TREND-LINES, INC.
BANKAMERICA BUSINESS CREDIT, INC.
BINDER
--------------------------------------------------------------------------------
1. Amended and Restated Loan and Security Agreement
2. Amended and Restated Stock Pledge Agreement
3. Trademark Security Agreement
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
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SECTION PAGE
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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, Application and Reversal of Payments...........38
4.8. INDEMNITY FOR RETURNED PAYMENTS...............................38
5. AGENT'S AND LENDER'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
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TABLE OF CONTENTS
-----------------
(CONT'D)
SECTION PAGE
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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............46
7.5. Appraisals....................................................46
7.6. Access and Examination........................................47
7.7. Insurance.....................................................47
7.8. Collateral Reporting..........................................48
7.9. [Intentionally Left Blank]....................................48
7.10. Collection of Accounts; Payments..............................49
7.11. Inventory.....................................................49
7.12. Equipment.....................................................50
7.13. Assigned Contracts............................................51
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 Lender'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. Validity 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
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TABLE OF CONTENTS
-----------------
(CONT'D)
SECTION PAGE
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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. Mergers, 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
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TABLE OF CONTENTS
-----------------
(CONT'D)
SECTION PAGE
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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
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TABLE OF CONTENTS
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(CONT'D)
SECTION PAGE
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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;
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 Agent's Security Interests......................91
17.20. Joint and Several Liability...................................91
v
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 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, as agent for
the Lenders (in its capacity as agent, the "Agent"), and TREND-LINES, INC., a
Massachusetts corporation with offices at 000 Xxxxxxxx Xxxxxx Xxxxxxx, Xxxxxx,
Xxxxxxxxxxxxx ("Trend-Lines"), and POST TOOL, INC., a Massachusetts corporation
with offices at 000 Xxxxxxxx Xxxxxx Xxxxxxx, Xxxxxx, Xxxxxxxxxxxxx ("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:
1. 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 Xxxxxx Xxxxxxx Inc., the Xxxxxxxx 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.
"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
2
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 Borrower's
account,
3
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 BABC 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.
4
"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 Xxxxxxx X. Xxxxx 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 Lender's name under the heading "COMMITMENT" on the
signature pages of this Agreement or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of SECTION 15.3,
5
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.
6
"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, xxxx-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.
7
"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. Section 6901 et seq., as
amended; the Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq., as amended; the Toxic Substances Control
Act, 15 U.S.C. Section 2601 et seq., as amended; the Clean Water Act, 33 U.S.C.
Section 466 et seq., as amended; the Clean Air Act, 42 U.S.C. Section 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
8
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 B-1, 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.
9
"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
10
(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;
11
(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.
12
"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.
13
"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
14
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
Borrower, 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
15
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.
16
"PRINCIPAL STOCKHOLDER" means Xxxxxxx Xxxxx, Xxxxxx X. Xxxxx, 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 xxx for past, present, and future infringement of any of the foregoing;
inventions, trade secrets, formulae, processes, compounds, drawings, designs,
blueprints, surveys, reports, manuals, and operating standards; goodwill;
customer and other lists in whatever form maintained; and trade secret rights,
copyright rights, rights in works of authorship, and contract rights relating to
computer software programs, in whatever form created or maintained.
"PRO RATA SHARE" means, with respect to a Lender, a fraction (expressed
as a percentage), the numerator of which is the amount of such Lender's
Commitment and the denominator of which is the sum of the amounts of all of the
Lenders' Commitments, or if no Commitments are outstanding, a fraction
(expressed as a percentage), the numerator of which is the amount of Obligations
owed to such Lender and the denominator of which is the aggregate amount of the
Obligations owed to the Lenders.
"PUBLIC AUTHORITY" means the government of any country or sovereign
state, or of any state, province, municipality, or other political subdivision
thereof, or any department, agency, public corporation or other instrumentality
of any of the foregoing.
"RECEIVABLES" means all of the Borrower's now owned and hereafter
arising or acquired: Accounts (whether or not earned by performance), including,
without limitation, Accounts owed to the Borrower by any of its Subsidiaries or
Affiliates, together with all interest, late charges, penalties, collection
fees, and other sums which shall be due and payable in connection with any
Account; proceeds of any letters of credit naming the Borrower as beneficiary;
contract rights, chattel paper, instruments, documents, general intangibles
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims,
17
and Reversions and other amounts payable to the Borrower from or with respect to
any Plan) and all forms of obligations owing to the Borrower (including, without
limitation, in respect of loans, advances, and extensions of credit by the
Borrower to its Subsidiaries and Affiliates); guarantees and other security for
any of the foregoing; goods represented by or the sale, lease or delivery of
which gave rise to any of the foregoing; merchandise returned to or repossessed
by the Borrower and rights of stoppage in transit, replevin, and reclamation;
and other rights or remedies of an unpaid vendor, lienor, or secured party.
"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.
18
"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 end thereafter.
"SEABROOK MORTGAGE" means a Mortgage in form and substance satisfactory
to the Agent on the Seabrook Premises, as it may be amended, supplemented,
waived or otherwise modified from time to time.
"SEABROOK PREMISES" shall mean the real estate owned by Trend-Lines
located at 0 Xxxxxxxxxx Xxxx at Xxxxx 000 xx Xxxxxxxx, Xxx Xxxxxxxxx.
"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
19
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).
20
"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 Borrower'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 Lender'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).
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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 Borrower'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.
22
(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(A) apply to a
requested Borrowing as described in SECTION 2.2(F), then promptly after receipt
of a Notice of Borrowing or telephonic notice pursuant to SECTION 2.2(B), the
Agent shall notify the Lenders by telecopy, telephone or other similar form of
transmission, of the requested Borrowing. . Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to the Agent
in same day funds, to such account of the Agent as the Agent may designate, not
later than 2:00 p.m. (New York City time) on the Funding Date applicable
thereto. After the Agent's receipt of the proceeds of such Revolving Loans, upon
satisfaction of the applicable conditions precedent set forth in SECTION 11, the
Agent shall make the proceeds of such Revolving Loans available to
23
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 Lender's Pro Rata Share of the Borrowing, the Agent may assume that each
Lender has made such amount available to the Agent in immediately available
funds on the Funding Date and the Agent may (but shall not be so required), in
reliance upon such assumption, make available to 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 Lender's Loan on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to the Agent on the
Business Day following the Funding Date, the Agent will notify the 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 Lender's benefit; nor shall a Defaulting Lender be entitled
to the sharing of any payments hereunder. Amounts payable to a Defaulting Lender
shall instead be paid to or retained by the Agent. The Agent may hold and, in
its discretion, re-lend to 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
24
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)
25
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 Lender'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 Lender'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.
26
(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 Lender's Pro Rata Share thereof by paying to the Agent, in same
day funds, an amount equal to such Lender's Pro Rata Share of such 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 an 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 Lender's Pro Rata Share of all payments of principal and interest
and all proceeds of Collateral received by the Agent in respect of such 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 BABC'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 BABC, 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 Lender's
Revolving Loans in its books and records, including computer records, such books
and records constituting rebuttably presumptive evidence, absent manifest error,
of the accuracy of the information contained therein.
27
(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
Borrower's request from time to time, cause merchandise or standby letters of
credit to be issued for such Borrower'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
28
(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
Borrower's request for the issuance of a Letter of Credit. Such notice shall be
irrevocable and shall specify the original face amount of the Letter of Credit
requested, the effective date (which date shall be a Business Day) of issuance
of such requested Letter of Credit, whether such Letter of Credit may be drawn
in a single or in partial draws, the date on which such requested Letter of
Credit is to expire (which date shall be a Business Day), the purpose for which
such Letter of Credit is to be issued, and the beneficiary of the requested
Letter of Credit. 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 Lender's Pro Rata Share of
the amount of such draw in same day funds. If the Agent so notifies the Lenders
prior to 1:00 p.m. (New York City time) on any Business Day, each Lender shall
make available to the Agent the relevant amount, as provided in the immediately
preceding sentence, on such Business Day.
29
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 Lender's Pro Rata
Share of the face amount of such Letter of Credit (including, without
limitation, all obligations of the Borrower with respect thereto, and any
security therefor or guaranty pertaining thereto).
(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 Lender'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 Lender.
(4) OBLIGATIONS IRREVOCABLE. The obligations
of each Lender to make payments to the Agent with respect to any Letter of
Credit or with respect to any credit support provided through the Agent with
respect to a Letter of Credit, and the obligations of the 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
30
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 of any 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.
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(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
Borrower's attorney, with full power and authority: (a) to sign and/or endorse
such Borrower'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
Borrower's name, and to sign and deliver to customs officials powers of attorney
in such Borrower'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 Borrower's attorney, shall be liable
for any acts or omissions, nor for any error of judgment or mistakes of fact or
law. This power, being coupled with an interest, is irrevocable until all
Obligations have been paid and satisfied.
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(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 or holding cash, checks, Inventory,
documents or instruments in which the Agent holds a security interest to deliver
them to the Agent and/or subject to the Agent's order and, if they shall come
into 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 2.3and 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:
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(i) For all Reference Rate Loans and other
Obligations (other than LIBOR Rate Loans), at a fluctuating per annum rate equal
to the Reference Rate plus the Applicable Margin; and
(ii) For all LIBOR Rate Loans, at a per
annum rate for each Interest Period therefor equal to the LIBOR Rate for such
Interest Period plus the Applicable Margin.
Each change in the Reference Rate shall be reflected in the interest
rate described in (i) above as of the effective date of such change. All
interest charges shall be computed on the basis of a year of 360 days and actual
days elapsed. All interest shall be payable to the Agent for the ratable account
of the Lenders on the first day of each month hereafter.
(b) If any Event or Event of Default occurs, then,
from the date such Event or Event of Default occurs until it is cured, or, if
not cured, until all Obligations are paid and performed in full, the 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
34
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
35
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.
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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
37
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
38
AMOUNT OF SUCH PAYMENT SURRENDERED. The provisions of this SECTION 4.8 shall be
and remain effective notwithstanding any contrary action which may have been
taken by the Agent or any Lender in reliance upon such payment, and any such
contrary action so taken shall be without prejudice to the Agent's and the
Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable. The
provisions of this SECTION 4.8 shall survive the termination of this Agreement.
5. AGENT'S AND LENDER'S BOOKS AND RECORDS; MONTHLY STATEMENTS. Each
Borrower agrees that the Agent's and each Lender's books and records showing the
Obligations and the transactions pursuant to this Agreement and the other Loan
Documents shall be admissible in any action or proceeding arising therefrom and
shall constitute PRIMA FACIE proof thereof, irrespective of whether any
Obligation is also evidenced by a promissory note or other instrument. The Agent
shall provide to 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:
39
(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
40
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 Lender agrees to use reasonable efforts (including reasonable
efforts to change the office in which it is booking the Loan) to avoid such
41
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;
42
(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
43
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
Borrower's books of account to disclose the Security Interest; (f) executing and
delivering to the Agent upon request a security agreement relating to the
Reversions in form and substance satisfactory to the Agent; (g) delivering to
the Agent upon request all letters of credit on which 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
Borrower'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
44
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 Borrower, 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 Borrower'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
Borrower'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, LIENS 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.
45
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 Borrower'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 Borrower'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 Borrower's personnel, supplies, and Premises as may be
reasonably necessary for maintaining or enforcing the Security Interest. The
Agent shall have the right, at any time, in the Agent's name or in the name of a
nominee of the Agent, to verify the validity, amount or any other matter
relating to the Accounts, by mail, telephone, or otherwise.
(b) Each Borrower agrees that, subject to such
Borrower's prior consent for uses other than in a traditional tombstone, which
consent shall not be unreasonably withheld or delayed, the Agent and each Lender
may use the Borrower's name in advertising and promotional material and in
conjunction therewith disclose the general terms of this Agreement. The Agent
and each Lender agree to take normal and reasonable precautions and exercise due
care to maintain the confidentiality of all information identified as
"confidential" or "secret" by the Borrower and provided to the Agent or such
Lender by or on behalf of the Borrower, under this Agreement or any other Loan
Document, and neither the Agent nor such Lender nor any of their respective
Affiliates shall use any such information other than in connection with or in
enforcement of this Agreement and the other Loan Documents, except to the extent
that such information (i) was or becomes generally available to the public other
than as a result of disclosure by the Agent or such Lender, or (ii) was or
becomes available oil a nonconfidential basis from a source other than the
Borrower, provided that such source is not bound by a confidentiality agreement
with the Borrower known to the Agent or such Lender; PROVIDED, HOWEVER, that the
Agent and any Lender may disclose such information (1) at the request or
pursuant to any requirement of any Governmental Authority to which the Agent or
such Lender is subject or in connection with an examination of the Agent or such
Lender by any such Governmental Authority; (2) pursuant to subpoena or other
court process; (3) when required to do so in accordance with the provisions of
any applicable requirement of law; (4) to the extent reasonably required in
connection with any litigation or proceeding (including any bankruptcy
proceeding) to which the Agent, any Lender or their respective Affiliates may be
a party; (5) to the extent reasonably required in connection with the exercise
of any remedy hereunder or under any other Loan Document; (6) to the Agent's or
such Lender's independent auditors, accountants, attorneys and other
professional advisors, provided that such auditors, accountants, attorneys and
other advisors agree to keep such information confidential to the same
46
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 Borrower'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)
47
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 lockbox 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.
48
(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 Borrower'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 xxxx-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
49
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 Borrower 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 Lender's costs and expenses in
connection therewith, shall be applied to the Obligations in such order as the
Agent determines. In any suit, proceeding or action brought by the Agent for the
benefit of the Lenders under any Assigned Contract for any sum owing thereunder
or to enforce any provision thereof, the 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
50
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 Borrower's loan account as a Reference Rate Loan. Any payment made or other
action taken by the Agent under this SECTION 7.15 shall be without prejudice to
any right to assert an Event of Default hereunder and to proceed thereafter as
herein provided.
7.16. POWER OF ATTORNEY. Each Borrower hereby appoints the
Agent and the Agent's designees as such Borrower's attorney, with power: (a) to
endorse such Borrower's name on any checks, notes, acceptances, money orders, or
other forms of payment or security that come into the Agent's or any Lender's
possession; (b) to sign such Borrower's name on any invoice, xxxx 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 Borrower'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 LENDER'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
51
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, xxx 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
52
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 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
53
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.
54
(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.
55
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, VALIDITY, 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
56
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, Xxxxxx
Xxxxxxxx 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 Xxxxxxx Xxxxx and his
spouse, together with certain entities controlled by Mr. Black 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
57
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 Borrower, 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 Borrower'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).
58
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 Borrower'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
Borrower's knowledge, any of its predecessors in interest has stored, treated or
disposed of any hazardous waste on any Premises, as defined pursuant to 40 CFR
Part 261 or any equivalent Environmental Law.
(d) 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
Borrower's knowledge has there ever been, on or in the Premises:
59
(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 a spill 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 Borrower.
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
60
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 11. 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
61
or solicit any offer to acquire any of the same from anyone so as to bring the
issuance thereof within the provisions of Section 5 of the Securities Act of
1933, as amended.
9.26. BROKER'S FEES. No Person is entitled to any brokerage or
finder's fee with respect to the transactions described in this Agreement.
9.27. NO MATERIAL ADVERSE CHANGE. No material adverse change
has occurred in 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
62
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 noncompliance 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
63
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 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 B-1; 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.
64
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:
65
RATIO
-----
Two Fiscal Quarters ending February 2.00:1.00
28, 1999
Three Fiscal Quarters ending May 31, 2.00:1.00
1999
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 2.00:1.00
quarter 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:
66
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
67
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, Xxxxxx &
Xxx-Xxxxx, 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.
68
Execution and delivery to the Agent by a Lender of a counterpart of
this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent in this SECTION 11.1 have been fulfilled to the
satisfaction of such Lender and (ii) the decision of such Lender to ' execute
and deliver to the Agent an executed counterpart of this Agreement was made by
such Lender independently and without reliance on the Agent or any other Lender
as to the satisfaction of any condition precedent set forth in this SECTION
11.1.
11.2. CONDITIONS PRECEDENT TO EACH LOAN. The obligation of the
Lenders to make each Loan 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
69
failure shall have existed for more than 30 (or 10 days for Section 10.4) after
the date that such Borrower discovers, or reasonably should have discovered,
such failure; PROVIDED, HOWEVER, that, to the extent that any covenant in
Section 8 specifies the number of days within which 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;
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(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 Xxxxxxx Xxxxx, Xxxxxx X. Xxxxx, 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
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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
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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 Lender's rights under this Agreement will
be cumulative and not exclusive of any other right or remedy which the Agent or
any Under may have.
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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,
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that the Borrower and the Agent may continue to deal solely and directly with
such Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions, addresses
and related information with respect to the Assignee, shall have been given to
the Borrower and the Agent by such Lender and the Assignee; (ii) such Lender and
its Assignee shall have delivered to the Borrower and the Agent an Assignment
and Acceptance in the form of EXHIBIT D ("ASSIGNMENT AND ACCEPTANCE") together
with any Note or Notes subject to such assignment and (iii) the assignor Lender
or Assignee has paid to the Agent a processing fee in the amount of $3,000.
(b) From and after the date that the Agent notifies
the assignor Lender that it has received an executed Assignment and Acceptance
and payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations,
including, but not limited to, the obligation to participate in Letters of
Credit and Credit Support have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).
(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.
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(d) Within five Business Days after its receipt of
notice by the Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, the Borrower shall execute and deliver to the
Agent, new Notes evidencing such Assignee's assigned Loans and, if the assignor
Lender has retained a portion of its Loans and its Commitment, replacement Notes
in the principal amount of the Loans retained by the assignor Lender (such Notes
to be in exchange for, but not in payment of, the Notes held by such Lender).
Immediately upon each Assignee's making its processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Lender PRO TANTO.
(e) Any Lender may at any time sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of the
Borrower (a "PARTICIPANT") participating interests in any Loans, the Commitment
of that Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrower and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
and subject to the same limitation as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.
(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 Section203.14, 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
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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
77
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,
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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.
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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 BABC of substantially all of its loan portfolio, BABC shall resign as Agent
and such purchaser or transferee shall become the successor Agent hereunder. If
the Agent resigns under this Agreement, subject to the proviso in the preceding
sentence, the Majority Lenders shall appoint from among the Lenders a successor
agent for the Lenders. If no successor agent is appointed prior to the effective
date of the resignation of the Agent, the Agent may appoint, after consulting
with the Lenders and the Borrower, a successor agent from among the Lenders.
Upon the acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this SECTION 16 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor agent
has accepted appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Agent hereunder until such time, if any, as the Majority Lenders
appoint a successor agent as provided for above. Notwithstanding any provision
in this Agreement to the contrary, (i) 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 Lender agrees with and in favor of the
Agent, to deliver to the Agent:
(i) if such Lender claims an exemption from,
or a reduction of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest in the first
calendar year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest
paid under this Agreement is exempt from United States withholding tax because
it is effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224 before the
payment of any interest is due in the first taxable year of such Lender and in
each succeeding taxable year of such Lender during which interest may be paid
under this Agreement, and IRS Form W-9; and
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(iii) such other form or forms as may be
required under the Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction
of, withholding tax under a United States tax treaty by providing IRS Form 1001
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Borrower to such Lender, such
Lender agrees to notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Borrower to such Lender. To
the extent of such percentage amount, the Agent will treat such Lender's IRS
Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United
States withholding tax by filing IRS Form 4224 with the Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the Obligations
of the Borrower to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent, then the Agent
may withhold from any interest payment to such Lender not providing such forms
or other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of
the United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Lender shall indemnify the Agent fully for all
-amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
Lenders under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent.
16.11. [INTENTIONALLY LEFT BLANK.
16.12. COLLATERAL MATTERS.
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(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 LENDERS; SHARING OF
PAYMENTS. (a) Each of the Lenders agrees that it shall not, without the express
consent of all Lenders, and that it shall, to the extent it is lawfully entitled
to do so, upon the request of all Lenders, set off against the
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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
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
ABA Number: 000000000
Account Number: 12353-03848
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Account Name: BankAmerica Business Credit, Inc.
Attention: Xxxxxx Xxxxx
Reference: Trend-Lines
if to Foothill Capital Corporation:
Bank: Xxx Xxxxx Xxxxxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx
Account Number: 323-266193
ABA Number: 000000000
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: 000000000
Account Name: Transamerica Business Credit Corp.
Attention: X. Xxxxxxx
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
LENDERS. By signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent
furnish such Lender, promptly after it becomes available, a copy of each field
audit or examination report (each a "Report" and collectively, "Reports")
prepared by the Agent;
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(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 Lender's purchase
of, a loan or loans of the Borrower; and (ii) to pay and protect, and indemnify,
defend and hold the Agent and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses and
other amounts (including, without limitation attorney costs) incurred by the
Agent and any such other Lender preparing a Report as the direct or indirect
result of any third parties who might obtain all or part of any Report through
the indemnifying Lender.
16.18. RELATION AMONG LENDERS. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
17. MISCELLANEOUS.
17.1. CUMULATIVE REMEDIES; NO PRIOR RECOURSE TO Collateral.
The enumeration herein of the Agent's rights and remedies is not intended to be
exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies that the Agent may have under the UCC
or other applicable law. The Agent shall have the right, in its sole discretion,
to determine which rights and remedies are to be exercised and in which order.
The exercise of one right or remedy shall not preclude the exercise of any
others, all of which shall be cumulative. The Agent may, without limitation,
proceed directly against the 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
85
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].
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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 them 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.
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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.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Division Manager
with a copy to: Bank of America NT&SA, Legal Department
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
-and-
Xxxxxx & Xxx-Xxxxx
Xxx Xxxxxxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
If to Trend-Lines: Trend-Lines, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: Chief Financial Officer
with a copy to: Xxxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Post Tool: Post Tool, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: Chief Financial Officer
with a copy to: Xxxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
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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
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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
90
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
91
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 xxxxxxxx any assets in favor of
such Borrower or against or in payment of any or all of the Obligations.
[SIGNATURES ON FOLLOWING PAGE]
92
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"BORROWERS"
TREND-LINES, INC.
By:
-----------------------------
Name: XXXX XXXXX
Title: CEO
POST TOOL, INC.
By:
-----------------------------
Name: XXXX XXXXX
Title: CEO
"AGENT"
BANKAMERICA BUSINESS CREDIT, INC.,
as the Agent
By:
-----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Sr. Account Executive
"LENDERS"
Commitment: $50,000,000 BANKAMERICA BUSINESS CREDIT, INC., as a
Lender
By:
-----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Sr. Account Executive
Commitment: $25,000,000 FOOTHILL CAPITAL CORPORATION
By:
-----------------------------
Name: XXXX X. XXXXXXXX
Title: V.P.
93
Commitment: $25,000,000 TRANSAMERICA BUSINESS CREDIT CORPORATION
By:
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Sr. Vice Pres.
94
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:
D-1
1. ASSIGNMENT AND ACCEPTANCE.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, the (i) 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.
D-2
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
D-3
(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
D-4
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 approval 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
D-5
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).
D-6
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:_____________________________
_____________________________
D-7
SCHEDULE 1 TO ASSIGNMENT AND ACCEPTANCE AGREEMENT
NOTICE OF ASSIGNMENT AND ACCEPTANCE
-----------------------------------
______________, 19__
BankAmerica Business Credit, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn:______________
Re: Trend-Lines, Inc.
Post Tool, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
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
S1-1
$____________, 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.
S1-2
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:
S1-3
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
AMENDED AND RESTATED STOCK PLEDGE AGREEMENT
DATED:__________, 199_
BANKAMERICA BUSINESS CREDIT INC., as Agent for itself and certain other
secured parties, with an office at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Secured Party"), and Trend-Lines, Inc., a Massachusetts corporation with an
office at 000 Xxxxxxx Xxxxxx Xxxxxxx, Xxxxxx, XX 00000 ("Pledgor"), hereby agree
as follows:
1. SECURITY INTEREST. In consideration of any loan, advance, or other
extension of credit heretofore or hereafter made by Secured Party to, or for the
account or benefit of, Pledgor or Post Tool, Inc., a Massachusetts corporation
("Post Tool"), and as security for the Obligations (as hereinafter defined),
Pledgor hereby pledges, transfers and assigns to Secured Party and grants to
Secured Party a security interest (the "Security Interest") in the following
described personal property, in all increases or profits received therefrom, in
all substitutions therefor, and in all Proceeds thereof in any form
("Collateral"):
5,000 shares of common stock, par value $.0l per share, of Post Tool (Stock
Certificate No. 2).
2. OBLIGATIONS. The Collateral secures payment of any and all debts,
liabilities, and obligations ("Obligations") of the Pledgor and/or Post Tool to
the Secured Party, including, without limitation, Obligations arising under this
Agreement, whether now existing or hereafter incurred, including, without
limitation, all interest provided in any instrument, document, or agreement
(including, without limitation, this Agreement) which accrues on any Obligations
until payment of such Obligations in full.
3. REPRESENTATIONS AND WARRANTEES OF PLEDGOR. Pledgor represents and
warrants and, so long as this Agreement is in effect, shall be deemed
continuously to represent and warrant that: (a) each Instrument and Document
constituting Collateral is genuine and in all respects what it purports to be;
(b) Pledgor is the owner of the Collateral free of all security interests or
other encumbrances, except under this Agreement; and (c) Pledgor is authorized
to enter into this Agreement; this Agreement is the legal, valid, and binding
obligation of Pledgor, enforceable in accordance with its terms; and Pledgor's
execution, delivery, and performance of this Agreement do not conflict with or
violate any law, regulation, order, judgment, rule or agreement to which Pledgor
is a party or by which Pledgor is bound.
4. IRREVOCABLE PROXY. Pledgor irrevocably constitutes and appoints Secured
Party, whether or not the Collateral has been transferred into the name of
Secured Party or its nominee, as Pledgor's proxy with full power, in the same
manner, to the same extent and with the same effect as if Pledgor were to do the
same: (a) to attend all meetings of stockholders of Post Tool held from the date
hereof and to vote the Collateral at such meeting in such manner as Secured
Party shall, in its sole discretion, deem appropriate, including, without
limitation, in favor of the liquidation of Post Tool; (b) to consent, in the
sole discretion of Secured Party, to any and all action by or with respect to
Post Tool for which the consent of the stockholders of Post Tool is or may be
necessary or appropriate; and (c) without limitation, to do all things which
Pledgor can or could do as a stockholder of Post Tool, giving to Secured Party
full power of substitution and revocation; provided, however, that this proxy
shall not be exercisable by Secured Party and Pledgor alone shall have the
foregoing powers (whether or not the Collateral has been transferred into the
name of the Secured Party or its nominee) until either (i) all or any part of
the Obligations have been declared by Secured Party to be, or have become,
immediately due and payable as provided in paragraph 9(b) hereof, or (ii) demand
for payment has been made respecting any of the Obligations which are payable on
demand (the date on which either of the foregoing occurs being referred to
hereinafter as the "Maturity Date"); provided, further, that Secured Party may
at its option, upon notice to Pledgor, elect to postpone having this proxy
become exercisable notwithstanding the occurrence of any event described in this
sentence which would otherwise cause this proxy to become exercisable. This
proxy shall terminate when this Security Agreement is no longer in full force
and effect as hereinafter provided. Pledgor hereby revokes any proxy or proxies
heretofore given by Pledgor to any person or persons whatsoever and agrees not
to give any other proxies in derogation hereof until this Security Agreement is
no longer in full force and effect as hereinafter provided.
5. COVENANTS OF PLEDGOR. So long as this Agreement is in effect, Pledgor:
(a) will defend the Collateral against the claims and demands of all other
parties; will keep the Collateral free from all security interests or other
encumbrances, except under this Agreement; and will not sell, transfer, assign,
deliver or otherwise dispose of any Collateral or any interest therein without
the prior written consent of Secured Party; (b) will notify Secured Party
promptly in writing of any change in Pledgor's address; (c) in connection
herewith, will execute and deliver to Secured Party such financing statements,
assignments and other documents and do such other things relating to the
Collateral and the Security Interest as Secured Party may request, and pay all
costs of lien searches and filing financing statements, assignments and other
documents in all public offices requested by Secured Party; and (d) will pay or
reimburse Secured Party for all taxes, assessments and other charges of every
nature which may be imposed, levied or assessed against the Collateral.
6. REGISTERED HOLDER OF COLLATERAL. Pledgor authorizes Secured Party to
transfer the Collateral or any part thereof into its own name or that of its
nominee so that Secured Party or its nominee may appear of record as the sole
owner thereof; provided, however, that, prior to the Maturity Date, Secured
Party shall deliver promptly to Pledgor all notices, statements or other
communications received by it or its nominee as such registered owner and, upon
demand and receipt of payment of necessary expenses thereof, shall give to
Pledgor or its designee a proxy or proxies to vote and take all action with
respect to such Collateral. On and after the Maturity Date, Pledgor waives all
rights to be advised of or to receive any notices, statements or communications
received by Secured Party or its nominees as such record owner and agrees that
no proxy or proxies given by Secured Party to Pledgor or its designee as
aforesaid shall thereafter be effective.
7. DIVIDENDS AND OTHER INCOME FROM COLLATERAL.
(a) Pledgor reserves the right to receive all dividends and other
income from the Collateral that is paid prior to the Maturity Date, and, if
Secured Party receives any such dividends or other income prior to such date,
Secured Party shall pay the same promptly to Pledgor.
(b) On and after the Maturity Date, Pledgor shall not demand or
receive any dividends or other income from the Collateral that is paid or
becomes payable on or after such date (regardless of when the same shall have
accrued), and, if Pledgor receives any such dividends or other income without
any demand by it, the same shall be held by Pledgor in trust for Secured Party
in the same medium in which received, shall not be commingled with any assets of
Pledgor and shall be delivered immediately to Secured Party in the form
received, properly endorsed to permit collection. Secured Party may apply the
net cash receipts from such dividends or other income to payment of any of the
Obligations provided that Secured Party shall account for and pay over to
Pledgor any such dividends or other income remaining after payment in full of
the Obligations.
8. INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS.
(a) Both prior to and on and after the Maturity Date, Pledgor
authorizes Secured Party: (i) to receive any increase in or profits on the
Collateral (including, without limitation, any stock issued as a result of any
stock split or dividend, any capital distribution, and the like) and to hold the
same as part of the Collateral; and (ii) to receive any payment or distribution
on the collateral upon redemption by, or dissolution and liquidation of, Post
Tool; to surrender the Collateral or any part thereof in exchange therefor; and
to hold the net cash receipts from any such payment or distribution as part of
the Collateral.
(b) If Pledgor receives such increases, profits, payments or
distributions, Pledgor will receive and deliver the same promptly to Secured
Party on the same terms and conditions set forth in paragraph 7(b) hereof
respecting dividends or other income, to be held by Secured Party as part of
the Collateral.
9. EVENTS OF DEFAULT.
(a) Any of the following events or conditions shall constitute an
event of default hereunder: (i) Pledgor fails to pay or perform any of the
Obligations when due in accordance with their terms; (b) any event occurs or
state of facts arises or exists which has or may have a material adverse effect
on the Collateral or the Security Interest, and Pledgor fails to remedy such
situation to Secured Party's satisfaction within 10 days after written demand by
Secured Party or, if such remedy cannot reasonably be completed within such
10-day period, Pledgor fails to commence during such period and thereafter to
pursue as diligently and as expeditiously as possible all steps necessary to
complete such remedy; (c) Pledgor commences, has commenced against it, or
acquiesces in the commencement of any action or proceeding in bankruptcy or
seeking reorganization, arrangement, readjustment of debts, or any other relief
under the United States Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency law, state or federal, now or hereafter existing,
whether or not an order for relief has been entered therein; or (d) Pledgor
applies for or acquiesces in the appointment of, or has appointed against it, a
receiver, custodian, trustee, sequestrator, or similar officer for it or the
Collateral or all or substantially all of its property.
(b) All Obligations not payable on demand shall be immediately due and
payable without demand or notice of any kind upon the happening of one or more
events of default under paragraph 9(a) hereof. The provisions of this paragraph
are not intended in any way to affect any rights of Secured Party with respect
to any Obligations which may now or hereafter be payable on demand.
(c) Secured Party's rights and remedies with respect to the Collateral
shall be those of a secured party under the Uniform Commercial Code and under
any other applicable law, as the same may from time to time be in effect, in
addition to those rights granted herein and in any other agreement now or
hereafter in effect between Pledgor and Secured Party.
(d) Without in any way requiring notice to be given in the following
time and manner, Pledgor agrees that any notice by Secured Party of sale,
disposition or other intended action hereunder or in connection herewith,
whether required by the Uniform Commercial Code or otherwise, shall constitute
reasonable notice to Pledgor if such notice is mailed by regular or certified
mail, postage prepaid, at least ten days prior to such action, to Pledgor's
address set forth above or as specified in writing to Secured Party as the
address to which notices shall be given to Pledgor.
(e) Pledgor agrees to pay on demand all costs and expenses incurred by
Secured Party in enforcing this Agreement, in realizing upon or protecting any
Collateral and in enforcing and collecting any Obligations or any guaranty
thereof, including, without limitation, if Secured Party retains counsel for
advice, suit, appeal, insolvency or other proceedings under the federal
Bankruptcy Code or otherwise, or for any of the above purposes, the reasonable
attorneys' fees incurred by Secured Party. Payment of all moneys hereunder is
secured by the Collateral, as well as by all other property serving as security
for the Obligations. The attorneys' fees billed to Secured Party at its
counsel's regular hourly rates are rebuttably presumed to be reasonable for all
purposes.
10. MISCELLANEOUS.
(a) Pledgor authorizes Secured Party, without notice or demand and
without affecting Pledgor's obligations hereunder, from time to time: (i) to
renew, extend, increase, accelerate or otherwise change the time for payment of,
the terms of, or the interest on, the Obligations or any part thereof; (ii) to
take from any party and hold collateral (other than the Collateral) for the
payment of the Obligations or any part thereof, and to exchange, enforce or
release such collateral or any part thereof; (iii) to accept and hold any
endorsement or guaranty of payment of the Obligations or any part thereof and to
release or substitute any such indorser or guarantor, or any party who has given
any security interest in any other collateral as security for the payment of the
Obligations or any part thereof, or any other party in any way obligated to pay
the Obligations or any part thereof; and (iv) to direct the order or manner of
the disposition of the Collateral and any and all other collateral and the
enforcement of any and all endorsement and guaranties relating to the
Obligations or any part thereof as Secured Party, in its sole discretion, may
determine.
(b) Pledgor hereby appoints Secured Party as Pledgor's attorney-in-
fact (without requiring Secured Party) to perform all acts which Secured Party
deems appropriate to perfect and continue its interests hereunder in the
Collateral and to protect, preserve and realize upon the Collateral. Pledgor
further appoints Secured Party as Pledgor's attorney-in-fact to execute such
orders and receipts for payment of the Collateral as Secured Party deems
appropriate in its sole discretion. These powers of attorney are coupled with an
interest and shall be irrevocable. Pledgor rectifies and approves all acts of
such attorney, and Secured Party shall not be liable for any acts or omissions
nor any error of judgment or mistake of fact or law other than resulting from
its willful misconduct. Secured Party may notify Post Tool of the Security
Interest. Subject to the terms of this Agreement, Secured Party may demand,
collect, and xxx on the Collateral (in either its or Pledgor's name, at Secured
Party's sole option), and enforce, compromise, settle, or discharge the
Collateral, without discharging the Obligations or any part thereof and whether
or not any such action results in the imposition of any penalty. Pledgor
authorizes and directs Post Tool to make any payments requested by Secured Party
as Secured Party may direct and hereby releases Post Tool from any liability to
Pledgor for making such payments.
(c) Upon Pledgor's failure to perform any of its duties hereunder,
Secured Party may, but shall not be obligated to, perform any or all such
duties, and Pledgor shall pay an amount equal to the cost thereof to Secured
Party on demand by Secured Party. Payment of all moneys hereunder shall be
secured by the Collateral, as well as by all other property serving as security
for the Obligations.
(d) No course of dealing between Pledgor and Secured Party and no
delay or omission by Secured Party in exercising any right or remedy hereunder
or with respect to any Obligations shall operate as a waiver thereof or of any
other right or remedy, and no single or partial exercise thereof shall preclude
any other or further exercise thereof or the exercise of any other right or
remedy. Secured Party may remedy any default by Pledgor hereunder or with
respect to any Obligations in any reasonable manner without waiving the default
remedied and without waiving any other prior or subsequent default by Pledgor.
All rights and remedies of Secured Party hereunder are cumulative.
(e) Secured Party shall have no obligation to take, and Pledgor shall
have the sole responsibility for taking, any and all steps to preserve rights
against any and all prior parties to any Instrument constituting Collateral,
whether or not in Secured Party's possession. Secured Party shall not be
responsible for loss or damage resulting from Secured Party's failure to enforce
or collect any such Collateral or to collect any moneys due or to become due
hereunder. Pledgor waives protest or any Instrument constituting Collateral at
any time held by Secured Party on which such Pledgor is in any way liable and
waives notice of any other action taken by Secured Party.
(f) The rights and benefits of Secured Party hereunder shall, if
Secured Party so directs, inure to any party acquiring any interest in the
Obligations or any part thereof.
(g) "Secured Party" and "Pledgor" as used herein shall include the
heirs, executors or administrators, or successors or assigns, of those parties.
(h) No modification, rescission, waiver, release or amendment of any
provision of this Agreement shall be made except by a written agreement
subscribed by Pledgor and Secured Party.
(i) This Agreement and the transaction evidenced hereby shall be
governed by, and construed and enforced under, the laws of the State of New
York, as the same may from time to time be in effect.
(j) All defined terms, unless otherwise defined in this Agreement,
shall have the definitions set forth in the Uniform Commercial Code adopted in
New York, as the same may from time to time be in effect.
(k) This Agreement is and is intended to be a continuing Agreement,
and shall remain in full force and effect until all Obligations have been paid
and performed in full and so long as the Guaranty is in effect.
(l) Pledgor waives trial by jury and the right to assert defenses,
setoffs, and counterclaims (other than compulsory counterclaims) in any action
or proceeding in any court arising on, out of, under, by virtue of, or in any
way relating to this Agreement or the transactions contemplated hereby. Pledgor
confirms that the foregoing waiver is informed and voluntary. Pledgor agrees
that, in addition to any other courts that may have jurisdiction under
applicable law and rules, the Supreme Court of the State of New York, in the
County of New York, and the United States District Court for the Southern
District of New York have jurisdiction to hear and determine any claims or
disputes pertaining directly or indirectly to this Agreement or to any matter
arising herefrom. Pledgor expressly submits and consents, in advance, to such
jurisdiction in any action or proceeding in such courts, agrees that venue will
be proper in such courts for all such matters, and waives personal service of
the summons and complaint or other process or papers issued therein. Pledgor
agrees that service of such summons or complaint or other process or papers may
be made by registered or certified mail (return receipt requested) addressed to
Pledgor's address as set forth above or as specified in writing to Secured Party
as the address to which notices shall be given to Pledgor.
(m) If, after receipt of any payment of all or any part of the
Obligations, Secured Party is for any reason compelled to surrender such payment
to any person or entity, because such payment is determined to be void or
voidable as a preference, impermissible set off, or a diversion of trust funds,
or for any other reason, this Agreement and the Obligations intended to be paid
by such payment shall be reinstated, if necessary, and shall continue in full
force notwithstanding any contrary action which may have been taken by Secured
Party in reliance upon such payment, and any such contrary action so taken shall
be without prejudice to Secured Party's rights under this Agreement and shall be
deemed to have been conditioned upon such payment having become final and
irrevocable.
(n) Without limiting any other right of Secured Party, whenever
any event of default exists or any Obligations are otherwise due and payable
(whether or not it has been so declared), Secured Party at its sole election may
set off against the Obligations any and all moneys then or thereafter owed to
Pledgor by Secured Party or any affiliate in any capacity, including, without
limitation, the Collateral and all deposit and other accounts and all funds of
Pledgor on deposit with or in the possession or control of Secured Party or any
affiliate, whether or not the indebtedness or the obligation to pay such moneys
owed by Secured Party or such affiliate is then due, and Secured Party shall be
deemed to have exercised such right of set-off immediately at the time of such
election even though any charge therefor is made or entered on Secured Party's
records subsequent thereto.
TREND-LINES, INC.
By:
Name:
Title:
Accepted at _________, __________
this ____ day of __________, 199_
BANKAMERICA BUSINESS CREDIT, INC., as Agent
By:
Name:
Title:
AMENDED AND RESTATED TRADEMARK SECURITY AGREEMENT
THIS AMENDED AND RESTATED TRADEMARK SECURITY AGREEMENT ("Agreement"),
dated as of ______________, 199_, is entered into between TREND-LINES, INC., a
Massachusetts corporation (the "Debtor"), and BankAmerica Business Credit, Inc.,
as Agent for itself (in such capacity, the "Agent") and certain other secured
parties, in light of the following:
A. The Agent, the Debtor and Post Tool, Inc. ("Post Tool") are,
contemporaneously herewith, entering into that certain Amended and Restated Loan
and Security Agreement Dated as of the Date Hereof Among the Agent and certain
other secured parties, the Debtor and Post Tool (the "Loan Agreement") and other
instruments, documents and agreements contemplated thereby or related thereto
(collectively, together with the Loan Agreement, the "Loan Documents"); and
B. The Debtor is the owner of certain intellectual property, identified
below, in which the Debtor is granting a security interest to the Agent on
behalf of itself and certain other secured parties.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
conditions, representations, and warranties hereinafter set forth and for other
good and valuable consideration, the parties hereto mutually agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
(a) DEFINITIONS. The following terms, as used in this Agreement,
have the following meanings:
"CODE" means the New York Uniform Commercial Code, as amended
and supplemented from time to time, and any successor statute.
"COLLATERAL" means:
(i) Each of the marks, rights and interests which are
capable of identifying the source or designating the origin of goods or services
which are presently, or in the future may be, owned, created, or acquired by the
Debtor, in whole or in part, and all rights with respect thereto throughout the
world, including, without limitation:
(A) all trademarks, service marks, designs, logos,
indicia, trade names, corporate names, company names, business names, fictitious
business names, trade styles, trade dress, and other words, terms, names,
symbols, devices, business identifiers, and any combination thereof;
(B) all rights to renew and extend such rights and,
to the extent not otherwise included, all payments under insurance, or any
indemnity, warranty, or guaranty payable by reason of loss of damage to or
otherwise with respect to Collateral; and
(C) all associated goodwill of the business in
which the xxxx is used;
(ii) All of the Debtor's right, title, and interest in
and to the registrations of and applications for marks listed on Schedule A,
attached hereto, as the same may be updated hereafter from time to time,
together (in each case) with all associated goodwill of the business in which
the xxxx is used;
(iii) All of the Debtor's right to register marks under
any state, federal, or foreign trademark law or regulation and to apply for,
renew, and extend the registrations and rights thereunder, the right (without
obligation) to xxx or bring opposition or cancellation proceedings in the name
of the Debtor or in the name of the Agent for past, present, future, and
anticipated infringements and dilutions of such marks, registrations, and rights
and all rights (but not obligations) corresponding thereto in the United States
and any foreign country, and the associated goodwill;
(iv) All general intangibles relating to the foregoing;
and
(v) All proceeds of any and all of the foregoing
(including, without limitation, license royalties and proceeds of infringement
suits) and, to the extent not otherwise included, all payments under insurance,
or any indemnity, warranty, or guaranty payable by reason of loss or damage to
or otherwise with respect to the Collateral.
"OBLIGATIONS" means all obligations, liabilities, and
indebtedness of the Debtor to the Agent, whether direct, indirect, liquidated or
contingent, and whether arising under this Agreement, the Loan Agreement, any
other of the Loan Documents, or otherwise, including, without limitation, all
costs and expenses described in Section 10(i) hereof.
(b) CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, and the term "including" is not limiting. The
words "hereof," "herein," "hereby," "hereunder," and other similar terms refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Any initially capitalized terms used but not defined herein shall
have the meaning set forth in the Loan Agreement. Any reference herein to any of
the Loan Documents includes any and all alterations, amendments, extensions,
modifications, renewals, or supplements thereto or thereof, as applicable.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against the Agent or the Debtor, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
the Debtor, the Agent, and their respective counsel and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of the Agent and the Debtor.
2. GRANT OF SECURITY INTEREST. The Debtor hereby grants to the Agent a
first-priority security interest in, and conditionally assigns, but does not
transfer title to the Agent to, all of the Debtor's right, title, and interest
in and to the Collateral to secure the Obligations.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Debtor hereby
represents, warrants, and covenants that:
(a) A true and complete schedule setting forth all federal and
state registrations of marks owned by the Debtor, together with a summary
description and full information in respect of the filing or issuance thereof
and expiration dates, is set forth on Schedule A;
(b) Each of the marks and registrations of marks is valid and
enforceable, and the Debtor is not presently aware of any past, present, or
prospective claim by any third party that any of the marks is invalid or
unenforceable or that the use of any marks violates the rights of any third
person, or of any basis for any such claims except as set forth on Schedule A;
(c) Except as set forth on Schedule B attached hereto, the Debtor
is the sole and exclusive owner of the entire and unencumbered right, title, and
interest in and to each of the marks, and xxxx registrations, free and clear of
any liens, charges, and encumbrances, including, without limitation, pledges,
assignments, licenses, shop rights, and covenants by the Debtor not to xxx third
persons;
(d) The Debtor has used and will continue to use proper statutory
notice in connection with its use of each of the registered marks;
(e) The Debtor has used and will continue to use consistent
standards of high quality (which may be consistent with the Debtor's past
practices) in the sale and delivery of products and services sold or delivered
under or in connection with the marks, including, without limitation and to the
extent applicable, in the operation and maintenance of its merchandising
operations, and will continue to maintain the validity of the marks;
(f) Except for the filing of a financing statement with the Clerk
of the Commonwealth of Massachusetts and filings with the United States Patent
and Trademark Office necessary to perfect the security interests created
hereunder with respect to domestic trademarks, no authorization, approval, or
other action by, and no notice to or filing with, any U.S. governmental
authority or regulatory body is required either for the grant by the Debtor of
the security interest hereunder or for the execution, delivery, or performance
of this Agreement by the Debtor or for the perfection of or the exercise by the
Agent of its rights hereunder in and to the Collateral in the United States.
4. AFTER-ACQUIRED TRADEMARK RIGHTS. If the Debtor shall obtain or
create rights to any new marks, the provisions of this Agreement shall
automatically apply thereto. The Debtor shall give prompt notice in writing to
the Agent with respect to any such new marks, and to the renewal or extension of
any registration of a xxxx. The Debtor shall bear any expenses incurred in
connection with future registrations of marks.
5. LITIGATION AND PROCEEDINGS. The Debtor shall commence and diligently
prosecute in its own name, as the real party in interest, for its own benefit,
and at its own expense, such suits, administrative proceedings, or other actions
for infringement or other damages as are in its reasonable business judgment
necessary to protect the Collateral. The Debtor shall provide to the Agent any
information with respect thereto requested by the Agent. The Agent shall provide
at the Debtor's expense all necessary cooperation in connection with any such
suits, proceedings, or actions, including, without limitation, joining as a
necessary party provided that the Debtor is not responsible for the Agent's
attorneys' fees if the Agent voluntarily chooses to become a party to any suit.
Following the Debtor's becoming aware thereof, the Debtor shall notify the Agent
of the institution of, or any adverse determination in, any proceeding in the
United States Patent and Trademark Office, or any United States, state, or
foreign court regarding the Debtor's claim of ownership in any of the marks, the
Debtor's right to apply for the same, or its right to keep and maintain such
ownership and rights in the marks.
6. POWER OF ATTORNEY. The Debtor grants the Agent power of attorney,
having the full authority, and in the place of, the Debtor and in the name of
the Debtor, from time to time following an Event of Default (as defined in
Section 8 hereof) and in the -Agent's discretion following such an Event of
Default and after five days' written notice to the Agent, to take any action and
to execute any instrument which the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) To endorse the Debtor's name on all applications, documents,
papers, and instruments necessary for the Agent to use or maintain the
Collateral;
(b) To ask, demand, collect, xxx for, recover, impound, receive,
and give acquittance and receipts for money due or to become due under or in
respect of any of the Collateral;
(c) To file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the Agent's rights with respect to
any of the Collateral and to assign, pledge, convey, or otherwise transfer title
in or dispose of the Collateral to any person.
7. RIGHT TO INSPECT. The Debtor grants to the Agent and its employees
and agents the right to visit the Debtor's plants and facilities which
manufacture, inspect, or store products sold under any of the trademarks, and to
inspect the products and quality control records relating thereto at reasonable
times during regular business hours or as otherwise provided in the Loan
Agreement.
8. EVENT OF DEFAULT. Any of the following events shall be an Event of
Default:
(a) An Event of Default shall occur as defined in the Loan
Agreement;
(b) Any representation or warranty made herein by the Debtor or in
any document furnished to the Lender by the Debtor under this Agreement is
incorrect in any
material respect when made or when reaffirmed and such misrepresentation shall
have a material adverse effect on the Debtor's business; and
(c) The Debtor fails to observe or perform any covenant,
condition, or agreement to be observed or performed pursuant to the terms
hereof.
9. SPECIFIC REMEDIES. Upon the occurrence of any Event of Default, the
Agent shall have, in addition to other rights given by law or in this Agreement,
the Loan Agreement, or in any other Loan Document, all of the rights and
remedies with respect to the Collateral of a secured party under the Code,
including, without limitation, the following:
(a) The Agent may notify licensees to make royalty payments on
license agreements directly to the Agent;
(b) The Agent may sell, license, franchise or assign the
Collateral at public or private sale for such amounts, and at such time or
times, as the Agent deems advisable, provided that it is done in a commercially
reasonable manner. Any requirement of reasonable notice of any disposition of
the Collateral shall be satisfied if such notice is sent to the Debtor 10 days
prior to such disposition. The Debtor shall be credited with the net proceeds of
such sale only when they are actually received by the Agent, and the Debtor
shall continue to be liable for any deficiency remaining after the Collateral is
sold or collected. If the sale is to be a public sale, the Agent shall also give
notice of the time and place by publishing a notice one time at least 10 days
before the date of the sale in a newspaper of general circulation in the county
in which the sale is to be held; and
(c) To the maximum extent permitted by applicable law, the Agent
may be the purchaser of any or all of the Collateral at any public sale and
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any
public sale, to use and apply all or any part of the Obligations as a credit on
account of the purchase price of any Collateral payable by the Agent at such
sale and the Obligations shall be deemed satisfied to the extent of such
application.
10. GENERAL PROVISIONS.
(a) EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall be
binding and deemed effective when executed by the Debtor and accepted and
executed by the Agent.
(b) CUMULATIVE REMEDIES: NO PRIOR RECOURSE TO COLLATERAL. The
enumeration herein of the Agent's rights and remedies is not intended to be
exclusive, provided that it is done in a commercially reasonable manner, 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 Loan Agreement, the
Code 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.
(c) 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 a 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.
(d) SEVERABILITY. If any provision of this Agreement shall be
prohibited, or invalid, under applicable law, such provision shall be effective
only to such extent, without invalidating the remainder of this Agreement.
(e) 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.
(f) CONSENT TO JURISDICTION AND VENUE; SERVICE OF PROCESS. The
Debtor agrees that, in addition to any other courts that may have jurisdiction
under applicable laws or rules, any action or proceeding to enforce or arising
out of this Agreement or any of the other Loan Documents to which it is a party
may be commenced in the United States District Court for the Southern District
of New York, consents and submits in advance to such jurisdiction, and agrees
that venue will be proper in such court on any such matter. The Debtor hereby
waives personal service of process and agrees that a summons and complaint
commencing an action or proceeding in any such courts shall be properly served
and shall confer personal jurisdiction if served by registered or certified mail
to the Debtor, or as otherwise provided by the laws of the State of New York or
the United States. 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.
(g) WAIVER OF JURY TRIAL., ETC. THE DEBTOR AND THE AGENT EACH
HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF, THIS AGREEMENT, THE OBLIGATIONS, OR THE
COLLATERAL, OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT HERETO. THE DEBTOR
AND THE AGENT EACH CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY
MADE.
(h) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
Debtor's representations and warranties contained in this Agreement, shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Lenders or their agents.
(i) FEES AND EXPENSES. The Debtor shall pay to the Agent on demand
all reasonable costs and expenses that the Agent pays or incurs in connection
with the enforcement and termination of this Agreement, including, without
limitation: (i) reasonable attorneys' and paralegals' fees and disbursements of
counsel to the Agent (including, without limitation, the
allocated fees and costs of the Agent's in-house counsel and paralegals); (ii)
costs and expenses (including, Without limitation, reasonable attorneys' and
paralegals' fees and disbursements (including, without limitation, the allocated
fees and costs of the Agent's in-house counsel and paralegals)) for any
amendment, supplement, waiver, consent, or subsequent closing in connection with
this Agreement and the transactions contemplated hereby; (iii) costs and
expenses of lien searches; (iv) taxes, fees, and other charges for filing this
Agreement at the United States Patent and Trademark Office, or for filing
financing statements, and continuations, and other actions to perfect, protect,
and continue the security interest created hereunder; (v) sums paid or incurred
to pay any amount or take any action required of the Debtor under Us Agreement
that the Debtor fails to pay or take; (vi) after the occurrence of an Event of
Default, the costs and expenses of preserving and protecting the Collateral; and
(vii) costs and expenses (including, without limitation, reasonable attorneys'
and paralegals' fees and disbursements (including, without limitation, the
allocated fees and costs of the Agent's in-house counsel and paralegals)) paid
or incurred to enforce the security interest created hereunder, sell or
otherwise realize upon the Collateral, and otherwise enforce the provisions of
this Agreement, or to defend any claims made or threatened against the Agent
arising out of the transactions contemplated hereby (including, without
limitation, preparations for the consultations concerning any such matters). The
foregoing shall not be construed to limit any other provisions of this Agreement
regarding costs and expenses to be paid by the Debtor. The parties agree that
reasonable attorneys' and paralegals' fees and costs incurred in enforcing any
judgment are recoverable as a separate item in addition to fees and costs
incurred in obtaining the judgment and that the recovery of postjudgment
reasonable attorneys' and paralegals' fees and costs is intended to survive any
judgment and is not to be deemed merged into any judgment.
(j) 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 and shall be governed by the provisions of Section
15.11 of the Loan Agreement.
(k) 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 the Debtor without the prior
written consent of the Agent other than to a parent or subsidiary corporation.
The rights and benefits of the Agent hereunder shall, if the Agent so agrees,
inure to any party acquiring any interest in the Obligations or any part
thereof.
(l) MODIFICATION. This Agreement is intended by the Debtor and the
Agent to be the final, complete, and exclusive expression of the agreement
between them respecting the subject matter hereof. This Agreement supersedes any
and all prior oral or written agreements relating to the subject matter hereof.
No modification, rescission, waiver, release, or amendment of any provision of
this Agreement shall be made, except by a written agreement signed by the Debtor
and a duly authorized officer of the Agent.
(m) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the Agent and the Debtor in separate counterparts, each of
which shall be an original, but all of which shall together constitute one and
the same agreement.
(n) 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.
(o) TERMINATION BY AGENT. After termination of the Loan Agreement
and when the Agent has received payment and performance in full of all
Obligations, the Agent shall execute and deliver to the Debtor a termination or
terminations of all of the security interests, in form suitable for filing,
granted by the Debtor hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
TREND-LINES, INC.
a Massachusetts corporation
By:
--------------------------------------
Name: Xxxx Xxxxx
Title: CEO
BANKAMERICA BUSINESS CREDIT, INC.
a Delaware corporation
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Sr. Account Executive
STATE OF MASSACHUSETTS )
) ss.:
COUNTY OF SUFFOLK )
On the 24 day of February, 1999, before me personally came Xxxxxxx
Xxxxx, to me known, who, being by me duly sworn, did depose and say that he
resides at 00 Xxxxxxx Xxxxx Xxxxxx, Xxxxxxxxxx, XX; that he is the CEO of
Trend-Lines, Inc., the corporation described in and which executed the above
instrument; and that he signed his name thereto by order of the board of
directors of said corporation.
XXXXXXX XXXXXXX
Notary Public
My Commission Expires December 21, 2001
---------------------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 27th day of February, 1999, before me personally came Xxxxxxx X.
Xxxxxx, to me known, who, being by me duly sworn, did depose and say that he
resides at ____________________________; that he is the Sr. Account Executive of
BankAmerica Business Credit, Inc., the corporation described in and which
executed the above instrument; and that he signed his name thereto by order of
the board of directors of said corporation.
---------------------------------------
Notary Public
XXXXXXXX X. XXXXXXX
Notary Public, State of New York
No. 02SA5036939
Qualified in Nassau County
Commission Expires December 12, 2000
Schedule A
Trademarks
Registration Registration
Trademark Number Date
--------- ---------- --------
Golf Express 1,278,735 10/27/92
CARB-TECH 1,737,995 12/08/92
Honors 1,778,948 06/29/93
Honors 1,804,596 11/16/93
Honors 1,815,027 01/04/94
Schedule B
Third Party Rights With Respect To The Trademarks
None.
AMENDED AND RESTATED TRADEMARK SECURITY AGREEMENT
THIS AMENDED AND RESTATED TRADEMARK SECURITY AGREEMENT ("Agreement"), dated
as of __________, 199_, is entered into between POST TOOL, INC., a Massachusetts
corporation (the "Debtor"), and BankAmerica Business Credit, Inc., as Agent for
itself (in such capacity, the "Agent") and certain other secured parties, in
light of the following:
A. The Agent, the Debtor and Trend Lines, Inc. ("Trend Lines") are,
contemporaneously herewith, entering into that certain Amended and Restated Loan
and Security Agreement Dated as of the Date Hereof Among the Agent and certain
other secured parties, the Debtor and Trend Lines (the "Loan Agreement") and
other instruments, documents and agreements contemplated thereby or related
thereto (collectively, together with the Loan Agreement, the "Loan Documents");
and
B. The Debtor is the owner of certain intellectual property, identified
below, in which the Debtor is granting a security interest to the Agent on
behalf of itself and certain other secured parties.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
conditions, representations, and warranties hereinafter set forth and for other
good and valuable consideration, the parties hereto mutually agree as follows:
1. Definitions and Construction.
(a) Definitions. The following terms, as used in this Agreement, have
the following meanings:
"Code" means the New York Uniform Commercial Code, as amended and
supplemented from time to time, and any successor statute.
"Collateral" means:
(i) Each of the marks, rights and interests which are
capable of identifying the source or designating the origin of goods or services
which are presently, or in the future may be, owned, created, or acquired by the
Debtor, in whole or in part, and all rights with respect thereto throughout the
world, including, without limitation:
(A) all trademarks, service marks, designs, logos,
indicia, trade names, corporate names, company names, business names, fictitious
business names, trade styles, trade dress, and other words, terms, names,
symbols, devices, business identifiers, and any combination thereof;
(B) all rights to renew and extend such rights and, to
the extent not otherwise included, all payments under insurance, or any
indemnity, warranty, or guaranty payable by reason of loss of damage to or
otherwise with respect to Collateral; and
(C) all associated goodwill of the business in which
the xxxx is used;
(ii) All of the Debtor's right, title, and interest in and
to the registrations of and applications for marks listed on Schedule A,
attached hereto, as the same may be updated hereafter from time to time,
together (in each case) with all associated goodwill of the business in which
the xxxx is used;
(iii) All of the Debtor's right to register marks under any
state, federal, or foreign trademark law or regulation and to apply for, renew,
and extend the registrations and rights thereunder, the right (without
obligation) to xxx or bring opposition or cancellation proceedings in the name
of the Debtor or in the name of the Agent for past, present, future, and
anticipated infringements and dilutions of such marks, registrations, and rights
and all rights (but not obligations) corresponding thereto in the United States
and any foreign country, and the associated goodwill;
(iv) All general intangibles relating to the foregoing; and
(v) All proceeds of any and all of the foregoing (including,
without limitation, license royalties and proceeds of infringement suits) and,
to the extent not otherwise included, all payments under insurance, or any
indemnity, warranty, or guaranty payable by reason of loss or damage to or
otherwise with respect to the Collateral.
"Obligations" means all obligations, liabilities, and
indebtedness of the Debtor to the Agent, whether direct, indirect, liquidated or
contingent, and whether arising under this Agreement, the Loan Agreement, any
other of the Loan Documents, or otherwise, including, without limitation, all
costs and expenses described in Section 10(i) hereof.
(b) Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, and the term "including" is not limiting. The
words "hereof," "herein," "hereby," "hereunder," and other similar terms refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Any initially capitalized terms used but not defined herein shall
have the meaning set forth in the Loan Agreement. Any reference herein to any of
the Loan Documents includes any and all alterations, amendments, extensions,
modifications, renewals, or supplements thereto or thereof, as applicable.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against the Agent or the Debtor, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
the Debtor, the Agent, and their respective counsel and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of the Agent and the Debtor.
2. Grant of Security Interest. The Debtor hereby grants to the Agent a
first-priority security interest in, and conditionally assigns, but does not
transfer title to the Agent to, all of the Debtor's right, title, and interest
in and to the Collateral to secure the Obligations.
3. Representations, Warranties and Covenants. The Debtor hereby represents,
warrants, and covenants that:
(a) A true and complete schedule setting forth all federal and state
registrations of marks owned by the Debtor, together with a summary description
and full information in respect of the filing or issuance thereof and expiration
dates, is set forth on Schedule A;
(b) Each of the marks and registrations of marks is valid and
enforceable, and the Debtor is not presently aware of any past, present, or
prospective claim by any third party that any of the marks is invalid or
unenforceable or that the use of any marks violates the rights of any third
person, or of any basis for any such claims except as set forth on Schedule A;
(c) Except as set forth on Schedule B attached hereto, the Debtor is
the sole and exclusive owner of the entire and unencumbered right, title, and
interest in and to each of the marks, and xxxx registrations, free and clear of
any liens, charges, and encumbrances, including, without limitation, pledges,
assignments, licenses, shop rights, and covenants by the Debtor not to xxx third
persons;
(d) The Debtor has used and will continue to use proper statutory
notice in connection with its use of each of the registered marks;
(e) The Debtor has used and will continue to use consistent standards
of high quality (which may be consistent with the Debtor's past practices) in
the sale and delivery of products and services sold or delivered under or in
connection with the marks, including, without limitation and to the extent
applicable, in the operation and maintenance of its merchandising operations,
and will continue to maintain the validity of the marks;
(f) Except for the filing of a financing statement with the Clerk of
the Commonwealth of Massachusetts and filings with the United States Patent and
Trademark Office necessary to perfect the security interests created hereunder
with respect to domestic trademarks, no authorization, approval, or other action
by, a and no notice to or filing with, any U.S. governmental authority or
regulatory body is required either for the grant by the Debtor of the security
interest hereunder or for the execution, delivery, or performance of this
Agreement by the Debtor or for the perfection of or the exercise by the Agent of
its rights hereunder in and to the Collateral in the United States.
4. After-Acquired Trademark Rights. If the Debtor shall obtain or create
rights to any new marks, the provisions of this Agreement shall automatically
apply thereto. The Debtor shall give prompt notice in writing to the Agent with
respect to any such new marks, and to the renewal or extension of any
registration of a xxxx. The Debtor shall bear any expenses incurred in
connection with future registrations of marks.
5. Litigation and Proceedings. The Debtor shall commence and diligently
prosecute in its own name, as the real party in interest, for its own benefit,
and at its own expense, such suits, administrative proceedings, or other actions
for infringement or other damages as are in its reasonable business judgment
necessary to protect the Collateral. The Debtor shall provide to the Agent any
information with respect thereto requested by the Agent. The Agent shall provide
at the Debtor's expense all necessary cooperation in connection with any such
suits, proceedings, or actions, including, without limitation, joining as a
necessary party provided that the Debtor is not responsible for the Agent's
attorneys' fees if the Agent voluntarily chooses to become a party to any suit.
Following the Debtor's becoming aware thereof, the Debtor shall notify the Agent
of the institution of, or any adverse determination in, any proceeding in the
United States Patent and Trademark Office, or any United States, state, or
foreign court regarding the Debtor's claim of ownership in any of the marks, the
Debtor's right to apply for the same, or its right to keep and maintain such
ownership and rights in the marks.
6. Power of Attorney. The Debtor grants the Agent power of attorney, having
the full authority, and in the place of, the Debtor and in the name of the
Debtor, from time to time following an Event of Default (as defined in Section 8
hereof) and in the Agent's discretion following such an Event of Default and
after five days' written notice to the Agent, to take any action and to execute
any instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
(a) To endorse the Debtor's name on all applications, documents,
papers, and instruments necessary for the Agent to use or maintain the
Collateral;
(b) To ask, demand, collect, xxx for, recover, impound, receive, and
give acquittance and receipts for money due or to become due under or in respect
of any of the Collateral;
(c) To file any claims or take any action or institute any proceedings
that the Agent may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the Agent's rights with respect to any of the
Collateral and to assign, pledge, convey, or otherwise transfer title in or
dispose of the Collateral to any person.
7. Right to Inspect. The Debtor grants to the Agent and its employees and
agents the right to visit the Debtor's plants and facilities which manufacture,
inspect, or store products sold under any of the trademarks, and to inspect the
products and quality control records relating thereto at reasonable times during
regular business hours or as otherwise provided in the Loan Agreement.
8. Event of Default. Any of the following events shall be an Event of
Default:
(a) An Event of Default shall occur as defined in the Loan Agreement;
(b) Any representation or warranty made herein by the Debtor or in any
document furnished to the Lender by the Debtor under this Agreement is incorrect
in any material respect when made or when reaffirmed and such misrepresentation
shall have a material adverse effect on the Debtor's business; and
(c) The Debtor fails to observe or perform any covenant, condition, or
agreement to be observed or performed pursuant to the terms hereof.
9. Specific Remedies. Upon the occurrence of any Event of Default, the
Agent shall have, in addition to other rights given by law or in this Agreement,
the Loan Agreement, or in any other Loan Document, all of the rights and
remedies with respect to the Collateral of a secured party under the Code,
including, without limitation, the following:
(a) The Agent may notify licensees to make royalty payments on license
agreements directly to the Agent;
(b) The Agent may sell, license, franchise or assign the Collateral at
public or private sale for such amounts, and at such time or times, as the Agent
deems advisable, provided that it is done in a commercially reasonable manner.
Any requirement of reasonable notice of any disposition of the Collateral shall
be satisfied if such notice is sent to the Debtor 10 days prior to such
disposition. The Debtor shall be credited with the net proceeds of such sale
only when they are actually received by the Agent, and the Debtor shall continue
to be liable for any deficiency remaining after the Collateral is sold or
collected. If the sale is to be a public sale, the Agent shall also give notice
of the time and place by publishing a notice one time at least 10 days before
the date of the sale in a newspaper of general circulation in the county in
which the sale is to be held; and
(c) To the maximum extent permitted by applicable law, the Agent may
be the purchaser of any or all of the Collateral at any public sale and shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any public sale,
to use and apply all or any part of the Obligations as a credit on account of
the purchase price of any Collateral payable by the Agent at such sale and the
Obligations shall be deemed satisfied to the extent of such application.
10. General Provisions.
(a) Effectiveness of This Agreement. This Agreement shall be binding
and deemed effective when executed by the Debtor and accepted and executed by
the Agent.
(b) Cumulative Remedies: No Prior Recourse to Collateral. The
enumeration herein of the Agent's rights and remedies is not intended to be
exclusive, provided that it is done in a commercially reasonable manner, 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 Loan Agreement, the
Code 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.
(c) 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 a 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.
(d) Severability. If any provision of this Agreement shall be
prohibited, or invalid, under applicable law, such provision shall be effective
only to such extent, without invalidating the remainder of this Agreement.
(e) 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.
(f) Consent to Jurisdiction and Venue; Service of Process. The Debtor
agrees that, in addition to any other courts that may have jurisdiction under
applicable laws or rules, any action or proceeding to enforce or arising out of
this Agreement or any of the other Loan Documents to which it is a party may be
commenced in the United States District Court for the Southern District of New
York, consents and submits in advance to such jurisdiction, and agrees that
venue will be proper in such court on any such matter. The Debtor hereby waives
personal service of process and agrees that a summons and complaint commencing
an action or proceeding in any such courts shall be properly served and shall
confer personal jurisdiction if served by registered or certified mail to the
Debtor, or as otherwise provided by the laws of the State of New York or the
United States. 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.
(g) Waiver of Jury Trial, Etc. THE DEBTOR AND THE AGENT EACH HEREBY
WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF, THIS AGREEMENT, THE OBLIGATIONS, OR THE
COLLATERAL, OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT HERETO. THE DEBTOR
AND THE AGENT EACH CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY
MADE.
(h) Survival of Representations and Warranties. All of the Debtor's
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Lenders or their agents.
(i) Fees and Expenses. The Debtor shall pay to the Agent on demand all
reasonable costs and expenses that the Agent pays or incurs in connection with
the enforcement and termination of this Agreement, including, without
limitation: (i) reasonable attorneys' and paralegals' fees and disbursements of
counsel to the Agent (including, without limitation, the allocated fees and
costs of the Agent's in-house counsel and paralegals); (ii) costs and expenses
(including, without limitation, reasonable attorneys' and paralegals' fees and
disbursements (including, without limitation, the allocated fees and costs of
the Agent's in-house counsel and paralegals) for an, amendment, supplement,
waiver, consent, or subsequent closing in connection with this Agreement and the
transactions contemplated hereby; (iii) costs and expenses of lien searches;
(iv) taxes, fees, and other charges for filing this Agreement at the United
States Patent and Trademark Office, or for filing financing statements, and '
continuations, and other actions to perfect, protect, and continue the security
interest created hereunder; (v) sums paid or incurred to pay any amount or take
any action required of the Debtor under this Agreement that the Debtor fails to
pay or take; (vi) after the occurrence of an Event of Default, the costs and
expenses of preserving and protecting the Collateral; and (vii) costs and
expenses (including, without limitation, reasonable attorneys' and paralegals'
fees and disbursements (including, without limitation, the allocated fees and
costs of the Agent's in-house counsel and paralegals)) paid or incurred to
enforce the security interest created hereunder, sell or otherwise realize upon
the Collateral, and otherwise enforce the provisions of this Agreement, or to
defend any claims made or threatened against the Agent arising out of the
transactions contemplated hereby (including, without limitation, preparations
for the consultations concerning any such matters). The foregoing shall not be
construed to limit any other provisions of this Agreement regarding costs and
expenses to be paid by the Debtor. The parties agree that reasonable attorneys'
and paralegals' fees and costs incurred in enforcing any judgment are
recoverable as a separate item in addition to fees and costs incurred in
obtaining the judgment and that the recovery of postjudgment reasonable
attorneys' and paralegals' fees and costs is intended to survive any judgment
and is not to be deemed merged into any judgment.
(j) 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 and shall be governed by the provisions of Section
15.11 of the Loan Agreement.
(k) 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 the Debtor without the prior written consent
of the Agent other than to a parent or subsidiary corporation. The rights and
benefits of the Agent hereunder shall, if the Agent so agrees, inure to any
party acquiring any interest in the Obligations or any part thereof.
(l) Modification. This Agreement is intended by the Debtor and the
Agent to be the final, complete, and exclusive expression of the agreement
between them respecting the subject matter hereof. This Agreement supersedes any
and all prior oral or written agreements relating to the subject matter hereof.
No modification, rescission, waiver, release, or amendment of any provision of
this Agreement shall be made, except by a written agreement signed by the Debtor
and a duly authorized officer of the Agent.
(m) Counterparts. This Agreement may be executed in any number of
counterparts and by the Agent and the Debtor in separate counterparts, each of
which shall be an original, but all of which shall together constitute one and
the same agreement.
(n) 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.
(o) Termination By Agent. After termination of the Loan Agreement and
when the Agent has received payment and performance in full of all Obligations,
the Agent shall execute and deliver to the Debtor a termination or terminations
of all of the security interests, in form suitable for filing, granted by the
Debtor hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
POST TOOL, INC.,
a Massachusetts corporation
By:
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
BANKAMERICA BUSINESS CREDIT, INC.,
a Delaware corporation
By:
Name: Xxxxxxx X. Xxxxxx
Title: Sr. Account Executive
STATE OF MA )
) ss.:
COUNTY OF Suffolk )
On the 24 day of February 1999, before me personally came
Xxxxxxx Xxxxx, to me known, who, being by me duly sworn, did depose and say
that he resides at 00 Xxxxxxx Xxxxx Xxxxxx Xxxxxxxxxx, XX; that he
is the CEO of Post Tool, Inc., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
Notary Public
My Commission Expires December 21, 0000
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of _________, 199_, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that he resides at ____________________________; that he is the ________________
of BankAmerica Business Credit, Inc., the corporation described in and which
executed the above instrument; and that he signed his name thereto by order of
the board of directors of said corporation.
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of _________, 199_, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that he resides at __________________________________________________; that he
is the ________________ of Post Tool, Inc., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 27th day of February, 1999, before me personally came
Xxxxxxx X. Xxxxxx, to me known, who, being by me duly sworn, did depose and say
that he resides at ______________________; that he is the Sr. Account Executive
of BankAmerica Business Credit, Inc., the corporation described in and which
executed the above instrument; and that he signed his name thereto by order of
the board of directors of said corporation.
Notary Public State of New York
No 02SA5036939
Qualified in Nassau County
Commission Expires December 12, 2000
Schedule A
Trademarks
Registration Registration
Trademark Number: Date:
Woodworkers Warehouse (& design) 1,983,739 7/2/96
Woodworkers Warehouse (& design) 1,988,103 7/23/96
Woodworkers Warehouse (& design) 1,986,737 7/16/96
Woodworkers Warehouse (& design) 1,544,938 6/20/89
Trend-Lines (& design) 1,553,312 8/22/89
Trend-Lines Woodworking Tools & Supplies
(& design) 1,556,257 9/12/89
Golf Day 1,226,392 2/8/83
Vulcan (& design) 795,106 8/31/65
Vulcan (& design) 795,166 8/31/65
Vulcan (& design) 795,455 10/12/65
Vulcan (& design) 797,935 10/20/65
Post Tool Today's Tool Leader (& design) 1,673,748 1/28/92
Schedule B
Third Party Rights With Respect To The Trademarks
None.
