SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT AND LIMITED WAIVER
This Second Amendment to Loan and Security Agreement and Limited Waiver
("Amendment") is dated July 10, 1997 and entered into by and between XXXXXX
FINANCIAL, INC. ("Lender"), and THE RIGHT START, INC. ("Borrower").
WHEREAS, Lender and Borrower have entered into a Loan and Security
Agreement dated November 14, 1996 (as amended, the "Loan Agreement"); and
WHEREAS, Lender and Borrower desire to amend the Agreement with respect to
the Minimum EBITDA covenant contained in subsection 6.3 thereof, subject to the
terms and conditions set forth herein; and
WHEREAS, Borrower has requested a temporary increase in Letter of Credit
Liability from $2,000,000 to $3,000,000 until July 31, 1997; and
WHEREAS, an Event of Default is in existence under that certain letter
agreement dated November 15, 1996 (the "Letter Agreement") between Borrower and
Lender wherein Borrower agreed to establish a Blocked Account with a Collecting
Bank satisfactory to Lender and to otherwise comply with subsection 5.6 of the
Loan Agreement by December 16, 1996;
WHEREAS, Borrower has been unable to comply with the terms of the Letter
Agreement as they pertain to the Blocked Account, and has requested that Lender
waive the Event of Default resulting from said noncompliance (the "Existing
Event of Default") until July 31, 1997; and
WHEREAS, Lender has agreed to: (i) amend the Agreement with respect to the
Minimum EBITDA covenant contained in subsection 6.3 thereof, (ii) amend the
Agreement to temporarily increase the aggregate amount of Letter of Credit
Liability, and (iii) waive the Existing Event of Default, subject to the terms
and conditions set forth herein;
NOW THEREFORE, in consideration of the mutual conditions and agreements set
forth in the Agreements and this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01. Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the Loan
Agreement, as amended hereby.
ARTICLE II. LIMITED WAIVER
Subject to satisfaction of the conditions set forth in Article IV herein,
Lender hereby waives the Existing Event of Default until July 31, 1997. This is
a limited waiver and shall not be deemed to constitute a waiver of any other
existing Events of Default or any future breach of the Agreement or any of the
other Loan Documents (including, without limitation, a breach of the covenant
causing the Existing Event of Default for any period other than that specified
herein).
ARTICLE III. AMENDMENTS
Section 3.01. Amendment to Subsection 6.3 of the Loan Agreement. Subsection
6.3 is hereby amended and restated as follows:
6.3 Minimum EBITDA. Borrower shall have a minimum EBITDA for the two
(2) fiscal quarters ending July 31, 1997 of no more negative than
($1,850,000) and for the three (3) fiscal quarters ending October 31, 1997
of no more negative than ($2,250,000).
Section 3.02. Amendment to Subsection 2.1(G)(1) of the Loan Agreement.
Subsection 2.1(G)(1) is hereby amended and restated as follows:
(1) Maximum Amount. The aggregate amount of Letter of Credit Liability
with respect to all Lender Letters of Credit outstanding at any time shall
not exceed $2,000,000, with the exception of the period from June 1, 1997
to July 31, 1997, in which the aggregate amount of Letter of Credit
Liability outstanding at any time shall not exceed $3,000,000.
ARTICLE IV. MISCELLANEOUS
Section 4.01. Conditions. The effectiveness of this Amendment is subject to
the satisfaction of the following conditions precedent (unless specifically
waived in writing by Lender):
(a) there shall have occurred no material adverse change in the business,
operations, financial conditions, profits or prospects, or in the
Collateral of Borrower;
(b) Borrower shall have executed and delivered such other documents and
instruments as Lender may require; and
(c) all corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and
other legal matters incident thereto shall be satisfactory to Lender
and its legal counsel.
Section 4.02 Ratification. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and, except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement, are ratified and confirmed
and shall continue in full force and effect.
Section 4.03 Corporate Action The execution, delivery and performance of
this Amendment have been authorized by all requisite corporate action on the
part of Borrower and will not violate the Articles of Incorporation or Bylaws of
Borrower.
Section 4.04 Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 4.05 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Lender and Borrower and their respective
successors and assigns.
Section 4.06 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first above written.
XXXXXX FINANCIAL, INC.,
as Lender
By:
Title:
THE RIGHT START, INC.,
as Borrower
By:
Title:
