<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File No. 0-20802
CELEBRITY, INC.
(Exact name of registrant as specified in its charter)
Texas 75-1289223
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) No.)
Physical Delivery Address:
4520 Old Troup Road
Tyler, Texas 75707
Mailing Address:
P.O. Box 6666
Tyler, Texas 75711
(903) 561-3981
(Address, including zip code, of principal executive
offices and registrant's telephone number, including
area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
------ ------
The registrant had 6,309,602 shares of Common Stock, par value $.01 per share,
outstanding as of November 8, 1996.
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PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS Page
----
<S> <C> <C>
Condensed Consolidated Balance Sheets at
September 30, 1996 and June 30, 1996
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Condensed Consolidated Statements of Income
for the three months ended
September 30, 1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Cash
Flows for the three months ended
September 30, 1996 and 1995 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Condensed Consolidated Financial
Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
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CELEBRITY, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS September 30, June 30,
1996 1996
-------------- ----------
<S> <C>
Current assets:
Cash $ 671 $ 1,166
Accounts receivable, net 19,296 14,919
Inventories 31,687 33,279
Other current assets 4,880 5,191
------------ -----------
Total current assets 56,534 54,555
Property, plant and equipment, net 11,705 11,774
Other assets 6,945 7,034
------------ -----------
Total assets $ 75,184 $ 73,363
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,348 $ 8,662
Accrued expenses 5,352 4,134
Current portion of notes payable 1,484 2,420
------------ -----------
Total current liabilities 14,184 15,216
Notes payable, net of current portion 33,453 31,081
------------ -----------
Total liabilities 47,637 46,297
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Redeemable common stock 350 350
Shareholders' equity:
Common stock 63 63
Paid-in capital 22,178 22,178
Subscriptions receivable (458) (461)
Retained earnings 5,777 5,292
Treasury stock (350) (350)
Cumulative translation adjustment (13) (6)
------------ -----------
Total shareholders' equity 27,197 26,716
------------ -----------
Total liabilities, redeemable common stock
and shareholder's equity $ 75,184 $ 73,363
============ ===========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
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CELEBRITY, INC.
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended September 30,
-------------------------------------
1996 1995
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<S> <C> <C>
Net sales $ 31,447 $ 35,933
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Costs and operating expenses:
Cost of goods sold 23,184 27,006
Selling 1,411 1,666
General and administrative 4,992 4,615
Depreciation and amortization 596 461
---------- ---------
30,183 33,748
---------- ---------
Operating income 1,264 2,185
Interest expense, net (851) (922)
Other, net 5 6
---------- ---------
Income before income taxes 418 1,269
Provision (benefit) for income taxes (67) 256
---------- ---------
Net income $ 485 $ 1,013
========== =========
Earnings per share $ .08 $ .16
========== =========
Weighted average common and common equivalent shares
outstanding 6,311 6,374
========== =========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
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CELEBRITY, INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended September 30,
----------------------------------
1996 1995
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<S> <C> <C>
Operating activities:
Net Income $ 485 $ 1,013
Adjustments to reconcile net income to net cash
provided by (used in) operations:
Depreciation and amortization 596 461
Deferred income taxes (190) (27)
Changes in operating assets and liabilities:
Accounts receivable (4,377) (8,493)
Inventory 1,592
(127)
Other current assets 501 457
Accounts payable and accrued expenses (208) 2,458
----------- ----------
Net cash used in operating activities (1,601) (4,258)
----------- ----------
Investing activities:
Additions to property and equipment (326) (435)
----------- ----------
Net cash used in investing activities (326) (435)
----------- ----------
Financing activities:
Payment on notes payable (936) (1,660)
Net proceeds under lines of credit 2,365 5,682
Payments on subscriptions receivable 3 83
Redemption of common stock (175)
----------- ----------
Net cash provided by financing activities 1,432 3,930
----------- ----------
Decrease in cash (495) (763)
Cash and cash equivalents, beginning of period 1,166 1,921
----------- ----------
Cash and cash equivalents, end of period $ 671 1,158
=========== ==========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
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CELEBRITY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. THE BUSINESS AND BASIS OF PRESENTATION
Description of Business
Celebrity, Inc. ("Celebrity" or the "Company") is a supplier of high
quality artificial flowers, foliage, flowering bushes, and other decorative
accessories to craft store chains and other retailers and to wholesale florists
throughout North America and Europe. Celebrity imports and/or produces
approximately 9,000 home accent, decorative accessory and giftware items,
including artificial floral arrangements, floor planters and trees, a wide
range of decorative brass and textile products and a broad line of seasonal
items such as Christmas trees, wreaths, garlands and other ornamental products.
Basis of Presentation
The Condensed Consolidated Financial Statements include the accounts
of Celebrity and its wholly-owned subsidiaries, Celebrity Exports International
Limited ("Celebrity Hong Kong"), The Cluett Corporation ("Cluett"), India
Exotics, Inc. ("India Exotics"), Magicsilk, Inc. ("Magicsilk") and Star
Wholesale Florist, Inc. All intercompany accounts and transactions have been
eliminated.
The accompanying financial statements are unaudited and, in the
opinion of management, reflect all adjustments that are necessary for a fair
presentation of the financial position and results of operations for the
periods presented. All of such adjustments are of a normal and recurring
nature. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the entire year. The
Condensed Consolidated Financial Statements should be read in conjunction with
the financial statement disclosures contained in the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1996.
2. INVENTORY
The composition of inventories at September 30, 1996, and June 30,
1996 is as follows:
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
--------- ---------
<S> <C> <C>
Raw materials $ 7,952 $ 6,165
Finished goods 23,735 27,114
--------- ---------
$ 31,687 $ 33,279
========= =========
</TABLE>
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3. REDEEMABLE COMMON STOCK
In October 1996 the Company repurchased 13,461 shares of Celebrity
common stock ("Common Stock") for an aggregate consideration of $175,000. The
repurchase was pursuant to certain put options issued in connection with the
Magicsilk acquisition.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE
RESULTS
This Quarterly Report on Form 10-Q contains forward-looking statements
about the business, financial condition and prospects of Celebrity. The actual
results of Celebrity could differ materially from those indicated by the
forward-looking statements because of various risks and uncertainties,
including without limitation (i) changes in customer demand for the Company's
products at the retail level, (ii) trends in the retail and wholesale
decorative accessories industries, (iii) inventory risks attributable to
possible changes in customer demand, compounded by extended lead times in
ordering the Company's products from overseas suppliers and the Company's
strategy of maintaining a high merchandise in stock percentage, (iv) the
effects of economic conditions, (v) supply and/or shipment constraints or
difficulties, (vi) the impact of competitors' pricing, (vii) the effects of the
Company's accounting policies, (viii) changes in foreign trade regulations,
including changes in duty rates, possible trade sanctions, import quotas and
other restrictions imposed by U.S. and foreign governments and (ix) other risks
detailed in the Company's Securities and Exchange Commission filings. These
risks and uncertainties are beyond the ability of the Company to control, and
in many cases, the Company cannot predict the risks and uncertainties that
could cause its actual results to differ materially from those indicated by the
forward-looking statements. When used herein, the words "believes", "expects",
"plans" and similar expressions as they relate to the Company or its management
generally are intended to identify forward-looking statements.
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RESULTS OF OPERATIONS
The following table sets forth certain items in the consolidated
statements of income of Celebrity expressed as a percentage of net sales for
the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
SEPTEMBER 30,
--------------------------
1996 1995
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<S> <C> <C>
Net sales 100% 100%
------ -----
Costs and operating expenses:
Cost of goods sold 74% 75%
Selling 4% 5%
General and administrative 16% 13%
Depreciation and amortization 2% 1%
------ -----
96% 94%
------ -----
Operating income 4% 6%
Interest expense, net (3)% (3)%
------ -----
Income before income taxes 1% 3%
Provision (benefit) for income taxes (1)% 1%
------ -----
Net income 2% 2%
====== =====
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1996, COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1995
Net sales decreased 12% from $35.9 million in fiscal 1996 to $31.4
million in fiscal 1997. The decrease was primarily attributable to a decrease
in sales to existing customers.
Cost of goods sold decreased from $27.0 million in fiscal 1996 to
$23.2 million in fiscal 1997. The decrease was primarily attributable to the
lower sales volume in fiscal 1997. Cost of goods sold decreased as a
percentage of net sales from 75% in fiscal 1996 to 74% in fiscal 1997. The
increase in gross margin was primarily attributable to a change in product mix
and the fact that direct shipment sales represented a lower percentage of net
sales in fiscal 1997 than fiscal 1996. Direct shipment sales are those for
which products are shipped directly from Celebrity Hong Kong to the customers
and generally consist of large orders with lower gross profit margins but also
lower selling, general and administrative costs.
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Selling expenses decreased from $1.7 million, or 5% of net sales, in
fiscal 1996 to $1.4 million, or 4% of net sales, in fiscal 1997. The decrease
was attributable to the lower sales volume, lower salaries and commissions, and
lower catalog and trade show costs.
General and administrative expenses increased from $4.6 million in
fiscal 1996 to $5.0 million in fiscal 1997. The increase was primarily
attributable to the fact that direct shipment sales represented a lower
percentage of net sales in fiscal 1997 than fiscal 1996. General and
administrative expenses increased as a percentage of net sales from 13% in
fiscal 1996 to 16% in fiscal 1997 as a result of (i) the lower sales volume,
(ii) the fact that direct shipment sales represented a lower percentage of net
sales in fiscal 1997 than fiscal 1996 and (iii) higher facility costs,
including rent, utilities and labor, resulting from higher average inventory
levels carried by the Company during fiscal 1996 and into the first quarter of
fiscal 1997.
Depreciation and amortization expense increased from $461,000 in
fiscal 1996 to $596,000, in fiscal 1997, primarily as a result of (i)
additional building and equipment depreciation associated with the expansion of
floral arrangement production facilities in Tyler,Texas and Encinitas,
California and (ii) depreciation associated with a new computer system placed
in service during fiscal 1996.
INFLATION
The effect of inflation on operating costs has been minimal in recent
years. Most of the Company's operating expenses are inflation sensitive, with
increases in inflation generally resulting in increased costs of operation.
The effect of inflation-driven cost increases on the Company's overall
operating costs is not expected to be greater for the Company than its
competitors.
SEASONALITY
Celebrity markets and distributes products for all seasons. The
shipping period for each season is relatively long. When combined with
shipments of basic merchandise that is sold all year, there has not been
material seasonal or quarterly fluctuation in net sales or operating income.
LIQUIDITY AND CAPITAL RESOURCES
Celebrity's sales and marketing strategy and the growth of its
business have required a significantly increased investment in inventory.
Additionally, the Company follows the industry practice of offering extended
terms to qualified customers for sales of Christmas merchandise. These sales
generally take place between the months of June and October on terms not
requiring payment until December 1. The Company has traditionally relied on
borrowings under its revolving line of credit and cash flows from operations to
fund these and other working capital needs.
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<PAGE> 10
The Company has a revolving line of credit in a maximum amount of
$35.0 million. At September 30, 1996, the outstanding balance on this line of
credit was approximately $28.6 million. Borrowing limits are based on
specified percentages of eligible accounts receivable and inventories. Based
on such limits, the maximum amount the Company would have been eligible to
borrow at September 30, 1996 was $29.0 million. Interest is charged monthly on
the daily outstanding balance at the bank's prime rate of interest plus 1/2%.
Interest on a maximum of $7.0 million of the amount borrowed may be fixed at
LIBOR + 2% for periods ranging from 30 days to one year. Amounts borrowed
under the line of credit are secured by accounts receivable and inventory of
Celebrity and its wholly-owned subsidiaries, Magicsilk, Cluett and India
Exotics, and by guarantees by Magicsilk, Cluett and India Exotics. The line of
credit expires in March 1998.
Celebrity Hong Kong generally makes full cash payments for products
ordered for Celebrity's account or for direct shipment to customers within ten
days after the manufacturers deliver products in Hong Kong for export. The
Company believes that its practice of making prompt payments has enhanced its
relationships with manufacturers. Celebrity Hong Kong finances these cash
payments through a credit facility with a Hong Kong bank. Generally, under the
terms of this facility the bank finances, with recourse, export bills for
specific shipments by Celebrity Hong Kong. The bank is reimbursed when payment
for these shipments is received. Under the terms of the facility, the maximum
aggregate amount of Celebrity Hong Kong export bills the bank is obligated to
finance at any time is $5.8 million. At September 30, 1996, export bills of
Celebrity Hong Kong aggregating $5.3 million were being financed by the bank.
All of these bills were related to direct shipments to customers and Celebrity
Hong Kong's related potential recourse liability was accounted for as a
contingent obligation.
The Company utilizes its existing management information systems to
monitor the turnover and rate of sale of inventory. Additionally, its credit
department carefully monitors the credit status of each customer.
The Company plans approximately $500,000 in capital expenditures in
fiscal 1997, primarily in connection with the Company's continuing program to
upgrade its management information systems.
In October 1996, the Company repurchased 13,461 shares of Common Stock
for an aggregate consideration of $175,000. This repurchase was pursuant to
certain put options issued in connection with the Magicsilk acquisition. The
holders of such put options have the right on one more occasion in September
1997 to put additional shares, with the Company's total remaining purchase
obligation limited to $175,000. The Company does not currently plan to
repurchase additional shares of Common Stock other than those it is required to
purchase under such put options.
The Company's business is subject to U.S. law relating to imports,
including those imposing import duties. If the U.S. government were to
terminate most favored nation treatment for the People's Republic of China (the
"PRC") or impose punitive tariff rates on products imported by the Company in
retaliation for market access barriers in the PRC, the duty on
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<PAGE> 11
products imported by the Company from the PRC would increase significantly. If
the Company were to face an increase in tariff rates on the products it imports
into the U.S., it would (i) attempt to increase the prices charged to its
customers, (ii) ask its suppliers to reduce the prices charged to the Company
and (iii) seek to identify more favorable sources; however, unless and until
these efforts were successful, the Company's results of operations could be
affected adversely.
The Company believes that its current financial position, credit
facilities and cash flows from operations will be adequate to fund its
operations and expansion plans for the foreseeable future. There is no
assurance, however, that these sources will be sufficient to fund its
operations and expansion plans or that any necessary additional financing will
be available, if at all, in amounts required or on terms satisfactory to the
Company.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
2.1 Asset Purchase Agreement dated June 16, 1992, among
Registrant, Holdingflower, Inc., a Delaware corporation,
Magicsilk, Inc., a Delaware corporation, and Magicsilk, Inc.,
a Texas corporation. (1)
2.2 Asset Purchase Agreement dated February 7, 1995, among India
Exotics, Inc., a Texas corporation, Registrant, India Exotics,
Inc., a Missouri corporation, Surendra Khokha, Rajneesh
Khokha, Asheesh Khokha and the Surendra K. Khokha Revocable
Trust, dated July 18, 1985. (7)
3.1 Restated Articles of Incorporation of the Registrant. (1)
3.2 Bylaws of the Registrant. (1)
4.1 Specimen Common Stock Certificate. (1)
4.2 Warrant Agreement dated June 16, 1992, between the Registrant
and Magicsilk, Inc. (1)
10.1 Loan Agreement dated March 21, 1994, between Registrant and
NationsBank of Texas, N.A. (3)
10.2 Amendment to Loan Agreement dated December 21, 1994, between
Registrant and NationsBank of Texas, N.A. (7)
10.3 Second Amendment to Loan Agreement dated March 20, 1995,
between Registrant and NationsBank of Texas, N.A. (8)
10.4 Third Amendment to Loan Agreement dated February 9, 1996,
between Registrant and NationsBank of Texas, N.A. (12)
10.5 Fourth Amendment and Modification Agreement dated May 15,
1996, between Registrant and NationsBank of Texas, N.A. (14)
10.6 Fifth Amendment and Modification Agreement dated September 30,
1996, between Registrant and NationsBank of Texas, N.A. (14)
10.7 Modification of Note and Deed of Trust dated December 21,
1994, between Registrant and NationsBank of Texas, N.A. (7)
10.8 Modification of Promissory Note and Deed of Trust dated March
20, 1995, between Registrant and NationsBank of Texas, N.A.
(8)
10.9 Guaranty dated March 21, 1994, executed by The Cluett
Corporation in favor of NationsBank of Texas, N.A. (3)
10.10 Guaranty dated March 21, 1994, executed by Magicsilk, Inc. in
favor of NationsBank of Texas, N.A. (3)
10.11 Guaranty dated March 21, 1994, executed by Star Wholesale
Florist, Inc. in favor of NationsBank of Texas, N.A. (3)
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<PAGE> 13
10.12 Guaranty dated February 7, 1995, executed by India Exotics,
Inc. in favor of NationsBank of Texas, N.A. (8)
10.13 Modification and Amendment of Note and Restatement of Deed of
Trust (Tract A) dated March 21, 1994, executed by Registrant
and NationsBank of Texas, N.A. (3)
10.14 Transfer of Lien dated March 21, 1994, executed by Tyler Bank
and Trust, N.A. in favor of NationsBank of Texas, N.A. (3)
10.15 $2,290,409.98 Promissory Note dated March 21, 1994, signed by
Registrant and payable to the order of NationsBank of Texas,
N.A. (3)
10.16 Commercial Loans Deed of Trust, Assignment, Security Agreement
and Financing Statement (Future Advances) dated March 21,
1994, executed by Registrant in favor of Michael F. Hord,
Trustee for the benefit of NationsBank of Texas, N.A. (3)
10.17 $1,800,000 Promissory Note (Winston-Salem, N.C.) dated March
21, 1994, signed by Registrant and payable to the order of
NationsBank of Texas, N.A. (3)
10.18 Commercial Loans Deed of Trust, Assignment, Security Agreement
and Financing Statement (Future Advances) dated March 20,
1994, executed by Registrant in favor of NationsBank of Texas,
N.A. (3)
10.19 Loan Agreement dated May 10, 1993, among Registrant,
Magicsilk, Inc. and National Canada Finance Corp. (4)
10.20 First Amendment to Loan Agreement dated July 27, 1993, among
Registrant, Magicsilk, Inc. and National Canada Finance Corp.
(5)
10.21 Second Amendment to Loan Agreement dated effective as of
November 17, 1993, among Registrant, Magicsilk, Inc., The
Cluett Corporation and National Canada Finance Corp. (6)
10.22 Third Amendment to Loan Agreement dated effective as of March
18, 1994, among Registrant, Magicsilk, Inc., The Cluett
Corporation and National Canada Finance Corp. (3)
10.23 Fourth Amendment to Loan Agreement dated effective as of
November 4, 1994, among Registrant, Magicsilk, Inc., The
Cluett Corporation and National Canada Finance Corp. (7)
10.24 Fifth Amendment to Loan Agreement dated effective as of
February 3, 1995, among Registrant, Magicsilk, Inc., The
Cluett Corporation, India Exotics, Inc. and National Canada
Finance Corp. (7)
10.25 Sixth Amendment to Loan Agreement dated effective as of March
14, 1995, among Registrant, Magicsilk, Inc., The Cluett
Corporation, India Exotics, Inc. and National Canada Finance
Corp. (8)
10.26 Seventh Amendment to Loan Agreement dated effective as of
August 4, 1995, among Registrant, Magicsilk, Inc., The Cluett
Corporation, India Exotics, Inc. and National Canada Finance
Corp. (10)
10.27 Promissory Note dated August 4, 1995, executed by Registrant,
Magicsilk, Inc., The Cluett Corporation and India Exotics,
Inc. in the principal amount of $35,000,000 payable to the
order of National Canada Finance Corp. (10)
10.28 Security Agreement dated May 10, 1993, among Registrant,
Magicsilk, Inc. and National Canada Finance Corp. (5)
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<PAGE> 14
10.29 Security Agreement dated November 17, 1993, between The Cluett
Corporation and National Canada Finance Corp. (6)
10.30 Security Agreement dated February 3, 1995, between India
Exotics, Inc. and National Canada Finance Corp. (7)
10.31 Subordination Agreement dated July 14, 1992, among National
Canada Finance Corp., TBK Partners, L.P., ML-Lee Acquisition
Fund, L.P., The Bank of New York Commercial Corporation,
Registrant and Magicsilk, Inc. (1)
10.32 Letter agreement dated August 16, 1995, setting forth the
terms of a banking facility between Celebrity Exports
International Limited and The Hongkong and Shanghai Banking
Corporation Limited. (11)
10.33 General Security Agreement Relating to Goods, dated April 30,
1984, between Celebrity Exports International Limited and The
Hongkong and Shanghai Banking Corporation Limited. (1)
10.34 Form of Guarantee by Limited Company executed by Registrant in
favor of the Hongkong and Shanghai Banking Corporation
Limited. (11)
10.35 Commitment of Celebrity Exports International Limited to
maintain a net worth of HK$30,000,000. (11)
10.36 Employment Agreement dated November 17, 1993, between The
Cluett Corporation and Robert C. Welles, Jr. (2)
10.37 Employment Agreement dated February 7, 1995, between India
Exotics, Inc. and Surendra Khokha. (7)
10.38 Letter Agreement dated June 20, 1996, amending the Employment
Agreement dated February 7, 1995, between India Exotics, Inc.
and Surendra Khokha. (13)
10.39 Employment Agreement dated February 7, 1995, between India
Exotics, Inc. and Meena Khokha. (7)
10.40 Letter Agreement dated June 20, 1996, amending the Employment
Agreement dated February 7, 1995, between India Exotics, Inc.
and Meena Khokha. (13)
10.41 Noncompetition Agreement dated November 17, 1993, between
Registrant and James N. Gammill, III. (2)
10.42 Noncompetition Agreement dated February 7, 1995, among India
Exotics, Inc., Surendra Khokha, Rajneesh Khokha, Asheesh
Khokha and Meena Khokha. (7)
10.43 Promissory Note of India Exotics, Inc., a Texas corporation,
guaranteed by Registrant, dated February 7, 1995, payable to
the order of India Exotics, Inc., a Missouri corporation. (7)
10.44 First Amendment to Promissory Note dated June 20, 1996,
amending the Promissory Note of India Exotics, Inc., a Texas
corporation, guaranteed by Registrant, dated February 7, 1995,
payable to the order of India Exotics, Inc., a Missouri
corporation. (13)
10.45 Promissory Note of India Exotics, Inc., a Missouri
corporation, guaranteed by Registrant, dated February 7, 1995,
in the principal amount of $1,800,000 payable to the order of
Surendra Khokha and his successors, trustees of the Surendra
K. Khokha Revocable Trust, dated July 18, 1985. (7)
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<PAGE> 15
10.46 Form of Indemnity Agreement. (1)
10.47 Amended and Restated 1992 Stock Option Plan. (3)
10.48 Amended and Restated 1993 Employee Stock Purchase Plan. (7)
10.49 1997 Employee Bonus Plan. (13)
27.1 Financial Data Schedule. (14)
(b) Reports on Form 8-K:
None.
_____________________
(1) Previously filed as an exhibit to Registration Statement No. 33-51820
on Form S-1 and incorporated herein by reference.
(2) Previously filed as an exhibit to the Registrant's Current Report on
Form 8-K dated November 17, 1993, as amended, and incorporated herein
by reference.
(3) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994, and incorporated
herein by reference.
(4) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1993, as amended,
and incorporated herein by reference.
(5) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1993, as amended, and
incorporated herein by reference.
(6) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1993, and incorporated
herein by reference.
(7) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1994, and incorporated
herein by reference.
(8) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1995, and incorporated
herein by reference.
(9) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1994, and incorporated
herein by reference.
(10) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1995, and incorporated
herein by reference.
(11) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-Q for the quarter ended September 30, 1995, and incorporated
herein by reference.
(12) Previously filed as an exhibit to the Registrants's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996, and incorporated
herein by reference.
(13) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1996, and incorporated
herein by reference.
(14) Filed herewith.
-14-
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CELEBRITY, INC.
Dated: November 14, 1996 By /s/ Robert H. Patterson, Jr.
------------------------------------------
Robert H. Patterson, Jr.,
Chief Executive Officer
Dated: November 14, 1996 By /s/ James R. Thompson
------------------------------------------
James R. Thompson, Vice President -
Finance
-15-
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----
<S> <C>
2.1 Asset Purchase Agreement dated June 16, 1992, among Registrant, Holdingflower, Inc.,
a Delaware corporation, Magicsilk, Inc., a Delaware corporation, and Magicsilk,
Inc., a Texas corporation. (1)
2.2 Asset Purchase Agreement dated February 7, 1995, among India Exotics, Inc., a Texas
corporation, Registrant, India Exotics, Inc., a Missouri corporation, Surendra
Khokha, Rajneesh Khokha, Asheesh Khokha and the Surendra K. Khokha Revocable Trust,
dated July 18, 1985. (7)
3.1 Restated Articles of Incorporation of the Registrant. (1)
3.2 Bylaws of the Registrant. (1)
4.1 Specimen Common Stock Certificate. (1)
4.2 Warrant Agreement dated June 16, 1992, between the Registrant and Magicsilk, Inc.
(1)
10.1 Loan Agreement dated March 21, 1994, between Registrant and NationsBank of Texas,
N.A. (3)
10.2 Amendment to Loan Agreement dated December 21, 1994, between Registrant and
NationsBank of Texas, N.A. (7)
10.3 Second Amendment to Loan Agreement dated March 20, 1995, between Registrant and
NationsBank of Texas, N.A. (8)
10.4 Third Amendment to Loan Agreement dated February 9, 1996, between Registrant and
NationsBank of Texas, N.A. (12)
10.5 Fourth Amendment and Modification Agreement dated May 15, 1996, between Registrant
and NationsBank of Texas, N.A. (14)
10.6 Fifth Amendment and Modification Agreement dated September 30, 1996, between
Registrant and NationsBank of Texas, N.A. (14)
10.7 Modification of Note and Deed of Trust dated December 21, 1994, between Registrant
and NationsBank of Texas, N.A. (7)
10.8 Modification of Promissory Note and Deed of Trust dated March 20, 1995, between
Registrant and NationsBank of Texas, N.A. (8)
10.9 Guaranty dated March 21, 1994, executed by The Cluett Corporation in favor of
NationsBank of Texas, N.A. (3)
10.10 Guaranty dated March 21, 1994, executed by Magicsilk, Inc. in favor of NationsBank
of Texas, N.A. (3)
10.11 Guaranty dated March 21, 1994, executed by Star Wholesale Florist, Inc. in favor of
NationsBank of Texas, N.A. (3)
</TABLE>
<PAGE> 18
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----
<S> <C>
10.12 Guaranty dated February 7, 1995, executed by India Exotics, Inc. in favor of
NationsBank of Texas, N.A. (8)
10.13 Modification and Amendment of Note and Restatement of Deed of Trust (Tract A) dated
March 21, 1994, executed by Registrant and NationsBank of Texas, N.A. (3)
10.14 Transfer of Lien dated March 21, 1994, executed by Tyler Bank and Trust, N.A. in
favor of NationsBank of Texas, N.A. (3)
10.15 $2,290,409.98 Promissory Note dated March 21, 1994, signed by Registrant and payable
to the order of NationsBank of Texas, N.A. (3)
10.16 Commercial Loans Deed of Trust, Assignment, Security Agreement and Financing
Statement (Future Advances) dated March 21, 1994, executed by Registrant in favor of
Michael F. Hord, Trustee for the benefit of NationsBank of Texas, N.A. (3)
10.17 $1,800,000 Promissory Note (Winston-Salem, N.C.) dated March 21, 1994, signed by
Registrant and payable to the order of NationsBank of Texas, N.A. (3)
10.18 Commercial Loans Deed of Trust, Assignment, Security Agreement and Financing
Statement (Future Advances) dated March 20, 1994, executed by Registrant in favor of
NationsBank of Texas, N.A. (3)
10.19 Loan Agreement dated May 10, 1993, among Registrant, Magicsilk, Inc. and National
Canada Finance Corp. (4)
10.20 First Amendment to Loan Agreement dated July 27, 1993, among Registrant, Magicsilk,
Inc. and National Canada Finance Corp. (5)
10.21 Second Amendment to Loan Agreement dated effective as of November 17, 1993, among
Registrant, Magicsilk, Inc., The Cluett Corporation and National Canada Finance
Corp. (6)
10.22 Third Amendment to Loan Agreement dated effective as of March 18, 1994, among
Registrant, Magicsilk, Inc., The Cluett Corporation and National Canada Finance
Corp. (3)
10.23 Fourth Amendment to Loan Agreement dated effective as of November 4, 1994, among
Registrant, Magicsilk, Inc., The Cluett Corporation and National Canada Finance
Corp. (7)
10.24 Fifth Amendment to Loan Agreement dated effective as of February 3, 1995, among
Registrant, Magicsilk, Inc., The Cluett Corporation, India Exotics, Inc. and
National Canada Finance Corp. (7)
10.25 Sixth Amendment to Loan Agreement dated effective as of March 14, 1995, among
Registrant, Magicsilk, Inc., The Cluett Corporation, India Exotics, Inc. and
National Canada Finance Corp. (8)
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----
<S> <C>
10.26 Seventh Amendment to Loan Agreement dated effective as of August 4, 1995, among
Registrant, Magicsilk, Inc., The Cluett Corporation, India Exotics, Inc. and
National Canada Finance Corp. (10)
10.27 Promissory Note dated August 4, 1995, executed by Registrant, Magicsilk, Inc., The
Cluett Corporation and India Exotics, Inc. in the principal amount of $35,000,000
payable to the order of National Canada Finance Corp. (10)
10.28 Security Agreement dated May 10, 1993, among Registrant, Magicsilk, Inc. and
National Canada Finance Corp. (5)
10.29 Security Agreement dated November 17, 1993, between The Cluett Corporation and
National Canada Finance Corp. (6)
10.30 Security Agreement dated February 3, 1995, between India Exotics, Inc. and National
Canada Finance Corp. (7)
10.31 Subordination Agreement dated July 14, 1992, among National Canada Finance Corp.,
TBK Partners, L.P., ML-Lee Acquisition Fund, L.P., The Bank of New York Commercial
Corporation, Registrant and Magicsilk, Inc. (1)
10.32 Letter agreement dated August 16, 1995, setting forth the terms as a banking
facility between Celebrity Exports International Limited and The Hongkong and
Shanghai Banking Corporation Limited. (11)
10.33 General Security Agreement Relating to Goods, dated April 30, 1984, between
Celebrity Exports International Limited and The Hongkong and Shanghai Banking
Corporation Limited. (1)
10.34 Form of Guarantee by Limited Company executed by Registrant in favor of the Hongkong
and Shanghai Banking Corporation Limited. (11)
10.35 Commitment of Celebrity Exports International Limited to maintain a net worth of
HK$30,000,000. (11)
10.36 Employment Agreement dated November 17, 1993, between The Cluett Corporation and
Robert C. Welles, Jr. (2)
10.37 Employment Agreement dated February 7, 1995, between India Exotics, Inc. and
Surendra Khokha. (7)
10.38 Letter Agreement dated June 20, 1996, amending the Employment Agreement dated
February 7, 1995, between India Exotics, Inc. and Surendra Khokha. (13)
10.39 Employment Agreement dated February 7, 1995, between India Exotics, Inc. and Meena
Khokha. (7)
10.40 Letter Agreement dated June 20, 1996, amending the Employment Agreement dated
February 7, 1995, between India Exotics, Inc. and Meena Khokha. (13)
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----
<S> <C>
10.41 Noncompetition Agreement dated November 17, 1993, between Registrant and James N.
Gammill, III. (2)
10.42 Noncompetition Agreement dated February 7, 1995, among India Exotics, Inc., Surendra
Khokha, Rajneesh Khokha, Asheesh Khokha and Meena Khokha. (7)
10.43 Promissory Note of India Exotics, Inc., a Texas corporation, guaranteed by
Registrant, dated February 7, 1995, payable to the order of India Exotics, Inc., a
Missouri corporation. (7)
10.44 First Amendment to Promissory Note dated June 20, 1996, amending the Promissory Note
of India Exotics, Inc., a Texas corporation, guaranteed by Registrant, dated
February 7, 1995, payable to the order of India Exotics, Inc., a Missouri
corporation. (13)
10.45 Promissory Note of India Exotics, Inc., a Missouri corporation, guaranteed by
Registrant, dated February 7, 1995, in the principal amount of $1,800,000 payable to
the order of Surendra Khokha and his successors, trustees of the Surendra K. Khokha
Revocable Trust, dated July 18, 1985. (7)
10.46 Form of Indemnity Agreement. (1)
10.47 Amended and Restated 1992 Stock Option Plan. (3)
10.48 Amended and Restated 1993 Employee Stock Purchase Plan. (7)
10.49 1997 Employee Bonus Plan. (13)
27.1 Financial Data Schedule. (14)
</TABLE>
_____________________
(1) Previously filed as an exhibit to Registration Statement No. 33-51820
on Form S-1 and incorporated herein by reference.
(2) Previously filed as an exhibit to the Registrant's Current Report on
Form 8-K dated November 17, 1993, as amended, and incorporated herein
by reference.
(3) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994, and incorporated
herein by reference.
(4) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1993, as amended,
and incorporated herein by reference.
(5) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1993, as amended, and
incorporated herein by reference.
(6) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1993, and incorporated
herein by reference.
(7) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1994, and incorporated
herein by reference.
(8) Previously filed as an exhibit to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1995, and incorporated
herein by reference.
(9) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1994, and incorporated
herein by reference.
<PAGE> 21
(10) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1995, and incorporated
herein by reference.
(11) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-Q for the quarter ended September 30, 1995, and incorporated
herein by reference.
(12) Previously filed as an exhibit to the Registrants's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996, and incorporated
herein by reference.
(13) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1996, and incorporated
herein by reference.
(14) Filed herewith.
<PAGE> 1
EXHIBIT 10.5
FOURTH AMENDMENT AND MODIFICATION AGREEMENT
THIS FOURTH AMENDMENT AND MODIFICATION AGREEMENT (the "Agreement") is
made effective as of the 15th day of May, 1996, by and between CELEBRITY, INC.,
a Texas corporation ("Borrower"), and NATIONSBANK OF TEXAS, N.A., a national
banking association ("Lender").
RECITALS
The following forms the basis for, and is a part of, this Agreement:
A. Lender and Borrower have entered into various documents
relating to loans (the "Loans") made by Lender to Borrower as follows: (i) that
certain Promissory Note in the original principal amount of $1,800,000.00,
dated April 22, 1993, executed by Borrower, and made payable to the order of
Tyler Bank & Trust, N.A., and endorsed over to Lender ("Note A"); (ii) that
certain Promissory Note in the original principal amount of $2,290,409.98,
dated March 21, 1994, executed by Borrower, and made payable to the order of
Lender ("Note B"); (iii) that certain Promissory Note in the original principal
amount of $1,800,000,00, dated March 21, 1994, executed by Borrower, and made
payable to the order of Lender ("Note "C"); and (iv) that certain Promissory
Note in the original principal amount of $455,550.00, dated February 9, 1996,
executed by Borrower, and made payable to the order of Lender ("Note "D") (Note
A, Note B, Note C and Note D are collectively referred to as the "Notes," and
the Notes, together with all other agreements, documents and instruments
relating thereto or executed in connection therewith or evidencing, securing or
relating to the obligations of Borrower to Lender are hereinafter referred to
as the "Loan Documents").
B. Borrower's obligations are further described and set forth in
that certain Loan Agreement dated March 21, 1994, by and between Borrower and
Lender, as amended by that certain Amendment to Loan Agreement dated December
21, 1994, that certain Second Amendment to Loan Agreement dated March 20, 1995,
and that certain Third Amendment to Loan Agreement dated February 9, 1996
(collectively, the "Loan Agreement").
C. Borrower is currently in default under Paragraph 9.b. of the
Loan Agreement (the "Existing Default"), and as a result thereof, Lender is
entitled to exercise any or all of its rights and remedies under the Loan
Documents.
D. Borrower has requested that Lender waive the Existing Default
and the continuance of the Existing Default as it pertains to the fiscal
quarter ending March 31, 1996, and Lender has agreed to do so, upon the terms
and conditions set forth in this Agreement.
<PAGE> 2
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
AGREEMENT
1. Definitions. Unless otherwise defined herein, capitalized
terms shall have the meanings given to them in the Loan Agreement and the Loan
Documents.
2. Existing Default. Borrower hereby acknowledges, confirms and
agrees the Existing Default has occurred, it presently constitutes an Event of
Default and entitles Lender to exercise its rights and remedies under the Loan
Documents.
3. Waiver. In reliance upon the representations, warranties and
covenants of Borrower contained in this Agreement and subject to the terms and
conditions of this Agreement, Lender hereby agrees to waive the Existing
Default arising from Borrower's failure to maintain a ratio of cash flow to
fixed charge coverage of at least 1.30 to 1.0 for the fiscal quarter ending
March 31, 1996, and from Borrower's violation and/or breach of Sections 6.17
and 6.16(c) of that certain Loan Agreement dated May 10, 1993, by and between
Borrower and NCFC as of this date and for the fiscal quarter ending June 30,
1996 (the "Waiver").
4. Outstanding Balance. Borrower and Lender agree and
acknowledge that as of the date of this Agreement the outstanding principal
balance of Note A is $1,334,590.01, of Note B is $2,042,282.23, of Note C is
$1,545,160.00, and of Note D is $447,191.28.
5. Modification of Interest Rate. The Stated Rate provided for
in the Notes shall be amended such that interest shall be charged, commencing
as of May 15, 1996, at the Prime Rate as provided for in the Notes,
respectively, plus one percentage point (1%).
6. Conditional Modification of Interest Rate. Notwithstanding
anything to the contrary contained herein, if under Paragraph 9.b. of the Loan
Agreement, Borrower maintains a ratio of cash flow to fixed charge coverage of
at least 1.30 to 1.0 for the fiscal quarter ending June 30, 1997, and there
shall be no other events or conditions existing which constitute an Event of
Default under the Loan Documents and/or with the passage of time and the giving
of notice would constitute Events of Default under the Loan Documents, then the
Stated Rate as modified herein shall be modified such that interest shall be
charged, at the Prime Rate, without any additional percentage points added to
the Prime Rate, upon Lender's receipt of Borrower's audited financial
statements
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<PAGE> 3
for fiscal year ending June 30, 1997, and confirmation of such ratio.
7. Minimum Fixed Charge Coverage Ratio. The first sentence of
Paragraph 9.b. of the Loan Agreement is hereby amended to read as follows:
In accordance with generally accepted accounting principles
consistently applied, maintain a ratio of cash flow to fixed charge
coverage as follows:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Ratio
--------------------- -----
<S> <C>
June 30, 1996 .90 to 1.0
September 30, 1996 .90 to 1.0
December 31, 1996 .90 to 1.0
March 31, 1997 1.25 to 1.0
June 30, 1997 1.30 to 1.0
All subsequent quarters 1.30 to 1.0
</TABLE>
8. Affirmative Covenants. Paragraph 9. of the Loan Agreement is
hereby amended by adding new subparagraphs j., k. and l. as follows:
j. Static Minimum Fixed Charge Coverage Ratio. In accordance
with generally accepted accounting principals consistently
applied, maintain a ratio of cash flow to fixed charge
coverage of at least 1.0 to 1.0 for the fiscal quarter ending
June 30, 1996, and a ratio of cash flow to fixed charge
coverage of at least 1.1 to 1.0 for each fiscal quarter
thereafter. The said ratio shall be calculated and tested as
of the end of each of Borrower's fiscal quarters solely for
the fiscal quarter just ending, and it shall not be calculated
and tested on a rolling basis as provided in subparagraph b.
above. The numerator of such ratio shall be equal to the sum
of Borrower's consolidated net income, plus depreciation and
amortization, plus operating lease expense and interest
expense. The denominator of such ratio shall be equal to the
sum of the scheduled maturities of Borrower's long-term debt
plus the current maturities of Borrower's capital lease
obligations, plus dividends and redemptions, plus the
aggregate of Borrower's operating lease expense and interest
expense.
k. Notice of Modifications. Promptly advise Lender in writing of
any changes, modifications or amendments to any agreements,
documents or instruments evidencing, securing or relating to
the obligations
-3-
<PAGE> 4
of Borrower to any other financial institutions, including,
but not limited to, NCFC, and furnish to Lender executed
copies of any and all agreements, documents or instruments
entered into or executed in connection with changing,
modifying or amending any other agreements, documents or
instruments which evidence, secure or relate to the
obligations of Borrower to any other financial institutions,
including, but no limited to, NCFC, within five (5) business
days after executing same.
l. Borrowing Base Report and Compliance Certificate. Furnish to
Lender on a monthly basis a copy of the Borrowing Base Report
and on a quarterly basis a copy of the Compliance Certificate
that Borrower provides to NCFC, and to furnish same to Lender
at the same time Borrower provides them to NCFC.
9. Negative Covenant. Paragraph 10.d. of the Loan Agreement is
hereby amended to read as follows:
Borrower will not violate, or fail to comply with, any covenants or
agreements regarding other debt which will or would with the passage
of time and/or the giving of notice cause maturity of any other debt
of Borrower to be accelerated, including, but not limited to, any
covenants or agreements of Borrower to or with National Canada Finance
Corp. ("NCFC") in connection with various agreements, documents or
instruments evidencing, securing or relating to the obligations of
Borrower to NCFC.
10. Events of Default. Paragraph 11. of the Loan Agreement is
hereby amended by adding a new subparagraph g. as follows:
g. NCFC Loan Default. Borrower shall be in default under any
agreement, document or instrument evidencing, securing or
relating to the obligations of Borrower to NCFC, regardless of
whether NCFC waives or agrees to waive such default or
defaults.
11. Conditions to Effectiveness of Waiver in this Agreement. The
effectiveness of this Agreement and the Waiver are subject to the satisfaction
of each of the following conditions precedent on or before 5:00 p.m. Dallas
time, on May 15, 1996, unless specifically waived in writing by Lender:
a. Lender shall have received this Agreement, duly
executed by Borrower, and such additional documents, instruments and
information as Lender may reasonably request;
b. All corporate proceedings taken in connection with
the transactions contemplated by this Agreement and all
-4-
<PAGE> 5
documents, instruments and other legal matters incident thereto shall
be satisfactory to Lender;
c. Lender shall have received an executed copy of any
and all agreements, documents or instruments executed by and between
Borrower and National Canada Finance Corp. ("NCFC") in connection with
the waiver by NCFC of Borrower's default under certain agreements,
documents and instruments executed by and between Borrower and NCFC,
evidencing, securing or relating to the obligations of Borrower to
NCFC; and
d. Payment of Lender's expenses in connection with the
preparation and negotiation of this Agreement.
12. No Waiver of Cure. Nothing contained herein shall be
construed as a waiver by Lender of any covenant or provision of any of the Loan
Documents or of this Agreement, except as otherwise specifically provided for
herein, and Lender's failure at any time or times hereafter to require strict
performance by Borrower of any provision hereof or thereof shall not waive,
affect or diminish any right of Lender to thereafter demand strict compliance
herewith or therewith. Lender hereby reserves all rights granted under the
Loan Documents and this Agreement.
13. Warranties and Representations. As a material inducement to
Lender to execute and deliver this Agreement, Borrower represents and warrants
to Lender that (a) except as noted herein, Borrower is in compliance with all
of the terms and conditions of the Notes, the Loan Agreement and the other Loan
Documents, including, without limitation, the payment of all amounts due and
payable under such instruments; (b) Borrower has full power and authority to
make the agreements contained in this Agreement without the joinder or consent
of any other party, and the execution and delivery of this Agreement have been
duly authorized or approved by Borrower and constitutes the valid and binding
obligation of Borrower, enforceable in accordance with their terms; (c) there
have been no material changes or conditions affecting any warranties,
representations, materials or information delivered to Lender by, or on behalf
of, Borrower prior to the date hereof; (d) Borrower is solvent and is not
bankrupt and is subject to no claims, suits, garnishments, bankruptcies or
court actions which would render Borrower insolvent; (e) there has been no
material adverse change in Borrower's financial condition subsequent to the
date of the most recent operating statement delivered to Lender; and (f)
Borrower has no defenses or counterclaims to the terms or provisions of, and
the obligations created by, the Loan Documents, or to the payment of the Notes,
and has no right of offset or claim against Lender. Should any of the foregoing
representations or warranties prove to have been false when made or should a
default occur and continue beyond any applicable grace or cure period, under
the Notes as modified hereby, or under any of the Security
-5-
<PAGE> 6
Documents, this Agreement, at Lender's election, shall immediately terminate.
14. Costs and Expenses. Borrower shall pay, on demand, all costs
and expenses, including, without limitation, attorneys' fees incurred in the
negotiation, preparation and execution of this Agreement and the consummation
of the transactions contemplated by this Agreement.
15. No Other Modifications. This Agreement is only a modification
of the Notes, the Loan Agreement and, to the extent necessary, the other Loan
Documents and is not a novation of the same. Except as modified by the terms of
this Agreement, the Notes and the Loan Agreement shall continue in full force
and effect in accordance with their terms. Nothing contained in this Agreement
shall (a) alter or limit the provisions of the Notes regarding late charges or
the rate of interest which shall accrue on amounts past due under the Notes,
(b) impair, waive or limit Lender's rights or remedies, at law or in equity,
under the Notes or the Loan Documents, in the event of any default under the
Notes or the Loan Documents, or (c) release Borrower from its liability to keep
and perform all of the terms and conditions, obligations and agreements
contained in the Notes and the Loan Documents. Borrower hereby reaffirms the
Notes, as further modified hereby, and all other indebtedness secured by the
Loan Documents and agrees to perform its obligations thereunder as they become
due.
16. Survival of Representations and Warranties. All
representations and warranties made in the Loan Documents or this Agreement
shall survive the execution and delivery of this Agreement, and no
investigation by Lender or any closing shall affect the representations and
warranties or the right of Lender to rely upon them.
17. Borrower Acknowledgments. Borrower hereby acknowledges and
agrees that (a) Lender is not in default in the performance of its obligations
under the Loan Documents; (b) Borrower has no claims, counterclaims, offsets,
credits or defenses to the Loan Documents in the performance of its obligations
thereunder, or if Borrower has any such claims, counterclaims, offsets, credits
or defenses to the Loan Documents or any transaction related to the
indebtedness evidenced by the Notes and any other indebtedness or obligations
owed by Borrower to Lender, same are hereby waived, relinquished and released
in consideration of Lender's execution and delivery of this Agreement; (c) all
of the provisions of the Loan Documents, except as modified hereby, are in full
force and effect; (d) the liens created and evidenced by the Loan Documents are
valid and existing liens of the recited dignity and priority; and (e) no other
granting of a lien or security interest or assignment has been or will be
executed affecting any of the property described in the Loan Documents in which
Lender has a
-6-
<PAGE> 7
lien, without Lender's prior written consent except as permitted in the Loan
Documents.
18. Effective Waiver. No consent or waiver, express or implied,
by Lender to or any breach of or deviation from any covenant or condition by
Borrower shall be deemed a consent to or waiver of any other breach of the same
or any other covenant, condition or duty.
19. Final Agreement. THIS AGREEMENT REPRESENTS THE ENTIRE
EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE
THIS AGREEMENT IS EXECUTED, THIS AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO MODIFICATION,
RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THE LOAN
DOCUMENTS OR THIS AGREEMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED
BY BORROWER AND LENDER.
20. Miscellaneous.
a. No Joint Venture, This Agreement shall not be
construed, and is not intended, to create a partnership or joint
venture between Borrower and Lender or to render either party liable
for the obligations of the other.
b. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA. The parties hereto intend to conform
strictly to the applicable usury laws. In no event, whether by reason
of acceleration of the maturity of the Notes or otherwise, shall the
amount paid or agreed to be paid to Lender for the use, forbearance or
detention of money under the Notes or otherwise exceed the maximum
amount permissible under applicable law. If fulfillment of any
provision of the Notes or of any Security Document, at the time
performance of such provision shall be due, would involve transcending
the limit of validity prescribed by law, then the obligation to be
fulfilled shall be reduced automatically to the limit of such
validity. If Lender shall ever receive anything of value deemed
interest under applicable law which would exceed interest at the
highest lawful rate, an amount equal to any amount which would have
been excessive interest shall be applied to the reduction of the
principal amount owing under the Notes in the inverse order of its
maturity and not to the payment of interest, or if such amount which
would have been excessive interest exceeds the unpaid balance of
principal of the Notes, such excess shall be refunded to Borrower.
All sums paid or agreed to be paid to Lender for the use, forbearance
or detention of the indebtedness of Borrower to Lender shall, to the
extent
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<PAGE> 8
permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of such indebtedness so that
the amount of interest on such indebtedness does not exceed the
maximum permitted by applicable law. The provisions of this paragraph
shall control all existing and future agreements between Borrower and
Lender.
c. Parties Bound. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, and their respective
heirs, executors, administrators, legal representatives, successors
and assigns where permitted by this Agreement.
d. Legal Construction. In case any one or more of the
provisions contained in this Agreement shall for any reason be held to
be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
e. Headings. The headings used in this Agreement have
been included only in order to make it easier to locate the subject
covered by each provision and are not to be used in construing this
Agreement.
f. Attorneys' Fees and Legal Expenses. Should either
party hereto institute any action or proceeding in court to enforce
any provision hereof or for damages by reason of any alleged breach of
any provision of this Agreement or for any other judicial remedy, the
prevailing party shall be entitled to receive from the losing party
all reasonable attorneys' fees and all court costs in connection with
said proceeding.
g. Counterparts and Facsimiles. This Agreement may be
executed in any number of counterparts, and each of such counterparts
shall for all purposes be deemed to be an original. Also, this
Agreement may be executed by facsimile signatures and a facsimile
signature shall for all purposes be deemed to be an original.
h. Modification. This Agreement may not be modified or
amended except by a written instrument signed by the parties hereto
and referring specifically to this Agreement.
i. Other Instruments. Each party shall, upon the request
of the other party, execute, acknowledge and deliver any and all
instruments reasonably necessary or appropriate to carry into effect
the intention of the parties as expressed in this Agreement.
-8-
<PAGE> 9
j. Rule of Construction. The parties acknowledge that
each party and its counsel have reviewed and revised this Agreement
and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments or
exhibits hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
15th day of May, 1996. This Agreement shall be void if each of the conditions
stated in Paragraph 9. hereof has not been satisfied (or waived by Lender in
writing) prior to 5:00 p.m. Dallas, Texas time on May 15, 1996.
BORROWER: CELEBRITY, INC.
By:/s/ JAMES R. THOMPSON
---------------------------------------
James R. Thompson,
Vice President - Finance
LENDER: NATIONSBANK TEXAS, N.A.
By:/s/ PAM CUNNINGHAM
---------------------------------------
Pam Cunningham,
Vice President
The undersigned hereby join in the foregoing Modification Agreement to
evidence their consent and agreement to the terms and provisions of same, and
the undersigned covenant and agree to be bound by all of the terms and
provisions of the foregoing Modification Agreement applicable to Guarantor.
THE CLUETT CORPORATION
By:/s/ JAMES R. THOMPSON
-----------------------------------------
James R. Thompson,
Vice President-Finance
MAGICSILK, INC.
By:/s/ JAMES R. THOMPSON
-----------------------------------------
James R. Thompson,
Vice President
STAR WHOLESALE FLORIST, INC.
By:/s/ JAMES R. THOMPSON
-----------------------------------------
James R. Thompson,
Vice President
INDIA EXOTICS, INC.
By:/s/ JAMES R. THOMPSON
-----------------------------------------
James R. Thompson,
Vice President
-9-
<PAGE> 1
EXHIBIT 10.6
When recorded, return to:
Valinda B. Wolfert, Esq.
Winstead Sechrest & Minick
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
FIFTH AMENDMENT AND MODIFICATION AGREEMENT
This FIFTH AMENDMENT AND MODIFICATION AGREEMENT ("Agreement") is made
as of the 30th day of September, 1996, by and among NATIONSBANK OF TEXAS, N.A.
("Lender"), a national banking association, CELEBRITY, INC. ("Borrower"), a
Texas corporation, and the hereinafter described Trustee.
W I T N E S S E T H :
WHEREAS, Lender and Borrower have entered into various documents
relating to loans (collectively, the "Loans") made by Lender to Borrower and
evidenced by the following promissory notes: (i) that certain Promissory Note
in the original principal amount of $1,800,000.00, dated April 22, 1993,
executed by Borrower and payable to the order of Tyler Bank & Trust, N.A., and
assigned and endorsed to Lender (as heretofore modified, "Note A"); (ii) that
certain Promissory Note in the original principal amount of $2,290,409.98,
dated March 21, 1994, executed by Borrower and payable to the order of Lender
(as heretofore modified, "Note B"); (iii) that certain Promissory Note in the
original principal amount of $1,800,000.00, dated March 21, 1994, executed by
Borrower and payable to the order of Lender (as heretofore modified, "Note C");
and (iv) that certain Promissory Note in the original principal amount of
$455,550.00, dated February 9, 1996, executed by Borrower and payable to the
order of Lender (as heretofore modified, "Note D") (Note A, Note B, Note C and
Note D are collectively referred to as the "Notes," and the Notes, together
with all other agreements, documents and instruments relating thereto or now or
hereafter executed in connection therewith or evidencing, securing or relating
to the obligations of Borrower to Lender, as the same may be amended or
modified from time to time, are hereinafter referred to as the "Loan
Documents").
WHEREAS, Lender and Borrower executed that certain Loan Agreement
dated March 21, 1994, by and between Borrower and Lender, as amended by that
certain Amendment to Loan Agreement dated December 21, 1994, that certain
Second Amendment to Loan Agreement dated March 20, 1995, that certain Third
Amendment to Loan Agreement dated February 9, 1996, and that certain Fourth
Amendment and Modification Agreement dated as of May 15, 1996 (as amended, the
"Loan Agreement").
WHEREAS, the Borrower executed and delivered those certain Deeds of
Trust described on Exhibit "A" hereto (as same may have been heretofore
amended, the "Deeds of Trust") to Michael F. Hord as Trustee (the "Trustee"),
covering the real property described in Exhibit "B"
MODIFICATION AGREEMENT - Page 1
<PAGE> 2
attached hereto and incorporated herein for all purposes, together with all
improvements, appurtenances, other properties (whether real or personal),
rights and interests described in and encumbered by the Deeds of Trust
(collectively, the "Property"), to secure the payment of the Notes and
performance by Borrower of the other obligations set forth in the Loan
Documents; and
WHEREAS, the Borrower caused to be issued by the title companies
("Title Companies") described on Exhibit "C" hereto those certain Mortgagee
Policies of Title Insurance described on Exhibit "C" hereto (collectively, the
"Policies"), insuring the dignity and priority of the lien created and
evidenced by the Deeds of Trust; and
WHEREAS, the Borrower caused Star Wholesale Florist, Inc., Magicsilk,
Inc., India Exotics, Inc., and The Cluett Corporation (whether one or more, the
"Guarantor") to execute and deliver to Lender those certain Continuing and
Unconditional Guaranties (collectively, the "Guaranty") dated February 9, 1996,
guaranteeing payment of the Notes and all the other monetary obligations
contained in the Loan Documents and performance by Borrower of the other
obligations as set forth in the Loan Documents; and
WHEREAS, the Lender and Borrower now propose to modify certain of the
terms and provisions of the Loan Agreement, the Notes, the Deeds of Trust and
the other Loan Documents.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lender and Borrower hereby agree as follows:
1. Definitions. Capitalized terms used in this Agreement, to
the extent not otherwise defined herein, shall have the same meanings as in the
Loan Agreement, as amended hereby. From and after the date hereof, this
Agreement shall be a Loan Document.
2. Existing Defaults. Borrower hereby acknowledges, confirms,
and agrees that Defaults exist which entitle Lender to exercise all rights and
remedies available to it under the Loan Documents as a result of Borrower's
breach of paragraphs 9.a, 9.b, 9.j, 10.d, and 11.g of the Loan Agreement
(collectively, the "Existing Defaults"). Subject the terms and conditions of
this Agreement, and in reliance upon the representations, warranties, and
covenants of Borrower herein, Lender hereby agrees to waive the Existing
Defaults from the date hereof until 5:00 p.m. Dallas, Texas time on January 31,
1997. After 5:00 p.m. Dallas, Texas time on January 31, 1997, Lender's waiver
herein shall terminate automatically without further action on the part of
Lender, and if the Existing Defaults or any other Default then exists, Lender
shall be entitled to exercise any and all rights and remedies available under
the Loan Documents, in this Agreement, at law, in equity, or otherwise, without
any further lapse of time, expiration of applicable grace periods, or
requirements of notice, all of which are hereby expressly waived by Borrower
and Guarantor.
MODIFICATION AGREEMENT - Page 2
<PAGE> 3
3. Appraisals and Environmental Report. At Borrower's cost and
expense, Lender shall order and shall receive promptly after the date hereof,
(i) an appraisal (the "1996 Appraisals") of each Property prepared by an
independent third party acceptable to Lender and conforming to the Uniform
Standards of Professional Appraisal Practice as promulgated by the Appraisal
Foundation, and (ii) an environmental report addressed to the Lender and
prepared by an independent third party acceptable to Lender certifying that the
Property and the Borrower's operations thereon comply with all environmental
laws, that the Property is free of hazardous materials, and that the Property
and any structures thereon are free of any conditions that present indoor or
outdoor air hazards.
4. Loan to Value Ratio. Effective upon receipt of the 1996
Appraisals, if at any time the outstanding principal balance of the Notes
exceeds eighty percent (80%) of the aggregate fair market value of the Property
as determined by the 1996 Appraisals, then Borrower shall immediately upon
demand by Lender prepay the Notes by an amount sufficient to cause the
outstanding principal balance of the Notes to be less than or equal to eighty
percent (80%) of the aggregate fair market value of the Property as determined
by the 1996 Appraisals.
5. Current Note Balance. On September 30, 1996, the aggregate
principal amount advanced by Lender and unpaid under Note A was $1,259,590.01,
under Note B was $1,946,848.48, under Note C was $1,413,960.00, and under Note
D was $426,294.48.
6. Modification of Maturity. The maturity date of the Notes is
hereby modified to be January 31, 1998, when the unpaid principal balance of
the Notes, together with all accrued and unpaid interest thereon, shall be due
and payable. The Borrower hereby modifies the Notes and the liens, security
interests and assignments created and evidenced by the Deeds of Trust and other
Loan Documents, and in this regard all of the Loan Documents are hereby
modified by modifying the maturity date thereof as set forth above. Borrower
covenants to observe, comply with and perform each of the terms and provisions
of the Loan Documents, as modified hereby. Except as expressly set forth
herein, all repayment terms of the Notes shall remain effective.
7. Rate of Interest. Commencing on January 31, 1997, interest
on the unpaid principal balance from day to day remaining under the Notes shall
be payable at a rate of interest which shall from day to day be at the annual
rate equal to the lesser of (a) the Maximum Lawful Rate (as defined herein), or
(b) the sum of three percent (3%) plus the Prime Rate (hereinafter defined),
calculated on the basis of a 360-day year and the actual number of days
elapsed; provided, however, if at any time a rate of interest specified in
clause (b) above would exceed the Maximum Lawful Rate, thereby causing the
interest on the indebtedness evidenced by the Notes to be limited to the
Maximum Lawful Rate, then any subsequent reduction in the Prime Rate shall not
reduce the rate of interest on the indebtedness evidenced by the Notes below
the Maximum Lawful Rate until the total amount of interest accrued on the
indebtedness evidenced by the Notes equals the amount of interest which would
have accrued on the indebtedness evidenced by the Notes if the rate specified
in clause (b) above had at all times been in effect. Each change in the rate
of interest charged hereunder shall become effective, without notice to Maker,
on the effective date of each change in the Prime Rate or Maximum Lawful Rate.
As used herein, the term "Maximum Lawful Rate" means at any time the maximum
rate of interest
MODIFICATION AGREEMENT - Page 3
<PAGE> 4
permitted by applicable law, including as to Article 5069-1.04, Texas Revised
Civil Statutes Annotated (and as amended), but otherwise without limitation,
that rate based upon the "Indicated (weekly) Rate Ceiling," calculated on the
basis of a 365- or 366-day year, as applicable, after taking into consideration
all sums paid or agreed to be paid to Lender outside the provisions of the
Notes for the use, forbearance or detention of the indebtedness of Borrower
evidenced by the Notes, and all other charges constituting interest on the
indebtedness of Borrower evidenced by the Notes. As used herein, the term
"Prime Rate" means at any time the rate of interest per annum then most
recently established by Lender as its prime rate. The term Prime Rate is not
intended nor shall it be implied to mean the lowest rate of interest available
to the most creditworthy borrowers of Lender. Unpaid principal and interest,
after maturity thereof, shall bear interest at the Maximum Lawful Rate until
paid or, if no such rate is designated under applicable law then at the annual
rate equal to the sum of six percent (6%) plus the Prime Rate, calculated on
the basis of a 360-day year and the actual number of days elapsed.
8. Title Insurance. Contemporaneously with the execution and
delivery hereof, the Borrower shall cause the Title Companies to issue with
respect to the Policies, the standard Texas Form T-38 Endorsement pursuant to
Rule P-9b(3) of the Basic Manual of Rules, Rates and Forms for the Writing of
Title Insurance in the State of Texas ("Title Manual") or such comparable
endorsement as may be appropriate in the State of North Carolina with respect
to Tract C, acceptable to Lender, confirming that the Policies have not been
reduced or terminated by virtue of the terms and provisions hereof.
9. Acknowledgment by Borrower. Except as otherwise specified
herein, the terms and provisions hereof shall in no manner impair, limit,
restrict or otherwise affect the obligations of Borrower or any third party to
Lender, as evidenced by the Loan Documents. Borrower hereby acknowledges,
agrees and represents that (i) Borrower is indebted to Lender pursuant to the
terms of the Notes as modified hereby; (ii) the liens, security interests and
assignments created and evidenced by the Loan Documents are, respectively,
valid and subsisting liens, security interests and assignments of the
respective dignity and priority recited in the Loan Documents, and that
notwithstanding the provisions of Paragraph 7 of the Loan Agreement the grant
under the Deeds of Trust of a lien upon the Property to secure repayment of the
Notes, as the same may be renewed, extended or modified from time to time, is
hereby ratified and confirmed; (iii) there are no claims or offsets against, or
defenses or counterclaims to, the terms or provisions of the Loan Documents,
and the other obligations created or evidenced by the Loan Documents; (iv)
Borrower has no claims, offsets, defenses or counterclaims arising from any of
Lender's acts or omissions with respect to the Property, the Loan Documents or
Lender's performance under the Loan Documents or with respect to the Property;
(v) the representations and warranties contained in the Loan Documents are true
and correct representations and warranties of Borrower and Guarantors as of the
date hereof; and (vi) Lender is not in default and no event has occurred which,
with the passage of time, giving of notice, or both, would constitute a default
by Lender of Lender's obligations under the terms and provisions of the Loan
Documents. To the extent Borrower now has any claims, offsets, defenses or
counterclaims against Lender or the repayment of all or a portion of the Loan,
whether known or unknown, fixed or contingent, same are hereby forever
irrevocably waived and released in their entirety.
MODIFICATION AGREEMENT - Page 4
<PAGE> 5
10. No Waiver of Remedies. Except as may be expressly set forth
herein, nothing contained in this Agreement shall prejudice, act as, or be
deemed to be a waiver of any right or remedy available to Lender by reason of
the occurrence or existence of any fact, circumstance or event constituting a
default under the Note or the other Loan Documents.
11. Joinder of Guarantor. Contemporaneously with the execution
and delivery hereof, Borrower shall cause each Guarantor to execute and deliver
to Lender the signature page of this Agreement, (i) acknowledging and
consenting to the terms and provisions hereof, (ii) ratifying and confirming
the Guaranty, including all interest and costs of collection, to and for the
benefit of Lender, (iii) agreeing that the Guaranty is and shall remain in full
force and effect, and the terms of the Guaranty cover and pertain to the Loan,
Notes, Deeds of Trust, and other Loan Documents, (iv) acknowledging that there
are no claims or offsets against, or defenses or counterclaims to, the terms
and provisions of and the obligations created and evidenced by the Guaranty,
(v) certifying that the representations and warranties contained in the
Guaranty remain true and correct representations and warranties of Guarantor as
of the date hereof, and (vi) acknowledging that Lender has satisfied and
performed its covenants and obligations under the Guaranty and the Loan
Documents (if any), and that no prior action or failure to act by or on behalf
of, Lender has given rise to any cause of action or other claim against Lender
for breach of the Guaranty, the Loan Documents or otherwise.
12. Conditions. The effectiveness of this Agreement is subject to
the satisfaction of the following conditions precedent:
(a) Lender shall have received all of the following, each
dated (unless otherwise indicated) the date of this Agreement, in form
and substance satisfactory to Lender:
(1) Resolutions. Resolutions of the Board of
Directors of Borrower and each Guarantor certified by such
entity's Secretary or an Assistant Secretary which authorize
the execution, delivery, and performance of this Agreement and
the other Loan Documents to which such entity is or is to be a
party hereunder;
(2) Incumbency Certificate. A certificate of
incumbency certified by the Secretary or an Assistant
Secretary of Borrower and each Guarantor certifying the names
of the officers of such entities authorized to sign this
Agreement and each of the other Loan Documents to which each
such entity is or is to be a party hereunder (including the
certificates contemplated herein) together with specimen
signatures of such officers;
(3) Articles of Incorporation. The articles of
incorporation of Borrower and each Guarantor certified by the
appropriate government official of the state of incorporation
or the Secretary or an Assistant Secretary of such entities
within thirty (30) days prior to the date of this Agreement;
MODIFICATION AGREEMENT - Page 5
<PAGE> 6
(4) Bylaws. The bylaws of Borrower and each
Guarantor certified by the Secretary or an Assistant Secretary
of such entities;
(5) Governmental Certificates. Certificates of
the appropriate government officials of the state of
incorporation of Borrower and each Guarantor as to the
existence and good standing of such entities, each dated
within thirty (30) days prior to the date of this Agreement;
(6) Opinion of Counsel. A favorable opinion
of legal counsel to Borrower and each Guarantor, as to the
following matters and such other matters as Lender may
reasonably request:
(i) Borrower and each Guarantor is a
corporation duly organized, validly existing, and in
good standing under the laws of the state of its
incorporation.
(ii) The execution, delivery, and
performance by Borrower of the Agreement and the
other Loan Documents to which Borrower is a party and
the transactions thereunder have been duly authorized
by all necessary action on the part of Borrower and
do not and will not violate the articles of
incorporation or bylaws of Borrower or the provisions
of any law or any rule, regulation, or order of any
governmental authority and do not and will not result
in a breach or violation of, or constitute a default
under, or require any consent or result in the
creation of any lien, charge, or encumbrance upon any
of Borrower's properties, revenues, or assets under,
any agreement, instrument, or document to which
Borrower is a party or by which Borrower or any of
its properties may be bound.
(iii) The Agreement and the other Loan
Documents to which Borrower is a party have been duly
executed and delivered by Borrower and constitute the
legal, valid, and binding obligations of Borrower
enforceable against Borrower in accordance with their
respective terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws
relating to the enforcement of creditors' rights
generally.
(iv) The execution, delivery, and
performance by each Guarantor of the Agreement and
the other Loan Documents to which such Guarantor is a
party and the transactions thereunder have been duly
authorized by all necessary action on the part of
each Guarantor and do not and will not violate the
provisions of any law or any rule, regulation, or
order of any governmental authority and do not and
will not result in a breach or violation of, or
constitute a default under, or require any consent or
result in the creation of any lien, charge, or
encumbrance upon any of any Guarantor's properties,
revenues, or assets under, any agreement,
MODIFICATION AGREEMENT - Page 6
<PAGE> 7
instrument, or document to which any Guarantor is a
party or by which any Guarantor or any of its
properties may be bound.
(v) The Agreement and the other Loan
Documents to which any Guarantor is a party have been
duly executed and delivered by such Guarantor and
constitute the legal, valid, and binding obligations
of such Guarantor enforceable against such Guarantor
in accordance with their respective terms, except as
the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium,
or other similar laws relating to the enforcement of
creditors' rights generally.
(vi) There are no legal or arbitral
proceedings, and no proceedings by or before any
governmental or regulatory authority or agency,
pending or, to our knowledge, threatened against or
affecting Borrower or any Guarantor or any properties
or rights of Borrower or any Guarantor, which if
adversely determined, would have a material adverse
effect on the financial condition or operations of
Borrower or any Guarantor.
(vii) No authorization, consent, approval,
license, filing or registration with any governmental
or regulatory authority or agency is required in
connection with the execution, delivery, or
performance of Borrower or any Guarantor of the
Agreement or the other Loan Documents thereunder to
which Borrower or Guarantor is a party.
(7) Additional Information. Lender shall have
received such additional documents, instruments and
information as Lender or its legal counsel, Winstead Sechrest
& Minick P.C., may request.
(b) Lender shall have received a true and correct copy of
the waiver by National Canada Finance Corp. of any and all defaults
existing under that certain Loan Agreement dated as of May 10, 1993,
as amended.
(c) The representations and warranties contained herein
and in all other Loan Documents, as amended hereby, shall be true and
correct as of the date hereof as if made on the date hereof.
(d) Except for the Existing Defaults, no Default shall
have occurred and be continuing and no event or condition shall have
occurred that with the giving of notice or lapse of time or both would
be a Default.
(e) All corporate proceedings taken in connection with
the transactions contemplated by this Amendment and all documents,
instruments, and other legal matters incident thereto shall be
satisfactory to Lender and its legal counsel, Winstead Sechrest &
Minick P.C.
MODIFICATION AGREEMENT - Page 7
<PAGE> 8
13. Notices. From and after the date hereof, all notices or other
communications required or permitted to be given pursuant to the Loan Documents
or hereto (except for notice of a foreclosure sale which shall be given in the
manner specifically set forth in the Deeds of Trust or by applicable law) shall
be in writing and shall be deemed served and given at the time of (i) deposit
in a depository receptacle under the care and custody of the United States
Postal Service, properly addressed to the designated address of the addressee
as set forth below, postage prepaid, registered or certified mail with return
receipt requested, (ii) delivery to the designated address of the addressee set
forth below by a third party commercial delivery service or (iii) receipt at
the facsimile or telex receiving facility of the addressee if transmitted by
facsimile transmission. Notice given in any other manner shall be effective
only if and when received by the addressee. For purposes of notices, the
addresses and facsimile numbers of the parties shall be as follows:
Lender: NationsBank of Texas, N.A.
901 Main Street, 11th Floor
Dallas, TX 75202-3714
Facsimile: (214) 508-2588
Phone: (214) 508-2565
Attn: Mark L. Henze
with a copy to: Valinda Barrett Wolfert, Esq.
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, TX 75270-2199
Facsimile: (214) 745-5390
Phone: (214) 745-5395
Borrower: Celebrity, Inc.
P.O. Box 6666
Tyler, TX 75711
Facsimile: (903) 581-2887
Phone: (800) 482-8148
Attn: James R. Thompson
with a copy to: Joan Sostek, Esq.
Jackson & Walker, L.L.P.
901 Main Street, Suite 6000
Dallas, TX 75202
Facsimile: (214) 953-5822
Phone: (214) 953-6000
Either party shall have the right to change its address and facsimile number
for notice hereunder and under the other Loan Documents to any other location
within the continental United States
MODIFICATION AGREEMENT - Page 8
<PAGE> 9
by notice to the other party of such new address at least (30) days prior to
the effective date of such new address.
14. Costs and Expenses. The Borrower hereby agrees to pay on
demand: (a) all costs and expenses of the Lender in connection with the
preparation, negotiation, execution, and delivery of this Agreement and the
other Loan Documents and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto, including, without limitation,
the fees and expenses of legal counsel for the Lender, (b) all costs and
expenses of the Lender in connection with any Default and the enforcement of
this Agreement or any other Loan Document, including, without limitation, the
fees and expenses of legal counsel for the Lender, (c) all transfer, stamp,
documentary, or other similar taxes, assessments, or charges levied by any
governmental authority in respect of this Agreement or any of the other Loan
Documents, (d) all costs, expenses, assessments, and other charges incurred in
connection with any filing, registration, recording, or perfection of any
security interest or Lien contemplated by this Agreement or any other Loan
Document, and (e) all other costs and expenses incurred by the Lender in
connection with this Agreement or any other Loan Document, including, without
limitation, all costs, expenses, and other charges incurred in connection with
obtaining any mortgagee title insurance policy, survey, audit, environmental
report, or appraisal in respect of the Collateral.
15. INDEMNIFICATION. THE BORROWER SHALL INDEMNIFY THE LENDER AND
EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME
SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE
NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT
OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE
LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OF ANY REPRESENTATION, WARRANTY,
COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE
PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY
HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE
PROPERTIES OR ASSETS OF THE BORROWER OR ANY SUBSIDIARY, OR (E) ANY
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY
OF THE FOREGOING; BUT EXCLUDING LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS'
FEES) ARISING AS A RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
LENDER. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN
DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO
BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
MODIFICATION AGREEMENT - Page 9
<PAGE> 10
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS'
FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF
SUCH PERSON.
16. Limitation of Liability. Neither the Lender nor any
affiliate, officer, director, employee, attorney, or agent of the Lender shall
have any liability with respect to, and the Borrower hereby waives, releases,
and agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by the Borrower in
connection with, arising out of, or in any way related to, this Agreement or
any of the other Loan Documents, or any of the transactions contemplated by
this Agreement or any of the other Loan Documents. The Borrower hereby waives,
releases, and agrees not to sue the Lender or any of the Lender's affiliates,
officers, directors, employees, attorneys, or agents for punitive damages in
respect of any claim in connection with, arising out of, or in any way related
to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
17. No Duty. All attorneys, accountants, appraisers, and other
professional persons and consultants retained by the Lender shall have the
right to act exclusively in the interest of the Lender and shall have no duty
of disclosure, duty of loyalty, duty of care, or other duty or obligation of
any type or nature whatsoever to the Borrower or any of the Borrower's
shareholders or any other person.
18. Lender Not Fiduciary. The relationship between the Borrower
and the Lender is solely that of debtor and creditor, and the Lender has no
fiduciary or other special relationship with the Borrower, and no term or
condition of any of the Loan Documents shall be construed so as to deem the
relationship between the Borrower and the Lender to be other than that of
debtor and creditor.
19. Equitable Relief. The Borrower recognizes that in the event
the Borrower fails to pay, perform, observe, or discharge any or all of the
Obligations, any remedy at law may prove to be inadequate relief to the Lender.
The Borrower therefore agrees that the Lender, if the Lender so requests, shall
be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
20.A. RELEASE AND COVENANT NOT TO SUE. BORROWER (IN ITS OWN RIGHT
AND ON BEHALF OF ITS DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS,
ATTORNEYS AND AGENTS) AND EACH GUARANTOR (IN ITS OWN RIGHT AND ON BEHALF OF
THEIR RESPECTIVE DEBTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS,
ATTORNEYS AND AGENTS) (THE "RELEASING PARTIES") JOINTLY AND SEVERALLY RELEASE,
ACQUIT, AND FOREVER DISCHARGE LENDER AND ITS DIRECTORS, OFFICERS, EMPLOYEES,
INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS, (THE "RELEASED PARTIES"), TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, FROM ANY AND ALL
ACTS AND OMISSIONS OF THE RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS,
MODIFICATION AGREEMENT - Page 10
<PAGE> 11
CAUSES OF ACTION, COUNTERCLAIMS, DEMANDS, CONTROVERSIES, COSTS, DEBTS, SUMS OF
MONEY, ACCOUNTS, RECKONINGS, BONDS, BILLS, DAMAGES, OBLIGATIONS, LIABILITIES,
OBJECTIONS, AND EXECUTIONS OF ANY NATURE, TYPE, OR DESCRIPTION WHICH THE
RELEASING PARTIES HAVE AGAINST THE RELEASED PARTIES, INCLUDING, BUT NOT LIMITED
TO, NEGLIGENCE, GROSS NEGLIGENCE, USURY, FRAUD, DECEIT, MISREPRESENTATION,
CONSPIRACY, UNCONSCIONABILITY, DURESS, ECONOMIC DURESS, DEFAMATION, CONTROL,
INTERFERENCE WITH CONTRACTUAL AND BUSINESS RELATIONSHIPS, CONFLICTS OF
INTEREST, MISUSE OF INSIDER INFORMATION, CONCEALMENT, DISCLOSURE, SECRECY,
MISUSE OF COLLATERAL, WRONGFUL RELEASE OF COLLATERAL, FAILURE TO INSPECT,
ENVIRONMENTAL DUE DILIGENCE, NEGLIGENT LOAN PROCESSING AND ADMINISTRATION,
WRONGFUL SETOFF, VIOLATIONS OF STATUTES AND REGULATIONS OF GOVERNMENTAL
ENTITIES, INSTRUMENTALITIES AND AGENCIES (BOTH CIVIL AND CRIMINAL),
RACKETEERING ACTIVITIES, SECURITIES AND ANTITRUST LAWS VIOLATIONS, TYING
ARRANGEMENTS, DECEPTIVE TRADE PRACTICES, BREACH OR ABUSE OF ANY ALLEGED
FIDUCIARY DUTY, BREACH OF ANY ALLEGED SPECIAL RELATIONSHIP, COURSE OF CONDUCT
OR DEALING, ALLEGED OBLIGATION OF FAIR DEALING, ALLEGED OBLIGATION OF GOOD
FAITH, AND ALLEGED OBLIGATION OF GOOD FAITH AND FAIR DEALING, WHETHER OR NOT IN
CONNECTION WITH OR RELATED TO THE LOAN DOCUMENTS AND THIS AGREEMENT, AT LAW OR
IN EQUITY, BY CONTRACT, IN TORT, OR OTHERWISE, KNOWN OR UNKNOWN, SUSPECTED OR
UNSUSPECTED (THE "RELEASED CLAIMS"). THE RELEASING PARTIES FURTHER AGREE TO
LIMIT ANY DAMAGES THEY MAY SEEK IN CONNECTION WITH ANY CLAIM OR CAUSE OF
ACTION, IF ANY, TO EXCLUDE ALL PUNITIVE AND EXEMPLARY DAMAGES, DAMAGES
ATTRIBUTABLE TO LOST PROFITS OR OPPORTUNITY, DAMAGES ATTRIBUTABLE TO MENTAL
ANGUISH, AND DAMAGES ATTRIBUTABLE TO PAIN AND SUFFERING, AND THE RELEASING
PARTIES DO HEREBY WAIVE AND RELEASE ALL SUCH DAMAGES WITH RESPECT TO ANY AND
ALL CLAIMS OR CAUSES OF ACTION WHICH MAY EXIST AS OF THE DATE HEREOF ANY OF THE
RELEASED PARTIES. THE RELEASING PARTIES REPRESENT AND WARRANT THAT NO FACTS
EXIST WHICH COULD PRESENTLY SUPPORT THE ASSERTION OF ANY OF THE RELEASED CLAIMS
AGAINST THE RELEASED PARTIES. THE RELEASING PARTIES FURTHER COVENANT NOT TO
SUE THE RELEASED PARTIES ON ACCOUNT OF ANY OF THE RELEASED CLAIMS, AND
EXPRESSLY WAIVE ANY AND ALL DEFENSES THEY MAY HAVE IN CONNECTION WITH THEIR
DEBTS AND OBLIGATIONS UNDER THE LOAN DOCUMENTS AND THIS AGREEMENT. THIS
PARAGRAPH IS IN ADDITION TO AND SHALL NOT IN ANY WAY LIMIT ANY OTHER RELEASE,
COVENANT NOT TO SUE, OR WAIVER BY THE RELEASING PARTIES IN FAVOR OF THE
RELEASED PARTIES.
20.B. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO
THE NOTES OR ANY RELATED NOTES OR
MODIFICATION AGREEMENT - Page 11
<PAGE> 12
INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT,
SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S.") AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION,
INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY
CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION.
(i) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED
IN THE CITY OF BORROWER'S DOMICILE AT THE TIME OF THIS AGREEMENT'S
EXECUTION AND ADMINISTERED BY J.A.M.S., WHO WILL APPOINT AN
ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM
ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED
WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR
SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR AN ADDITIONAL 60 DAYS.
(ii) RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE
APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED
IN THIS AGREEMENT OR THE NOTES; OR (II) BE A WAIVER BY LENDER OF THE
PROTECTION AFFORDED TO IT BY 12 U.S.C. Section 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF LENDER
HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO)
SETOFF, OR (B) TO FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY
REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. LENDER MAY EXERCISE SUCH
SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY
OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS NOTE. NEITHER
THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE
OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE
CLAIMANT IN SUCH
MODIFICATION AGREEMENT - Page 12
<PAGE> 13
ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
21. Additional Documentation. From time to time, Borrower shall
execute or procure and deliver to Lender such other and further documents and
instruments evidencing, securing or pertaining to the Loan or the Loan
Documents as shall be reasonably requested by Lender so as to evidence or
effect the terms and provisions hereof.
22. Effectiveness of the Loan Documents. Except as expressly
modified by the terms and provisions hereof, each of the terms and provisions
of the Loan Documents are hereby ratified and shall remain in full force and
effect; provided, however, that any reference in any of the Loan Documents to
the Loan, the amount constituting the Loan, any defined terms, or to any of the
other Loan Documents shall be deemed, from and after the date hereof, to refer
to the Loan, the amount constituting the Loan, defined terms and to such other
Loan Documents, as modified hereby.
23. GOVERNING LAW. THE TERMS AND PROVISIONS HEREOF SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
24. Time. Time is of the essence in the performance of the
covenants contained herein and in the Loan Documents.
25. Binding Agreement. This Agreement shall be binding upon the
successors and assigns of the parties hereto; provided, however, the foregoing
shall not be deemed or construed to (i) permit, sanction, authorize or condone
the assignment of all or any part of the Property or any of Borrower's rights,
titles or interests in and to the Property, except as expressly authorized in
the Loan Documents, or (ii) confer any right, title, benefit, cause of action
or remedy upon any person or entity not a party hereto, which such party would
not or did not otherwise possess.
26. Headings. The section headings hereof are inserted for
convenience of reference only and shall in no way alter, amend, define or be
used in the construction or interpretation of the text of such section.
27. Construction. Whenever the context hereof so requires,
reference to the singular shall include the plural and likewise, the plural
shall include the singular; words denoting gender shall be construed to mean
the masculine, feminine or neuter, as appropriate; and specific enumeration
shall not exclude the general, but shall be construed as cumulative of the
general recitation.
28. Severability. If any clause or provision of this Agreement is
or should ever be held to be illegal, invalid or unenforceable under any
present or future law applicable to the terms hereof, then and in that event,
it is the intention of the parties hereto that the remainder of this Agreement
shall not be affected thereby, and that in lieu of each such clause or
provision of this Agreement that is illegal, invalid or unenforceable, such
clause or provision shall be judicially
MODIFICATION AGREEMENT - Page 13
<PAGE> 14
construed and interpreted to be as similar in substance and content to such
illegal, invalid or unenforceable clause or provision, as the context thereof
would reasonably suggest, so as to thereafter be legal, valid and enforceable.
29. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
30. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER DOCUMENTS, IF
ANY, HEREIN REQUIRED TO BE EXECUTED REPRESENT THE FINAL AGREEMENT OR AGREEMENTS
BETWEEN THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND THEREOF, AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. THIS INSTRUMENT MAY BE AMENDED ONLY BY AN INSTRUMENT IN WRITING
EXECUTED BY THE PARTIES HERETO.
MODIFICATION AGREEMENT - Page 14
<PAGE> 15
EXECUTED as of the date first above written.
LENDER:
------
NATIONSBANK OF TEXAS, N.A.,
a national banking association
By:
------------------------------------
Name:
-----------------------------
Title:
-----------------------------
BORROWER:
--------
CELEBRITY, INC.,
ATTEST: a Texas corporation
[SEAL]
By:
- --------------------------------- ------------------------------------
Name: Name:
----------------------------- ---------------------------------
Title: Title:
---------------------------- ---------------------------------
(Secretary or Assistant Secretary)
TRUSTEE:
(Seal)
-----------------------------------------
MICHAEL F. HORD, as Trustee
MODIFICATION AGREEMENT - Page 15
<PAGE> 16
STATE OF TEXAS Section
Section
COUNTY OF _________ Section
This instrument was ACKNOWLEDGED before me, on the _____ day of
________, 1996, by ________________________________, the __________________ of
NATIONSBANK OF TEXAS, N.A., a national banking association on behalf of said
association.
[ S E A L ]
-------------------------------------
Notary Public, State of Texas
My Commission Expires:
-------------------------------------
- ---------------------- Printed Name of Notary Public
STATE OF TEXAS Section
Section
COUNTY OF _________ Section
This instrument was ACKNOWLEDGED before me, on the _____ day of
________, 1996, by ________________________________, the __________________ of
CELEBRITY, INC., a Texas corporation, on behalf of said corporation.
[ S E A L ]
-------------------------------------
Notary Public, State of Texas
My Commission Expires:
-------------------------------------
- ---------------------- Printed Name of Notary Public
STATE OF TEXAS Section
Section
COUNTY OF _________ Section
This instrument was ACKNOWLEDGED before me, on the _____ day of
________, 1996, by Michael F. Hord, Trustee.
[ S E A L ]
-------------------------------------
Notary Public, State of Texas
My Commission Expires:
-------------------------------------
- ---------------------- Printed Name of Notary Public
MODIFICATION AGREEMENT - Page 16
<PAGE> 17
NORTH CAROLINA ACKNOWLEDGMENT FORM
STATE OF TEXAS Section
Section
COUNTY OF _________ Section
I, a Notary Public of the County and State aforesaid, certify that
______________, personally came before me this day and acknowledged that he is
_________ Secretary of CELEBRITY, INC., a Texas corporation, and that by
authority duly given and as the act of the corporation, the foregoing instrument
was signed in its name by its _______ President, sealed with its corporate seal
and attested by ___________ as its ___________ Secretary. Witness my hand and
official stamp or seal, this _____ day of __________, 1996.
[ S E A L ]
-------------------------------------
Notary Public, State of Texas
My Commission Expires:
-------------------------------------
- ---------------------- Printed Name of Notary Public
STATE OF TEXAS Section
Section
COUNTY OF _________ Section
I, a Notary Public of the County and State aforesaid, certify that
MICHAEL F. HORD, TRUSTEE, personally appeared before me this day and
acknowledged the execution of the foregoing instrument. Witness my hand and
official stamp or seal, this _____ day of _______, 1996.
[ S E A L ]
-------------------------------------
Notary Public, State of Texas
My Commission Expires:
-------------------------------------
- ---------------------- Printed Name of Notary Public
MODIFICATION AGREEMENT - Page 17
<PAGE> 18
Each Guarantor hereby consents and agrees to this Agreement and agrees
that its respective Guaranty shall remain in full force and effect, shall
continue to be the legal, valid and binding obligation of such Guarantor
enforceable against such Guarantor in accordance with its terms, and shall
guarantee to Lender repayment of the Notes as modified hereby and as the same
may be further renewed, extended, or modified from time to time.
Guarantors:
----------
STAR WHOLESALE FLORIST, INC.
By:
-------------------------------------
Name:
--------------------------
Title:
--------------------------
MAGICSILK, INC.
By:
-------------------------------------
Name:
--------------------------
Title:
--------------------------
INDIA EXOTICS, INC.
By:
-------------------------------------
Name:
--------------------------
Title:
--------------------------
THE CLUETT CORPORATION
By:
-------------------------------------
Name:
--------------------------
Title:
--------------------------
MODIFICATION AGREEMENT - Page 18
<PAGE> 19
STATE OF TEXAS Section
Section
COUNTY OF __________ Section
This instrument was ACKNOWLEDGED before me on ________, 1996, by
________________________________________________,
_______________________________ of STAR WHOLESALE FLORIST, INC., a Texas
corporation, on behalf of said corporation.
[ S E A L ]
-------------------------------------
Notary Public, State of Texas
My Commission Expires:
-------------------------------------
- ---------------------- Printed Name of Notary Public
STATE OF TEXAS Section
Section
COUNTY OF __________ Section
This instrument was ACKNOWLEDGED before me on __________, 1996, by
________________________________________________,
_______________________________ of MAGICSILK, INC., a Texas corporation, on
behalf of said corporation.
[ S E A L ]
-------------------------------------
Notary Public, State of Texas
My Commission Expires:
-------------------------------------
- ---------------------- Printed Name of Notary Public
MODIFICATION AGREEMENT - Page 19
<PAGE> 20
STATE OF TEXAS Section
Section
COUNTY OF __________ Section
This instrument was ACKNOWLEDGED before me on __________, 1996, by
________________________________________________,
_______________________________ of INDIA EXOTICS, INC., a Texas corporation, on
behalf of said corporation.
[ S E A L ]
-------------------------------------
Notary Public, State of Texas
My Commission Expires:
-------------------------------------
- ---------------------- Printed Name of Notary Public
STATE OF TEXAS Section
Section
COUNTY OF __________ Section
This instrument was ACKNOWLEDGED before me on __________, 1996, by
________________________________________________,
_______________________________ of THE CLUETT CORPORATION, a California
corporation, on behalf of said corporation.
[ S E A L ]
-------------------------------------
Notary Public, State of Texas
My Commission Expires:
-------------------------------------
- ---------------------- Printed Name of Notary Public
MODIFICATION AGREEMENT - Page 20
<PAGE> 21
EXHIBIT "A"
Deeds of Trust
<TABLE>
<CAPTION>
Date of Place of Date Subject Filing Secured
Instrument Recordation of Filing Property Information Obligations
---------- ----------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1. 4/22/93 Smith Co., TX 4/22/93 Tract A Vol. 3354, Pg. 701 Note A
Modified 3/21/94 Vol. 3492, Pg. 849 &
3/21/94 Vol. 3492, Pg. 830
2. 3/21/94 Smith Co., TX 3/21/94 Tract B (Also 2d Vol. 3492, Page 803 Notes A, B, C & D
lien on Tract A
and Tract B)
Modified 4/5/95 Vol. 3645, Page 511
3/20/95
3. 3/20/94 Forsyth Co., NC 3/21/94 Tract C Book 1818, Page 1197 Notes A, B, C & D
Modified 1/6/95 Book 1845, Page 2587
12/21/94
Modified 3/18/96 Book 1892, Page 0557
2/9/96
4. 2/9/96 Smith Co., TX 2/12/96 Tract D (Also 2d Vol. 3759, Page 431 Notes A, B, C & D
lien on Tract A
and Tract B)
</TABLE>
<PAGE> 22
EXHIBIT "B"
Legal Description of Property
<PAGE> 23
EXHIBIT "C"
Title Insurance
<TABLE>
<CAPTION>
Policy Policy
Issuer Policy No. Date Amount Subject Property
------ ---------- ---- ------ ----------------
<S> <C> <C> <C> <C>
1. Boren Abstract Co./Old TM1077368 3/21/94 $1,800,000 Tract A
Republic National Title
Insurance Company
2. Boren Abstract Co./Old TM1130119 3/24/94 $2,290,409.98 Tract B
Republic National Title
Insurance Company
3. Lawyers Title of North 135-00-247835 3/21/94 $2,100,000 Tract C
Carolina/Lawyers Title
Insurance Corporation
4. Smith County Abstract M-5842-227944 2/12/96 $455,550 Tract D
Company
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 671
<SECURITIES> 0
<RECEIVABLES> 20,647
<ALLOWANCES> 1,351
<INVENTORY> 31,687
<CURRENT-ASSETS> 56,534
<PP&E> 11,705
<DEPRECIATION> 5,217
<TOTAL-ASSETS> 75,184
<CURRENT-LIABILITIES> 14,184
<BONDS> 0
63
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 75,184
<SALES> 31,447
<TOTAL-REVENUES> 31,447
<CGS> 23,184
<TOTAL-COSTS> 30,183
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 851
<INCOME-PRETAX> 418
<INCOME-TAX> (67)
<INCOME-CONTINUING> 485
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 485
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>