THE LOAN AGREEMENT.
(C)
THE FOREGOING CONSENT AND WAIVER IS GIVEN
SOLELY IN CONNECTION WITH THE SUB-TRANSACTION AND SHALL NOT BE DEEMED TO BE AN
AGREEMENT, OBLIGATION OR COMMITMENT BY LENDER TO CONSENT TO ANY OTHER
TRANSACTION WHICH WOULD BE PROHIBITED BY THE TERMS AND CONDITIONS OF THE LOAN
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
(D)
BORROWERS AND GUARANTOR HEREBY ACKNOWLEDGE
AND AGREE THAT, EXCEPT WITH THE PRIOR WRITTEN CONSENT OF LENDER, WHICH CONSENT
MAY BE WITHHELD BY LENDER IN ITS SOLE DISCRETION, NO BORROWER OR GUARANTOR WILL
MAKE ANY LOANS, ADVANCES, CAPITAL CONTRIBUTIONS OR OTHER EXTENSIONS OF CREDIT TO
SHERWOOD BRANDS ZIP, LLC.
3.
PERMITTED OUT-OF FORMULA AMOUNT.
(A)
DURING THE PERIOD COMMENCING OCTOBER 8,
2004 THROUGH AND INCLUDING NOVEMBER 21, 2004 ONLY, IN ADDITION TO THE SUMS
OTHERWISE AVAILABLE TO BORROWERS AS REVOLVING LOANS SUPPORTED BY THE BORROWING
BASE, BORROWERS MAY BORROW FOR EACH PERIOD LISTED IN COLUMN A BELOW, AN AMOUNT
UP TO THE AMOUNT LISTED IN COLUMN B BELOW FOR SUCH PERIOD (THE "PERMITTED
OUT-OF-FORMULA AMOUNT"):
Column A
Column B
Commencing October 8, 2004 through and including October 31, 2004
$
1,000,000.00
Commencing November 1, 2004 through and including November 14, 2004
$
500,000.00
Commencing November 15, 2004 through and including November 21, 2004
$
250,000.00
(B)
COMMENCING ON NOVEMBER 22, 2004 AND AT ALL
TIMES THEREAFTER, NO PERMITTED OUT-OF-FORMULA AMOUNT SHALL BE AVAILABLE TO
BORROWERS.
(C)
NOTWITHSTANDING ANYTHING IN THIS AMENDMENT
TO THE CONTRARY, IN NO EVENT WILL THE SUM OF THE (I) REVOLVING LOANS AND LETTERS
OF CREDIT SUPPORTED BY THE BORROWING BASE, PLUS (II) REVOLVING LOANS AND LETTERS
OF CREDIT SUPPORTED BY THE PERMITTED OUT-OF-FORMULA AMOUNT, EXCEED THE MAXIMUM
REVOLVING CREDIT, LESS ANY RESERVES.
4.
UNUSED LINE FEE.
COMMENCING
SEPTEMBER 1, 2004, SECTION 3.3 OF THE LOAN AGREEMENT IS HEREBY DELETED IN ITS
ENTIRETY AND REPLACED WITH THE FOLLOWING:
2
"3.3
Unused Line Fee.
Borrowers shall pay Lenders,
monthly, on the first day of each month, in arrears, an Unused Line Fee for each
month during the Term equal to .375% per annum of the amount, if any, by which
the Maximum Revolving Credit exceeds the average outstanding daily principal
balance during the preceding month of all Revolving Loans and any Letters of
Credit."
5.
REPORTING REQUIREMENTS.
(A)
SECTION 6.10(B)(I) OF THE LOAN AGREEMENT IS
HEREBY DELETED IN ITS ENTIRETY AND REPLACED WITH THE FOLLOWING:
"(i)
Intentionally Deleted."
(B)
SECTION 6.10 OF THE LOAN AGREEMENT IS HEREBY
AMENDED BY ADDING THE FOLLOWING AS SUBSECTION (H) THERETO:
"(h)
Borrowers shall, at their expense and within
thirty (30) days following the end of each calendar month, deliver to Lender a
compliance certificate duly completed and certified by Borrowers' chief
executive officer or chief financial officer, demonstrating Borrowers'
compliance with the financial covenants set forth in Section 6.19 for the
immediately preceding calendar month and showing the calculations therefor in
reasonable detail."
6.
FINANCIAL COVENANTS.
(A)
LENDER HEREBY WAIVES ANY DEFAULT OR EVENT
OF DEFAULT THAT EXISTS OR MAY ARISE UNDER THE LOAN