**Exhibit 10.19**

 

 

 

AMENDMENT NO. 5 TO THE

 

FIRST LIEN SENIOR SECUREDCREDIT AGREEMENT

 

Dated as of March 26,2010

 

among

 

WII MERGER CORPORATION,as the initial Borrower,

 

CREDIT SUISSE AG (fka CreditSuisse),as Administrative Agent, Swing Line Lender andan L/C Issuer,

 

The Other Lenders PartiesHereto

 

and

 

CREDIT SUISSE AG (fka CreditSuisse),as Collateral Agent

 
|   |   |   |
|--------|--------|--------|

 

CREDIT SUISSE SECURITIES(USA) LLC

 

Sole Lead Arranger and SoleBookrunning Manager

 
|   |   |   |
|--------|--------|--------|

 

 

 

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**AMENDMENT NO. 5 TO THECREDIT AGREEMENT**

** **

**Dated as of March 26, 2010**

** **

**AMENDMENT NO. 5 TO THE CREDITAGREEMENT**(this “Amendment”) among WII COMPONENTS,INC., a Delaware corporation (the “Borrower”), the Lenders party theretoand CREDIT SUISSE AG (formerly known as Credit Suisse), acting through one ormore of its branches, or any Affiliate thereof (collectively, “Credit Suisse”),as Administrative Agent, Swing Line Lender, an L/C Issuer and Collateral Agent.

 

**PRELIMINARY STATEMENTS:**

 

(1)           WII Merger Corporation and Credit Suisse entered into aCredit Agreement dated as of January 9, 2007, as amended by Amendment No. 1dated as of February 7, 2007, Amendment No. 2 dated as of June 12,2007, Amendment No. 3 dated February 19, 2008 and Amendment No. 4dated as of March 30, 2009 (as so amended, the “Credit Agreement”).  Capitalized terms not otherwise defined inthis Amendment have the same meanings as specified in the Credit Agreement.

 

(2)           Pursuant to the Merger and the Assumption Agreement, theBorrower assumed all of the obligations of WII Merger Corporation under theLoan Documents.

 

(3)           The Borrower has requested that the Required Lenders agreeto amend certain provisions of the Credit Agreement as described herein.

 

(4)           The Required Lenders have agreed, subject to the terms andconditions stated below, to amend the Credit Agreement as hereinafter setforth.

 

SECTION 1.         Amendments to Credit Agreement.  The CreditAgreement is, effective as of the date hereof and subject to the satisfactionof the conditions precedent set forth in Section 2, hereby amended asfollows:

 

### (a)           Section 1.01 is hereby amended by adding thefollowing definitions in the correct alphabetical order:

###  

“***Borrowing Base Certificate***”means a certificate in substantially the form of Exhibit N hereto, dulycertified by the chief financial officer or the chief executive officer of theBorrower.

 

“***Borrowing Base Deficiency***” has themeaning specified in Section 2.05(b)(vi).

 

“***Eligible Collateral***”means, collectively, Eligible Inventory and Eligible Receivables.

 

“***Eligible Inventory***”means Inventory of the Loan Parties, other than the following classes ofInventory, except to the extent otherwise expressly agreed in writing by theAdministrative Agent:

 

(a)   Inventory not in the possession of or under thesole control of any Loan Party (other than (i) Inventory located on leasedproperty (which is covered by clause (b) below) and (ii) inventoryconsigned by a Borrower to a customer or 

 

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located in a third party warehouse; *provided*, with respect to any such customer or warehouseman,the Administrative Agent shall have received a collateral access andsubordination agreement reasonably acceptable to the Administrative Agent);

 

(b)           Inventory located on leased propertyas to which  the landlord has not enteredinto a collateral access and subordination agreement reasonably acceptable tothe Administrative Agent providing the Collateral Agent with the right torepossess such Inventory and such other reasonable rights as may be required bythe Collateral Agent; *provided*, inthe event such landlord does not enter into a collateral access andsubordination agreement, the Administrative Agent shall establish a rentreserve of not more than two months with respect to such location and Inventorylocated at such location shall not be excluded from Eligible Inventory solelyby reason of this clause (b);

 

(c)           Inventory that is obsolete, unusableor otherwise unfit for sale;

 

(d)           Inventory with respect to which therepresentations and warranties set forth in the Collateral Documents applicableto Inventory are not true and correct in all material respects;

 

(e)           Inventory consisting of promotional,marketing, packaging or shipping materials and supplies;

 

(f)            Inventory that fails to meet allstandards imposed by any Governmental Authority having regulatory authorityover such Inventory or its use or sale;

 

(g)           Inventory that is subject to anylicensing, patent, royalty, trademark, trade name or copyright agreement withany third party from which any Loan Party has received notice of a dispute withrespect to infringing upon the rights of such licensor or any other Person inrespect of any such agreement;

 

(h)           Inventory located outside the UnitedStates and Canada; and

 

(i)            (i) Inventory located in theUnited States in respect of which the Security Agreement, after giving effectto the related filings of financing statements that have then been made, doesnot or has ceased to create a valid and perfected first priority lien orsecurity interest in favor of the Collateral Agent for the benefit of theSecured Parties securing the Secured Obligations under applicable laws of theUnited States or (ii) Inventory located in Canada in respect of which theSecurity Agreement, after giving effect to the related filings of financingstatements that have then been made, does not or has ceased to create a validand perfected first priority lien or security interest in favor of theCollateral Agent for the benefit of the Secured Parties securing the SecuredObligations under applicable laws of Canada.

 

“***Eligible Receivables***”means Receivables of the Loan Parties, other than the following classes ofReceivables, except to the extent otherwise expressly agreed in writing by theAdministrative Agent:

 

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(a)           Receivables that do not arise out ofsales of goods or rendering of services in the ordinary course of the businessof the Loan Parties;

 

(b)           Receivables on terms other than thosenormal or customary in the business of the Loan Parties, as reasonablydetermined by the Borrower in good faith;

 

(c)           Receivables owing from any Person thatis an Affiliate of any Loan Party or any of its Subsidiaries;

 

(d)           Receivables more than 120 dayspast the original invoice date or more than 60 days past the date due;

 

(e)           Receivables owing from any Personfrom which an aggregate amount of more than 35% of the Receivables owing fromsuch Person and its Affiliates is more than 60 days past due;

 

(f)            Receivables owing from any Personthat has asserted any claim, demand or liability against any Loan Party orany of its Subsidiaries, whether by action, suit, counterclaim or otherwise,but only to the extent of any such claim, demand, liability, counterclaim,suit,  deduction, defense, setoff ordispute;

 

(g)           Receivables owing from any Personthat shall take or be the subject of any action or proceeding of a typedescribed in Section 8.01(f) (other than post-petition accountspayable of an account debtor that is a debtor-in-possession under theBankruptcy Code and reasonably acceptable to the Administrative Agent);

 

(h)           Receivables owing from anyPerson that is also a supplier to or creditor of any Loan Party unless suchaccount debtor has executed a no-offset letter reasonably satisfactory to theAdministrative Agent, *provided*, thatReceivables shall be ineligible under this clause only to the extent of any offsetor claim of such account debtor;

 

(i)            Receivables arising out of sales toaccount debtors outside the United States and Canada, unless such Receivable issupported by a letter of credit or other similar obligation satisfactory to theAdministrative Agent;

 

(j)            Receivables arising out of sales ona bill-and-hold, guaranteed sale, sale-or-return, sale on approval orconsignment basis or similar arrangements;

 

(k)           Receivables owing from an accountdebtor that is an agency, department or instrumentality of the United States orany State thereof; and

 

(l)            Receivables in respect of which theSecurity Agreement, after giving effect to the related filings of financingstatements that have then been made, does not or has ceased to create a validand perfected first priority lien or security interest in favor of theCollateral Agent for the benefit of the Secured Parties securing the SecuredObligations.

 

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“***Inventory***” means allInventory referred to in Section 1(b) of the Security Agreement.

 

“***Loan Value***” means,with respect to any Eligible Collateral:

 

(a)     inthe case of Eligible Inventory, 65% of the lower of cost or book valuedetermined in accordance with GAAP; and

 

(b)     inthe case of Eligible Receivables, 85% of the principal amount thereof.

 

“***Receivables***” meansall Receivables referred to in Section 1(c) of the SecurityAgreement.

 

### (b)           Section 2.05(b)(vi) is hereby amended by addinga new sentence at the end thereof to read as follows:

###  

“The Borrower shall,  within oneBusiness Day of the Business Day on which the aggregate amount of TotalOutstandings exceeds the sum of the Loan Values of the Eligible Collateral onsuch Business Day (the amount of any such excess being referred to as the “***Borrowing Base Deficiency***”), prepayan aggregate principal amount of the Revolving Credit Loans and the Swing LineAdvances and, after prepayment in full of all such Revolving Credit Loans andSwing Line Advances, Cash Collateralize the L/C Obligations, in an aggregateamount equal to such Borrowing Base Deficiency.”

 

### (c)           Section 4.02(a) is hereby amended to add a newclause at the end thereof to read as follows:

###  

“; and the sum of the Loan Values of the Eligible Collateral exceedsthe aggregate principal amount of the Total Outstandings plus the amount ofsuch Credit Extension”.

 

### (d)           A new Section 6.22 is hereby added to read asfollows:

###  

“6.22.  Borrowing BaseCertificates.  As soon as availableand in any event within 20 days after the end of each month, a BorrowingBase Certificate, as at the end of the previous month, certified by the chieffinancial officer of the Borrower and in form and substance satisfactory to theAdministrative Agent.”

 

### (e)           Section 7.02(a)(ii) is hereby amended bydeleting the date “March 31, 2010” appearing therein and replacing it withthe date “March 31, 2011”.

###  

### (f)            Section 7.06(k) is hereby amended by  deleting each reference to the date “March 31,2010” appearing therein and replacing it with the date “March 31, 2011”.

###  

### (g)           For each period of four Fiscal Quarters ending after December 31,2009, the grid in Section 7.11(a)(i) is hereby amended to read asfollows (it being understood and agreed that such grid for prior periods shallremain in effect notwithstanding such amendment):

 
| **Four Fiscal Quarters Ending** | ** ** | **Maximum Consolidated  Leverage Ratio** |
|---------------------------------|------------|------------------------------------------|
| March 31, 2010             |       | 17.15:1.00                               |

 

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| **Four Fiscal Quarters Ending**                    | ** ** | **Maximum Consolidated  Leverage Ratio** |
|----------------------------------------------------|------------|------------------------------------------|
| June 30, 2010                                 |       | 18.00:1.00                               |
| September 30, 2010                            |       | 18.50:1.00                               |
| December 31, 2010                             |       | 20.15:1.00                               |
| March 31, 2011 through December 31, 2011 |       | 6.00:1.00                                |
| March 31, 2012                                |       | 4.20:1.00                                |
| June 30, 2012                                 |       | 4.00:1.00                                |
| September 30, 2012                            |       | 3.90:1.00                                |
| December 31, 2012                             |       | 3.80:1.00                                |

###  

### (h)           For each period of four Fiscal Quarters ending after December 31,2009, the grid in Section 7.11(c)(i) is hereby amended to read asfollows (it being understood and agreed that such grid for prior periods shallremain in effect notwithstanding such amendment):

 
| **Four  Fiscal Quarters Ending**                       | ** ** | **Minimum Consolidated  Interest Coverage Ratio** |
|--------------------------------------------------------|------------|---------------------------------------------------|
| March 31, 2010 through December 31, 2010     |       | 1.10:1.00                                         |
| March 31, 2011                                    |       | 3.90:1.00                                         |
| June 30, 2011                                     |       | 4.00:1.00                                         |
| September 30, 2011 through December 31, 2011 |       | 4.10:1.00                                         |
| March 31, 2012                                    |       | 4.70:1.00                                         |
| June 30, 2012                                     |       | 5.40:1.00                                         |
| September 30, 2012                                |       | 6.20:1.00                                         |
| December 31, 2012                                 |       | 7.10:1.00                                         |

###  

### (i)            Section 8.01(o) is hereby amended by deletingthe date “March 31, 2010” appearing therein and replacing it with the date“March 31, 2011”.

###  

### (j)            A new Exhibit N is hereby added to the CreditAgreement in the form of Exhibit N hereto.

###  

SECTION 2.         Conditions of Effectiveness.  This Amendment shall become effective as ofthe date first above written when, and only when,

 

### (a)           the Administrative Agent shall have received counterpartsof this Amendment executed by each Loan Party and the Required Lenders;

###  

### (b)           the Administrative Agent shall have received, in form andsubstance reasonably satisfactory to the Administrative Agent, a certificate ofthe Secretary or an Assistant Secretary of each Loan Party certifying that thecertified resolutions of the Board of Directors (or similar governing body) ofeach Loan Party delivered in connection with the Credit Agreement have not beenamended, modified or revoked and are in full force and effect on the datehereof; and

###  

### (c)           all expenses and reasonable fees ofthe Administrative Agent (including all reasonable fees and expenses of counselto the Administrative Agent), to the extent invoiced and due prior to the datehereof, shall have been paid.

 

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SECTION 3.         Confirmation of Representations andWarranties and No Event of Default. Each of the Loan Parties hereby represents and warrants (a) on andas of the date hereof, that the representations and warranties contained in theLoan Documents are true and correct in all material respects on and as of thedate hereof, but after giving effect to this Amendment, as though made on andas of the date hereof, other than any such representations or warranties that,by their terms, refer to a specific date and (b) after giving effect tothis Amendment, no event has occurred and is continuing that constitutes aDefault.

 

SECTION 4.         Affirmationof Guarantors.  Each Guarantor hereby consents to the amendments to theCredit Agreement effected hereby, and hereby confirms and agrees that, notwithstanding theeffectiveness of this Amendment, the obligations of such Guarantor contained inthe Holdings Guaranty or the Subsidiary Guaranty (as the case may be), or inany other Loan Document to which it is a party are, and shall remain, in fullforce and effect and are hereby ratified and confirmed in all respects, exceptas set forth in Section 6(a) below.

 

## SECTION 5.         Reference to and Effect on the LoanDocuments.  (a) On and after theeffectiveness of this Amendment, each reference in the Credit Agreement to “thisAgreement”, “hereunder”, “hereof” or words of like import referring to the CreditAgreement, and each reference in each of the other Loan Documents to “theCredit Agreement”, “thereunder”, “thereof” or words of like import referring tothe Credit Agreement, shall mean and be a reference to the Credit Agreement, asamended by this Amendment.

##  

## (b)   The Credit Agreement and each of the otherLoan Documents, as specifically amended by this Amendment, are and shallcontinue to be in full force and effect and are hereby in all respects ratifiedand confirmed.

##  

## (c)   The execution, delivery and effectiveness ofthis Amendment shall not, except as expressly provided herein, operate as awaiver of any right, power or remedy of any Lender or the Administrative Agentunder the Credit Agreement, nor constitute a waiver of any provision of theCredit Agreement or any other Loan Document.

##  

SECTION 6.         Costs, Expenses.  The Borrower agrees to pay on demand allcosts and expenses of the Administrative Agent (including, without limitation,the reasonable fees and expenses of counsel for the Administrative Agent) inconnection with the preparation, execution, delivery and administration,modification and amendment of this Amendment and the other instruments anddocuments to be delivered hereunder, in accordance with the terms of Section 10.04of the Credit Agreement.

 

SECTION 7.         Execution in Counterparts.  This Amendment may be executed in any numberof counterparts and by different parties hereto in separate counterparts, eachof which when so executed shall be deemed to be an original and all of whichtaken together shall constitute but one and the same agreement.  Delivery of an executed counterpart of asignature page to this Amendment by facsimile shall be effective asdelivery of a manually executed counterpart of this Amendment.

 

SECTION 8.         Governing Law.  This Amendment shall be governed by, andconstrued in accordance with, the laws of the State of New York.

 

[The remainder of this page intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties hereto have causedthis Amendment to be executed by their respective officers thereunto dulyauthorized, as of the date first above written.

 

 
|   | WII  COMPONENTS, INC., as Borrower |
|--------|------------------------------------|
|   |                               |
|   |                               |   |
|   | By                                 | /s/  Dale B. Herbst |
|   |                               | Name:  Dale B. Herbst |
|   |                               | Title:  CFO |
|   |                               |   |
|   |                               |   |
|   | WII  HOLDING, INC.,                |
|   | as  Guarantor                      |
|   |                               |   |
|   |                               |   |
|   | By                                 | /s/  Dale B. Herbst |
|   |                               | Name:  Dale B. Herbst |
|   |                               | Title:  CFO |
|   |                               |   |
|   |                               |   |
|   | WOODCRAFT INDUSTRIES, INC.,        |
|   | as  Guarantor                      |
|   |                               |   |
|   |                               |   |
|   | By                                 | /s/  Dale B. Herbst |
|   |                               | Name:  Dale B. Herbst |
|   |                               | Title:  CFO |
|   |                               |   |
|   |                               |   |
|   | BRENTWOOD  ACQUISITION CORP.,      |
|   | as  Guarantor                      |
|   |                               |   |
|   |                               |   |
|   | By                                 | /s/  Dale B. Herbst |
|   |                               | Name:  Dale B. Herbst |
|   |                               | Title:  CFO |
|   |                               |   |
|   |                               |   |
|   | PRIMEWOOD,  INC.,                  |
|   | as  Guarantor                      |
|   |                               |   |
|   |                               |   |
|   | By                                 | /s/  Dale B. Herbst |
|   |                               | Name:  Dale B. Herbst |
|   |                               | Title: CFO |

 

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|   | CREDIT  SUISSE AG (formerly known as Credit Suisse), Cayman Islands Branch, |
|--------|-----------------------------------------------------------------------------|
|   | as  Administrative Agent and Collateral Agent                               |
|   |                                                                        |
|   |                                                                        |   |
|   | By                                                                          | /s/  Bill O’Daly |
|   |                                                                        | Name:  Bill O’Daly |
|   |                                                                        | Title:  Director |
|   |                                                                        |   |
|   |                                                                        |   |
|   | By                                                                          | /s/  Vipul Dhadda |
|   |                                                                        | Name:  Vipul Dhadda |
|   |                                                                        | Title: Associate |

 

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|   | CREDIT  SUISSE AG (formerly known as Credit Suisse), Cayman Islands Branch, |
|--------|-----------------------------------------------------------------------------|
|   | as  Lender                                                                  |
|   |                                                                        |   |
|   |                                                                        |   |
|   | By                                                                          | /s/  Bill O’Daly |
|   |                                                                        | Name:  Bill O’Daly |
|   |                                                                        | Title:  Director |
|   |                                                                        |   |
|   |                                                                        |   |
|   | By                                                                          | /s/  Vipul Dhadda |
|   |                                                                        | Name:  Vipul Dhadda |
|   |                                                                        | Title: Associate |

 

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EXHIBIT N

 

FORM OF BORROWING BASE CERTIFICATE

 

To:          Credit Suisse AG, as AdministrativeAgent

 

Date:         ,

 

(1)          AccountsReceivable

 

(2)           Total Ineligible Receivables

 

(3)           Eligible Receivables       (line1 — line 2)

 

(4)           Loan Value of Eligible Receivables(85% of line 3)

 

(5)           Inventory

 

(6)           Ineligible Inventory

 

(7)           Rent Reserve and other adjustments*

 

(8)           Eligible Inventory (line 5 — line 6 —line 7)

 

(9)           Loan Value of Eligible Inventory (65%of line 8)

 

(10)         Loan Value of Eligible Collateral (line4 + line 9)

 

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*Explain:

 

This report (this “Certificate”) is submitted pursuant to theCredit Agreement, dated as of January 9, 2007 (as amended, restated,extended, supplemented or otherwise modified in writing from time to time, the “CreditAgreement”), among WII COMPONENTS, Inc., a Delaware corporation (the “Borrower”),the Lenders from time to time party thereto, and CREDIT SUISSE AG (formerlyknown as Credit Suisse), acting through one or more of its branches or anyAffiliate thereof, as Administrative Agent, Swing Line Lender, an L/C Issuerand Collateral Agent.  Unless otherwiseindicated, capitalized terms used but not defined herein shall have themeanings ascribed to them in the Credit Agreement.

 

The undersigned hereby certifies, solely in his/her capacity as anauthorized officer of the Borrower and not in his/her individual capacity, asof the date first written above, that the amounts and calculations hereinaccurately reflect the Eligible Collateral.

 
|   | WII  COMPONENTS, INC. |
|--------|-----------------------|
|   |                  |   |
|   | By:                   |   |
|   | Name:                 |   |
|   | Title:                |   |

 

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