Exhibit 10.1


 


EXECUTION


 


SECOND AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT


 


SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of
August 26, 1996, by and between CACHE INC., a corporation organized under the
laws of the State of Florida with its principal place of business at 1460
Broadway, New York, New York 10036 (the “Borrower”) and FLEET BANK, N.A.
(successor in interest to National Westminster Bank NJ), a national banking
association with its principal place of business at Exchange Place Centre, 10
Exchange Place, Jersey City, New Jersey 07302 (the “Bank”).


 


W I  T  N  E  S
S  E  T  H:


 


WHEREAS, pursuant to the Amended and Restated Loan and Security
Agreement, dated as of December 15, 1993, as modified pursuant to Amendments,
dated as of April 15, 1994, December 15, 1994, August 10, 1995 and May 10, 1996
respectively (collectively, the “1993 Loan Agreement”) the Bank has, from time
to time, made loans to the Borrower and issued letters of credit on behalf of
the Borrower in an aggregate principal amount of up to $8,500,000;


 


WHEREAS, the parties desire to amend and restate the 1993 Loan
Agreement in its entirety in order to, among other things (i) provide for loans
to the Borrower and the issuance of letters of credit on behalf of the Borrower
in an aggregate principal amount of up to $12,000,000; and (ii) provide for the
grant to the Bank of a security interest in certain assets of the Borrower upon
the occurrence of an Event of Default, as hereinafter defined; and


 


WHEREAS, certain terms used herein shall have the meanings ascribed
thereto in Section 5.1 hereof;


 


NOW, THEREFORE, the Borrower and the Bank hereby amend and restate the
1993 Loan Agreement in its entirety as follows:


 


ARTICLE 1


REVOLVING CREDIT


 


1.1           Loans.


 


(a)           Subject to the terms
and conditions of this Agreement, the Bank may from time to time hereafter,
make loans to the Borrower.  Each Loan may
be a Prime Rate Loan, LIBOR Loan or COF Loan (each a “type” of Loan), provided,
that, no more than five LIBOR Loans and COF Loans, in the aggregate may be
outstanding at any time.


 

















 


(b)           The total principal
amount of all outstanding Loans, together with the face amount of all
outstanding Letters of Credit, as hereinafter defined, shall not exceed
$12,000,000; provided, however, that the Borrower shall, for one consecutive
sixty day period during each of the periods listed in Column A below, maintain
the daily sum of (a) the total principal amount of all outstanding Loans plus
(b) the face amount of all outstanding Letters of Credit such that the average
thereof for any such consecutive sixty day period does not exceed the amount
set forth opposite such period in Column B below (the “Required Low Point”).


 




	
  A

  	
   

  	
  B

  	
   

  
	
  Period

  	
   

  	
  Required

  Low Point

  	
   

  
	
  January 1,
  1997,

  through

  December 1, 1997

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  1998,

  through 

  December 1, 1998

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  1999,

  through

  December 31, 1999

  	
   

  	
  $

  	
  3,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2000,

  through

  December 31, 2000

  	
   

  	
  $

  	
  3,500,000

  	
   

  
							






 


(c)           Subject to the
provisions of Section 1.1(b), the Borrower need not repay the principal amount
of any Loans until the Commitment Termination Date, provided, however, that the
Borrower will be required to repay all amounts paid by the Bank on account of
drafts presented under the Letters of Credit in the manner prescribed in
Section 1.6 of this Agreement.


 


(d)           Repayment by the
Borrower of principal amounts of any Loans shall not affect the ability of the
Borrower to borrow and reborrow hereunder so long as the Borrower is in
compliance with the terms of this agreement and so long as the sum of the total
outstanding principal balance of Loans outstanding at any time and the face
amounts of all outstanding Letters of Credit, does not exceed the amounts set
forth in Section 1.1(b) above.


 

















 


(e)           Notwithstanding the
foregoing provisions of Section 1.1, subject to the acceleration of the payment
thereof in accordance with the terms of this Agreement, all sums outstanding on
the Commitment Termination Date shall be due and payable on that date.


 


(f)            In addition to the
repayment of principal of the Loans, the Borrower also promises to pay interest
on the unpaid Loans (including all amounts paid by the Bank on account of
drafts presented under the Letters of Credit) as follows: 


 


(1)           The
Borrower will pay to the Bank interest on the unpaid principal amount of each
Loan, for the period commencing on the date of such Loan to but excluding the
date such Loan shall be paid in full, at the following rates per annum:


 


(a)           if
such Loan is a Prime Rate Loan, the Prime Rate (as in effect from time to time)
plus the Applicable Margin, and


 


(b)           If
such Loan is a LIBOR Loan, the LIBOR Rate for the Interest Period therefor plus
the Applicable Margin; and


 


(c)           If
such Loan is a COF Loan, the COF Rate for the Interest Period therefor plus the
Applicable Margin.


 


(2)           The
rate of interest on Prime Rate Loans shall be changed effective as of the
effective date of each change in the Prime Rate, as established by the Bank,
without notice to the Borrower.  Any
change in the Prime Rate shall not affect or alter any of the other terms and
conditions of this Agreement.


 


(3)           Interest
shall be computed on the basis of a year of 360 days for actual days
elapsed.  Interest, shall be payable in arrears
on each Interest Payment Date.


 


(4)           The
Bank is hereby authorized to charge interest and any other amounts (including,
without limitation, principal and fees) due under this Agreement to Borrower’s
Account No. 0011301810 maintained at the Bank or in the event that there are insufficient
funds in such account, then to such other accounts as may be maintained by the
Borrower at the Bank on each due date.  The
Bank will send the Borrower monthly debit notices.  Promptly after the determination of any
interest rate provided for herein or any change therein, the Bank shall give
notice thereof to the Borrower; provided, however, that the failure to give
such notice shall not affect the Borrower’s obligations to make interest payments
hereunder at the rates provided for herein.


 

















 


(5)           At
no time shall the amount of interest due or payable hereunder or under the Note
exceed the maximum rate of interest allowed by applicable law, and if any such
payment is inadvertently made by the Borrower or inadvertently received by the
Bank, then such excess sum shall be credited as a payment of principal, unless
the Borrower notifies the Bank in writing that it elects to have such excess
sum returned forthwith.  It is the express
intent of this Agreement that the Borrower not pay and the Bank not receive,
directly or indirectly, in any manner whatsoever, interest in excess of that
which may legally be paid by the Borrower under applicable law.


 


(g)           Notwithstanding
anything herein to the contrary, upon the occurrence and during the continuance
of an Event of Default, all outstanding Loans shall bear interest at the Post
Default Rate, which interest shall be payable upon the demand of the Bank.


 


(h)           The obligations of the
Borrower to the Bank under this Agreement (including, without limitation, the
obligations to make payments of principal, interest and fees hereunder) are
collectively called the “Liabilities” in this Agreement.


 


1.2           Term.


 


(a)           The Commitment shall
continue in full force and effect until the Commitment Termination Date (unless
sooner terminated as provided herein). Notwithstanding the foregoing, the
availability of additional Loans and Letters of Credit after the Commitment
Termination Date may, at the request of the Borrower and on notice to the
Borrower, be renewed from time to time by the Bank in its sole discretion.  Unless otherwise agreed to in writing by the
Borrower and the Bank, the terms of this Agreement will govern the relationship
between the Bank and the Borrower upon any such renewal or renewals and until
all the Liabilities are paid in full.


 


(b)           Notwithstanding the
foregoing provisions of Section 1.2(a), the Bank has the right to terminate its
obligation to make Loans and to issue Letters of Credit at any time upon the
occurrence of an Event of Default hereunder. 
Immediately upon the occurrence of an Event of Default, the Bank shall
have all the remedies set forth in Article VII of this Agreement. Despite such
termination, the Bank’s rights under this Agreement shall remain in full force
and effect until all Liabilities are paid in full.


 


(c)           By giving the Bank 30
days’ prior written notice, the Borrower may reduce or terminate the
Commitment, provided, however that each reduction in the Commitment shall be in
an amount not less than $1,000,000 or an integral multiple thereof and provided
further that the Commitment may not be reduced to an amount less than the sum
of (a) the total principal amount of the Loans then outstanding and (b) the
aggregate face amounts of all then outstanding Letters of Credit.  Despite the Borrower’s giving such notice,
the Bank’s other rights under this Agreement shall remain in full force and
effect until all Liabilities are paid in full.


 

















 


1.3           Advances.


 


(a)           All Loans (and
conversions of outstanding Loans from one type of Loan to another type of Loan)
shall be made after written request therefor by the Borrower.  Each such request shall be given on a
Business Day and shall be irrevocable and effective only upon receipt by the
Bank and shall specify (i) the aggregate amount and date (which shall be a
Business Day) of the Loan to be borrowed, (ii) the type of Loan to be borrowed
or to which an outstanding Loan is to be converted and (iii) in the case of
LIBOR Loans and COF Loans, the duration of the Interest Period therefor.  Each such request shall be given not later
than 1:00 p.m. New Jersey time on the day which is not less than the number of
Business Days prior to the date of such borrowing or conversion specified below
opposite the type of such Loan:            


 


	
  Type

  	
   

  	
  Number of

  Business Days

  	
   

  
	
  Prime Rate Loan

  	
   

  	
  1

  	
   

  
	
  LIBOR Loan

  	
   

  	
  3

  	
   

  
	
  COF Loan

  	
   

  	
  3

  	
   

  



 


Notwithstanding anything herein to the contrary, no notice pursuant to
this Section 2.02 shall be necessary upon the expiration of the Interest Period
for a LIBOR Loan or a COF Loan, as the case may be; such Loans shall
automatically be converted to Prime Rate Loans but may be reconverted into
LIBOR Loans or COF Loans, as the case may, be in accordance with the terms and
conditions hereof.  If an Event of
Default shall have occurred and be continuing, (i) each Loan which is a Prime
Rate Loan shall remain a Prime Rate Loan and may not be converted to a LIBOR
Loan or a COF Loan, as the case may be; and (ii) each LIBOR Loan or a COF Loan,
as the case may be, shall remain a LIBOR Loan or COF Loan, as the case may be,
until the expiration of the Interest Period therefor at which time it shall
automatically convert to a Prime Rate Loan. Advances shall normally be
disbursed by the Bank from its offices at Exchange Place Centre, 10 Exchange
Place, Jersey City, New Jersey 07302, by crediting the Borrower’s direct
deposit account referred to in Section 1.1(f) hereof (or paying drafts
presented under the Letters of Credit) and charging the Borrower’s loan account
or accounts on the Bank’s books.


 


(b)           All the Liabilities
(including without limitation, the principal amount of the Loans, accrued
interest thereon and other amounts payable hereunder) shall be payable in full
on the Commitment Termination Date, unless the due date therefor is accelerated
as provided in this Agreement.


 

















 


(c)           Subject to the provisions
of Sections 1.1(b) and 1.3(b), repayment by the Borrower of principal amounts
of the outstanding Loans shall not affect the ability of the Borrower to borrow
and reborrow hereunder so long as the Borrower is in compliance with the terms
of this Agreement.


 


(d)           Anything in this
Agreement to the contrary notwithstanding, the Commitment shall forthwith
cease, terminate, and be extinguished upon the first occurring of (1) an Event
of Default (as defined in Article VI hereof) or (2) an event which, except for
the passage of time or the giving of notice, would be such an Event of Default
hereunder or (3) the Commitment Termination Date.


 


1.4           Evidence of
Indebtedness.


 


(a)           The Loans evidenced by
the Original Revolving Note and all Loans made on or after the date hereof,
shall be deemed evidenced by a Note in the form of Exhibit 1.4 hereto (the “Note”),
executed on and dated the date hereof, in the principal amount of $12,000,000
made by the Borrower in favor of the Bank. 
The Note is given in substitution by the Borrower for the Indebtedness
evidenced by the Original Revolving Note and is accepted by the Bank for but
not in cancellation, discharge or extinguishment of the Indebtedness formerly
evidenced by the Original Revolving Note and now evidenced by the Note.  Despite the use of such Note, at any and all
times that Loans remain outstanding (including amounts owed pursuant to
drawings on the Letters of Credit), the amount due and all payments made on
account of principal and interest may be entered by the Bank on records of the
Bank and/or on “grids” attached to the Note.


 


(b)           Notwithstanding the
face amount of the Note, the aggregate unpaid principal and interest amounts
shown on the records of the Bank, if not objected to by the Borrower within 30
days after a monthly statement of such records is mailed to the Borrower shall
be deemed an account stated and binding upon Borrower, absent manifest error.
Notwithstanding the foregoing, the Bank’s failure to enter on such records the
date and amount of any advance (including all amounts paid by the Bank on
account of drafts presented under the Letters of Credit) shall not limit or
otherwise affect the obligations of the Borrower under this Agreement to repay
the principal amount of the advances including all amounts paid by the Bank on
account of drafts presented under the Letters of Credit) made under this
Agreement together with all interest accruing thereon.


 


1.5           Letters of Credit.  Subject to the terms and conditions of this Agreement,
the Bank will, from time to time at the request of and for the account of
Borrower, issue “clean” Letters of Credit on terms and conditions satisfactory
to the Bank for the benefit of suppliers of the Borrower as designated by the
Borrower from time to time (the “Letters of Credit”).  The Letters of Credit shall be used by the
Borrower solely for the purchase of inventory and supplies.  The Bank’s obligation under the Letters of
Credit shall be evidenced by the Letters of Credit themselves.  Borrower hereby confirms and agrees that the
Letters of Credit described on Schedule 1.5 hereto shall be deemed Letters of
Credit issued pursuant to this Agreement.


 

















 


1.6           Repayment of
Drawings Against Letters of Credit.


 


(a)           The amount of each
draft honored by the Bank on account of the Letters of Credit shall be repaid
by the Borrower within 10 days after the Bank’s written demand therefor.


 


(b)           In the event the
Borrower defaults in the repayment of any such amount, interest shall accrue
during the period from the date of any such drawing to the date that such
drawing is paid in full and such drawings shall be deemed Prime Rate Loans
hereunder.  All interest shall be
computed on the unpaid balance of principal owing.  Interest shall be computed on the basis of a
year consisting of 360 days and paid for actual days elapsed at the same rate
that the Borrower pays for interest on any other Prime Rate Loans hereunder.


 


(c)           All payments by the
Borrower to the Bank hereunder shall be made in lawful currency of the United
States and in immediately available funds at the Bank’s office at Exchange
Place Centre, 10 Exchange Place, Jersey City, New Jersey 07302.  Whenever any payment hereunder shall be due
on a day which is not a Business Day, the date for payment thereof shall be
extended to the next succeeding Business Day, and any interest payable thereon
shall be payable for such extended time at the specified rate.


 


1.7           Evidence of
Obligation to Repay Advances Drawn on the Letters of Credit.  Drawings made by the beneficiaries under the
Letters of Credit, all repayments of such drawings made by or on behalf of the
Borrower and all other amounts due or paid on account of the Letters of Credit
may be entered by the Bank on records of the Bank.  The aggregate unpaid amounts shown on the aforementioned
records of the Bank shall evidence the principal, interest and other amounts
owed by the Borrower on account of the Letters of Credit.  The Bank’s failure to enter any such amount
on such records shall not, however, limit or otherwise affect the obligations
of the Borrower under this Agreement to pay to the Bank all amounts owing on
account of the Letters of Credit.


 


1.8           Fees for the Letters
of Credit.  For the issuance of the
Letters of Credit, the Borrower will pay the Bank’s standard issuance fees plus
other applicable standard fees of the Bank, as such fees are in effect from
time to time.


 


1.9           General Obligations
and Indemnification Regarding the Letters of Credit.


 


(a)           The obligations of the
Borrower under this Agreement shall be absolute, unconditional and irrevocable,
and will remain in full force and effect until the entire principal of, and
premium, if any, and interest on the Loans and all other Liabilities shall have
been paid in full.  Such obligations
shall not be affected, modified or impaired upon the happening from time to
time of any event, including without limitation any of the following, whether
or not with notice to, or consent of the Borrower:    


 

















 


(1)           any lack of validity or
enforceability of the Letters of Credit or any document referred to therein or
related thereto or the inability of the Bank to recover payment from any person
for any amounts paid by the Bank on account of the Letters of Credit;


 


(2)           any amendment or waiver
of or any consent to departure from all or any of the Letters of Credit or any
portion thereof;


 


(3)           the existence of any
claim, setoff, defense or other rights which the Borrower or any guarantor may
have at any time against (1) the Bank, (2) any beneficiary or any transferee of
the Letters of Credit, (3) any persons for whom the Bank any such beneficiary
or any such transferee may be acting, or (4) any other person whether in
connection with the Letters of Credit or any related transactions;


 


(4)           any statement or any
other document presented under the Letters of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect whatsoever;


 


(5)           payment by the Bank
under the Letters of Credit against presentation of a sight draft or certificate
which does not comply with the terms of the Letters of Credit, provided that
such payment shall not have constituted willful misconduct or gross negligence
of the Bank but provided further, however, that to the extent that the Bank has
liability on account of the foregoing, the Bank will be entitled to assert
against the Borrower any and all claims and rights that could have been
asserted against the Borrower by any beneficiary of the Letters of Credit had
such beneficiary not received payment from the Bank;           


 


(6)           any other circumstance
or happening whatsoever, whether or not similar to any of the foregoing except
where caused by the willful misconduct or gross negligence of the Bank,
provided, however, that to the extent that the Bank has liability on account of
the foregoing, the Bank will be entitled to assert against the Borrower any and
all claims and rights that could have been asserted against the Borrower by any
beneficiary of the Letters of Credit had such beneficiary not received payment
from the Bank.


 


(b)           The Bank shall be
indemnified and held harmless from and against:          


 


(1)           any and all claims,
damages, losses, liabilities, reasonable costs or expenses whatsoever which the
Bank may incur (or which may be claimed against the Bank by any person or
entity whatsoever) by reason of or in connection with the execution and
delivery or transfer of, or payment or failure to pay under, the Letters of
Credit or the issuance of the Letters of Credit, provided that the Bank shall
not be indemnified for any claims, damages, losses, liabilities, costs or
expenses to the extent caused by the wilful misconduct or gross negligence of
the Bank in determining whether a sight draft or certificate presented under
the Letters of Credit complied with the terms of the Letters of Credit
provided, however, that to the extent that the Bank has liability on account of
the foregoing, the Bank will be entitled to assert against the Borrower any and
all claims and rights that could have been asserted against the Borrower by any
beneficiary of the Letters of Credit had such beneficiary not received payment
from the Bank; and 


 

















 


(2)           Notwithstanding the
provisions of 1.9(b) (1) above, any and all reasonable charges and expenses
which the Bank may pay or incur relative to the issuance of Letters of Credit
and its honoring of drafts which comply with the terms of the Letters of Credit.


 


1.10         Reduction of
Availability.  Notwithstanding
anything herein to the contrary, the Bank shall not be obligated to make any
Loans requested by the Borrower or to issue any Letter of Credit requested by
the Borrower if the making of such Loan or the issuance of such Letter of
Credit would cause the aggregate principal amount of the outstanding Loans and
the face amounts of the outstanding Letters of Credit to exceed the Commitment
as then in effect.


 


1.11         Application of
Payments.


 


(a)           Prior to the occurrence
of an Event of Default, payments received by the Bank from or for the account
of the Borrower shall be applied as directed by Borrower.


 


(b)           Upon the occurrence of
an Event of Default, the Bank may apply all payments and other sums of money
received by it from or on account of the Borrower towards the satisfaction of
those Liabilities which the Bank in its sole discretion deems fit.


 


1.12         Additional Costs.


 


(a)           The Borrower shall pay
the Bank from time to time such amounts as the Bank may reasonably determine to
be necessary to compensate it for any costs (not otherwise included in the
Reserve Requirement) which the Bank determines are attributable to its making
or maintaining of any LIBOR Loans or COF Loans, or its obligation to make any
LIBOR Loans hereunder or any reduction in any amount receivable by the Bank
hereunder in respect of any of LIBOR Loans or COF Loans or such obligation
(such increases in costs and reductions in amounts receivable being herein
called “Additional Costs”), resulting from any Regulatory Change which:    


 

















 


(i)            changes
the basis of taxation of any amounts payable to the Bank under this Agreement
or the Note in respect of any LIBOR Loans or COF Loans (other than taxes
imposed on the overall net income of the Bank for any of such Loans); or      


 


(ii)           imposes
or modifies any reserve, special deposit or similar requirements relating to
any extensions of credit or other assets of, or any deposits with or other
liabilities of the Bank (including any of such Loans, such obligations or any
deposits referred to in the definition of “LIBOR Base Rate” in Section 5.1
hereof); or            


 


(iii)          imposes
any other condition affecting this Agreement or the Note (or any of such
extensions of credit or liabilities).


 


The Bank will notify the Borrower of any event occurring after the date
of this Agreement which will entitle the Bank to compensation pursuant to this Section
1.12(a) as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation and will furnish the Borrower with a
certificate setting forth in reasonable detail the basis and the calculation of
the amount of each request for compensation under this Section 1.12(a).  If the Bank requests compensation from the
Borrower under this Section 1.12(a), the Borrower may, by notice to the Bank,
suspend the obligation of the Bank to make additional Loans of the type with
respect to which such compensation is requested until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the
provisions of Section 1.15 hereof shall be applicable).


 


(b)           Without limiting the
effect of the provisions of Section 1.12(a) hereof, in the event that, by
reason of any Regulatory Change, the Bank either (i) incurs Additional Costs
based on or measured by the excess above a specified level of the amount of a
category of deposits or other liabilities of the Bank which includes deposits
by reference to which the interest rate on LIBOR Loans or COF Loans determined
as provided in this Agreement or a category of extensions of credit or other
assets of the Bank which includes LIBOR Loans or COF Loans or (ii) becomes
subject to restrictions on the amount of such a category of liabilities or
assets which it may hold, then, if the Bank so elects by notice to the
Borrower, the obligation of the Bank to make additional LIBOR Loans or COF
Loans hereunder shall be suspended until such Regulatory Change ceases to be in
effect (in which case the provisions of Section 1.15 hereof shall be
applicable).


 


(c)           Determinations and
allocations by the Bank for purposes of this Section 1.12 of the effect of any
Regulatory Change on its costs of making or maintaining LIBOR Loans or COF
Loans or on amounts receivable by it in respect of LIBOR Loans or COF Loans its
costs of maintaining its obligations to make LIBOR Loans, and of the additional
amounts required to compensate the Bank in respect of any Additional Costs,
shall be conclusive, provided that such determinations and allocations are made
on a reasonable basis.


 

















 


(d)           The Bank will notify
the Borrower of any event that will entitle it to Additional Costs as promptly
as practicable but in any event within 30 days after the Bank obtains knowledge
thereof; provided that if the Bank fails to give such notice within 30 days
after it obtains knowledge thereof the Bank shall only be entitled to payment
of Additional Costs incurred from and after the date 30 days prior to the date
that the Bank does give such notice; and provided, further, that the Bank will
designate a different lending office for LIBOR Loans or COF Loans, as the case
may be, if such designation will avoid or reduce the amount of Additional Costs
and will not in the sole opinion of the Bank be disadvantageous to the Bank.


 


1.13         Limitation on Types of
Loans.  Anything herein to the
contrary notwithstanding, if             


 


(a)           the Bank determines
(which determination shall be conclusive) that quotations of interest rates for
the relevant deposits referred to in the definition of “LIBOR Base Rate” or “COF
Rate,” as the case may be, in Section 5.1 hereof are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining
rates of interest for LIBOR Loans or COF Loans, as the case may be, as provided
herein; or 


 


(b)           the Bank determines
after the date hereof (which determination shall be conclusive) that as a
result of circumstances arising after the date hereof the relevant rates of
interest referred to in the definition of “LIBOR Base Rate” or “COF Rate,” as
the case may be, in Section 5.1 hereof upon the basis of which the rate of
interest for LIBOR Loans is to be determined no longer adequately cover the
cost to the Bank of making or maintaining LIBOR Loans or COF Loans, as the case
may be; then the Bank shall give the Borrower prompt notice thereof and, so
long as such condition remains in effect, the Bank shall be under no obligation
to make additional LIBOR Loans or COF Loans, as the case may be.


 


1.14         Illegality.  Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for the Bank to honor its obligation to
make or maintain LIBOR Loans or COf Loans hereunder, then the Bank shall
promptly notify the Borrower thereof and the Bank’s obligation to make LIBOR
Loans or COF Loans shall be suspended until such time as the Bank may again
make and maintain LIBOR Loans or COF Loans (in which case the provisions of
Section 1.15 hereof shall be applicable).


 


1.15         Prime Rate Loans
Pursuant to Sections 1.12 and 1.14. 
If the obligation of the Bank to make LIBOR Loans or COF Loans, as the
case may be, shall be suspended pursuant to Section 1.12 or 1.14 hereof, all
Loans which would otherwise be made as LIBOR Loans and/or COF Loans, as the
case may be, shall be made instead as Prime Rate Loans (and, if the event
referred to in Section 1.12(b) or 1.14 hereof has occurred and the Bank so
requests by notice to the Borrower, all LIBOR Loans and/or COF Loans, as the
case may be, then outstanding to the extent required by the applicable
Regulatory Change shall be automatically converted, on the date specified by
the Bank, in such notice, into Prime Rate Loans.


 

















 


1.16         Compensation.  The Borrower shall pay to the Bank, upon the request
of the Bank, such amount or amounts as shall be sufficient (in the reasonable
opinion of the Bank) to compensate it for any loss, cost or expense which the
Bank determines are attributable to:           


 


(a)           any payment or
conversion of a LIBOR Loan or COF Loan for any reason (including, without
limitation, the acceleration of the Loans pursuant to Article 7 hereof) made by
the Bank on a date other than the last day of the Interest Period for such
Loan; or 


 


(b)           any failure by the
Borrower to borrow a LIBOR Loan or COF Loan or to convert any Loan into a LIBOR
Loan or COf Loan, as the case may be, for any reason (including, without
limitation, the acceleration of the Loans pursuant to Article 7 hereof) on the
date for such borrowing or conversion specified in the relevant request for
borrowing or conversion given pursuant to Section 1.3 hereof.


 


Without limiting the effect of the preceding sentence hereof, such compensation
shall include, with respect to the LIBOR Loan or COF Loan so paid, converted or
not borrowed, an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan for the
period from the date of such payment, conversion or failure to borrow to the
end of the Interest Period of such Loan over (ii) the interest component (as
reasonably determined by the Bank) of the amount (as reasonably determined by
the Bank) the Bank would have bid in the London interbank market for Dollar
deposits of leading banks in amounts comparable to such principal amount and
maturities comparable to such period.


 


1.17         Payments in Respect of
Increased Costs.  In the event that
the Bank shall have determined that any Regulatory Change regarding reserves, capital
adequacy, special deposit or other similar requirement(s) or any change therein
or in the interpretation or application thereof or compliance by the Bank with
any request or directive regarding any such requirements (whether or not having
the force of law, so long as the Bank reasonably believes that compliance
therewith is necessary) from any central bank or governmental authority, does
or shall have the effect of reducing the rate of return on the Bank’s capital
as a consequence of its Commitment or any of its obligations hereunder to a
level below that which the Bank could have achieved but for such law or change
or compliance (taking into consideration such Bank’s policies with respect to
capital adequacy or other similar requirements) by an amount deemed by the Bank
in the exercise of reasonable discretion to be material, then from time to
time, upon submission by the Bank to the Borrower of a written demand therefor
which sets forth in reasonable detail the basis for such request and the
computation of the amount requested (the amounts set forth in any such demand
shall be presumptive evidence thereof, absent manifest error), the Borrower
shall pay to the Bank such additional amount or amounts as will compensate the
Bank for such increased cost relating to this Agreement from the date of such
event, together with any late charge applicable thereto as provided in Section
4.3 hereof and thereafter such similar payments requested by the Bank on the
basis set forth above.


 

















 


1.18         Use of Proceeds.  The proceeds of the Loans hereunder shall be used
by the Borrower solely for working capital purposes of the Borrower including,
without limitation, the payment of interest, fees and expenses relating to this
Agreement and the Loans hereunder.


 


ARTICLE 2


 


CONDITIONS PRECEDENT AND COLLATERAL


 


2.1           Initial Loans.  The obligation of the Bank to make the
initial Loans hereunder and to issue an initial Letter of Credit is subject to
the receipt by the Bank of the following documents and other items, each of
which shall be satisfactory to the Bank in form and substance:             


 


(a)           Borrower Matters.  A certificate from the Borrower certifying (i)
its certificate of incorporation and bylaws and its director resolutions or
other authorizations with respect to this Agreement and the transactions contemplated
hereunder and (ii) the name and authorized signature of each of its officers
authorized to sign this Agreement, the Note and the Security Documents, as the
case may be, and who will, until replaced by another officer or representative
duly authorized for that purpose, act as its representative for purposes of
signing documents and giving notices and other communications in connection
with the transactions contemplated hereby. 
The Bank may conclusively rely on such certificates until it receives
notice in writing from the Borrower to the contrary.


 


(b)           No Default
Certificate.  A certificate of the
President, any Vice President or Treasurer of the Borrower to the effect set
forth in clauses (a) and (b) of the first sentence of Section 2.2 hereof.


 


(c)           Note.  The Note duly completed and executed.


 


(d)           Security Agreement.  The Security Agreement, duly executed and
delivered by the Borrower.


 

















 


(e)           UCC Financing
Statements.  UCC-1 financing
statements naming the Borrower as debtor and executed by the Borrower and the
Bank as the secured party in proper form for filing in such jurisdictions as
the Bank may reasonably request, and copies of UCC filing searches against the
Borrower, as debtor, conducted in each jurisdiction described above
demonstrating as at a recent date the existence of no other financing
statements against the Borrower.


 


(f)            Intercreditor
Agreement.  An Amended and Restated Intercreditor
and Subordination Agreement (the “Intercreditor Agreement”), duly executed and
delivered by the Borrower and Joseph Saul.


 


(g)           Good Standing.  Certificates issued by the Secretaries of the
States of New Jersey, New York, and Florida such certificates showing the Borrower
to be duly qualified to do business and in good standing in such States.


 


(h)           Guarantees.  Guarantees of the Liabilities executed by
each of the Subsidiaries of the Borrower.


 


(i)            Other Documents.  Such other documents as the Bank or counsel to
the Bank may reasonably request.


 


(j)            Commitment Fee.  The fee referred to in Section 8.13(a) hereof.


 


(k)           Legal Fees.  The Borrower shall have either paid directly
to or reimbursed the Bank for the fees and disbursements of Bank’s counsel, Windels,
Marx, Davies & Ives incurred in connection with the preparation, execution
and delivery of the Loan Documents.


 


2.2           Initial and Subsequent
Loans.  The obligation of the Bank to
make Loans to the Borrower upon the occasion of each borrowing hereunder
(including the initial borrowing) and to issue Letters of Credit upon the
occasion of each issuance of a Letter of Credit is subject to the further
conditions precedent that, as of the date of such Loans (or issuance) and after
giving effect thereto:  (a) no Event of
Default (or event which could become an Event of Default after the giving of
notice and/or the passage of time) shall have occurred and be continuing; (b)
the representations and warranties made by the Borrower in Article 3 hereof
shall be true in all material respects on and as of the date of the making of
such Loans with the same force and effect as if made on and as of such date
(except to the extent such representations expressly relate to the date hereof
or any specified earlier date); and (c) all legal matters incident to the Loans
shall be reasonably satisfactory to counsel to the Bank.  Each notice of borrowing by the Borrower
hereunder shall include a certification and representation by the Borrower to
the effect set forth in clauses (a) and (b) of the immediately preceding
sentence (both as of the date of such notice and, unless the Borrower otherwise
notifies the Bank prior to the date of such borrowing, as of the date of such
borrowing).


 

















 


2.3           Security Documents.


 


(a)           Intentionally Omitted.


 


(b)           Upon the occurrence of
an Event of Default, the Bank shall have the option, in addition to all of the
rights and remedies available to it at law, in equity or under this Agreement,
to acquire a Lien upon the Borrower’s accounts receivable and inventory
(collectively, the “Collateral”) pursuant to a Security Agreement in the form
and substance satisfactory to the Bank. 
Notwithstanding the execution and delivery by the Borrower of the Security
Agreement and selected financing statements pursuant to Section 2.1 hereof, the
Security Agreement shall be of no force and effect and the financing statements
shall not be filed until the occurrence of an Event of Default.


 


(c)           The Borrower will pay
as they become due (or, if the same are being contested in good faith by proper
proceedings, provide adequate reserves for) all taxes, assessments, levies and
other governmental charges, by whatever name called, that may at any time be
lawfully assessed or levied against or with respect to the Collateral or any
other property acquired by the Borrower in substitution for, as a renewal or
replacement of, or modification, improvement or addition to the Collateral.


 


(d)           The Borrower agrees
that in the event that the Collateral or any part thereof shall be damaged or
partly or totally destroyed there shall be no abatement or reduction in the
amounts payable hereunder and the Borrower shall continue to be obligated to
make such payments.


 


(e)           During such time that
the Bank has a Lien on inventory, the Borrower agrees to keep all of the
Collateral insured, at its own cost and expense, for the benefit of the Bank,
and in such amounts, with such companies, and against such risks as may be
acceptable to the Bank, and deliver to the Bank certificates of insurance or,
at the request of the Bank, the policies evidencing such insurance.  During such time that the Bank has a Lien on
inventory, the Bank shall be named as loss payee and an additional insured, as
its interests may appear.  During such
time that the Bank has a Lien on inventory, all policies shall provide that the
Bank will be given 30 days notice prior to the non-renewal or cancellation of
any policy.  If the Borrower fails to
take the action called for herein, the Bank may, in its discretion obtain
insurance covering the Bank’s interest in the Collateral) and the amount of the
premium for said insurance shall be added to the Liabilities.  During such time that the Bank has a Lien on
inventory and no Event of Default shall have occurred and be continuing, the
proceeds of any such insurance resulting from a loss of 50% or more of the
Borrower’s inventory may, at the discretion of the Bank, be applied on account
of the Liabilities or used to repair or replace the Collateral which was
destroyed, giving rise to such proceeds. 
Upon the occurrence and during the continuance of an Event of Default,
the proceeds of any such insurance may, at the discretion of the Bank, be
applied on account of the Liabilities or used to repair or replace the
Collateral which was destroyed, giving rise to such proceeds.


 

















 


ARTICLE 3

REPRESENTATIONS


 


In order to
induce the Bank to enter into this Agreement and to perform its obligations
hereunder, the Borrower makes the following representations to the Bank each
and all of which shall survive the execution and delivery of this Agreement:


 


3.1           Due Organization,
Etc.


 


(a)           The Borrower is a
corporation duly organized and validly existing under the laws of the State of
Florida with its principal corporate place of business at 1460 Broadway, New
York, New York 10036;


 


(b)           Except as set forth on
Exhibit 7.02 hereto, as at the date hereof, the Borrower has no Subsidiaries.


 


3.2           Good Standing.  The Borrower is in good standing under the laws
of the state of its incorporation.


 


3.3           Qualification.  The Borrower is duly qualified to do business
and is in good standing in every jurisdiction where the nature of its business requires
it to be so qualified.


 


3.4           Power and Authority.
 The Borrower has full corporate power
and authority to execute, deliver and perform this Agreement and any note,
instrument or agreement required hereunder, and to perform and observe the
terms and provisions hereof and thereof. 
The making and performance by the Borrower of this Agreement, the Loan
Documents to which it is a party, the Note and the borrowing hereunder, and the
granting to the Bank of the Lien on in the Collateral under the Security
Documents, have been duly authorized by all necessary corporate action and do
not and will not violate any provision of law, rules, regulations or orders
applicable to the Borrower; or result in the breach of, or constitute a default
or require any consent under, any indenture or other agreement or instrument by
which the Borrower or any of its properties may be bound or affected; or result
in, or require, the creation or imposition of any Lien upon or with respect to
any properties of the Borrower (other than the Liens on the Collateral created
by the Security Documents).


 


3.5           Third Party Consents.  No consent or approval of any trustee or holder
of any indebtedness or obligation of the Borrower is necessary in connection
with the execution and delivery of this Agreement and any note, instrument or
agreement required hereunder, or any transaction contemplated hereby, with the
exception of any consents or approvals which may have been obtained and
certified copies of which have been delivered to the Bank.


 

















 


3.6           Governmental Consents.  No consent, permission, authorization, order
or license of any governmental authority is necessary in connection with the
execution and delivery of this Agreement and any note, instrument or agreement
required hereunder, or any transaction contemplated hereby, except as may have
been obtained and certified copies of which have been delivered to the Bank.


 


3.7           Conflicts.  There is no provision of any indenture or
material agreement, written or oral, to which the Borrower is a party or under
which it is obligated which would be contravened by the execution and delivery
of this Agreement or any note or other instrument or agreement required
hereunder, or by the performance of any provision, condition, covenant or other
term hereof or thereof.


 


3.8           Compliance with Law.


 


(a)           There is no judgment,
decree or order of any court or agency binding on the Borrower which would be
contravened by the execution and delivery of this Agreement or any note or
other instrument or agreement required hereunder, or by the performance of any
provision, condition, covenant or other term hereof or thereof.


 


(b)           There is no statute,
rule or regulation binding on the Borrower which would be contravened by the
execution and delivery of this Agreement or any note or other instrument or
agreement required hereunder, or by the performance of any provision,
condition, covenant or other term hereof or thereof.


 


3.9           Title.  The Borrower has good and marketable title to
its inventory, and none of said inventory is subject to any Lien, security
interest, encumbrance, charge or title retention or other security agreement or
arrangement of any character.


 


3.10         Taxes.


 


(a)           The Borrower has timely
filed all returns and information and other reports required of it under all
Federal, State, local and foreign tax laws to which it is subject;


 


(b)           all such returns and
reports are true, correct and complete in all material respects;


 


(c)           there are not now in
effect any extensions of time in which to assess additional taxes;


 


(d)           the Borrower has paid
or made adequate provision for the full payment of all fees, taxes, interest
and penalties which have been incurred or are due and payable by it or which
have been asserted or proposed to be asserted against it;


 

















 


(e)           liability for taxes
shown on the most current financial statements of the Borrower submitted to the
Bank is sufficient for the payment of all Federal, State, local and foreign
taxes attributable or with respect to all periods, or portions thereof, prior
to the date of such financial statements remaining unpaid as of such date and
any interest thereon to such date;


 


(f)            except for periodic
audits with respect to collection of state sales and use taxes, the Borrower is
not now being audited by any tax authority; and


 


(g)           there are pending no unresolved
issues arising from prior or present audits, except as set forth in the most
current financial statements of the Borrower submitted to the Bank and except
as set forth on Schedule 3.10 attached hereto.


 


3.11         Litigation.  The Borrower has not received any written
notice of any action or proceeding which is now pending or, to the knowledge of
the Borrower threatened against the Borrower at law, in equity or otherwise, before
any court, board, commission, agency or instrumentality of any federal, state
or local government or of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators other than claims covered by insurance or
which, if adversely determined, would not have a material adverse effect on the
business or financial condition of the Borrower.


 


3.12         Defaults.


 


(a)           No event has occurred
and is continuing which would constitute an Event of Default or which, upon a
lapse of time and notice, if applicable, would become such an Event of Default.


 


(b)           No borrowing by the Borrower
under this Agreement constitutes an event of default under any material
agreement to which the Borrower is a party.


 


3.13         Financial Condition.  Borrower’s Form 10Q for the period ended June
30, 1996 is complete and correct in all material respects, and the financial
statements contained therein have been prepared in accordance with generally
accepted accounting principles and practices consistently applied and fairly
represent the financial condition of the Borrower as of the date thereof and
for the period indicated.  Since June 30,
1996 there has been no material adverse change in Borrower’s financial
condition sufficient to impair its ability to repay all of the
Liabilities.  The Borrower does not have
any contingent obligations, liabilities for taxes or other outstanding
financial obligations which are material in the aggregate, except as disclosed
in the Form 10Q.


 

















 


3.14         ERISA.


 


(a)           Neither the Borrower
nor any employee benefit plan maintained by the Borrower is in violation of any
of the provisions of ERISA, and no prohibited transaction (within the meaning
of Title I of ERISA or the Code) has occurred and is continuing with respect to
any such plan, in each instance where such violation or prohibited transaction
or any liabilities resulting directly or indirectly therefrom individually or
in the aggregate might have a material adverse effect on the business, results
of operations, prospects, financial condition or any material asset of the
Borrower or on the ability of the Borrower to execute this Agreement or
consummate any of the transactions contemplated hereby.


 


(b)           With respect to each
employee benefit plan within the meaning of Section 3(3) of ERISA maintained by
the Borrower:


 


(1)           all reports forms or
other information required to be filed with any government agency or to be
distributed or made available to any plan participant or beneficiary by the
Borrower has been filed, distributed or made available;


 


(2)           all such plans have
been amended to the extent currently required by the applicable provisions of
ERISA and the Code;


 


(3)           the Borrower has made
all contributions required to be made with respect to each such plan; and


 


(4)           with respect to each
group health plan maintained by Borrower, the requirements of Sections 601
through 608 of ERISA have been complied with.


 


(c)           Neither the Borrower
nor any officer, director or other employee of Borrower, nor any “party in
interest” or “disqualified person”, as such terms are defined in Section 3 of
ERISA and Section 4975 of the Code, has, with respect to any employee benefit
plan maintained by Borrower, engaged in or been a party to any “prohibited
transaction,” as such term is defined in Section 4975 of the Code or Section
406 of ERISA, in connection with which the Borrower or any officer, director or
other employee of Borrower, or any employee benefit plan maintained by the
Borrower could, directly or indirectly, be subject to either a penalty,
assessed pursuant to Section 502(i) of ERISA, or a tax imposed by Section 4975
of the Code.


 


(d)           The present value
(determined using actuarial and other assumptions which are currently
reasonable in respect to the benefits provided and the employees participating)
of the liability of the Borrower for post-retirement benefits to be provided to
its current and former employees under benefit plans (as defined in Section
3(l) of ERISA) does not, in the aggregate, exceed the assets under all such
benefit plans allocable to such benefits.


 


3.15         Indebtedness.  The Borrower is indebted to Joseph Saul in
the aggregate amount of $2,000,000.  This
debt is evidenced by a $1,750,000 note dated November 16, 1990 and a $250,000
note dated November 19, 1991, the originals of which have been delivered to the
Bank.


 

















 


3.16         Margin Stock.  The Borrower is not engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of buying or carrying margin stock (within the meaning of Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System) and no part
of the proceeds of the Loans hereunder will be used to buy or carry any margin
stock or to extend credit to others for the purpose of buying or carrying any
margin stock.


 


3.17         Binding Agreements.  This Agreement constitutes, and the Note and the
Loan Documents to which the Borrower is a party when executed and delivered by
the Borrower will constitute, the legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms, except insofar
as the enforceability hereof and thereof may be limited by applicable
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity.


 


3.18         Environmental Laws.  The Borrower does not own any real property. Except
as consistent with applicable Environmental Laws and Regulations, to the best
of the Borrower’s knowledge, no Hazardous Substances are present on or below
the surface of the leased premises included in the Borrower’s assets. To the
best of Borrower’s knowledge, none of the soil, ground water, or surface water
of such leased premises, is contaminated in any material respect by any
Hazardous Substance and there is no reasonable potential for such contamination
from neighboring property.  To the best
of Borrower’s knowledge, there are no incinerators, septic tanks, or cesspools
located on such leased premises, all sewage is discharged into a public
sanitary sewer system, and no Hazardous Substances are emitted, discharged or
released in any material respect from such leased premises, directly or
indirectly, into the atmosphere or any body of water.  Neither the Borrower nor, to the best of the
Borrower’s knowledge, any present or former owner or operator of such leased
premises, has been identified as a potentially responsible party for cleanup
liability with respect to the emission, discharge, or release of any Hazardous
Substance which could materially impair the Borrower’s ability to repay the
Loans hereunder.  As of the date hereof,
no permits, licenses, or other authorizations issued pursuant to the
Environmental Laws and Regulations are required for Borrower’s ownership,
present use of or occupancy in any material respect of such leased premises.


 


3.19         Full Disclosure.  None of the financial statements, nor any certificate,
opinion, or any other statement made or furnished to the Bank by or on behalf
of the Borrower in connection with this Agreement or the transactions
contemplated hereby, contains any untrue statement of a material fact, or omits
to state a material fact necessary in order to make the statements contained
therein or herein not misleading, as of the date such statement was made.  There is no fact now known to the Borrower
which has, or would in the now foreseeable future have, a material adverse effect
on the business, prospects or condition, financial or otherwise, of the
Borrower, which fact has not been set forth herein, in the Financial
Statements, or any certificate, opinion, or other written statement so made or
furnished to the Bank.


 

















 


3.20         Government Regulation.
 Neither the Borrower nor any of its Subsidiaries
nor any Person controlling the Borrower or any of its Subsidiaries or under
common control with the Borrower or any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Investment
Company Act of 1940, the Interstate Commerce Act or any statute or regulation
which regulates the incurring by the Borrower of Indebtedness for borrowed
money.


 


ARTICLE 4

COVENANTS


 


The Borrower covenants and agrees that until the full and final payment
of the Liabilities, unless the Bank waives compliance in writing:


 


4.1           Payment.  The Borrower will repay the Loans, all amounts
drawn against any of the Letters of Credit and all other Liabilities according
to the terms hereof and the Note.


 


4.2           Maintenance.  The Borrower will maintain, preserve and keep
its properties and assets or cause the same to be maintained, preserved and
kept in good repair, working order and condition excepting reasonable wear and
tear.


 


4.3           Taxes.  The Borrower will pay as they become due (or,
if the same are being contested in good faith by proper proceedings, provide
adequate reserves for) all taxes assessments, levies and other governmental
charges, by whatever name called, that may at any time be lawfully assessed or
levied against or with respect to the Borrower.


 


4.4           Mergers, Etc.
The Borrower will maintain all of its rights, privileges and franchises
necessary or desirable in the normal conduct of its business, conduct its
business in an orderly and regular manner, not dissolve or otherwise dispose of
all or a substantial part of its assets. The Borrower will maintain its
corporate existence and will not (a) consolidate with or merge into another
corporation or permit one or more other corporations to consolidate with or
merge into it or (b) acquire all or substantially all of the assets of any
Person except that the Borrower may make acquisitions of the assets or the
stock of such Person otherwise prohibited by this Section provided, that (i)
such acquisition(s) is made for cash in an amount not greater than $1,000,000
in the aggregate, (ii) the Borrower remains the surviving entity of any such
acquisition and (iii) the combined financial statements of the Borrower and the
Person evidence proforma compliance with all of the terms of this Agreement for
the combined entities, as determined by the Bank.


 

















 


4.5           Financial Statements.


 


(a)           The Borrower will
deliver to the Bank, within 90 days after the close of each fiscal year of
Borrower, its “10K” Balance Sheet and Income, Profit & Loss Statement duly
audited on a certified basis by a certified public accountant or firm of
certified public accountants, acceptable to the Bank, showing the assets and
liabilities of the Borrower as of the close of said fiscal year and the results
of its operations during said fiscal year. Said statements shall be prepared in
accordance with generally accepted accounting principles and practices
consistently applied over the entire period to which they relate.


 


(b)           The Borrower will
deliver to the Bank, within 45 days after the close of each fiscal quarter of
Borrower, its “10Q” Balance Sheet and Income, Profit & Loss Statement
prepared internally by the management of the Borrower showing the assets and
liabilities of the Borrower as of the close of said fiscal quarter and
year-to-date and the results of its operations during said fiscal quarter and
year-to-date.  Said statements shall be
prepared in accordance with generally accepted accounting principles and practices
consistently applied over the entire period to which they relate, subject only to
year end adjustment.


 


(c)           The Borrower will
submit to the Bank, together with the financial statements required under
clauses (a) and (b) of this Section 4.5, a certificate signed by the Chief
Financial Officer of the Borrower to the effect that all warranties and
representations made by the Borrower to the Bank in this Agreement remain true,
correct and complete and that the Borrower is in compliance therewith and, and
none of the Borrower’s covenants (including financial covenants), have been
breached or violated, or if any such warranty or representation is no longer
true, correct or complete or if any such covenant has been breached, specifying
the nature thereof and stating what action is proposed with respect thereto.
The Borrower’s compliance with the provisions of this Section 4.5 shall not be
deemed a cure of its failure to comply with the underlying obligations which
have been breached or violated.


 


(d)           The Borrower will
deliver to the Bank, within 30 days after the close of each calendar month, a
statement setting forth in reasonable detail the Borrower’s receivable,
inventory, accounts payable, Indebtedness payable to (or from) its officers and
directors and its Indebtedness to banks (including the Bank) or other financial
institutions.


 


4.6           Litigation.  The Borrower will notify the Bank in writing
within a reasonable time (which shall in no event exceed ten business days) of
the commencement of any litigation against the Borrower which, if determined adversely
to it would result in its dissolution or liquidation, prevent or materially
impair it from conducting its business substantially as now conducted, prevent
or materially impair the Borrower from repaying the Loans, amounts which may be
drawn against any of the Letters of Credit and other Liabilities or otherwise
faithfully performing its obligations under this Agreement or result in a
material adverse change in Borrower’s business or financial condition or
affairs or creditworthiness. Without intending to limit the generality of the
foregoing, any litigation which seeks monetary damages (whether compensatory or
punitive) from the Borrower in an aggregate amount in excess of $100,000.00
which is not covered by insurance shall be deemed to constitute litigation of a
character which must be reported to the Bank.


 

















 


4.7           Additional
Information.  The Borrower shall
deliver to the Bank:


 


(1)           Promptly upon receipt
thereof, copies of all other material reports, including management letters,
submitted to the Borrower by its independent certified public accountants in
connection with any annual, interim or special audit of the books of the
Borrower made by such accountants.


 


(2)           As soon as possible,
and in any event within 10 days after the Borrower knows that any of the events
or conditions specified below with respect to any Plan or Multiemployer Plan
have occurred or exist, a statement signed by a senior officer of the Borrower
setting forth details respecting such event or condition and the action, if
any, which the Borrower or any ERISA Affiliate proposes to take with respect
thereto (and a copy of any report or notice required to be filed with or given to
PBGC by the Borrower or any ERISA Affiliate with respect to such event or
condition):


 


(i)  any
reportable event, as defined in Section 4043(b) of ERISA and the regulations
issued thereunder, with respect to a Plan as to which PBGC has not by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event (provided that a
failure to meet the minimum funding standard of Section 412 of the Code or
Section 302 of ERISA shall be a reportable event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code);


 


(ii)  the
filing under Section 4041 of ERISA of a notice of intent to terminate any Plan
or the termination of any Plan;


 


(iii)  the
institution by PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Borrower or any ERISA Affiliate or a notice from a Multiemployer
Plan that such action has been taken by PBGC with respect to such Multiemployer
Plan;


 


(iv)  the
complete or partial withdrawal by the Borrower or any ERISA Affiliate under
Section 4201 or 4204 of ERISA from a Multiemployer Plan, or the receipt by the
Borrower or any ERISA Affiliate of notice from a Multiemployer Plan that it is
in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or
that it intends to terminate or has terminated under Section 4041A of ERISA;
and


 

















 


(v)  the
institution of a proceeding by a fiduciary of any Multiemployer Plan against
the Borrower or any ERISA Affiliate to enforce Section 515 of ERISA, which
proceeding is not dismissed within 30 days.


 


(vi)  any Person shall have engaged in any
“prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of
the Code; and


 


(vii)  any
“accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan.


 


(3)           Promptly
after their becoming available, copies of financial statements and proxy
statements which the Borrower shall have sent to its stockholders generally.


 


(4)           As
soon as possible, and in any event within 10 days after the Borrower knows that
any of the events or conditions set forth below have occurred or exist, a
statement signed by a senior officer of the Borrower setting forth details
respecting such event or condition and the action which the Borrower (or the
applicable Affiliate) proposes to take with respect thereto (and a copy of any
notices or other communications received or given by the Borrower or the
applicable Affiliate with respect thereto):


 


(i)  any
judgment, action, proceeding or investigation pending before any court or
governmental authority, bureau or agency, including, without limitation, any
environmental regulatory body, with respect to or threatened against or
affecting the Borrower or any of its Affiliates or relating to the assets or liabilities
of any of them (including, without limitation, in respect of any “facility”
owned, leased or operated by any of them under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or under any
state, local or municipal statute, ordinance or regulation in respect thereof,
in connection with any release of any toxic or hazardous waste or chemical
substance, pollutant or contaminant into the environment, or with the
generation, storage or disposal of any toxic or hazardous wastes or other
chemical substances), which could have a material adverse effect on the
business or financial condition of the Borrower or materially impair the value
of any of the Collateral; and


 


(ii)  any liability or threatened liability of the
Borrower or its Affiliates (a) under any applicable law for any release of a hazardous
substance caused by the seeping, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of
hazardous wastes or other chemical substances, pollutants or contaminants into
the environment, or (b) for the costs of any cleanup or other remedial action
including, without limitation, costs arising out of security fencing,
alternative water supplies, temporary evacuation and housing and other
emergency assistance undertaken by any environmental regulatory body having
jurisdiction over the Borrower or its Affiliates to prevent or minimize any
actual or threatened release by the Borrower or its Affiliates of any hazardous
wastes or other chemical substances, pollutants and contaminants into the
environment which would endanger the public health or the environment which
could in either case have a material adverse effect on the business or
financial condition of the Borrower.


 

















 


(5)           Promptly
after the Borrower has knowledge of the occurrence of any Event of Default or
any material adverse change in the business or financial condition of the
Borrower, a statement of a senior officer of the Borrower describing such Event
of Default or material adverse change, as the case may be, and the action which
the Borrower proposes to take with respect thereto.


 


4.8           Compliance.  The Borrower will at all times comply with,
or cause to be complied with, all laws, statutes, rules, regulations applicable
to it and all orders and directions of any governmental authority having
jurisdiction over it and its business. 
Without limiting the generality of the foregoing, the Borrower will
operate all property owned or leased by it such that no material obligation,
including a cleanup obligation, shall arise under any Environmental Law and
Regulation, which obligation would constitute a Lien or charge (prior to that
in favor of the Bank under the Security Documents) on any property of the
Borrower.


 


4.9           Access to Properties.  Upon reasonable notice and during normal business
hours and in a way that will not materially interfere with the Borrower’s
business operations, the Bank shall have full access to, and the right, through
its officers, agents, attorneys or accountants to enter upon Borrower’s
premises and from time to time, for the purpose of examining Borrower’s records
concerning the Collateral and for inspecting the Collateral and any and all
records.


 


4.10         Reports.  The Borrower shall supply to the Bank on
forms supplied by the Bank or otherwise acceptable to the Bank, such
information as the Bank may request on a frequency requested by the Bank.  Such information may include, but is not
limited to, information concerning each store and the performance of each such
store.


 


4.11         Books and Records.  After reasonable notice and during normal business
hours and in a way that will not materially interfere with the Borrower’s
business operations, the Bank shall have full access to, and the right, through
its officers, agents, attorneys or accountants and at Borrower’s expense to
examine, check, inspect and make abstracts and copies from Borrower’s books,
accounts, orders, records, audits, correspondence, and all other papers and, in
furtherance of the foregoing, to enter upon Borrower’s premises during business
hours and from time to time, for the purpose of examining all of Borrower’s
records.


 

















 


 


4.12         Debt Ratio.


 


(a)           The Borrower will not
permit the Debt Ratio to exceed 1.00 to 1 as at the end of any fiscal quarter.


 


(b)           The Bank will determine
compliance with the foregoing based on the financial information which the
Borrower is required to submit to the Bank.


 


4.13         Tangible Net Worth.


 


(a)           The Borrower will not
permit its Tangible Net Worth as at any date set forth in Column A below to be
less than the amount set forth in Column B below.


 


	
  A

  	
   

  	
  B

  	
   

  
	
   

  	
   

  	
  Minimum Tangible

  	
   

  
	
  Date

  	
   

  	
  Net Worth

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  August 26, 1996

  	
   

  	
  $

  	
  19,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 1996

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 1997

  	
   

  	
  $

  	
  23,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 1998

  	
   

  	
  $

  	
  26,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December 31, 1999 and thereafter

  	
   

  	
  $

  	
  30,000,000

  	
   

  



 


(b)           The Bank will determine
compliance with the foregoing based on the financial information which the
Borrower is required to submit to the Bank. If on any determination date,
Borrower is not in compliance with this covenant, the Bank shall permit
Borrower to incur up to $2,000,000 of Subordinated Indebtedness within 30 days
after such non-compliance if it is determined that the incurrence of such
Subordinated Indebtedness will cure such Event of Default.


 

















 


4.14         Current Ratio.


 


(a)           The Borrower shall not
permit the ratio of the Borrower’s current assets to current liabilities
(including, without limitation, all Liabilities and other long term loans owing
to Persons other than the Bank), as of the end of any fiscal quarter, to be
less than 1.15:1.


 


(b)           The Bank will determine
compliance with the foregoing based on the financial information which the
Borrower is required to submit to the Bank.


 


4.15         Capital Expenditures.


 


(a)           The Borrower shall not
make capital expenditures in excess of $4,150,000 for the nine months ending
September 30, 1996.


 


(b)           The Borrower shall not
make capital expenditures in excess of $5,500,000 for the fiscal year ending
December 31, 1996.


 


(c)           The Borrower shall not
make capital expenditures in excess of $2,050,000 for the fiscal quarter ending
March 31, 1997.


 


(d)           The Borrower shall not
make capital expenditures in excess of $3,800,000 for the six months ending
June 30, 1997.


 


(e)           The Borrower shall not
make capital expenditures in excess of $5,800,000 for the nine months ending
September 30, 1997.


 


(f)            The Borrower shall not
make capital expenditures in excess of $7,200,000 for the fiscal year ending
December 31, 1997.


 


(g)           The Borrower shall not
make capital expenditures in excess of $2,550,000 for the fiscal quarter ending
March 31, 1998.


 


(h)           The Borrower shall not
make capital expenditures in excess of $4,150,000 for the six months ending
June 30, 1998.


 


(i)            The Borrower shall not
make capital expenditures in excess of $6,150,000 for the nine months ending
September 30, 1998.


 


(j)            The Borrower shall not
make capital expenditures in excess of $8,300,000 for the fiscal year ending
December 31, 1998.


 


(k)           The Borrower shall not
make capital expenditures in excess of $3,050,000 for the fiscal quarter ending
March 31, 1999.


 

















 


(l)            The Borrower shall not
make capital expenditures in excess of $5,650,000 for the six months ending
June 30, 1999.


 


(m)          The Borrower shall not
make capital expenditures in excess of $8,650,000 for the nine months ending
September 30, 1999.


 


(n)           The Borrower shall not
make capital expenditures in excess of $10,550,000 for the fiscal year ending
December 31, 1999 and for each fiscal quarter thereafter.


 


(o)           The Borrower shall not
make any capital expenditures during the period commencing January 1, 2000
until and including January 31, 2000.


 


(p)           The Bank will determine
compliance with the foregoing based on the financial information which the
Borrower is required to submit to the Bank.


 


4.16         Debt Service. The
Borrower will cause Debt Service Coverage as at the end of any fiscal quarter
beginning the fiscal quarter ending September 30, 1996 to be not be less than
375%.


 


(b)           The Bank will determine
compliance with the foregoing on a rolling four quarter basis, based on the
financial information which the Borrower is required to submit to the Bank.


 


4.17         Transactions with
Affiliates. The Borrower will not directly or indirectly:  (a) make any Investment in an Affiliate; (b)
transfer, sell, lease, assign or otherwise dispose of any assets to an
Affiliate; (c) merge into or consolidate with or purchase or acquire assets
from an Affiliate; or (d) enter into any other transaction directly or
indirectly with or for the benefit of any Affiliate (including, without
limitation, Guarantees and assumptions of obligations of an Affiliate);
provided that the Borrower may enter into any transaction with an Affiliate providing
for the leasing of property, the rendering or receipt of services or the
purchase or sale of inventory and other assets in the ordinary course of
business, if the monetary or business consideration arising therefrom would be
substantially as advantageous to the Borrower as the monetary or business
consideration which would obtain in a comparable arms length transaction with a
Person not an Affiliate.


 


4.18         Restricted Payments.
The Borrower will not make any Restricted Payments at any time.


 


4.19         Liens. The
Borrower will not suffer to exist any Lien, encumbrance, mortgage or security
interest on any property in which the Bank has (or could, pursuant to Section
2.3 hereof, have) a Lien under this Agreement other than Carrier’s
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business which are not overdue for a period
of more than 30 days or which are being contested in good faith and by
appropriate proceedings.


 

















 


4.20         Accounts Receivable.
The Borrower shall not dispose of more than $100,000 of its accounts receivable
in any fiscal year. If the Borrower disposes of any accounts receivable it
shall be for a sale price not less than 85% of the face amount thereof.


 


4.21         Guarantees. The
Borrower will not Guarantee any Indebtedness of any Person without the prior
written consent of the Bank.


 


4.22         Business. The
Borrower will not materially change the nature of its business without the
consent of the Bank.


 


4.23         Inventory. All
Inventory and other Collateral subject to the Security Documents is located at
the locations set forth on Schedule 4.23 hereof; in the event, any additional
locations are added, Borrower shall notify Bank of same and execute any UCC-1
Financing Statements or take such other actions as Bank may reasonably request
to evidence the security interest granted to the Bank.


 


ARTICLE 5


DEFINITIONS AND ACCOUNTING MATTERS


 


5.1           Certain
Defined Terms. In addition to the other defined terms provided for
elsewhere in this Agreement, as used herein the following terms shall have the
following meanings (terms defined in the singular to have the same meanings
when used in the plural and vice  versa):


 


“Affiliate”
shall mean, as to any Person, any other Person which directly or indirectly
controls, or is under common control with, or is controlled by, such Person. As
used in this definition, “control” (including, with its correlative
meanings, “controlled by” and “under common control with”) shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person which owns directly or indirectly 5% or more of
the securities having ordinary voting power for the election of directors or
any other governing body of a corporation or 5% or more of the partnership or
other ownership interests of any other Person (other than as a limited partner
of such other Person) will be deemed to control such corporation or other
Person. Notwithstanding the foregoing, no individual shall be deemed to be an
Affiliate of a Person solely by reason of his or her being an officer or
director of such Person.


 


“Applicable Margin” shall mean (A) if the Debt Ratio shall at
any time equal or exceed 1.00:1, with respect to Loans which are (i) Prime Rate
Loans, .5%; (ii) COF Loans, 2.5% and (iii) LIBOR Loans, 2.5%; or (B) effective
three Business Days after receipt by the Bank from the Borrower of financial
statements demonstrating a change in the Debt Ratio such that the Debt Ratio
equals or is less than .99 to 1, with respect to Loans which are (i) Prime Rate
Loans, 0%; (ii) COF Loans, 2.0% and (iii) LIBOR Loans, 2.0%; provided, that if
an Event of Default shall occur and be continuing “Applicable Margin” shall
mean the Applicable Margin as set forth in clause (A) above.


 

















 


“Bankruptcy Code” shall mean 11 U.S.C. S101, et  seq.,
as amended.


 


“Business Day” shall mean any day on which commercial banks are
not authorized or required to close in New York City and, where such term is
used in the definition of “Quarterly Date” in this Section 5.1 or if such day
relates to a borrowing of, a payment or prepayment of principal of or interest
on, or the Interest Period for, a LIBOR Loan or a COF Loan, as the case may be,
or a notice by the Borrower with respect to any such borrowing, payment,
prepayment or Interest Period, any day which is also a London Banking Day.


 


“Capital Lease Obligations” shall mean, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under United States generally accepted
accounting principles and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with United States generally accepted accounting principles.


 


“COF Rate” shall mean the rate of interest per annum determined
by the Bank, in its sole discretion, that is based upon a rate per annum or a
blending of rates per annum at which the Bank is then able to raise deposits to
fund a given COF Loan, the source of which may change daily but is currently
determined by the Bank as the rate it would offer in the London interbank
market for deposits of Eurodollars in amounts and for an Interest Period
comparable to the amount and term of the Interest Period selected by the
Borrower, which offered rate shall be adjusted as necessary to reflect the
reserve requirements and assessment rates and all other costs of such funds.


 


“Code” shall mean the Internal Revenue Code of 1986, as amended.


 


“Collateral” shall have the meaning assigned to such term in the
Security Documents.


 


“Commitment” shall mean the obligation of the Bank to make Loans
and issue Letters of Credit hereunder in the aggregate amounts specified in
Section 1.1(b) subject to and in accordance with the terms and condition of
this Agreement as the same may be reduced from time to time in accordance with
Section 1.2(c) hereof. 


 

















 


“Commitment Termination Date” shall mean January 31, 2000.


 


“Debt Ratio” shall mean, as of any date of determination
thereof, the ratio of (i) the aggregate amount of Indebtedness (exclusive of
Subordinated Indebtedness) and other liabilities, of the Borrower and its
Subsidiaries on a consolidated basis as at such date of determination to (ii)
the sum Tangible Net Worth plus Subordinated Indebtedness of the Borrower and
its Subsidiaries on a consolidated basis as at such date of determination.


 


“Debt Service” shall mean, as at any date, the sum (calculated
without duplication) of (i) all payments of principal and fees on all items of
Indebtedness made during the period commencing on the first day of the fiscal
year of the Borrower in which such date occurs and concluding on the last day
of the immediately preceding full fiscal quarter; plus (ii) all payments
of principal and fees on all items of Indebtedness scheduled to be made during
the period commencing on the first day of the fiscal year of the Borrower in
which such date occurs and concluding on the last day of the immediately
preceding full fiscal quarter (whether or not timely paid); plus (iii)
all payments of interest on all items of Indebtedness made during the period
commencing on the first day of the fiscal year of the Borrower in which such
date occurs and concluding on the last day of the immediately preceding full
fiscal quarter; plus (iv) all payments of interest on all items of
Indebtedness accrued during the period commencing on the first day of the
fiscal year of the Borrower in which such date occurs and concluding on the
last day of the immediately preceding full fiscal quarter (whether or not
timely paid) exclusive of interest on Subordinated Indebtedness which is not
payable during such period assuming compliance with the terms of subordination
thereof; plus (v) all payments of taxes made during the period
commencing on the first day of the fiscal year of the Borrower in which such
date occurs and concluding on the last day of the immediately preceding full
fiscal quarter; plus (vi) all payments made in respect of the current
portion of capital leases made during the period commencing on the first day of
the fiscal year of the Borrower in which such date occurs and concluding on the
last day of the immediately preceding full fiscal quarter.


 


“Debt Service Coverage” shall mean, as at any date of
determination thereof, the quotient, expressed as a percentage (which may be in
excess of 100%) determined by dividing (i) the earnings before interest, taxes,
depreciation and amortization of the Borrower and its Subsidiaries on a
consolidated basis for the period commencing on the first day of the fiscal
year of the Borrower in which such date occurs and concluding on the last day
of the immediately preceding full fiscal quarter by (ii) Debt Service.


 


“Dollars” and “$” shall each mean lawful money of the
United States of America.


 

















 


“Environmental Laws and Regulations” shall mean all
environmental, health and safety laws, rules, regulations, and ordinances
applicable to the Borrower or any other Loan Party, or any of their respective
assets or properties, including, without limitation:  (i) all rules, regulations, ordinances,
decrees, and other similar documents and instruments of all courts and
governmental authorities, bureaus and agencies, whether issued by environmental
regulatory agencies or otherwise, and (ii) all laws, rules, regulations,
ordinances and decrees relating to the release of any toxic or hazardous waste
or other chemical substance, pollutant or contaminant into the environment or
the generation, treatment, storage or disposal of any toxic or hazardous wastes
or other chemical substances.


 


“ERISA” shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time, and the regulations
promulgated thereunder.


 


“ERISA Affiliate” shall mean any corporation or trade or
business which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as the Borrower or is under common
control (within the meaning of Section 414(c) of the Code) with the Borrower.


 


“Guarantee” by any Person shall mean any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing any
Indebtedness or other obligation of any other Person or in any manner providing
for the payment of any Indebtedness or other obligation of any other Person or
otherwise protecting the holder of such Indebtedness against loss (whether by
virtue of partnership arrangements, agreements to keep well, to purchase
assets, goods, securities or services, or to take or pay or otherwise),
provided that the term “Guarantee” shall not include endorsements for
collection or deposit in the ordinary course of business. The term “Guarantee”
used as a verb shall have a correlative meaning.


 


“Hazardous Substance” shall mean any hazardous substance,
hazardous or toxic waste, hazardous material, pollutant or contaminant, as
those or similar terms are used in the Environmental Laws and Regulations and
shall include, without limitation, asbestos and asbestos related products,
chlorofluorocarbons, oils or petroleum derived compounds, polychlorinated
biphenyls, pesticides and radon.


 


“Indebtedness” shall mean, as to any Person at any date (without
duplication):  (i) indebtedness created,
issued, incurred or assumed by such Person for borrowed money or evidenced by
bonds, debentures, notes or similar instruments; (ii) all obligations of such
Person to pay the deferred purchase price of property or services, excluding,
however, trade accounts payable (other than for borrowed money) arising in, and
accrued expenses incurred in, the ordinary course of business of such Person so
long as such trade accounts payable are paid within 120 days of the date
incurred or, if unpaid, are being disputed in good faith by such Person and for
which an adequate reserve has been established; (iii) all Indebtedness of
others secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; (iv) all Indebtedness or other
obligations of others Guaranteed by such Person; (v) all Capital Lease
Obligations; and (vi) reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers acceptances,
surety or other bonds and similar instruments.


 

















 


“Interest Payment Date” shall mean (a) with respect to any Prime
Loan, the first Business Day of each calendar month to occur after a Prime Loan
is made or a Libor Loan or a COF Loan is converted to a Prime Loan, and the
date of conversion of a Prime Loan to a Libor Loan or a COF Loan, (b) as to any
Libor Loan or COF Loan in respect of which the Borrower has selected an
Interest Period of one, two, three or six months, the last Business Day of such
Interest Period and, in the case of any Interest Period of six months, on the
corresponding date of the third month of such Interest Period, (c) as to any
COF Loan in respect of which the Borrower has selected an Interest Period of
one week, the day which is six days after the first day of the commencement of
such Interest Period, subject to adjustment as set forth in the definition of
“Interest Period” set forth below and (d) as to any Loan, the Commitment
Termination Date or such earlier date as the Commitment shall terminate as
provided herein.


 


“Interest Period” shall mean, with respect to any LIBOR Loan or
COF Loan, the period commencing on the date such Loan is made or converted from
another type of loan and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as the Borrower may
select as provided in Section 1.3 hereof, except that (i) each such Interest
Period which commences on the last Business Day of a calendar month (or on any
day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month and (ii) in respect of a COF Loan for
which a one week Interest Period has been selected, the sixth day after the day
such Interest Period commences. Notwithstanding the foregoing, each Interest
Period which would otherwise end on a day which is not a Business Day shall end
on the next succeeding Business Day (or, if such next succeeding Business Day
falls in the next succeeding calendar month, on the next preceding Business
Day); and in the case of Libor Loans, no Interest Period shall have a duration
of less than one month and, if the Interest Period for any LIBOR Loans would
otherwise be a shorter period, such Loans shall not be available hereunder.


 


“Investment” by the Borrower shall mean any investment in any
Person whether by means of share purchase, loan, advance, extension of credit,
Guarantee, capital contribution or otherwise.


 


“Liabilities” shall have the meaning set forth in Section 1.1(h)
hereof.


 

















 


“LIBOR Base Rate” shall mean the rate per annum determined on
the basis of the offered rates for United States dollar deposits (having terms
comparable to the Interest Period and in amounts comparable to the principal
amount of the LIBOR Loans to which such Interest Period relates) which appeared
on the Reuters Screen LIBOR Page as of 11:00 A.M. (London time) two London
Banking Days prior to the date of determination thereof. If at least two such
offered rates appeared on the Reuters Screen LIBOR Page, the rate for any day
shall be the arithmetic mean (rounded upward to the nearest whole multiple of
1/100% per annum, if such average is not such a multiple) of such offered
rates, or if fewer than two offered rates appeared, “LIBOR Base Rate” shall
mean the rate of interest for United States dollar deposits (having terms
comparable to the Interest Period and in amounts comparable to the LIBOR Loans
to which such Interest Period relates) offered by the principal London office
of Fleet Bank to major banks in the London interbank market at approximately
11:00 A.M. (London time) two London Banking Days prior to the determination
thereof.


 


“LIBOR Loans” shall mean Loans the interest rates on which are determined
on the basis of the LIBOR Rate.


 


“LIBOR Rate” shall mean, on any date of determination thereof, a
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Bank to be equal to the LIBOR Base Rate for the applicable
Interest Period divided by one minus the Reserve Requirement.


 


“Lien” shall mean any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction).


 


“Loan Documents” shall mean the Security Documents and the
Intercreditor Agreement.


 


“Loan Party” shall mean any Person other than the Bank which is
a party to a Loan Document.


 


“Loans” shall mean the loans provided for by Section 1.1 hereof and
drawings under the Letters of Credit.


 


“London Banking Day” shall mean any day on which dealings in
deposits in Dollars are transacted in the London interbank market.


 


“Multiemployer Plan” shall mean a plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower or
any ERISA Affiliate and which is covered by Title IV of ERISA.


 

















 


“Original Revolving Note” means the Note dated December 15, 1993
in the principal amount of $8,500,000 made by the Borrower in favor of the
Bank.


 


“PBGC” shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.


 


“Person” shall mean an individual, a corporation, a partnership,
a joint venture, a joint adventure, a trust or unincorporated organization, a
joint stock company or other similar organization, a government or any
political subdivision thereof, or any other legal entity.


 


“Plan” shall mean an employee benefit or other plan established
or maintained by the Borrower or any ERISA Affiliate and which is covered by
Title IV of ERISA, other than a Multiemployer Plan.


 


“Post Default Rate” shall mean a rate per annum equal to 2%
above the Prime Rate as in effect from time to time plus the Applicable Margin
for Prime Rate Loans (provided that, with respect to LIBOR Loans and COF Loans
the “Post Default Rate” shall be, for the period commencing on the date at
which such Loans bear interest at the Post Default Rate and ending on the last
day of the Interest Period therefor, 2% above the interest rate for such Loan
as provided in Section 1.1(f) hereof and, thereafter, the rate provided for
above in this definition).


 


“Prime Rate” shall mean the rate per annum established by the
Bank from time to time as the reference rate for short term commercial loans in
Dollars to domestic corporate borrowers (which the Borrower acknowledges is not
necessarily the Bank’s lowest rate).


 


“Prime Rate Loans” shall mean Loans which bear interest at rates
based upon the Prime Rate.


 


“Qualified Preferred Stock” shall mean (a) preferred stock of
the Borrower, the proceeds of the issuance of which are used to pay accrued
dividends on outstanding issues of the Borrower’s preferred stock, with an
effective interest rate which does not exceed by more than 25% the effective
interest rate of the preferred stock the dividends on which are being paid; (b)
preferred stock of the Borrower, the proceeds of the issuance of which are used
to redeem (in whole or in part) outstanding issues of the Borrower’s preferred
stock, with an effective interest rate which does not exceed by more than 25%
the effective interest rate of the preferred stock being redeemed; and (c)
preferred stock of the Borrower, the proceeds of the issuance of which are used
to repay the principal of Subordinated Indebtedness, with an effective interest
rate which does not exceed by more than 25% the interest rate of the
Subordinated Indebtedness being repaid.


 


“Quarterly Dates” shall mean the first Business Day of each
January, April, July and October.


 

















 


“Regulation D” shall mean Regulation D of the Board of Governors
of the Federal Reserve System (or any successor thereto), as the same may be
amended or supplemented from time to time.


 


“Regulatory Change” shall mean any change after the date of this
Agreement in United States federal, state or foreign laws or regulations
(including Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks including
the Bank of or under any United States federal or state, or any foreign, laws
or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.


 


“Reserve Requirement” shall mean, in the case of LIBOR Loans or
COF Loans, as the case may be, the actual rate at which reserves (including any
marginal, supplemental or emergency reserves) are maintained, in each case
during the Interest Period therefor, under Regulation D by member banks of the
Federal Reserve System in New York City with deposits exceeding one billion
Dollars against “Eurocurrency liabilities” (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the LIBOR Rate or the COF Rate, as the
case may be, is to be determined or (ii) any category of extensions of credit
or other assets which include LIBOR Loans or COF Loans, as the case may be.


 


“Restricted Payments” shall mean: (i) prepayments of principal
of, or interest on, or any other amounts owing in respect of, any Indebtedness
of the Borrower other than Indebtedness to the Bank (ii) payments of principal
of or any other amounts owing in respect of any items of Subordinated
Indebtedness other than interest thereon: (iii) after the occurrence and during
the continuance of an Event of Default, payments of interest on any items of
Subordinated Indebtedness; and (iv) dividends or other distributions of the
Borrower (in cash, property or obligations) on, or other payments or
distributions on account of, or the setting apart of money for a sinking or
other analogous fund for, or the purchase, redemption, retirement or other
acquisition of, any capital stock of the Borrower. Notwithstanding the
foregoing, “Restricted Payments” shall not include (1) payments of principal of
any items of Subordinated Indebtedness; (2) payments of accrued dividends on
preferred stock of the Borrower; or (3) payments in redemption of preferred
stock of the Borrower if in each such case (a) the funds used to make such
payments are derived exclusively from the proceeds of the issuance by the
Borrower of either its common stock or a new issue of Qualified Preferred
Stock; and (b) at the time of such payment and after giving effect thereto no
Event of Default shall have occurred and be continuing.


 

















 


“Security Agreement” shall mean the Security Agreement between
the Borrower and the Bank described in Section 2.3(b) hereof, as the same shall
be amended, modified and supplemented and in effect from time to time.


 


“Security Documents” shall mean the Security Agreement, the
financing statements referred to in Section 2.1(f) hereof, the Guarantees
referred to in Section 2.1(j) hereof and such other agreements, instruments and
documents as the Bank may reasonably require to effect the purposes of the
Security Agreement and this Agreement.


 


“Subordinated Indebtedness” shall mean Indebtedness which is subordinated
in right of payment of principal, interest and other amounts to the payment of
the principal of and interest on the Loans and other amounts payable by the
Borrower under this Agreement, the Note and the Security Documents upon terms
(including, without limitation, terms of amortization and interest rate) which
are in form and substance satisfactory to the Bank.


 


“Subsidiary” shall mean, with respect to any Person, any
corporation or other entity, whether now existing or hereafter organized or
acquired, of which a majority of the securities or other ownership interests
having ordinary voting power for the election of directors or other persons
performing similar functions (irrespective of whether or not at the time stock
of any other class or classes of such corporation or any other type of
ownership interest of such other entity shall have or might have voting power
by reason of the happening of any contingency) are at the time owned by such
Person and/or one or more Subsidiaries of such Person.


 


“Tangible Net Worth” shall mean the amount, on a consolidated
basis, by which the tangible assets of the Borrower and its Subsidiaries
exceeds the total liabilities of the Borrower and its Subsidiaries, all as
determined in accordance with generally accepted accounting principles.


 


5.2           Accounting Terms and
Determinations. Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all determinations with respect to accounting
matters hereunder shall be made and all financial statements and certificates
and reports as to financial matters required to be delivered hereunder shall be
prepared in accordance with United States generally accepted accounting
principles consistently applied. To enable the ready determination of
compliance by the Borrower with the various covenants set forth in Article 4
hereof, the Borrower will not change the last day of its fiscal year from
December 31, or the last days of the first three fiscal quarters in its fiscal
year from March 31, June 30 and September 30, respectively. 


 

















 


ARTICLE 6


EVENTS OF DEFAULT


 


The occurrence of any of the following events shall be deemed an event
of default (an “Event of Default”) hereunder:


 


6.1           Payment. The
Borrower shall (a) fail to pay within ten days after its due date any interest
and/or principal due on the Loans or (b) fail to pay any amounts drawn against
any of the Letters of Credit within ten (10) days after notice to pay such
amounts or (c) fail to pay within ten (10) days of its due date any other
payment due under this Agreement or (d) fail to pay on its due date (or after
any applicable grace period) any other sum of money due to the Bank.


 


6.2           Representations and
Warranties. Any representation or warranty herein or in any other
agreement, instrument or certificate executed pursuant hereto shall prove to
have been false or misleading in any material respect when made.


 


6.3           First Lien. The
Bank shall fail to have a legal, valid and binding first Lien on any of the
Collateral, provided, however, that the foregoing shall have applicability only
to the extent the Bank has a security interest in the Collateral.


 


6.4           Additional Liens.
A security interest, perfected or otherwise, other than the security interests
specifically provided for or permitted hereunder, shall be created in the
Collateral or if any Lien, including but not limited to any judgment against
the Borrower, becomes an encumbrance against the Collateral.


 


6.5           Bankruptcy. The
Borrower shall admit in writing an inability to pay debts as they come due or
shall file or shall have filed against it any petition or action for relief
under any bankruptcy, reorganization, insolvency or moratorium law, or any
other law or laws for the relief of, or relating to, debtors.


 


6.6           Liquidation. The
Borrower shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property, (ii) make a general assignment for the
benefit of its creditors, fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code, or (iii) take any action (corporate
or otherwise) for the purpose of effecting any of the foregoing.


 


6.7           Operations. The
Borrower ceases its operations.


 


6.8           Material Defaults.
Any default shall occur under a credit agreement involving either the borrowing
of money or the advance of credit in excess of $500,000 to which the Borrower
may be a party as borrower or guarantor and such default results in the
acceleration of the money owing under such other loan agreement.


 

















 


6.9           Covenants.


 


(a)           Default by the Borrower
in the performance or observance of any of its agreements in Section 1.1 (b) or
Article 4 hereof or in the other Loan Documents;


 


(b)           Default by the Borrower
in the performance or observance of any of its agreements herein (other than
those addressed in Section 6.9(a)) which remain unremedied for 30 or more days
after notice from the Bank to the Borrower.


 


6.10         Any change of control (as
such term is used in the definition of “Affiliate” in Section 5.1 hereof) of
the Borrower.


 


6.11         Any other material event
occurs or material condition exists which in the opinion of the Bank, using
reasonable commercial judgment, constitutes a material adverse change in the
business condition or financial status of the Borrower and which in the opinion
of the Bank, using reasonable commercial judgment, impairs the ability of the
Borrower to discharge its obligations under this Agreement.


 


ARTICLE 7


REMEDIES


 


7.1           Whenever
an Event of Default has occurred and has not been cured as allowed by this
Agreement except in the case of the occurrence of an Event of Default described
in Section 6.5, the Bank may do any or all of the following at the same time or
at different times:


 


(a)           Declare (i) the
Commitment terminated and (ii) the entire principal amount of the Loans, or the
unpaid balance thereof, together with all accrued interest and all other lawful
and proper charges thereon immediately due and payable whereupon all such sums
shall become immediately due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby expressly waived by
Borrower.


 


(b)           Declare (i) the
Commitment terminated and (ii) the entire amount for which the Bank may be
liable under the Letters of Credit, together with all accrued interest and all
other lawful and proper charges thereon immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by Borrower. For purposes of this Section, the Bank
shall be entitled to declare immediately due all sums which the Bank is
obligated to advance under the Letters of Credit, whether or not such sums have
yet been advanced or funded by the Bank. Upon such declaration, all such sums
shall become immediately due and payable.


 


(c)           Declare all other
loans, sums and Liabilities owed to the Bank under this Agreement or any other
agreement or loan between the Bank and the Borrower together with all accrued
interest and all other lawful and proper charges thereon to be forthwith due
and payable, whereupon all such sums shall forthwith become immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by Borrower.


 

















 


(d)           (1)           Immediately,
and without notice or other action, setoff and apply against the Liabilities
(1) any and all deposit accounts (as described in Article 2) and/or (2) any sum
owed by the Bank in any capacity to the Borrower whether due or not. The Bank
shall be deemed to have exercised such right of setoff and to have made a
charge against any such sum immediately upon the occurrence of such Event of
Default, even though the actual book entries may be made at some time
subsequent thereto.


 


(2)           Upon the expiration of
the Bank’s obligations under the Letters of Credit, the Borrower will be
entitled to a refund of those sums so setoff, less the expenses of the Bank
otherwise provided for in this Agreement, if such sums have not been drawn
against the Letters of Credit.


 


(e)           Add to the Liabilities
the Bank’s reasonable expenses to obtain or enforce payment of any Liabilities
hereunder and the enforcement or liquidation of any debt hereunder shall
include reasonable attorneys’ fees, plus other reasonable legal expenses incurred
by the Bank in connection therewith.


 


Upon the occurrence of an Event of Default set forth in Section 6.5,
automatically and immediately the Commitment shall be deemed terminated and all
Liabilities shall be deemed immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by Borrower.


 


7.2           The rights of the Bank
under this Article are in addition to all other remedies, statutory and
otherwise, which are available to it under law or otherwise or under the terms
of the Note, the Security Documents or any other instrument or agreement
required hereunder.


 


ARTICLE 8


MISCELLANEOUS


 


8.1           Notice.


 


(a)           Any communications
between the parties hereto or notices provided herein to be given may be given
by mailing the same, certified mail, return receipt requested, postage prepaid
or by hand delivery or by telecopy or by an overnight delivery service, (1) to
the Bank at Exchange Place Centre, 10 Exchange place, Jersey City, New Jersey
07302 Attn: Bonnie Bernstein, Vice President, with a copy to “Current Account
Officer for Cache, Inc.”, (2) to the Borrower at the address first above
written for the Borrower (Attention: Chief Financial Officer) and (3) such
other addresses as either party may in writing hereafter indicate by notice
given in conformity with this Section.


 

















 


(b)           Notices sent by hand
delivery or by telecopy or by certified mail shall be deemed received when
delivered to the address and/or person designated in this Section. Notices sent
by overnight delivery service shall be deemed received when delivered to the
address and/or person designated in this Section.


 


8.2           Binding Agreement.
This Agreement shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, that the Borrower
shall not assign this Agreement or any of its rights, duties or obligations
hereunder without the prior written consent of the Bank. The Bank may (a)
assign up to 65% of the Loans to another bank or financial institution so long
as the principal amount of the Loans included in each such assignment is not
less than $2,000,000; or (b) sell participation in all or any part of any Loan
or Loans made by it to another bank or financial institution. In the case of a
participation, the participant shall not have any rights under this Agreement
or the Notes (the participant’s rights against the Bank in respect of such
participation to be those set forth in the agreement executed by the Bank in
favor of the participant relating thereto), other than certain voting rights
set forth in the immediately succeeding sentence and all amounts payable by the
Borrower hereunder shall be determined as if the Bank had not sold such
participation. No participant shall have the right to approve any amendment,
waiver or modification of this Agreement or any Loan Document except to the
extent such amendment, waiver or modification extends the due date for payment
of any amount payable hereunder or reduces the amount of principal of, or the
interest rate on, the Loans.


 


8.3           Waiver. No delay
or omission to exercise any right, power or remedy accruing to the Bank upon
any breach or default (whether such breach or default is now or hereafter
occurring) of the Borrower under this Agreement or any note or other document
or agreement executed in connection with this Agreement shall (a) impair any
such right, power or remedy of the Bank, (b) be construed to be a waiver of any
such breach or default, or an acquiescence therein, or (c) be construed to be a
waiver of or an acquiescence in any similar breach or default thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of the Bank of any breach or default under this Agreement or any note
or other instrument or agreement required hereunder, or any waiver on the part
of the Bank of any provision or condition of this Agreement or such other
documents or agreements, must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under this
Agreement or note or other instrument or agreement required hereunder, or by
law or otherwise afforded to the Bank, shall be cumulative and not alternative.


 


8.4           Expenses and
Indemnity.


 


(a)           The Borrower agrees to
pay: (i) the reasonable fees and expenses of Windels, Marx, Davies & Ives,
special counsel to the Bank, in connection with (a) the preparation, execution
and delivery of this Agreement, the Loan Documents and the Note and the making
of the Loans hereunder regardless of whether any transaction contemplated
hereby is consummated, (b) any amendment, modification or waiver of any of the
terms of this Agreement, the Loan Documents or the Note, and (c) filing and
recording fees, and taxes and other charges incurred in connection with
perfecting, maintaining and protecting the security interest of the Bank in the
Collateral; and (ii) after the occurrence of any Event of Default, all
reasonable costs and expenses of the Bank (including reasonable counsel’s fees)
in connection with the enforcement of this Agreement, the Loan Documents and
the Note.


 

















 


(b)           Whenever an attorney is
used to collect any obligation or enforce any right of the Bank against the
Borrower under this Agreement, whether by suit or other means, the Borrower
agrees to pay the reasonable attorneys’ fees and other reasonable costs and
expenses incurred by the Bank. The Borrower also agrees to pay the Bank’s
attorneys a reasonable fee and costs and expenses for enforcing against third
parties any other rights of the Bank pertaining hereto including the Bank’s
defending against any claim pertaining to the Collateral.


 


(c)           The Borrower will
indemnify and hold harmless the Bank from any liability, loss or damage
resulting from the violation by the Borrower of Section 1.17 hereof. The
Borrower will also indemnify and hold harmless the Bank and its directors,
officers and employees and each Person, if any, who controls the Bank from and
against any and all claims, damages, liabilities and expenses (including,
without limitation, reasonable attorneys’ fees) which any of them may incur or
which may be asserted against any of them in connection with any litigation
(including, without limitation, litigation arising under or pursuant to
Environmental Laws and Regulations) or investigation (including, without
limitation, compliance with or contesting of any subpoenas or process issued
against any of the indemnified parties) involving the Borrower or any of its
Subsidiaries or any officer, director or employee thereof.


 


8.5           SetOff.
Nothing in this Agreement shall be deemed any waiver or prohibition of the
Bank’s right of setoff.


 


8.6           Governing Law.
This Agreement, and any note, other instrument or agreement required hereunder,
shall be governed by, and construed under, the laws of the State of New Jersey.


 


8.7           Jurisdiction.
The Borrower agrees that, in addition to any other available forum, any suit,
action or proceeding against it arising under or growing out of, or relating to
this Agreement or any note or other instrument or agreement required hereunder,
or any other instrument executed by the Borrower for the benefit of the Bank
may be instituted in any federal court in the State of New Jersey or any State
court in the State of New Jersey or in any other court having jurisdiction, and
the Borrower hereby waives any objection which it might have now or hereafter
to the laying of the venue of any such suit, action or proceeding, and
irrevocably submits to the jurisdiction of any such court in any suit, action
or proceeding and waives any claim or defense of inconvenient forum.


 

















 


8.8           Entire Agreement.
This Agreement contains the entire understanding of the parties and any
promises or representations not herein contained shall have no force and
effect, unless in writing, duly signed by the party to be charged. Neither this
Agreement nor any portion or provision hereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled or terminated, orally or
by any course of dealing, or in any manner other than by an agreement in
writing, signed by the party to be charged.


 


8.9           Termination. The
termination of this Agreement shall not affect any rights of the Bank, or any
obligation owing to the Bank, arising prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into, rights created or any Liabilities incurred
prior to such termination have been fully disposed of, concluded or liquidated.


 


8.10         No Discharge. If
at any time Liens on any assets of the Borrower are granted to the Bank
hereunder, the same shall continue in full force and effect notwithstanding the
fact that Borrower’s account may, from time to time, be temporarily in a credit
position.


 


8.11         Survival. All representations,
warranties, covenants, waivers and agreements contained herein shall survive
the execution of this Agreement.


 


8.12         Severability. If
any part of this Agreement is contrary to, prohibited by, or deemed invalid
under applicable laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given effect so
far as possible.


 


8.13         Fees.


 


(a)           Upon execution of this
Agreement, the Borrower shall pay the Bank a non-refundable closing fee of
$60,000.


 


(b)           The Borrower shall pay
to the Bank, a commitment fee on the daily average unused amount of the
aggregate principal amount available for Loans and Letters of Credit hereunder
for the period from and including the date of the execution hereof to and
including the earlier of (i) the date the Commitment is terminated pursuant to
the terms hereof or (ii) the Commitment Termination Date, at a rate equal to
1/8 of 1% per annum. The accrued commitment fee, if any, shall be payable on
the Quarterly Dates and on the earlier of the date the Commitment is terminated
and the Commitment Termination Date.


 

















 


8.14         Confidential
Information. The Bank shall keep confidential any non-public information
supplied to it by the Borrower except where (a) disclosure is required by law,
rule or regulation or the valid order of a court or other governmental
authority; (b) such information enters the public domain through no fault of
the Bank’s; or (c) the Bank receives such information from a third party not
subject to any confidentiality agreement with the Borrower. The foregoing shall
not serve to limit the Bank’s ability to use any such information in any
litigation or other proceeding with the Borrower.


 


8.15         Counterparts. This
Agreement may be executed in one or more counterparts, any or all of which
shall constitute one and the same instrument.


 


8.16         Captions. Captions
and section headings appearing herein are included solely for convenience of reference
only and are not intended to affect the interpretation of any provision of this
Agreement.


 


8.17         Trial by Jury.
EACH OF THE PARTIES HERETO WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF
ANY KIND OR NATURE IN ANY COURT IN WHICH THEY MAY BOTH BE PARTIES, WHICH ACTION
OR PROCEEDING ARISES OUT OF, UNDER, OR BY REASON OF THIS AGREEMENT.


 


IN WITNESS WHEREOF, the duly authorized officers of the Borrower and
the Bank have executed this Agreement as of the date first above written.


 


 


	
   

  	
  CACHE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas E. Reinckens

  	
   

  
	
   

  	
   

  	
  Thomas E. Reinckens

  
	
   

  	
   

  	
  Executive Vice President/CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FLEET BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bonnie Bernstein

  	
   

  
	
   

  	
   

  	
  Bonnie Bernstein

  
	
   

  	
   

  	
  Vice President