Exhibit 10.5
AMENDMENT No. 2, dated as of August 21, 2002 (this "Amendment"), to the
Loan and Security Agreement, dated as of October 29, 2001 (as heretofore or
hereafter amended, supplemented and otherwise modified, the "Agreement"), among
Woodworkers Warehouse, Inc. (the "Borrower"), 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") and Bank of America, N.A. as
agent for the Lenders (in its capacity as agent, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Agent and the Lenders are parties to the
Agreement;
WHEREAS, the Borrower has requested that the Lenders modify certain
provisions of the Agreement and the Lenders are willing to do so on the terms
and conditions as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms
used herein have the respective meanings ascribed thereto in the Agreement.
2. Amendments to the Agreement. The Agreement is hereby amended as
follows:
(a) Section 1 of the Agreement is hereby amended by
deleting the definition of "Additional Availability
Amount" and replacing it with the following
definition:
"Additional Availability Amount" means, for the
Availability Increase Period specified, (a)
$3,000,000 from the Effective Date through and
including the date which is the 60th day after the
Effective Date, (b) $2,500,000 during the period from
the date which is the 61st day after the Effective
Date through and including the date which is the 90th
day after the Effective Date, (c) $2,000,000 from the
91st day after the Effective Date through and
including July 31, 2002; provided, however, that the
Additional Availability Amount shall be reduced by
$166,667 each month end commencing February 28, 2002
through and including July 31, 2002 and (d)
$1,167,000 from August 1, 2002 through and including
the Stated Termination Date; provided however, that
the Additional Availability Amount shall be reduced
by $233,000 each month end commencing on October 31,
2002 until the Additional Availability Amount is
zero.
(b) Section 1 of the Agreement is hereby amended by
deleting clause (ii) of the definition of "Applicable
Margin" and replacing it with the following clause:
"(ii) with respect to Additional Availability
Reference Rate Loans, four percent (4.00%) and"
(c) Section 1 of the Agreement is hereby amended by
deleting the definition of "Availability Increase
Period" and replacing it with the following
definition:
"Availability Increase Period" means each of the
following periods (a) the Effective Date through and
including the date which is the 60th day after the
Effective Date, (b) the date which is the 61st day
after the Effective Date through and including the
date which is the 90th day after the Effective Date,
(c) the date which is the 91st day after the
Effective Date through and including July 31, 2002,
and (d) August 1, 2002 through and including the
Stated Termination Date. The foregoing periods may be
respectively referred to herein as the first, second,
third and final Availability Increase Periods.
(d) Section 1 of the Agreement is hereby amended by
deleting clause (ii) in the definition of "Borrowing
Base" and replacing it with the following clause:
"(ii) from April 1, 2002 through and including the
Stated Termination Date, the sum of (a) the lesser of
(x) sixty-five percent (65%) of the value, at the
lower of cost (on a weighted average cost basis) or
market, of all Eligible Inventory or (y) eighty-five
percent (85%) of the Net Recovery Percentage for
Inventory multiplied by the Value of Eligible
Inventory, plus (b) eighty-five percent (85%) of the
Net Amount of Eligible Accounts, plus (c) until
December 31, 2002 and so long as the Borrower is the
fee owner of the Seabrook Premises, the sum equal to
the lesser of (x) $600,000 through October 31, 2002,
and $500,000 from November 1, 2002 through December
31, 2002 or (y) the amount equal to 75% of the fair
market value of such property as determined in such
appraisal, plus (d) without duplication, 50% of the
undrawn face amount of Letters of Credit issued or
caused to be issued by the Agent for the account of
the Borrower for the purchase of goods which will
become Eligible Inventory.
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(e) Section 4.3 of the Agreement is hereby deleted
and replaced with the following:
"4.3 Mandatory Prepayments. Upon the date of sale of
the Seabrook Premises, Borrower shall prepay any
outstanding Loans against the Seabrook Premises.
(f) Section 10.26 of the Agreement is hereby deleted
and replaced with the following:
"10.26 Seabrook Proceeds. Borrower shall be permitted
to, upon the date of sale of the Seabrook Premises,
retain any excess proceeds from such sale for working
capital purposes only."
3. Representations and Warranties. To induce the Lenders to enter into
this Amendment, the Borrower hereby represents and warrants as follows, with the
same effect as if such representations and warranties were set forth in the
Agreement:
(1) The Borrower has the power and authority to enter
into this Amendment and has taken all corporate
action required to authorize the Borrower's
execution, delivery and performance of this
Amendment. This Amendment has been duly executed and
delivered by the Borrower, and the Agreement, as
amended hereby, constitutes the valid and binding
obligation of the Borrower, enforceable against the
Borrower in accordance with its terms. The execution,
delivery, and performance of this Amendment and the
Agreement, as amended hereby, by the Borrower will
not violate its certificate of incorporation or
by-laws or any material agreement or legal
requirement binding on the Borrower.
(ii) On the date hereof and after giving effect to the
terms of this Amendment, (A) the Agreement and the
other Loan Documents are in full force and effect and
constitute binding obligations, enforceable against
the Borrower in accordance with their respective
terms; (B) no Default or Event of Default has
occurred and is continuing; and (C) the Borrower has
no defense to or setoff, counterclaim or claim
against payment of the Obligations and enforcement of
the Loan Documents based upon a fact or circumstance
existing or occurring on or prior to the date hereof.
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4. Limited Effect. Except as expressly amended hereby, all of the
covenants, representations and warranties (including, without limitation, those
found in Section 9.1), and provisions of the Agreement are and shall continue to
be in full force and effect. Upon the effectiveness of this Amendment, each
reference in the Agreement to "this Agreement", "hereunder", "hereof", "herein"
or words of like import and each reference in the other Loan Documents to the
Agreement shall mean and be a reference to the Agreement as amended hereby.
5. Conditions of Effectiveness. This Amendment shall become effective
when and only when this Amendment shall be executed and delivered by the
Borrower and each Lender.
6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
7. Counterparts. This Amendment may be executed by the parties hereto
in any number of separate counterparts, each of which shall be an original, and
all of which taken together shall be deemed to constitute one and the same
instrument.
8. Amendment. No modification or waiver of any provision of this
Amendment, or any consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
9. Additional Availability Amount Request. Upon execution of this
Amendment, Borrower requests that Lender fully funds the Additional Availability
Amount to Borrower in accordance with this Amendment and the Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
"BORROWER"
Woodworkers Warehouse, Inc.
By:/s/ Xxxx X. Xxxxxx
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Name: Xxxx Xxxxxx
Title: Vice President and Chief Financial Officer
"AGENT"
Bank of America, N.A.
as the Agent
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
"LENDERS"
Bank of America, N.A.
as a Lender
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Foothill Capital Corporation
By:/s/ Xxxx Xxxxxxx
---------------------
Name: Xxxx Xxxxxxx
Title: Assistant Vice President
Transamerica Business Capital Corporation
By:/s/ Xxxxx Xxxxxxxx
---------------------
Name: Xxxxx Xxxxxxxx
Title: Executive Vice President
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