WAIVER AND AMENDMENT No. 6, dated as of September 30, 1998, (this
Amendment), to the Loan and Security Agreement, dated as of July 3, 1996 (as
heretofore amended, supplemented or otherwise modified, the ("Agreement")
among Trend-Lines, Inc. and Post Tool, Inc. (collectively, the "Borrowers")
and BankArnerica Business Credit, Inc. (the Lender").
WITNESSETH:
WHEREAS, the Borrowers and the Lender are parties to the Agreement;
WHEREAS, Borrowers have requested that Lender waive compliance with
certain covenants and modify certain provisions of the Agreement and the Lender
is 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. Waiver. Lender waives compliance by the Borrowers with the provisions
of Sections 10.22 and 10.27 for the period through the end of the second fiscal
quarter of 1998.
3. Amendments to the Agreement. The Agreement is hereby amended as
follows:
(a) The definition of Additional Availability Period in Section 1 of
the Agreement is amended in its entirety to read as follows:
"Additional Availability Period" means the period from October
1, 1998 through December 31, 1998 and, thereafter, the period,
if any, (a) commencing on the fourth Business Day after the
delivery to the Lender of the certificate referred to in
Section 8.2(c) relating to the Interest Coverage Ratio which
shows an Interest Coverage Ratio of greater than 2.5 to 1.0
for the period ending on the last day of the third fiscal
quarter of 1998; and 2.5 to1.0 for any subsequent fiscal
quarter period; and (b) ending on the earlier of (i) the
occurrence of an Event of Default, (ii) the subsequent
delivery to the Lender of the certificate referred to in
Section 8.2 (c) relating to the Interest Coverage Ratio which
shows an Interest Coverage Ratio of less than or equal to 2.5
to 1 .0, or (iii) the subsequent failure of the Borrowers to
deliver to Lender the certificate referred to in Section
8.2(c) relating to the Interest Coverage Ratio within the time
required under such Section 8.2(c). At the end of any
Additional Availability Period, any Additional Availability
Loan outstanding shall be immediately repaid by the applicable
Borrower. No Additional Availability Period shall commence
during the continuance of an Event of Default. "
(b) Section 3.6 of the Agreement is amended in its entirety to read
as follows:
"Additional Availability Fee. Effective on January 1, 1999, if
an Additional Availability Period is not in effect and the
Borrowers have not repaid all outstanding Additional
Availability Loans as required hereunder, the Borrowers shall
pay Lender (i) a fee in the amount of $500,000, which shall be
charged to Borrowers' loan account effective January 1, 1999
and (ii) a fee in the $50,000 on the first day of each month
thereafter, until no Additional Availability Loans remain
outstanding."
(c) The definition of Borrowing Base in Section 1 of the Agreement
is amended in its entirety to read as follows:
"Borrowing Base" means, with respect to either Borrower, (a)
sixty-five percent (65%) of the value, at the lower of cost
(on a first-in-first-out basis) or market, of all Eligible
Inventory of such Borrower plus, (b) without duplication, 50%
of 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
plus (c) during an Additional Availability Period, the
Additional Availability of such Borrower.
(d) The following representation is added to the Agreement as
Section 9.29:
"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. "
(e) Section 10.20 of the Agreement is hereby amended by adding the
following sentence to the end thereof:
"Notwithstanding the foregoing, Capital Expenditures for
the six month period ending February 27, 1999 shall not
exceed $6,000,000."
(f) Section 10.22 of the Agreement is hereby amended to read in
its entirety as follows:
"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
Third Quarter 1998 1.80:1.00
Third and Fourth Quarter 1998 2.50:1.00
Three Quarters ending May 31,1999 2.50:1.00
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 2.50:1.00"
and each fiscal quarter thereafter
(g) The following representation is added to the Agreement as
Section 10.26:
"10.26 New Store Openings. Effective October 1, 1998, 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."
(h) Section 10.27 of the Agreement is hereby amended in its
entirety to read as follows,
"10.27 Adjusted Tangible Net Worth. Trend-Lines on a
consolidated basis shall maintain Adjusted Net Worth,
determined as of the last day of each fiscal quarter
indicated below, of not less than the following amounts:
3rd Fiscal Quarter 1998 $39,500,000
4th Fiscal Quarter 1998 $41,000,000
1st Fiscal Quarter 1999 $11,000,000
2nd Fiscal Quarter 1999 $41,000,000
3rd Fiscal Quarter 1999 and $42,000,000"
each fiscal
quarter thereafter
4. Additional Agreements and Undertakings of Borrowers.
The Borrowers shall cooperate with Lender in the obtaining of
participants in, or the syndication (at Lender's option), the Total Facility,
including the execution and delivery of such additional documentation (or
re-documentation) as may be required by Lender (or Agent, in the case of a
syndication).
5. Representations and Warranties. To induce Lender to enter into this
Amendment, Borrowers hereby represent and warrant as follows, with the same
effect as if such representations and Warranties were set forth in the
Agreement:
(a) Each Borrower has the power and authority to enter into this
Amendment and has taken all corporate action required to authorize
its execution, delivery and performance of this Amendment. This
Amendment has been duly executed and delivered by each Borrower and
the Agreement, as amended hereby, constitutes the valid and binding
obligation of Borrowers, enforceable against each Borrower in
accordance with its terms. The execution, delivery, and performance
of this Amendment and the Agreement, as amended hereby, by each
Borrower, will not violate its respective certificate of
incorporation or by-laws or any agreement or legal requirement
binding on such Borrower.
(b) On the date hereof and after giving effect to the terms of this
Amendment, (i) the Agreement and the Other Loan Documents are in
full force and effect and, to the extent that a Borrower is a party
thereto, constitute its binding obligation, enforceable against it
in accordance with their respective terms; (ii) no Default or Event
of Default has occurred and is continuing (iii) no Borrower has any
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.
6. Limited Effect. Except as expressly waived or amended hereby, all of
the covenants 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.
7. Conditions of Effectiveness. This Amendment shall become effective
when and only when (i) this Amendment shall be executed by the Borrowers;
(ii) the Lender shall have received such opinion of counsel, such other
documents (including, without limitation, certified resolutions), and such
evidence of filings, as the Lender shall request and (iii) the Borrowers
shall have paid the Lender a fee of $100,000.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUEDAND
INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT
OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
9. 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.
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.
TREND-LINES, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
POST TOOL, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
BANKAMERICA BUSINESS CREDIT,
INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Senior Account Executive
