FOURTH AMENDMENT
TO LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Fourth
Amendment") is entered into as of March 12, 2002 by and among The Right Start,
Inc., a California corporation ("Parent"), Toy Soldier, Inc., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Toy Soldier" and, jointly,
severally, and jointly and severally with Parent, "Borrowers"), and Xxxxx Fargo
Retail Finance, LLC (the "Lender").
RECITALS
Parent and the Lender are parties to a Loan and Security Agreement dated as
of January 23, 2001, as amended by (i) the First Amendment to Loan and Security
Agreement dated as of September 5, 2001 by and between Parent and the Lender,
(ii) the Second Amendment to Loan and Security Agreement dated as of December
14, 2001 by and between Parent and the Lender, and (iii) the Third Amendment to
Loan and Security Agreement dated as of January 6, 2002 by and among Borrowers
and the Lender (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 Lender has agreed to make certain revolving
credit advances and other financial accommodations to Parent.
Borrowers have requested certain amendments to the Loan Agreement,
including an increase in the Credit Limit, and that the Lender granter certain
waivers thereunder. The Lender is willing to amend the Loan Agreement and 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. Amendments to the Loan Agreement.
(a) Section 1-8 of the Loan Agreement is hereby amended by deleting
subsection (a) of such Section in its entirety and inserting in lieu
thereof the following:
"(a) The unpaid principal balance of the
Loan Account up to $17,500,000 shall bear interest, until
repaid (calculated based upon a 360-day and actual days
elapsed) at a rate of interest equal to the sum of the Base
plus 0.75% per annum. Any unpaid principal balance of the Loan
Account in excess of $17,500,000 shall bear interest, until
repaid (calculated based upon a 360-day and actual days
elapsed) at a rate of interest equal to the sum of the Base
plus 1.00% per annum. in no event shall any rate of interest
payable hereunder be less than 8% per annum or in excess of
the maximum rate permitted by applicable law."
(b) Section 5-25 of the Loan Agreement is hereby amended by deleting such
Section in its entirety and inserting in lieu thereof the following:
"5-25. Minimum Excess Availability. As of any date of determination during
the period commencing March 1, 2002 and ending April 15, 2002, Borrower shall
not allow Excess Availability to be less than $2,000,000.
(c) Exhibit 3 of the Loan Agreement is hereby amended
(i) first, by deleting the second sentence of the definition of
"Acceptable Inventory";
(ii) and, second, by deleting the definition of "Credit Limit"
and inserting in lieu thereof the following definition:
""Credit Limit": $17,500,000; provided, that during the period commencing
March 1, 2002 and ending April 15, 2002, the Credit Limit shall be $24,000,000."
2. Conditions Precedent to Fourth Amendment. The satisfaction of each of the
following, unless waived or deferred by the Lender, in its sole discretion,
shall constitute conditions precedent to the effectiveness of this Fourth
Amendment and each and every provision hereof:
(a) The Lender shall have received each of the following documents, each
such document in form and substance reasonably satisfactory to the Lender, duly
executed and in full force and effect:
(i) this Fourth Amendment, fully executed by each of the parties hereto;
(ii) such other instruments, certificates or documents as the Lender
shall reasonably request, each of which shall be in form and substance
satisfactory to the Lender, for the purpose of implementing or effectuating the
provisions of the Loan Agreement and the other Loan Documents, each as amended
hereby; and
(iii) an opinion of legal counsel to Borrowers in form and substance
reasonably satisfactory to the Lender.
(b) The representations and warranties in this Fourth Amendment, the Loan
Agreement as amended hereby and the other Loan Documents shall be true and
correct in all material 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);
(c) Except as expressly waived hereby, 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;
(d) No injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
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contemplated herein shall have been issued and remain in force by any court or
other governmental authority against either Borrower or the Lender;
(e) The Lender shall have received a fourth amendment fee of $50,000 from
the Borrowers; and
(f) The Lender 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 Fourth Amendment.
3. Waiver. The Lender hereby waives the Event of Default arising under Section
10-7A of the Loan Agreement solely to the extent arising from the failure of ZB
Company, Inc. to comply with the Effective Advance Rate covenant for the
calendar months of January and February 2002 under Section 7.21 of the ZB Loan
Agreement.
4. Representations and Warranties. Each Borrower hereby represents and warrants
to the Lender that (a) the execution, delivery, and performance of this Fourth
Amendment and the Loan Agreement are within such 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 Fourth Amendment and the Loan Agreement constitute such Borrower's
legal, valid, and binding obligation, enforceable against such Borrower in
accordance with its terms; (c) this Fourth Amendment has been duly executed and
delivered by such Borrower; (d) the Borrowers are in compliance with all of the
terms and provisions set forth in the Loan Agreement and each of the other Loan
Documents, as previously amended and as amended hereby, on their part to be
observed or performed on or prior to the date hereof; and (e) except as
expressly waived hereby, no Event of Default has occurred and is continuing.
5. Reaffirmation. Each Borrower further reaffirms all of its obligations, as
amended hereby, under the Loan Agreement, as amended hereby, and the other Loan
Documents.
6. 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 Fourth 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 Lender under the Loan Agreement, as in effect prior to the date hereof.
7. Further Assurances. The Borrowers shall execute and deliver all agreements,
documents, and instruments, in form and substance satisfactory to the Lender,
and take all actions as the Lender may reasonably request from time to time, to
perfect and maintain the perfection and priority of the security interest in the
Collateral held by the Lender and to fully consummate the transactions
contemplated under this Fourth Amendment and the Loan Agreement, as amended
hereby.
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8. No Novation; Entire Agreement. This Fourth Amendment evidences solely the
amendment of the terms and provisions of the Borrower's obligations under the
Loan Agreement and is not a novation or discharge thereof. There are no other
understandings, express or implied, between the Lender and the Borrowers
regarding the subject matter hereof.
9. Choice of Law. The validity of this Fourth 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 Commonwealth of Massachusetts without giving effect to conflicts of laws
principals.
10. Counterparts; Telefacsimile Execution. This Fourth 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
Fourth Amendment by telefacsimile shall be as effective as delivery of a
manually executed counterpart of this Fourth Amendment. Any party delivering an
executed counterpart of this Fourth Amendment by telefacsimile also shall
deliver a manually executed counterpart of this Fourth Amendment but the failure
to deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Fourth Amendment.
11. Definitions and Construction.
(a) Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Loan Agreement, as amended
hereby.
(b) This Fourth Amendment is a Loan Document. This Fourth Amendment and the
Loan Agreement shall be construed collectively and in the event that any term,
provision or condition of any of such documents is inconsistent with or
contradictory to any term, provision or condition of any other such document,
the terms, provisions and conditions of this Fourth Amendment shall supersede
and control the terms, provisions and conditions of the Loan Agreement. Upon and
after the effectiveness of this Fourth 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.
(c) Except to the extent expressly amended hereby, the Loan Agreement and
all other Loan Documents shall be unaffected hereby and shall continue in full
force and effect and are hereby in all respects ratified and confirmed, and the
Loan Agreement and other Loan Documents, as amended hereby, constitute the
legal, valid, binding and enforceable obligations of the Borrowers to the
Lender.
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IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to Loan and Security Agreement to be executed as of the date first
above written.
BORROWERS:
THE RIGHT START, INC.
By:/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Executive Vice President
TOY SOLDIER, INC.
By:/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Executive Vice President
LENDER:
XXXXX FARGO RETAIL FINANCE, LLC, as Lender
By:/s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx,
Senior Vice President
