Document:

Exhibit 10.9

Form of Underwriters’ Warrants Agreement

 

THESE SECURITIES HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

THE REGISTERED HOLDER OF THIS
PURCHASE WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED
AND THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE
WARRANT FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER THAN (I) MAXIM GROUP LLC
OR AN UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER OR PARTNER OF MAXIM GROUP LLC OR OF
ANY SUCH UNDERWRITER OR SELECTED DEALER.

 

THIS PURCHASE WARRANT IS NOT EXERCISABLE
PRIOR TO [________________] [DATE THAT IS SIX MONTHS FROM THE EFFECTIVE DATE OF THE OFFERING]. VOID AFTER 5:00 P.M., EASTERN TIME,
[___________________] [DATE THAT IS FOUR AND A HALF YEARS FROM THE EFFECTIVE DATE OF THE OFFERING].

 

COMMON STOCK PURCHASE WARRANT

 

For the Purchase of [_____] Shares of Common Stock

of

NEXALIN TECHNOLOGY, INC.

 

1.      Purchase
Warrant. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of Maxim Group LLC (“Holder”),
as registered owner of this Purchase Warrant, Nexalin Technology, Inc., a Delaware corporation (the “Company”), Holder
is entitled, at any time or from time to time from [________________] [DATE THAT IS SIX MONTHS FROM THE EFFECTIVE DATE OF THE OFFERING]
(the “Commencement Date”), and at or before 5:00      p.m., Eastern time, [____________]
[DATE THAT IS FOUR AND A HALF YEARS FROM THE EFFECTIVE DATE OF THE OFFERING] (the ”Expiration Date”),
but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to [____] shares of common stock of the Company, par
value $0.001 per share (the “Shares”), subject to adjustment as provided in Section 6 hereof. If the Expiration Date
is a day on which banking institutions are

    

     

    

authorized by law to close, then this Purchase Warrant
may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. This Purchase Warrant is initially
exercisable at $[___] per Share [110% of the public offering price of the Firm Shares sold in the Offering]; provided, however,
that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase Warrant, including the
exercise price per Share and the number of Shares to be received upon such exercise, shall be adjusted as therein specified. The term
“Exercise Price” shall mean the initial exercise price or the adjusted exercise price, depending on the context. The
term “Effective Date” shall mean [____], the date on which the Registration Statement on Form S-1 (File No. 333-[____])
of the Company was declared effective by the Securities and Exchange Commission.

 

2.              Exercise.

 

2.1          Exercise
Form. In order to exercise this Purchase Warrant, the exercise form attached hereto must be duly executed and completed and delivered
to the Company, together with this Purchase Warrant and payment of the Exercise Price for the Shares being purchased payable in cash by
wire transfer of immediately available funds to an account designated by the Company or by certified check or official bank check. If
the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this Purchase
Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire.

 

2.2          Cashless
Exercise.  If at any time after the Commencement Date there is no effective registration statement registering, or no current
prospectus available for, the resale of the Shares by the Holder, then in lieu of exercising this Purchase Warrant by payment of cash
or check payable to the order of the Company pursuant to Section 2.1 above, Holder may elect to receive the number of Shares equal to
the value of this Purchase Warrant (or the portion thereof being exercised), by surrender of this Purchase Warrant to the Company, together
with the exercise form attached hereto, in which event the Company shall issue to Holder, Shares in accordance with the following formula:

 

	X	=	Y(A-B)	 
	A	 

 

	Where,	 	 	 
	 	X	=	The number of Shares to be issued to Holder;
	 	Y	=	The number of Shares for which the Purchase Warrant is being exercised;
	 	A	=	The fair market value of one Share; and
	 	B	=	The Exercise Price.

 

For purposes of this Section 2.2,
the fair market value of a Share is defined as follows:

 

		(i)	if the Company’s common stock is traded on a securities exchange, the value shall be deemed to be the
closing price on such exchange prior to the exercise form being submitted in connection with the exercise of the Purchase Warrant; or

    

     

    

		(ii)	if the Company’s common stock is actively traded over-the-counter, the value shall be deemed to be
the closing bid price prior to the exercise form being submitted in connection with the exercise of the Purchase Warrant; or

 

		(iii)	if there is no active public market, the value shall be the fair market value thereof, as determined in good
faith by the Company’s Board of Directors.

 

2.3          Legend.
Each certificate for the securities purchased under this Purchase Warrant shall bear a legend as follows unless such securities have been
registered under the Securities Act of 1933, as amended (the “Securities Act”):

 

“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE
STATE LAW. NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE LAW WHICH, IN THE OPINION OF COUNSEL TO THE COMPANY, IS AVAILABLE.”

 

3.              Transfer.

 

3.1          General
Restrictions. The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof, that such Holder will not:
(a) sell, transfer, assign, pledge or hypothecate this Purchase Warrant for a period of one hundred eighty (180) days following the Effective
Date to anyone other than: (i) Maxim Group LLC (“Maxim”) or an underwriter or a selected dealer participating in the
Offering, or (ii) a bona fide officer or partner of Maxim or of any such underwriter or selected dealer, in each case in accordance with
FINRA Conduct Rule 5110(e)(1), or (b) cause this Purchase Warrant or the securities issuable hereunder to be the subject of any hedging,
short sale, derivative, put or call transaction that would result in the effective economic disposition of this Purchase Warrant or the
securities hereunder, except as provided for in FINRA Rule 5110(e)(2). On and after one hundred eighty (180) days after the Effective
Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted
assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with the
Purchase Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five (5) business
days transfer this Purchase Warrant on the books of the Company and shall execute and deliver a new Purchase Warrant or Purchase Warrants
of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of
Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.

 

3.2          Restrictions
Imposed by the Securities Act. The securities evidenced by this Purchase Warrant shall not be transferred unless and until the Company
has received the opinion of counsel for the Holder that the securities may be transferred pursuant to an exemption from

    

     

    

registration under the Securities Act and applicable
state securities laws, the availability of which is established to the reasonable satisfaction of the Company (the Company hereby agreeing
that the opinion of Nelson Mullins Riley & Scarborough LLP shall be deemed satisfactory evidence of the availability of an exemption).

 

3.3          Ownership
of Warrants. The Company may treat the registered holder of this Warrant in the books of the Company as the owner and holder thereof
for all purposes, notwithstanding any notice to the contrary, except that, if and when any Warrant is properly assigned in blank, the
Company may (but shall not be obligated to) treat the bearer thereof as the owner of such Warrant for all purposes, notwithstanding any
notice to the contrary.

 

4.              Registration
Rights.

 

4.1          Demand
Registration.

 

4.1.1          Grant
of Right. Subject to the further requirements of this section 4.4.1, the Company, upon written demand (a “Demand Notice”)
of the Holders of at least 51% of the Purchase Warrants and/or the underlying Shares, agrees to register, on one occasion, all or any
portion of the Shares underlying the Purchase Warrants (collectively, the “Registrable Securities”). For the purpose
of this Section 4, the term “Registrable Securities” shall not include Shares that have been transferred and the subsequent
disposition thereof no longer requires registration or qualification under the Securities Act or any similar state law then in force.
On such occasion, the Company will file a registration statement with the Commission covering the Registrable Securities within sixty
(60) days after receipt of a Demand Notice and use its reasonable best efforts to have the registration statement declared effective promptly
thereafter, subject to compliance with review by the Commission; provided, however, that the Company shall not be required to comply with
a Demand Notice if (a) the Registration Statement is still in effect or (b) the Company has filed a registration statement with respect
to which the Holder is entitled to piggyback registration rights pursuant to Section 4.2 hereof and either: (i) the Holder has elected
to participate in the offering covered by such registration statement or (ii) if such registration statement relates to an underwritten
primary offering of securities of the Company, until the offering covered by such registration statement has been withdrawn or until thirty
(30) days after such offering is consummated. The demand for registration may be made on one occasion during the three (3) year period
beginning on the Commencement Date. The Company covenants and agrees to give written notice of its receipt of any Demand Notice by any
Holders to all other registered Holders of the Purchase Warrants and/or the Registrable Securities within ten (10) days after the date
of the receipt of any such Demand Notice.

 

4.1.2          Terms.
The Company shall bear all fees and expenses attendant to the registration of the Registrable Securities pursuant to Section 4.1.1, but
the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent
them in connection with the sale of the Registrable Securities. The Company agrees to use commercially reasonable efforts to cause the
filing required herein to become effective promptly and to qualify or register the Registrable Securities in such states as are reasonably
requested by the Holders; provided, however, that in no event shall the Company be required to register the Registrable
Securities in a State in which such registration would cause: (i) the

    

     

    

Company to be obligated to register or license to
do business in such State or submit to general service of process in such State, or (ii) the principal stockholders of the Company to
be obligated to escrow their shares of capital stock of the Company. The Company shall cause any registration statement filed pursuant
to the demand right granted under Section 4.1.1 to remain effective for a period of at least twelve (12) consecutive months after the
date that the Holders of the Registrable Securities covered by such registration statement are first given the opportunity to sell all
of such securities. The Holders shall only use the prospectuses provided by the Company to sell the shares covered by such registration
statement, and will immediately cease to use any prospectus furnished by the Company if the Company advises the Holder that such prospectus
may no longer be used due to a material misstatement or omission. Notwithstanding the provisions of this Section 4.1.2, the Holder shall
be entitled to a demand registration under this Section 4.1.2 on only one (1) occasion and such demand registration right shall terminate
on the third anniversary of the Commencement Date.

 

4.2          “Piggy-Back”
Registration.

 

4.2.1          Grant
of Right. In addition to the demand right of registration described in Section 4.1 hereof, the Holder shall have the right, for a
period of no more than seven (7) years from the Effective Date in accordance with FINRA Rule 5110(g)(8)(D), to include the Registrable
Securities as part of any other registration of securities filed by the Company (other than in connection with a transaction contemplated
by Rule 145(a) promulgated under the Securities Act or pursuant to Form S-8 or any equivalent form); provided, however,
that if, solely in connection with any primary underwritten public offering for the account of the Company, the managing underwriter(s)
thereof shall, in its reasonable discretion, impose a limitation on the number of shares of common stock which may be included in the
registration statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary
to facilitate public distribution, then the Company shall be obligated to include in such registration statement only such limited portion
of the Registrable Securities with respect to which the Holder requested inclusion hereunder as the underwriter shall reasonably permit.
Any exclusion of Registrable Securities shall be made pro rata among the Holders seeking to include Registrable Securities in proportion
to the number of Registrable Securities sought to be included by such Holders; provided, however, that the Company shall
not exclude any Registrable Securities unless the Company has first excluded all outstanding securities, the holders of which are not
entitled to inclusion of such securities in such registration statement or are not entitled to pro rata inclusion with the Registrable
Securities.

 

4.2.2          Terms.
The Company shall bear all fees and expenses attendant to registering the Registrable Securities pursuant to Section 4.2.1 hereof, but
the Holders shall pay any and all underwriting commissions and fees and the expenses of any legal counsel selected by the Holders to represent
them in connection with the sale of the Registrable Securities. In the event of such a proposed registration, the Company shall furnish
the then Holders of outstanding Registrable Securities with not less than thirty (30) days’ written notice prior to the anticipated
effective date of such registration statement. Such notice to the Holders shall continue to be given for each registration statement filed
by the Company until such time as all of the Registrable Securities have been sold by the Holder. The holders of the Registrable Securities
shall exercise the “piggy-back” rights provided for herein by giving written notice within ten (10) days of the

    

     

    

receipt of the Company’s notice of the anticipated
effective date of the registration statement. Except as otherwise provided in this Purchase Warrant, there shall be no limit on the number
of times the Holder may request registration under this Section 4.2.2; provided, however, that such registration rights
shall terminate on the sixth anniversary of the Commencement Date.

 

4.3          General
Terms.

 

4.3.1           Indemnification.
The Company shall indemnify the Holders of the Registrable Securities to be sold pursuant to any registration statement hereunder and
each person, if any, who controls such Holders within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities
Exchange Act of 1934, as amended (“Exchange Act”), against all loss, claim, damage, expense or liability (including
all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, arising from such registration
statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify
the Underwriters contained in Section 5.1 of the Underwriting Agreement between the Underwriters and the Company, dated as of [___________],
2022. The Holders of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns,
shall severally, and not jointly, indemnify the Company, against all loss, claim, damage, expense or liability (including all reasonable
attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to
which they may become subject under the Securities Act, the Exchange Act or otherwise, arising from information furnished by or on behalf
of such Holders, or their successors or assigns, in writing, for specific inclusion in such registration statement to the same extent
and with the same effect as the provisions contained in Section 5.2 of the Underwriting Agreement pursuant to which the Underwriters have
agreed to indemnify the Company.

 

4.3.2          Exercise
of Purchase Warrants. Nothing contained in this Purchase Warrant shall be construed as requiring the Holders to exercise their Purchase
Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof.

 

4.3.3          Documents
Delivered to Holders. In the sale by the Holders is an underwritten offering, the Company shall furnish to Holder participating in
such offering and each underwriter of any such offering, a signed counterpart, addressed to such Holder or underwriter, of: (i) an opinion
of counsel to the Company dated the date of the closing under any underwriting agreement related thereto), and (ii) a “cold comfort”
letter dated the date of the closing under the underwriting agreement) signed by the independent registered public accounting firm which
has issued a report on the Company’s financial statements included in such registration statement, in each case covering substantially
the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants’
letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer’s
counsel and in accountants’ letters delivered to underwriters in underwritten public offerings of securities. The Company shall
also deliver promptly to each Holder participating in the offering requesting the correspondence and memoranda described below and to
the managing underwriter, if any, copies of all correspondence between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff

    

     

    

with respect to the registration statement and permit
each Holder and underwriter to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of FINRA. Such investigation
shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent
auditors, all to such reasonable extent and at such reasonable times as any such Holder shall reasonably request.

 

4.3.4          Underwriting
Agreement. The Company shall enter into an underwriting agreement with the managing underwriter(s), if any, selected by any Holders
whose Registrable Securities are being registered pursuant to this Section 4, which managing underwriter shall be reasonably satisfactory
to the Company. Such agreement shall be reasonably satisfactory in form and substance to the Company, each Holder and such managing underwriters,
and shall contain such representations, warranties and covenants by the Company and such other terms as are customarily contained in agreements
of that type used by the managing underwriter. The Holders shall be parties to any underwriting agreement relating to an underwritten
sale of their Registrable Securities and may, at their option, require that any or all the representations, warranties and covenants of
the Company to or for the benefit of such underwriters shall also be made to and for the benefit of such Holders. Such Holders shall not
be required to make any representations or warranties to or agreements with the Company or the underwriters except as they may relate
to such Holders, their Shares and their intended methods of distribution.

 

4.3.5          Documents
to be Delivered by Holders. Each of the Holders participating in any of the foregoing offerings shall furnish to the Company a completed
and executed questionnaire provided by the Company requesting information customarily sought of selling security holders.

 

4.3.6          Damages.
Should the registration or the effectiveness thereof required by Sections 4.1 and 4.2 hereof be delayed by the Company or the Company
otherwise fails to comply with such provisions, the Holders shall, in addition to any other legal or other relief available to the Holders,
be entitled to obtain specific performance or other equitable (including injunctive) relief against the threatened breach of such provisions
or the continuation of any such breach, without the necessity of proving actual damages and without the necessity of posting bond or other
security.

 

5.              New
Purchase Warrants to be Issued.

 

5.1          Partial
Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised or assigned in whole
or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Warrant for cancellation,
together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax if exercised
pursuant to Section 2.1 hereto, the Company shall cause to be delivered to the Holder without charge a new Purchase Warrant of like tenor
to this Purchase Warrant in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable hereunder
as to which this Purchase Warrant has not been exercised or assigned.

    

     

    

5.2          Lost
Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase
Warrant and of reasonably satisfactory indemnification or the posting of a bond, the Company shall execute and deliver a new Purchase
Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft, mutilation or destruction
shall constitute a substitute contractual obligation on the part of the Company.

 

6.              Adjustments.

 

6.1          Adjustments
to Exercise Price and Number of Securities. The Exercise Price and the number of Shares underlying the Purchase Warrant shall be subject
to adjustment from time to time as hereinafter set forth:

 

6.1.1          Share
Dividends; Split Ups. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares
is increased by a stock dividend payable in Shares or by a split up of Shares or other similar event, then, on the effective day thereof,
the number of Shares purchasable hereunder shall be increased in proportion to such increase in outstanding Shares, and the Exercise Price
shall be proportionately decreased.

 

6.1.2          Aggregation
of Shares. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is decreased
by a consolidation, combination or reclassification of Shares or other similar event, then, on the effective date thereof, the number
of Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding Shares, and the Exercise Price shall
be proportionately increased.

 

6.1.3          Replacement
of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding Shares other than a change
covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such Shares, or in the case of any share reconstruction
or amalgamation or consolidation of the Company with or into another corporation (other than a consolidation or share reconstruction or
amalgamation in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of
the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an
entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Warrant shall
have the right thereafter (until the expiration of the right of exercise of this Purchase Warrant) to receive upon the exercise hereof,
for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or
consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares of the Company obtainable
upon exercise of this Purchase Warrant immediately prior to such event; and if any reclassification also results in a change in Shares
covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions
of this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations,
or consolidations, sales or other transfers.

    

     

    

6.1.4          Changes
in Form of Purchase Warrant. This form of Purchase Warrant need not be changed because of any change pursuant to this Section 6.1,
and Purchase Warrants issued after such change may state the same Exercise Price and the same number of Shares as are stated in the Purchase
Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Warrants reflecting
a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Commencement Date or the
computation thereof.

 

6.2          Substitute
Purchase Warrant. In case of any consolidation of the Company with, or share reconstruction or amalgamation of the Company with or
into, another corporation (other than a consolidation or share reconstruction or amalgamation which does not result in any reclassification
or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute
and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each Purchase Warrant then outstanding or to be
outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant) to receive, upon exercise of such Purchase
Warrant, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or share reconstruction
or amalgamation, by a holder of the number of Shares for which such Purchase Warrant might have been exercised immediately prior to such
consolidation, share reconstruction or amalgamation, sale or transfer. Such supplemental Purchase Warrant shall provide for adjustments
which shall be identical to the adjustments provided for in this Section 6. The above provision of this Section shall similarly apply
to successive consolidations or share reconstructions or amalgamations.

 

6.3          Elimination
of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Shares upon the exercise
of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent
of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case
may be, to the nearest whole number of Shares or other securities, properties or rights.

 

7.              Reservation
and Listing. The Company shall at all times reserve and keep available out of its authorized Shares, solely for the purpose of issuance
upon exercise of the Purchase Warrants, such number of Shares or other securities, properties or rights as shall be issuable upon the
exercise thereof. The Company covenants and agrees that, upon exercise of the Purchase Warrants and payment of the Exercise Price therefor,
in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any stockholder. The Company further covenants and agrees that upon exercise
of the Purchase Warrants and payment of the exercise price therefor, all Shares and other securities issuable upon such exercise shall
be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any stockholder. As long as the Purchase
Warrants shall be outstanding, the Company shall use its commercially reasonable efforts to cause all Shares issuable upon exercise of
the Purchase Warrants to be listed (subject to official notice of issuance) on all national securities exchanges (or, if applicable, on
the OTC Bulletin Board or any successor trading market) on which the Shares issued to the public in the Offering may then be listed and/or
quoted.

    

     

    

8.             Certain
Notice Requirements.

 

8.1          No
Rights as Stockholder. No Holder shall be entitled to vote or receive dividends or distributions or be deemed the holder of any equity
securities which may at any time be issuable on the exercise hereof, nor shall anything contained herein be construed to confer upon the
Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value, consolidation, merger, conveyance or otherwise) or to receive notice
of meetings, or to receive dividends or distributions, or to share in the assets of the Company in the event of a liquidation, dissolution
or the winding up of the Company, until the Purchase Warrant shall have been exercised and the Shares shall have become deliverable, as
provided herein.

 

8.2          Certain
Notices. If at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events described in Section
8.3 shall occur, then, in one or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior
to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such
dividend, distribution, conversion or exchange of securities or subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books, as the case
may be. Notwithstanding the foregoing, the Company shall deliver to each Holder a copy of each notice given to the other stockholders
of the Company at the same time and in the same manner that such notice is given to the stockholders.

 

8.3          Events
Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following events:
(i) if the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend or distribution
payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the Company; (ii) the Company shall offer to all the holders of
its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital
stock of the Company, or any option, right or warrant to subscribe therefor; or (iii) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or share reconstruction or amalgamation) or a sale of all or substantially all
of its property, assets and business shall be proposed.

 

8.4          Notice
of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section
6 hereof, send notice to the Holders of such event and change (“Price Notice”). The Price Notice shall describe the
event causing the change and the method of calculating same and shall be certified as being true and accurate by the Company’s Chief
Financial Officer.

 

8.5          Transmittal
of Notices. All notices, requests, consents and other communications under this Purchase Warrant shall be in writing and shall be
deemed to have been duly made when hand delivered or mailed by express mail or private courier service: (i) if to the registered Holder

    

     

    

of the Purchase Warrant, to the address of such Holder
as shown on the books of the Company, or (ii) if to the Company, to following address or to such other address as the Company may designate
by notice to the Holders:

 

If to the Holder:

 

Maxim Group LLC

405 Lexington Avenue

New York, New York 100174

Telecopy No.: (212) 895-3555

Attn: Legal Department

 

with a copy (which shall not constitute notice)
to:

 

Nelson Mullins Riley & Scarborough LLP

101 Constitution Avenue NW, Suite 900

Washington, DC 20001

Fax No.: (202) 689-2860

Attn: Andrew M. Tucker, Esq.

 

If to the Company:

 

Nexalin Technology, Inc.

1776 Yorktown, Suite 550

Houston, Texas 77056

Fax No.: [●]

Attn: [●]

 

with a copy (which shall not constitute notice)
to:

 

Warshaw Burstein, LLP

575 Lexington Avenue

New York, New York 10022

Fax No.: [●]

Attn: Martin S. Siegel, Esq.

 

9.              Miscellaneous.

 

9.1          Amendments.
The Company and Maxim may from time to time supplement or amend this Purchase Warrant without the approval of any of the Holders in order
to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions
herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Maxim may deem necessary
or desirable and that the Company and Maxim deem shall not adversely affect the interest of the Holders. All other modifications or amendments
shall require the written consent of and be signed by the party against whom enforcement of the modification or amendment is sought.

    

     

    

9.2           Headings.
The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Purchase Warrant.

 

9.3.          Entire
Agreement. This Purchase Warrant (together with the other agreements and documents being delivered pursuant to or in connection with
this Purchase Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes
all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.

 

9.4           Binding
Effect. This Purchase Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their
permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any
legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions herein contained.

 

9.5          Governing
Law; Submission to Jurisdiction; Trial by Jury. This Purchase Warrant shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any
action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought and enforced in
the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction
and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting
a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in
Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding
or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other
party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders
and affiliates) and the Holder hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial
by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

9.6          Waiver,
etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Warrant shall not be deemed
or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or any provision hereof
or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Warrant. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Purchase Warrant shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance
or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.

    

     

    

9.7          Execution
in Counterparts. This Purchase Warrant may be executed in one or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement,
and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other
parties hereto. Such counterparts may be delivered by facsimile transmission or other electronic transmission.

 

9.8          Exchange
Agreement. As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees that, at any time prior
to the complete exercise of this Purchase Warrant by Holder, if the Company and Maxim enter into an agreement (“Exchange Agreement”)
pursuant to which they agree that all outstanding Purchase Warrants will be exchanged for securities or cash or a combination of both,
then Holder shall agree to such exchange and become a party to the Exchange Agreement.

 

[Signature Page Follows]

    

     

    

 IN WITNESS
WHEREOF, the Company has caused this Purchase Warrant to be signed by its duly authorized officer as of the ____ day of _______, 2022.

 

NEXALIN TECHNOLOGY, INC.

 

	By:	 	 
	 	Name: Mark White	 
	 	Title: Chief Executive Officer	 

 

    

     

    

 [Form to be used to exercise
Purchase Warrant]

 

Date: __________, 20___

 

The undersigned hereby
elects irrevocably to exercise the Purchase Warrant for ______ shares of common stock, par value $0.001 per share (the “Shares”),
of Nexalin Technology, Inc., a Delaware corporation (the “Company”), and hereby makes payment of $____ (at the rate
of $____ per Share) in payment of the Exercise Price pursuant thereto. Please issue the Shares as to which this Purchase Warrant is exercised
in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which
this Purchase Warrant has not been exercised.

 

or

 

The undersigned hereby
elects irrevocably to convert its right to purchase ___ Shares of the Company under the Purchase Warrant for ______ Shares, as determined
in accordance with the following formula:

 

	 	X	=	Y(A-B)	 
	A	 
	Where,	 	 	 
	 	X	=	The number of Shares to be issued to Holder;
	 	Y	=	The number of Shares for which the Purchase Warrant is being exercised;
	 	A	=	The fair market value of one Share which is equal to $_____; and
	 	B	=	The Exercise Price which is equal to $______ per share
	 	 	 	 	 	 	 

The undersigned agrees
and acknowledges that the calculation set forth above is subject to confirmation by the Company and any disagreement with respect to the
calculation shall be resolved by the Company in its sole discretion.

 

Please issue the Shares
as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant
representing the number of Shares for which this Purchase Warrant has not been converted.

 

	Signature	 	 

 

	Signature Guaranteed	 	 

 

INSTRUCTIONS FOR REGISTRATION OF SECURITIES

 

	Name:	 	 
	 	(Print in Block Letters)	 

 

	Address:	 	 
	 	 	 

    

     

    

	 	 	 
	 	 	 
	 	 	 

 

NOTICE: The signature to this form
must correspond with the name as written upon the face of the Purchase Warrant without alteration or enlargement or any change whatsoever,
and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national
securities exchange.

    

     

    

 [Form to be used to assign
Purchase Warrant]

 

ASSIGNMENT

 

(To be executed by the registered Holder to effect
a transfer of the within Purchase Warrant):

 

FOR VALUE RECEIVED, __________________ does hereby
sell, assign and transfer unto the right to purchase shares of common stock, par value $0.001 per share, of Nexalin Technology, Inc.,
a Delaware corporation (the “Company”), evidenced by the Purchase Warrant and does hereby authorize the Company to
transfer such right on the books of the Company.

 

Dated: __________, 20__

 

	Signature	 	 

 

	Signature Guaranteed	 	 

 

NOTICE: The signature to this form must correspond with
the name as written upon the face of the within Purchase Warrant without alteration or enlargement or any change whatsoever, and must
be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities
exchange.ex_329206.htm

Exhibit 4A

 

 

 

 

 

 

 

 

$25,000,000.00

 

SEVENTH AMENDED AND RESTATED

CREDIT AGREEMENT

 

dated as of

 

January 27, 2022

 

among

 

BASSETT FURNITURE INDUSTRIES, INCORPORATED,

 

The Initial Guarantors Listed Herein,

 

and

 

TRUIST BANK

 

 

 

 

 

 

TABLE OF CONTENTS

Page

 

	
			ARTICLE I DEFINITIONS

				1
	
			SECTION 1.01.

				
			Definitions

				
			1

			
	
			SECTION 1.02.

				
			Accounting Terms and Determinations

				
			16

			
	
			SECTION 1.03.

				
			Use of Defined Terms

				
			16

			
	
			SECTION 1.04.

				
			Terminology

				
			16

			
	
			SECTION 1.05.

				
			References

				
			16

			
	
			SECTION 1.06.

				
			Divisions

				
			16

			
	
			SECTION 1.07.

				
			Rates

				
			16

			
	
			SECTION 1.08.

				
			Times of Day

				
			17

			
	
			SECTION 1.09.

				
			Letter of Credit Amounts

				
			17

			
	
			ARTICLE II THE CREDITS

				17
	
			SECTION 2.01.

				
			Commitment to Make Advances

				
			17

			
	
			SECTION 2.02.

				
			Method of Borrowing Advances

				
			17

			
	
			SECTION 2.03.

				
			Letters of Credit.

				
			18

			
	
			SECTION 2.04.

				
			Note

				
			18

			
	
			SECTION 2.05.

				
			Maturity of Loans

				
			19

			
	
			SECTION 2.06.

				
			Interest Elections and Rates

				
			19

			
	
			SECTION 2.07.

				
			Inability to Determine Interest Rates; Benchmark Replacement Setting.

				
			20

			
	
			SECTION 2.08.

				
			Fees

				
			22

			
	
			SECTION 2.09.

				
			Late Charge

				
			22

			
	
			SECTION 2.10.

				
			Termination of Commitment

				
			22

			
	
			SECTION 2.11.

				
			Optional Prepayments

				
			23

			
	
			SECTION 2.12.

				
			Mandatory Prepayments

				
			23

			
	
			SECTION 2.13.

				
			General Provisions as to Payments

				
			23

			
	
			SECTION 2.14.

				
			Computation of Interest and Fees

				
			24

			
	
			SECTION 2.15.

				
			[Intentionally Omitted].

				
			24

			
	
			SECTION 2.16.

				
			[Intentionally Omitted].

				
			24

			
	
			SECTION 2.17.

				
			[Intentionally Omitted]

				
			24

			
	
			SECTION 2.18.

				
			[Intentionally Omitted]

				
			24

			

 

-i-

 

 

TABLE OF CONTENTS

(continued)

Page

 

	
			SECTION 2.19.

				
			Illegality

				
			24

			
	
			ARTICLE III CONDITIONS TO BORROWINGS

				24
	
			SECTION 3.01.

				
			Effectiveness of Agreement

				
			24

			
	
			SECTION 3.02.

				
			Conditions to All Borrowings

				
			25

			
	
			SECTION 3.03.

				
			Conditions to Issuance of Letters of Credit

				
			26

			
	
			SECTION 3.04.

				
			[Intentionally Omitted].

				
			26

			
	
			ARTICLE IV REPRESENTATIONS AND WARRANTIES

				26
	
			SECTION 4.01.

				
			Existence and Power

				
			26

			
	
			SECTION 4.02.

				
			Organizational and Governmental Authorization; No Contravention

				
			27

			
	
			SECTION 4.03.

				
			Binding Effect

				
			27

			
	
			SECTION 4.04.

				
			Financial Information

				
			27

			
	
			SECTION 4.05.

				
			Litigation

				
			27

			
	
			SECTION 4.06.

				
			Compliance with ERISA

				
			27

			
	
			SECTION 4.07.

				
			Taxes

				
			27

			
	
			SECTION 4.08.

				
			Subsidiaries

				
			28

			
	
			SECTION 4.09.

				
			Not an Investment Company

				
			28

			
	
			SECTION 4.10.

				
			[Intentionally Omitted].

				
			28

			
	
			SECTION 4.11.

				
			Ownership of Property; Liens

				
			28

			
	
			SECTION 4.12.

				
			No Default

				
			28

			
	
			SECTION 4.13.

				
			Full Disclosure

				
			28

			
	
			SECTION 4.14.

				
			Environmental Matters

				
			28

			
	
			SECTION 4.15.

				
			Compliance with Laws

				
			29

			
	
			SECTION 4.16.

				
			Capital Stock

				
			29

			
	
			SECTION 4.17.

				
			Margin Stock

				
			29

			
	
			SECTION 4.18.

				
			Insolvency

				
			29

			
	
			SECTION 4.19.

				
			[Intentionally Omitted].

				
			29

			
	
			SECTION 4.20.

				
			Labor Matters

				
			29

			
	
			SECTION 4.21.

				
			Patents, Trademarks, Etc

				
			29

			

 

-ii-

 

 

TABLE OF CONTENTS

(continued)

Page

 

	
			ARTICLE V COVENANTS

				30
	
			SECTION 5.01.

				
			Information

				
			30

			
	
			SECTION 5.02.

				
			Inspection of Property, Books and Records

				
			31

			
	
			SECTION 5.03.

				
			[Intentionally Omitted].

				
			31

			
	
			SECTION 5.04.

				
			[Intentionally Omitted].

				
			31

			
	
			SECTION 5.05.

				
			[Intentionally Omitted].

				
			31

			
	
			SECTION 5.06.

				
			[Intentionally Omitted].

				
			31

			
	
			SECTION 5.07.

				
			[Intentionally Omitted]

				
			31

			
	
			SECTION 5.08.

				
			[Intentionally Omitted].

				
			32

			
	
			SECTION 5.09.

				
			[Intentionally Omitted].

				
			32

			
	
			SECTION 5.10.

				
			[Intentionally Omitted].

				
			32

			
	
			SECTION 5.11.

				
			[Intentionally Omitted].

				
			32

			
	
			SECTION 5.12.

				
			[Intentionally Omitted];

				
			32

			
	
			SECTION 5.13.

				
			[Intentionally Omitted].

				
			32

			
	
			SECTION 5.14.

				
			Negative Pledge

				
			32

			
	
			SECTION 5.15.

				
			Maintenance of Existence

				
			32

			
	
			SECTION 5.16.

				
			Dissolution

				
			32

			
	
			SECTION 5.17.

				
			Consolidations, Mergers and Sales of Assets

				
			32

			
	
			SECTION 5.18.

				
			Use of Proceeds

				
			32

			
	
			SECTION 5.19.

				
			Compliance with Laws; Payment of Taxes

				
			33

			
	
			SECTION 5.20.

				
			[Intentionally Omitted].

				
			33

			
	
			SECTION 5.21.

				
			Change in Fiscal Year

				
			33

			
	
			SECTION 5.22.

				
			Maintenance of Property

				
			33

			
	
			SECTION 5.23.

				
			Environmental Notices

				
			33

			
	
			SECTION 5.24.

				
			Environmental Matters

				
			33

			
	
			SECTION 5.25.

				
			Insurance

				
			33

			
	
			SECTION 5.26.

				
			Environmental Release

				
			34

			
	
			SECTION 5.27.

				
			Additional Covenants, Etc

				
			34

			
	
			SECTION 5.28.

				
			[Intentionally Omitted].

				
			34

			
	
			SECTION 5.29.

				
			[Intentionally Omitted].

				
			34

			
	
			SECTION 5.30.

				
			[Intentionally Omitted].

				
			34

			

 

-iii-

 

 

TABLE OF CONTENTS

(continued)

Page

 

	
			SECTION 5.31.

				
			Subsidiaries, Partnerships and Joint Ventures

				
			34

			
	
			SECTION 5.32.

				
			Additional Debt

				
			35

			
	
			SECTION 5.33.

				
			[Intentionally Omitted].

				
			35

			
	
			SECTION 5.34.

				
			[Intentionally Omitted].

				
			35

			
	
			SECTION 5.35.

				
			[Intentionally Omitted].

				
			35

			
	
			SECTION 5.36.

				
			[Intentionally Omitted].

				
			35

			
	
			SECTION 5.37.

				
			Consolidated Lease Adjusted Leverage to EBITDAR Ratio

				
			35

			
	
			SECTION 5.38.

				
			Consolidated Fixed Charge Coverage Ratio

				
			35

			
	
			SECTION 5.39.

				
			Minimum Consolidated Tangible Net Worth

				
			35

			
	
			SECTION 5.40.

				
			Deposit Accounts

				
			35

			
	
			ARTICLE VI DEFAULTS

				25
	
			SECTION 6.01.

				
			Events of Default

				
			35

			
	
			SECTION 6.02.

				
			Notice of Default

				
			38

			
	
			SECTION 6.03.

				
			Cash Cover

				
			38

			
	
			SECTION 6.04.

				
			[Intentionally Omitted].

				
			38

			
	
			SECTION 6.05.

				
			Allocation of Proceeds

				
			38

			
	
			ARTICLE VII COMPENSATION

				38
	
			SECTION 7.01.

				
			Increased Costs

				
			38

			
	
			SECTION 7.02.

				
			Funding Indemnity

				
			39

			
	
			ARTICLE VIII MISCELLANEOUS

				39
	
			SECTION 8.01.

				
			Notices

				
			39

			
	
			SECTION 8.02.

				
			No Waivers

				
			39

			
	
			SECTION 8.03.

				
			Expenses; Documentary Taxes; Indemnification.

				
			40

			
	
			SECTION 8.04.

				
			Setoffs; Sharing of Set-Offs

				
			41

			
	
			SECTION 8.05.

				
			Amendments and Waivers

				
			41

			
	
			SECTION 8.06.

				
			[Intentionally Omitted].

				
			41

			
	
			SECTION 8.07.

				
			Successors and Assigns

				
			41

			
	
			SECTION 8.08.

				
			Confidentiality

				
			41

			
	
			SECTION 8.09.

				
			[Intentionally Omitted].

				
			42

			
	
			SECTION 8.10.

				
			[Intentionally Omitted].

				
			42

			

 

-iv-

 

 

TABLE OF CONTENTS

(continued)

Page

 

	
			SECTION 8.11.

				
			Survival of Certain Obligations

				
			42

			
	
			SECTION 8.12.

				
			Virginia Law

				
			42

			
	
			SECTION 8.13.

				
			Severability

				
			42

			
	
			SECTION 8.14.

				
			Interest

				
			42

			
	
			SECTION 8.15.

				
			Interpretation

				
			42

			
	
			SECTION 8.16.

				
			Consent to Jurisdiction

				
			42

			
	
			SECTION 8.17.

				
			Counterparts

				
			42

			
	
			SECTION 8.18.

				
			[Intentionally Omitted].

				
			43

			
	
			ARTICLE IX GUARANTY

				43
	
			SECTION 9.01.

				
			[Intentionally Omitted].

				
			43

			
	
			SECTION 9.02.

				
			Unconditional Guaranty

				
			43

			
	
			SECTION 9.03.

				
			Obligations Absolute

				
			43

			
	
			SECTION 9.04.

				
			Continuing Obligations; Reinstatement

				
			45

			
	
			SECTION 9.05.

				
			Additional Security, Etc

				
			45

			
	
			SECTION 9.06.

				
			Information Concerning the Borrowers

				
			45

			
	
			SECTION 9.07.

				
			Guarantors’ Subordination

				
			45

			
	
			SECTION 9.08.

				
			Waiver of Subrogation

				
			45

			
	
			SECTION 9.09.

				
			Enforcement

				
			46

			
	
			SECTION 9.10.

				
			Miscellaneous

				
			46

			
	
			SECTION 9.11.

				
			Amended, Restated and Replacement Agreement

				
			46

			

 

-v-

 

 

SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT dated as of January 27, 2022, is by and among BASSETT FURNITURE INDUSTRIES, INCORPORATED, BASSETT FURNITURE INDUSTRIES OF NORTH CAROLINA, LLC, BASSETT DIRECT STORES, LLC. BASSETT DIRECT NC, LLC, BASSETT DIRECT SC, LLC and TRUIST BANK, formerly known as Branch Banking and Trust Company.

 

The Borrower, the Guarantors and Branch Banking and Trust Company (“BB&T”) are parties to the Original Credit Agreement (as defined herein) which provides for the making of loans by the Bank to the Borrower. BB&T has changed its name to Truist Bank.

 

The parties hereto wish to amend the Original Credit Agreement in certain respects and to restate the Original Credit Agreement to read in its entirety as set forth below. Accordingly, the parties hereto agree that effective on the Restatement Effective Date (as defined herein), the Original Credit Agreement is amended and restated to read in its entirety as follows:

 

ARTICLE I

DEFINITIONS

 

SECTION 1.01.    Definitions. The terms as defined in this Section 1.01 shall, for all purposes of this Agreement and any amendment hereto (except as herein otherwise expressly provided or unless the context otherwise requires), have the meanings set forth herein:

 

“ACL Agreement” means any credit line sweep services agreement now or hereafter entered into between the Bank and the Borrower and all amendments and modifications thereof.

 

“Acquisition” means the acquisition of (i) a controlling equity interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such equity interest or upon exercise of an option or warrant for, or conversion of securities into, such equity interest, or (ii) assets of another Person which constitute all or any material part of the assets of such Person or of a line or lines of business conducted by such Person.

 

“Adjusted Term SOFR” means, for purposes of any calculation, the rate per annum equal to (a) Term SOFR for such calculation plus (b) the Term SOFR Adjustment; provided that if Adjusted Term SOFR as so determined shall ever be less than the Floor, then Adjusted Term SOFR shall be deemed to be the Floor.

 

“Advance” means an advance made to the Borrower under this Agreement pursuant to Article II. An Advance is a “Base Rate Advance” if such Advance is part of a Base Rate Loan or a “SOFR Advance” if such Advance is part of a SOFR Loan.

 

“Affiliate” of any Person means (i) any other Person which directly, or indirectly through one or more intermediaries, controls such Person, (ii) any other Person which directly, or indirectly through one or more intermediaries, is controlled by or is under common control with such Person, or (iii) any other Person of which such Person owns, directly or indirectly, 20% or more of the common stock or equivalent equity interests. As used herein, the term “control” means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

-6-

 

 

“Agreement” means this Credit Agreement, together with all amendments and supplements hereto.

 

“Applicable Margin” means, as of any date, with respect to all Loans outstanding on such date, 0.50% per annum with respect to Base Rate Loans and 1.50% per annum with respect to SOFR Loans.

 

“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.07(e).

 

“Bank” means Truist Bank, a North Carolina banking corporation, formerly known as Branch Banking and Trust Company, and its successors and assigns.

 

“Base Rate” means for any day a rate per annum equal to the highest of (i) the rate of interest which the Bank announces from time to time as its prime lending rate, as in effect from time to time (the “Prime Rate”), (ii) the Federal Funds Rate, as in effect from time to time, plus 0.50%, (iii) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00% and (iv) zero percent (0%). The Bank’s prime lending rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. The Bank may make commercial loans or other loans at rates of interest at, above, or below the Bank’s prime lending rate. Any change in the Base Rate due to a change in the Prime Rate, the Federal Funds Rate, or Adjusted Term SOFR will be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Rate, or Adjusted Term SOFR, respectively.

 

“Base Rate Loan” means the Loan during Interest Periods when the Loan bears or is to bear interest at a rate based upon the Base Rate.

 

“Benchmark” means, initially, the Term SOFR Reference Rate; provided that if a Benchmark Transition Event has occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.07(b).

 

“Benchmark Replacement” means with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by the Bank for the applicable Benchmark Replacement Date:

 

(a)    Daily Simple SOFR; or

 

(b)    the sum of: (i) the alternate benchmark rate that has been selected by the Bank and the Borrower giving due consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities and (ii) the related Benchmark Replacement Adjustment.

 

-7-

 

 

If the Benchmark Replacement as determined pursuant to clause (a) or (b) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.

 

“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Bank and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities.

 

“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:

 

(a)    in the case of clause (a) or (b) of the definition of “Benchmark Transition Event”, the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or

 

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(b)    in the case of clause (c) of the definition of “Benchmark Transition Event”, the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by or on behalf of the administrator of such Benchmark (or such component thereof) or the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative or non-compliant with or non-aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks; provided that such non-representativeness, non-compliance or non-alignment will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.

 

For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) above with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

 

“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:

 

(a)    a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

 

(b)    a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

 

(c)    a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) or the regulatory supervisor for the administrator of such Benchmark (or such component thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative or in compliance with or aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks.

 

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

 

“Benchmark Unavailability Period” means, the period (if any) (a) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.07 and (b) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.07.

 

“Borrower” means Bassett Furniture Industries, Incorporated, a Virginia corporation, and its successors and permitted assigns.

 

“Borrowing” means a borrowing hereunder consisting of Advances made to the Borrower at the same time by the Bank pursuant to Article II.

 

“Capital Stock” means any nonredeemable capital stock of the Borrower or any Consolidated Subsidiary (to the extent issued to a Person other than the Borrower), whether common or preferred.

 

“Cash Equivalents” means (i) securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality thereof having maturities of not more than 90 days from the date of acquisition; (ii) time deposits, certificates of deposit and banker’s acceptances of any domestic commercial bank having capital and surplus in excess of $200,000,000 having maturities of not more than 90 days from the date of acquisition; (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) and entered into with any bank meeting the qualifications thereof, the highest credit rating obtainable from Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc. and maturing within ninety days after the date of acquisition; and (v) money market funds which invest at least 90% of their assets in the types of securities or instruments described in clauses (i), (ii), (iii) and (iv) above.

 

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“CERCLA” means the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. §9601 et seq. and its implementing regulations and amendments.

 

“CERCLIS” means the Comprehensive Environmental Response Compensation and Liability Information System established pursuant to CERCLA.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (i) the adoption or taking effect of any law, rule, regulation or treaty, (ii) any change in any law, rule, regulation or treaty, or in the administration, interpretation, implementation or application thereof by any Governmental Authority, or (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) of any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“Closing Certificate” has the meaning set forth in Section 3.01(e).

 

“Code” means the Internal Revenue Code of 1986, as amended, or any successor Federal tax code. Any reference to any provision of the Code shall also be deemed to be a reference to any successor provision or provisions thereof.

 

“Commitment” means $25,000,000.00.

 

“Compliance Certificate” has the meaning set forth in Section 5.01(d).

 

“Conforming Changes” means, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Domestic Business Day”, the definition of “U.S. Government Securities Business Day”, the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 7.02 and other technical, administrative or operational matters) that the Bank decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Bank in a manner substantially consistent with market practice (or, if the Bank decides that adoption of any portion of such market practice is not administratively feasible or if the Bank determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Bank decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

 

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“Consolidated EBITDA” means, for any four-quarter period ending on the date of measurement, (a) the sum of (i) Consolidated Net Income for such four-quarter period, (ii) Depreciation and Amortization for such four-quarter period, (iii) interest expense net of interest income for such four-quarter period of the Borrower and its Consolidated Subsidiaries on a consolidated basis determined in accordance with GAAP, (iv) federal and state income taxes for such four-quarter period of the Borrower and its Consolidated Subsidiaries on a consolidated basis determined in accordance with GAAP, and (v) expenses or losses that are of an unusual nature or infrequently occurring for such four-quarter period of the Borrower and its Consolidated Subsidiaries on a consolidated basis determined in accordance with GAAP, minus (b) income or gains that are of an unusual nature or infrequently occurring for such four-quarter period of the Borrower and its Consolidated Subsidiaries on a consolidated basis determined in accordance with GAAP (including, for avoidance of doubt, those associated with the Zenith Divesture).

 

“Consolidated EBITDAR” means, for any four-quarter period ending on the date of measurement, Consolidated EBITDA plus Rent Expense for such four-quarter period of the Borrower and its Consolidated Subsidiaries on a consolidated basis.

 

“Consolidated Fixed Charge Coverage Ratio” means, for any four-quarter period ending on the date of measurement, the ratio of (i) Consolidated EBITDAR for such four-quarter period of the Borrower and its Consolidated Subsidiaries on a consolidated basis minus distributions to shareholders or other distributions or payments or advances to shareholders (other than for stock repurchases) declared for such four-quarter period of the Borrower and its Consolidated Subsidiaries on a consolidated basis to (ii) the Borrower’s and its Consolidated Subsidiaries’ interest expense for such four-quarter period of the Borrower and its Consolidated Subsidiaries on a consolidated basis plus Rent Expense for such four-quarter period on a consolidated basis plus Current Maturities of Long Term Debt for such four-quarter period on a consolidated basis, all as prepared in accordance with GAAP.

 

“Consolidated Lease Adjusted Leverage to EBITDAR” means, for any four-quarter period ending on the date of measurement, the ratio of (i) Consolidated Total Debt to (ii) Consolidated EBITDAR for such four-quarter period of the Borrower and its Consolidated Subsidiaries on a consolidated basis.

 

“Consolidated Net Income” means, for any period, the Net Income of the Borrower and its Consolidated Subsidiaries determined on a consolidated basis, but excluding (i) extraordinary gains; (ii) extraordinary non-cash losses and (iii) any equity interests of the Borrower or any Subsidiary of the Borrower in the unremitted earnings of any Person that is not a Subsidiary of the Borrower.

 

“Consolidated Subsidiary” means at any date any Subsidiary or other entity the accounts of which, in accordance with GAAP, would be consolidated with those of the Borrower in its consolidated and consolidating financial statements as of such date.

 

“Consolidated Tangible Net Worth” means, at any time, Stockholders’ Equity, less the sum of the value, as set forth or reflected on the most recent consolidated balance sheet of the Borrower and its Consolidated Subsidiaries, prepared in accordance with GAAP,

 

(A)         [Intentionally Omitted];

 

(B)         All assets which would be treated as intangibles under generally accepted accounting principles, including without limitation goodwill (whether representing the excess of cost over book value of assets acquired, or otherwise), trademarks, tradenames, copyrights, patents and technologies, and unamortized debt discount and expense;

 

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(C)         To the extent not included in (B) of this definition, any amount at which shares of capital stock of the Borrower appear as an asset on the balance sheet of the Borrower and its Consolidated Subsidiaries; and

 

(D)         Loans or advances to stockholders, directors, officers or employees.

 

“Consolidated Total Assets” means, at any time, the total assets of the Borrower and its Consolidated Subsidiaries, determined on a consolidated basis, as set forth or reflected on the most recent consolidated balance sheet of the Borrower and its Consolidated Subsidiaries, prepared in accordance with GAAP.

 

“Consolidated Total Debt” means at any date, without duplication, the sum of: (1) all Debt of the Borrower and its Consolidated Subsidiaries, (2) all obligations (absolute or contingent) of the Borrower and its Consolidated Subsidiaries to reimburse any bank or other Person in respect of amounts which are available to be drawn or have been drawn under a Letter of Credit, or under any other letter of credit or similar instrument, and (3) all Lease Obligations, all as reflected in the Borrower’s financial statements or as otherwise determined in accordance with GAAP.

 

“Controlled Group” means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code.

 

“Cost of Acquisition” means, with respect to any Acquisition, as at the date of entering into any agreement therefor, the sum of the following (without duplication): (i) the value of the capital stock, warrants or options to acquire capital stock of Borrower or any Subsidiary to be transferred in connection therewith, (ii) the amount of any cash and fair market value of other property (excluding property described in clause (i) and the unpaid principal amount of any debt instrument) given as consideration, (iii) the amount (determined by using the face amount or the amount payable at maturity, whichever is greater) of any Debt incurred, assumed or acquired by the Borrower or any Subsidiary in connection with such Acquisition, (iv) all additional purchase price amounts in the form of earnouts and other contingent obligations that should be recorded on the financial statements of the Borrower and its Subsidiaries in accordance with GAAP, (v) all amounts paid in respect of covenants not to compete, consulting agreements that should be recorded on financial statements of the Borrower and its Subsidiaries in accordance with GAAP, and other affiliated contracts in connection with such Acquisition, (vi) the aggregate fair market value of all other consideration given by the Borrower or any Subsidiary in connection with such Acquisition, and (vii) out of pocket transaction costs for the services and expenses of attorneys, accountants and other consultants incurred in effecting such transaction, and other similar transaction costs so incurred. For purposes of determining the Cost of Acquisition for any transaction, (A) the capital stock of the Borrower shall be valued (I) in the case of capital stock that is then designated as a national market system security by the National Association of Securities Dealers, Inc. (“NASDAQ”) or is listed on a national securities exchange, the average of the last reported bid and ask quotations or the last prices reported thereon, and (II) with respect to any other shares of capital stock, as determined by the Board of Directors of the Borrower and, if requested by the Bank, determined to be a reasonable valuation by the independent public accountants referred to in Section 5.01(a), (B) the capital stock of any Subsidiary shall be valued as determined by the Board of Directors of such Subsidiary and, if requested by the Bank, determined to be a reasonable valuation by the independent public accountants referred to in Section 5.01(a), and (C) with respect to any Acquisition accomplished pursuant to the exercise of options or warrants or the conversion of securities, the Cost of Acquisition shall include both the cost of acquiring such option, warrant or convertible security as well as the cost of exercise or conversion.

 

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“Current Debt” means the aggregate principal amount of Debt which would in accordance with GAAP, be classified as current debt.

 

“Current Maturities of Long Term Debt” means all payments in respect of Long Term Debt (excluding any such amounts included within Current Debt) that are required to be made within one year from the date of determination, whether or not the Obligation to make such payments would constitute a current liability of the obligor under GAAP.

 

“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Bank in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Bank decides that any such convention is not administratively feasible for the Bank, then the Bank may establish another convention in its reasonable discretion.

 

“Debt” of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person to reimburse any bank or other Person in respect of amounts payable under a banker’s acceptance, (v) all Redeemable Preferred Stock of such Person (in the event such Person is a corporation), (vi) all obligations (absolute or contingent) of such Person to reimburse any bank or other Person in respect of amounts which are available to be drawn or have been drawn under a letter of credit or similar instrument, (vii) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person, (viii) all Debt of others Guaranteed by such Person, (ix) all obligations of such Person with respect to interest rate protection agreements, foreign currency exchange agreements or other hedging agreements (valued as the termination value thereof computed in accordance with a method approved by the International Swap Dealers Association and agreed to by such Person in the applicable hedging agreement, if any); and (x) the principal portion of all obligations of such Person under any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease under GAAP.

 

“Default” means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived in writing, become an Event of Default.

 

“Default Rate” means, with respect to the Loan, on any day, the sum of 2% plus the then highest interest rate (including the Applicable Margin) which may be applicable to the Loan (irrespective of whether any Loan is actually outstanding hereunder).

 

“Depreciation and Amortization” means for any period an amount equal to the sum of all depreciation and amortization expenses of the Borrower and its Consolidated Subsidiaries for such period, as determined in accordance with GAAP.

 

“Dollars” or “$” means dollars in lawful currency of the United States of America.

 

“Domestic Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in Charlotte, North Carolina or New York are authorized or required by law to close.

 

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“Domestic Subsidiary” means any Subsidiary which is organized under the laws of any state or territory of the United States of America.

 

“Eligible Guarantor” means Bassett Furniture Industries of North Carolina, LLC.

 

“Environmental Authority” means any foreign, federal, state, local or regional government that exercises any form of jurisdiction or authority under any Environmental Requirement.

 

“Environmental Authorizations” means all licenses, permits, orders, approvals, notices, registrations or other legal prerequisites for conducting the business of a Loan Party or any Subsidiary of a Loan Party required by any Environmental Requirement.

 

“Environmental Judgments and Orders” means all judgments, decrees or orders arising from or in any way associated with any Environmental Requirements, whether or not entered upon consent or written agreements with an Environmental Authority or other entity arising from or in any way associated with any Environmental Requirement, whether or not incorporated in a judgment, decree or order.

 

“Environmental Laws” means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes into the environment, including, without limitation, ambient air, surface water, groundwater or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the clean-up or other remediation thereof.

 

“Environmental Liabilities” means any liabilities, whether accrued, contingent or otherwise, arising from and in any way associated with any Environmental Requirements.

 

“Environmental Notices” means notice from any Environmental Authority or by any other person or entity, of possible or alleged noncompliance with or liability under any Environmental Requirement, including without limitation any complaints, citations, demands or requests from any Environmental Authority or from any other person or entity for correction of any violation of any Environmental Requirement or any investigations concerning any violation of any Environmental Requirement.

 

“Environmental Proceedings” means any judicial or administrative proceedings arising from or in any way associated with any Environmental Requirement.

 

“Environmental Releases” means releases as defined in CERCLA or under any applicable state or local environmental law or regulation.

 

“Environmental Requirements” means any legal requirement relating to health, safety or the environment and applicable to a Loan Party, any Subsidiary of a Loan Party or the Properties, including but not limited to any such requirement under CERCLA or similar state legislation and all federal, state and local laws, ordinances, regulations, orders, writs, decrees and common law.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor law. Any reference to any provision of ERISA shall also be deemed to be a reference to any successor provision or provisions thereof.

 

“Event of Default” has the meaning set forth in Section 6.01.

 

“Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the next succeeding Domestic Business Day or, if such rate is not so published for any Domestic Business Day, the Federal Funds Rate for such day shall be the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day on such transactions received by the Bank from three Federal funds brokers of recognized standing selected by the Bank. For purposes of this Agreement the Federal Funds Rate shall not be less than zero percent (0%).

 

“Financing” means (i) any transaction or series of transactions for the incurrence by a Loan Party of any Debt or for the establishment of a commitment to make advances which would constitute Debt of a Loan Party, which Debt is not by its terms subordinate and junior to other Debt of a Loan Party, (ii) an obligation incurred in a transaction or series of transactions in which assets of a Loan Party are sold and leased back, or (iii) a sale of accounts or other receivables or any interest therein, other than a sale or transfer of accounts or receivables attendant to a sale permitted hereunder of an operating division.

 

“Fiscal Month” means any fiscal month of the Borrower.

 

“Fiscal Quarter” means any fiscal quarter of the Borrower.

 

“Fiscal Year” means any fiscal year of the Borrower.

 

“Floor” means a rate of interest equal to 0.00%.

 

“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.

 

“GAAP” means generally accepted accounting principles applied on a basis consistent with those which, in accordance with Section 1.02, are to be used in making the calculations for purposes of determining compliance with the terms of this Agreement.

 

“Governmental Authority” means the government of the United States or any other nation, or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Guarantee” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to secure, purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to provide collateral security, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.

 

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“Guaranteed Obligations” means any and all liabilities, indebtedness and obligations of any and every kind and nature, heretofore, now or hereafter owing, arising, due or payable from the Borrower to the Bank, arising under or evidenced by this Agreement or the Note.

 

“Guarantors” means the Initial Guarantors.

 

“Hazardous Materials” includes, without limitation, (a) solid or hazardous waste, as defined in the Resource Conservation and Recovery Act of 1980, 42 U.S.C. §6901 et seq. and its implementing regulations and amendments, or in any applicable state or local law or regulation, (b) any “hazardous substance”, “pollutant” or “contaminant”, as defined in CERCLA, or in any applicable state or local law or regulation, (c) gasoline, or any other petroleum product or by-product, including crude oil or any fraction thereof, (d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or in any applicable state or local law or regulation and (e) insecticides, fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or in any applicable state or local law or regulation, as each such Act, statute or regulation may be amended from time to time.

 

“Initial Guarantors” means collectively (i) Bassett Furniture Industries of North Carolina, LLC, a North Carolina limited liability company, (ii) Bassett Direct Stores, LLC, a Virginia limited liability company, (iii) Bassett Direct NC, LLC, a Virginia limited liability company, and (iv) Bassett Direct SC, LLC, a Virginia limited liability company.

 

“Interest Period” means, with respect to any SOFR Borrowing, a period of one (1) month (in each case, subject to the availability thereof); provided that:

 

(i)    the initial Interest Period for such Borrowing shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing of another Type), and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires;

 

(ii)    if any Interest Period would otherwise end on a day other than a Domestic Business Day, such Interest Period shall be extended to the next succeeding Domestic Business Day, unless such Domestic Business Day falls in another calendar month, in which case such Interest Period would end on the immediately preceding Domestic Business Day;

 

(iii)    any Interest Period which begins on the last Domestic 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 Domestic Business Day of such calendar month;

 

(iv)    [intentionally omitted];

 

(v)    no Interest Period may extend beyond the Termination Date; and

 

(vi)    no tenor that has been removed from this definition pursuant to Section 2.07(e) shall be available for specification in such Notice of Borrowing or Notice of Conversion/Continuation.

 

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“Investment” means any investment in any Person, whether by means of purchase or acquisition of obligations or securities of such Person, capital contribution to such Person, loan or advance to such Person, making of a time deposit with such Person, Guarantee or assumption of any obligation of such Person or otherwise.

 

“Lease Obligations” means, with respect to any Person for any period, the obligations of such Person to pay rent or other amounts under any finance or operating lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as liabilities on a balance sheet of such person under GAAP.

 

“Letters of Credit” means the letters of credit issued by the Bank pursuant to Section 2.03(a) and “Letter of Credit” means any one of such Letters of Credit, as any of such letters of credit may be extended, renewed, replaced or amended from time to time.

 

“Letter of Credit Advance” means an advance made by the Bank pursuant to Section 2.03(c).

 

“Letter of Credit Agreement” means any agreement entered into by the Borrower and the Bank pursuant to which a Letter of Credit is issued, as amended, modified or restated from time to time.

 

“Lien” means, with respect to any asset, any mortgage, deed to secure debt, deed of trust, lien, pledge, charge, security interest, security title, preferential arrangement which has the practical effect of constituting a security interest or encumbrance, servitude or encumbrance of any kind in respect of such asset to secure or assure payment of a Debt or a Guarantee, whether by consensual agreement or by operation of statute or other law, or by any agreement, contingent or otherwise, to provide any of the foregoing. For the purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, lease or other title retention agreement relating to such asset.

 

“Loan” means the aggregate outstanding Advances made by the Bank to the Borrower under this Agreement. The Loan shall at all times be a SOFR Loan, unless such Loan is to be a Base Rate Loan pursuant to Section 2.07(f).

 

“Loan Documents” means this Agreement, the Note, the Letter of Credit Agreements, the Letters of Credit, any ACL Agreement, any other document evidencing, relating to or securing the Loan or the Letters of Credit, and any other document or instrument delivered from time to time in connection with this Agreement, the Note, the Letter of Credit Agreements, the Letters of Credit or the Loan, as such documents and instruments may be amended or supplemented from to time.

 

“Loan Parties” means collectively the Borrower and each Guarantor that is now or hereafter a party to any of the Loan Documents.

 

“Long Term Debt” means the aggregate principal amount of Debt for Money Borrowed which would in accordance with GAAP, be classified as long term debt.

 

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“Margin Stock” means “margin stock” as defined in Regulations T, U or X of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder.

 

“Material Adverse Effect” means, with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other related event or events, act or acts, condition or conditions, occurrence or occurrences, a material adverse change in, or a material adverse effect upon, any of (a) the financial condition, operations, business, properties or prospects of the Borrower and its Consolidated Subsidiaries, taken as a whole, (b) the rights and remedies of the Bank under the Loan Documents, or the ability of the Borrower or any other Loan Party to perform its obligations under the Loan Documents to which it is a party, as applicable, or (c) the legality, validity or enforceability of any Loan Document.

 

“Multiemployer Plan” shall have the meaning set forth in Section 4001(a)(3) of ERISA.

 

“Net Proceeds of Capital Stock/Conversion of Debt” means any and all proceeds (whether cash or non-cash) or other consideration received by the Borrower or a Consolidated Subsidiary in respect of the issuance of Capital Stock (including, without limitation, the aggregate amount of any and all Debt converted into Capital Stock), after deducting therefrom all reasonable and customary costs and expenses incurred by the Borrower or such Consolidated Subsidiary directly in connection with the issuance of such Capital Stock.

 

“Net Income” means, as applied to any Person for any period, the aggregate amount of net income of such Person, after taxes, for such period, as determined in accordance with GAAP.

 

“Note” means the promissory note of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Advances, together with all amendments, consolidations, modifications, renewals and supplements thereto.

 

“Notice of Borrowing” has the meaning set forth in Section 2.02.

 

“Obligations” means the collective reference to all indebtedness, obligations and liabilities to the Bank existing on the date of this Agreement or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, of the Loan Parties under this Agreement, any Letter of Credit Agreement or any other Loan Document.

 

“Officer’s Certificate” has the meaning set forth in Section 3.01(f).

 

“Original Credit Agreement” means that certain Sixth Amended and Restated Credit Agreement, dated as of June 15, 2020, between the Borrower, the Guarantors and the Bank. This Agreement amends, restates and replaces the Original Credit Agreement.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

 

“Person” means an individual, a corporation, a limited liability company, a partnership (including without limitation, a joint venture), an unincorporated association, a trust or any other entity or organization, including, but not limited to, a government or political subdivision or an agency or instrumentality thereof.

 

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“Plan” means at any time an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is either (i) maintained by a member of the Controlled Group for employees of any member of the Controlled Group or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding 5 plan years made contributions.

 

“Properties” means all real property owned, leased or otherwise used or occupied by a Loan Party or any Subsidiary of a Loan Party, wherever located.

 

“Quarterly Payment Date” means March 31, June 30, September 30 and December 31 of each year.

 

“Redeemable Preferred Stock” of any Person means any preferred stock issued by such Person which is at any time prior to the Termination Date either (i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or (ii) redeemable at the option of the holder thereof.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the managers, administrators, trustees, partners, directors, officers, employees, agents, advisors or other representatives of such Person and such Person’s Affiliates.

 

“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.

 

“Rent Expense” means, for any period, (i) operating lease expense of the Borrower and its Consolidated Subsidiaries on a consolidated basis as determined in accordance with GAAP minus (ii) income from subleases of the Borrower and its Consolidated Subsidiaries on a consolidated basis determined in accordance with GAAP.

 

“Restatement Effective Date” shall have the meaning provided in Section 3.01.

 

“SOFR” means a rate per annum equal to the secured overnight financing rate as administered by the SOFR Administrator.

 

“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

 

“SOFR Borrowing” means a Loan or a Borrowing the interest rate on which is determined by reference to Term SOFR.

 

“SOFR Loan” means an Advance that bears interest at a rate based on Adjusted Term SOFR, other than pursuant to clause (iii) of the definition of “Base Rate”.

 

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“Stockholders’ Equity” means, at any time, the shareholders’ equity of the Borrower and its Consolidated Subsidiaries, as set forth or reflected on the most recent consolidated balance sheet of the Borrower and its Consolidated Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable Preferred Stock of the Borrower or any of its Consolidated Subsidiaries. Shareholders’ equity generally would include, but not be limited to (i) the par or stated value of all outstanding Capital Stock, (ii) capital surplus, (iii) retained earnings, and (iv) various deductions such as (A) purchases of treasury stock, (B) valuation allowances, (C) receivables due from an employee stock ownership plan, (D) employee stock ownership plan debt guarantees, and (E) translation adjustments for foreign currency transactions.

 

“Subsidiary” means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Borrower.

 

“Taxes” has the meaning set forth in Section 2.13(c).

 

“Termination Date” means January 27, 2025.

 

“Term SOFR” means,

 

(a)    for any calculation with respect to a SOFR Loan, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, that if as of 5:00 p.m. on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day;

 

(b)   for any calculation with respect to a Base Rate Loan on any day, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “Base Rate Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day, as such rate is published by the Term SOFR Administrator; provided that if as of 5:00 p.m. on any Base Rate Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Base Rate Term SOFR Determination Day;

 

provided, that if Term SOFR determined as provided above (including pursuant to the proviso under clause (a) or (b) above) shall ever be less than the Floor, then Term SOFR shall be deemed to be the Floor.

 

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“Term SOFR Adjustment” means, for any calculation for a SOFR Loan based on Term SOFR, a percentage equal to 0.10% per annum.

 

“Term SOFR Administrator” means the CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Bank in its reasonable discretion).

 

“Term SOFR Reference Rate” means the rate per annum determined by the Bank as the forward-looking term rate based on SOFR.

 

“Third Parties” means all lessees, sublessees, licensees and other users of the Properties, excluding those users of the Properties in the ordinary course of the Borrower’s business and on a temporary basis.

 

“Type”, when used in reference to a Loan or a Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to Adjusted Term SOFR or the Base Rate.

 

“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.

 

“Undrawn Amount” means, with respect to any Letter of Credit, at any time, the maximum amount available to be drawn under such Letter of Credit at such time and “Undrawn Amounts” means, at any time, the sum of all Undrawn Amounts at such time.

 

“Unused Commitment” means at any date, with respect to the Bank, an amount equal to the Commitment less the Used Commitment.

 

“Used Commitment” means at any date, with respect to the Bank, the sum of (A) the aggregate outstanding principal amount of the Advances, (B) the aggregate outstanding principal amount of the Letter of Credit Advances, and (C) the aggregate Undrawn Amounts.

 

“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

 

“Wholly Owned Subsidiary” means any Subsidiary all of the shares of capital stock or other ownership interests of which (except directors’ qualifying shares) are at the time directly or indirectly owned by the Borrower.

 

“Zenith Divestiture” means the sale by the Borrower of all or substantially all of the assets of the Borrower’s Logistics Division during the period January 1, 2022 to and including March 31, 2022 for a purchase price not less than $75,000,000, which sale shall be on such terms and subject to such conditions as are acceptable to the Bank in its reasonable discretion.

 

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SECTION 1.02.    Accounting Terms and Determinations. Unless otherwise specified herein, all terms of an accounting character used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP, applied on a basis consistent (except for changes concurred in by the Borrower’s independent public accountants or otherwise required by a change in GAAP) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Bank, unless with respect to any such change concurred in by the Borrower’s independent public accountants or required by GAAP, in determining compliance with any of the provisions of this Agreement or any of the other Loan Documents: (i) the Borrower shall have objected to determining such compliance on such basis at the time of delivery of such financial statements, or (ii) the Bank shall so object in writing within 30 days after the delivery of such financial statements, in either of which events such calculations shall be made on a basis consistent with those used in the preparation of the latest financial statements as to which such objection shall not have been made (which, if objection is made in respect of the first financial statements delivered under Section 5.01 hereof, shall mean the financial statements referred to in Section 4.04).

 

SECTION 1.03.    Use of Defined Terms. All terms defined in this Agreement shall have the same meanings when used in any of the other Loan Documents, unless otherwise defined therein or unless the context shall otherwise require.

 

SECTION 1.04.    Terminology. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural and the plural shall include the singular. Titles of Articles and Sections in this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement.

 

SECTION 1.05.    References. Unless otherwise indicated, references in this Agreement to “Articles”, “Exhibits”, “Schedules”, and “Sections” are references to articles, exhibits, schedules and sections hereof.

 

SECTION 1.06.    Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its equity interests at such time.

 

SECTION 1.07.    Rates. The Bank does not warrant or accept responsibility for, and shall not have any liability with respect to (a) the continuation of, administration of, submission of, calculation of or any other matter related to the Base Rate, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or any component definition thereof or rates referred to in the definition thereof, or any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes. The Bank and its affiliates or other related entities may engage in transactions that affect the calculation of the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Bank may select information sources or services in its reasonable discretion to ascertain the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, or any other Benchmark, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

 

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SECTION 1.08.    Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

 

SECTION 1.09.    Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the amount of such Letter of Credit available to be drawn at such time; provided that with respect to any Letter of Credit that, by its terms, provides for one or more automatic increases in the available amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum amount is available to be drawn at such time.

 

ARTICLE II

THE CREDITS

 

SECTION 2.01.    Commitment to Make Advances. The Bank agrees, on the terms and conditions set forth herein, to make Advances to the Borrower from time to time before the Termination Date; provided that, immediately after each such Advance is made, the aggregate outstanding principal amount of all Advances by the Bank together with the aggregate outstanding principal amount of all Letter of Credit Advances and Undrawn Amounts shall not exceed the amount of the Commitment. The aggregate principal amount of each SOFR Borrowing shall not be less than $1,000,000 or a larger multiple of $500,000, and, except as otherwise provided in an ACL Agreement, the aggregate principal amount of each Base Rate Borrowing shall not be less than $1,000,000 or a larger multiple of $100,000 (except that any such Borrowing may be in the aggregate amount of the Unused Commitment). Each Advance under an ACL Agreement shall be deemed to be a Base Rate Advance. Within the foregoing limits, the Borrower may borrow under this Section, repay or, to the extent permitted by Section 2.11, prepay Advances and reborrow under this Section at any time before the Termination Date.

 

SECTION 2.02.    Method of Borrowing Advances. Except as otherwise provided in an ACL Agreement, the Borrower shall give the Bank notice in the form attached hereto as Exhibit B-1 (a “Notice of Borrowing”) (x) prior to 11:00 A.M. (Charlotte, North Carolina time) one (1) Domestic Business Day prior to the requested date of each Base Rate Borrowing and (y) prior to 11:00 A.M. (Charlotte, North Carolina time) three (3) U.S. Securities Business Days prior to the requested date of each SOFR Borrowing. Each Notice of Borrowing shall be irrevocable and shall specify (i) the aggregate principal amount of such Borrowing, (ii) the date of such Borrowing (which shall be a Domestic Business Day) the Type of such Loan comprising such Borrowing and (iv) in the case of a SOFR Borrowing, the duration of the initial Interest Period applicable thereto (which shall be one (1) month and otherwise subject to the provisions of the definition of Interest Period). At no time shall the total number of SOFR Borrowings outstanding at any time exceed one (1).

 

(b)    [Intentionally Omitted].

 

(c)    Unless the Bank determines that any applicable condition specified in Article III has not been satisfied, not later than 1:00 P.M. (Charlotte, North Carolina time) on the date of each Borrowing, the Bank shall make available such Borrowing, in Federal or other funds immediately available in Charlotte, North Carolina, to the Borrower at the Bank’s aforesaid address.

 

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SECTION 2.03.    Letters of Credit.

 

(a)    The Bank may, from time to time upon request of the Borrower, in its sole discretion issue Letters of Credit for the account of the Borrower, subject to satisfaction of the conditions referenced in Section 3.03.

 

(b)    Each Letter of Credit shall be subject to the provisions of this Agreement and to the provisions set forth in the Letter of Credit Agreement executed by the Borrower in connection with the issuance of such Letter of Credit. The Borrower agrees to promptly perform and comply with the terms and conditions of each Letter of Credit Agreement.

 

(c)    The payment by the Bank of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement a Letter of Credit Advance in the amount of such draft.

 

(d)    [Intentionally Omitted].

 

(e)    As of the Restatement Effective Date, the existing Letters of Credit are set forth on Schedule 2.03 attached hereto.

 

(f)    [Intentionally Omitted].

 

(g)    The Borrower shall pay to the Bank on the earlier of demand and the Termination Date the outstanding principal amount of such Letter of Credit Advance.

 

(h)    The Bank will notify the Borrower promptly of the presentment for payment of any Letter of Credit (on the date of presentment, if possible, and otherwise on the next Domestic Business Day, it being agreed that such notice may be made by phone), together with notice of the date such payment shall be made.

 

SECTION 2.04.    Note. The Advances of the Bank shall be evidenced by a single Note payable to the order of the Bank in an amount equal to the original principal amount of the Commitment.

 

(b)    [Intentionally Omitted].

 

(c)    The Bank shall record, and prior to any transfer of its Note shall endorse on the schedule forming a part thereof appropriate notations to evidence, the date, amount and maturity of, and effective interest rate for, each Advance made by it, the date and amount of each payment of principal made by the Borrower with respect thereto and such schedule shall constitute rebuttable presumptive evidence of the principal amount owing and unpaid on the Note; provided that the failure of the Bank to make, or any error in making, any such recordation or endorsement shall not affect the obligation of the Borrower hereunder or under the Note or the ability of the Bank to assign the Note. The Bank is hereby irrevocably authorized by the Borrower so to endorse the Note and to attach to and make a part of the Note a continuation of any such schedule as and when required.

 

SECTION 2.05.    Maturity of Loans. Except with respect to any Advance made pursuant to an ACL Agreement (which Advance shall be repaid in accordance with such ACL Agreement), each Advance included in any Borrowing shall mature, and the principal amount thereof shall be due and payable, subject to Section 6.01, on the Termination Date.

 

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SECTION 2.06.    Interest Elections and Rates. Except with respect to any Advance made pursuant to an ACL Agreement (which Advance shall be deemed to be a Base Rate Advance), each Borrowing initially shall be of the Type specified in the applicable Notice of Borrowing. Thereafter, the Borrower may elect to convert such Borrowing into a different Type or to continue such Borrowing, all as provided in this Section.

 

(b)    To make an election pursuant to this Section, the Borrower shall give the Bank written notice (or telephonic notice promptly confirmed in writing) of each Borrowing that is to be converted or continued, as the case may be, substantially in the form of Exhibit B-2 (a “Notice of Conversion/Continuation”) (x) prior to 10:00 a.m. one (1) Business Day prior to the requested date of a conversion into a Base Rate Borrowing and (y) prior to 11:00 a.m. three (3) U.S. Government Securities Business Days prior to a continuation of or conversion into a SOFR Borrowing. Each such Notice of Conversion/Continuation shall be irrevocable and shall specify (i) the Borrowing to which such Notice of Conversion/Continuation applies and, if different options are being elected with respect to different portions thereof, the portions thereof that are to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing), (ii) the effective date of the election made pursuant to such Notice of Conversion/Continuation, which shall be a Domestic Business Day, (iii) whether the resulting Borrowing is to be a Base Rate Borrowing or a SOFR Borrowing, and (iv) if the resulting Borrowing is to be a SOFR Borrowing, the Interest Period applicable thereto after giving effect to such election, which shall be for a period of one (1) month and otherwise as contemplated by the definition of “Interest Period”. If any such Notice of Conversion/Continuation requests a SOFR Borrowing but does not specify an Interest Period, the Borrower shall be deemed to have selected a SOFR Borrowing based on Adjusted Term SOFR for an Interest Period of one (1) month. The principal amount of any resulting Borrowing shall satisfy the minimum borrowing amount for SOFR Borrowings and Base Rate Borrowings set forth in Section 2.02.

 

(c)    If, on the expiration of any Interest Period in respect of any SOFR Borrowing, the Borrower shall have failed to deliver a Notice of Conversion/Continuation, then, unless such Borrowing is repaid as provided herein, the Borrower shall be deemed to have elected to convert such Borrowing to a SOFR Borrowing based on Adjusted Term SOFR for an Interest Period of one (1) month. No Borrowing may be converted into, or continued as, a SOFR Borrowing if a Default or an Event of Default exists, unless the Bank shall have otherwise consented in writing. No conversion of any SOFR Loan shall be permitted except on the last day of the Interest Period in respect thereof.

 

(d)    During each Interest Period in which the Loan is a Base Rate Loan, such Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day during the applicable Interest Period, at a rate per annum equal to the Base Rate for such day plus the Applicable Margin. Any overdue principal of and, to the extent permitted by applicable law, overdue interest on any Base Rate Loan shall bear interest, payable on demand, for each day until paid in full at a rate per annum equal to the Default Rate.

 

(e)     During each Interest Period in which the Loan is a SOFR Loan, such SOFR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of: (1) the Applicable Margin, plus (2) Adjusted Term SOFR for such Interest Period. Any overdue principal of and, to the extent permitted by applicable law, overdue interest on any SOFR Loan shall bear interest, payable on demand, for each day until paid in full at a rate per annum equal to the Default Rate.

 

(f)     Interest on the principal amount of all Loans shall accrue from and including the date such Loans are made to but excluding the date of any repayment thereof. Interest on all outstanding Base Rate Loans shall be payable monthly in arrears on the last day of each calendar month and on the Termination Date. Interest on all outstanding SOFR Loans shall be payable on the last day of each Interest Period applicable thereto and on the Termination Date. Interest on any Loan which is converted into a Loan of another Type or which is repaid or prepaid shall be payable on the date of such conversion or on the date of any such repayment or prepayment (on the amount repaid or prepaid) thereof. Interest on all Loans bearing interest at the Default Rate shall be payable on demand.

 

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(g)     Each Letter of Credit Advance shall bear interest on the outstanding principal amount thereof, payable on demand, for each day from the date such Letter of Credit Advance is made until paid in full at a rate per annum equal to the Default Rate.

 

(h)     The Bank shall determine each interest rate applicable to the Loan hereunder. The Bank shall give prompt notice to the Borrower by telecopy of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error.

 

(i)     After the occurrence and during the continuance of a Default, the principal amount of the Loans (and, to the extent permitted by applicable law, all accrued interest thereon) may, at the election of the Bank, bear interest at the Default Rate; provided, however, that automatically any overdue principal of and, to the extent permitted by law, overdue interest on the Loan shall bear interest payable on demand, for each day until paid, at a rate per annum equal to the Default Rate.

 

(j)     In connection with the use or administration of Term SOFR, the Bank will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document. The Bank will promptly notify the Borrower of the effectiveness of any Conforming Changes in connection with the use or administration of Term SOFR.

 

SECTION 2.07.    Inability to Determine Interest Rates; Benchmark Replacement Setting.

 

(a)    Inability to Determine SOFR. Subject to paragraphs (b) through and (f) below, if, prior to the commencement of any Interest Period for any SOFR Borrowing:

 

(i)    the Bank shall have determined (which determination shall be conclusive absent manifest error) that “Adjusted Term SOFR” cannot be determined pursuant to the definition thereof, or

 

(ii)    the Bank shall have determined that Adjusted Term SOFR for such Interest Period will not adequately and fairly reflect the cost to the Bank of making, funding or maintaining the SOFR Loans for such Interest Period,

 

then the Bank shall give written notice thereof (or telephonic notice, promptly confirmed in writing) to the Borrower as soon as practicable thereafter.

 

Upon notice thereof by the Bank to the Borrower, any obligation of the Bank to make SOFR Loans, and any right of the Borrower to continue SOFR Loans or to convert Base Rate Loans to SOFR Loans, shall be suspended (to the extent of the affected SOFR Loans or affected Interest Periods) until the Bank revokes such notice. Upon receipt of such notice, (i) the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of SOFR Loans (to the extent of the affected SOFR Loans or affected Interest Periods) or, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to Base Rate Loans in the amount specified therein and (ii) any outstanding affected SOFR Loans will be deemed to have been converted into Base Rate Loans at the end of the applicable Interest Period. Upon any such conversion, the Borrower shall also pay accrued interest on the amount so converted, together with any additional amounts required pursuant to Section 7.02.

 

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(b)    Benchmark Replacement.

 

(i)    Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (a) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (b) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. on the fifth (5th) Domestic Business Day after the date notice of such Benchmark Replacement is provided to the Bank without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document.

 

(ii)    [Intentionally Omitted].

 

(c)    Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Bank will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.

 

(d)    Notices; Standards for Decisions and Determinations. The Bank will promptly notify the Borrower of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement. The Bank will promptly notify the Borrower of the removal or reinstatement of any tenor of a Benchmark pursuant to Section 2.07(e). Any determination, decision or election that may be made by the Bank pursuant to this Section 2.07, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.07.

 

(e)    Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including the Term SOFR Reference Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Bank in its reasonable discretion or (B) the administrator of such Benchmark or the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will be not be representative or in compliance with or aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks, then the Bank may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will not be representative or in compliance with or aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks for a Benchmark (including a Benchmark Replacement), then the Bank may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.

 

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(f)    Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending request for a SOFR Borrowing of, conversion to or continuation of SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to Base Rate Loans. During a Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate.

 

SECTION 2.08.    Fees. [Intentionally Omitted].

 

(b)    The Borrower shall pay to the Bank, with respect to each Letter of Credit, a letter of credit fee (the “Letter of Credit Fee”) determined by the Bank in its sole and absolute discretion in an amount not less than $350.00 and not greater than one percent (1.0%) of the face amount of the Letter of Credit. Such Letter of Credit Fee shall be payable at the time each Letter of Credit is issued or renewed by the Bank.

 

(c)    The Borrower shall pay to the Bank an unused commitment fee equal to the product of: (i) the aggregate of the daily average amounts of the Unused Commitment times (ii) a per annum percentage equal to 0.25%. Such unused commitment fee shall accrue from and including January 1, 2022 to and including the Termination Date. Unused commitment fees shall be payable quarterly in arrears on each Quarterly Payment Date and on the Termination Date; provided, that should the Commitment be terminated at any time prior to the Termination Date for any reason, the entire accrued and unpaid fee shall be paid on the date of such termination.

 

(d)         [Intentionally Omitted].

 

SECTION 2.09.    Late Charge. In the event that the Borrower fails to pay any installment of interest or the principal of the Loan within ten (10) days after the due date therefor, the Borrower shall pay to the Bank without demand a late charge equal to five percent (5%) of the amount of the scheduled payment. The imposition and payment of any late charge shall not constitute a waiver of the Bank’s rights with respect to an Event of Default resulting from such late payment.

 

SECTION 2.10.    Termination of Commitment. The Commitment shall terminate on the Termination Date and any Advances and if demand had not been earlier made Letter of Credit Advances then outstanding (together with accrued interest thereon) shall be due and payable on such date.

 

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SECTION 2.11.    Optional Prepayments. The Borrower may, subject to the terms of any applicable ACL Agreement, prepay the Loan in whole at any time, or from time to time in part in amounts aggregating at least $10,000.00, or any larger multiple of $1,000.00, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay the Advances.

 

SECTION 2.12.    Mandatory Prepayments. On the date on which the Commitment is terminated pursuant to Section 2.10, the Borrower shall repay or prepay such principal amount of the outstanding Advances (together with interest accrued thereon and any amounts due under Article VII) as may be necessary so that after such payment the aggregate unpaid principal amount of the Advances, together with the aggregate principal amount of all Letter of Credit Advances and Undrawn Amounts does not exceed the aggregate amount of the Commitment as then reduced. Each such payment or prepayment shall be applied to repay or prepay the Advances.

 

(b)    In the event that the aggregate principal amount of all Advances, together with the aggregate principal amount of the Letter of Credit Advances and Undrawn Amounts at any one time outstanding shall at any time exceed the aggregate amount of the Commitment at such time, the Borrower shall immediately repay so much of the Advances as is necessary in order that the aggregate principal amount of the Advances thereafter outstanding, together with the aggregate principal amount of the Letter of Credit Advances and Undrawn Amounts shall not exceed the aggregate amount of the Commitment at such time.

 

SECTION 2.13.    General Provisions as to Payments. The Borrower shall make each payment of principal of, and interest on, the Loan and of fees hereunder, not later than 11:00 A.M. (Charlotte, North Carolina time) on the date when due, in Federal or other funds immediately available in Charlotte, North Carolina, to the Bank at its address referred to in Section 8.01.

 

(b)    Whenever any payment of principal of, or interest on, the Advances or of fees shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time.

 

(c)    All payments of principal, interest and fees and all other amounts to be made by the Borrower pursuant to this Agreement with respect to any Advance or fee relating thereto shall be paid without deduction for, and free from, any tax, imposts, levies, duties, deductions, or withholdings of any nature now or at any time hereafter imposed by any governmental authority or by any taxing authority thereof or therein (all such non-excluded taxes, imposts, levies, duties, deductions or withholdings of any nature being “Taxes”). In the event that the Borrower is required by applicable law to make any such withholding or deduction of Taxes with respect to any Advance or fee or other amount, the Borrower shall pay such deduction or withholding to the applicable taxing authority, shall promptly furnish to the Bank in respect of which such deduction or withholding is made all receipts and other documents evidencing such payment and shall pay to the Bank additional amounts as may be necessary in order that the amount received by the Bank after the required withholding or other payment shall equal the amount the Bank would have received had no such withholding or other payment been made. If no withholding or deduction of Taxes are payable in respect of any Advance or fee relating thereto, the Borrower shall furnish the Bank, at the Bank’s request, a certificate from each applicable taxing authority or an opinion of counsel acceptable to the Bank, in either case stating that such payments are exempt from or not subject to withholding or deduction of Taxes. If the Borrower fails to provide such original or certified copy of a receipt evidencing payment of Taxes or certificate(s) or opinion of counsel of exemption, the Borrower hereby agrees to compensate the Bank for, and indemnify them with respect to, the tax consequences of the Borrower’s failure to provide evidence of tax payments or tax exemption.

 

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In the event the Bank receives a refund of any Taxes paid by the Borrower pursuant to this Section 2.13, it will pay to the Borrower the amount of such refund promptly upon receipt thereof; provided, however, if at any time thereafter it is required to return such refund, the Borrower shall promptly repay to it the amount of such refund.

 

SECTION 2.14.    Computation of Interest and Fees. Interest on the Loans shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). Facility fees, letter of credit fees and any other fees (excluding Facing Fees) payable hereunder shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day).

 

SECTION 2.15.    [Intentionally Omitted].

 

SECTION 2.16.    [Intentionally Omitted].

 

SECTION 2.17.    [Intentionally Omitted]

 

SECTION 2.18.    [Intentionally Omitted]

 

SECTION 2.19.    Illegality. If any Change in Law shall make it unlawful or impossible for the Bank to perform any of its obligations hereunder, to make, maintain or fund any SOFR Loan or to or to determine or charge interest rates based upon SOFR, the Term SOFR Reference Rate or Term SOFR, the Bank shall promptly give notice thereof to the Borrower, whereupon until the Bank notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the obligation of the Bank to make SOFR Loans, or to continue or convert outstanding Loans as or into SOFR Loans, shall be suspended. In the case of the making of a SOFR Borrowing, the Loan shall be made as a Base Rate Loan as part of the same Borrowing for the same Interest Period and, if the affected SOFR Loan is then outstanding, such Loan shall be converted to a Base Rate Loan either (i) on the last day of the then current Interest Period applicable to such SOFR Loan if the Bank may lawfully continue to maintain such Loan to such date or (ii) immediately if the Bank shall determine that it may not lawfully continue to maintain such SOFR Loan to such date. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted, together with any additional amounts required pursuant to Section 7.02.

 

ARTICLE III

CONDITIONS TO BORROWINGS

 

SECTION 3.01.    Effectiveness of Agreement. This Agreement shall become effective on the date (the “Restatement Effective Date”) on which the Bank receives the following documents and evidence of satisfaction of the following conditions:

 

(a)    receipt by the Bank from each of the parties hereto of a duly executed counterpart of this Agreement signed by such party;

 

(b)    receipt by the Bank of a duly executed Note complying with the provisions of Section 2.04;

 

(c)    [Intentionally Omitted];

 

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(d)    Receipt by the Bank of (i) the consolidated balance sheets of the Borrower and its Consolidated Subsidiaries as of November 27, 2021 and November 28, 2020, (ii) the consolidated statements of operations of the Borrower and its Consolidated Subsidiaries for the years ended November 27, 2021, November 28, 2020 and November 30, 2019, (iii) the consolidated statements of comprehensive income (loss) of the Borrower and its Consolidated Subsidiaries for the years ended November 27, 2021, November 28, 2020 and November 30, 2019, (iv) the consolidated statements of cash flow of the Borrower and its Consolidated Subsidiaries for the years ended November 27, 2021, November 28, 2020 and November 30, 2019 and (v) the consolidated statements of stockholders’ equity of the Borrower and its Consolidated Subsidiaries for the years ended November 27, 2021, November 28, 2020 and November 30, 2019, which fairly present, in conformity with GAAP, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such period stated;

 

(e)    receipt by the Bank of a certificate (the “Closing Certificate”), dated the date of the Restatement Effective Date, substantially in the form of Exhibit C hereto, signed by a principal financial officer of each Loan Party, to the effect that (i) no Default has occurred and is continuing on the Restatement Effective Date and (ii) the representations and warranties of the Loan Parties contained in Article IV are true on and as of the date of the Restatement Effective Date;

 

(f)    receipt by the Bank of all documents which the Bank may reasonably request relating to the existence of each Loan Party, the authority for and the validity of this Agreement, the Note and the other Loan Documents, and any other matters relevant hereto, all in form and substance satisfactory to the Bank, including without limitation a certificate of incumbency of each Loan Party (the “Officer’s Certificate”), signed by the Secretary or an Assistant Secretary of the respective Loan Party, substantially in the form of Exhibit D hereto, certifying as to the names, true signatures and incumbency of the officer or officers of the respective Loan Party, authorized to execute and deliver the Loan Documents, and certified copies of the following items: (i) the Loan Party’s Certificate of Incorporation or Articles of Organization, as the case may be, (ii) the Loan Party’s Bylaws or Operating Agreement, as the case may be, (iii) a certificate of the Secretary of State of such Loan Party’s State of organization as to the good standing of such Loan Party, and (iv) the action taken by the Board of Directors of the Loan Party authorizing the Loan Party’s execution, delivery and performance of this Agreement, the Note and the other Loan Documents to which the Loan Party is a party;

 

(g)    [Intentionally Omitted];

 

(h)    [Intentionally Omitted];

 

(i)    the Bank shall have received the results of a search of the Uniform Commercial Code filings (or equivalent filings) made with respect to the Borrower and Guarantors in the states (or other jurisdictions) in which the chief executive office of each such person is located, any offices of such persons in which records have been kept relating to the Borrower’s or any Guarantor’s personal property assets, together with copies of the financing statements (or similar documents) disclosed by such search, and accompanied by evidence satisfactory to the Bank that the Liens indicated in any such financing statement (or similar document) have been released;

 

(j)    receipt and approval by the Bank of the insurance required under this Agreement; and

 

(k)    such other documents or items as the Bank or its counsel may reasonably request.

 

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SECTION 3.02.    Conditions to All Borrowings. The obligation of the Bank to make an Advance on the occasion of each Borrowing is subject to the satisfaction of the following conditions:

 

(a)    receipt by the Bank of a Notice of Borrowing as required by Section 2.02;

 

(b)    the fact that, immediately before and after such Borrowing, no Default shall have occurred and be continuing;

 

(c)    the fact that the representations and warranties of the Loan Parties contained in Article IV of this Agreement shall be true, in all material respects, on and as of the date of such Borrowing, except to the extent explicitly relating to a specified date; and

 

(d)    the fact that, immediately after such Borrowing, the Used Commitment will not exceed the Commitment.

 

Each Borrowing hereunder shall be deemed to be a representation and warranty by the Loan Parties on the date of such Borrowing as to the truth and accuracy of the facts specified in clauses (b), (c) and (d) of this Section.

 

SECTION 3.03.    Conditions to Issuance of Letters of Credit. The issuance of each Letter of Credit shall be subject to satisfaction of the conditions set forth in the related Letter of Credit Agreement and satisfaction of the following conditions:

 

(a)    the fact that, immediately before and after the issuance of such Letter of Credit, no Default shall have occurred and be continuing;

 

(b)    the fact that the representations and warranties of the Loan Parties contained in Article IV of this Agreement shall be true, in all material respects, on and as of the date of issuance of such Letter of Credit, except to the extent explicitly relating to a specified date;

 

(c)    the fact that, immediately after the issuance of such Letter of Credit, the Used Commitment will not exceed the Commitment; and

 

(d)    no Letter of Credit shall have an expiry date or termination date on or after the earlier of: (1) the date twelve months after the date of the issuance of such Letter of Credit; and (2) the date two Domestic Business Days prior to the Termination Date; provided that if the Borrower requests that the Bank issue a Letter of Credit with an expiry date or termination date after the date two Domestic Business Days prior to the Termination Date and the Bank agrees in its sole and absolute discretion to issue such Letter of Credit, the Borrower shall, not later than twenty (20) Domestic Business Days prior to the Termination Date, (1) secure such Letter of Credit with collateral of a type and having a value acceptable to, and as determined by, the Bank in its sole and absolute discretion and (2) execute and deliver to the Bank all such agreements, documents, instruments, certificates, opinions and other papers as the Bank shall require in its sole and absolute discretion as are necessary for the Bank to obtain a first priority lien on and security interest in such collateral.

 

SECTION 3.04.    [Intentionally Omitted].

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

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The Loan Parties represent and warrant that:

 

SECTION 4.01.    Existence and Power. Each Loan Party is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, as the case may be, is duly qualified to transact business in every jurisdiction where, by the nature of its business, such qualification is necessary, and has all organizational powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted.

 

SECTION 4.02.    Organizational and Governmental Authorization; No Contravention. The execution, delivery and performance by each Loan Party of this Agreement, the Note and the other Loan Documents (i) are within each Loan Party’s organizational powers, (ii) have been duly authorized by all necessary organizational action, (iii) require no action by or in respect of, or filing with, any governmental body, agency or official, (iv) do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation, articles of organization, operating agreement or by-laws of each Loan Party or of any agreement, judgment, injunction, order, decree or other instrument binding upon each Loan Party or any of its Subsidiaries, and (v) do not result in the creation or imposition of any Lien on any asset of the Loan Parties or any of their respective Subsidiaries except as created by Section 8.04 hereof.

 

SECTION 4.03.    Binding Effect. This Agreement constitutes a valid and binding agreement of the Loan Parties enforceable in accordance with its terms, and the Note and the other Loan Documents, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of the Loan Parties enforceable in accordance with their respective terms, provided that the enforceability hereof and thereof is subject in each case to general principles of equity and to bankruptcy, insolvency and similar laws affecting the enforcement of creditors’ rights generally.

 

SECTION 4.04.    Financial Information.  The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of November 27, 2021 and the related consolidated statements of income, shareholders’ equity and cash flows for the Fiscal Year then ended, reported on by Ernst & Young, LLP, copies of which have been delivered to the Bank, fairly present, in conformity with GAAP, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such period stated.

 

(b)    Since November 27, 2021, there has been no event, act, condition or occurrence having a Material Adverse Effect.

 

SECTION 4.05.    Litigation. There is no action, suit or proceeding pending, or to the knowledge of the Loan Parties threatened, against or affecting the Loan Parties or any of their respective Subsidiaries before any court or arbitrator or any governmental body, agency or official which could have a Material Adverse Effect or which in any manner draws into question the validity or enforceability of, or could impair the ability of the Loan Parties to perform their respective obligations under, this Agreement, the Note or any of the other Loan Documents.

 

SECTION 4.06.    Compliance with ERISA. The Loan Parties and each member of the Controlled Group have fulfilled their obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and have not incurred any liability to the PBGC or a Plan under Title IV of ERISA.

 

(b)    Neither the Loan Parties nor any member of the Controlled Group is or ever has been obligated to contribute to any Multiemployer Plan.

 

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SECTION 4.07.    Taxes. There have been filed on behalf of the Loan Parties and their respective Subsidiaries all Federal, state and local income, excise, property and other tax returns which are required to be filed by them and all taxes due pursuant to such returns or pursuant to any assessment received by or on behalf of the Loan Parties or any Subsidiary have been paid. The charges, accruals and reserves on the books of the Loan Parties and their respective Subsidiaries in respect of taxes or other governmental charges are, in the opinion of the Loan Parties, adequate.

 

SECTION 4.08.    Subsidiaries. Each of the Loan Party’s Subsidiaries is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, as the case may be, is duly qualified to transact business in every jurisdiction where, by the nature of its business, such qualification is necessary, and has all organizational powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. No Loan Party has any Subsidiaries except those Subsidiaries listed on Schedule 4.08, which accurately sets forth each such Subsidiary’s complete name and jurisdiction of incorporation.

 

SECTION 4.09.    Not an Investment Company. No Loan Party nor any Subsidiary of a Loan Party is an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

SECTION 4.10.    [Intentionally Omitted].

 

SECTION 4.11.    Ownership of Property; Liens. Each of the Loan Parties and their respective Subsidiaries has title to its properties sufficient for the conduct of its business, and none of such property is subject to any Lien except as permitted in Section 5.14.

 

SECTION 4.12.    No Default. No Loan Party nor any of their respective Subsidiaries is in default under or with respect to any agreement, instrument or undertaking to which it is a party or by which it or any of its property is bound which could have or cause a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.

 

SECTION 4.13.    Full Disclosure. All information heretofore furnished by any Loan Party to the Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by any Loan Party to the Bank will be, true, accurate and complete in every material respect or based on reasonable estimates on the date as of which such information is stated or certified. Each Loan Party has disclosed to the Bank in writing any and all facts which could have or cause a Material Adverse Effect.

 

SECTION 4.14.    Environmental Matters. No Loan Party nor any Subsidiary of a Loan Party is subject to any Environmental Liability which could have or cause a Material Adverse Effect and no Loan Party nor any Subsidiary of a Loan Party has been designated as a potentially responsible party under CERCLA or under any state statute similar to CERCLA which could have or cause a Material Adverse Effect. None of the Properties has been identified on any current or proposed (i) National Priorities List under 40 C.F.R. § 300, (ii) CERCLIS list or (iii) any list arising from a state statute similar to CERCLA.

 

(b)    No Hazardous Materials have been or are being used, produced, manufactured, processed, treated, recycled, generated, stored, disposed of, managed or otherwise handled at, or shipped or transported to or from the Properties or are otherwise present at, on, in or under the Properties, or, to the best of the knowledge of the Loan Parties, at or from any adjacent site or facility, except for Hazardous Materials, such as cleaning solvents, pesticides, finishing materials, glues and other materials used, produced, manufactured, processed, treated, recycled, generated, stored, disposed of, and managed or otherwise handled in the ordinary course of business in compliance with all applicable Environmental Requirements.

 

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(c)    The Loan Parties, and each of their respective Subsidiaries and Affiliates, has procured all Environmental Authorizations necessary for the conduct of its business, and is in compliance with all Environmental Requirements in connection with the operation of the Properties and the Loan Party’s, and each of their respective Subsidiary’s and Affiliate’s, respective businesses.

 

SECTION 4.15.    Compliance with Laws. Each Loan Party and each Subsidiary of a Loan Party is in compliance with all applicable laws, including, without limitation, all Environmental Laws, except where any failure to comply with any such laws would not, alone or in the aggregate, have a Material Adverse Effect.

 

SECTION 4.16.    Capital Stock. All Capital Stock, debentures, bonds, notes and all other securities of each Loan Party and their respective Subsidiaries presently issued and outstanding are validly and properly issued in accordance with all applicable laws, including, but not limited to, the “Blue Sky” laws of all applicable states and the federal securities laws. The issued shares of Capital Stock of the Loan Party’s respective Wholly Owned Subsidiaries are owned by the Loan Parties free and clear of any Lien or adverse claim. At least a majority of the issued shares of capital stock of each of the other Subsidiaries of the Loan Parties (other than Wholly Owned Subsidiaries) is owned by the respective Loan Parties free and clear of any Lien or adverse claim.

 

SECTION 4.17.    Margin Stock. No Loan Party nor any of their respective Subsidiaries is engaged principally, or as one of its important activities, in the business of purchasing or carrying any Margin Stock, and no part of the proceeds of any Advance will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, or be used for any purpose which violates, or which is inconsistent with, the provisions of Regulation X.

 

SECTION 4.18.    Insolvency. After giving effect to the execution and delivery of the Loan Documents, the issuance of the Letters of Credit under this Agreement and the making of the Advances under this Agreement, no Loan Party will be “insolvent,” within the meaning of such term as defined in § 101 of Title 11 of the United States Code or Section 2 of the Uniform Fraudulent Transfer Act, or any other applicable state law pertaining to fraudulent transfers, as each may be amended from time to time, or be unable to pay its debts generally as such debts become due, or have an unreasonably small capital to engage in any business or transaction, whether current or contemplated.

 

SECTION 4.19.    [Intentionally Omitted].

 

SECTION 4.20.    Labor Matters. There are no significant strikes, lockouts, slowdowns or other labor disputes against any Loan Party or any Subsidiary of any Loan Party pending or, to the knowledge of any Loan Party, threatened, that could reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. The hours worked by and payment made to employees of the Loan Parties and each Subsidiary of any Loan Party have not been in violation of the Fair Labor Standards Act or any other applicable federal, state or foreign law dealing with such matters, where such violations could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

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SECTION 4.21.    Patents, Trademarks, Etc. To the best of their knowledge, the Loan Parties and each Subsidiary of a Loan Party owns, or is licensed to use, all patents, trademarks, trade names, copyrights, technology, know-how and processes, service marks and rights with respect to the foregoing that are (a) used in or necessary for the conduct of their respective businesses as currently conducted and (b) material to the businesses, assets, operations, properties, prospects or condition (financial or otherwise) of the Loan Parties and their respective Subsidiaries taken as a whole. To the best of their knowledge, the use of such patents, trademarks, trade names, copyrights, technology, know-how, processes and rights with respect to the foregoing by the Loan Parties and their respective Subsidiaries, does not infringe on the rights of any Person. The Loan Parties have delivered to the Bank a schedule setting forth all registered patents, trademarks and copyrights owned by, or licensed to, the Loan Parties.

 

ARTICLE V

COVENANTS

 

The Loan Parties agree, jointly and severally, that, so long as the Bank has any Commitment hereunder or any amount payable under the Note or any Letter of Credit Advance remains unpaid:

 

SECTION 5.01.    Information. The Borrower will deliver to the Bank:

 

(a)    as soon as available and in any event within 90 days after the end of each Fiscal Year, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such Fiscal Year and the related consolidated statements of income, shareholders’ equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous fiscal year, all audited by Ernst & Young, LLP or other independent public accountants of nationally recognized standing, with such audit to be free of exceptions and qualifications not acceptable to the Bank;

 

(b)    as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such Fiscal Quarter and the related statement of income and statement of cash flows for such Fiscal Quarter and for the portion of the Fiscal Year ended at the end of such Fiscal Quarter, setting forth in each case in comparative form the figures for the corresponding Fiscal Quarter and the corresponding portion of the previous Fiscal Year, all reviewed by the accountants referenced in (a) above and certified (subject to normal year-end adjustments) as to fairness of presentation, GAAP and consistency by the Chief Financial or Accounting Officer of the Borrower, any of which may be satisfied by providing copies of Borrower’s filed 10-Qs and 10-Ks together with Section 906 certifications;

 

(c)    [Intentionally Omitted];

 

(d)    simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate, substantially in the form of Exhibit E (a “Compliance Certificate”), of the Chief Financial or Accounting Officer of the Borrower (i) setting forth in reasonable detail the calculations required to establish whether the Borrower was in compliance with the requirements of Sections 5.32, 5.37, 5.38 and 5.39 on the date of such financial statements, and (ii) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Loan Parties are taking or propose to take with respect thereto;

 

(e)    [Intentionally Omitted];

 

(f)    within 5 Domestic Business Days after the Borrower becomes aware of the occurrence of any Default, a certificate of the Chief Financial or Accounting Officer of the Borrower setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto;

 

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(g)    promptly upon the mailing thereof to the shareholders of the Borrower generally, copies of all financial statements, reports and proxy statements so mailed;

 

(h)    promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and annual, quarterly or monthly reports which the Borrower shall have filed with the Securities and Exchange Commission;

 

(i)    if and when the Borrower or any member of the Controlled Group (i) gives or is required to give notice to the PBGC of any “reportable event” (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA, a copy of such notice; or (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate or appoint a trustee to administer any Plan, a copy of such notice;

 

(j)    promptly after the Borrower knows of the commencement thereof, notice of any litigation, dispute or proceeding involving a claim against a Loan Party and/or any Subsidiary of a Loan Party for $1,000,000.00 or more in excess of amounts covered in full by applicable insurance;

 

(k)    [Intentionally Omitted];

 

(l)    [Intentionally Omitted];

 

(m)    [Intentionally Omitted];

 

(n)    [Intentionally Omitted];

 

(o)    [Intentionally Omitted]; and

 

(p)    from time to time such additional information regarding the financial position or business of the Borrower and its Subsidiaries as the Bank may reasonably request.

 

SECTION 5.02.    Inspection of Property, Books and Records. The Borrower will (i) keep, and will cause each Subsidiary to keep, proper books of record and account in which full, true and correct entries in conformity with GAAP shall be made of all dealings and transactions in relation to its business and activities; (ii) permit, and will cause each Subsidiary of the Borrower and Guarantors to permit the Bank, or its designee, at the expense of the Borrower and Guarantors, to perform periodic field audits and investigations of the Borrower and the Guarantors; and (iii) permit, and will cause each Subsidiary to permit, with reasonable prior notice which notice shall not be required in the case of an emergency, representatives of the Bank at the Bank’s expense prior to the occurrence of an Event of Default and at the Borrower’s expense after the occurrence of an Event of Default to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants. The Borrower agrees to cooperate and assist in such visits and inspections, in each case at such reasonable times and as often as may reasonably be desired.

 

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SECTION 5.03.    [Intentionally Omitted].

 

SECTION 5.04.    [Intentionally Omitted].

 

SECTION 5.05.    [Intentionally Omitted].

 

SECTION 5.06.    [Intentionally Omitted].

 

SECTION 5.07.    [Intentionally Omitted]

 

SECTION 5.08.    [Intentionally Omitted].

 

SECTION 5.09.    [Intentionally Omitted].

 

SECTION 5.10.    [Intentionally Omitted].

 

SECTION 5.11.    [Intentionally Omitted].

 

SECTION 5.12.    [Intentionally Omitted];

 

SECTION 5.13.    [Intentionally Omitted].

 

SECTION 5.14.    Negative Pledge. No Loan Party nor any Subsidiary of a Loan Party will voluntarily create, assume or suffer to exist any Lien on any of its accounts (as such term is defined in the Uniform Commercial Code as adopted in Virginia), any of its inventory (as such term is defined in the Uniform Commercial Code as adopted in Virginia), or the proceeds thereof, except for Liens securing the Bank created or arising under the Loan Documents.

 

SECTION 5.15.    Maintenance of Existence. Each Loan Party shall, and shall cause each Subsidiary of a Loan Party to, maintain its organizational existence and carry on its business in substantially the same manner and in substantially the same fields as such business is now carried on and maintained; provided that a Subsidiary of a Loan Party may be dissolved with the Bank’s prior written consent if: (1) such Subsidiary is not a Loan Party; and (2) the total assets of such Subsidiary are less than $50,000.

 

SECTION 5.16.    Dissolution. No Loan Party nor any Subsidiary of a Loan Party shall suffer or permit dissolution or liquidation either in whole or in part, except through corporate reorganization to the extent permitted by Section 5.17.

 

SECTION 5.17.    Consolidations, Mergers and Sales of Assets. No Loan Party will, nor will it permit any Subsidiary of a Loan Party to, consolidate or merge with or into, or sell, lease or otherwise transfer all or any substantial part of its assets to, any other Person, or discontinue or eliminate any business line or segment, provided that (a) a Loan Party may merge with another Person if (i) such Person was organized under the laws of the United States of America or one of its states, (ii) the Loan Party is the corporation surviving such merger, (iii) immediately after giving effect to such merger, no Default shall have occurred and be continuing, and (iv) if the Borrower merges with another Loan Party, the Borrower is the corporation surviving such merger, (b) Subsidiaries of a Loan Party (excluding Loan Parties) may merge with one another, (c) a Loan Party (other than the Borrower or an Eligible Guarantor) may transfer all or any part of its assets to another Loan Party, (d) a Loan Party may sell Inventory in the ordinary course of business and for fair value, and (e) the foregoing limitation on the sale, lease or other transfer of assets and on the discontinuation or elimination of a business line or segment shall not (i) prohibit, during any Fiscal Quarter, a transfer of assets or the discontinuance or elimination of a business line or segment (in a single transaction or in a series of related transactions) unless the aggregate assets to be so transferred or utilized in a business line or segment to be so discontinued, when combined with all other assets transferred (excluding assets transferred under Sections 5.17(d)), and all other assets utilized in all other business lines or segments discontinued, during such Fiscal Quarter and the immediately preceding three Fiscal Quarters have a fair market value or book value whichever is greater (determined with respect to each such asset transferred or discontinued) of more than $20,000,000 or (ii) prohibit the Zenith Divesture.

 

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SECTION 5.18.    Use of Proceeds. No portion of the proceeds of the Loan will be used by the Borrower or any Subsidiary (i) in connection with, either directly or indirectly, any tender offer for, or other acquisition of, stock of any corporation with a view towards obtaining control of such other corporation, (ii) directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock, or (iii) for any purpose in violation of any applicable law or regulation. Except as otherwise provided herein, the proceeds of the Loan shall be used for general corporate purposes and working capital.

 

SECTION 5.19.    Compliance with Laws; Payment of Taxes. Each Loan Party will, and will cause each Subsidiary of a Loan Party and each member of the Controlled Group to, comply with applicable laws in all material respects (including but not limited to ERISA), regulations and similar requirements of governmental authorities (including but not limited to PBGC), except where the necessity of such compliance is being contested in good faith through appropriate proceedings diligently pursued. Each Loan Party will, and will cause each Subsidiary of a Loan Party to, pay promptly when due all taxes, assessments, governmental charges, claims for labor, supplies, rent and other obligations which, if unpaid, might become a lien against the property of a Loan Party or any Subsidiary of a Loan Party, except liabilities being contested in good faith by appropriate proceedings diligently pursued and against which, if requested by the Bank, the Borrower shall have set up reserves in accordance with GAAP.

 

SECTION 5.20.    [Intentionally Omitted].

 

SECTION 5.21.    Change in Fiscal Year. Each Loan Party will not change its Fiscal Year without the consent of the Bank.

 

SECTION 5.22.    Maintenance of Property. Each Loan Party shall, and shall cause each Subsidiary of a Loan Party to, maintain all of its properties and assets (excluding assets that are obsolete or no longer useful in such Loan Party’s business) in good condition, repair and working order, ordinary wear and tear excepted.

 

SECTION 5.23.    Environmental Notices. Each Loan Party shall furnish to the Bank prompt written notice of all material Environmental Liabilities, pending, threatened or anticipated Environmental Proceedings, Environmental Notices, Environmental Judgments and Orders, and Environmental Releases at, on, in, under or in any way affecting the Properties or any adjacent property, and all facts, events, or conditions that could lead to any of the foregoing.

 

SECTION 5.24.    Environmental Matters. No Loan Party or any Subsidiary of a Loan Party will, nor will any Loan Party permit any Third Party to, use, produce, manufacture, process, treat, recycle, generate, store, dispose of, manage at, or otherwise handle or ship or transport to or from the Properties any Hazardous Materials except for Hazardous Materials such as cleaning solvents, pesticides, finishing materials, glues, petroleum products, and other similar materials used, produced, manufactured, processed, treated, recycled, generated, stored, disposed, managed or otherwise handled in the ordinary course of business in compliance with all applicable Environmental Requirements.

 

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SECTION 5.25.    Insurance. The Borrower, Guarantors and the Subsidiaries of the Borrower and Guarantors shall maintain insurance with insurance companies satisfactory to the Bank on such of their respective properties and assets, in such amounts and against such risks as is customarily maintained by similar businesses operating in the same vicinity, but in any event to include public liability, worker’s compensation, business interruption, malicious mischief, errors and omissions, loss, damage, flood, windstorm, fire, theft, extended coverage and product liability insurance in amounts satisfactory to the Bank, which insurance shall not be cancelled or altered (or the coverage thereunder reduced or restricted) by the Borrower, Guarantor or any Subsidiary of the Borrower and Guarantors, unless with the prior written consent of the Bank, or by the insurer of the Borrower and Guarantors, unless the Borrower gives at least 30 days advance written notice to the Bank thereof. The Borrower and Guarantors shall deliver to the Bank on the Restatement Effective Date and at such other times as the Bank may request, a detailed list of such insurance then in effect stating the names of the insurance companies, the amounts and rates of insurance, the date of expiration thereof, the properties and risks covered thereby and the insured with respect thereto, and, within 30 days after notice in writing from the Bank, obtain such additional insurance as the Bank may reasonably request. The Borrower and Guarantors will pay all premiums on the insurance referred to herein as and when they become due and shall do all things necessary to maintain the insurance in effect. If the Borrower or any Guarantor shall default in its obligation hereunder to insure their properties and other assets in a manner satisfactory to the Bank, then the Bank shall have the right (but not the obligation) to procure such insurance and to charge the costs of same to the Borrower and Guarantors, which costs shall be added to and become a part of the unpaid principal amount of the Obligations, shall bear interest at the Default Rate, and shall be payable on demand by the Bank.

 

SECTION 5.26.    Environmental Release. Each Loan Party agrees that upon the occurrence of an Environmental Release at or on any of the Properties it will act immediately to investigate the extent of, and to take appropriate remedial action to eliminate, such Environmental Release, whether or not ordered or otherwise directed to do so by any Environmental Authority.

 

SECTION 5.27.    Additional Covenants, Etc

 

. In the event that at any time this Agreement is in effect or the Note or any Letter of Credit Advance remains unpaid any Loan Party shall enter into any agreement, guarantee, indenture or other instrument governing, relating to, providing for commitments to advance or guaranteeing any Financing or to amend any terms and conditions applicable to any Financing, which agreement, guarantee, indenture or other instrument includes covenants, warranties, representations, defaults or events of default (or any other type of restriction which would have the practical effect of any of the foregoing, including, without limitation, any “put” or mandatory prepayment of such debt) or other terms or conditions not substantially as, or in addition to those, provided in this Agreement or any other Loan Document, or more favorable to the lender or other counterparty thereunder than those provided in this Agreement or any other Loan Document, the Loan Party shall promptly so notify the Bank. Thereupon, if the Bank shall request by written notice to the Loan Parties, the Loan Parties and the Bank shall enter into an amendment to this Agreement providing for substantially the same such covenants, warranties, representations, defaults or events of default or other terms or conditions as those provided for in such agreement, guarantee, indenture or other instrument, to the extent required and as may be selected by the Bank, such amendment to remain in effect, unless otherwise specified in writing by the Bank, for the entire duration of the stated term to maturity of such Financing (to and including the date to which the same may be extended at the option of the Loan Party), notwithstanding that such Financing might be earlier terminated by prepayment, refinancing, acceleration or otherwise, provided that if any such agreement, guarantee, indenture or other instrument shall be modified, supplemented, amended or restated so as to modify, amend or eliminate from such agreement, guarantee, indenture or other instrument any such covenant, warranty, representation, default or event of default or other term or condition so made a part of this Agreement, then unless required by the Bank pursuant to this Section, such modification, supplement or amendment shall not operate to modify, amend or eliminate such covenant, warranty, representation, default or event of default or other term or condition as so made a part of this Agreement.

 

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SECTION 5.28.    [Intentionally Omitted].

 

SECTION 5.29.    [Intentionally Omitted].

 

SECTION 5.30.    [Intentionally Omitted].

 

SECTION 5.31.    Subsidiaries, Partnerships and Joint Ventures. No Loan Party shall: (1) create, acquire, form or otherwise permit to exist, any Subsidiary other than Subsidiaries that are Subsidiaries existing on the Restatement Effective Date and described on Schedule 4.08; or (2) become a general partner in any general or limited partnership or joint venture; provided that: (a) so long as Schedule 4.08 is revised within fifteen (15) Domestic Business Days after the date that a Subsidiary is created, acquired or formed, a Loan Party may create, acquire or form a Subsidiary so long as after, and as a result of, giving pro forma effect to such creation, acquisition or formation no Default or Event of Default shall occur or exist; and (b) a Subsidiary of a Loan Party that is a corporation or limited liability company may become a general partner in a general or limited partnership or joint venture so long as the sole assets of such Subsidiary consist of its interest in such partnership or joint venture and after giving pro-forma effect to such action, no Default or Event of Default shall occur or exist.

 

SECTION 5.32.    Additional Debt. No Loan Party or Subsidiary of a Loan Party shall directly or indirectly issue, assume, create, incur or suffer to exist any Debt or the equivalent (or Lease Obligations), except for: (a) Debt owed to the Bank; (b) Lease Obligations entered into in such Loan Party’s normal course of business; and (c) Debt not otherwise permitted under this Section 5.32, the aggregate outstanding principal amount of which shall not, at any time, exceed $1,000,000.

 

SECTION 5.33.    [Intentionally Omitted].

 

SECTION 5.34.    [Intentionally Omitted].

 

SECTION 5.35.    [Intentionally Omitted].

 

SECTION 5.36.    [Intentionally Omitted].

 

SECTION 5.37.    Consolidated Lease Adjusted Leverage to EBITDAR Ratio. The Borrower and its Consolidated Subsidiaries shall not permit the Consolidated Lease Adjusted Leverage to EBITDAR Ratio to exceed 3.00 to 1 as of the Fiscal Quarter ending on February 28, 2022 or as of each Fiscal Quarter ending thereafter.

 

SECTION 5.38.    Consolidated Fixed Charge Coverage Ratio. The Borrower and its Consolidated Subsidiaries shall maintain a Consolidated Fixed Charge Coverage Ratio of not less than 1.40 to 1 as of the end of each Fiscal Quarter ending on February 28, 2022 or as of each Fiscal Quarter ending thereafter.

 

SECTION 5.39.    Minimum Consolidated Tangible Net Worth. Prior to the consummation of the Zenith Divestiture, Consolidated Tangible Net Worth shall at no time be less than $120,000,000. On and after the consummation of the Zenith Divestiture, Consolidated Tangible Net Worth shall at no time be less than $140,000,000.

 

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SECTION 5.40.    Deposit Accounts. The Borrower shall maintain all of its primary deposit accounts, including without limitation its primary operating deposit accounts, with the Bank.

 

ARTICLE VI

DEFAULTS

 

SECTION 6.01.    Events of Default. If one or more of the following events (“Events of Default”) shall have occurred and be continuing:

 

(a)    the Borrower shall fail to pay when due any principal of the Loan (including, without limitation, any Advance) or shall fail to pay any interest on the Loan (including, without limitation, any Advance) within five Domestic Business Days after such interest shall become due, or any Loan Party shall fail to pay any fee or other amount payable hereunder within five Domestic Business Days after such fee or other amount becomes due; or

 

(b)    any Loan Party shall fail to observe or perform any covenant contained in Sections 5.02(ii), 5.14 to 5.18, inclusive, or Sections 5.21, 5.25, 5.32, 5.37, 5.38, 5.39 or 5.40; or

 

(c)    any Loan Party shall fail to observe or perform any covenant or agreement contained or incorporated by reference in this Agreement (other than those covered by clause (a) or (b) above) for thirty days after the earlier of (i) the first day on which any Loan Party has knowledge of such failure or (ii) written notice thereof has been given to the Borrower by the Bank; or

 

(d)    any representation, warranty, certification or statement made or deemed made by the Loan Parties in Article IV of this Agreement or in any financial statement, material certificate or other material document delivered pursuant to this Agreement shall prove to have been incorrect or misleading in any material respect when made (or deemed made); or

 

(e)    any Loan Party or any Subsidiary of a Loan Party shall fail to make any payment in respect of Debt in an aggregate amount outstanding in excess of $1,000,000 (other than the Note or any Letter of Credit Advance) when due or within any applicable grace period; or

 

(f)    any event or condition shall occur which results in the acceleration of the maturity of Debt outstanding of any Loan Party or any Subsidiary of a Loan Party in an aggregate amount in excess of $1,000,000 or the mandatory prepayment or purchase of such Debt by any Loan Party (or its designee) or such Subsidiary of a Loan Party (or its designee) prior to the scheduled maturity thereof, or enables (or, with the giving of notice or lapse of time or both, would enable) the holders of such Debt or any Person acting on such holders’ behalf to accelerate the maturity thereof or require the mandatory prepayment or purchase thereof prior to the scheduled maturity thereof, without regard to whether such holders or other Person shall have exercised or waived their right to do so; or

 

(g)    any Loan Party or any Subsidiary of a Loan Party shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally, or shall admit in writing its inability, to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or

 

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(h)    an involuntary case or other proceeding shall be commenced against any Loan Party or any Subsidiary of a Loan Party seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against any Loan Party or any Subsidiary of a Loan Party under the federal bankruptcy laws as now or hereafter in effect; or

 

(i)    any Loan Party or any member of the Controlled Group shall fail to pay when due any material amount which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans shall be filed under Title IV of ERISA by any Loan Party, any member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any such Plan or Plans or a proceeding shall be instituted by a fiduciary of any such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30 days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any such Plan or Plans must be terminated; or

 

(j)    one or more judgments or orders for the payment of money in an aggregate amount in excess of $1,000,000 shall be rendered against any Loan Party or any Subsidiary of a Loan Party and such judgment or order shall continue unsatisfied and unstayed for a period of 30 days; or

 

(k)    a federal tax lien shall be filed against any Loan Party or any Subsidiary of a Loan Party under Section 6323 of the Code or a lien of the PBGC shall be filed against any Loan Party or any Subsidiary of a Loan Party under Section 4068 of ERISA and in either case such lien shall remain undischarged for a period of 25 days after the date of filing; or

 

(l)    (i)any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 20% or more of the outstanding shares of the voting stock of the Borrower; or (ii) as of any date a majority of the Board of Directors of the Borrower consists of individuals who were not either (A) directors of the Borrower as of the corresponding date of the previous year, (B) selected or nominated to become directors by the Board of Directors of the Borrower of which a majority consisted of individuals described in clause (A), or (C) selected or nominated to become directors by the Board of Directors of the Borrower of which a majority consisted of individuals described in clause (A) and individuals described in clause (B); or

 

(m)    [Intentionally Omitted]; or

 

(n)    a default or event of default shall occur and be continuing under any of the Letter of Credit Agreements or any other Loan Document or the Borrower or any Guarantor shall fail to observe or perform any obligation to be observed or performed by it under any Letter of Credit Agreements or any other Loan Document, and such default, event of default or failure to perform or observe any obligation continues beyond any applicable cure or grace period provided in such Letter of Credit Agreement or such Loan Document; or

 

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(o)    [Intentionally Omitted]; or

 

(p)    the occurrence of any event, act or condition which the Bank determines either does or has a reasonable probability of causing a Material Adverse Effect;

 

then, and in every such event, the Bank shall (i) by notice to the Borrower, terminate the Commitment and it shall thereupon terminate, (ii) declare an Event of Default under the Letter of Credit Agreements, and (iii) by notice to the Borrower, declare the Note (together with accrued interest thereon), the Letter of Credit Advances (together with all accrued interest thereon) and all other amounts payable hereunder and under the other Loan Documents to be, and the Note (together with all accrued interest thereon), the Letter of Credit Advances (together with all accrued interest thereon) and all other amounts payable hereunder and under the other Loan Documents shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Loan Parties; provided that if any Event of Default specified in clause (g) or (h) above occurs with respect to any Loan Party, without any notice to any Loan Party or any other act by the Bank, the Commitment shall thereupon automatically terminate and the Note (together with accrued interest thereon), the Letter of Credit Advances (together with all accrued interest thereon) and all other amounts payable hereunder and under the other Loan Documents shall automatically become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Loan Parties. Notwithstanding the foregoing, the Bank shall have available to it all other remedies at law or equity, and shall exercise any one or all of them in its sole and absolute discretion. Notwithstanding the foregoing, the Bank shall have available to it all rights and remedies provided under the Loan Documents and in addition thereto, all other rights and remedies at law or equity, and the Bank shall exercise any one or all of them in its sole and absolute discretion.

 

SECTION 6.02.    Notice of Default. The Bank shall give notice to the Borrower of any Default under Section 6.01(c).

 

SECTION 6.03.    Cash Cover. If any Event of Default shall have occurred and be continuing, the Borrower shall, if requested by the Bank, pay to the Bank an amount in immediately available funds (which funds shall be held as collateral pursuant to arrangements satisfactory to the Bank) equal to the aggregate Undrawn Amounts, provided that, if any Event of Default specified in clause (g) or (h) above occurs, the Borrower shall be obligated to pay such amount to the Bank forthwith without any notice to the Borrower or any other act by the Bank.

 

SECTION 6.04.    [Intentionally Omitted].

 

SECTION 6.05.    Allocation of Proceeds. If an Event of Default has occurred and not been waived, and the maturity of the Note has and the Letter of Credit Advances have been accelerated pursuant to Article VI hereof, all payments received by the Bank hereunder, in respect of any principal of or interest on the Obligations or any other amounts payable by the Borrower or any other Loan Party hereunder, shall be applied by the Bank to the Obligations in such order as the Bank shall determine in its sole and absolute discretion.

 

ARTICLE VII

COMPENSATION

 

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SECTION 7.01.    Increased Costs. If after the Restatement Effective Date, any Change in Law shall:

 

(i)    impose, modify or deem applicable any reserve (including pursuant to regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, special, supplemental or other marginal reserve requirement) with respect to eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D)), special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Bank;

 

(ii)    subject the Bank to any tax, duty or other charge; or

 

(iii)    impose on the Bank any other condition, cost or expense affecting this Agreement, the Loans or any Letter of Credit;

 

and the result of any of the foregoing is to increase the cost to the Bank of making, converting into, continuing or maintaining a SOFR Loan or to increase the cost to the Bank of issuing any Letter of Credit or to reduce the amount received or receivable by the Bank hereunder (whether of principal, interest or any other amount),

 

then, from time to time, the Bank may provide the Borrower with written notice and demand with respect to such increased costs or reduced amounts, and within five (5) Domestic Business Days after receipt of such notice and demand, the Borrower shall pay to the Bank such additional amounts as will compensate the Bank for any such increased costs incurred or reduction suffered.

 

(b)    If the Bank shall have determined that on or after the Restatement Effective Date any Change in Law regarding capital or liquidity ratios or requirements has or would have the effect of reducing the rate of return on the Bank’s capital (or on the capital of the Bank’s parent company) as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which the Bank or the Bank’s parent company could have achieved but for such Change in Law (taking into consideration the Bank’s policies or the policies of the Bank’s parent company with respect to capital adequacy and liquidity), then, from time to time, the Bank may provide the Borrower with written notice and demand with respect to such reduced amounts, and within five (5) Domestic Business Days after receipt of such notice and demand the Borrower shall pay to the Bank such additional amounts as will compensate the Bank or the Bank’s parent company for any such reduction suffered.

 

(c)    A certificate of the Bank setting forth the amount or amounts necessary to compensate the Bank or the Bank’s parent company, as the case may be, specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive, absent manifest error.

 

(d)    Failure or delay on the part of the Bank to demand compensation pursuant to this Section shall not constitute a waiver of the Bank’s right to demand such compensation.

 

SECTION 7.02.    Funding Indemnity. In the event of (a) the payment of any principal of a SOFR Loan other than on the last day of the Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion or continuation of a SOFR Loan other than on the last day of the Interest Period applicable thereto, or (c) the failure by the Borrower to borrow, prepay, convert or continue any SOFR Loan on the date specified in any applicable notice (regardless of whether such notice is withdrawn or revoked), then, in any such event, the Borrower shall compensate the Bank, within five (5) Domestic Business Days after written demand from the Bank, for any loss, cost or expense attributable to such event. In the case of a SOFR Loan, such loss, cost or expense shall be deemed to include an amount determined by the Bank to be the excess, if any, of (A) the amount of interest that would have accrued on the principal amount of such SOFR Loan if such event had not occurred at Term SOFR applicable to such SOFR Loan for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such SOFR Loan) over (B) the amount of interest that would accrue on the principal amount of such SOFR Loan for the same period if Term SOFR were set on the date such SOFR Loan was prepaid or converted or the date on which the Borrower failed to borrow, convert or continue such SOFR Loan. A certificate as to any additional amount payable under this Section submitted to the Borrower by the Bank shall be conclusive, absent manifest error.

 

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ARTICLE VIII

MISCELLANEOUS

 

SECTION 8.01.    Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission or similar writing) and shall be given to such party at its address or telecopy number set forth on the signature pages hereof or such other address or telecopy number as such party may hereafter specify for the purpose by notice to each other party. Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopy number specified in this Section and the telecopy machine used by the sender provides a written confirmation that such telecopy has been so transmitted or receipt of such telecopy transmission is otherwise confirmed, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, and (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Bank under Article II shall not be effective until received.

 

SECTION 8.02.    No Waivers. No failure or delay by the Bank in exercising any right, power or privilege hereunder or under any Note or other Loan Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

SECTION 8.03.    Expenses; Documentary Taxes; Indemnification.

 

(a)    The Loan Parties shall, jointly and severally, pay (i) all reasonable, out-of-pocket costs and expenses of the Bank and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Bank and its Affiliates, in connection with the preparation and administration of the Loan Documents and any amendments, modifications or waivers thereof (whether or not the transactions contemplated in this Agreement or any other Loan Document shall be consummated), including the reasonable fees, charges and disbursements of counsel for the Bank and its Affiliates and (ii) all out-of-pocket costs and expenses (including, without limitation, the reasonable fees, charges and disbursements of outside counsel and the allocated cost of inside counsel) incurred by the Bank in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Loans made or any Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

 

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(b)    The Borrower shall indemnify the Bank, and each Related Party of the Bank (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from (1) the gross negligence or willful misconduct of such Indemnitee or (2) a claim brought by the Borrower or any other Loan Party against an Indemnitee for a material breach of such Indemnitee’s obligations hereunder or under any other Loan Document or (y) result from any claim not involving an act or omission of the Borrower and that is brought by an Indemnitee against another Indemnitee.

 

(c)    The Borrower shall pay, and hold the Bank harmless from and against, any and all present and future stamp, documentary, and other similar taxes with respect to this Agreement and any other Loan Documents, any collateral described therein or any payments due thereunder, and save the Bank harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such taxes.

 

(d)    [Intentionally Omitted].

 

(e)    To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to actual or direct damages) arising out of, in connection with or as a result of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated therein, any Loan or any Letter of Credit or the use of proceeds thereof; provided that nothing in this paragraph (e) shall relieve the Borrower of any obligation it may have to indemnify any Indemnitee against special, indirect, consequential or punitive damages asserted against such Indemnitee by a third party.

 

(f)    All amounts due under this Section shall be payable promptly after written demand therefor.

 

SECTION 8.04.    Setoffs; Sharing of Set-Offs. Each Loan Party hereby grants to the Bank, as security for the full and punctual payment and performance of the obligations of each Loan Party under this Agreement, a continuing lien on and security interest in all deposits and other sums credited by or due from the Bank to such Loan Party or subject to withdrawal by such Loan Party; and regardless of the adequacy of any collateral or other means of obtaining repayment of such obligations, the Bank may at any time upon or after the occurrence of any Event of Default, and without notice to any Loan Party, set off the whole or any portion or portions of any or all such deposits and other sums against such obligations, whether or not any other Person or Persons could also withdraw money therefrom.

 

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SECTION 8.05.    Amendments and Waivers. Any provision of this Agreement, the Note or any other Loan Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Bank.

 

SECTION 8.06.    [Intentionally Omitted].

 

SECTION 8.07.    Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no Loan Party may assign or otherwise transfer any of its rights under this Agreement.

 

(b)         Anything in this Section 8.07 to the contrary notwithstanding, the Bank may assign and pledge all or any portion of the Loan, any Letter of Credit Advance and/or obligations owing to it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned Loan, Letter of Credit Advance and/or obligations made by the Borrower to the assigning and/or pledging Bank in accordance with the terms of this Agreement shall satisfy the Borrower’s obligations hereunder in respect of such assigned Loan, Letter of Credit Advance and/or obligations to the extent of such payment. No such assignment shall release the assigning and/or pledging Bank from its obligations hereunder.

 

SECTION 8.08.    Confidentiality. The Bank agrees to exercise its best efforts to keep any information delivered or made available by the Loan Parties to it which is clearly indicated to be confidential information, confidential from anyone other than persons employed or retained by the Bank who are or are expected to become engaged in evaluating, approving, structuring or administering the Loan, the Letters of Credit, the Letter of Credit Advances or any other advances of credit under this Agreement; provided, however, that nothing herein shall prevent the Bank from disclosing such information (i) upon the order of any court or administrative agency, (ii) upon the request or demand of any regulatory agency or authority having jurisdiction over the Bank, (iii) which has been publicly disclosed, (iv) to the extent reasonably required in connection with any litigation to which the Bank or its Affiliates may be a party, (v) to the extent reasonably required in connection with the exercise of any remedy hereunder, and (vi) to the Bank’s legal counsel and independent auditors.

 

SECTION 8.09.    [Intentionally Omitted].

 

SECTION 8.10.    [Intentionally Omitted].

 

SECTION 8.11.    Survival of Certain Obligations. Article VII and Section 8.03, and the obligations of the Loan Parties thereunder, shall survive, and shall continue to be enforceable notwithstanding, the termination of this Agreement and the Commitment and the payment in full of the principal of and interest on all Advances and Letter of Credit Advances.

 

SECTION 8.12.    Virginia Law. This Agreement, each Note and each Letter of Credit Agreement shall be construed in accordance with and governed by the law of the Commonwealth of Virginia.

 

SECTION 8.13.    Severability. In case any one or more of the provisions contained in this Agreement or any of the other Loan Documents should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby and shall be enforced to the greatest extent permitted by law.

 

-48-

 

 

SECTION 8.14.    Interest. In no event shall the amount of interest due or payable hereunder, under the Note or under any Letter of Credit Advance exceed the maximum rate of interest allowed by applicable law, and in the event any such payment is inadvertently made to the Bank by the Borrower or inadvertently received by the Bank, then such excess sum shall be credited as a payment of principal, unless the Borrower shall notify the Bank in writing that it elects to have such excess sum returned forthwith. It is the express intent hereof that the Borrower not pay and the Bank not receive, directly or indirectly in any manner whatsoever, interest in excess of that which may legally be paid by the Borrower under applicable law.

 

SECTION 8.15.    Interpretation. No provision of this Agreement or any of the other Loan Documents shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured or dictated such provision.

 

SECTION 8.16.    Consent to Jurisdiction. The Loan Parties (a) submit to personal jurisdiction in the Commonwealth of Virginia, the courts thereof and the United States District Courts sitting therein, for the enforcement of this Agreement, the Note and the other Loan Documents, (b) waives any and all personal rights under the law of any jurisdiction to object on any basis (including, without limitation, inconvenience of forum) to jurisdiction or venue within the State of North Carolina for the purpose of litigation to enforce this Agreement, the Note or the other Loan Documents, and (c) agrees that service of process may be made upon it in the manner prescribed in Section 8.01 for the giving of notice to the Borrower. Nothing herein contained, however, shall prevent the Bank from bringing any action or exercising any rights against any security and against the Loan Parties personally, and against any assets of the Loan Parties, within any other state or jurisdiction.

 

SECTION 8.17.    Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Delivery of an executed counterpart to this Agreement or any other Loan Document by facsimile transmission or by electronic mail in pdf format shall be as effective as delivery of a manually executed counterpart hereof

 

SECTION 8.18.    [Intentionally Omitted].

 

ARTICLE IX

GUARANTY

 

SECTION 9.01.    [Intentionally Omitted].

 

SECTION 9.02.    Unconditional Guaranty. Each Guarantor hereby irrevocably, unconditionally and jointly and severally guarantees, each as a primary obligor and not merely as a surety, to the Bank the due and punctual payment of the principal of and the premium, if any, and interest on the Guaranteed Obligations and any and all other amounts due under or pursuant to the Loan Documents, when and as the same shall become due and payable (whether at stated maturity or by optional or mandatory prepayment or by declaration, redemption or otherwise) in accordance with the terms of the Loan Documents. The Guarantors’ guaranty under this Section is an absolute, present and continuing guarantee of payment and not of collectibility, and is in no way conditional or contingent upon any attempt to collect from the Borrower, any of the Guarantors or any other guarantor of the Guaranteed Obligations (or any portion thereof) or upon any other action, occurrence or circumstances whatsoever. In the event that the Borrower or any Guarantor shall fail so to pay any such principal, premium, interest or other amount to the Bank, the Guarantors will pay the same forthwith, without demand, presentment, protest or notice of any kind (all of which are waived by the Guarantors to the fullest extent permitted by law), in lawful money of the United States, at the place for payment specified in Loan Documents or specified by the Bank. The Guarantors further agree, promptly after demand, to pay to the Bank the costs and expenses incurred by the Bank in connection with enforcing the rights of the Bank against the Borrower and any or all of the Guarantors (whether in a bankruptcy proceeding or otherwise) following any default in payment of any of the Guarantied Obligations or the obligations of the Guarantors hereunder, including, without limitation, the fees and expenses of counsel to the Bank.

 

-49-

 

 

SECTION 9.03.    Obligations Absolute. The obligations of the Guarantors hereunder are and shall be absolute and unconditional, irrespective of the validity, regularity or enforceability of this Agreement, any of the Guaranteed Obligations or any of the Loan Documents, shall not be subject to any counterclaim, set-off, deduction or defense based upon any claim any of the Guarantors may have against the Borrower, any other Guarantor or the Bank hereunder or otherwise, and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by, to the fullest extent permitted by law, any circumstance or condition whatsoever (whether or not any of the Guarantors shall have any knowledge or notice thereof), including, without limitation:

 

(a)    any amendment or modification of or supplement to any of the Loan Documents or any other instrument referred to herein or therein, or any assignment or transfer of any thereof or of any interest therein, or any furnishing or acceptance of additional security for any of the Guaranteed Obligations;

 

(b)    any waiver, consent or extension under any Loan Document or any such other instrument, or any indulgence or other action or inaction under or in respect of, or any extensions or renewals of, any Loan Document, any such other instrument or any Guaranteed Obligation;

 

(c)    any failure, omission or delay on the part of the Bank to enforce, assert or exercise any right, power or remedy conferred on or available to the Bank against the Borrower or any Guarantor, any Subsidiary of the Borrower or any other Guarantor;

 

(d)    any bankruptcy, insolvency, readjustment, composition, liquidation or similar proceeding with respect to the Borrower, any Subsidiary of the Borrower or any Guarantor or any property of the Borrower or any such Subsidiary or any unavailability of assets against which the Guaranteed Obligations, or any of them, may be enforced;

 

(e)    any merger or consolidation of the Borrower, any Subsidiary of the Borrower or any Guarantor or any of the Guarantors into or with any other Person or any sale, lease or transfer of any or all of the assets of any of the Guarantors, the Borrower or any Subsidiary of the Borrower to any Person;

 

(f)    any failure on the part of the Borrower or any Subsidiary of the Borrower or any Guarantor for any reason to comply with or perform any of the terms of any agreement with any of the Guarantors;

 

(g)    any exercise or non-exercise by the Bank of any right, remedy, power or privilege under or in respect of any of the Loan Documents or the Guaranteed Obligations, including, without limitation, under this Section;

 

(h)    any default, failure or delay, willful or otherwise, in the performance or payment of any of the Guaranteed Obligations;

 

(i)    any furnishing or acceptance of security, or any release, substitution or exchange thereof, for any of the Guaranteed Obligations;

 

-50-

 

 

(j)    any failure to give notice to any of the Guarantors of the occurrence of any breach or violation of, or any event of default or any default under or with respect to, any of the Loan Documents or the Guaranteed Obligations;

 

(k)    any partial prepayment, or any assignment or transfer, of any of the Guaranteed Obligations; or

 

(l)    any other circumstance (other than indefeasible payment in full) which might otherwise constitute a legal or equitable discharge or defense of a guarantor or which might in any manner or to any extent vary the risk of such Guarantor.

 

The Guarantors covenant that their respective obligations hereunder will not be discharged except by complete performance of the obligations contained in the Loan Documents and this Agreement and the final and indefeasible payment in full of the Guaranteed Obligations. The Guarantors unconditionally waive, to the fullest extent permitted by law (A) notice of any of the matters referred to in this Section, (B) any and all rights which any of the Guarantors may now or hereafter have arising under, and any right to claim a discharge of the Guarantor’s obligations hereunder by reason of the failure or refusal by the Bank to take any action pursuant to a notice given under, Sections 49-25 or 49-26 of the Code of Virginia (1950), as amended, or any similar or successor provisions, (C) all notices which may be required by statute, rule of law or otherwise to preserve any of the rights of the Bank against the Guarantors, including, without limitation, presentment to or demand of payment from the Borrower, any of the Borrower’s Subsidiaries or any of the other Guarantors with respect to any Loan Document or this agreement, notice of acceptance of the Guarantors’ guarantee hereunder and/or notice to the Borrower, any of the Borrower’s Subsidiaries or any Guarantor of default or protest for nonpayment or dishonor, (D) any diligence in collection from or protection of or realization upon all or any portion of the Guaranteed Obligations or any security therefor, any liability hereunder, or any party primarily or secondarily liable for all or any portion of the Guaranteed Obligations, and (E) any duty or obligation of the Bank to proceed to collect all or any portion of the Guaranteed Obligations from, or to commence an action against, the Borrower, any Guarantor or any other Person, or to resort to any security or to any balance of any deposit account or credit on the books of the Bank in favor of the Borrower, any Guarantor or any other Person, despite any notice or request of any of the Guarantors to do so.

 

SECTION 9.04.    Continuing Obligations; Reinstatement. The obligations of the Guarantors under this Article IX are continuing obligations and shall continue in full force and effect until such time as all of the Guaranteed Obligations (and any renewals and extensions thereof) shall have been finally and indefeasibly paid and satisfied in full. The obligations of the Guarantors under this Article IX shall continue to be effective or be automatically reinstated, as the case may be, if any payment made by the Borrower, any Guarantor or any Subsidiary of the Borrower or any Guarantor on, under or in respect of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by the recipient upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, any Guarantor or any such Subsidiary, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the Borrower, any Guarantor or any such Subsidiary or any substantial part of the property of the Borrower, any Guarantor or any such Subsidiary, or otherwise, all as though such payment had not been made. If an event permitting the acceleration of all or any portion of the Guaranteed Obligations shall at any time have occurred and be continuing, and such acceleration shall at such time be stayed, enjoined or otherwise prevented for any reason, including without limitation because of the pendency of a case or proceeding relating to the Borrower, any Guarantor or any Subsidiary of the Borrower or any Guarantor under any bankruptcy or insolvency law, for purposes of this Article IX and the obligations of the Guarantors hereunder, such Guaranteed Obligations shall be deemed to have been accelerated with the same effect as if such Guaranteed Obligations had been accelerated in accordance with the terms of the applicable Loan Documents or of this Agreement.

 

-51-

 

 

SECTION 9.05.    Additional Security, Etc. The Guarantors authorize the Bank without notice to or demand on the Guarantors and without affecting their liability hereunder, from time to time (a) to obtain additional or substitute endorsers or guarantors; (b) to exercise or refrain from exercising any rights against, and grant indulgences to, the Borrower, any Subsidiary of the Borrower, any other Guarantor or others; and (c) to apply any sums, by whomsoever paid or however realized, to the payment of the principal of, premium, if any, and interest on, and other obligations consisting of, the Guaranteed Obligations. The Guarantors waive any right to require the Bank to proceed against any additional or substitute endorsers or guarantors or the Borrower or any of their Subsidiaries or any other Person or to pursue any other remedy available to the Bank.

 

SECTION 9.06.    Information Concerning the Borrowers. The Guarantors assume all responsibility for being and keeping themselves informed of the financial condition and assets of the Borrower, the other Guarantors and their respective Subsidiaries, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which the Guarantors assume and insure hereunder, and agree that the Bank shall not have any duty to advise the Guarantors of information known to the Bank regarding or in any manner relevant to any of such circumstances or risks.

 

SECTION 9.07.    Guarantors’ Subordination. The Guarantors hereby absolutely subordinate, both in right of payment and in time of payment, any present and future indebtedness of the Borrower or any Subsidiary of the Borrower or any Guarantor to any or all of the Guarantors to the indebtedness of the Borrower or any such Subsidiary to the Bank, provided that the Guarantors may receive scheduled payments of principal, premium (if any) and interest in respect of such present or future indebtedness so long as there is no Event of Default then in existence.

 

SECTION 9.08.    Waiver of Subrogation. Notwithstanding anything herein to the contrary, the Guarantors hereby waive any right of subrogation (under contract, Section 509 of the Bankruptcy Code or otherwise) or any other right of indemnity, reimbursement or contribution and hereby waive any right to enforce any remedy that the Bank now has or may hereafter have against the Borrower, any Guarantor or any endorser or any other guarantor of all or any part of the Guaranteed Obligations, and the Guarantors hereby waive any benefit of, and any right to participate in, any security or collateral given to the Bank to secure payment or performance of the Guaranteed Obligations or any other liability of the Borrower to the Bank. The waiver contained in this Section shall continue and survive the termination of this Agreement and the final and indefeasible payment in full of the Guaranteed Obligations.

 

SECTION 9.09.    Enforcement. In the event that the Guarantors shall fail forthwith to pay upon demand of the Bank any amounts due pursuant to this Article IX or to perform or comply with or to cause performance or compliance with any other obligation of the Guarantors under this Agreement, the Bank shall be entitled and empowered to institute any action or proceeding at law or in equity for the collection of the sums so due and unpaid or for the performance of or compliance with such terms, and may prosecute any such action or proceeding to judgment or final decree and may enforce such judgment or final decree against the Guarantors and collect in the manner provided by law out of the property of the Guarantors, wherever situated, any monies adjudged or decreed to be payable. The obligations of the Guarantors under this Agreement are continuing obligations and a fresh cause of action shall arise in respect of each default hereunder.

 

-52-

 

 

SECTION 9.10.    Miscellaneous. Except as may otherwise be expressly agreed upon in writing, the liability of the Guarantors under this Article IX shall neither affect nor be affected by any prior or subsequent guaranty by the Guarantors of any other indebtedness to the Bank. Notwithstanding anything in this Article IX to the contrary, the maximum liability of each Guarantor hereunder shall in no event exceed the maximum amount which could be paid out by such Guarantor without rendering such Guarantor’s obligations under this Article IX, in whole or in part, void or voidable under applicable law, including, without limitation, (i) the Bankruptcy Code of 1978, as amended, and (ii) any applicable state or federal law relative to fraudulent conveyances.

 

SECTION 9.11.    Amended, Restated and Replacement Agreement. This Agreement amends, restates and replaces in its entirety the Original Credit Agreement, all effective as of the Restatement Effective Date.

 

[The remainder of this page intentionally left blank.]

 

-53-

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, under seal, by their respective authorized officers as of the day and year first above written.

 

	
			 

				
			BASSETT FURNITURE INDUSTRIES, INCORPORATED

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			[Corporate Seal] 

				
			By:

				
			/s/ J. Michael Daniel

				
			(SEAL)

			
	
			 

				
			Name: 

				
			J. Michael Daniel

				
			 

			
	
			 

				
			Title: 

				
			Senior Vice President, Chief Financial and

			Administrative Officer

				
			 

			
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Jay R. Hervey	(SEAL)
	 	Name: 	Jay R. Hervey	 
	 	Title: 	Vice President, General Counsel and Secretary	 
	 	 	 	 
	 	
			c/o Bassett Furniture Industries, Incorporated

			3525 Fairystone Park Highway

			P.O. Box 626

			Bassett, Virginia 24055

			Attention: Jay R. Hervey

			Telecopy number: (276) 629-6311

			Telephone number: (276) 629-6000

				 
	 	 	 	 
	 	
			BASSETT FURNITURE INDUSTRIES OF NORTH

			CAROLINA, LLC

				 
	 	 	 	 
	[Corporate Seal]	By:	Bassett Furniture Industries, Incorporated	 
	 	Its sole Member and Manager	 
	 	 	 	 
	 	 	By:	/s/ J. Michael Daniel	(SEAL)
	 	 	Name:  	J. Michael Daniel	 
	 	 	Title: 	
			 Senior Vice President, Chief Financial and

			Administrative Officer

				 
	 	 	 	 	 
	 	 	By:	/s/ Jay R. Hervey	(SEAL)
	 	 	Name:	Jay R. Hervey	 
	 	 	Title:	Vice President, General Counsel and Secretary	 
	 	 	 	 
	 	
			c/o Bassett Furniture Industries, Incorporated

			3525 Fairystone Park Highway

			P.O. Box 626

			Bassett, Virginia 24055

			Attention: Jay R. Hervey

			Telecopy number: (276) 629-6311

			Telephone number: (276) 629-6000

				 

 

-54-

 

 

	
			 

				BASSETT DIRECT STORES, LLC	
			 

			
	
			 

				
			 

				
			 

				
			 

			
	 	By:	Bassett Direct Stores, LLC	 
	 	Its sole Member and Manager	 
	 	 	 	 
	
			
			[Corporate Seal]

			

				By:	Bassett Furniture Industries, Incorporated	 
	 	Its sole Member and Manager	 
	 	 	 	 
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By:

				
			/s/ J. Michael Daniel

				
			(SEAL)

			
	
			 

				
			Name: 

				
			J. Michael Daniel

				
			 

			
	
			 

				
			Title: 

				
			Senior Vice President, Chief Financial and

			Administrative Officer

				
			 

			
	 	 	 	 
	 	 	 	 
	 	
			
			By:

			

				
			
			/s/ Jay R. Hervey

			

				
			
			(SEAL)

			

			
	 	
			
			Name: 

			

				
			
			Jay R. Hervey

			

				 
	 	
			
			Title: 

			

				
			
			Vice President, General Counsel and Secretary

			

				 
	 	 	 	 
	 	
			c/o Bassett Furniture Industries, Incorporated

			
			
			
			
			3525 Fairystone Park Highway

			

			

			

			

			
			
			
			
			P.O. Box 626

			

			

			

			

			
			
			
			
			Bassett, Virginia 24055

			

			

			

			

			
			
			
			
			Attention: Jay R. Hervey

			

			

			

			

			
			
			
			
			Telecopy number: (276) 629-6311

			

			

			

			

			
			
			
			
			Telephone number: (276) 629-6000

			

			

			

			

				 

 

-55-

 

 

	 	
			BASSETT DIRECT NC, LLC

				 
	 	 	 	 
	 	By:	Bassett Direct Stores, LLC	 
	 	Its sole Member and Manager	 
	 	 	 	 
	
			
			[Corporate Seal]

			

				
			
			By:

			

				
			
			Bassett Furniture Industries, Incorporated

			

				 
	 	
			
			Its sole Member and Manager

			

				 
	 	 	 	 
	 	 	
			
			By:

			

				
			
			/s/ J. Michael Daniel

			

				
			
			(SEAL)

			

			
	 	 	
			
			Name:  

			

				
			
			J. Michael Daniel

			

				 
	 	 	
			
			Title: 

			

				
			Senior Vice President, Chief Financial and

			Administrative Officer

				 
	 	 	 	 	 
	 	 	
			
			By:

			

				
			
			/s/ Jay R. Hervey

			

				
			
			(SEAL)

			

			
	 	 	
			
			Name:

			

				
			
			Jay R. Hervey

			

				 
	 	 	
			
			Title:

			

				
			
			Vice President, General Counsel and Secretary

			

				 
	 	 	 	 
	 	
			c/o Bassett Furniture Industries, Incorporated

			3525 Fairystone Park Highway

			P.O. Box 626

			Bassett, Virginia 24055

			Attention: Jay R. Hervey

			Telecopy number: (276) 629-6311

			Telephone number: (276) 629-6000

				 

 

 

-56-

 

 

	 	
			BASSETT DIRECT SC, LLC

				 
	 	 	 	 
	 	
			
			By:

			

				
			
			Bassett Direct Stores, LLC

			

				 
	 	
			
			Its sole Member and Manager

			

				 
	 	 	 	 
	
			
			
			
			[Corporate Seal]

			

			

			

				
			
			
			
			By:

			

			

			

				
			
			
			
			Bassett Furniture Industries, Incorporated

			

			

			

				 
	 	
			
			
			
			Its sole Member and Manager

			

			

			

				 
	 	 	 	 
	 	 	
			
			
			
			By:

			

			

			

				
			
			
			
			/s/ J. Michael Daniel

			

			

			

				
			
			
			
			(SEAL)

			

			

			

			
	 	 	
			
			
			
			Name:  

			

			

			

				
			
			
			
			J. Michael Daniel

			

			

			

				 
	 	 	
			
			
			
			Title: 

			

			

			

				
			 Senior Vice President, Chief Financial and

			Administrative Officer

				 
	 	 	 	 	 
	 	 	
			
			
			
			By:

			

			

			

				
			
			
			
			/s/ Jay R. Hervey

			

			

			

				
			
			
			
			(SEAL)

			

			

			

			
	 	 	
			
			
			
			Name:

			

			

			

				
			
			
			
			Jay R. Hervey

			

			

			

				 
	 	 	
			
			
			
			Title:

			

			

			

				
			
			
			
			Vice President, General Counsel and Secretary

			

			

			

				 
	 	 	 	 
	 	
			c/o Bassett Furniture Industries, Incorporated

			3525 Fairystone Park Highway

			P.O. Box 626

			Bassett, Virginia 24055

			Attention: Jay R. Hervey

			Telecopy number: (276) 629-6311

			Telephone number: (276) 629-6000

				 

 

-57-

 

 

	
			 

				
			TRUIST BANK, formerly known as Branch Banking

			and Trust Company

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ Patricia J. Noneman

				
			(SEAL)

			
	
			 

				
			 

				Patricia J. Noneman, Director	
			 

			
	
			 

				
			 

				 	
			 

			
	 	
			Truist Securities

			214 N. Tryon Street

			Charlotte, North Carolina 28202

			Attention: Patricia J. Noneman

			Telephone number: (704) 362-8528

				 

 

-58-

 

 

EXHIBIT A

 

 

SEVENTH AMENDED AND RESTATED

REVOLVING CREDIT NOTE

 

	$25,000,000.00	Roanoke, Virginia          

January 27, 2022

 

FOR VALUE RECEIVED, the undersigned, BASSETT FURNITURE INDUSTRIES, INCORPORATED, a Virginia corporation (the “Borrower”), hereby promises to pay to TRUIST BANK (the “Bank”) the principal amount of all Loans made by the Bank to the Borrower pursuant to that certain Seventh Amended and Restated Credit Agreement dated as of January 27, 2022 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used in this Revolving Credit Note and not otherwise defined shall have the meanings ascribed to such terms in the Credit Agreement) by and among the Borrower, Bassett Furniture Industries of North Carolina, LLC, Bassett Direct Stores, LLC, Bassett Direct NC, LLC, Bassett Direct SC, LLC, and Truist Bank, payable at such times and in such amounts as are specified in the Credit Agreement.

 

In addition, should legal action or an attorney-at-law be utilized to collect any amount due hereunder, the Borrower further promises to pay all costs of collection in accordance with the terms of Section 8.03 of the Credit Agreement.

 

The Borrower promises to pay interest on the unpaid principal amount of the Loans from the date made until such principal amount is paid in full, payable at such times and at such interest rates as are specified in the Credit Agreement. Demand, diligence, presentment, protest and notice of non-payment and protest are hereby waived by the Borrower.

 

Both principal and interest are payable in Dollars to the Bank, at the Bank’s Office, in immediately available funds.

 

This Revolving Credit Note is referred to in, and is entitled to the benefits of, the Credit Agreement.

 

The Credit Agreement, among other things, (a) provides for the making of Loans by the Bank to the Borrower in an aggregate amount not to exceed at any time outstanding the amount set forth above, the indebtedness of the Borrower resulting from such Loans being evidenced by this Revolving Credit Note and (b) contains provisions for acceleration of the maturity of the unpaid principal amount of this Revolving Credit Note upon the happening of certain stated events and also for prepayments on account of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified. This Revolving Credit Note is secured by and is also entitled to the benefits of the Loan Documents to the extent provided therein and any other agreement or instrument providing collateral for the Loans, whether not or hereafter in existence and any filings, instruments, agreements and documents relating thereto and providing collateral for the Loans.

 

This Revolving Credit Note is a Loan Document and is entitled to the benefits of the Loan Documents.

 

THIS REVOLVING CREDIT NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF VIRGINIA.

 

[Remainder of Page Intentionally Left Blank]

 

 

 

 

IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note to be executed and delivered by its duly authorized officer as of the day and year and at the place set forth above.

 

	
			 

				
			BASSETT FURNITURE INDUSTRIES,

			INCORPORATED

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			[Corporate Seal] 

				
			By:

				
			 

				
			(SEAL)

			
	
			 

				
			Name: 

				
			J. Michael Daniel

				
			 

			
	
			 

				
			Title: 

				
			Senior Vice President, Chief Financial and

			Administrative Officer

				
			 

			
	 	 	 	 
	 	 	 	 
	 	
			
			By:

			

				 	
			
			(SEAL)

			

			
	 	
			
			Name: 

			

				
			
			Jay R. Hervey

			

				 
	 	
			
			Title: 

			

				
			
			Vice President, General Counsel and Secretary

			

				 

 

 

 

 

EXHIBIT B-1

 

NOTICE OF BORROWING

 

[Date]

 

Email – capitalmarkets-w-s@truist.com; Telecopy – 888-707-4162

Truist Bank

150 S. Stratford Road

Winston-Salem, North Carolina 27104

Attention: Loan Services

 

Ladies and Gentlemen:

 

Reference is made to the Seventh Amended and Restated Credit Agreement, dated as of January 27, 2022 (as amended and in effect on the date hereof, the “Credit Agreement”), among the undersigned, as the Borrower, Bassett Furniture Industries of North Carolina, LLC, Bassett Direct Stores, LLC, Bassett Direct NC, LLC, Bassett Direct SC, LLC, and Truist Bank. Terms defined in the Credit Agreement are used herein with the same meanings. This notice constitutes a Notice of Borrowing and is delivered pursuant to Section 2.02 of the Credit Agreement. The Borrower hereby requests a Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to the Revolving Borrowing requested hereby:

 

	
			(A)         Aggregate principal amount of such Borrowing1:

				 
	 	 
	
			(B)         Date of such Revolving Borrowing2:

				 
	 	 
	
			(C)         Interest rate basis3:

				 
	 	 
	
			(D)         Interest Period4:

				 
	 	 
	
			(E)         Location and number of the Borrower’s account to which proceeds of such Borrowing are to be disbursed:

				 

 

The Borrower hereby represents and warrants that the conditions specified in clauses (b), (c) and (d) of Section 3.02 of the Credit Agreement are satisfied.

 

1   Not less than $1,000,000 and an integral multiple of $500,000 for a SOFR Borrowing or less than $1,000,000 and an integral multiple of $100,000 for Base Rate Borrowing.

2   Which is a Domestic Business Day.

3  SOFR Borrowing or Base Rate Borrowing.

4  Which must be one (1) month, otherwise comply with the definition of “Interest Period” and end not later than the Termination Date.

 

 

 

	
			 

				
			Very truly yours,

			 

			BASSETT FURNITURE INDUSTRIES, INCORPORATED

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			 

				
			 

			
	
			 

				
			Name:

			Title:

				
			 

				
			 

			

 

cc:

 

Truist Bank

150 S. Stratford Road

Winston-Salem, North Carolina 27104

Attention: Shana Pask

Shana.pask@truist.com

 

 

 

 

EXHIBIT B-2

 

NOTICE OF CONTINUATION/CONVERSION

 

[Date]

 

Email – capitalmarkets-w-s@truist.com; Telecopy – 888-707-4162

Truist Bank

150 S. Stratford Road

Winston-Salem, North Carolina 27104

Attention: Loan Services

 

Ladies and Gentlemen:

 

Reference is made to the Seventh Amended and Restated Credit Agreement, dated as of January 27, 2022 (as amended and in effect on the date hereof, the “Credit Agreement”), among the undersigned, as the Borrower, Bassett Furniture Industries of North Carolina, LLC, Bassett Direct Stores, LLC, Bassett Direct NC, LLC, Bassett Direct SC, LLC, and Truist Bank. Terms defined in the Credit Agreement are used herein with the same meanings.

 

This notice constitutes a Notice of Continuation/Conversion, and the Borrower hereby requests the conversion or continuation of Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to the Borrowing to be converted or continued as requested hereby:

 

	
			(A)         Borrowing to which this request applies:

				 
	 	 
	
			(B)         Principal amount of Borrowing to be converted/continued:

				 
	 	 
	
			(C)         Effective date of election5:

				 
	 	 
	
			(D)         Interest rate basis6:

				 
	 	 
	
			(E)         Interest Period7:

				 

 

 

5  Which is a Domestic Business Day.

6   SOFR Borrowing or Base Rate Borrowing.

7    Which must be one (1) month and otherwise comply with the definition of “Interest Period”.

 

 

 

 

	
			 

				
			Very truly yours,

			BASSETT FURNITURE INDUSTRIES, INCORPORATED

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By:

				
			 

				
			 

			
	
			 

				
			Name:

			Title:

				
			 

				
			 

			

 

cc:

 

Truist Bank

150 S. Stratford Road

Winston-Salem, North Carolina 27104

Attention: Shana Pask

Shana.pask@truist.com

 

2

 

 

EXHIBIT C

CLOSING CERTIFICATE

 

Reference is made to the Seventh Amended and Restated Credit Agreement (the “Credit Agreement”) dated as of January 27, 2022 among Bassett Furniture Industries, Incorporated, Bassett Furniture Industries of North Carolina, LLC, Bassett Direct Stores, LLC, Bassett Direct NC, LLC, Bassett Direct SC, LLC, and Truist Bank. Capitalized terms used herein have the meanings ascribed thereto in the Credit Agreement.

 

Pursuant to Section 3.01(e) of the Credit Agreement, ___________________, the duly authorized ____________________ of the Borrower; and ___________________, the duly authorized ____________ of each of the Initial Guarantors hereby certify to the Bank that: (i) no Default has occurred and is continuing on the date hereof; and (ii) the representations and warranties of the Borrower and the Initial Guarantors contained in Article IV of the Credit Agreement are true on and as of the date hereof.

Certified as of the 27th day of January, 2022.

 

	 	
			BORROWER

			 

			BASSETT FURNITURE INDUSTRIES, INCORPORATED

			 

			 

			By: ___________________________

			Title:

			 

			BASSETT FURNITURE INDUSTRIES OF NORTH CAROLINA, LLC

			 

			 

			By: ___________________________

			Title:

			 

			BASSETT DIRECT STORES, LLC

			 

			 

			By: ___________________________

			Title:

			 

			BASSETT DIRECT NC, LLC

			 

			 

			By: ___________________________

			Title:

			 

			BASSETT DIRECT SC, LLC

			 

			 

			By: ___________________________

			Title:

			

 

 

 

 

EXHIBIT D

 

SECRETARY’S CERTIFICATE

 

The undersigned, Jay R. Hervey, Secretary of Bassett Furniture Industries, Incorporated, a Virginia corporation (the “Company”), and its subsidiaries, Bassett Furniture Industries of North Carolina, LLC (a North Carolina limited liability company), Bassett Direct Stores, LLC (a Virginia limited liability company), Bassett Direct NC, LLC (a Virginia limited liability company), and Bassett Direct SC, LLC (a Virginia limited liability company) (the “LLCs”), hereby certifies that he has been duly elected, qualified and is acting in such capacity and that, as such, he is familiar with the facts herein certified and is duly authorized to certify the same, and hereby further certifies, in connection with the Seventh Amended and Restated Credit Agreement dated as of January 27, 2022, among Bassett Furniture Industries, Incorporated, Bassett Furniture Industries of North Carolina, LLC, Bassett Direct Stores, LLC, Bassett Direct NC, LLC, Bassett Direct SC, LLC, and Truist Bank, that:

 

1.    Attached hereto as Exhibit A is a complete and correct copy of the Certificate of Incorporation of the Company as in full force and effect on the date hereof, and complete and correct copies of the Certificates of Organization of the LLCs as in full force and effect on the date hereof.

 

2.    Attached hereto as Exhibit B is a complete and correct copy of the Bylaws of the Company as in full force and effect on the date hereof, and complete and correct copies of the Operating Agreements of the LLCs as in full force and effect on the date hereof.

 

3.    Attached hereto as Exhibit C is a complete and correct copy of the resolutions duly adopted by the Board of Directors of the Company on January 12, 2022, approving and authorizing the execution and delivery of the Credit Agreement, the Note (as such term is defined in the Credit Agreement) and the other Loan Documents (as such term is defined in the Credit Agreement) to which the Company and the LLCs are parties. Such resolutions have not been repealed or amended and are in full force and effect, and no other resolutions or consents have been adopted by the Board of Directors of the Company in connection therewith.

 

4.    Attached hereto as Exhibit D are complete and correct copies as of a recent date of the certificate of good standing for the Company, the certificate of existence for Bassett Furniture Industries of North Carolina, LLC and the certificates of fact for each of Bassett Direct Stores, LLC, Bassett Direct NC, LLC and Bassett Direct SC, LLC.

 

5.    J. Michael Daniel, who as Senior Vice President, Chief Financial and Administrative Officer, and Jay R. Hervey, who as Secretary of the Company and the LLCs signed the Credit Agreement, the Note and the other Loan Documents to which the Company and the LLCs are parties, were duly elected, qualified and acting as such at the time they signed the Credit Agreement, the Note and the other Loan Documents to which the Company and the LLCs are parties, and their respective signatures appearing on the Credit Agreement, the Note and the other Loan Documents to which the Company and the LLCs are parties are their genuine signatures.

 

 

 

 

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the 27th day of January, 2022.

	
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			Name: Jay R. Hervey

			Title: Secretary

				
			 

			

 

2

 

 

EXHIBIT E

COMPLIANCE CERTIFICATE

 

Reference is made to the Seventh Amended and Restated Credit Agreement dated as of January 27, 2022 (as modified and supplemented and in effect from time to time, the “Credit Agreement”) among Bassett Furniture Industries, Incorporated, Bassett Furniture Industries of North Carolina, LLC, Bassett Direct Stores, LLC, Bassett Direct NC, LLC, Bassett Direct SC, LLC, and Truist Bank. Capitalized terms used herein shall have the meanings ascribed thereto in the Credit Agreement.

 

Pursuant to Section 5.01(d) of the Credit Agreement, _________________, the duly authorized [__________________], of Bassett Furniture Industries, Incorporated, hereby certifies to the Bank that the information contained in the Compliance Checklist attached hereto is true, accurate and complete as of _____________, 20__ (the “Compliance Date”), and that no Default is in existence on and as of the date hereof.

 

Dated as of _________________.

 

	 	
			BASSETT FURNITURE INDUSTRIES,

			INCORPORATED

			 

			By:__________________________________

			Name:________________________________

			Title:_________________________________

			

 

1

 

 

COMPLIANCE CHECKLIST8

 

BASSETT FURNITURE INDUSTRIES, INCORPORATED,

BASSETT FURNITURE INDUSTRIES OF NORTH CAROLINA, LLC,

BASSETT DIRECT STORES, LLC,

BASSETT DIRECT NC, LLC, AND BASSETT DIRECT SC, LLC

 

_________________, 20___

 

	
			1.

				
			Additional Debt (Section 5.32)

			
	 	
			a.

				
			Debt not otherwise permitted under Section 5.32

				 	 
	 	 	
			(shall not exceed $1,000,000)

				 	
			_________

			
	 	 	 	 	 	 
	
			2.

				
			Consolidated Lease Adjusted Leverage to EBITDAR Ratio (Section 5.37 – Commencing February 28, 2022)

			
	 	 	 	 	 	 
	 	
			a.

				
			Consolidated Total Debt for such four-quarter period

				
			 

				 	_________
	 	 	 	 	 	 
	 	
			b.

				
			(i) Consolidated EBITDA for such four-quarter period

				 	  __________	 
	 	 	
			(ii) Rent Expense for such four-quarter period

				 	  __________	 
	 	 	
			Consolidated EBITDAR (2.b.(i) plus 2.b.(ii))

				
			 

				_________
	 	 	
			(Ratio shall not exceed 3.00 to 1 as of the end of such Fiscal Quarter) 

				_________
	 	 	 	 	 	 
	
			3.

				
			Consolidated Fixed Charge Coverage Ratio (Section 5.38  – Commencing February 28, 2022)

			
	 	 	 	 	 	 
	 	
			a.

				
			(i) Consolidated EBITDA for such four-quarter period            

				 	___________	 
	 	 	
			(ii) Rent Expense for such four-quarter period

				 	___________	 
	 	 	
			Consolidated EBITDAR ((3.a.(i) plus 3.a.(ii))

				___________	 
	 	 	
			(iii) Distributions to shareholders or other distributions or payments or advances to shareholders (other than for stock repurchases) declared for such four-quarter period 

				 	___________	 
	 	 	Consolidated EBITDAR minus distributions to shareholders ((3.a.(i) plus 3.a.(ii)) minus 3.a.(iii))	
			 

				 	_________
	 	 	 	
			 

				
			 

				 
	 	
			b.

				
			(i) Borrower’s and its Consolidated Subsidiaries interest expense for such four-quarter period

				 	 _________	 
	 	 	
			(ii) Rent Expense for such four-quarter period

				 	 _________	 
	 	 	
			(iii) Current Maturities of Long Term Debt for such  four-quarter period

				 	 _________	 
	 	 	Interest expense plus Rent Expenses plus Current Maturities of Long Term Debt (3.b.(i) plus 3.b.(ii) plus 3.b.(iii))	
			 

				 	_________
	 	 	
			(Ratio shall not be less than 1.40 to 1 as of the end of such Fiscal Quarter) 

				
			 

				 	_________
	 	 	 	 	 	 
	
			4.

				
			Minimum Consolidated Tangible Net Worth (Section 5.39)

			
	 	 	
			(Shall at no time be less than $120,000,000 or $140,000,000, as applicable) 

				
			 

				 	_________

 

	
			8

				
			All calculations are to be based on the Borrower and its Consolidated Subsidiaries, unless specifically indicated otherwise.

			

2

 

 

SCHEDULE 2.03

 

Existing Letters of Credit

 

	
			1.

				
			Obligation # 00211

			

Face Amount: $250,000

Beneficiary: National Interstate Insurance Company

 

	
			2.

				
			Obligation # 00214

			

Face Amount: $20,000

Beneficiary: Liberty Mutual Insurance Company

 

	
			3.

				
			Obligation # 00218

			

Face Amount: $218,000

Beneficiary: Liberty Mutual Insurance Company

 

	
			4.

				
			Obligation # 90010

			

Face Amount: $277,000

Beneficiary: Liberty Mutual Insurance Company

 

5.         Obligation # 90012

Face Amount: $1,416,000

Beneficiary: Liberty Mutual Insurance Company

 

6.         Obligation # 90016

Face Amount: $500,000

Beneficiary: National Interstate Insurance Company

 

7.         Obligation # 90020

Face Amount: $100,000

Beneficiary: Comptroller of Public Accounts

 

8.         Obligation # 90022

Face Amount: $100,000

Beneficiary: Comptroller of Public Accounts

 

9.         Obligation # 90024

Face Amount: $300,000

Beneficiary: Avalon Risk Management Insurance

 

10.         Obligation # 90026

Face Amount: $750,000

Beneficiary: Liberty Mutual Insurance Company

 

-1-

 

 

SCHEDULE 4.08

 

Subsidiaries

 

 

The E.B. Malone Corporation (Delaware corporation)

 

LRG Furniture, LLC (Virginia limited liability company)

 

BFD-Atlanta, LLC (Virginia limited liability company)

 

BD Boston, LLC (Virginia limited liability company)

 

BDU NY, LLC (Virginia limited liability company)

 

Zenith Freight Lines, LLC (North Carolina limited liability company)

 

Zenith, Inc. (North Carolina corporation)

 

Western States Distribution, LLC (California limited liability company)

 

 

 

All Subsidiaries are wholly-owned.

 

 

-2-

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