SECOND AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Second Amendment to Amended and Restated Loan and Security
Agreement is made as of the 31st day of October, 1998 by and between
BankBoston Retail Finance Inc. (in such capacity, the "Agent"), as
Agent for the Lenders party to a certain Amended and Restated Loan
and Security Agreement dated as of June 4, 1998,
the Lenders party thereto, and
Designs, Inc. (the "Borrower"), a Delaware corporation with its
principal executive offices at 00 X Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx
00000
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
W I T N E S S E T H:
WHEREAS, on June 4, 1998, the Agent, the Lenders and the Borrower
entered in a certain Amended and Restated Loan and Security Agreement (as
amended and in effect, the "Agreement"); and
WHEREAS, the Borrower desires to amend and terminate the Joint Venture,
to acquire certain of the assets of the Joint Venture, and to assume certain of
the liabilities of the Joint Venture, all of which requires the consent of the
Agent and the Lenders pursuant to the Agreement; and
WHEREAS, the Agent, the Lenders and the Borrower desire to consent to
the aforesaid transaction and to modify certain of the provisions of the
Agreement as set forth herein.
NOW, THEREFORE, it is hereby agreed among the Agent, the Lenders and
the Borrowers as follows:
1. Capitalized Terms. All capitalized terms used herein and not
otherwise defined shall have the same meaning herein as in the
Agreement.
2. Amendments to Article 1. The provisions of Article 1 of the Agreement
are hereby amended
(a) by adding the following new definitions:
"Joint Venture Distribution Agreement": The Amendment and
Distribution Agreement dated as of October 31, 1998 by and among
Designs JV Corp., LDJV Inc. and The Designs/OLS Partnership.
"JV Acquisition": The transactions described in the Joint Venture
Distribution Agreement, including, without limitation, the
acquisition by the Borrower of eleven (11) retail store leases
and certain personal property associated therewith from the Joint
Venture pursuant to the Joint Venture Distribution Agreement.
(b) by amending the following definitions, effective upon the
dissolution of the Joint Venture (in accordance with the
provisions of Section 6.1 of the Joint Venture Distribution
Agreement):
(i) the definition of "Affiliate" by deleting the proviso
thereto in its entirety.
(ii) the definition of "ERISA Affiliate" by deleting the
words "(other than the Joint Venture)" therefrom.
(iii) the definition of "Guarantors" by deleting the words
"the Joint Venture and" in the parenthetical thereto.
(iv) the definition of "Indebtedness" by deleting the words
"(other than the Joint Venture)" therefrom.
(v) the definition of "Permitted Acquisition" by deleting
the words "(other than the Joint Venture)" from
subparagraph (A) thereof.
(vi) the definition of "Related Entity" by deleting the
words " but excluding, in any event, the Joint Venture"
therefrom.
(vii) the definition of "Tangible Net Worth" to read as
follows:
"Tangible Net Worth": The result, on the day
on which compliance with any financial
performance covenant applicable to
Tangible Net Worth is being determined,
of (a) the difference between (i) the
Obligors' assets and (ii) the Obligors'
liabilities, respectively, minus (b) the
aggregate of those of the Obligors'
assets as may be deemed intangible in
accordance with GAAP, all of the
foregoing as would be reflected on a
balance sheet prepared in accordance
with the requirements of Section 5-1 hereof.
(c) by deleting the number "$300,000.00" appearing in clause (i) of
the definition of "Availability Reserves" and substituting the
number "$400,000.00" in its stead.
3. Amendments to Article 4. The provisions of Article 4 of the Loan
Agreement are hereby amended by
(a) adding the following new subparagraph to Section 4-7:
(d) Indebtedness assumed pursuant to the
Joint Venture Distribution Agreement
(including, without limitation, any guaranty
of the indemnities furnished thereunder).
(b) by deleting the provisions of subparagraph 4-18(c)(i) in their
entirety and substituting the words "Intentionally Omitted" in
their stead.
(c) deleting the provisions of clause (B)(including the first
proviso thereto) in Section 4-20(c) of the Agreement.
(d) adding the words "in accordance with the Joint Venture
Distribution Agreement" at the end of the first sentence of
Section 4-21(a).
(e) adding the following at the end of Section 4-21(b):
, other than in accordance with the Joint Venture
Distribution Agreement.
(f) adding the following new subsection to Section 4-21:
(c) The Borrower shall not, and shall not
permit, any material change or amendment to
the Joint Venture Distribution Agreement.
(g) adding the following at the end of Section 4-22:
,other than as contemplated in the Joint Venture
Distribution Agreement.
4. Amendments to Article 5. The provisions of Article 5 of the
Loan Agreement are hereby amended by deleting the number
"$50,000.00" appearing in Section 5-11(f)(i) and substituting
the number "$65,000.00" in its stead.
5. Amendments to Article 10. The provisions of Article 10 of the Loan
Agreement are hereby amended by
(a) adding the following at the end of Section 10-7 thereof:
(except that possible terminations of
Capital Leases by virtue of the consummation
of the JV Acquisition shall not constitute
an Event of Default hereunder unless the
subject lessor actually terminates its
Capital Lease and the Borrower fails to
repay the amounts due thereunder within
three (3) Business Days thereafter).
(b) adding the following at the end of Section 10-17 thereof:
(except that any default arising thereunder
by virtue of the consummation of the JV
Acquisition shall not constitute an Event of
Default hereunder unless the lessor declares
a default thereunder and the Borrower fails
to repay the amounts due thereunder within
three (3) Business Days thereafter).
(c) deleting the provisions of Section 10-19 in their entirety.
6. Amendments to Exhibits.
(a) The following Exhibits to the Agreement are hereby deleted in
their entirety and new Exhibits in the form annexed hereto
substituted in their stead:
(i) Exhibit 4-3
(ii) Exhibit 4-5
(b) The provisions of Exhibit 5-13(a) are hereby amended by deleting
(i) the Minimum Tangible Net Worth required for the Fiscal
Quarter ending October, 1998 (i.e. $51,000,000.00) and
substituting $57,000,000.00 in its stead; and
(ii) the Minimum Tangible Net Worth required for the Fiscal
Quarter ending January, 1999 and each fiscal quarter ending
thereafter (i.e. $48,000,000.00) and substituting "(x)
$56,000,000.00, plus (y) an amount equal to the difference
between the "Final Outlet Assets Value" as determined under
Section 2.3 of the Joint Venture Distribution Agreement
and $6,000,000.00 (but in no event less than zero)" in its
stead.
7. Consent to JV Acquisition. The Agent and the Lenders hereby consent to
the consummation of the JV Acquisition and the execution and
performance of the Joint Venture Distribution Agreement and waive any
Events of Default which otherwise would have been occasioned thereby.
8. Ratification of Loan Documents. Except as provided herein, all terms
and conditions of the Agreement on the other Loan Documents remain in
full force and effect.
9. Miscellaneous.
(a) The Borrower and the Lender acknowledge that:
(i) the Inventory acquired by the Borrower in the JV
Acquisition and the LOS Inventory constitutes "Acceptable
Inventory"; and
(ii) the notification by the Borrower of its intent to close
the locations set forth in EXHIBIT 4-5 under the caption
"Stores Planned for Closure" satisfies the notice
requirements of Section 4-5(d) of the Agreement.
(b) This Second Amendment to Amended and Restated Loan and
Security Agreement may be executed in several counterparts and by
each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which
together shall constitute one instrument.
(c) This Second Amendment to Amended and Restated Loan and
Security Agreement expresses the entire understanding of the parties
with respect to the transactions contemplated hereby. No prior
negotiations or discussions shall limit, modify, or otherwise affect
the provisions hereof.
(d) Any determination that any provision of this Second
Amendment or any application hereof is invalid, illegal or
unenforceable in any respect and in any instance shall not affect the
validity, legality, or enforceability of such provision in any other
instance, or the validity, legality or enforceability of any other
provisions of this Second Amendment to Amended and Restated Loan and
Security Agreement.
(e) The Borrower shall pay on demand all costs and expenses of
the Agent and each Lender, including, without limitation, reasonable
attorneys' fees in connection with the preparation, negotiation,
execution and delivery of this Second Amendment to Amended and
Restated Loan and Security Agreement.
(f) The Borrower warrants and represents that the Borrower has
consulted with independent legal counsel of the Borrower's selection
in connection with this Second Amendment and is not relying on any
representations or warranties of the Agent or any Lender or their
respective counsel in entering into this Second Amendment.
IN WITNESS WHEREOF, the parties have hereunto caused this Second
Amendment to be executed and their seals to be hereto affixed as of the date
first above written.
AGENT
BANKBOSTON RETAIL FINANCE INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Director
LENDERS
BANKBOSTON RETAIL FINANCE INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Director
NORWEST BUSINESS CREDIT, INC.
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Assistant Vice President
BORROWER
DESIGNS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
341050.4
