TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is dated as of July 30, 2000, and entered into by and between THE
RIGHT START, INC., a California corporation ("Borrower"), and HELLER FINANCIAL,
INC. ("Lender").
RECITALS
WHEREAS, Borrower and Lender have entered into that certain
Loan and Security Agreement dated as of November 14, 1996, as amended by that
certain First Amendment to Loan and Security Agreement and Limited Waiver and
Consent dated as of April 30, 1997, as further amended by that certain Second
Amendment to Loan and Security Agreement and Limited Waiver dated July 10, 1997,
as further amended by that certain Third Amendment to Loan and Security
Agreement, Limited Waiver and Consent dated September 3, 1997, as further
amended by that certain Fourth Amendment to Loan and Security Agreement and
Limited Consent effective as of January 30, 1998, as further amended by that
certain Waiver and Fifth Amendment to Loan and Security Agreement dated as of
December 9, 1998, as further amended by that certain Sixth Amendment to the Loan
and Security Agreement and First Amendment to Secured CAPEX Note dated as of
November 8, 1999, as further amended by that certain Seventh Amendment to Loan
and Security Agreement and Second Amendment to Secured CAPEX Note dated as of
January 18, 2000, as further amended by that certain Eighth Amendment to Loan
and Security Agreement and Waiver dated as of April 28, 2000 (the "Eighth
Amendment), as further amended by that certain Ninth Amendment to Loan and
Security Agreement dated as of June 9, 2000 (the "Ninth Amendment" and the Loan
Agreement, as so amended by all the foregoing, the "Loan Agreement");
WHEREAS, Borrower has requested certain amendments to the Loan
Documents (as defined in the Loan Agreement), as set forth herein;
WHEREAS, Lender is willing to grant such amendments, all on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of these premises, the
agreements, provisions and covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Defined Terms. Capitalized terms used but not otherwise defined herein
shall have the meanings given in the Loan Agreement.
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2. Amendment to Subsection 1.1 of the Loan Agreement. The defined terms
"Subscription Agreement" and "Warrant" set forth in subsection 1.1 of the Loan
Agreement are hereby deleted in their entirety and the following substituted,
respectively, therefor:
""Subscription Agreement" means, collectively, (i)
that certain Subscription Agreement dated as of January 18,
2000, regarding the issuance to Lender of 5,130 shares of the
common stock of Borrower and a warrant to acquire 5,000 shares
of the common stock of Borrower, and (ii) that certain
Subscription Agreement dated as of August 8, 2000, regarding
the issuance to Lender of warrants to acquire 20,000 shares
and 5,000 shares of the common stock of Borrower, as each may
be amended from time to time."
""Warrant" means, collectively, (i) the warrant dated January
18, 2000, to purchase 5,000 shares of the common stock of
Borrower issued to Heller Financial, Inc., and (ii) the
warrants to purchase 20,000 shares and 5, 000 shares of the
common stock of Borrower issued or to be issued to Heller
Financial, Inc., as each may be amended from time to time."
3. Amendment to Subsection 5.17 of the Loan Agreement. Subsection 5.17 of
the Loan Agreement is hereby deleted in its entirety and the following
substituted therefor:
"5.17 Minimum Availability. Borrower shall maintain
Minimum Availability of at least $200,000 at all times."
4. Amendment to Subsection 6.1 of the Loan Agreement. Subsection 6.1 of
the Loan Agreement is hereby deleted in its entirety and the following
substituted therefor:
"6.1 Net Worth. Borrower shall maintain Net Worth of
at least (a) $5,900,000 as of July 31, 2000, (b) $5,700,000 as
of August 31, 2000, and (c) $10,800,000 as of September 30,
2000, and as of the end of each month thereafter."
5. Amendment to Subsection 6.3 of the Loan Agreement. Subsection 6.3 of
the Loan Agreement is hereby deleted in its entirety and the following
substituted therefor:
"6.3 Minimum EBITDA. Borrower shall have a minimum
EBITDA for the periods set forth below in the amounts set forth below:
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Period Amount
Three months ended April 30, 1998 ($1,200,000)
Six months ended July 31, 1998 ($1,200,000)
Nine months ended October 31, 1998 ($ 900,000)
Twelve months ended January 31, 1999 ($ 900,000)
Twelve months ended April 30, 1999 ($ 500,000)
Twelve months ended July 31, 1999 $ 0
Twelve months ended October 31, 1999 $ 400,000
Twelve months ended January 31, 2000 $ 500,000
Twelve months ended April 30, 2000 $ 250,000
Twelve months ended July 31, 2000 $ 0
Twelve months ended October 31, 2000 $ 500,000
Twelve months ended February 3, 2001 $ 500,000"
6. Representations and Warranties. Borrower represents and warrants to
Lender as follows:
a. Borrower has been duly organized and is validly existing and in good
standing under the laws of the jurisdiction of its incorporation, as
well as in each jurisdiction in which Borrower is required to be
qualified to transact business.
b. Borrower has full power and authority and legal right to execute and
deliver this Amendment and to perform its obligations under the Loan
Agreement and the other Loan Documents, each as amended hereby, and has
taken all necessary action to authorize such execution, delivery and
performance.
c. This Amendment has been duly executed and delivered by Borrower and
such Amendment, and each of the Loan Agreement and the other Loan
Documents as amended hereby, each constitutes the legally valid and
binding obligations of Borrower, enforceable against Borrower in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally and subject
to the availability of equitable remedies.
7. Conditions to the Effectiveness of this Amendment. Each of the following
shall be conditions precedent to the effectiveness of this Amendment (the date
on which such conditions are met being the "Effective Date" and on such date
this Amendment shall be effective as of July 30, 2000):
a. Borrower shall have duly executed and delivered a counterpart of this
Amendment to Lender or its counsel.
b. After giving effect to this Amendment, (a) no Default or Event of
Default has occurred and is continuing, (b) all of the representations
and warranties contained in the Loan Documents shall be true and
correct in all material respects (except for any representation or
warranty limited by its terms to a specific date), (c) Borrower shall
have performed in all material respects all agreements and satisfied
all conditions which any Loan Document (including as amended hereby)
provides shall be performed by it on or prior to such date, and (d)
Borrower shall have delivered to Lender a certificate to such effect in
the form attached hereto as Exhibit A.
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c. Lender or its counsel shall have received (i) a duly executed and
delivered Subscription Agreement (the "New Subscription Agreement"), in
form and substance satisfactory to Lender, and (ii) the related
warrants issued to "Heller Financial, Inc." for 20,000 shares and 5,000
shares, respectively, of common stock of Borrower (the "New Warrants"),
in form and substance satisfactory to Lender.
d. Borrower shall have delivered to Lender or its counsel a certificate of
its Secretary or an Assistant Secretary, certifying as to (i) the
resolutions of its Board of Directors authorizing (A) this Amendment
and (B) the New Subscription Agreement, the New Warrants and the
issuance of stock under each of the New Subscription Agreement and the
New Warrants, (ii) the incumbency of the officers executing this
Amendment and any other documents in connection herewith, (iii) the
articles of incorporation of Borrower and (iv) the bylaws of Borrower,
each as in effect on the Effective Date, together with a good standing
certificate from the Secretary of State of the State of California with
respect to the Borrower.
e. Lender or its counsel shall have received an opinion of Milbank, Tweed,
Hadley & McCloy LLP, special counsel to Borrower, in form and substance
satisfactory to Lender.
f. Lender or its counsel shall have received two (2) original counterparts
each, executed on behalf of Borrower by an authorized officer thereof,
to the Eighth Amendment and the Ninth Amendment, together with two (2)
original counterparts each to the certificates set forth, respectively,
at Exhibit A to each.
8. Effect of Amendment; Ratification. From and after the Effective Date,
all references in the Loan Documents to the Loan Agreement shall mean the
Loan Agreement as amended hereby. The terms and provisions set forth in
this Amendment shall amend 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 hereby ratified
and confirmed and are and shall continue in full force and effect.
9. No Waiver. Nothing contained herein or in any other instrument or
document executed in connection herewith, nor any action taken by Lender in
connection with this Amendment or any other action contemplated hereby shall in
any event be construed or deemed to constitute a waiver of any past, present or
future Default or Event of Default or a waiver or an estoppel of any cause of
action Lender may have against Borrower for any reason whatsoever, and Lender
hereby reserves all rights and remedies under the Agreement or the other Loan
Documents.
10. Fees and Expenses. Borrower acknowledges that all fees and expenses
(including reasonable attorneys' fees) incurred by Lender in connection with
this Amendment are for the account of Borrower pursuant to the Loan Agreement.
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11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. Delivery via facsimile of an executed counterpart of a
signature page of this Amendment shall be effective as delivery of a
manually-executed counterpart of this Amendment.
12. Severability. The illegality or unenforceability of any provision of
this Amendment, the Loan Agreement (including as amended hereby) or any other
document or any other instrument or agreement required hereunder or thereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Amendment, the Loan Agreement (including as amended
hereby) or such other document or any other instrument or agreement required
hereunder or thereunder.
13. Successors and Assigns. This Amendment shall be binding upon and shall
inure to the benefit of Lender and Borrower and their respective successors and
assigns.
14. Governing Law. This Amendment shall be governed by, and shall be
construed and enforced in accordance with, the internal laws of the State of
Illinois, without regard to conflicts of laws principles.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by a duly authorized officer as of the date first
above written.
THE RIGHT START, INC.
By: /s/ Jerry R. Welch
Name: Jerry R. Welch
Its: President and Chief Executive Officer
HELLER FINANCIAL, INC.
By: /s/ Barry S. O'Neall
Name: Barry S. O'Neall
Its: Senior Vice President
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