SECOND AMENDMENT
TO LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Second
Amendment") is entered into and effective as of April 11, 2002 by and among ZB
Company, Inc., a Delaware corporation with its chief executive office located at
00000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx ("Borrower"), the financial
institutions from time to time party to the Loan Agreement referred to below
(collectively, the "Lenders" and each individually, a "Lender"), and XXXXX FARGO
RETAIL FINANCE, LLC, as agent for the Lenders under the Loan Agreement (in such
capacity, "Agent").
RECITALS
Borrower, Agent and the Lenders are party to a Loan and Security Agreement
dated as of September 5, 2001, as amended by the First Amendment to Loan and
Security Agreement dated as of October 31, 2001 (as so amended, further amended
hereby and as further amended, restated, supplemented or otherwise modified from
time to time, the "Loan Agreement") pursuant to which the Lenders have agreed to
make certain revolving credit advances and other financial accommodations to
Borrower.
Borrower has requested certain amendments to the Loan Agreement, including
changes in the Tangible Net Worth and Effective Advance Rate covenants set forth
therein, and that the Agent and Lenders grant certain waivers thereunder. The
Agent and the Lenders are willing to amend the Loan Agreement and to grant such
waivers on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties signatory hereto agree
as follows.
1. Definitions. Capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Loan Agreement.
2. Amendments to the Loan Agreement.
(a) Section 1.1 of the Loan Agreement is hereby amended
(i) first, by inserting the following new defined term in the
proper alphabetical order:
"Second Amendment" means the Second Amendment to Loan
and Security Agreement dated as of April 11, 2002 by
and among Borrower, Agent and the Lenders."
(ii) and, second, by inserting the words ", the Second Amendment"
after the words "means this Agreement, the First Amendment"
and before the words ", the Availability Letter of Credit" in
the definition of the term "Loan Documents".
(b) Section 7.20 of the Loan Agreement is hereby amended by deleting the
first sentence of subsection (a) of such Section 7.20 in its entirety and
inserting in lieu thereof the following sentence: "Fail to maintain a Tangible
Net Worth of at least $14,000,000 as of April 30, 2002."
3. Waivers.
(a) The Lenders hereby waive the Event of Default arising under Section
2.1(a) of the Loan Agreement solely to the extent arising from the fact that the
sum of the aggregate outstanding Advances plus all outstanding Stand-by Letters
of Credit in an aggregate amount in excess of $1,000,000 have exceeded 90% of
the product of the Cost value of Eligible Inventory multiplied by Net Retail
Liquidation Value during the month of March 2002.
(b) The Lenders hereby waive the Event of Default arising under Section
7.20(a) of the Loan Agreement solely to the extent arising from Borrower's
failure to comply with the minimum Tangible Net Worth covenant in such Section
7.20(a) for the calendar months of February and March 2002.
(c) The Lenders hereby waive the Event of Default arising under Section
7.21 of the Loan Agreement solely to the extent arising from Borrower's failure
to comply with the maximum Effective Advance Rate covenants set forth in Item A
of Schedule 7.21 of the Loan Agreement for the calendar months of January,
February and March 2002.
4. Conditions Precedent to Second Amendment. The satisfaction of each of
the following, unless waived or deferred by Agent, in its sole discretion, shall
constitute conditions precedent to the effectiveness of this Second Amendment
and each and every provision hereof:
(a) The representations and warranties in this Second Amendment, the
Loan Agreement as amended by this Second Amendment, and the other Loan Documents
shall be true and correct in all respects on and as of the date hereof, as
though made on such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) No Event of Default shall have occurred and be continuing on the
date hereof, nor shall result from the consummation of the transactions
contemplated herein;
(c) No injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any
Governmental Authority against Borrower or Agent;
(d) Agent shall have received a second amendment fee of $5000 from
Borrower; and
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(e) Agent shall have received payment in full of its out-of pocket
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with the Loan Agreement and this Second Amendment.
5. Representations and Warranties. Borrower hereby represents and
warrants to Agent that (a) the execution, delivery, and performance of this
Second Amendment and of the Loan Agreement are within Borrower's corporate
powers, have been duly authorized by all necessary corporate action, and are not
in contravention of any law, rule, or regulation, or any order, judgment,
decree, writ, injunction, or award of any arbitrator, court, or governmental
authority, or of the terms of its charter or bylaws, or of any contract or
undertaking to which it is a party or by which any of its properties may be
bound or affected, (b) this Second Amendment and the Loan Agreement constitute
Borrower's legal, valid, and binding obligation, enforceable against Borrower in
accordance with its terms, and (c) this Second Amendment has been duly executed
and delivered by Borrower.
6. Choice of Law. The validity of this Second Amendment, its
construction, interpretation and enforcement, and the rights of the parties
hereunder, shall be determined under, governed by, and construed in accordance
with the laws of the State of New York without giving effect to conflicts of
laws principles.
7. Counterparts; Telefacsimile Execution. This Second Amendment may be
executed in any number of counterparts and by different parties and separate
counterparts, each of which when so executed and delivered, shall be deemed an
original, and all of which, when taken together, shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this
Second Amendment by telefacsimile shall be as effective as delivery of a
manually executed counterpart of this Second Amendment. Any party delivering an
executed counterpart of this Second Amendment by telefacsimile also shall
deliver a manually executed counterpart of this Second Amendment but the failure
to deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Second Amendment.
8. Effect on Loan Agreement. The Loan Agreement, as amended hereby,
shall be and remain in full force and effect in accordance with its respective
terms and hereby is ratified and confirmed in all respects. The execution,
delivery, and performance of this Second Amendment shall not operate as a waiver
of or, except as expressly set forth herein, as an amendment of, any right,
power, or remedy of the Agent under the Loan Agreement, as in effect prior to
the date hereof.
9. Further Assurances. Borrower shall execute and deliver all
agreements, documents, and instruments, in form and substance satisfactory to
Agent, and take all actions as Agent may reasonably request from time to time,
to perfect and maintain the perfection and priority of the security interest in
the Collateral held by Agent and to fully consummate the transactions
contemplated under this Second Amendment and the Loan Agreement, as amended by
this Second Amendment.
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10. Miscellaneous.
(a) Upon and after the effectiveness of this Second Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder", "herein",
"hereof" or words of like import referring to the Loan Agreement, and each
reference in the other Loan Documents to "the Loan Agreement", "thereunder",
"therein", "thereof" or words of like import referring to the Loan Agreement,
shall mean and be a reference to the Loan Agreement as modified and amended
hereby.
(b) The Loan Agreement and all other Loan Documents, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed and shall constitute the legal, valid, binding and enforceable
obligations of Borrower to Agent.
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Loan and Security Agreement to be executed as of the date first
above written.
BORROWER:
ZB COMPANY, INC., a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx,
Executive Vice President
REQUIRED LENDERS:
XXXXX FARGO RETAIL FINANCE, LLC,
as Agent and as a Lender
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Vice President
ACKNOWLEDGED:
THE RIGHT START, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx,
Executive Vice President
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Acknowledgment and Consent
Reference is made to the Participation and Intercreditor Agreement
dated as of September 5, 2001 by and between Agent and Hilco Capital LP, a
Delaware limited partnership ("Participant"), as amended by the Letter Agreement
dated as of November 1, 2001. By its signature below, Participant acknowledges
receipt of a copy of the Second Amendment and consents to the execution and
delivery by Borrower, Agent and the Lenders of the Second Amendment and the
execution and delivery of all other Loan Documents (as defined in the Loan
Agreement as amended by the Second Amendment) to be executed in connection
therewith.
HILCO CAPITAL LP
By: /s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx,
Vice President
