FIRST AMENDMENT TO AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
This First Amendment to Amended and Restated Credit and Security
Agreement ("Amendment"), dated as of September ___, 1999, is made by and
among XXXXX'X FASHIONS, INC., a Minnesota corporation ("Borrower"), XXXXX'X
FASHIONS CORPORATION, a Delaware corporation ("Guarantor"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association ("Lender").
RECITALS
FIRST: The Borrower and the Lender have entered into that Amended
and Restated Revolving Credit and Security Agreement dated as of March 15,
1999 ("Credit Agreement"). Capitalized terms used in this Amendment have the
meanings given to them in the Credit Agreement unless otherwise specified.
SECOND: The Borrower has requested certain amendments to the
Credit Agreement which Lender is willing to accept pursuant to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, it is agreed as follows:
1. DEFINITION OF BORROWING BASE. The definition of Borrowing
Base shall be deleted in its entirety and replaced with the following:
"Borrowing Base" means, at any time the lessor of:
(a) the Maximum Line; or
(b) subject to change from time to time in the Lender's
sole discretion with prior written or telefacsimile notice to the
Borrower, the sum of:
(i) either (A) between June 1 and August 31 in any
year, and so long as there are no outstanding Advances, 80%
of the Eligible Apparel Inventory, or (B) at all other
times, 70% of Eligible Apparel Inventory; and
(ii) 30% of Eligible Accessories Inventory; and
(iii) 50% of Eligible In-Transit Inventory.
2. DEFINITION OF ELIGIBLE INVENTORY. The definition of "Eligible
Inventory" shall be deleted in its entirety and replaced with the following:
"Eligible Inventory" means all Inventory of the Borrower, at
the lower of cost or market value as determined in accordance
with GAAP; provided, however, that the following shall not in
any event be deemed Eligible Inventory:
(a) Inventory that is: in-transit (except for
Eligible In-Transit Inventory); located at any warehouse,
job site or other premises not approved by the Lender in
writing; located outside of the states, or localities, as
applicable, in which the Lender has filed financing
statements to perfect a first priority security interest
in such Inventory; covered by any negotiable or
non-negotiable warehouse receipt, xxxx of lading or other
document of title; on consignment from any Person; on
consignment to any Person or subject to any bailment
unless such consignee or bailee has executed an agreement
with the Lender;
(b) Supplies, packaging, parts or sample Inventory;
(c) Work-in-process Inventory;
(d) Inventory that is damaged, obsolete, slow
moving (that is, over four months old) or not currently
saleable in the normal course of the Borrower's
operations;
(e) Inventory that the Borrower has returned, has
attempted to return, is in the process of returning or
intends to return to the vendor thereof;
(f) Inventory that is perishable or live;
(g) Inventory manufactured by the Borrower pursuant
to a license unless the applicable licensor has agreed in
writing to permit the Lender to exercise its rights and
remedies against such Inventory;
(h) Inventory that is subject to a security
interest in favor of any Person other than the Lender; and
(i) Inventory otherwise deemed ineligible by the Lender
in its sole discretion.
3.
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DEFINITION OF ELIGIBLE IN-TRANSIT INVENTORY. A
definition of "Eligible In-Transit Inventory" shall be added
to the Credit Agreement as follows:
"Eligible In-Transit Inventory" means Eligible Inventory that
is in-transit and backed by a documentary Letter of Credit
issued by the Lender.
4. REPORTING REQUIREMENTS. Paragraph 6.1(c) shall be deleted in
its entirety and replaced with the following:
(c) within 20 days after the end of each month or more frequently
if the Lender so requires, agings of the Borrower's accounts receivable and
its accounts payable, and within 15 days after the end of each month an
inventory certification report, and a calculation of the Borrower's Accounts,
Eligible Accounts, Inventory, Eligible Inventory, and Eligible In-Transit
Inventory as of the end of each month or more frequently as the Lender
requires.
5. STOCK PURCHASE LOANS. Paragraph 7.4(a)(iii) shall be deleted
in its entirety and replaced with the following:
(iii) Stock Purchase Loans in an amount not to exceed the sum of $500,000
to any one Person, and $2,500,000 in the aggregate at any one time.
6. NO OTHER CHANGES. Except as explicitly amended by this
Amendment, all of the terms and conditions of the Credit Agreement shall
remain in full force and effect and shall apply to any advance or letter of
credit herein.
7. CONDITIONS PRECEDENT. This Amendment shall be effective when
the Lender shall have received an executed original hereof, together with
each of the following, each in substance and form acceptable to the Lender in
its sole discretion:
(a) The Agreement, duly executed by the Borrower.
(b) The Acknowledgment and Agreement of Guarantor set forth
at the end of this Amendment, duly executed by the Guarantor.
(c) A Certificate of Authority of the Borrower setting forth
the sample signatures of each of the officers and agents of the
Borrower authorized to execute and deliver this Amendment and all
other documents, agreements and certificates on behalf of the
Borrower, and setting forth (i) the resolutions of the board of
directors of the Borrower approving the execution and delivery of
this Amendment and (ii) the fact that the articles of incorporation
and bylaws of the Borrower, which were certified and delivered to
the Lender in connection with the execution and delivery of the
Credit Agreement continue in full force and effect and have not
been amended or otherwise modified except as set forth in the
Certificate of Authority to be delivered.
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(d) Such other matters as the Lender may require.
8. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to
execute this Amendment and to perform all of its obligations
hereunder, and this Amendment has been duly executed and delivered
by the Borrower and constitutes the legal, valid and binding
obligation of the Borrower, enforceable in accordance with its
terms except as may be limited by bankruptcy, insolvency or other
laws affecting the rights of creditors generally.
(b) The execution, delivery and performance by the Borrower
of this Amendment has been duly authorized by all necessary
corporate actions and does not (i) require any authorization,
consent or approval by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, (ii)
violate any provision of any law, rule or regulation or of any
order, writ, injunction or decree presently in effect, having
applicability to the Borrower, or the articles of incorporation or
bylaws of the Borrower, or (iii) result in a breach of or
constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which the
Borrower is a party or by which it or its properties may be bound
or affected.
(c) All of the representations and warranties contained in
Section 5 of the Credit Agreement are correct on and as of the date
hereof as though made on and as of such date, except to the extent
that such representations and warranties relate solely to an
earlier date.
9. NO WAIVER. The execution of this Amendment and acceptance of
any documents related hereto shall not be deemed to be a waiver of any
Default or Event of Default under the Credit Agreement or breach, default or
event of default under any Loan Document or other document held by the
Lender, whether or not known to the Lender and whether or not existing on the
date of this Amendment.
10. RELEASE. The Borrower, and the Guarantor by signing the
Acknowledgment and Agreement of Guarantor set forth below, each hereby
absolutely and unconditionally releases and forever discharges the Lender,
and any and all participants, parent corporations, subsidiary corporations,
affiliated corporations, insurers, indemnitors, successors and assigns
thereof, together with all of the present and former directors, officers,
agents and employees of any of the foregoing, from any and all claims,
demands or causes of action of any kind, nature or description, whether
arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which the Borrower or Guarantor has had, now has or
has made claim to have against any such person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of
time to and including the date of this Amendment, whether such claims,
demands and causes of action are matured or unmatured or known or unknown.
11. COSTS AND EXPENSES. The Borrower hereby reaffirms its
agreement under the
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Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Credit Agreement, the
Loan Documents and all other documents contemplated thereby, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, upon receipt of an
accounting for costs and expenses the Borrower specifically agrees to pay all
reasonable fees and disbursements of counsel to the Lender for the services
performed by such counsel in connection with the preparation of this
Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its
sole discretion and without further authorization by the Borrower, make a
loan to the Borrower under the Credit Agreement, or apply the proceeds of any
loan, for the purpose of paying any such fees, disbursements, costs and
expenses.
12. MISCELLANEOUS. This Amendment and the Acknowledgment and
Agreement of Guarantor may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original and all of
which counterparts, taken together, shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date first written above.
NORWEST BANK MINNESOTA, NATIONAL XXXXX'X FASHIONS, INC.
ASSOCIATION
By: By:
Name: Name:
------------------------------- -------------------------------
Its: Its:
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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR
The undersigned, a guarantor of the indebtedness of XXXXX'X
FASHIONS, INC. ("Borrower") to NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
("Lender") pursuant to a Guaranty dated as of March 15, 1999 ("Guaranty"),
hereby (i) acknowledges receipt of the foregoing Amendment; (ii) consents to
the terms and execution of this Amendment by the Borrower; (iii) reaffirms
its obligations to the Lender pursuant to the terms of its Guaranty; (iv)
reaffirms the security interest of Lender and its assets granted to Lender
pursuant to that Security Agreement dated as of December 2, 1996 ("Security
Agreement"); and (v) acknowledges that Lender may amend, restate, extend,
renew or otherwise modify the agreement and any indebtedness or agreement of
Borrower, or enter into any agreement or extend additional or other credit
accommodations, without notifying or obtaining the consent of the undersigned
and without impairing the liability of the undersigned under the Guaranty and
Security Agreement for all of the Borrower's present and future indebtedness
to the Lender.
XXXXX'X FASHIONS CORPORATION
By:
Name:
Title:
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