
17.17 Captions.............................................................90
17.18 Right of Set-Off.....................................................90
17.19 Participating Lender's Security Interests............................91
17.20 Joint and Several Liability..........................................91
LOAN AND SECURITY AGREEMENT, dated as of February 23, 1999, 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"), BankAmerica Business Credit, Inc., a Delaware corporation
("BABC") with an office at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, as agent for
the Lenders (in its capacity as agent, the "Agent"), and TREND-LINES, INC., a
Massachusetts corporation with offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ("Trend-Lines"), and POST TOOL, INC., a Massachusetts corporation
with offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ("Post
Tool").
W I T N E S E T H
WHEREAS, the Borrowers and BABC are parties to a Loan and
Security Agreement dated as of July 3, 1996 and amended as of September 18,
1996, January 28, 1997, June 16, 1997, December 31, 1997, July 31, 1998, and
September 30, 1998 (as so amended, the "Existing Agreement"); and
WHEREAS, the Borrowers and BABC have agreed to amend further
the Existing Agreement and certain other loan documents executed or entered into
pursuant thereto by, among other things, increasing the amount of the total
facility thereunder and adding Transamerica Business Credit Corporation and
Foothill Capital Corporation, as Lenders, and, for the purpose of convenience
only, to restate in its entirety the Existing Agreement; and
WHEREAS, the parties hereto have acknowledged and agreed that
this Agreement and the transactions contemplated hereby are not intended to be a
novation of the indebtedness of the Borrowers under the Existing Agreement
outstanding on the date hereof (the "Existing Debt");
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 Borrowers, the Lenders and the
Agent hereby agree as follows:
I. DEFINITIONS. As used herein:
"Accounts" means all of a Borrower's now owned or hereafter
acquired or arising accounts, and any other 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.
"Adjusted Tangible Assets" means all of Trend-Lines' assets on
a consolidated basis except: (a) deferred assets, other than prepaid insurance
and prepaid taxes; (b) patents, copyrights, trademarks, trade names, franchises,
goodwill, and other similar intangibles; (c) Restricted Investments; (d)
unamortized debt discount and expense; (e) assets of Trend-Lines constituting
Intercompany Accounts; and (f) fixed assets to the extent of any write-up in the
book value thereof resulting from a revaluation effective after the Closing
Date.
"Adjusted Tangible Net Worth" means, at any date: (a) the book
value (after deducting related depreciation, obsolescence, amortization,
valuation, and other proper reserves as determined in accordance with GAAP) at
which the assets of Trend-Lines and its Subsidiaries would be shown on a
consolidated balance sheet of Trend-Lines at such date prepared in accordance
with GAAP less (b) the amount at which Trend-Lines' consolidated liabilities
would be shown on such balance sheet, including as liabilities all reserves for
contingencies and other potential liabilities which in accordance with GAAP
would be shown on such balance sheet.
"Affiliate" means, with respect to either Borrower: (a) a
Person which, directly or indirectly, controls, is controlled by, or is under
common control with, such Borrower; (b) a Person which beneficially owns or
holds, directly or indirectly, ten percent or more of any class of voting stock
of such Borrower (but excluding ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., the ▇▇▇▇▇▇▇▇ Fund, Inc.,
Wellington Management Company, LLP, Dimensional Fund Advisors, Inc., each an
investment company, investment advisor or similar financial institution, and
each of their respective clients, funds and related entities (collectively, the
"Institutional Holders"); 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.
"Agent" means BankAmerica Business Credit, Inc., 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, BABC, 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 Loan and Security Agreement.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means (i) with respect to (a) Reference
Rate Loans and all other obligations (other than LIBOR Rate Loans) incurred
during any period that the Borrowing Base is 65% or lower, three-quarters of one
percent (0.75%) and (b) Reference Rate Loans and all other obligations (other
than LIBOR Rate Loans) incurred during any period that the Borrowing Base is in
excess of 65%, three-quarters of 1% (0.75%) on the principal amount up to and
including the Borrowing Base of 65% and 2% (2.00%) on the principal amount in
excess of such Borrowing Base of 65%, as applicable, and (ii) with respect to
LIBOR Rate Loans, two and one-quarter percent (2.25%); provided, however, that,
if for any Rolling Period the certificate referred to in Section 8.2(c) relating
to such Rolling Period indicates that the Fixed Charges Ratio is equal to or
more than 1.0:1.0, then the "Applicable Margin" set forth in clauses (i)(a) and
(ii) above for each type of Loan outstanding during the Interest Adjustment
Period immediately following such Rolling Period (but only so long as no Event
or Event of Default exists during such Interest Adjustment Period) shall be as
set forth below:
Applicable Margin for Applicable Margin
Reference Rate Loans for LIBOR Rate Loans
0.5% 2.0%
"Assigned Contracts" means, collectively, all of the relevant
Borrower's rights and remedies under, and all moneys and claims for money due or
to become due to such Borrower under, any material contracts and any and all
amendments, supplements, extensions, and renewals thereof, including, without
limitation, all rights and claims of such 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).
"Availability" means, at any time with respect to either
Borrower:
(a) the Sub-facility of such Borrower at such time; minus
(b) the sum of (i) Outstanding Credit to such Borrower at such
time, (ii) reserves for accrued interest on the Obligations of such
Borrower, (iii) the Environmental Compliance Reserve for such Borrower,
(iv) the Rental Reserve for such Borrower, (v) in the case of Trend-Lines,
a reserve of $550,000 in connection with the Indemnification Agreement,
and (vi) all other reserves which the Lender deems necessary in the
exercise of its reasonable credit judgment to maintain with respect to
such ▇▇▇▇▇▇▇▇'s account, including, without limitation, reserves for any
amounts which the Lender may be obligated to pay in the future for the
account of such Borrower.
"BABC" means BankAmerica Business Credit, Inc.
"BABC Loan" and "BABC Loans" have the meaning specified in
Section 2.2(h).
"Bank of America" means Bank of America National Trust and
Savings Association, a National Banking Association, or any successor entity
thereto.
"BankBoston" means BankBoston, N.A.
"BankBoston Letter of Credit" means a Letter of Credit issued
by BankBoston and referred to in the Indemnification Agreement.
"Borrower" means either of Trend-Lines or Post Tool.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans made on the same day by the Lenders to the Borrower (or by ▇▇▇▇
in the case of a Borrowing funded by BABC Loans) or by the Agent in the case of
a Borrowing consisting of an Agent Advance.
"Borrowing Base" means, with respect to either Borrower, (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 such Borrower plus,
(b) without duplication, 50% of the undrawn face amount of Letters of Credit
issued or caused to be issued by the Lender for the account of such Borrower for
the purchase of goods which will become Eligible Inventory provided, however,
that with respect to either Borrower, within the period June 1, 1999 through
October 31, 1999, the 65% advance rate under subclause (a) shall be increased to
70%.
"Business Day" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in New York, New York or San Francisco,
California, 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 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 a Borrower
that, in accordance with GAAP, should be reflected as a liability on the balance
sheet of such Borrower.
"Change in Control" means and shall be deemed to occur on the
earliest of, and upon any occurrence of, any of the following:
(a) Any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended from time to
time, (the "Exchange Act"), other than the
Principal Stockholders, shall become the
"beneficial owner" as defined in Rules 13d-3 and
13d-5 under the Exchange Act) of 50% or more of
the voting stock of Trend-Lines;
(b) At any time during any consecutive two-year
period, individuals who at the beginning of such
period constituted the Board of Directors of
Trend-Lines (together with any new directors whose
election by such Board of Directors or whose
nomination for election by the stockholders of
Trend-Lines was approved by a vote of 51% 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 Trend-Lines
then in office, unless ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and any
designee of the Principal Stockholders are
directors of Trend-Lines.
"Closing Date" means July 3, 1996.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning given to such term in Section 7.1.
"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 ▇▇▇▇▇▇'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.
"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.
"Conversion/Continuation Date" has the meaning given to such
term in Section 3.2(b).
"Debt" means all liabilities, obligations and indebtedness of
either 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) such Borrower's liabilities and obligations
to trade creditors; (b) all Obligations; (c) all obligations and liabilities of
any Person secured by any Lien on such Borrower's Property, even though such
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 such
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 such 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 such 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 of such corporation, other than distributions in capital stock
of the same class; or (b) the redemption or other acquisition of any capital
stock of such corporation.
"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.
"EBITDA" means, with respect to any period of Trend-Lines and
its Subsidiaries, the sum of:
(i) the net income (or net loss) of Trend-Lines
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 Trend-Lines and
its Subsidiaries for such period;
(B) federal and state income tax expense
of Trend-Lines and its Subsidiaries for such
period;
and
(C) the amount of all depreciation and
amortization for such period.
"Eligible Inventory" means, with respect to either Borrower,
Inventory of such Borrower, valued at the lower of cost (on a first-in,
first-out basis) or market, that constitutes raw materials or first quality
finished goods and that: (a) is owned by such Borrower and with respect to which
such 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 a 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, bill-and-hold Inventory, returned or defective
Inventory, or Inventory delivered to such Borrower on consignment; and (f) 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 10 days' written notice prior to establishing such
additional criteria and the reason(s) therefor. There shall in any event be
excluded from Eligible Inventory (i) any goods returned by a Borrower's
customers that are determined by such Borrower or the Agent to be unsalable in
the ordinary course of business or held for return to vendors and (ii) goods in
transit. If any Inventory at any time ceases to be Eligible Inventory, such
Inventory shall promptly be excluded from the calculation of Eligible Inventory.
"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 a Borrower and such Borrower's operations and
Property to comply with Environmental Laws or in order to correct any violation
by such Borrower or such 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 relevant 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 U.S.C. ss. 6901 et seq., as
amended; the Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C. ss. 9601 et seq., as amended; the Toxic Substances Control Act,
15 U.S.C. ss. 2601 et seq., as amended; the Clean Water Act, 33 U.S.C. ss. 466
et seq., as amended; the Clean Air Act, 42 U.S.C. ss. 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 each 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, motor vehicles, aircraft,
dies, tools, jigs, and office equipment, as well as all of such types of
property leased by such Borrower and all of such 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, as amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Trend-Lines 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 either 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 such 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.
"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 Existing Agreement.
"Facility Fee" has the meaning specified in Section 3.4.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.
"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.
"Fiscal Year" means the Borrowers' fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrowers will end on March
1, 1999.
"Fixed Charges Ratio" means, for any Rolling Period, EBITDA
for such Rolling Period divided by the sum of Capital Expenditures, interest
expense of the Borrowers, federal and state income tax expense of the Borrowers
and principal payments which the Borrowers were required to make for borrowed
money, for such Rolling Period provided that, for the purposes of this
definition, Capital Expenditures shall not include the first $1.1 million
expended by the Borrowers for Warehouse MIS on and after the Closing Date.
"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.
"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.
"Indemnification Agreement" means the Indemnification
Agreement made and entered into the 28th day of January, 1997 by and among
Trend-Lines, the Lender and BankBoston, as it may be amended, supplemented,
waived or otherwise modified from time to time.
"Intercompany Accounts" means all assets and liabilities,
however arising, which are due to a Borrower from, which are due from a Borrower
to, or which otherwise arise from any transaction by a Borrower with, any
Affiliate.
"Interest Adjustment Date" means, with respect to any Rolling
Period in connection with the adjustment of the Applicable Margin:
(i) In the case of any Reference Rate Loan outstanding
during the Interest Adjustment Period immediately
following such Rolling Period:
(A) the first day of the calendar month in which
the certificate relating to Fixed Charges Ratio
referred to in Section 8.2(c) is delivered to the
Agent with respect to such Rolling Period,
provided that such certificate is delivered no
later than four Business Days prior to the last
day of the month following such Rolling Period; or
(B) the first day of the calendar month following
the month in which such certificate is delivered
if it is delivered later than four Business Days
prior to, but no later than, the last day of such
month following such Rolling Period; or
(C) if such certificate is not delivered until
after the end of the month following such Rolling
Period, the first day of such month but the
Applicable Margin shall be three-quarters of one
percent (0.75%),
provided, that, in the event that, with respect to
any calendar month, there would be a conflict
between the provisions of (A) and the provisions
of (B) above, the provisions of (A) shall prevail
with respect to such month; and
(ii) In the case of any LIBOR Rate Loan:
(A) the day such certificate is delivered to the
Agent, if such certificate is delivered within 30
days after the end of such Rolling Period; or
(B) if such certificate is not delivered within
such 30 days, the previous Interest Adjustment
Date (that is, there is no change in Applicable
Margin based on Fixed Charges Ratio for such
Rolling Period).
"Interest Adjustment Period" means a period commencing on any
Interest Adjustment Date and ending on the first day of the following month.
"Interest Coverage Ratio" means, for any period, the ratio of
(a) EBITDA over (b) total interest expense during such period.
"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).
"Inventory" means all of each 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, returned goods,
and materials and supplies of any kind, nature or description which are or might
be used or consumed in such 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 Borrowers' monthly financial condition, results of
operations, and cash flow for the one-year period ending February 28, 2000,
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 BABC to the extent of any BABC Loan outstanding;
provided that no such Agent Advance or BABC 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.
"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:
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; and (b) 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 Amended and
Restated Trademark Security Agreements, the Seabrook Mortgage, the Amended and
Restated Stock Pledge Agreement, the Indemnification Agreement 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.
"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.
"Mortgages" means: (a) each mortgage, security agreement, and
assignments of leases and rents between either Borrower and the Agent or BABC
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 Trend-Lines 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.
"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 either 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 the Lender in such 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 and other sums chargeable to such
Borrower hereunder, under another Loan Document, or under any other agreement or
instrument with the Lender. "Obligations" includes, without limitation, all
debts, liabilities, and obligations now or hereafter owing from such Borrower to
the Agent and/or any Lender under or in connection with the Letters of Credit or
the Indemnification Agreement.
"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 either
▇▇▇▇▇▇▇▇, the sum of (a) the aggregate outstanding principal amount of the Loans
at such time made to such Borrower plus (b) the aggregate undrawn amount of all
outstanding Letters of Credit at such time issued for the account of such
Borrower plus (c) the aggregate amount of all unpaid reimbursement obligations
of such Borrower in respect of Letters of Credit issued for the account of such
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 the Lender.
"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 either 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 such 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 Trend-Lines 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.
"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 Trend-Lines 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 relevant 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 relevant 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
relevant 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 relevant 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 relevant Borrower or the value of the Agent's Security
Interest therein, or materially interfere with the ordinary conduct of the
business of the relevant Borrower; and (j) purchase money security interests and
liens of lessors under capital leases to the extent that the acquisition or
lease of the underlying asset was permitted under Section 10.20, 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 any Borrower or any ERISA Affiliate sponsors or maintains
or to which any Borrower or any ERISA Affiliate makes, is making, or is
obligated to make contributions and includes any Pension Plan.
"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 either Borrower
has any interests on the Closing Date.
"Principal Stockholder" means ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
his spouse, or any of his or her respective 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 each 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, trade names, trade styles, patent and trademark applications and
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 sue 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
▇▇▇▇▇▇'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, choses 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;
▇▇▇▇▇▇▇▇▇▇▇ 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.
"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 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
either Borrower, shall mean, as of any date, an amount equal to the next three
months of Rental that would be payable by the relevant 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.
"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 a
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 a
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 a
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; (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; (e) commercial paper
given the highest rating by a national credit rating agency and maturing not
more than 270 days from the date of creation thereof; and (f) Property made in
connection with the opening of new stores in accordance with Section 10.26.
"Reversions" means any funds which may become due to either
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 BABC Loan.
"Rolling Period" means each period of 12 consecutive fiscal
months ended March 1, 1997 and each fiscal month endthereafter.
"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 Trend-
Lines located at ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ at ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇.
"Security Interest" means collectively the Liens granted to
the Agent on behalf of the Lenders in the Collateral pursuant to this 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).
"Solvent" shall mean when used with respect to any Person
that: (a) the fair value of all its Property is in excess of the total amount of
its debts (including, without limitation, contingent liabilities); (b) it is
able to pay its debts as they mature; (c) it does not have unreasonably small
capital for the business in which it is engaged or for any business or
transaction in which it is about to engage; and (d) it is not "insolvent" as
such term is defined in Section 101(32) of the Bankruptcy Code.
"Stated Termination Date" means December 31, 2001.
"Stock Pledge Agreement" means the Amended and Restated Stock
Pledge Agreement dated as of the date hereof between the Agent and Trend-Lines,
as it may be amended, supplemented, waived or otherwise modified from time to
time.
"Sub-facility" means, as of any date with respect to either
Borrower, the lesser of (a) the excess, if any, of (i) the Total Facility on
such date over (ii) the Outstanding Credit of the other Borrower on such date or
(b) the Borrowing Base of such Borrower on such date.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 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 relevant 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.
"Total Facility" has the meaning specified in Section 2.1.
"Trademark Security Agreements" means the Amended and Restated
Trademark Security Agreements, each dated as of the date hereof, executed and
delivered by the Borrowers to the Agent to evidence and perfect the Agent's
Security Interest in the Borrowers' present and future trademarks and related
licenses and rights, as it may be amended, supplemented, waived or otherwise
modified from time to time.
"UCC" means the Uniform Commercial Code (or any successor
statute) of the State of New York or of any other state the laws of which are
required by Section 9-103 thereof to be applied in connection with the issue of
perfection of security interests.
"Unused Line Amount" means $100,000,000.
"Unused Line Fee" has the meaning specified in Section 3.1(c).
"Warehouse MIS" means management information systems to be
used with respect to one or more warehouses; whether an expenditure constitutes
an expenditure for such a system shall be determined by the Agent in its
reasonable commercial discretion.
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 $100,000,000 in the aggregate (the "Total Facility") for the
Borrowers' 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 a
▇▇▇▇▇▇▇▇'s request from time to time, to make revolving loans
(the "Revolving Loans") to such Borrower in amounts not to exceed (except for
BABC with respect to BABC Loans or Agent Advances) such ▇▇▇▇▇▇'s Pro Rata Share
of the Availability of such 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 either
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 either Borrower or to be obligated to exceed the limits of the Availability
for either 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). A
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 such Borrower to do so and the crediting of a Revolving
Loan to such Borrower's deposit account, or transmittal to such Person as the
Borrower shall direct, shall conclusively establish the obligation of such
Borrower to repay such Revolving Loan as provided herein. The Agent will charge
all Revolving Loans to and other Obligations of a Borrower to a loan account of
such 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 such ▇▇▇▇▇▇▇▇'s loan
account as of the date due from such Borrower or the date paid or incurred by
the Agent and/or Lenders, as the case may be.
(b) Procedure for Borrowing. (i) Each Borrowing
shall be made upon a 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 or LIBOR Revolving Loans;
provided, however, all Revolving Loans requested at a Borrowing Base advance
rate in excess of 65%, shall be Reference Rate 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.
(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 a 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.
(c) Reliance upon Authority. On or prior to the Effective Date
(as hereinafter defined), and thereafter prior to any change with respect to any
of the information contained in the following clauses (i) and (ii), each
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 such 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 such Borrower, the proceeds of which are to
be transferred to any of the accounts specified by such 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 such Borrower to
make such requests on its behalf.
(d) No Liability. The Agent shall not incur any liability to a
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 such 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 such Borrower shall direct, shall conclusively establish the
obligation of such 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 BABC to make a BABC Loan
pursuant to the terms of Section 2.2(h) in the amount of the requested
Borrowing; provided, however, that if BABC declines in its sole discretion to
make a BABC 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.
(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 ▇▇▇▇▇▇'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
applicable 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 such Borrower, designated in writing by such
Borrower; provided, however, that the amount of Revolving Loans so made on any
date shall in no event exceed the Availability of such Borrower on such date.
(ii) Unless the Agent receives notice from a
Lender on or prior to the Effective Date or, with respect to any Borrowing after
the Effective 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 applicable Borrower the amount of
that ▇▇▇▇▇▇'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 such 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 such 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 ▇▇▇▇▇▇'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 relevant
Borrower of such failure to fund and, upon demand by the Agent, such 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 such Borrower to the Agent for the
Defaulting ▇▇▇▇▇▇'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 a 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 a 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.
(h) Making of BABC Loans. (i) In the event the Agent shall
elect, with the consent of BABC, to have the terms of this Section 2.2(h) apply
to a requested Borrowing as described in Section 2.2(f), BABC shall make a
Revolving Loan in the amount of such Borrowing (any such Revolving Loan made
solely by BABC pursuant to this Section 2.2(h) being referred to as a "BABC
Loan" and such Revolving Loans being referred to collectively as "BABC Loans")
available to a Borrower on the Funding Date applicable thereto by transferring
same day funds to a general operating account of such Borrower, designated in
writing by such Borrower. Each BABC 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 BABC 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 BABC to make any
BABC 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 such Borrower on such Funding Date. BABC 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 BABC Loan. The Agent agrees that on any date
that BABC Loans exceed $10,000,000, the Agent shall request Settlement of all
outstanding BABC Loans on the Business Day following such date.
(ii) The BABC 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 each 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 each 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 each such 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.
(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 ▇▇▇▇▇▇'s Pro Rata Share of the outstanding Revolving Loans. Notwithstanding
such agreement, the Agent, BABC, and the other Lenders agree (which agreement
shall not be for the benefit of or enforceable by a 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 BABC 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 BABC, with
respect to each outstanding BABC 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 BABC, in the case of BABC Loans)
shall make the amount of such ▇▇▇▇▇▇'s Pro Rata Share of the outstanding
principal amount of the BABC Loans and Agent Advances with respect to which
Settlement is requested available to the Agent, for itself or for the account of
BABC, 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 BABC Loan or
Agent Advance and, together with the portion of such BABC Loan or Agent Advance
representing BABC'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.
(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 BABC Loan or Agent
Advance), each other Lender shall irrevocably and unconditionally purchase and
receive from BABC or the Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such BABC Loan or Agent Advance to the
extent of such ▇▇▇▇▇▇'s Pro Rata Share thereof by paying to the Agent, in same
day funds, an amount equal to such ▇▇▇▇▇▇'s Pro Rata Share of such BABC 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 and undivided interest and participation in any BABC 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 ▇▇▇▇▇▇'s Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral received by the Agent in respect of such BABC Loan or
Agent Advance.
(iv) Between Settlement Dates, the Agent, to the
extent no Agent Advances or BABC Loans are outstanding, may pay over to BABC
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 ▇▇▇▇'s other outstanding Revolving Loans. If, as of any
Settlement Date, collections received since the then immediately preceding
Settlement Date have been applied to BABC's other outstanding Revolving
Loans other than to BABC Loans or Agent Advances, as provided for in the
previous sentence, BABC 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, BABC with respect to BABC Loans, the Agent with
respect to Agent Advances, and each Lender with respect to the Revolving Loans
other than BABC 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 ▇▇▇▇, 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 BABC
Loans owing to BABC, 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 ▇▇▇▇▇▇'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 BABC
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.
2.3 Letters of Credit. (a) Subject to the terms and conditions
of this Agreement, the Agent on behalf of the Lenders shall, upon a ▇▇▇▇▇▇▇▇'s
request from time to time, cause merchandise or standby letters of credit to be
issued for such ▇▇▇▇▇▇▇▇'s account by Bank of America or another issuer
reasonably acceptable to such 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 and the maximum claim (matured or
unmatured) of BankBoston under the Indemnification Agreement, would exceed
$2,000,000; (ii) the maximum face amount of the requested Letter of Credit, and
all commissions, fees, and charges due from such Borrower to the Lender 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 or
the Indemnification Agreement will be charged to such 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 relevant 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.
(c) Issuance of Letters of Credit.
(1) Request for Issuance. The
relevant Borrower shall give the Agent two Business Days' prior written notice
of such ▇▇▇▇▇▇▇▇'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. Such 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 Borrowers agree to reimburse the issuer, in the manner set
forth in Section 2.3(d)(2), for any draw under any Letter of Credit or
BankBoston 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 or
BankBoston, respectively, the amount of all other obligations and other amounts
payable to such issuer under or in connection with any Letter of Credit or
BankBoston Letter of Credit immediately when due, irrespective of any claim,
setoff, defense or other right which the Borrowers 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
or BankBoston honors a draw under such Letter of Credit or BankBoston Letter
of Credit, respectively, 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 ▇▇▇▇▇▇'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, 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 ▇▇▇▇▇▇'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).
(2) Sharing of Reimbursement Obligation
Payments. Whenever the Agent receives a payment from a 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 ▇▇▇▇▇▇'s Pro Rata Share of such payment from such 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 ▇▇▇▇▇▇.
(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 Borrowers 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 Borrowers
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 Borrowers 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 ofany of the terms of any
of the Loan Documents; or
(v) the occurrence of any Event
or Event of Default.
(f) Recovery or Avoidance of Payments. In
the event any payment by or on behalf of a Borrower received by the Agent with
respect to any Letter of Credit (or any guaranty by such Borrower or
reimbursement obligation of such 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
Borrowers agree 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
Borrowers 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 Borrowers
hereby agree 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 (A) the issuance of any
Letter of Credit or the provision of any credit support or enhancement in
connection therewith or (B) the Indemnification Agreement. The agreement in
this Section 2.3(h)(1) shall survive payments of all Obligations.
(2) Assumption of Risk by the Borrowers.
As among the Borrowers, the Lenders, and the Agent, the Borrowers assume 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.
(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 Borrowers or relieve the Borrowers of any of their obligations hereunder to
any such Person.
(4) Power of Attorney. In connection
with all Inventory financed by Letters of Credit, or a
BankBoston Letter of Credit, each Borrower hereby appoints the Agent, or the
Agent's designee, as such ▇▇▇▇▇▇▇▇'s attorney, with full power and authority:
(a) to sign and/or endorse such ▇▇▇▇▇▇▇▇'s name upon any warehouse or other
receipts; (b) to sign such 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 such ▇▇▇▇▇▇▇▇'s name, and to sign and deliver to customs
officials powers of attorney in such ▇▇▇▇▇▇▇▇'s name for such purpose; (d) to
complete in such 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 such
▇▇▇▇▇▇▇▇'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. Each Borrower
hereby authorizes and directs any issuer of a Letter of Credit to name such
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 or a BankBoston Letter of
Credit, each Borrower shall, at the Agent's request, instruct all suppliers,
carriers, forwarders, warehouses or others receiving orholding 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 a Borrower's possession, such Borrower
shall deliver them, upon request, to the Agent in their original form.
Each 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.
(i) Cash Collateral. If, notwithstanding
the provisions of this Section 2.3 and Section 14, any
Letter of Credit or BankBoston Letter of Credit is outstanding upon the
termination of this Agreement, then upon such termination each Borrower shall
deposit with the Agent, at its discretion, with respect to each Letter of Credit
or BankBoston Letter of Credit then outstanding, cash in amounts necessary to
reimburse the Agent for payments made by the Agent and/or Lenders under such
Letter of Credit or under any credit support or enhancement provided through the
Agent. Such deposit of cash shall be held by the Agent as security for, and to
provide for the payment of, the aggregate undrawn amount of such Letters of
Credit or BankBoston Letter of Credit remaining outstanding.
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:
(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 Borrowers shall pay interest on the unpaid principal
balances of the Revolving Loans at a per annum rate 2% greater than the rate of
interest otherwise specified herein, and the Letter of Credit Fee shall be
increased to three and one-quarter percent (3.25%) per annum.
(c) Unused Line Fee. For every month during the
term of this Agreement, the Borrowers agree, jointly
and severally, to pay the Agent for the ratable account of the Lenders a fee
(the "Unused Line Fee") in an amount equal to three-eighths of one percent per
annum, multiplied by the average daily amount by which the Unused Line Amount
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) Either 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 (other than Reference Rate Loans made at a
Borrowing Base advance rate in excess of 65%) 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 such Borrower having
Interest Periods expiring on such day;
provided that neither Borrower may 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 such Borrower to continue
such Loans as, and convert such Loans into, LIBOR Rate Loans, as the case may
be, shall terminate.
(b) Such 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 relevant
Borrower has failed to select timely a new Interest Period to be applicable to
such LIBOR Rate Loans or if any Event or Event of Default then exists, such
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, neither Borrower may 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 a 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 such 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 a 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 such 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 such Borrower such excess.
3.4 Facility Fee. The Borrowers agree, jointly and severally,
to pay to the Agent, for the account of the Lenders, on the Effective Date a
facility fee in the amount of $175,000 (the "Facility Fee").
3.5 Collateral Management Fee. The Borrowers agree to pay the
Agent, solely for its own account, on the Effective Date and January 1 of each
year thereafter, a collateral management fee ("Collateral Management Fee") in
the amount provided in the Commitment Letter dated February 10, 1999 by the
Agent to the Borrowers.
3.6. Additional Accommodation Fee. The Borrowers agree to pay
the Agent, for the ratable account of the Lenders, on June 1, 1999, a fee (the
"Additional Accommodation Fee") in the amount of $400,000, which Additional
Accommodation Fee shall be fully earned by the Lenders on the Effective Date.
3.7 Letter of Credit Fee. The Borrowers agree, jointly and
severally, to pay to the Agent, for the ratable account of the Lenders, a fee
(the "Letter of Credit Fee") equal to one and one-quarter percent (1.25%) per
annum of the undrawn face amount of each Letter of Credit issued for any
Borrower's account at such 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.
4. PAYMENTS AND PREPAYMENTS.
4.1 Revolving Loans. The Borrowers 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 Borrowers shall pay to the
Agent, for account of the Lenders, on demand, the amount by which the unpaid
principal balance of the Revolving Loans 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 [Intentionally Left Blank].
4.4 [Intentionally Left Blank].
4.5 Place and Form of Payments; Extension of Time. (a) All
payments by the Borrowers 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
Borrowers 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 a
Borrower prior to the date on which any payment is due to
the Lenders that such Borrower will not make such payment in full as and when
required, the Agent may assume that such 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.
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 a 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, BABC 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
Borrowers; second, to pay any fees or expense reimbursements then due to the
Lenders from the Borrowers; third, to pay interest due in respect of all
Revolving Loans, including BABC Loans and Agent Advances; fourth, to pay or
prepay principal of the BABC Loans and Agent Advances; fifth, to pay or prepay
principal of the Revolving Loans (other than BABC Loans and Agent Advances) and
unpaid reimbursement obligations in respect of Letters of Credit; and sixth, to
the payment of any other Obligation due to the Agent or any Lender by the
Borrowers. Notwithstanding anything to the contrary contained in this Agreement,
unless so directed by the Borrowers, 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. 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.
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 BORROWERS 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 ▇▇▇▇▇▇'S BOOKS AND RECORDS; MONTHLY STATEMENTS. Each
Borrower agrees that the Agent's and each ▇▇▇▇▇▇'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 Trend-Lines a monthly statement of Loans, payments, and other
transactions of the Borrowers pursuant to this Agreement. Such statement shall
be deemed correct, accurate, and binding on the Borrowers 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
Trend-Lines 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 Trend-Lines, 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 a 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 Borrowers shall pay all Other
Taxes.
(b) The Borrowers agree 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 the
Lender 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 the Lender or the Agent makes written demand therefor.
(c) If any 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) such Borrower shall make such
deductions and withholdings;
(iii) such Borrower shall pay the full
amount deducted or withheld to the relevant taxing authority or other authority
in accordance with applicable law; and
(iv) such 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 the Lender would have received if such
Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment
by a Borrower of Taxes or Other Taxes, such 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 a 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 such 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 Borrowers 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 Borrowers 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.
(g) Unless the Borrowers 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 Borrowers) that under applicable law and
treaties at the time in effect no Taxes will be required to be withheld by the
Agent, the Borrowers 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
Borrowers 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 Borrowers) to provide
the transferor Lender, the Agent and the Borrowers 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 Borrowers) to be bound by the provisions of
Section 6.1 as if such Transferee were a Lender hereunder.
(h) The obligations of the Borrowers under this
Section 6.1 shall be joint and several.
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 Borrowers through the
Agent, any obligation of that Lender to make LIBOR Rate Loans shall be suspended
until the Lender notifies the Agent and Borrowers 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 Borrowers 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 a
Borrower is required so to prepay any LIBOR Rate Loan, then, concurrently with
such prepayment, such 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 ▇▇▇▇▇▇ 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.
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 Borrowers 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 Borrowers through the Agent, the Borrowers 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.
(c) The obligations of the Borrowers under this
Section 6.3 shall be joint and several.
6.4 Funding Losses. Each 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 such Borrower to make on a
timely basis any payment of principal of any LIBOR Rate
Loan;
(b) the failure of such Borrower to borrow,
continue or convert a Loan after such 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 such Borrower of any LIBOR
Rate Loan on a day that is not the last day of the relevant Interest Period;
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
Borrowers 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 relevant Borrower may
revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by such Borrower. If such Borrower does not revoke such Notice, the
Lenders shall make, convert or continue the Loans, as proposed by such Borrower,
in the amount specified in the applicable notice submitted by such 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 Borrowers 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, each 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
such Borrower, whether now owned or existing or hereafter acquired or arising,
regardless of where located: (i) all Receivables, Inventory, Equipment, Assigned
Contracts, Proprietary Rights, and Proceeds, wherever located and whether now
existing or hereafter arising or acquired; (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 either Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, including,
without limitation, all of such Borrower's deposit accounts, credits, and
balances with Agent or any Lender and all claims of such Borrower against the
Agent or any Lender at any time existing; (iii) all of such Borrower's deposit
accounts with any financial institutions with which such 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, Proprietary Rights,
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.
(b) As additional security for the Obligations,
the Borrower shall simultaneously herewith execute and deliver to the Agent a
Mortgage satisfactory to the Agent on the Seabrook Premises.
(c) 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.
7.2 Perfection and Protection of Security Interest. Each
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 Agreements 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 such
▇▇▇▇▇▇▇▇'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 such 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. To the
extent permitted by applicable law, the Agent may file, without either
▇▇▇▇▇▇▇▇'s signature, one or more financing statements disclosing the Security
Interest. The Borrowers agree 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 either Borrower's agents or
processors, then the relevant 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 either ▇▇▇▇▇▇▇▇,
then the Borrowers 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 Borrowers 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 neither
▇▇▇▇▇▇▇▇'s failure to do so shall 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. Each Borrower represents and
warrants to the Agent that: (a) Schedule 7.3 hereto is a correct and complete
list of such 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 such Borrower and sets forth the
names of the owners and lessors or sub-lessors of, and, to the best of such
▇▇▇▇▇▇▇▇'s knowledge, the holders of any mortgages on, such facilities and
locations. Each 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 such Borrower has given notice to the Agent, has
executed any and all financing statements 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 Borrowers 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.
7.4 Title to, ▇▇▇▇▇ on, and Sale and Use of Collateral. Each
Borrower represents and warrants to the Agent and the Lenders with respect to
Collateral owned by such Borrower that: (a) all Collateral is and will continue
to be owned by such 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) such
Borrower will use, store, and maintain such Collateral with all reasonable care
and will use such Collateral for lawful purposes only; and (d) such 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 not more frequently than once a year as the Agent
requests, each 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 such Borrower from an appraiser.
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 either Borrower's records,
files, and books of account and the Collateral and may discuss such Borrower's
affairs with such ▇▇▇▇▇▇▇▇'s officers and management. Such Borrower shall
deliver to the Agent any instrument necessary for the Agent to obtain records
from any service bureau maintaining records for such Borrower. The Agent may, at
any time when an Event of Default exists and at either ▇▇▇▇▇▇▇▇'s expense, make
copies of all of such Borrower's books and records, or require such Borrower to
deliver such copies to the Agent. The Agent may, without expense to the Agent,
use such of either ▇▇▇▇▇▇▇▇'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) Each Borrower agrees that, subject to such
▇▇▇▇▇▇▇▇'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 ▇▇▇▇▇▇'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.
7.7 Insurance. The Borrowers 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
Borrowers 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
Borrowers shall also maintain flood insurance for such Inventory and Equipment
as is located at any time in an SFHA. The Borrowers 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 either 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 Borrowers 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 Borrowers 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
Borrowers fail 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 either ▇▇▇▇▇▇▇▇'s loan account as a Reference Rate Loan.
The Borrowers 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 Borrowers 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.
7.8 Collateral Reporting. The Borrowers shall provide the
Agent with the following documents at the following times in form satisfactory
to the Agent: (a) on a weekly basis as of the end of the Borrowers' fiscal week,
a report of the inventory balance (by location) based on the perpetual inventory
reports no later than four Business Days following the end of such fiscal week;
(b) upon request, monthly aged inventory reports by category no later than the
10th day of the following month; (c) upon request, monthly perpetual inventory
reports; (d) upon request, monthly agings of accounts payable no later than the
10th day of the following month; (e) upon request, copies of purchase orders,
invoices, and delivery documents for Inventory and Equipment acquired by either
Borrower; (f) on or before the third Business Day of each week, a Borrowing Base
Certificate in the form of Exhibit C, as of the last Business Day of the prior
week; (g) such other reports as to the Collateral as the Agent shall request
from time to time; and (h) certificates of an officer of the relevant Borrower
certifying as to the foregoing. If any of a Borrower's records or reports of the
Collateral are prepared by an accounting service or other agent, such Borrower
hereby authorizes such service or agent to deliver such records, reports, and
related documents to the Agent.
7.9 [Intentionally Left Blank].
7.10 Collection of Accounts; Payments.
(a) Until the Agent notifies the Borrowers to
the contrary, the Borrowers 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, each Borrower shall establish a lock-box service for collections
of Accounts at a bank mutually acceptable to the Agent and such Borrower and
pursuant to documentation satisfactory to the Agent. If such lock-box service is
established, such Borrower shall instruct all Account Debtors to make all
payments directly to the address established for such service. If,
notwithstanding such instructions, such 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 a 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 relevant
Borrower's loan account as a Revolving Loan. At the Agent's request, the
relevant 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.
(b) If sales of Inventory are made for cash, the
relevant 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 such 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 relevant ▇▇▇▇▇▇▇▇'s
loan account on such day.
(d) In the event the Borrowers repay 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 relevant Borrower's loan account one
Business Day after the Agent's receipt thereof.
7.11 Inventory. The Borrowers represent and warrant to the
Agent and the Lenders and agree 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
Borrowers' respective business, and is and will be fit for such purposes. The
Borrowers shall keep the Inventory in good and marketable condition, at their
own expense. The Borrowers shall not, without prior written consent of the
Agent, acquire or accept any Inventory on consignment or approval. The Borrowers
agree 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. Each Borrower shall maintain a perpetual inventory reporting system
at all times. Each 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). Neither Borrower shall, without the
Agent's prior written consent, sell any Inventory on a bill-and-hold, guaranteed
sale, sale and return, sale on approval, consignment, or other repurchase or
return basis.
7.12 Equipment. The Borrowers represent and warrant to the
Agent that all of the Equipment is and will be used or held for use in the
relevant Borrower's business and is and will be fit for such purposes. The
Borrowers 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 Borrowers shall promptly inform the Agent of any
material additions to or deletions from the Equipment. Neither Borrower shall
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 Borrowers
shall not, without the Agent's prior written consent, alter or remove any
identifying symbol or number on the Equipment. The Borrowers 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 Borrowers from selling obsolete, worn-out or
surplus Equipment no longer necessary or useful in the ordinary course of
business as conducted by Borrowers or their Subsidiaries. No later than the 10th
day of each month (in conjunction with the collateral reporting under Section
7.8), the Borrowers 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.
7.13 Assigned Contracts. Each 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 neither Borrower shall 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 such Borrower
thereunder. Without limiting the generality of the foregoing, the Borrowers
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, neither Borrower shall, 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.
Each Borrower shall notify the Agent in writing, promptly after such ▇▇▇▇▇▇▇▇
becomes aware thereof, of any event or fact which could give rise to a claim by
such 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. Each 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 such Borrower as indemnification or otherwise
pursuant to the Assigned Contracts. If a 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 such
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 ▇▇▇▇▇▇'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 Borrowers 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 a
Borrower of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing from a Borrower to or in favor of
such obligor or its successors. All such obligations of such Borrower shall be
and remain enforceable only against such Borrower and shall not be enforceable
against the Agent or any Lender. Notwithstanding any provision hereof to the
contrary, the Borrowers shall at all times remain liable to observe and perform
all of their 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 either 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.
7.14 Documents, Instruments, and Chattel Paper. The Borrowers
represent and warrant 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 relevant 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 a Borrower hereunder to preserve, protect, maintain or
enforce the Obligations, the Collateral or the Security Interest, and which such
Borrower fails to pay or do, including, without limitation, payment of any
judgment against such 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
such ▇▇▇▇▇▇▇▇'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. Each Borrower hereby appoints the
Agent and the Agent's designees as such ▇▇▇▇▇▇▇▇'s attorney, with power: (a) to
endorse such ▇▇▇▇▇▇▇▇'s name on any checks, notes, acceptances, money orders, or
other forms of payment or security that come into the Agent's or any ▇▇▇▇▇▇'s
possession; (b) to sign such ▇▇▇▇▇▇▇▇'s name on any invoice, bill 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 such ▇▇▇▇▇▇▇▇'s mail to an address
designated by the Agent and to receive, open and dispose of all mail addressed
to such 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 Borrowers ratify and approve 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.
7.17 The Agent's and ▇▇▇▇▇▇'s Rights, Duties, and Liabilities.
The Borrowers assume 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 Borrowers' 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 either
Borrower from any of the Obligations. The Agent may (but shall not be required
to), without notice to or consent from the Borrowers, sue 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 Borrowers for the
Obligations or under this Agreement or any other agreement now or hereafter
existing between the Agent and/or any Lender and either Borrower.
8. BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.
8.1 Books and Records. The Borrowers 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 Borrowers 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 Borrowers 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 Borrowers 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,
Trend-Lines 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:
(a) As soon as available, but in any event not
later than 90 days after the close of each Fiscal Year, consolidated and
consolidating unaudited balance sheets, and statements of income and expense,
retained earnings, and cash flows and stockholders equity for Trend-Lines 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 Trend-Lines 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
Trend-Lines and reasonably satisfactory to the Agent.
(b) As soon as available, but in any event not
later than 45 days after the close of each fiscal quarter other than the fourth
quarter of a Fiscal Year, consolidated and consolidating unaudited balance
sheets of Trend-Lines and its consolidated Subsidiaries as at the end of such
quarter, and consolidated and consolidating unaudited statements of income and
expense and cash flows for Trend-Lines and its consolidated Subsidiaries for
such quarter and for the period from the beginning of the Fiscal Year to the end
of such quarter, together with the accompanying notes thereto, all in reasonable
detail, fairly presenting the financial position and results of operation of
Trend-Lines and its consolidated Subsidiaries as at the date thereof and for
such periods, prepared in accordance with GAAP consistent with the audited
Financial Statements required pursuant to Section 8.2(a). Such statements shall
be certified to be correct by the chief financial or accounting officer of
Trend-Lines, subject to normal year-end adjustments.
(c) 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 Trend-Lines and its consolidated
Subsidiaries as at the end of such month, and consolidated and consolidating
unaudited statements of income and expenses for Trend-Lines 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 Trend-Lines 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
and the Interest Coverage Ratio for the Rolling Period as of such month end.
Such statements shall be certified to be correct by the chief financial or
accounting officer of Trend-Lines, subject to normal year-end adjustments.
(d) 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.
(e) 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 Trend-Lines
(i) setting forth in reasonable detail the calculations required to establish
that Trend-Lines was in compliance with its covenants set forth in Sections
10.20 through 10.28 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 Borrowers 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 relevant
Borrower has taken or proposes to take with respect thereto.
(f) 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 Trend-Lines and its Subsidiaries as at the end of and for each
month of such Fiscal Year.
(g) Within 45 days after the end of each fiscal
quarter, a report of the Capital Expenditures of Trend-Lines and its
Subsidiaries for such quarter and a statement of cash flow for Trend-Lines 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).
(h) Promptly after their preparation, copies of
any and all proxy statements, financial statements, and reports which
Trend-Lines makes available to its stockholders.
(i) 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 Trend-Lines 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.
(j) Such additional information as the Agent
and/or any Lender may from time to time reasonably request regarding the
financial and business affairs of Trend-Lines or any Subsidiary, including,
without limitation, projections of future operations on both a consolidated and
consolidating basis.
8.3 Notices to Lenders. The Borrowers 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.
(b) Promptly, but in no event later than three
Business Days, after becoming aware that the holder of any capital stock of a
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 a
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 Borrowers, either individually or collectively, having to pay $1
million 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 a Borrower or any of its Subsidiaries.
(f) Promptly, but in no event later than three
Business Days, after becoming aware of any violation of any law, statute,
regulation, or ordinance of a Public Authority applicable to a 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 a 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 a Borrower of
Environmental Laws or immediately upon receipt of any notice that a Public
Authority has asserted that a Borrower is not in compliance with
Environmental Laws or that its compliance is being investigated.
(h) Thirty days prior to a Borrower's changing its
name.
(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 a 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 a Borrower to any
Pension Plan to which such Borrower was not contributing at the Closing Date;
and immediately upon becoming aware of any other event or condition regarding a
Plan or a Borrower's or an ERISA Affiliate's compliance with ERISA, which may
materially and adversely affect a Borrower's Property, business, operations, or
condition (financial or otherwise).
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 relevant
Borrower has taken or proposes to take with respect thereto.
9. GENERAL WARRANTIES AND REPRESENTATIONS.
The Borrowers jointly and severally continuously warrant and
represent 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, ▇▇▇▇▇▇▇▇, and Enforceability of this
Agreement and the Loan Documents. Each 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. Each
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 each 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 each
Borrower party thereto and each constitutes the legal, valid and binding
obligation of such Borrower, enforceable against it in accordance with its terms
without defense, setoff, or counterclaim. Each 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 any 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 any 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 such Borrower or any of
its Subsidiaries, or (c) the corporate charter or By-Laws of such 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 each Borrower and all third
parties.
9.3 Organization and Qualification. Each Borrower: (a) is duly
incorporated and organized and validly existing in good standing under the laws
of Massachusetts; (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.
9.4 Corporate Name; Prior Transactions. Neither of the
Borrowers has 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
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 Trend-Lines of each and all of
Trend-Lines' 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 Trend-Lines.
9.6 Financial Statements and Projections.
(a) Trend-Lines has delivered to the Agent
and the Lenders the audited balance sheet and related statements of income,
retained earnings, cash flows, and changes in stockholders equity for Trend-
Lines as of February 28, 1998 and for the Fiscal Year then ended, accompanied
by the report thereon of Trend-Lines' independent certified public accountants,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP. Trend-Lines has also delivered to the Agent and the Lenders
the unaudited balance sheet and related statements of income and cash flows
for Trend-Lines, as at January 2, 1999 and for the ten 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 Trend-Lines' financial position as at the dates thereof and its
results of operations for the periods then ended.
(b) The Latest Projections represent Trend-Lines'
best estimate of Trend-Lines' 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 Trend-Lines believes are fair
and reasonable in light of current and reasonably foreseeable business
conditions.
9.7 Capitalization. The only Persons who own beneficially (as
such term is used under the securities laws of the United States) 10% or more of
any class of stock or the voting power of Trend-Lines are ▇▇▇▇▇▇▇ ▇▇▇▇▇ and his
spouse, together with certain entities controlled by ▇▇. ▇▇▇▇▇ and his spouse
and one or more of the Institutional Holders. Trend-Lines owns beneficially and
of record 100% of all classes of stock of Post Tool.
9.8 Solvency. Each 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. Neither Borrower has any Debt, except (a) the
Obligations (other than those arising under or in connection with the
Indemnification Agreement), (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, (d) Debt incurred since the date of such
Financial Statements to finance Capital Expenditures permitted hereby and (e)
Indebtedness, as such term is defined in the Indemnification Agreement (without
giving effect to any amendment to such definition after January 28, 1997), in an
amount not greater than $550,000..
9.10 Distributions. Since March 2, 1996, no Distribution has
been declared, paid, or made upon or in respect of any capital stock or other
securities of Trend-Lines.
9.11 Title to Property. Except for Property which either
Borrower leases, each 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. Each 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 either ▇▇▇▇▇▇▇▇, all leases and
subleases of real or personal property by either Borrower as lessee or
sublessee, and all leases and subleases of real or personal property by either
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 each 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 a Borrower constitute all of the
Property of such type necessary to the current and anticipated future conduct of
such ▇▇▇▇▇▇▇▇'s business.
9.15 Trade Names and Terms of Sale. All trade names or styles
under which either 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 either 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 either Borrower's
Property, business, operations, or condition (financial or otherwise).
9.17 Restrictive Agreements. Neither Borrower is a party to
any contract or agreement, and neither is subject to any charter or other
corporate restriction, which affects such Borrower's ability to execute,
deliver, and perform the Loan Documents and repay the Obligations or which
materially and adversely affects such Borrower's Property, business, operations,
or condition (financial or otherwise).
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 either 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
either Borrower or any of its Subsidiaries or for any similar purpose; and (d)
there is no pending or, to the best of either ▇▇▇▇▇▇▇▇'s knowledge, threatened
strike, work stoppage, material unfair labor practice claim, or other material
labor dispute against or affecting either Borrower or any of its Subsidiaries or
their respective employees.
9.19 Environmental Laws.
(a) Each Borrower has complied in all material
respects with all Environmental Laws applicable to its Premises and business,
and neither Borrower nor any of its present Premises or operations, nor its past
property or operations, is 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) Each Borrower has obtained all permits
necessary for its current operations under Environmental Laws, all such permits
are in good standing, and each Borrower is in compliance in all material
respects with all terms and conditions of such permits.
(c) Neither Borrower, nor, to the best of such
▇▇▇▇▇▇▇▇'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) Neither Borrower has 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
either 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 either
▇▇▇▇▇▇▇▇'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
(iii) any polychlorinated biphenyls (PCB's)
used in hydraulic oils, electrical transformers or
other equipment.
(g) Neither Borrower has filed any notice
under any requirement of Environmental Law reporting aspill or accidental
and unpermitted release or discharge of a Contaminant into the environment.
(h) Neither Borrower has 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 such 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 either Borrower contains asbestos material.
(j) No Environmental Lien has attached to any
Premises of either ▇▇▇▇▇▇▇▇.
9.20 No Violation of Law. Neither Borrower is 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 such Borrower's Property, business,
operations, or condition (financial or otherwise).
9.21 No Default. Neither Borrower is in default with respect
to any note, indenture, loan agreement, mortgage, lease, deed, or other
agreement to which such 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 such 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 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 Trend-Lines, nothing has occurred which would cause
the loss of such qualification. Each 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 Borrowers, 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 either 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 either Borrower's business or
operations.
(c) (i) No ERISA Event has occurred or is
reasonably expected to occur; (ii) no Pension Plan has any
unfunded pension liability; (iii) neither a Borrower nor any ERISA Affiliate has
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) neither a Borrower nor any ERISA Affiliate
has 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) neither a Borrower nor any ERISA
Affiliate has engaged in a transaction that could subject any Person to Section
4069 or Section 4212(c) of ERISA.
9.23 Taxes. Each 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. Except as permitted by
Section 10.28, (a) neither Borrower owns or intends to carry or purchase any
"margin stock" within the meaning of said Regulation U or G and (b) 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. Neither Borrower has, 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. Each 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 ▇▇▇▇▇▇'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 either 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 either 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.
9.29 Year 2000. On the basis of the Borrowers' review and
assessment of its systems and equipment, Borrowers reasonably believe that the
"Year 2000 problem" (that is, the inability of computers, as well as embedded
microchips in non-computing devices, to perform properly date-sensitive
functions with respect to certain dates prior to and after December 31, 1999),
including costs of remediation, will not result in a material adverse change in
the operations, business, properties, condition or prospects (financial or
otherwise) of Borrowers. Borrowers will be fully "Year 2000" compliant by
September 30, 1999.
10. AFFIRMATIVE AND NEGATIVE COVENANTS. The Borrowers covenant jointly and
severally that, so long as any of the Obligations remains outstanding or this
Agreement is in effect:
10.1 Taxes and Other Obligations. Trend-Lines 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 Trend-Lines 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.
10.2 Corporate Existence and Good Standing. Trend-Lines 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. Trend-Lines 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. Trend-Lines 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 Borrowers from
selling obsolete, worn-out or surplus Equipment no longer necessary or useful in
the ordinary course of business as conducted by Borrowers or their
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.
10.5 Environmental Laws. Trend-Lines 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 Trend-Lines' generation, handling, use, storage, and disposal of
hazardous and toxic wastes and substances. Trend-Lines 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 a Borrower gives notice to the Agent
pursuant to Section 8.3(g) Trend-Lines shall, at the Agent's request and
Trend-Lines' expense: (a) cause an independent environmental engineer acceptable
to the Agent to conduct such tests of the site where Trend-Lines' 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 Trend-Lines' response thereto or the estimated costs thereof, shall
change.
10.6 ERISA. Trend-Lines 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
compliance with Section 401(a) of the Code. Trend-Lines and each of its
Subsidiaries shall cause each Plan to be administered in all respect in
compliance with ERISA.
10.7 Mergers, Consolidations, Acquisitions, or Sales. Neither
Trend-Lines 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
Borrowers or their 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 Trend-Lines nor
any of its Subsidiaries shall: (a) directly or indirectly declare or make, or
incur any liability to make, any Distribution, except Distributions to
Trend-Lines by a Subsidiary wholly-owned by Trend-Lines; or (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
Trend-Lines nor any of its Subsidiaries shall enter into any transaction which
materially and adversely affects the Collateral or either Borrower's ability to
repay the Obligations.
10.10 Guaranties. Neither Trend-Lines 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 Trend-Lines nor any of its Subsidiaries
shall incur or maintain any Debt, other than: (a) the Obligations (other than
those arising under or in connection with the Indemnification Agreement); (b)
trade payables and contractual obligations to suppliers and customers incurred
in the ordinary course of business; (c) other Debt existing on the Closing Date
and reflected in the Financial Statements attached as Exhibit ▇-▇; and (d)
Indebtedness, as such term is defined in the Indemnification Agreement (without
giving effect to any amendment to such definition after January 28, 1997) in an
amount not greater than $550,000.
10.12 Prepayment. Neither Trend-Lines nor any of its
Subsidiaries shall voluntarily prepay any Debt, except the Obligations in
accordance with their terms.
10.13 Transactions with Affiliates. Except as set forth below
or in Schedule 10.13, neither Trend-Lines 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,
Trend-Lines 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 Trend-Lines or such Subsidiary than would obtain
in a comparable arm's length transaction with a third party who is not an
Affiliate.
10.14 [Intentionally Left Blank].
10.15 Business Conducted. Trend-Lines 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 Trend-Lines 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 Trend-Lines nor
any of its Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for Trend-Lines or a Subsidiary to lease
or rent Property that Trend-Lines 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
$6,000,000 in aggregate in any Fiscal Year.
10.18 New Subsidiaries. Trend-Lines shall not, directly or
indirectly, organize or acquire any Subsidiary other than those listed on
Schedule 10.18.
10.19 Restricted Investments. Neither Trend-Lines nor any
of its Subsidiaries shall make any Restricted Investment.
10.20 Capital Expenditures Neither Trend-Lines nor any of its
Subsidiaries shall make or incur any Capital Expenditure if, after giving effect
thereto, the aggregate amount of all Capital Expenditures by Trend-Lines and its
Subsidiaries during any Fiscal Year would exceed $6,000,000; provided, however,
that, if all or a portion of the amount of the amount of Capital Expenditures
permitted during any Fiscal Year is not expended, such amount may be expended
during the following Fiscal Year.
10.21 [Intentionally Left Blank].
10.22 Interest Coverage Ratio. For the fiscal quarters
indicated below, Trend-Lines on a consolidated basis shall maintain an Interest
Coverage Ratio, determined as of the last day of such fiscal quarter, of not
less than the amount set forth below:
Ratio
Two Fiscal Quarters ending February 28, 1999 2.00:1.00
Three Fiscal Quarters ending May 31, 1999 2.00:1.00
Thereafter, Trend-Lines on a consolidated basis
shall maintain an Interest Coverage 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:
Second Quarter 1999 and each fiscal quarter 2.00:1.00
thereafter
10.23 Intentionally Left Blank.
10.24 Intentionally Left Blank.
10.25 Intentionally Left Blank.
10.26 New Store Openings. Effective October 1, 1998 and for
the balance of the Fiscal Year ending February 27, 1999, or any Fiscal Year
thereafter, the Borrowers may only enter into new commitments to open, or in
connection with opening, more than 10 new stores if daily average unused
Availability for the 30 consecutive day period immediately prior to entering
into any such commitment exceeds $5,000,000; provided, however, that (i) a store
relocated to a new location shall not be treated as a new store for purposes
hereof and (ii) amounts not yet spent under commitments relating to new stores
subject to this Section 10.26, shall be deducted in determining compliance with
this Section 10.26.
10.27 Adjusted Tangible Net Worth. Trend-Lines on a
consolidated basis shall maintain Adjusted Tangible Net Worth, determined as of
the last day of each fiscal quarter indicated below, of not less than the
following amounts:
4th Fiscal Quarter 1998 $40,000,000
1st Fiscal Quarter 1999 $40,000,000
2nd Fiscal Quarter 1999 $41,000,000
3rd Fiscal Quarter 1999 $41,000,000
4th Fiscal Quarter 1999 and each fiscal
quarter thereafter $42,000,000
10.28 Buy-Back of Common Stock. Notwithstanding the provisions
of Sections 9.24, 10.8, and 10.19, at any time and from time to time Trend-Lines
shall be permitted to repurchase or redeem stock (a "buy-back"), provided that,
at the time of any such buy-back, (a) the total cost of all buy-backs from the
Closing Date to the date of completion of any such buy-back shall not exceed
$4,000,000, (b) no accounts payable by either Borrower shall be more than 30
days past due, (c) after giving effect to such buy-back, the Borrowers'
aggregate remaining Availability is not less than $10,000,000 (d) no Event or
Event of Default shall exist at the time of such buy-back or after giving effect
thereto and (e) Trend-Lines shall have provided Agent with at least three (and
not more than five) days prior written notice, which notice shall include a
statement as to the amount of such buy-back, the total of all buy-backs after
giving effect to such buy-back, a statement that no account payable of the
Borrowers is more than 30 days past due and that no Event or Event of Default
exists as of the date thereof before or after giving effect to such buy-back.
10.29 Post-Closing Matters. Within (i) 60 days after the
Closing Date, the Agent shall 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
either Borrower to comply with this Section 10.29(i) shall not constitute an
Event or Event of 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 and (ii) 30 days after the
Closing Date the Agent shall have received the Seabrook Mortgage and a current
ALTA form of mortgage title insurance policy from a company, and in form and
substance, acceptable to the Agent, 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.
10.30 Further Assurances. The Borrowers 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, the following conditions precedent
have been satisfied in a manner satisfactory to the Agent (the "Effective
Date").
(a) Representations and Warranties; Covenants.
The Borrowers' representations and warranties contained in this Agreement
and the other Loan Documents shall be correct and complete and the Borrowers
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 Borrowers shall have
delivered, or caused to be delivered, to the Agent such documents, instruments,
agreements, 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) Fees. The Borrowers shall have paid in full the
Facility Fee and the Collateral Management Fee.
(d) Payment of Fees and Expenses. The Borrowers shall
have paid all fees and expenses of the Lenders' outside counsel, ▇▇▇▇▇▇ &
▇▇▇-▇▇▇▇▇, and all other fees and expenses of the Lenders incurred in
connection with any of the Loan Documents and the transactions
contemplated thereby.
(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 Trend-Lines' business, operations,
profits, prospects or financial condition or in the Collateral since January 2,
1999, and the Agent shall have received a certificate of Trend-Lines'
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.
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 ▇▇▇▇▇▇ and (ii) the decision of such Lender to execute and
deliver to the Agent an executed counterpart of this Agreement was made by such
▇▇▇▇▇▇ 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 or to provide for the issuance of any Letter of Credit
shall be subject to the conditions precedent that on the date of any such
extension of credit the following statements shall be true, and the acceptance
by either Borrower of any extension of credit (except an Agent Advance or a
deemed Loan under Section 4.6) shall be deemed to be a statement to the effect
set forth in clauses (a) and (b), with the same effect as the delivery to the
Agent and the Lenders of a certificate signed by the chief executive officer and
chief financial officer of Trend-Lines, dated the date of such extension of
credit, stating that:
(a) The representations and warranties
contained in this Agreement and the other Loan Documents are correct in all
material respects on and as of the date of such extension of credit as though
made on and as of such date, except to the extent that the Agent has been
notified by Trend-Lines that any representation or warranty is not correct
and the Majority Lenders have explicitly waived in writing compliance
with such representation or warranty; and
(b) No Event or Event of Default has occurred and is
continuing or would result from such extension of
credit.
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 either Borrower in this Agreement, any of the other Loan Documents, any
Financial Statement, or any certificate furnished by either 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 Borrowers 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, 10.5 or 10.6 if such failure shall
have existed for more than 30 (or 10 days for Section 10.4) after the date
that such ▇▇▇▇▇▇▇▇ 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 a Borrower must comply with
any reporting requirement therein, such failure shall have existed for the
number of days specified in such covenant plus five days.
(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 Mortgages, the other Loan Documents,
or any other agreement entered into at any time to which either Borrower and the
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) Trend-Lines 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;
(g) an involuntary petition shall be filed or an
action or proceeding otherwise commenced seeking reorganization, arrangement or
readjustment of Trend-Lines' 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 Trend-Lines 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 Trend-Lines 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) Trend-Lines 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 either
Borrower shall be nationalized, expropriated or condemned, seized or otherwise
appropriated, or custody or control of such Property or of either 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 Trend-Lines or any Subsidiary and Trend-Lines 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 either Borrower's business or (ii) is material in amount and is
not adequately covered by insurance;
(n) Trend-Lines shall cease to own 100% of the
voting stock of Post Tool or any person other than ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, his spouse, and his or her respective Affiliates shall own more than 50%
of the voting stock of Trend-Lines or have the power to control (such term
having the meaning given to it in the definition of Affiliate herein) the Board
of Directors of Trend-Lines.
(o) any event or condition shall occur or exist with
respect to a Plan that could, in the Agent's reasonable judgment, subject
Trend-Lines 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 either
Borrower; or
(p) there occurs any material adverse change in
either Borrower's Property, business, operations, or condition (financial or
otherwise).
13. REMEDIES. 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, or the advance rates
against Eligible Inventory 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), 12.1(g),
12.1(h) or 12.1 (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.
(a) 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 either
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 a Borrower shall, upon the Agent's
demand, at such 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 Borrowers agree 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 relevant
Borrower if such notice is mailed by registered or certified mail, return
receipt requested, postage prepaid, or is delivered personally against receipt,
at least five 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 either Borrower. In the event the Agent seeks to take possession of all or
any portion of the Collateral by judicial process, the Borrowers irrevocably
waive: (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 Borrowers agree 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, each 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 each 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 relevant Borrower or such other Person as shall be legally entitled
thereto and the Borrowers shall remain liable for any deficiency.
(b) If an Event of Default occurs, the Borrowers hereby waive
(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.
(c) If the Agent terminates this Agreement upon an Event of
Default, the Borrower shall pay the Agent, immediately upon termination, an
early termination penalty equal to the early termination fee that would have
been payable under Section 14 if this Agreement had been terminated on that date
pursuant to the Borrowers election.
14. TERM AND TERMINATION. This Agreement shall expire on the Stated
Termination Date unless terminated or automatically extended as provided in this
Section. This Agreement shall automatically be renewed thereafter for successive
one-year terms, unless this Agreement is terminated as provided below. The Agent
and the Borrowers 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 Borrowers may also terminate
this Agreement at any time during its initial term or any successive renewal
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 Borrowers shall immediately arrange
for the cancellation of Letters of Credit and BankBoston 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 ▇▇▇▇▇▇'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:
(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,
assign and delegate to one or more assignees (provided that no written consent
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 $10,000,000 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 ▇▇▇▇▇▇ 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).
(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 ▇▇▇▇▇▇).
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 ▇▇▇▇▇▇ (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.
(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 ss.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 BankAmerica Business Credit, Inc. 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.
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.
(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.
16.8 Agent in Individual Capacity. BABC 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 BABC were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, BABC 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, BABC 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 BABC 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 BABC sells all of its
Commitments and Revolving Loans as part of a sale, transfer or other disposition
by ▇▇▇▇ of substantially all of its loan portfolio, ▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇
appoint a successor agent as provided for above. Notwithstanding any provision
in this Agreement to the contrary, (i) BABC 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 BABC 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 Borrowers.
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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
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 ▇▇▇▇▇▇'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 ▇▇▇▇▇▇ 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.
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 $5,000,000 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.
16.13 Restrictions on Actions by ▇▇▇▇▇▇▇; 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.
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 BABC:
Bank: Bank of America NT&SA
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA Number: ▇▇▇▇▇▇▇▇▇
Account Number: 12353-03848
Account Name: BankAmerica Business Credit, Inc.
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Reference: Trend-Lines
if to Foothill Capital Corporation:
Bank: The Chase Manhattan Bank
New York, New York
Account Number: 323-266193
ABA Number: ▇▇▇▇▇▇▇▇▇
Credit: Foothill Capital Corporation
Reference: Trend-Lines
if to Transamerica Business Credit Corporation:
Bank: First National Bank of Chicago
Account Number: 52-97184
ABA Number: ▇▇▇▇▇▇▇▇▇
Account Name: Transamerica Business Credit Corp.
Attention: ▇. ▇▇▇▇▇▇▇
Reference: Trend-Lines
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, Term 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.
16.17 Field Audit and Examination Reports; Disclaimer by
▇▇▇▇▇▇▇. 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 BABC 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
▇▇▇▇▇▇'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 Borrowers or either of them to collect the
Obligations without any prior recourse to the Collateral.
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 in effective 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 Borrowers consent and submit in advance to such jurisdiction and agree that
venue will be proper in such courts on any such matter. The Borrowers hereby
waive personal service of process and agree 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 Borrowers. Should a Borrower fail to appear or answer any summons,
complaint, process or papers so served within 30 days after the mailing or other
service thereof, such 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. EACH 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 SUCH BORROWER AND THE LENDERS. EACH
BORROWER CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
17.7 [Intentionally Left Blank].
17.8 Survival of Representations and Warranties. All of each
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 Lender or their respective
agents.
17.9 Other Security and Guaranties. The Agent may, without
notice or demand and without affecting either 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 Borrowers 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; (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 either Borrower under
the Loan Documents that such 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; and (i) 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 Borrowers. All of the foregoing costs and expenses shall be
charged to the relevant Borrower's loan account as Reference Rate Loans.
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: BankAmerica Business Credit, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Division Manager
with a copy to: Bank of America NT&SA, Legal Department
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--and--
▇▇▇▇▇▇ & ▇▇▇-▇▇▇▇▇
One Battery Park Plaza, 27th Floor
New York, New York 10004
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to Trend-Lines: Trend-Lines, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
with a copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Post Tool: Post Tool, 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. EACH BORROWER HEREBY INDEMNIFIES,
DEFENDS AND HOLDS 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 NEITHER
BORROWER SHALL INDEMNIFY THE 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 a
Borrower, or by a 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 Borrowers 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.
17.13 Waiver of Notices. Unless otherwise expressly provided
herein, the Borrowers waive 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 a Borrower
which the Agent or any Lender may elect to give shall entitle either 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 either 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.
17.15 Indemnity of the Agent and the Lenders by the Borrowers.
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 Borrowers 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 Borrowers 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 Participating Agent's Security Interests. The Agent may,
without notice to or consent by the Borrowers, grant one or more participations
in the Loans to Participating Agents. If a Participating Agent shall at any time
with the Borrowers' knowledge participate with the Agent in the Loans, the
Borrowers hereby grant to such Participating Agent, and the Agent and such
Participating Agent shall have and are hereby given, a continuing lien on and
security interest in any money, securities and other property of the Borrowers
in the custody or possession of the Participating Agent, including, without
limitation, the right of setoff, to the extent of the Participating Agent's
participation in the Obligations, and such Participating Agent shall be deemed
to have the same right of setoff to the extent of such Participating Agent's
participation in the Obligations under this Agreement as it would have if it
were a direct lender.
17.20 Joint and Several Liability. The liability of the
Borrowers for all of the Obligations shall be joint and several regardless of
which Borrower actually receives loans or other extensions of credit hereunder
or the amount of such loans received or the manner in which the Agent accounts
for such loans or other extensions of credit on its books and records. Each
Borrower's Obligations with respect to Revolving Loans made to it or Letters of
Credit issued for its account, and related fees, costs and expenses, and each
Borrower's Obligations arising as a result of the joint and several liability of
the Borrowers hereunder, with respect to Revolving Loans made to the other
Borrower hereunder or Letters of Credit issued for the account of the other
Borrower hereunder, together with the related fees, costs and expenses, shall be
separate and distinct obligations, all of which are primary obligations of each
Borrower.
Each Borrower's Obligations arising as a result of the joint
and several liability of the Borrowers hereunder with respect to loans or other
extensions of credit made to the other Borrower hereunder shall, to the fullest
extent permitted by law, be unconditional irrespective of (i) the validity of
enforceability, avoidance or subordination of the Obligations of the other
Borrower or of any promissory note or other document evidencing all of any part
of the Obligations of the other Borrower, (ii) the absence of any attempt to
collect the Obligations from the other Borrower, any other guarantor, or any
other security therefor, or the absence of any other action to enforce the same,
(iii) the waiver, consent, extension, forbearance or granting of any indulgence
by the Agent with respect to any provision of any instrument evidencing the
Obligations of the other Borrower, or any part thereof, or any other agreement
now or hereafter executed by the other Borrower and delivered to the Agent, (iv)
the failure by the Agent to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Obligations of the other Borrower, (v) the Agent's election, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by
the other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy
Code, (vii) the disallowance of all or any portion of the Agent's claim(s) for
repayment of the Obligations of the other Borrower under Section 502 of the
Bankruptcy Code, or (viii) any other circumstance which might constitute a legal
or equitable discharge or defense of a guarantor or of the other Borrower.
Each Borrower (the "First Borrower") hereby irrevocably agrees
that it will not bring any "claims" (as defined in Section 101(5) of the
Bankruptcy Code) against the other Borrower to which the First Borrower is or
would at any time be otherwise entitled by virtue of its obligations under this
Agreement or under any of the Loan Documents, including, without limitation, any
right of subrogation (whether contractual, under Section 509 of the Bankruptcy
Code or otherwise), reimbursement, contribution, exoneration or other similar
right against the other Borrower until such time as all of the Obligations have
been satisfied in full and this Agreement shall have terminated in accordance
with its terms.
Upon any Event of Default, the Agent may, at its sole
election, proceed directly and at once, without notice, against either Borrower
to collect and recover the full amount, or any portion of the Obligations,
without first proceeding against the other Borrower or any other Person, or
against any security or collateral for the Obligations. Each Borrower consents
and agrees that the Agent shall be under no obligation to ▇▇▇▇▇▇▇▇ any assets in
favor of such Borrower or against or in payment of any or all of the
Obligations.
[signatures on following page]
IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
"BORROWERS"
TREND-LINES, INC.
By:
Name:
Title:
POST TOOL, INC.
By:
Name:
Title:
"AGENT"
BANKAMERICA BUSINESS CREDIT, INC.,
as the Agent
By:
Name:
Title:
"LENDERS"
Commitment: $50,000,000 BANKAMERICA BUSINESS CREDIT, INC.,
as a Lender
By:
Name:
Title:
Commitment: $25,000,000 FOOTHILL CAPITAL CORPORATION.
By:
Name:
Title:
Commitment: $25,000,000 TRANSAMERICA BUSINESS CREDIT
CORPORATION
By:
Name:
Title:
EXHIBIT D
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of , 199_ is made between ______________________________
(the "Assignor") and __________________________ (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Amended and
Restated Loan and Security Agreement dated as of __________, 199_ (as amended,
amended and restated, modified, supplemented or renewed, the "Credit Agreement")
among Trend-Lines, Inc. and Post Tool, Inc., each a Massachusetts corporation
(the "Borrowers"), the several financial institutions from time to time party
thereto (including the Assignor, the "Lenders"), and BankAmerica Business
Credit, Inc., as agent for the Lenders (the "Agent"). Any terms defined in the
Credit Agreement and not defined in this Assignment and Acceptance are used
herein as defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor
has committed to making Loans (the "Committed Loans") to the Borrower in an
aggregate amount not to exceed $__________ (the "Commitment");
WHEREAS, the Assignor has made Committed Loans in the
aggregate principal amount of $__________ to the Borrower
WHEREAS, [the Assignor has acquired a participation in its pro
rata share of the Lenders' liabilities under Letters of Credit in an aggregate
principal amount of $____________ (the "L/C Obligations")] [no Letters of Credit
are outstanding under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part
of the] [all] rights and obligations of the Assignor under the Credit Agreement
in respect of its Commitment, together with a corresponding portion of each of
its outstanding Committed Loans and L/C Obligations, in an amount equal to
$__________ (the "Assigned Amount") on the terms and subject to the conditions
set forth herein and the Assignee wishes to accept assignment of such rights and
to assume such obligations from the Assignor on such terms and subject to such
conditions;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) __% (the "Assignee's Percentage
Share") of (A) the Commitment, the Committed Loans and the L/C Obligations of
the Assignor and (B) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Credit Agreement
and the Loan Documents.
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Lender under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender. It is the
intent of the parties hereto that the Commitment of the Assignor shall, as of
the Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; provided, however, the Assignor shall not relinquish its rights under
Sections __ and __ of the Credit Agreement to the extent such rights relate to
the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignee's Commitment will be
$__________.
(d) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignor's Commitment will be
$__________.
2. Payments.
(a) As consideration for the sale, assignment and
transfer contemplated in Section 1 hereof, the Assignee shall pay to the
Assignor on the Effective Date in immediately available funds an amount equal
to $__________, representing the Assignee's Pro Rata Share of the
principal amount of all Committed Loans.
(b) The Assignee further agrees to pay to the Agent a
processing fee in the amount specified in Section 15.3(a) of the Credit
Agreement.
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitment, and Committed Loans and L/C Obligations shall be
for the account of the Assignor. Any interest, fees and other payments accrued
on and after the Effective Date with respect to the Assigned Amount shall be for
the account of the Assignee. Each of the Assignor and the Assignee agrees that
it will hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements of the Borrower, and such other documents and
information as it has deemed appropriate to make its own credit and legal
analysis and decision to enter into this Assignment and Acceptance; and (b)
agrees that it will, independently and without reliance upon the Assignor, the
Agent 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 and legal
decisions in taking or not taking action under the Credit Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective
date for this Assignment and Acceptance shall be __________, 199__ (the
"Effective Date"); provided that the following conditions precedent have been
satisfied on or before the Effective Date:
i) this Assignment and Acceptance shall be
executed and delivered by the Assignor and the Assignee;
ii) the consent of the Agent required
for an effective assignment of the Assigned Amount by the Assignor to the
Assignee shall have been duly obtained and shall be in full force and effect as
of the Effective Date;]
iii) the Assignee shall pay to the Assignor
all amounts due to the Assignor under this Assignment and Acceptance;
iv) the Assignee shall have complied with Section
13.3 of the Credit Agreement;
v) the processing fee referred to in Section
2(b) hereof and in Section 15.3(a) of the Credit Agreement shall have been
paid to the Agent; and
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Borrower and the Agent, for
acknowledgment by the Agent, a Notice of Assignment in the form attached hereto
as Schedule 1.
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor to
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the Lenders pursuant to the
terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by
the Assignor in its capacity as Agent under the Credit Agreement.]
7. Withholding Tax.
The Assignee (a) represents and warrants to the Lender, the Agent and
the Borrower that under applicable law and treaties no tax will be required to
be withheld by the Agent, the Borrower or the Lender with respect to any
payments to be made to the Assignee hereunder, (b) agrees to furnish (if it is
organized under the laws of any jurisdiction other than the United States or any
State thereof) to the Assignor, the Agent and the Borrower prior to the time
that the Agent or the Borrower is required to make any payment of principal,
interest or fees hereunder, duplicate executed originals of either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein
the Assignee claims entitlement to the benefits of a tax treaty that provides
for a complete exemption from U.S. federal income withholding tax on all
payments hereunder) or any successor applicable form, as the case may be, and
agrees to provide new Forms 4224 or 1001 upon the expiration or obsolescence of
any previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and
completed by the Assignee, (c) agrees to comply with all applicable U.S. laws
and regulations with regard to such withholding tax exemption and (d) agrees to
be bound by the provisions of Section 6.1 of the Credit Agreement as if the
Assignee were a Lender thereunder.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any Lien or other adverse claim; (ii) it
is duly organized and existing and it has the full power and authority to take,
and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto. The Assignor makes no representation or warranty in connection with,
and assumes no responsibility with respect to, the solvency, financial condition
or statements of the Borrower, or the performance or observance by the Borrower,
of any of its respective obligations under the Credit Agreement or any other
instrument or document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; and (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Borrower or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this Assignment
and Acceptance shall be in writing and signed by the parties hereto. No failure
or delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation, execution
and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. The Assignor and
the Assignee each irrevocably submits to the non-exclusive jurisdiction of any
State or Federal court sitting in New York over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York state or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:__________________________
Name:____________________
Title:___________________
By:_________________________
Name:___________________
Title:__________________
Address:________________
[ASSIGNEE]
By:_________________________
Name:__________________
Title:__________________
By:________________________
Name:__________________
Title:__________________
Address:_______________
SCHEDULE 1 TO ASSIGNMENT AND ACCEPTANCE AGREEMENT
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, 19__
BankAmerica Business Credit, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
Re: Trend-Lines, Inc.
Post Tool, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Ladies and Gentlemen:
We refer to the Amended and Restated Loan and Security Agreement dated
as of ___________, 199_ (as amended, amended and restated, modified,
supplemented or renewed from time to time the "Credit Agreement") among
Trend-Lines, Inc. and Post Tool, Inc. (the "Borrowers"), the Lenders
referred to therein and BankAmerica Business Credit, Inc., as agent for
the Lenders (the "Agent"). Terms defined in the Credit Agreement are used
herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in
and to the Credit Agreement (including, without limitation, the right,
title and interest of the Assignor in and to the Commitments of the
Assignor, all outstanding Loans made by the Assignor and the Assignor's
participation in the Letters of Credit pursuant to the Assignment and
Acceptance Agreement attached hereto (the "Assignment and Acceptance"). We
understand and agree that the Assignor's Commitment, as of , 19 , is $
___________, the aggregate amount of its outstanding Loans is
$_____________, and its participation in L/C Obligations is
$_____________.
2. The Assignee agrees that, upon receiving the consent of the Agent to
such assignment, the Assignee will be bound by the terms of the Credit
Agreement as fully and to the same extent as if the Assignee were the
Lender originally holding such interest in the Credit Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name:
Address:
Attention:
Telephone: (___)
Telecopier: (___)
Telex (Answerback):
(B) Payment Instructions:
Account No.:
At:
Reference:
Attention:
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective
duly authorized officials, officers or agents as of the date first above
mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:____________________________
Name:
Title:
[NAME OF ASSIGNEE]
By:____________________________
Name:
Title:
ACKNOWLEDGED AND ASSIGNMENT CONSENTED TO:
BankAmerica Business Credit, Inc,
as Agent
By: ____________________________
Name:
Title:
List of Exhibits/Schedules
Exhibit A Permitted Liens
Exhibit B Financial Statements and Projections
-- Exhibit B-1 Financial Statements
-- Exhibit B-2 Proforma Financial Statements
-- Exhibit B-3 Projections
-- Exhibit B-4 First Quarter Financials
Exhibit C Borrowing Base Certificate
Exhibit D [Form of Assignment and Acceptance Agreements]
Schedule 7.3 Locations of Borrowers
Schedule 9.2 Jurisdictions in Which to Record Mortgages
Schedule 9.4 Names of Borrowers and Trade Styles
Schedule 9.5 Subsidiaries and Affiliates and states of
incorporation and qualification
Schedule 9.13 Real Estate--Owned and Leased
Schedule 9.14 Proprietary Rights Collateral (patents, trademarks,
and copyrights)
Schedule 9.15 Trade Names
Schedule 9.16 Litigation
Schedule 9.18 Labor Disputes
Schedule 9.19 Environmental Laws
Schedule 9.22 ERISA Compliance
Schedule 10.18 New Subsidiaries