AMENDMENT No. 1, dated as of March 28, 1998 (this "Amendment"), to the
Loan and Security Agreement, dated as of April 25, 1997 (as heretofore or
hereafter amended, supplemented and otherwise modified, the "Agreement"), among
The Cosmetic Center, Inc. (the "Borrower"), the financial institutions listed
therein and BankAmerica Business Credit, Inc., as Agent.
W I T N E S S E T H:
WHEREAS, the Borrower and the Lenders are parties to the Agreement;
WHEREAS, the Borrower has requested that the Lenders modify certain
provisions of the Agreement and the Lenders are willing to do so on the terms
and conditions as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms used
herein have the respective meanings ascribed thereto in the Agreement.
2. Amendments to the Agreement. The Agreement is hereby amended as
follows:
(a) The definition of Applicable Margin in Section 1.1 of the
Agreement is amended in its entirety to read as follows:
"Applicable Margin" means (i) with respect to Base Rate
Revolving Loans and all other Obligations (other than LIBOR Rate
Loans), three quarters of one percentage point (0.75%) and
(ii) with respect to LIBOR Rate Loans, two and one-half
percentage points (2.50%); provided, however, "Applicable
Margin" shall mean (a) five-eighths of one percentage point
(.625%) for Base Rate Loans and two and three-eighths percentage
points (2.375%) for LIBOR Rate Loans if the Interest Coverage
Ratio is equal to or greater than 2.0:1.0, but less than 3.0:1.0
and (b) one-half of one percentage point (0.50%) for Base Rate
Loans and two and one-quarter percentage points (2.25%) for
LIBOR Rate Loans if the Interest Coverage Ratio is equal to or
greater than 3.0:1.0.
Any change in the Applicable Margin shall be effective from the
first day of the month following receipt by the Agent of the
most current certificate
delivered pursuant to Section 7.2(e), provided that such
certificate indicates that the Interest Coverage Ratio
corresponding to such Applicable Margin has been met or
exceeded for the preceding four fiscal quarters ended on the
last day of the fiscal quarter covered by such certificate.
If the Borrower fails to timely deliver the certificate required
pursuant to Section 7.2(e) or if an Event of Default occurs, the
Applicable Margin shall be immediately increased to the highest
rate set forth above until the requisite certificate is
delivered to Lender and/or the Event of Default is cured or
waived, as the case may be.
(b) The definition of "Stated Termination Date" in Section 1.1 of
the Agreement is amended in its entirety to read as follows:
"Stated Termination Date" means April 30, 1999 or such later
date to which it may have been extended pursuant to the last
sentence of Section 12.1."
(c) Section 7.2(e) of the Agreement is amended by changing the
phrase "covenant set forth in Section 9.28" to read "covenants
set forth in Section 9.28 and 9.29".
(d) Section 9.28 of the Agreement is amended in its entirety as
follows:
9.28 Adjusted Tangible Net Worth. CCI on a consolidated basis shall
maintain Adjusted Tangible Net Worth, determined as of the last day of each
fiscal quarter indicated below, of not less than the following amounts:
2nd Fiscal Quarter 1997 $22,400,000
3rd Fiscal Quarter 1997 22,000,000
4th Fiscal Quarter 1997 29,200,000
1st Fiscal Quarter 1998 24,000,000
2nd Fiscal Quarter 1998 22,308,000
3rd Fiscal Quarter 1998 23,847,000
4th Fiscal Quarter 1998 30,288,000
1st Fiscal Quarter 1999 and thereafter 27,288,000
(e) Section 9.29 of the Agreement is amended in its entirety as
follows:
9.29 Interest Coverage Ratio. Beginning with the fourth fiscal quarter of
1997, the Borrower shall maintain an Interest Coverage Ratio, determined as of
the last day of each fiscal quarter for the four fiscal quarters ending on
such last day (except that, with respect to the fourth fiscal quarter of 1997,
for the three fiscal quarters ending on the last day of such fiscal quarter),
of not less than the amount set forth below:
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Period Interest
Ending Coverage Ratio
-------- --------------
4th Fiscal Quarter 1997 2.2:1
1st Fiscal Quarter 1998 1.15:1
2nd Fiscal Quarter 1998 1.25:1
3rd Fiscal Quarter 1998 1.75:1
4th Fiscal Quarter 1998 and thereafter 2.0:1
(f) Section 12.1 of the Agreement is amended by inserting the words
"but prior to April 30, 1999 or (iii) .125% of the Total Facility
if such termination is made on or after April 30, 1999 but prior
to April 30, 2000" after the words "after the first Anniversary
Date" in clause (c)(ii) of the second sentence thereof.
(g) Section 12.1 of the Agreement is amended by inserting the words
"but prior to April 30, 1999 or (z) .125% of the Total Facility
if such termination is made on or after April 30, 1999 but prior
to April 30, 2000" after the words "after the first Anniversary
Date" in clause (y) of the last sentence thereof.
(h) Section 12.1 of the Agreement is amended by inserting the words
"extended or" between the words "unless" and "terminated" in the
first sentence thereof and adding the following immediately after
the last sentence of Section 12.1:
"The Lenders may, at their option, elect to extend this Agreement
to April 30, 2000, by giving the Borrower written notice of such
election not later than July 15, 1998."
3. Representations and Warranties. To induce the Lenders to enter into
this Amendment, the Borrower hereby represents and warrants as follows, with
the same effect as if such representations and warranties were set forth in the
Agreement:
(i) the Borrower has the power and authority to enter into this
Amendment and has taken all corporate action required to
authorize the Borrower's execution, delivery and performance of
this Amendment. This Amendment has been duly executed and
delivered by the Borrower, and the Agreement, as amended hereby,
constitutes the valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms.
The execution, delivery, and performance of this Amendment and
the Agreement, as amended hereby, by the Borrower will not
violate its certificate of incorporation or by-laws or any
material agreement or legal requirement binding on the Borrower.
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(ii) On the date hereof and after giving effect to the terms of this
Amendment, (A) the Agreement and the other Loan Documents are
in full force and effect and constitute binding obligations,
enforceable against the Borrower in accordance with their
respective terms; (B) no Default or Event of Default has
occurred and is continuing; and (C) the Borrower has no defense
to or setoff, counterclaim or claim against payment of the
Obligations and enforcement of the Loan Documents based upon
a fact or circumstance existing or occurring on or prior to
the date hereof.
4. Limited Effect. Except as expressly amended hereby, all of the
covenants, representations and warranties (including, without limitation, those
found in Section 9.1), and provisions of the Agreement are and shall continue
to be in full force and effect. Upon the effectiveness of this Amendment,
each reference in the Agreement to "this Agreement", "hereunder", "herein" or
words of like import and each reference in the other Loan Documents to the
Agreement shall mean and be a reference to the Agreement as amended hereby.
5. Conditions of Effectiveness. This Amendment shall become effective as
of March 28, 1998 when and only when this Amendment shall be executed and
delivered by the Borrower, the Agent and the Lenders.
6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT
OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
7. Counterparts. This Amendment may be executed by the parties hereto in
any number of separate counterparts, each of which shall be an original, and
all of which taken together shall be deemed to constitute one and the same
instrument.
8. Amendment. No modification or waiver of any provision of this
Amendment, or any consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective power and duly authorized
officers as of the day and year first above written.
"BORROWER"
The Cosmetic Center, Inc., as the Borrower
By /s/ XXXXXX X. XXXXXXX
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Name: XXXXXX X. XXXXXXX
Title: CHIEF FINANCIAL OFFICER
"AGENT"
BankAmerica Business Credit, Inc., as the Agent
By /s/ XXX X. XXXXXXXXXXX
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Name: XXX X. XXXXXXXXXXX
Title: VICE PRESIDENT
"LENDERS"
BankAmerica Business Credit, Inc., as a Lender
By /s/ XXX X. XXXXXXXXXXX
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Name: XXX X. XXXXXXXXXXX
Title: VICE PRESIDENT
Bank Boston, N.A., as a Lender
By /s/ XXXXXX XXXXXX
---------------------------------------
Name: XXXXXX XXXXXX
Title: VICE PRESIDENT
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