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2001 LOAN AND SECURITY AGREEMENT
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FLEET RETAIL FINANCE INC.
ADMINISTRATIVE AGENT
COLLATERAL AGENT
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REVOLVING CREDIT LENDERS
NAMED HEREIN
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BACK BAY CAPITAL FUNDING LLC
THE LENDER
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J. BAKER, INC.
THE BORROWERS' REPRESENTATIVE
FOR:
THE BORROWERS NAMED HEREIN
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Fleet Securities Inc.
THE SYNDICATOR
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February 3, 2001
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TABLE OF CONTENTS
ARTICLE 1: - DEFINITIONS:
ARTICLE 2: - THE REVOLVING CREDIT:
2-1. Establishment of Revolving Credit..............................................................35
2-2. Advances in Excess of Borrowing Base (OverLoans)...............................................36
2-3. Initial Reserves. Changes to Reserves..........................................................36
2-4. Risks of Value of Collateral...................................................................36
2-5. Commitment to Make Revolving Credit Loans and Support Letters of Credit........................37
2-6. Revolving Credit Loan Requests.................................................................37
2-7 Making of Revolving Credit Loans...............................................................39
2-8. SwingLine Loans................................................................................39
2-9. The Loan Account...............................................................................40
2-10. The Revolving Credit Notes.....................................................................41
2-11. Payment of The Loan Account....................................................................41
2-12. Interest on Revolving Credit Loans.............................................................42
2-13. Revolving Credit Commitment Fee................................................................43
2-14. Administrative Agent's Fee.....................................................................43
2-15. Unused Line Fee................................................................................43
2-16. Early Termination Fee..........................................................................44
2-17. Concerning Fees................................................................................44
2-18. Agents' and Lenders' Discretion................................................................44
2-19. Procedures For Issuance of L/C's...............................................................45
2-20. Fees For L/C's.................................................................................46
2-21. Concerning L/C's...............................................................................47
2-22. Changed Circumstances..........................................................................48
2-23. Designation of Borrowers' Representative as Borrowers' Agent...................................49
2-24. Lenders' Commitments...........................................................................50
ARTICLE 3: - THE TERM LOAN:
3-1. The Term Loan.................................................................................51
3-2. The Term Note..................................................................................51
3-3. Payment of Principal of the Term Loan..........................................................52
3-4 Interest On The Term Loan......................................................................52
3-5. Term Loan Commitment Fee.......................................................................53
3-6. Payments On Account of Term Loan...............................................................53
ARTICLE 4: - CONDITIONS PRECEDENT:
4-1. Corporate Due Diligence........................................................................54
4-2.. Opinion........................................................................................54
4-3. Additional Documents...........................................................................54
4-4. Consummation of Shoe Division Sale.............................................................54
4-5. Officers' Certificates.........................................................................54
4-6. Representations and Warranties.................................................................55
4-7. Minimum Day One Excess Availability............................................................55
4-8. All Fees and Expenses Paid.....................................................................55
4-9. No Borrower In Default.........................................................................55
4-10. No Adverse Change..............................................................................55
4-11. Benefit of Conditions Precedent................................................................55
ARTICLE 5: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
5-1. Payment and Performance of Liabilities.........................................................56
5-2. Due Organization. Authorization. No Conflicts..................................................56
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5-3. Trade Names....................................................................................57
5-4. Infrastructure.................................................................................57
5-5. Locations......................................................................................58
5-6. Stores.........................................................................................58
5-7. Title to Assets................................................................................60
5-8. Indebtedness...................................................................................60
5-9. Insurance......................................................................................60
5-10. Licenses.......................................................................................61
5-11. Leases.........................................................................................61
5-12. Requirements of Law............................................................................62
5-13. Labor Relations................................................................................62
5-14. Maintain Properties............................................................................63
5-15. Taxes..........................................................................................63
5-16. No Margin Stock................................................................................64
5-17. ERISA..........................................................................................64
5-18. Hazardous Materials............................................................................64
5-19. Litigation.....................................................................................64
5-20. Dividends. Investments. Corporate Action.......................................................64
5-21. LOANS..........................................................................................66
5-22. Protection of Assets...........................................................................66
5-23. Line of Business...............................................................................66
5-24. Affiliate Transactions.........................................................................67
5-25. Further Assurances.............................................................................67
5-26. Adequacy of Disclosure.........................................................................68
5-27. No Restrictions on Liabilities.................................................................69
5-28. Other Covenants................................................................................69
ARTICLE 6: FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
6-1. Maintain Records...............................................................................69
6-2. Access to Records..............................................................................70
6-3. Prompt Notice to Administrative Agent..........................................................70
6-4. Borrowing Base Certificate.....................................................................71
6-5. Weekly and Monthly Reports.....................................................................71
6-6. Quarterly Reports..............................................................................72
6-7. Annual Reports.................................................................................72
6-8. Officers' Certificates.........................................................................72
6-9. Inventories, Appraisals, and Audits............................................................73
6-10. Additional Financial Information...............................................................74
6-11. Financial Performance Covenants................................................................74
ARTICLE 7: - USE OF COLLATERAL:
7-1. Use of Inventory Collateral....................................................................75
7-2. Inventory Quality..............................................................................75
7-3. Adjustments and Allowances.....................................................................75
7-4. Validity of Accounts...........................................................................76
7-5. Notification to Account Debtors................................................................76
ARTICLE 8: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
8-1 The Blocked Account............................................................................76
8-2. The Concentration, Blocked, and Operating Accounts.............................................77
8-3. Proceeds and Collections.......................................................................77
8-4. Payment of Liabilities.........................................................................78
8-5. The Operating Account..........................................................................79
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ARTICLE 9: - GRANT OF SECURITY INTEREST:
9-1. Grant of Security Interest.....................................................................79
9-2. Extent and Duration of Security Interest.......................................................80
ARTICLE 10: - ADMINISTRATIVE AGENT AS BORROWER'S ATTORNEY-IN-FACT:
10-1. Appointment as Attorney-In-Fact................................................................80
10-2. No Obligation to Act...........................................................................81
ARTICLE 11: - EVENTS OF DEFAULT:
11-1. Failure to Pay the Revolving Credit or the Term Loan...........................................82
11-2. Failure To Make Other Payments.................................................................82
11-3. Failure to Perform Covenant or Liability (No Grace Period).....................................82
11-4. Failure to Perform Covenant or Liability (Grace Period)........................................83
11-5. Misrepresentation..............................................................................83
11-7. Default Under Other Agreements.................................................................83
11-8. Uninsured Casualty Loss........................................................................83
11-9. Attachment. Judgment. Restraint of Business....................................................83
11-10. Business Failure...............................................................................84
11-11. Bankruptcy.....................................................................................84
11-12. Default by Guarantor...........................................................................84
11-13. Indictment - Forfeiture........................................................................85
11-14. Termination of Guaranty........................................................................85
11-15. Challenge to Loan Documents....................................................................85
11-16. Change in Control..............................................................................85
ARTICLE 12: - RIGHTS AND REMEDIES UPON DEFAULT:
12-1 Acceleration...................................................................................85
12-2. Rights of Enforcement..........................................................................85
12-3. Sale of Collateral.............................................................................86
12-4. Occupation of Business Location................................................................87
12-5. Grant of Nonexclusive License..................................................................87
12-6. Assembly of Collateral.........................................................................87
12-7. Rights and Remedies............................................................................88
ARTICLE 13: - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
13-1. Revolving Credit Funding Procedures............................................................88
13-2. SwingLine Loans................................................................................88
13-3. Administrative Agent's Covering of Fundings:...................................................89
13-4. Ordinary Course Distributions: Revolving Credit................................................91
13-5. Ordinary Course Distributions: Term Loan.......................................................93
ARTICLE 14: - ACCELERATION AND LIQUIDATION:
14-1. Acceleration Notices...........................................................................93
14-2. Mandatory Acceleration Right of Term Lender:...................................................93
14-3. Acceleration...................................................................................94
14-4. Initiation of Liquidation......................................................................94
14-5. Actions At and Following Initiation of Liquidation............................................94
14-6. Collateral Agent's Conduct of Liquidation......................................................95
14-7. Distribution of Liquidation Proceeds:..........................................................95
14-8. Relative Priorities To Proceeds of Liquidation ................................................96
ARTICLE 15: - THE AGENTS:
15-1. Appointment of The Agents ...................................................................96
15-2. Responsibilities of Agents ....................................................................97
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15-3. Concerning Distributions By the Agents ........................................................98
15-4. Dispute Resolution:............................................................................99
15-5. Distributions of Notices and of Documents......................................................99
15-6. Confidential Information.......................................................................99
15-7. Reliance by Agents ...........................................................................100
15-8. Non-Reliance on Agents and Other Lenders......................................................100
15-9. Indemnification...............................................................................100
15-10. Resignation of Agent..........................................................................101
ARTICLE 16: - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:
16-1. Administration of Credit Facilities...........................................................102
16-2. Actions Requiring or On Direction of Majority Lenders.........................................102
16-3. Actions Requiring or On Direction of SuperMajority Lenders....................................102
16-4. Action Requiring Certain Consent .............................................................103
16-5. Actions Requiring or Directed By Unanimous Consent............................................103
16-6. Actions Requiring SwingLine Lender Consent....................................................105
16-7. Actions Requiring Term Lender Consent.........................................................105
16-8. Actions Requiring Agents' Consent.............................................................105
16-9. Miscellaneous Actions.........................................................................105
16-10. Actions Requiring Borrowers' Representative's Consent.........................................106
16-11. NonConsenting Revolving Credit Lender.........................................................106
16-12. The BuyOut:...................................................................................107
ARTICLE 17: - ASSIGNMENTS BY LENDERS:
17-1. Assignments and Assumptions:..................................................................108
17-2. Assignment Procedures.........................................................................109
17-3. Effect of Assignment..........................................................................109
ARTICLE 18: - NOTICES:
18-1. Notice Addresses..............................................................................110
18-2. Notice Given..................................................................................112
18-3. Wire Instructions.............................................................................113
ARTICLE 19: - TERM:
19-1. Termination of Revolving Credit...............................................................113
19-2. Actions On Termination........................................................................113
ARTICLE 20: - GENERAL:
20-1. Protection of Collateral......................................................................114
20-2. Publicity.....................................................................................114
20-3. Successors and Assigns........................................................................114
20-4. Severability..................................................................................114
20-5. Amendments. Course of Dealing................................................................115
20-6. Power of Attorney.............................................................................115
20-7. Application of Proceeds.......................................................................115
20-8. Increased Costs...............................................................................116
20-9. Costs and Expenses of the Agents .............................................................116
20-10. Copies and Facsimiles.........................................................................117
20-11. Massachusetts Law.............................................................................117
20-12. Consent to Jurisdiction.......................................................................117
20-13. Indemnification...............................................................................118
20-14. Rules of Construction.........................................................................118
20-15. Intent........................................................................................120
20-16. Participations:...............................................................................120
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20-17. Right of Set-Off..............................................................................121
20-18. Pledges To Federal Reserve Banks: ............................................................121
20-19. Maximum Interest Rate.........................................................................121
20-20. Waivers. .....................................................................................121
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EXHIBITS
1:1-0 : Guarantors
2:2-8(c) : SwingLine Note
2:2-10 : Revolving Credit Note
2:2-12 : Pricing Grid
2:2-24 : Revolving Credit Lenders' Commitments
3:3-2 : Term Note
5:5-2 : Corporate Information
5:5-3 : Trade Names
5:5-5 : Locations, Leases, and Landlords
5:5-7(b) : Consigned Inventory
5:5-7(c)(ii) : Equipment Usage Agreement
5:5-7(d) : Certain Affiliates
5:5-9 : Insurance Policies
5:5-11 : Capital Leases
5:5-13(a) : Labor Relations
5:5-19 : Litigation
6:6-4 : Borrowing Base Certificate
6:6-5 : Weekly and Monthly Financial Reporting Requirements
6:6-11 : Financial Performance Covenants
17:17-2 : Assignment / Assumption
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LOAN AND SECURITY AGREEMENT Fleet Retail Finance Inc.
ADMINISTRATIVE AND COLLATERAL AGENT
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February 3, 2001
THIS AGREEMENT is made amongst
Fleet Retail Finance Inc. (in such capacity, the
"Administrative Agent"), a Delaware corporation with offices at 40
Broad Street, Boston, Massachusetts 02109, as Administrative Agent for
the ratable benefit of (i) the Collateral Agent, (ii) the "Revolving
Credit Lenders", who are, at present, those financial institutions
identified on the signature pages of this Agreement and any Person who
becomes a "Revolving Credit Lender" in accordance with the provisions
of Article 17:17-1 of this Agreement and (iii) the Term Lender;
and
Fleet Retail Finance Inc. (in such capacity, the "Collateral
Agent", a Delaware corporation with offices at 40 Broad Street, Boston,
Massachusetts 02109, as Collateral Agent for the ratable benefit of the
Administrative Agent, the Revolving Credit Lenders, and the Term
Lender;
and
The Revolving Credit Lenders;
and
Back Bay Capital Funding LLC (in such capacity, with any
successor or assign, the "Term Lender"), a limited liability company
with offices at 40 Broad Street, Boston, Massachusetts 02109,
and
J. Baker, Inc. (in such capacity, the " Borrowers'
Representative"), a Massachusetts corporation with its principal
executive offices at 555 Turnpike Street, Canton, Massachusetts 02021,
as agent for the following (individually, a "Borrower" and
collectively, the "Borrowers"):
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Morse Shoe, Inc. ( a Delaware corporation with its principal
executive offices at 555 Turnpike Street, Canton, Massachusetts 02021);
JBI, Inc. ( a Massachusetts corporation with its principal
executive offices at 555 Turnpike Street, Canton, Massachusetts 02021);
JBI Apparel, Inc.( a Massachusetts corporation with its
principal executive offices at 555 Turnpike Street, Canton,
Massachusetts 02021);
The Casual Male, Inc. ( a Massachusetts corporation with its
principal executive offices at 437 Turnpike Street, Canton,
Massachusetts 02021);
WGS Corp. ( a Massachusetts corporation with its principal
executive offices at 555 Turnpike Street, Canton, Massachusetts 02021);
and
TCMB&T, Inc.( a Massachusetts corporation with its principal
executive offices at 437 Turnpike Street, Canton, Massachusetts 02021);
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom, and with the intention that this Agreement constitute an
amendment and restatement of the 1999 Loan Agreement,
WITNESSETH:
ARTICLE 1: - DEFINITIONS:
As used herein, the following terms have the following meanings or are
defined in the section of this Agreement so indicated:
"1999 Loan Agreement": The August 30, 1999 Loan and Security
Agreement between the Agent (then known as "BankBoston Retail
Finance Inc.") and the Revolving Credit Lenders referred to
therein and the Term Lender, on the one hand, and the
Borrowers' Representative and the Borrowers on the other as
amended by the First through and including Third Amendments
thereto.
"Acceleration": The making of demand or declaration that any
indebtedness, not otherwise due and payable, is due and
payable. Derivations of the word "Acceleration" (such as
"Accelerate") are used with like meaning in this Agreement.
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"Acceleration Notice": Written notice as follows:
(a) From the Administrative Agent to the Collateral
Agent and the Revolving Credit Lenders, as provided in Section
14:14-1(a).
(b) From the SuperMajority Lenders to the Administrative
Agent, as provided in Section 14:14-1(b).
(c) From the Term Lender to the Administrative Agent, as
provided in Section 14:14-1(c).
"Account Debtor": Has the meaning given that term in the UCC.
"Accounts" and "Accounts Receivable" include, without limitation,
"accounts" as defined in the UCC, and also all: accounts,
accounts receivable, receivables, and rights to payment
(whether or not earned by performance) for: property that has
been or is to be sold, leased, licensed, assigned, or
otherwise disposed of; services rendered or to be rendered; a
policy of insurance issued or to be issued; a secondary
obligation incurred or to be incurred; energy provided or to
be provided; for the use or hire of a vessel; arising out of
the use of a credit or charge card or information contained on
or used with that card; winnings in a lottery or other game of
chance; and also all Inventory which gave rise thereto, and
all rights associated with such Inventory, including the right
of stoppage in transit; all reclaimed, returned, rejected or
repossessed Inventory (if any) the sale of which gave rise to
any Account.
"ACH": Automated clearing house.
"Adjusted EBITDA": EBITDA (a) determined excluding charges of up to $40
Million on account of discontinued operations of J. Baker's
shoe division (b) minus dividends which constitute Permitted
Distributions
"Administrative Agent": Defined in the Preamble.
"Administrative Agent's Cover": Defined in Section 13:13-3(c)(i).
"Administrative Agent's Fee": Is defined in Section 2:2-14.
"Affiliate": With respect to any two Persons, a relationship in which
(i) one holds, directly or indirectly, not less than Twenty
Five Percent (25%) of the capital stock, beneficial
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interests, partnership interests, or other equity interests of
the other; or (ii) one has, directly or indirectly, the right,
under ordinary circumstances, to vote for the election of a
majority of the directors (or other body or Person who has
those powers customarily vested in a board of directors of a
corporation); or (iii) not less than Twenty Five Percent (25%)
of their respective ownership is directly or indirectly held
by the same third Person.
"Agent": When not preceded by "Administrative" or "Collateral",
the term "Agent" refers collectively and individually to the
Administrative Agent and the Collateral Agent.
"Agents' Rights and Remedies": Is defined in Section 12:12-7.
"Applicable Law": As to any Person: (i) All statutes, rules,
regulations, orders, or other requirements having the force of
law and (ii) all court orders and injunctions, arbitrator's
decisions, and/or similar rulings, in each instance ((i) and
(ii)) of or by any federal, state, municipal, and other
governmental authority, or court, tribunal, panel, or other
body which has or claims jurisdiction over such Person, or any
property of such Person, or of any other Person for whose
conduct such Person would be responsible.
"Appraised Inventory Liquidation Value": The product of (a) the Retail
of Eligible Inventory (net of Inventory Reserves) multiplied
by (b) that percentage, determined from the then most recent
appraisal of the Borrowers' Inventory undertaken at the
request of the Administrative Agent, to reflect the
appraiser's estimate of the net recovery on the Borrowers'
Inventory in the event of an in-store liquidation of that
Inventory.
"Assigning Revolving Credit Lender": Defined in Section 17:17-1(a).
"Assignment and Acceptance": Defined in Section 17:17-2.
"Availability": The lesser of (a) or (b), where:
(a) is the result of
(i) The Revolving Credit Ceiling
Minus
(ii) The aggregate unpaid balance of the Loan
Account
Minus
(iii) The aggregate undrawn Stated Amount of all
then outstanding L/C's.
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(b) is the result of
(i) The Borrowing Base
Minus
(ii) The aggregate unpaid balance of the Loan Account
Minus
(iv) The aggregate undrawn Stated Amount of all then
outstanding L/C's.
Minus
(v) The aggregate of the Availability Reserves.
Minus
(vi) The Loan to Collateral Reserve.
"Availability Reserves": Such reserves as the Administrative Agent from
time to time determines in the Administrative Agent's
reasonable discretion as being appropriate to reflect the
impediments to the Collateral Agent's ability to realize upon
the Collateral. Without limiting the generality of the
foregoing, Availability Reserves may include (but are not
limited to) reserves based on the following::
(i) Rent (based upon past due rent , except where a
Landlord's Waiver, acceptable to the Collateral
Agent, has been received by the Administrative
Agent).
(ii) Customer Credit Liabilities.
(iii) Taxes and other governmental charges, including, ad
valorem, personal property, and other taxes which
might have priority over the Collateral Interests of
the Collateral Agent in the Collateral.
(iv) L/C Landing Costs.
"Average Availability": The average of Availability at the close of
each day of the period in respect of which Average
Availability is being determined.
"Bankruptcy Code": Title 11, U.S.C., as amended from time to time.
"Base": The Base Rate announced from time to time by Fleet National
Bank (or any successor in interest to Fleet National Bank). In
the event that said bank (or any such successor) ceases to
announce such a rate, "Base" shall refer to that rate or index
announced or published from time to time as the Administrative
Agent, in good faith, designates as the functional equivalent
to said Base Rate. Any change in "Base" shall be
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effective, for purposes of the calculation of interest due
hereunder, when such change is made effective generally by the
bank on whose rate or index "Base" is being set.
"Base Margin Loan": Each Revolving Credit Loan while bearing interest
at the Base Margin Rate.
"Base Margin Rate": Until the Pricing Grid Effective Date: 0.5%
Commencing with the Pricing Grid Effective Date: The then
applicable Base Margin as determined from the Pricing Grid.
"BaseLine Covenant Breach": For three (3) or more consecutive days,
(x) The aggregate of (i) the unpaid principal balance of
the Loan Account plus (ii) the Stated Amount of all
then outstanding L/C's, plus (iii) the then unpaid
principal balance of the Term Loan
exceeds
(y) The aggregate of
(i) All components of the Borrowing
Base (net of any Reserves
applicable thereto) other than any
component based on Eligible
Inventory.
plus
(ii) The Appraised Inventory Liquidation
Value of Eligible Inventory other
than Eligible Shoe Inventory
multiplied by the Loan to
Collateral Percentage.
plus
(iii) Until April 15, 2001, the Appraised
Inventory Liquidation Value of
Eligible Inventory consisting of
Eligible Shoe Inventory multiplied
by the Loan to Collateral
Percentage.
"BBC": Back Bay Capital LLC.
"Blocked Account": Any DDA into which the contents of any other DDA is
transferred.
"Blocked Account Agreement": An Agreement, in form satisfactory to the
Administrative Agent, which Agreement recognizes the
Collateral Agent's Collateral Interest in the contents of the
DDA which is the subject of such Agreement and agrees that
such contents shall be transferred only to the Concentration
Account or as otherwise instructed by an Agent.
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"Bonds": J. Baker's 7% Convertible Subordinated Notes due 2002.
"Borrower" and "Borrowers": Is defined in the Preamble.
"Borrowing Base": The aggregate of the following:
(a) The face amount of Eligible Receivables (net of
Receivables Reserves) multiplied by the Receivables
Advance Rate.
Plus
(b) The face amount of Eligible Credit Card Receivables
multiplied by the Credit Card Advance Rate.
Plus
(c) The Retail of Eligible Inventory other than Eligible
Shoe Inventory (net of Inventory Reserves other than
as allocable to Eligible Shoe Inventory) multiplied
by the Inventory Advance Rate.
Plus
(d) The face amount of Eligible Host Store Receivables
multiplied by the Host Store Receivables Advance
Rate.
Plus
(e) Included in the Borrowing Base Only Until May 1,
2001: The face amount of Eligible Shoe Division Host
Store Receivables of the Shoe Division Borrowers
multiplied by the Shoe Division Host Store
Receivables Advance Rate.
Plus
(f) Included in the Borrowing Base Only Until April 15,
2001: The Retail of Eligible Shoe Inventory (net of
Inventory Reserves allocable to Eligible Shoe
Inventory) multiplied by the Shoe Inventory Advance
Rate.
"Borrowing Base Certificate": Is defined in Section 6:6-4.
"Business Day": Any day other than (a) a Saturday or Sunday; (b) any
day on which banks in Boston, Massachusetts, generally are not
open to the general public for the purpose of conducting
commercial banking business; or (c) a day on which the
principal office of the Administrative Agent is not open to
the general public to conduct business.
"Business Plan": The Borrowers' business plan dated on or about
February 1, 2001, as from time to time updated by the
Borrowers' Representative pursuant to this Agreement.
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"BuyOut": The consummation of a transaction described in Section
16:16-12.
"Capital Expenditures": The expenditure of funds or the incurrence of
liabilities which may be capitalized in accordance with GAAP.
"Capital Lease": Any lease which may be capitalized in accordance with
GAAP.
"Change in Control": The occurrence of either of the following:
(a) The acquisition, by any group of persons (within
the meaning of the Securities Exchange Act of 1934, as
amended) or by any Person, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange
Commission) of 35% or more of the issued and outstanding
capital stock of the Borrowers' Representative having the
right, under ordinary circumstances, to vote for the election
of directors of J. Baker.
(b) Any failure of J. Baker directly or indirectly to
own, beneficially and of record, 100% of the capital stock of
all other Borrowers.
"Chattel Paper": Has the meaning given that term in the UCC.
"Collateral": Is defined in Section 9:9-1.
"Collateral Agent": Is defined in the Preamble.
"Collateral Interest": Any interest in property to secure an
obligation, including, without limitation, a security
interest, mortgage, and deed of trust.
"Concentration Account": Is defined in Section 8:8-2.
"Consent": Actual consent given by the Lender from whom such consent is
sought; or the passage of Seven (7) Business Days from receipt
of written notice to a Lender from an Agent of a proposed
course of action to be followed by an Agent without such
Lender's giving that Agent written notice of that Revolving
Credit Lender's objection to such course of action, provided
that all Agents may rely on such passage of time as consent by
a Lender only if such written notice states that consent will
be deemed effective if no objection is received within such
time period.
"Consolidated": When used to modify a financial term, test, statement,
or report, refers to
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the application or preparation of such term, test, statement
or report (as applicable) based upon the consolidation, in
accordance with GAAP, of the financial condition or operating
results of the Borrowers.
"Costs of Collection": Includes, without limitation, all attorneys'
reasonable fees and reasonable out-of-pocket expenses incurred
by any Agent's attorneys, and all reasonable out-of-pocket
costs incurred by any Agent in the administration of the
Liabilities and/or the Loan Documents, including, without
limitation, reasonable costs and expenses associated with
travel on behalf of any Agent, where such costs and expenses
are directly or indirectly related to or in respect of any
Agent's: administration and management of the Liabilities;
negotiation, documentation, and amendment of any Loan
Document; or efforts to preserve, protect, collect, or enforce
the Collateral, the Liabilities, and/or the Agents' Rights and
Remedies and/or any of the rights and remedies of any Agent
against or in respect of any guarantor or other person liable
in respect of the Liabilities (whether or not suit is
instituted in connection with such efforts). "Costs of
Collection" also includes the reasonable fees and expenses of
Lenders' Special Counsel. The Costs of Collection are
Liabilities, and at the Administrative Agent's option may bear
interest at the then effective Base Margin Rate.
"Credit Card Advance Rate": 85%
"Current Pay Interest": Is defined in Section 3:3-4(b)(i)
"Customer Credit Liability": Gift certificates, customer deposits,
merchandise credits, layaway obligations, frequent shopping
programs, and similar liabilities of any Borrower to its
retail customers and prospective customers.
"DDA": Any checking or other demand daily depository account, other
than an Exempt DDA, maintained by any Borrower.
"Delinquent Revolving Credit Lender": Defined in Section 13:13-3(c).
"Deposit Account": Has the meaning given that term in the UCC.
"Documents": Has the meaning given that term in the UCC.
"Documents of Title": Has the meaning given that term in the UCC.
Page: 9
"EBITDA": Earnings before interest, taxes, depreciation, and
amortization, each as determined in accordance with GAAP.
"Eligible Assignee": A bank, insurance company, or company engaged in
the business of making commercial loans having a combined
capital and surplus in excess of $300 Million or any Affiliate
of any Revolving Credit Lender, or any Person to whom a
Revolving Credit Lender assigns its rights and obligations
under this Agreement as part of a programmed assignment and
transfer of such Revolving Credit Lender's rights in and to a
material portion of such Revolving Credit Lender's portfolio
of asset based credit facilities.
"Eligible Credit Card Receivables": Under 4 business day accounts due
on a non-recourse basis from major credit card processors
(which, if due on account of a private label credit card
program, are deemed in the discretion of the Administrative
Agent to be eligible).
"Eligible In-Transit Inventory": "Eligible In-Transit Inventory " will
be calculated at 75% of the retail value of such of the
Borrowers' Inventory (without duplication as to Eligible
Inventory and Eligible L/C Inventory ), title to which has
passed to a Borrower and which is then being shipped from a
foreign location for receipt, within 45 days, at a warehouse
of one of the Borrowers, provided that
(a) Such Inventory is of such types, character,
qualities and quantities (net of Inventory Reserves) as the
Administrative Agent in its discretion from time to time
determines to be eligible for borrowing; and
(b) The documents which relate to such shipment names
the Collateral Agent as consignee of the subject Inventory and
the Collateral Agent has control over the documents which
evidence ownership of the subject Inventory (such as by the
providing to the Collateral Agent of a Customs Brokers
Agreement in form reasonably satisfactory to the Collateral
Agent).
"Eligible Host Store Receivables:" Amounts due from Host Stores which,
if due from a Key Host Store, is subject to a Host Store
Consent.
"Eligible Inventory": The following:
(a) Such of the Borrowers' Inventory, at such
locations, and of such types, character, qualities and
quantities, as the Administrative Agent, in its sole
discretion from time to time determines to be acceptable for
borrowing, as to which Inventory, the Lender has a perfected
security interest which is prior and superior to all security
interests,
Page: 10
claims, and encumbrances, which Inventory, if at a Key Host
Store, is subject to a Host Store Consent.
(b) Eligible L/C Inventory.
(c) Eligible In-Transit Inventory
Without limiting the foregoing, "Eligible Inventory" shall not
include (i) direct shipment inventory; (ii) any
non-merchandise inventory (such as labels, bags, and packaging
materials); (iii) "dummy warehouse inventory"; and (iv)
damaged goods, return to vendor merchandise, packaways,
consigned inventory, and other similar categories.
"EligibleL/C Inventory": "Eligible L/C Inventory" will be calculated at
75% of the retail value of such of the Borrowers' Inventory
(without duplication as to Eligible Inventory and Eligible
In-Transit Inventory ), the purchase of which is supported by
a documentary L/C then having an initial expiry of seventy
five or less days, provided that
(a) Such Inventory is of such types, character,
qualities and quantities (net of Inventory Reserves) as the
Administrative Agent in its discretion from time to time
determines to be eligible for borrowing; and
(b) The documentary L/C supporting such purchase
names the Collateral Agent as consignee of the subject
Inventory and the Collateral Agent has control over the
documents which evidence ownership of the subject Inventory
(such as by the providing to the Collateral Agent of a Customs
Brokers Agreement in form reasonably satisfactory to the
Collateral Agent).
"Eligible Receivables": Such of the Borrowers' Accounts and accounts
receivable as arise in the ordinary course of the Borrowers'
business (without duplication of Eligible Credit Card
Receivables, Eligible Host Store Receivables, and Eligible
Shoe Division Host Store Receivables) for goods sold and/or
services rendered by the Borrowers, which Accounts and
accounts receivable have been determined by the Administrative
Agent to be satisfactory and have been earned by performance
and are owed to the Borrowers by such of the Borrowers'
Account Debtors as the Administrative Agent determines to be
satisfactory, in the Administrative Agent's discretion in each
instance.
"Eligible Shoe Division Host Store Receivables:" Amounts which are no
more than 7 days past due (under contractual terms in effect
on January 1, 2001) on account of a Shoe Division Borrower's
operation of a licensed shoe department at the relevant
Account Debtor.
Page: 11
"Eligible Shoe Inventory": Eligible Inventory which consists of shoes
offered for sale by Shoe Division Borrowers.
"Employee Benefit Plan": As defined in ERISA.
"Encumbrance": A Collateral Interest or agreement to create or grant a
Collateral Interest; the interest of a lessor under a Capital
Lease; conditional sale or other title retention agreement;
sale of accounts receivable or chattel paper; or other
arrangement pursuant to which any Person is entitled to any
preference or priority with respect to the property or assets
of another Person or the income or profits of such other
Person; each of the foregoing whether consensual or
non-consensual and whether arising by way of agreement,
operation of law, legal process or otherwise.
"End Date": The date upon which both (a) all Liabilities have been
paid in full and (b) all obligations of any Lender to make
loans and advances and to provide other financial
accommodations to the Borrowers hereunder shall have been
irrevocably terminated.
"Environmental Laws": All of the following:
(a) Applicable Law which regulates or relates to, or
imposes any standard of conduct or liability on account of or
in respect to environmental protection matters, including,
without limitation, Hazardous Materials, as are now or
hereafter in effect.
(b) The common law relating to damage to Persons or
property from Hazardous Materials.
"Equipment": Includes, without limitation, "equipment" as defined in
the UCC, and also all furniture, store fixtures, motor
vehicles, rolling stock, machinery, office equipment, plant
equipment, tools, dies, molds, and other goods, property, and
assets which are used and/or were purchased for use in the
operation or furtherance of a Borrower's business, and any and
all accessions or additions thereto, and substitutions
therefor.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate": Any Person which is under common control with a
Borrower within the meaning of Section 4001 of ERISA or is
part of a group which includes any Borrower and which would be
treated as a single employer under Section 414 of the Internal
Revenue Code of 1986, as amended.
Page: 12
"Events of Default": Is defined in Article 11:. An "Event of Default"
shall be deemed to have occurred and to be continuing unless
and until that Event of Default has been duly waived by the
requisite Lenders or by the Administrative Agent as
applicable. In the event of such due waiver, the so-waived
Event of Default shall be deemed never to have occurred (other
than with respect to any Costs of Collection for which the
Borrowers are obligated to reimburse any Agent or the Lenders,
which reimbursement obligation is not specifically duly
waived).
"Excess Availability": The result of (a) Availability minus (b) all
then past due obligations of the Borrowers, including accounts
payable which are beyond customary trade terms and rent
obligations which are beyond applicable grace periods.
"Excluded Collateral": The following:
(a) Equipment which is financed through Permitted
Equipment Debt.
(b) Any Borrowers' interest as lessee under any real
estate lease.
"Exempt DDA": A depository account maintained by any Borrower, the
only contents of which may be transfers from the Operating
Account and actually used solely (i) for petty cash purposes;
or (ii) for payroll.
"Farm Products": Has the meaning given that term in the UCC.
"Fee Letter": The two letters, each on or about December 13, 2000
and styled "Fee Letter" between the Borrowers' Representative,
respectively and FRFI and the Term Lender, as such letters may
from time to time be amended.
"Fiscal": When followed by "month" or "quarter", the relevant fiscal
period based on the Borrowers' fiscal year and accounting
conventions. When followed by reference to a specific year,
the fiscal year which ends in a month of the year to which
reference is being made (e.g. if the Borrowers' fiscal year
ends in January 2001 reference to that year would be to the
Borrowers' "Fiscal 2001").
"Fixtures": Has the meaning given that term in the UCC.
"FRFI": Fleet Retail Finance Inc.
Page: 13
"GAAP": Principles which are consistent with those promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to that
accounting period in respect of which reference to GAAP is
being made, provided, however, in the event of a Material
Accounting Change, then unless otherwise specifically agreed
to by the Administrative Agent, (a) the Borrowers' compliance
with the financial performance covenants imposed pursuant to
Section 6:6-11 shall be determined as if such Material
Accounting Change had not taken place and (b) the Borrowers'
Representative shall include, with its monthly, quarterly, and
annual financial statements a schedule, certified by the
Borrowers' Representative's chief financial officer, on which
the effect of such Material Accounting Change on that
statement shall be described.
"General Intangibles": Includes, without limitation, "general
intangibles" as defined in the UCC; and also all: rights to
payment for credit extended; deposits; amounts due to any
Borrower; credit memoranda in favor of any Borrower; warranty
claims; tax refunds and abatements; insurance refunds and
premium rebates; all means and vehicles of investment or
hedging, including, without limitation, options, warrants, and
futures contracts; records; customer lists; telephone numbers;
goodwill; causes of action; judgments; payments under any
settlement or other agreement; literary rights; rights to
performance; royalties; license and/or franchise fees; rights
of admission; licenses; franchises; license agreements,
including all rights of any Borrower to enforce same; permits,
certificates of convenience and necessity, and similar rights
granted by any governmental authority; patents, patent
applications, patents pending, and other intellectual
property; internet addresses and domain names; developmental
ideas and concepts; proprietary processes; blueprints,
drawings, designs, diagrams, plans, reports, and charts;
catalogs; manuals; technical data; computer software programs
(including the source and object codes therefor), computer
records, computer software, rights of access to computer
record service bureaus, service bureau computer contracts, and
computer data; tapes, disks, semi-conductors chips and
printouts; trade secrets rights, copyrights, mask work rights
and interests, and derivative works and interests; user,
technical reference, and other manuals and materials; trade
names, trademarks, service marks, and all goodwill relating
thereto; applications for registration of the foregoing; and
all other general intangible property of any Borrower in the
nature of intellectual property; proposals; cost estimates,
and reproductions on paper, or otherwise, of any and all
concepts or ideas, and any matter related to, or connected
with, the design, development, manufacture, sale, marketing,
leasing, or use of any or all property produced, sold, or
leased, by any or credit extended or services performed, by
any Borrower, whether
Page: 14
intended for an individual customer or the general business of
any Borrower, or used or useful in connection with research by
any Borrower.
"Goods": Has the meaning given that term in the UCC, and also includes
all things movable when a security interest therein attaches
and also all computer programs embedded in goods and any
supporting information provided in connection with a
transaction relating to the program if (i) the program is
associated with the goods in such manner that it customarily
is considered part of the goods or (ii) by becoming the owner
of the goods, a Person acquires a right to use the program in
connection with the goods.
"Guarantor": Each Person listed on EXHIBIT 1:1-0, annexed hereto.
"Guarantor Agreement": Each instrument and document executed by any
guarantor of the Liabilities to evidence or secure that
guarantor's guaranty thereof.
"Guarantor Default": Default or breach or the occurrence of any event
of default under any Guarantor Agreement.
"Hazardous Materials": Any (a) substance which is defined or regulated
as a hazardous material in or under any Environmental Law and
(b) oil in any physical state.
"Host Store": An entity which operates a retail store at which a
Borrower, other than a Shoe Division Borrower, operates a
retail shoe or apparel department as a so-called "licensed
department".
"Host Store Consent": An agreement by a Key Host Store
(a) with the Agents' predecessors in interest under
the 1999 Loan Agreement or the 1997 JBI / Morse Shoe Facility
to which reference is made in the 1999 Loan Agreement ; or
(b) which the Administrative Agent determines (in the
Administrative Agent's reasonable discretion) provides for
reasonable safeguards and protections concerning the interests
of the Agents and the Lenders in the assets and operations of
that Borrower, which agreement shall be similar in tenor to
those provided to GBFC, Inc. and Fleet National Bank, as
agents, in connection with said 1997 JBI / Morse Shoe
Facility.
"Host Store Receivables Advance Rate": 85%.
Page: 15
"Indebtedness": All indebtedness and obligations of or assumed by
any Person on account of or in respect to any of the
following:
(a) In respect of money borrowed (including any
indebtedness which is non-recourse to the credit of such
Person but which is secured by an Encumbrance on any asset of
such Person) whether or not evidenced by a promissory note,
bond, debenture or other written obligation to pay money.
(b) In connection with any letter of credit or
acceptance transaction (including, without limitation, the
face amount of all letters of credit and acceptances issued
for the account of such Person or reimbursement on account of
which such Person would be obligated).
(c) In connection with the sale or discount of
accounts receivable or chattel paper of such Person.
(d) On account of deposits or advances.
(e) As lessee under Capital Leases.
(f) In connection with any sale and leaseback
transaction which is not Permitted Equipment Debt.
"Indebtedness" of any Person also includes:
(x) Indebtedness of others secured by an
Encumbrance on any asset of such Person, whether or
not such Indebtedness is assumed by such Person.
(y) Any guaranty, endorsement, suretyship or
other undertaking pursuant to which that Person may
be liable on account of any obligation of any third
party other than on account of the endorsement of
checks and other items in the ordinary course.
(z) The Indebtedness of a partnership or
joint venture for which such Person is liable as a
general partner or joint venturer.
"InDefault": Any occurrence, circumstance, or state of facts with
respect to a Borrower which (a) is an Event of Default; or (b)
would become an Event of Default if any requisite notice were
given and/or any requisite period of time were to run and such
occurrence, circumstance, or state of facts were not cured
within any applicable grace period.
"Indemnified Person": Is defined in Section 20:20-13.
"Instruments": Has the meaning given that term in the UCC.
Page: 16
"Interest Payment Date": With reference to:
Each Libor Loan: The last day of the Interest Period
relating thereto; the Termination Date; and the End Date.
Each Base Margin Loan: The first day of each month;
the Termination Date; and the End Date.
"Interest Period": The following:
(a) With respect to each Libor Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of, or conversion to, the subject
Libor Loan and ending one, two, or three months thereafter, as
the Borrowers' Representative may elect by notice (pursuant to
Section 2:2-6) to the Administrative Agent and such other
periods (no longer, in any event, however, than three months
to which the Administrative Agent and the Borrowers'
Representative may agree from time to time.
(b) With respect to each Base Margin Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of or conversion to such Base
Margin Loan and ending on that date (i) as of which the
subject Base Margin Loan is converted to a Libor Loan, as the
Borrowers' Representative may elect by notice (pursuant to
Section 2:2-6) to the Administrative Agent, or (ii) on which
the subject Base Margin Loan is paid by the Borrowers.
(c) The setting of Interest Periods is in all
instances subject to the following:
(i) Any Interest Period for a Base Margin
Loan which would otherwise end on a day which is not
a Business Day shall be extended to the next
succeeding Business Day.
(ii) Any Interest Period for a Libor Loan
which would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding
Business Day, unless that succeeding Business Day is
in the next calendar month, in which event such
Interest Period shall end on the last Business Day of
the month during which the Interest Period ends.
(iii) Subject to Subsection (iv), below, any
Interest Period applicable to a Libor Loan, which
Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month
during which such Interest Period ends, shall end on
the last Business Day of the month during which that
Interest Period ends.
(iv) Any Interest Period which would
otherwise end after the Termination Date shall end on
the Termination Date.
Page: 17
(v) The number of Interest Periods in effect
at any one time is subject to Section 2:2-12(e)
hereof.
"Inventory": Includes, without limitation, "inventory" as defined in
the UCC and also all: (a) Goods which are leased by a Person
as lessor; are held by a Person for sale or lease or to be
furnished under a contract of service; are furnished by a
Person under a contract of service; or consist of raw
materials, work in process, or materials used or consumed in a
business; (b) Goods of said description in transit; (c) Goods
of said description which are returned, repossessed and
rejected; (d) packaging, advertising, and shipping materials
related to any of the foregoing; (e) all names, marks, and
General Intangibles affixed or to be affixed or associated
thereto; and (f) Documents and Documents of Title which
represent any of the foregoing.
"Inventory Advance Rate": 30%.
Inventory Reserves": Such Reserves as may be established from time to
time by the Administrative Agent in the Administrative Agent's
reasonable discretion with respect to the determination of the
saleability, at retail, of the Eligible Inventory or which
reflect such other factors as affect the market value of the
Eligible Inventory. Without limiting the generality of the
foregoing, Inventory Reserves may include (but are not limited
to) reserves based on the following:
(i) Obsolescence (based upon Inventory on hand beyond a
given number of days).
(ii) Seasonality.
(iii) Shrinkage.
(iv) Imbalance.
(v) Change in Inventory character.
(vi) Change in Inventory composition
(vii) Change in Inventory mix.
(viii) Markdowns (both permanent and point of sale)
(ix) Retail markons and markups inconsistent with prior
period practice and performance; industry standards;
current business plans; or advertising calendar and
planned advertising events.
(x) Consigned Inventory.
"Investment Property": Has the meaning given that term in the UCC.
Page: 18
"Issuer": The issuer of any L/C.
"J. Baker": J. Baker, Inc.
"Key Host Store": Any Host Store at whose Stores more than five
percent (5%) of the Borrowers' Inventory (at Retail) without
regard to any Inventory of any Shoe Division Borrower is
located.
"L/C": Any letter of credit, the issuance of which is procured by the
Administrative Agent for the account of any Borrower and any
acceptance made on account of such letter of credit.
"L/C Landing Costs": To the extent not included in the Stated
Amount of an L/C, customs, duty, freight, and other
out-of-pocket costs and expenses which will be expended to
"land" the Inventory, the purchase of which is supported by
such L/C.
"Lease": Any lease or other agreement, no matter how styled or
structured, pursuant to which a Borrower is entitled to the
use or occupancy of any space.
"Lender": Collectively and each individually, each Revolving Credit
Lender and the Term Lender.
"Lenders' Special Counsel": A single counsel, selected by the Majority
Lenders following the occurrence of an Event of Default, to
represent the interests of the Lenders in connection with the
enforcement, attempted enforcement, or preservation of any
rights and remedies under this, or any other Loan Document, as
well as in connection with any "workout", forbearance, or
restructuring of the credit facility contemplated hereby.
"Letter-of-Credit Right": Has the meaning given that term in UCC 9'99
and also refers to any right to payment or performance under
an L/C, whether or not the beneficiary has demanded or is at
the time entitled to demand payment or performance.
"Liabilities": (a) All and each of the following, whether now existing
or hereafter arising under this Agreement or under any of the
other Loan Documents, including, without limitation, the
following:
(i) Any and all direct and indirect liabilities,
debts, and obligations of each
Page: 19
Borrower to any Agent or any Lender, each of every kind,
nature, and description owing on account of this Agreement or
any other Loan Document.
(ii) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or
hereafter owing by any Borrower to any Agent or any Lender
(including all future advances whether or not made pursuant to
a commitment by any Agent or any Lender), whether or not any
of such are liquidated, unliquidated, primary, secondary,
secured, unsecured, direct, indirect, absolute, contingent, or
of any other type, nature, or description, or by reason of any
cause of action which any Agent or any Lender may hold against
any Borrower.
(iii) All notes and other obligations of each
Borrower now or hereafter assigned to or held by any Agent or
any Lender, each of every kind, nature, and description.
(iv) All interest, fees, and charges and other
amounts which may be charged by any Agent or any Lender to any
Borrower and/or which may be due from any Borrower to any
Agent or any Lender from time to time.
(v) All costs and expenses incurred or paid by any
Agent in respect of any agreement between any Borrower and any
Agent or instrument furnished by any Borrower to any Agent
(including, without limitation, Costs of Collection,
attorneys' reasonable fees, and all court and litigation costs
and expenses).
(vi) Any and all covenants of each Borrower to or
with any Agent or any Lender and any and all obligations of
each Borrower to act or to refrain from acting in accordance
with any agreement between that Borrower and any Agent or any
Lender or instrument furnished by that Borrower to any Agent
or any Lender.
(vii) Each of the foregoing as if each reference to
the " any Agent or any Lender" were to each Affiliate of the
Administrative Agent.
(b) Any and all direct or indirect liabilities, debts, and
obligations of each Borrower to any Agent or any Affiliate of any
Agent, each of every kind, nature, and description owing on account of
any service or accommodation provided to, or for the account of any
Borrower pursuant to this or any other Loan Document, including cash
management services and the issuances of L/C's.
"Libor Business Day": Any day which is both a Business Day and a day
on which the principal interbank market for Libor deposits in
London in which Fleet National Bank participates is open for
dealings in United States Dollar deposits.
"Libor Loan": Any Revolving Credit Loan which bears interest at a
Libor Rate.
Page: 20
"Libor Offer Rate": That rate of interest (rounded upwards, if
necessary, to the next 1/100 of 1%) determined by the
Administrative Agent in good faith to be the highest
prevailing rate per annum at which deposits on U.S. Dollars
are offered to Fleet National Bank, by first-class banks in
the London interbank market in which Fleet National Bank
participates at or about 10:00AM (Boston Time) Two (2) Libor
Business Days before the first day of the Interest Period for
the subject Libor Loan, for a deposit approximately in the
amount of the subject loan for a period of time approximately
equal to such Interest Period.
"Libor Margin": Until the Pricing Grid Effective Date: 225 Basis
Points. Commencing with the Pricing Grid Effective Date: The
then applicable Libor Margin as determined from the Pricing
Grid.
"Libor Rate": That per annum rate which is the aggregate of the
Libor Offer Rate plus the Libor Margin except that, in the
event that the Administrative Agent determines in good faith
that any Revolving Credit Lender may be subject to the Reserve
Percentage, the "Libor Rate" shall mean, with respect to any
Libor Loans then outstanding (from the date on which that
Reserve Percentage first became applicable to such loans), and
with respect to all Libor Loans thereafter made, an interest
rate per annum equal the sum of (a) plus (b), where:
(a) is the decimal equivalent of the following
fraction:
Libor Offer Rate
----------------
1 minus Reserve Percentage
(b) is the applicable Libor Margin.
"Liquidation": The exercise, by the Collateral Agent, of those
rights accorded to the Collateral Agent under the Loan
Documents as a creditor of the Borrowers following and on
account of the occurrence of an Event of Default looking
towards the realization on the Collateral. Derivations of the
word "Liquidation" (such as "Liquidate") are used with like
meaning in this Agreement.
"Loan Account": Is defined in Section 2:2-9.
"Loan Commitment": With respect to each Revolving Credit Lender,
that respective Revolving Credit Lender's Revolving Credit
Dollar Commitment.
With respect to the Term Lender, the then unpaid
principal balance of the Term Loan.
Page: 21
"Loan Documents": This Agreement, each instrument and document
executed and/or delivered pursuant to the 1999 Loan Agreement
or as contemplated by Article 4:, below, and each other
instrument or document from time to time executed and/or
delivered in connection with the arrangements contemplated
hereby or in connection with any transaction with the
Administrative Agent or the Collateral Agent or any Affiliate
of the Administrative Agent or the Collateral Agent,
including, without limitation, any transaction which arises
out of any cash management, depository, investment, letter of
credit, interest rate protection, or equipment leasing
services provided by the Administrative Agent or the
Collateral Agent or any Affiliate of the Administrative Agent
or the Collateral Agent, as each may be amended from time to
time.
"Loan to Collateral Percentage": Restatement Date to December 15,
2002: 100%
On and After December 15, 2002: 97.0%
"Loan to Collateral Reserve": A Reserve set so that
(a) The amount made available under the Borrowing Base on
account of Eligible Inventory does not exceed 85% of
the Appraised Inventory Liquidation Value.
And
(b) The aggregate of the following does not exceed the
Appraised Inventory Liquidation Value multiplied by
the Loan to Collateral Percentage:
(i) The then unpaid principal balance of the
Term Loan
plus
(ii) Amounts made available under the Borrowing
Base on account of Eligible Inventory other
than Eligible Shoe Inventory.
plus
(iii) Until April 15, 2001, amounts made available
under the Borrowing Base on account of
Eligible Shoe Inventory.
"Majority Lenders": Lenders (other than Delinquent Revolving Credit
Lenders) holding 51% or more of the Loan Commitments (other
than any Loan Commitments held by Delinquent Revolving Credit
Lenders).
"Material Accounting Change": Any change in GAAP applicable to
accounting periods subsequent to the Borrowers' fiscal year
most recently completed prior to the execution of this
Agreement, which change has a material effect on the
Borrowers' Consolidated
Page: 22
financial condition or operating results, as reflected on
financial statements and reports prepared by or for the
Borrowers, when compared with such condition or results as if
such change had not taken place or where preparation of the
Borrowers' statements and reports in compliance with such
change results in the breach of a financial performance
covenant imposed pursuant to Section 6:6-11 where such a
breach would not have occurred if such change had not taken
place or visa versa.
"Maturity Date": January 31, 2004.
"Minimum Availability Breach": The occurrence of either of the
following for three (3) or more consecutive days:
(a) At any time, Excess Availability is less than $6.5
Million.
(b) At any time from December 15, 2001 to date on which all of
the Bonds are repurchased, redeemed, or retired, Excess Availability is
less than the greater of:
(i) The result of (x) $35 Million minus the
aggregate face amount of the Bonds which
have been repurchased, redeemed, or retired;
or
(ii) $25 Million.
"Nominee": A business entity (such as a corporation or limited
partnership) formed by the Collateral Agent to own or manage
any Post Foreclosure Asset.
"NonConsenting Revolving Credit Lender": Is defined in Section
16:16-11.
"Obligor": J. Baker and each Borrower.
"Operating Account": Is defined in Section 8:8-2.
"OverLoan": A loan, advance, or providing of credit support (such as
the issuance of any L/C) to the extent that, immediately after
its having been made, Availability is less than zero.
"Participant": Is defined in Section 20:20-16, hereof.
"Payment Intangible": Has the meaning given that term in UCC 9'99 and
also refers to any general intangible under which the Account
Debtor's primary obligation is a monetary
Page: 23
obligation.
"Permitted Asset Disposition": A sale or other disposition of the
assets of any Borrower, not in the ordinary course (other than
the Shoe Division Sale), where
(a) the assets which are the subject of such sale
(valued for such purpose in the same manner that such assets
are valued for purposes of calculation of the Borrowing Base)
when aggregated with all assets which had been the subject of
prior such sales or other dispositions, does not exceed 20
percent of the Borrowing Base on the date on which such sale
or other disposition is consummated; and
(b) on the date on which the sale or other
disposition of assets is consummated, no Borrower is InDefault
and none will become InDefault as a result of such
consummation.
"Permitted Bond Refinancing": The issuance of unsecured bonds, the net
proceeds of which are used to effect (x) a Permitted
Redemption or (y) to repay the then unpaid principal balance
of the Loan Account or (z) possibly to provide funds for a
Permitted Term Loan Refinancing, where
(a) such unsecured bonds have a maturity which is later than
the Maturity Date; and
(b) if the documentation which governs such bonds includes a
limitation on secured working capital financing, then such limitation
does not
(i) include reference to any formula as the basis on
which such working capital financing may be incurred; and
(ii) include a cap on the aggregate secured debt
outstanding at any one time which is less than $15 Million
greater than the secured debt commitments in effect on the
date of such transaction.
"Permitted Distributions": The following payments:
(a) To J. Baker, in order to make regularly scheduled payments
of interest on the Bonds.
(b) Dividends, declared and made after the date of this
Agreement, not exceeding $1.5 Million in any one year, and not
otherwise described in this Definition.
(c) Applicable only after the retirement of all of the Bonds:
Dividends, which in any Fiscal year, when combined with the dividends
described in Section (b) of this Definition, do not exceed 25% of the
Borrowers' Consolidated net income
Page: 24
for the then immediately previous Fiscal year, provided that each of
the following conditions is satisfied:
(i) Availability (on average), during the Fiscal
quarter immediately prior to that during
which such dividend is paid, is not less
than $30,000,000.00.
(ii) Availability, after giving effect to the
payment of such dividend, is not less than
$30,000,000.00.
(e) Permitted Overhead Contributions.
"Permitted Encumbrances": The following:
(a) The security interest created herein.
(b) Encumbrances which secure Permitted Equipment Debt.
(c) Encumbrances on properties to secure taxes, assessments
and other government charges or claims for labor, material or supplies
in respect of obligations not then overdue; deposits or pledges made in
connection with, or to secure payment of, workmen's compensation,
unemployment insurance, old age pensions or other social security
obligations; Encumbrances of carriers, warehousemen, mechanics and
materialmen, and other like Encumbrances on properties in existence
less than 90 days from the date of creation thereof in respect of
obligations not overdue; and Encumbrances on properties consisting of
easements, rights of way, zoning restrictions, restrictions on the use
of real property and defects and irregularities in the title thereto,
landlord's or lessor's Encumbrances under leases to which the Borrower
is a party, and other minor Encumbrances or encumbrances none of which
interferes materially with the use of the property affected in the
ordinary conduct of the business of the Borrower, which defects do not
individually or in the aggregate have a materially adverse effect on
the business of any Borrower individually or of the Borrowers as a
whole or which are being actively contested in good faith by
appropriate proceedings as to which the Borrowers have established
reasonable reserves, it being understood, however, that the filing of a
tax lien which includes any Inventory or Accounts does not constitute a
"Permitted Encumbrance", even if being so contested.
"Permitted Equipment Debt": Indebtedness to finance Equipment,
including (i) including Capital Leases (but excluding any
Indebtedness on account of any operating lease), (ii) purchase
money financing, or (iii) sales and leasebacks within 90 days
of the acquisition of the subject Equipment, which when
aggregated with all other Permitted Equipment Debt, does not
to exceed $15 Million outstanding at any one time, where the
holder of such
Page: 25
Indebtedness has executed an Equipment Usage Agreement
substantially in the form of EXHIBIT 5:5-7(c)(ii), annexed
hereto.
"Permitted Indebtedness": The following Indebtedness:
(a) Indebtedness on account of the Revolving Credit.
(b) Indebtedness on account of the Term Loan.
(c) Permitted Bond Refinancing.
(d) Permitted Equipment Debt
(e) Permitted SubDebt
(f) Permitted Term Loan Refinancing
(g) Indebtedness on account of the Bonds; the debentures
initially issued by Morse Shoe, Inc.; and J. Baker's
notes initially placed by DLJ.
Permitted Investments": Marketable direct or guaranteed obligations of
the United States of America that mature within one (1) year
from the date of purchase by a Borrower; demand deposits,
certificates of deposit, bankers acceptances and time deposits
of United States banks having total assets in excess of
$1,000,000,000.00; securities commonly known as "commercial
paper" issued by a corporation organized and existing under
the laws of the United States of America or any state thereof
that at the time of purchase have been rated and the ratings
for which are not less than "P 1" if rated by Moody's
Investors Services, Inc., and not less than "A 1" if rated by
Standard and Poor's; investments (not to exceed $100,000.00 at
any one time) in common and preferred stock traded on national
securities exchanges; additional investments in the capital
stock of any other Borrower; and loans permitted pursuant to
Section 5:5-21(c).
"Permitted Overhead Contributions": Rent under the lease of the Canton
Warehouse.
"Permitted Redemptions": Redemptions, prepayments, repayments, and
purchases at a discount of any of the following: the Bonds;
the debentures initially issued by Morse Shoe, Inc.; and J.
Baker's notes initially placed by DLJ.
"Permitted SubDebt": Unsecured Indebtedness (in addition to Permitted
Bond Refinancing)
(a) not to exceed $35 Million principal balance outstanding at
any one time;
(b) repayment of which is subordinated to the Liabilities;
(c) with a maturity which is later than the Maturity Date;
Page: 26
(d) if the documentation which governs such unsecured
Indebtedness includes a limitation on secured working capital
financing, then such limitation does not
(i) include reference to any formula as the basis on
which such working capital financing may be incurred; and
(ii) include a cap on the aggregate secured debt
outstanding at any one time which is less than $15 Million
greater than the secured debt commitments in effect on the
date of such transaction.
"Permitted Term Loan Refinancing": A refinancing of the Term Loan on
terms reasonably satisfactory to the Administrative Agent.
"Person": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other
enterprise or entity.
"PIK Interest": Defined in Section 3:3-4(b)(ii).
"Post Foreclosure Asset": All or any part of the Collateral,
ownership of which is acquired by the Collateral Agent or a
Nominee on account of the "bidding in" at a disposition as
part of a Liquidation or by reason of a "deed in lieu" type of
transaction.
"Pricing Grid": The table annexed hereto as EXHIBIT 2:2-12.
"Pricing Grid Effective Date": The later of (a) June 1, 2002 or (b) the
redemption in full of the Bonds.
"Proceeds": Includes, without limitation, "Proceeds" as defined in the
UCC and each type of property described in Section 9:9-1
hereof.
"Pro-Rata": A proportional distribution based upon a Lender's
percentage claim to the overall aggregate amount being
distributed.
"Protective OverAdvances": Revolving Credit Loans which are OverLoans,
but as to which each of the following conditions is satisfied:
(a) the Revolving Credit Ceiling is not exceeded; and (b) when
aggregated with all other Protective OverAdvances, such
Revolving Credit Loans do not aggregate more than 5% of the
aggregate of the Borrowing Base; and (c) such Revolving Credit
Loans are made or undertaken in the Agents'
Page: 27
discretion to protect and preserve the interests of the
Lenders.
"Receipts": All cash, cash equivalents, money, checks, credit card
slips, receipts and other Proceeds from any sale of the
Collateral.
"Receivables Advance Rate": 75%.
"Receivables Collateral": That portion of the Collateral which consists
of Accounts, Accounts Receivable, General Intangibles, Chattel
Paper, Instruments, Documents of Title, Documents, Investment
Property, Payment Intangibles, Letter-of-Credit Rights,
bankers' acceptances, and all other rights to payment.
"Receivables Reserves": Such Reserves as may be established from time
to time by the Administrative Agent in the Administrative
Agent's reasonable discretion with respect to the
determination of the collectibility in the ordinary course and
of the creditworthiness of the Eligible Receivables. Without
limiting the generality of the foregoing, A/R Reserves shall
include (but are not limited to) reserves based on the
following:
(i) The aggregate of all accounts receivables which are
more than 60 days past invoice.
(ii) The aggregate of all accounts receivable owed by any
Account Debtor 25% or more of whose accounts are
described in Subsection (i), above.
(iii) The aggregate of all accounts receivable which arise
out of the sale by the Borrower of goods consigned or
delivered to the Borrower or to the Account Debtor on
sale or return terms (whether or not compliance has
been made with the applicable provisions of Article 2
of the Uniform Commercial Code).
(iv) The aggregate of all accounts receivable which arise
out of any sale made on a basis other than upon terms
usual to the business of the Borrower.
(v) The aggregate of all accounts receivable which arise
out of any sale made on a "bill and hold," dating, or
delayed shipping basis.
(vi) The aggregate of all accounts receivable which are
owed by any Account Debtor whose principal place of
business is not within the United States, the
District of Columbia, or Canada.
(vii) The aggregate of all accounts receivable which are
owed by any Affiliate.
(viii) The aggregate of all accounts receivable to the
extent that the Account
Page: 28
Debtor holds or is entitled to any claim,
counterclaim, set off, or chargeback as determined by
the Administrative Agent in its discretion.
(ix) The aggregate of all accounts receivable which are
evidenced by a promissory note or other documentation
evidencing modified payment terms.
(x) The aggregate of all accounts receivable which are
owed by any person employed by, or a salesperson of,
the Borrower.
"Register": Is defined in Section 17:17-2(c).
"Requirements of Law": As to any Person:
(a) Applicable Law.
(b) That Person's organizational documents.
(c) That Person's by-laws and/or other instruments which
deal with corporate or similar governance, as
applicable.
"Reserve Percentage": The decimal equivalent of that rate applicable to
the Lender under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for
determining the maximum reserve requirement of Lender with
respect to "Eurocurrency liabilities" as defined in such
regulations. The Reserve Percentage applicable to a particular
Libor Loan shall be based upon that in effect during the
subject Interest Period, with changes in the Reserve
Percentage which take effect during such Interest Period to
take effect (and to consequently change any interest rate
determined with reference to the Reserve Percentage) if and
when such change is applicable to such loans.
"Reserves": The following: Loan to Collateral Reserve, Receivables
Reserves, Availability Reserves and Inventory Reserves.
"Restatement Date": The date of this first amendment and restatement of
the 1999 Loan Agreement.
"Retail": As reflected in a Borrowers' stock ledger, being the current
ticket price aggregated by SKU, except that to the extent that
Eligible Inventory is not reflected in the stock ledger,
"Retail" shall be determined as tracked on such non stock
ledger inventory systems of a Borrower which are deemed
adequate for such purpose by the
Page: 29
Administrative Agent in the exercise of the Administrative
Agent's discretion.
"Revolving Credit": Is defined in Section 2:2-1.
"Revolving Credit Ceiling": $110,000,000.00.
"Revolving Credit Commitment Fee": Is defined in Section 2:2-13.
"Revolving Credit Debt": At any time, the lesser of (a) or (b), where
(a) is $110,000,000.00.
(b) is Indebtedness of the Borrowers on account of
loans and advances under the Revolving Credit which
Indebtedness, when incurred or when Acceleration takes place,
is within amounts available to be borrowed under the Revolving
Credit or constitutes Protective OverAdvances, as reflected on
the Borrowing Base Certificate (if any) in reliance on which
the subject loan or advance was made, it being understood
that, (i) in the absence of manifest computational error by
the Borrowers' Representative, the Administrative Agent may
rely on, and Term Lender shall be bound by, the determination
of such availability as reflected on such Borrowing Base
Certificate, and (ii) the status of indebtedness as "Revolving
Credit Debt" is determined without regard to any subsequent
declination in the appraised value of the Inventory or other
assets on which such availability had been so determined, and
(iii) the occurrence of a BaseLine Covenant Breach, in and of
itself, shall not affect the status of indebtedness as
"Revolving Credit Debt". (For purposes of the determination of
whether a loan or advance to cover the honoring of a L/C
constitutes "Revolving Credit Debt", the date of issuance of
the subject L/C shall constitute the date on which the subject
indebtedness was incurred).
"Revolving Credit Dollar Commitment": As set forth on EXHIBIT 2:2-24,
annexed hereto (as such amounts may change in accordance with
the provisions of this Agreement).
"Revolving Credit Early Termination Fee": Is defined in Section 2:2-16.
"Revolving Credit Fees": The Unused Line Fee, Revolving Credit
Commitment Fee, Revolving Credit Early Termination Fee, fees
for L/C's which are specifically for the account of the
Revolving Credit Lenders and all other fees (such as a fee (if
any) on account of the execution of an amendment of a Loan
Document) payable by any Borrower in respect of the Revolving
Credit other than any amount payable to an Agent as
Page: 30
reimbursement for any cost or expense incurred by that Agent
on account of the discharge of that Agent's duties under the
Loan Documents.
"Revolving Credit Lenders": Each Revolving Credit Lender to which
reference is made in the Preamble of this Agreement and any
other Person who becomes a "Revolving Credit Lender" in
accordance with the provisions of this Agreement.
"Revolving Credit Loans": Loans made under the Revolving Credit, except
that where the term "Revolving Credit Loan" is used with
reference to available interest rates applicable to the loans
under the Revolving Credit, it refers to so much of the unpaid
principal balance of the Loan Account as bears the same rate
of interest for the same Interest Period. (See Section
2:2-12(d)).
"Revolving Credit Note": Is defined in Section 2:2-10.
"Revolving Credit Obligations": The aggregate of the Borrowers'
liabilities, obligations, and indebtedness of any character on
account of or in respect to the Revolving Credit.
"Revolving Credit Percentage Commitment": As set forth on EXHIBIT
2:2-24, annexed hereto (as such amounts may change in
accordance with the provisions of this Agreement).
"SEC": The Securities and Exchange Commission.
"Shoe Division Borrowers": Morse Shoe, Inc. and JBI, Inc.
"Shoe Division Host Store Receivables Advance Rate":
Restatement Date to May 1, 2001 : 85%
Thereafter : Zero
"Shoe Division Sale": That transaction described in a certain
November 8, 2000 letter from the Borrowers' Representative to
the Administrative Agent, pursuant to which transaction, J.
Baker would cause the sale, by the Shoe Division Borrowers, of
substantially all of their respective assets (it being
understood that each reference, herein, to the consummation of
the Shoe Division Sale is to consummation of such sale as
consented to by the Lenders under the 1999 Loan Agreement, but
subject to such adjustment to the net proceeds to be received
by the Borrowers as reflects a change to the number of retail
Page: 31
locations which are the subject of such sale).
"Shoe Inventory Advance Rate":
Restatement Date to April 15, 2001 : 28%
Thereafter : Zero
"Side Collateral Account": An account established by the Borrowers'
Representative with Fleet National Bank, the contents of which
shall be pledged to the Collateral Agent to secure the
Liabilities and which may consist of cash and Permitted
Investments.
"Standstill Period": A period of 15 consecutive days, initiated by
written notice by the Term Lender to the Administrative Agent
in accordance with Section 14:14-2(a).
"Stated Amount": The maximum amount for which an L/C may be honored.
"Store": Each location at which a Borrower regularly offers Inventory
for sale to the public.
"SuperMajority Lenders": Lenders (other than Delinquent Revolving
Credit Lenders) holding 66-2/3% or more the Loan Commitments
(other than Loan Commitments held by a Delinquent Revolving
Credit Lender).
"Supporting Obligation": Has the meaning given that term in UCC 9'99
and also refers to a Letter-of-Credit Right or secondary
obligation which supports the payment or performance of an
Account, Chattel Paper, a Document, a General Intangible, an
Instrument, or Investment Property.
"SwingLine": The facility pursuant to which the SwingLine Lender may
advance Revolving Credit Loans aggregating up to the SwingLine
Loan Ceiling.
"SwingLine Lender": FRFI.
"SwingLine Loan Ceiling": $15,000,000.00 (subject to increase as
provided in Section 16:16-4(b)).
"SwingLine Loans": Defined in Section 2:2-8.
Page: 32
"Term Loan Interest Payment Date": Defined in Section 3:3-4(b)(i).
"Term Loan Interest Rate": Defined in Section 3:3-4(a).
"Term Lender": Defined in the Preamble.
"Term Loan": Defined in Section 3:3-1(b).
"Term Loan Action Event": The occurrence of any of the following: a
BaseLine Covenant Breach, a Minimum Availability Breach, or a
Term Loan Payment Breach.
"Term Loan Commitment Fee": Described in Section 3:3-5.
"Term Loan Early Termination Fee": Defined in Section 3:3-3(b).
"Term Loan Fees": The Term Loan Commitment Fee, the Term Loan Early
Termination Fee, and all other fees (such as a fee (if any) on
account of the execution of an amendment of any Loan Document)
payable by any Borrower in respect of the Term Loan other than
any amount payable to an Agent as reimbursement for any cost
or expense incurred by that Agent on account of the discharge
of that Agent's duties under the Loan Documents.
"Term Loan Obligations": The aggregate of the Borrowers' liabilities,
obligations, and indebtedness of any character to Term Lender
under the Loan Documents.
"Term Loan Payment Breach": The failure by the Borrowers to have
made any payment on account of the Term Loan Debt or Term Loan
Fees prior to expiry of any grace period applicable to such
payment.
"Term Note": Defined in Section 3:3-2.
"Termination Date": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 11:11-11, below;
or (c) the Administrative Agent's notice to the Borrowers'
Representative setting the Termination Date on account of the
occurrence of any Event of Default other than as described in
Section 11:11-11, below; or (d) that date, ninety (90) days
irrevocable written notice of which is provided by the
Borrowers' Representative to the Administrative Agent.
Page: 33
"Transfer": Wire transfer pursuant to the wire transfer system
maintained by the Board of Governors of the Federal Reserve
Board, or as otherwise may be agreed to from time to time by
the Administrative Agent making such Transfer and the subject
Revolving Credit Lender. Wire instructions may be changed in
the same manner that Notice Addresses may be changed (Section
18:18-1), except that no change of the wire instructions for
Transfers to any Revolving Credit Lender shall be effective
without the consent of the Administrative Agent.
"UCC": The Uniform Commercial Code as in effect from time to time in
Massachusetts.
"UCC9'99": The Uniform Commercial Code, Article 9, 1999 Official Text,
except that following the effectiveness, in Massachusetts, of
the revision of Article 9 of the Uniform Commercial Code
contemplated by UCC9'99 (with such nonuniform variations as
may be adopted as part of the enactment of that revision),
each reference to "UCC9'99" shall be to the UCC.
"Unanimous Consent": Consent of Lenders (other than Delinquent
Revolving Credit Lenders) holding 100% of the Loan Commitments
(other than Loan Commitments held by a Delinquent Revolving
Credit Lender).
"Unused Line Fee": Is defined in Section 2:2-15.
ARTICLE 2: - THE REVOLVING CREDIT:
2-1 . ESTABLISHMENT OF REVOLVING CREDIT
(a) The Revolving Credit Lenders hereby establish a revolving
line of credit (the "Revolving Credit") in the Borrowers' favor pursuant to
which each Revolving Credit Lender, subject to, and in accordance with, this
Agreement, acting through the Administrative Agent, shall make loans and
advances and otherwise provide financial accommodations to and for the account
of the Borrowers as provided herein.
(b) Loans, advances, and financial accommodations under the
Revolving Credit shall be made with reference to the Borrowing Base and shall be
subject to Availability. The Borrowing Base and Availability shall be determined
by the Administrative Agent by reference to Borrowing Base Certificates
furnished as provided in Section 6:6-4, below, and shall be subject to the
following:
(i) Such determination shall take into account the
Loan to Collateral Reserve
Page: 34
and such other Reserves as the Administrative Agent may determine as
being applicable thereto.
(ii) The Retail of Eligible Inventory will be
calculated in a manner consistent with current tracking practices,
based on stock ledger inventory at Retail and (to the extent not
reflected in the stock ledger) JBI Apparel catalogue and Work N' Gear
inventory shall be determined at Retail as tracked on such non stock
ledger inventory systems of a Borrower which are deemed adequate for
such purpose by the Administrative Agent.
(c) The commitment of each Revolving Credit Lender to provide
such loans, advances, and financial accommodations is subject to
Section 2:2-24.
(d) The proceeds of borrowings under the Revolving Credit
shall be used solely in accordance with the Business Plan for the
Borrowers' working capital needs, Capital Expenditures, and to effect
Permitted Redemptions, all solely to the extent permitted by this
Agreement. No proceeds of a borrowing under the Revolving Credit may be
used, nor shall any be requested, with a view towards the accumulation
of any general fund or funded reserve of the Borrowers other than in
the ordinary course of the Borrowers' business and consistent with the
provisions of this Agreement.
2-2. ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).
(a) No Revolving Credit Lender has any obligation to make any
loan or advance, or otherwise to provide any credit to or for the
benefit of the Borrowers where the result of such loan, advance, or
credit is an OverLoan.
(b) The Revolving Credit Lenders' obligations, among
themselves, are subject to Section 13:13-3(a) (which relates to each
Revolving Credit Lender's making amounts available to the
Administrative Agent) and to Section 16:16-3(a) (which relates to
Protective OverAdvances).
(c) The Revolving Credit Lenders' providing of an OverLoan on
any one occasion does not affect the obligations of each Borrower
hereunder (including each Borrower's obligation to immediately repay
any amount which otherwise constitutes an OverLoan) nor obligate the
Revolving Credit Lenders to do so on any other occasion.
2-3. INITIAL RESERVES. CHANGES TO RESERVES.
(a) At the execution of the amendment and restatement of this
Agreement, the only Reserves are as follows:
(i) Those in effect, immediately prior to such
amendment and restatement.
(ii) The Loan to Collateral Reserve.
(b) The Administrative Agent shall provide not less than seven
(7) days prior notice to the Borrowers' Representative of the
establishment of any Reserve (other than those established at the
execution of this Agreement) except that the following may be
undertaken without such prior notice:
Page: 35
(i) a change to the amount of a then existing Reserve
(as distinguished from a change by which such Reserve is measured or
determined), which change reflects changed circumstances (e.g. the
amount of the Reserve for Customer Credit Liability will change based
on the aggregate of Customer Credit Liability at any one time); and
(ii) the creation of, or a change to an existing
Reserve on account of circumstances which the Administrative Agent
determines as having a material adverse change on the maintenance of
loan to collateral values.
2-4. RISKS OF VALUE OF COLLATERAL. The Administrative Agent's reference
to a given asset in connection with the making of loans, credits, and advances
and the providing of financial accommodations under the Revolving Credit and/or
the monitoring of compliance with the provisions hereof shall not be deemed a
determination by the Administrative Agent or any Revolving Credit Lender
relative to the actual value of the asset in question. All risks concerning the
value of the Collateral are and remain upon the Borrowers. All Collateral
secures the prompt, punctual, and faithful performance of the Liabilities
whether or not relied upon by the Administrative Agent in connection with the
making of loans, credits, and advances and the providing of financial
accommodations under the Revolving Credit.
2-5. COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF
CREDIT.
Subject to the provisions of this Agreement, the Lenders shall make a
loan or advance under the Revolving Credit and the Administrative Agent shall
cause L/C's to be issued for the account of the Borrowers' Representative, in
each instance if duly and timely requested by the Borrowers' Representative as
provided herein provided that: (a) No OverLoan is then outstanding and none will
result therefrom. (b) No Borrower is then InDefault and none will thereby become
InDefault.
2-6. REVOLVING CREDIT LOAN REQUESTS.
(a) Requests for loans and advances under the Revolving Credit
or for the continuance or conversion of an interest rate applicable to a
Revolving Credit Loan may be requested by the Borrowers' Representative in such
manner as may from time to time be reasonably acceptable to the Administrative
Agent.
(b) Subject to the provisions of this Agreement, the
Borrowers' Representative may request a Revolving Credit Loan and elect an
interest rate and Interest Period to be applicable to that Revolving Credit Loan
by giving notice to the Administrative Agent by no later than the following:
(i) If such Revolving Credit Loan is to be or is to
be converted to a Base Margin Loan: By 1:00PM on the Business Day on
which the subject Revolving Credit Loan is to be made or is to be so
converted. Base Margin Loans requested by the Borrowers'
Representative,
Page: 36
other than those resulting from the conversion of a Libor Loan, shall
not be less than $10,000.00.
(ii) If such Revolving Credit Loan is to be, or is to
be continued as, or converted to, a Libor Loan: By 1:00PM Three (3)
Libor Business Days before the commencement of any new Interest Period
or the end of the then applicable Interest Period. Libor Loans and
conversions to Libor Loans shall each be not less than $1,000,000.00
and in increments of $100,000.00 in excess of such minimum.
(iii) Any Libor Loan which matures while any Borrower
is InDefault shall be converted, at the option of the Administrative
Agent, to a Base Margin Loan notwithstanding any notice from the
Borrowers' Representative that such Loan is to be continued as a Libor
Loan.
(c) Any request for a Revolving Credit Loan or for the
continuance or conversion of an interest rate applicable to a Revolving Credit
Loan which is made after the applicable deadline therefor, as set forth above,
shall be deemed to have been made at the opening of business on the then next
Business Day or Libor Business Day, as applicable. Each request for a Revolving
Credit Loan or for the conversion of a Revolving Credit Loan shall be made in
such manner as may from time to time be acceptable to the Administrative Agent.
(d) The Borrowers' Representative may request that the
Administrative Agent cause the issuance by the Issuer of L/C's for the account
of a Borrower as provided in Section 2:2-19.
(e) The Administrative Agent may rely on any request for a
loan or advance, or other financial accommodation under the Revolving Credit
which the Administrative Agent, in good faith, believes to have been made by a
Person duly authorized to act on behalf of the Borrowers' Representative and may
decline to make any such requested loan or advance, or issuance, or to provide
any such financial accommodation pending the Administrative Agent's being
furnished with such documentation concerning that Person's authority to act as
reasonably may be satisfactory to the Administrative Agent.
(f) A request by the Borrowers' Representative for loan or
advance, or other financial accommodation under the Revolving Credit shall be
irrevocable and shall constitute certification by each Borrower that as of the
date of such request, each of the following is true and correct:
(i) There has been no material adverse change in the
Borrowers' financial condition (taken as a whole) from the most recent
financial information furnished Administrative Agent or any Lender
pursuant to this Agreement.
(ii) Each representation, not relating to a specific
date, which is made herein or in any of the Loan Documents is then true
and correct in all material respects as of and as if made on the date
of such request (except (A) to the extent of changes resulting from
transactions contemplated or permitted by this Agreement or the other
Loan Documents and changes occurring in the ordinary course of business
which singly or in the aggregate are not materially adverse and (B) to
the extent that such representations and warranties expressly relate to
a then earlier date).
Page: 37
(iii) Unless accompanied by the Certificate of the
Borrowers' Representative's Chief Executive Officer, President, or
Chief Financial Officer describing (in reasonable detail) the facts and
circumstances thereof and the steps (if any) being taken to remedy such
condition, no Borrower is InDefault.
(g) If, at any time or from time to time, any Borrower is
InDefault:
(i) The Administrative Agent may suspend the
Revolving Credit immediately, in which event, neither the Administrative Agent
nor any Revolving Credit Lender shall be obligated, during such suspension, to
make any loans or advance, or to provide any financial accommodation hereunder
or to seek the issuance of any L/C.
(ii) The Administrative Agent may suspend the right
of the Borrowers' Representative to request any Libor Loan or to
convert any Base Margin Loan to a Libor Loan.
2-7 MAKING OF REVOLVING CREDIT LOANS.
(a) A loan or advance under the Revolving Credit shall be made
by the transfer of the proceeds of such loan or advance to the Operating Account
or as otherwise instructed by the Borrowers' Representative.
(b) A loan or advance shall be deemed to have been made under
the Revolving Credit (and the Borrowers shall be indebted to the Administrative
Agent and the Revolving Credit Lenders for the amount thereof immediately) at
the following:
(i) The Administrative Agent's initiation of the
transfer of the proceeds of such loan or advance in accordance with the
Borrowers' Representative's instructions (if such loan or advance is of
funds requested by the Borrowers' Representative).
(ii) The charging of the amount of such loan to the
Loan Account (in all other circumstances).
(c) There shall not be any recourse to or liability of any
Agent or any Lender on account of:
(i) Any delay, beyond the reasonable control of the
Agents and the Revolving Credit Lenders, in the making of any loan or
advance requested under the Revolving Credit.
(ii) Any delay, beyond the reasonable control of the
Agents and the Revolving Credit Lenders, by any bank or other
depository institution in treating the proceeds of any such loan or
advance as collected funds.
(iii) Any delay in the receipt, and/or any loss, of
funds which constitute a loan or advance under the Revolving Credit,
the wire transfer of which was properly initiated by the Administrative
Agent in accordance with wire instructions provided to the
Administrative Agent by the Borrowers' Representative.
Page: 38
2-8. SWINGLINE LOANS.
(a) For ease of administration, Base Margin Loans may be made
by the SwingLine Lender (in the aggregate, the "SwingLine Loans") in accordance
with the procedures set forth in this Agreement for the making of loans and
advances under the Revolving Credit. The unpaid principal balance of the
SwingLine Loans shall not at any one time be in excess of the SwingLine Loan
Ceiling.
(b) The aggregate unpaid principal balance of SwingLine Loans
shall bear interest at the rate applicable to Base Margin Loans and shall be
repayable as a loan under the Revolving Credit.
(c) The Borrowers' obligation to repay SwingLine Loans shall
be evidenced by a Note in the form of EXHIBIT 2:2-8(c), annexed hereto, executed
by the Borrowers, and payable to the SwingLine Lender. Neither the original nor
a copy of that Note shall be required, however, to establish or prove any
Liability. Upon the Borrowers' Representative's being provided with an affidavit
from the Administrative Agent to the effect that said Note has been lost,
mutilated, or destroyed, the Borrowers shall execute a replacement thereof and
deliver such replacement to the SwingLine Lender.
(d) For all purposes of this Loan Agreement, the SwingLine
Loans and the Borrowers' obligations to the SwingLine Lender constitute
Revolving Credit Loans and are secured as "Liabilities".
(e) SwingLine Loans may be subject to periodic settlement with
the Revolving Credit Lenders as provided in this Agreement.
2-9. THE LOAN ACCOUNT.
(a) An account ("Loan Account") shall be opened on the books
of the Administrative Agent in which a record shall be kept of all loans and
advances made under the Revolving Credit.
(b) The Administrative Agent shall also keep a record (either
in the Loan Account or elsewhere, as the Administrative Agent may from time to
time elect) of all interest, fees, service charges, costs, expenses, and other
debits owed to the Administrative Agent and each Revolving Credit Lender on
account of the Liabilities and of all credits against such amounts so owed.
(c) All credits against the Liabilities shall be conditional
upon final payment to the Administrative Agent for the account of each Lender of
the items giving rise to such credits. The amount of any item credited against
the Liabilities which is charged back against the Administrative Agent or any
Revolving Credit Lender for any reason or is not so paid shall be a Liability
and shall be added to the Loan Account, whether or not the item so charged back
or not so paid is returned.
(d) Except as otherwise provided herein, all fees, service
charges, costs, and expenses for which any Borrower is obligated hereunder are
payable on demand. In the determination of Availability, the Administrative
Agent may deem fees, service charges, accrued interest, and other payments which
will be due and payable between the date of such determination and the first day
of the then next succeeding month as having been advanced under the Revolving
Credit whether or not such
Page: 39
amounts are then due and payable.
(e) The Administrative Agent, without the request of the
Borrowers' Representative, may advance under the Revolving Credit any interest,
fee, service charge, or other payment to which any Agent or any Revolving Credit
Lender is entitled from any Borrower pursuant hereto and may charge the same to
the Loan Account notwithstanding that an OverLoan may result thereby. Such
action on the part of the Administrative Agent shall not constitute a waiver of
the Administrative Agent's rights and
each Borrower's obligations under Section 2:2-11(b). Any amount which is added
to the principal balance of the Loan Account as provided in this Section
2:2-9(e) shall bear interest at the interest rate then and thereafter applicable
to Base Margin Loans.
(f) In the absence of manifest error, a statement rendered by
the Administrative Agent or any Revolving Credit Lender to the Borrowers'
Representative concerning the Liabilities shall be considered correct and
accepted by each Borrower and shall be conclusively binding upon each Borrower
unless the Borrowers' Representative provides the Administrative Agent with
written objection thereto within thirty (30) days from the mailing of such
statement, which written objection shall indicate, with particularity, the
reason for such objection. In the absence of manifest error, the Loan Account
and the Administrative Agent's books and records concerning the loan arrangement
contemplated herein and the Liabilities shall be prima facie evidence and proof
of the items described therein.
2-10. THE REVOLVING CREDIT NOTES. The Borrowers' obligation to repay
loans and advances under the Revolving Credit, with interest as provided herein,
shall be evidenced by Notes (each, a "Revolving Credit Note") in the form of
EXHIBIT 2:2-10, annexed hereto, executed by each Borrower, one payable to each
Revolving Credit Lender. Neither the original nor a copy of any Revolving Credit
Note shall be required, however, to establish or prove any Liability. Upon the
Borrowers' Representative's being provided with an affidavit, from the
Administrative Agent to the effect that any Revolving Credit Note has been lost,
mutilated, or destroyed, the Borrowers shall execute a replacement thereof and
deliver such replacement to the Administrative Agent.
2-11. PAYMENT OF THE LOAN ACCOUNT.
(a) The Borrowers may repay all or any portion of the
principal balance of the Loan Account from time to time until the Termination
Date. Unless the Borrowers' Representative otherwise advises the Administrative
Agent, such payments shall be applied first to Base Margin Loans and only then
to Libor Loans.
(b) The Borrowers, without notice or demand from the
Administrative Agent or any Revolving Credit Lender, shall pay the
Administrative Agent that amount, from time to time, which is necessary so that
there is no OverLoan outstanding.
Page: 40
(c) The Borrowers shall repay the then entire unpaid balance
of the Loan Account and all other Liabilities on the Termination Date.
(d) The Administrative Agent shall endeavor to cause the
application of payments (if any), pursuant to Sections 2:2-11(a) and 2:2-11(b)
against Libor Loans then outstanding in such manner as results in the least cost
to the Borrowers, but shall not have any affirmative obligation to do so nor
liability on account of the Administrative Agent's failure to have done so. In
no event shall action or inaction taken by the Administrative Agent excuse any
Borrower from any indemnification obligation under Section 2:2-11(e).
(e) The Borrowers shall indemnify the Administrative Agent and
each Revolving Credit Lender and hold the Administrative Agent and each
Revolving Credit Lender harmless from and against any loss, cost or expense
(including loss of anticipated profits and amounts payable by the Administrative
Agent or such Revolving Credit Lender on account of "breakage fees" (so-called))
which the Administrative Agent or such Revolving Credit Lender may sustain or
incur (including, without limitation, by virtue of acceleration after the
occurrence of any Event of Default) as a consequence of the following:
(i) Default by any Borrower in payment of the
principal amount of or any interest on any Libor Loan as and when due
and payable, including any such loss or expense arising from interest
or fees payable by such Revolving Credit Lender in order to maintain
its Libor Loans.
(ii) Default by any Borrower in making a borrowing or
conversion after the Borrowers' Representative has given (or is deemed
to have given) a request for a Revolving Credit Loan or a request to
convert a Revolving Credit Loan from one applicable interest rate to
another.
(iii) The making of any payment on a Libor Loan or
the making of any conversion of any such Loan to a Base Margin Loan on
a day that is not the last day of the applicable Interest Period with
respect thereto.
2-12. INTEREST ON REVOLVING CREDIT LOANS.
(a) Each Revolving Credit Loan shall bear interest at the Base
Margin Rate unless timely notice is given (as provided in Section 2:2-6) that
the subject Revolving Credit Loan (or a portion thereof) is, or is to be
converted to, a Libor Loan.
(b) Each Revolving Credit Loan which consists of a Libor
Loan shall bear interest at the applicable Libor Rate.
(c) Commencing with the Pricing Grid Commencing Date, the Base
Margin and the Libor Margin shall be determined according to the Pricing Grid
annexed hereto as EXHIBIT 2:2-12, and shall be reset as of the first day of each
of the Borrowers' Representative's Fiscal quarters thereafter,
Page: 41
except that the Libor Rate applicable to any Revolving Credit Loan shall remain
in effect with respect to that Revolving Credit Loan notwithstanding any change
in the Libor Margin which takes place subsequent to the making of that Revolving
Credit Loan, that is to say Libor contracts in effect at the time of
increases/decreases in margin will remain at the margin originally utilized when
the contract was opened for the balance of the applicable Interest Period. (d)
Subject to, and in accordance with, the provisions of this Agreement, the
Borrowers' Representative may cause all or a part of the unpaid principal
balance of the Loan Account to bear interest at the Base Margin Rate or the
Libor Rate as specified from time to time by notice to the Administrative Agent.
For ease of reference and administration, each part of the Loan Account which
bears interest at the same interest and for the same Interest Period is referred
to herein as if it were a separate "Revolving Credit Loan".
(e) The Borrowers' Representative shall not select, renew, or
convert any interest rate for a Revolving Credit Loan such that, in addition to
interest at the Base Margin Rate, there are more than Eight (8) Libor Rates
applicable to the Revolving Credit Loans at any one time.
(f) The Borrowers shall pay accrued and unpaid interest on
each Revolving Credit Loan in arrears as follows:
(i) On the applicable Interest Payment Date for
that Revolving Credit Loan.
(ii) On the Termination Date and on the End Date.
(iii) Following the occurrence of any Event of
Default, with such frequency
as may be determined by the Administrative Agent.
(g) Following the occurrence of any Event of Default (and
whether or not the Administrative Agent exercises the Administrative Agent's
rights on account thereof), all Revolving Credit Loans shall bear interest, at
the option of the Administrative Agent or at the instruction of the
SuperMajority Lenders at rate which is the aggregate of the rate applicable to
Base Margin Loans plus Two Percent (2%) per annum.
2-13. REVOLVING CREDIT COMMITMENT FEE. In consideration of the
commitment to make loans and advances to the Borrowers under the Revolving
Credit, and to maintain sufficient funds available for such purpose, there has
been earned by FRFI and the Borrowers shall pay the "Revolving Credit Commitment
Fee" (so referred to herein) to the Administrative Agent in the amount and
payable as provided in the Fee Letter.
2-14. ADMINISTRATIVE AGENT'S FEE. In addition to any other fee or
expense to be paid by the Borrowers on account of the Revolving Credit, the
Borrowers shall pay the Administrative Agent the " Administrative Agent's Fee"
at the times and in the amounts as set forth the Fee Letter.
Page: 42
2-15. UNUSED LINE FEE. In addition to any other fee to be paid by the
Borrowers on account of the Revolving Credit, the Borrowers shall pay the
Administrative Agent the "Unused Line Fee" (so referred to herein) of 0.375% per
annum of the average difference, during the quarter just ended (or relevant
period with respect to the payment being made on the Termination Date) between
the Revolving Credit Ceiling and the aggregate of the unpaid principal balance
of the Loan Account and the
undrawn Stated Amount of L/C's outstanding during the relevant period. The
Unused Line Fee shall be paid in arrears, on the first day of each quarter after
the Restatement Date and on the Termination Date.
2-16. EARLY TERMINATION FEE.
(a) In the event that the Termination Date occurs, for any
reason, prior to July 31, 2002, then except as provided in Section 2:2-16(b),
the Borrowers shall pay the Administrative Agent, for the Pro-Rata account of
the Revolving Credit Lenders, the "Revolving Credit Early Termination Fee" (so
referred to herein) consisting of one percent (1.0%) of the Revolving Credit
Ceiling.
(b) No Revolving Credit Early Termination Fee shall be due and
payable in the event of the early termination of the Revolving Credit in
connection with a refinancing of the Revolving Credit agented or provided by
FRFI or any affiliate of FRFI, it being understood that neither FRFI nor any
affiliate of FRFI has agreed to provide any such refinancing.
2-17. CONCERNING FEES. Except as provided in Section 2:2-16(b) , the
Borrower shall not be entitled to any credit, rebate or repayment of any fee
previously earned by any Agent or any Lender pursuant to this Agreement
notwithstanding any termination of this Agreement or suspension or termination
of the Administrative Agent's and any Lender's respective obligation to make
loans and advances hereunder.
2-18. AGENTS' AND LENDERS' DISCRETION.
(a) Each reference in the Loan Documents to the exercise of
discretion, reasonable discretion, or the like by any Agent or any Lender shall
be to such Person's reasonable exercise of its judgment, in good faith (which
shall be presumed), based upon such Person's consideration of any such factors
as that Agent or that Lender, taking into account information of which that
Person then has actual knowledge, reasonably believes:
(i) Will or reasonably could be expected to affect,
in more than a de minimis manner, the value of the Collateral, the
enforceability of the Collateral Agent's Collateral Interests therein,
or the amount which the Collateral Agent would likely realize therefrom
(taking into account delays which may possibly be encountered in the
Collateral Agent's realizing upon the Collateral and likely Costs of
Collection).
(ii) Indicates that any report or financial
information delivered to any Agent or
Page: 43
any Lender by or on behalf of any Borrower is incomplete, inaccurate,
or misleading in any material manner or was not prepared in accordance
with the requirements of this Agreement.
(iii) That any Borrower is InDefault.
(b) In the exercise of such judgement, each Agent or each
Lender reasonably also
may take into account any of the following factors:
(i) Those included in, or tested by, the
definitions of "Eligible Accounts,"
"Eligible Inventory" and "Cost".
(ii) Material changes in or to the mix of the
Borrowers' Inventory.
(iii) Seasonality with respect to the Borrowers'
Inventory and patterns of retail sales.
(c) The burden of establishing the failure of any Agent or any
Revolving Credit Lender to have acted in a reasonable manner in such Person's
exercise of such discretion shall be the Borrowers'.
2-20. PROCEDURES FOR ISSUANCE OF L/C'S.
(a) The Borrowers' Representative may request that the
Administrative Agent cause the issuance by the Issuer of L/C's for the account
of a Borrower. Each such request shall be in such manner as may from time to
time be reasonably +acceptable to the Administrative Agent.
(b) The Administrative Agent will endeavor to cause the
issuance of any L/C so requested by the Borrowers' Representative, provided that
, at the time that the request is made, the Revolving Credit has not been
suspended as provided in Section 2:2-6(g) and if so issued:
(i) The aggregate Stated Amount of all L/C's then
outstanding, does not exceed Thirty Million Dollars and No Cents
($30,000,000.00).
(ii) The expiry of the L/C is not later than the
following:
(A) Standby's: One (1) year from
initial issuance.
(B) Documentary's: One Hundred Eighty
(180) days from issuance.
(iii) If the expiry of an L/C is later than the
Maturity Date, it is 103% cash collateralized at its issuance.
(iv) An OverLoan will not result from the issuance of
the subject L/C.
(c) Unless otherwise agreed between the Borrowers'
Representative and the Administrative Agent, the Issuer of all L/C's shall be
Fleet National Bank and any successor to Fleet National Bank.
(d) Each Borrower shall execute such documentation to apply
for and support the issuance of an L/C as may be required by the Issuer.
(e) There shall not be any recourse to, nor liability of, any
Agent or any Revolving Credit Lender on account of
Page: 44
(i) Any delay or refusal by an Issuer to issue an
L/C;
(ii) Any action or inaction of an Issuer on account
of or in respect to, any L/C except where there is a specific finding
in a judicial proceeding (in which the Administrative Agent has had an
opportunity to be heard), from which finding no further appeal is
available, that the subject action or omission to act had been in
actual bad faith or grossly negligent or constituted willful
misconduct.
(f) The Borrowers shall reimburse the Issuer for the amount of
any honoring of a drawing under an L/C on the same day on which such honoring
takes place. The Administrative Agent, without the request of any Borrower, may
advance under the Revolving Credit (and charge to the Loan Account) the amount
of any honoring of any L/C and other amount for which any Borrower, the Issuer,
or the Revolving Credit Lenders become obligated on account of, or in respect
to, any L/C. Such advance shall be made whether or not any Borrower is InDefault
or such advance would result in an OverLoan. Such action shall not constitute a
waiver of the Administrative Agent's rights under Section 2:2-11(b) hereof.
2-21. FEES FOR L/C'S.
(a) The Borrowers shall pay to the Administrative Agent a fee,
on account of L/C's, the issuance of which had been procured by the
Administrative Agent, quarterly in arrears, and on the Termination Date and on
the End Date, equal to 1.75% per annum of the weighted average Stated Amount of
all L/C's outstanding during the period in respect of which such fee is being
paid except that, following the occurrence of any Event of Default (and whether
or not the Administrative Agent exercises the Administrative Agent's rights on
account thereof), the above fee, at the option of the Administrative Agent or
the direction of the SuperMajority Lenders shall be 3.75% per annum.
(b) In addition to the fee to be paid as provided in
Subsection 2:2-20(a), above, the Borrowers shall pay to the Administrative Agent
(or to the Issuer, if so requested by Administrative Agent), on demand, all
customary issuance, processing, negotiation, amendment, and administrative fees
and other amounts charged by the Issuer on account of, or in respect to, any
L/C.
(c) If any change in Applicable Law shall either:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirements against letters of credit
heretofore or hereafter issued by any Issuer or with respect to which
any Revolving Credit Lender or any Issuer has an obligation to lend to
fund drawings under any L/C; or
(ii) impose on any Issuer any other condition or
requirements relating to any such letters of credit;
and the result of any event referred to in Section 2:2-20(c)(i) or
2:2-20(c)(ii), above, shall be to increase the cost to any Revolving Credit
Lender or to any Issuer of issuing or maintaining any L/C (which increase
Page: 45
in cost shall be the result of such Issuer's reasonable allocation among that
Revolving Credit Lender's or Issuer's letter of credit customers of the
aggregate of such cost increases resulting from such events), then, upon demand
by the Administrative Agent and delivery by the Administrative Agent to the
Borrowers' Representative of a certificate of an officer of the subject
Revolving Credit Lender orthe subject Issuer describing such change in law,
executive order, regulation, directive, or interpretation thereof, its effect on
such Revolving Credit Lender or such Issuer, and the basis for determining such
increased costs and their allocation, the Borrowers shall immediately pay to the
Administrative Agent, from time to time as specified by the Administrative
Agent, such amounts as shall be sufficient to compensate the subject Revolving
Credit Lender or the subject Issuer for such increased cost. In the absence of
manifest error, any Revolving Credit Lender's or any Issuer's determination of
costs incurred under Section 2:2-20(c)(i) or 2:2-20(c)(ii), above, and the
allocation, if any, of such costs among the Borrowers and other letter of credit
customers of such Revolving Credit Lender or such Issuer, if done in good faith
and made on an equitable basis and in accordance with such officer's
certificate, shall be conclusive and binding on the Borrowers.
2-21. CONCERNING L/C'S.
(a) None of the Issuer, the Issuer's correspondents, any
Revolving Credit Lender, any Agent, or any advising, negotiating, or paying bank
with respect to any L/C shall be responsible in any way for:
(i) The performance by any beneficiary under any L/C
of that beneficiary's obligations to any Borrower.
(ii) The form, sufficiency, correctness, genuineness,
authority of any person signing; falsification; or the legal effect of;
any documents called for under any L/C if (with respect to the
foregoing) such documents on their face appear to be in order.
(b) The Issuer may honor, as complying with the terms of any
L/C and of any drawing thereunder, any drafts or other documents otherwise in
order, but signed or issued by an administrator, executor, conservator, trustee
in bankruptcy, debtor in possession, assignee for the benefit of creditors,
liquidator, receiver, or other legal representative of the party authorized
under such L/C to draw or issue such drafts or other documents.
(c) The Borrower may instruct the Issuer concerning the
designation of any advising bank, paying bank, and negotiating bank, it being
understood that the Issuer shall honor such designation to the extent then
practicable.
(d) All directions, correspondence, and funds transfers
relating to any L/C are at the risk of the Borrowers. The Issuer shall have
discharged the Issuer's obligations under any L/C which, or the drawing under
which, includes payment instructions, by the initiation of the method of payment
called for in, and in accordance with, such instructions (or by any other
commercially reasonable and comparable method). No Agent, any Revolving Credit
Lender, or the Issuer shall have any responsibility
Page: 46
for any inaccuracy, interruption, error, or delay in transmission or delivery by
post, telegraph or cable, or for any inaccuracy of translation.
(e) Each Agent's, each Revolving Credit Lender's Lender's and
the Issuer's rights, powers, privileges and immunities specified in or arising
under this Agreement are in addition to any heretofore or at any time hereafter
otherwise created or arising, whether by statute or rule of law or contract.
(f) Except to the extent otherwise expressly provided
hereunder or agreed to in writing by the Issuer and the Borrowers'
Representative, documentary L/C's will be governed by the Uniform Customs and
Practice for Documentary Credits, International Chamber of Commerce, Publication
No. 500, and standby L/C's will be governed by International Standby Practices
ISP98 (adopted by the International Chamber of Commerce on April 6, 1998) and
any respective subsequent revisions thereof.
(g) The obligations of the Borrowers under this Agreement with
respect to L/C's are absolute, unconditional, and irrevocable and shall be
performed strictly in accordance with the terms hereof under all circumstances,
whatsoever including, without limitation, the following:
(i) Any lack of validity or enforceability or
restriction, restraint, or stay in the enforcement of this Agreement,
any L/C, or any other agreement or instrument relating thereto.
(ii) Any Borrower's consent to any amendment or
waiver of, or consent to the departure from, any L/C.
(iii) The existence of any claim, set-off, defense,
or other right which any Borrower may have at any time against the
beneficiary of any L/C.
(iv) Any good faith honoring of a drawing under any
L/C, which drawing possibly could have been dishonored based upon a
strict construction of the terms of the L/C.
(h) Each Issuer shall be deemed to have agreed as
follows:
(i) That any action taken or omitted by that Issuer,
that Issuer's correspondents, or any advising, negotiating or paying bank with
respect to any L/C and the related drafts and documents, shall be done in good
faith and in compliance with foreign or domestic laws.
(ii) That the Borrowers shall not be required to
indemnify the Issuer, the Issuer's correspondents, or any advising, negotiating
or paying bank with respect to any L/C for any claims, damages, losses,
liabilities, costs or expenses to the extent, caused by (x) the willful
misconduct or gross negligence of the Issuer, the Issuer's correspondents, or
any advising, negotiating or paying bank with respect to any L/C in determining
whether a request presented under any Letter of Credit complied with the terms
of such Letter of Credit or (y) the Issuer's failure to pay under any Letter of
Credit after the presentation to it of a request strictly complying with the
terms and conditions of such Letter of Credit.
Page: 47
2-22. CHANGED CIRCUMSTANCES.
(a) The Administrative Agent may advise the Borrowers'
Representative (in reasonable detail as to the facts and circumstances thereof)
that the Administrative Agent has made the good faith determination (which
determination, in the absence of manifest error, shall be final and conclusive)
of any of the following:
(i) Adequate and fair means do not exist for
ascertaining the rate for Libor Loans.
(ii) The continuation of or conversion of any
Revolving Credit Loan to a Libor Loan has been made impracticable or
unlawful by the occurrence of a contingency that materially and
adversely affects the applicable market or the compliance by the
Administrative Agent or any Revolving Credit Lender in good faith with
any Applicable Law.
(iii) The indices on which the interest rates for
Libor Loans are based shall no longer represent the effective cost to
the Administrative Agent or any Revolving Credit Lender for U.S. dollar
deposits in the interbank market for deposits in which it regularly
participates.
(b) In the event that the Administrative Agent advises the
Borrowers' Representative of an occurrence described in Section 2:2-22(a), then,
until the Administrative Agent notifies the Borrowers' Representative that the
circumstances giving rise to such notice no longer apply:
(i) The obligation of the Agent or each Revolving
Credit Lender to make loans of the type affected by such changed
circumstances or to permit the Borrowers' Representative to select the
affected interest rate as otherwise applicable to any Revolving Credit
Loans shall be suspended.
(ii) Any notice which the Borrowers' Representative
had given the Administrative Agent with respect to any Libor Loan, the
time for action with respect to which has not occurred prior to the
Administrative Agent's having given notice pursuant to Section 2:2-
22(a), shall be deemed at the option of the Administrative Agent to not
having been given.
2-23. DESIGNATION OF BORROWERS' REPRESENTATIVE AS BORROWERS' AGENT.
(a) Each Borrower hereby irrevocably designates and appoints
the Borrowers' Representative as that Borrower's agent to obtain loans and
advances under the Revolving Credit, the proceeds of which shall be available to
each Borrower for those uses as those set forth in Section 2:2- 1(d). As the
disclosed principal for its agent, each Borrower shall be obligated to the Agent
and each Revolving Credit Lender on account of loans and advances so made under
the Revolving Credit as if made directly by the Revolving Credit Lenders to that
Borrower, notwithstanding the manner by which such loans and advances are
recorded on the books and records of the Borrowers' Representative and of any
Borrower.
(b) Each Borrower recognizes that credit available to it under
the Revolving Credit is in excess of and on better terms than it otherwise could
obtain on and for its own account and that one of
Page: 48
the reasons therefor is its joining in the credit facility contemplated
herein with all other Borrowers. Consequently, each Borrower hereby assumes and
agrees to discharge all Liabilities of each of the other Borrowers as if the
Borrower which is so assuming and agreeing were each of the other Borrowers.
(c) The Borrowers' Representative shall act as a conduit for
each Borrower (including itself, as a "Borrower") on whose behalf the Borrowers'
Representative has requested a Revolving Credit Loan.
(d) The proceeds of each loan and advance provided under the
Revolving Credit which is requested by the Borrowers' Representative shall be
deposited into the Operating Account or as otherwise indicated by the Borrowers'
Representative. The Borrowers' Representative shall cause the transfer of the
proceeds thereof to the (those) Borrower(s) on whose behalf such loan and
advance was obtained. Neither the Agent nor any Revolving Credit Lender shall
have any obligation to see to the application of such proceeds.
2-24. LENDERS' COMMITMENTS
(a) Subject to Section 17:17-1 (which provides for assignments
and assumptions of commitments), each Revolving Credit Lender's "Revolving
Credit Percentage Commitment", and "Revolving Credit Dollar Commitment"
(respectively so referred to herein) is set forth on EXHIBIT 2:2- 24, annexed
hereto.
(b) The obligations of each Revolving Credit Lender are
several and not joint. No Revolving Credit Lender shall have any obligation to
make any loan or advance under the Revolving Credit in excess of either of the
following:
(i) That Revolving Credit Lender's Revolving Credit
Percentage Commitment of the subject loan or advance or of
Availability.
(ii) that Revolving Credit Lender's Revolving Credit
Dollar Commitment.
(c) No Revolving Credit Lender shall have any liability to the
Borrowers on account of the failure of any other Revolving Credit Lender to
provide any loan or advance under the Revolving Credit nor any obligation to
make up any shortfall which may be created by such failure.
(d) The Revolving Credit Dollar Commitments, Revolving Credit
Commitment Percentages, and identities of the Revolving Credit Lenders (but not
the Revolving Credit Ceiling) may be changed, from time to time by the
reallocation or assignment of Revolving Credit Dollar Commitments and Revolving
Credit Commitment Percentages amongst the Revolving Credit Lenders or with other
Persons who determine to become "Revolving Credit Lenders".
(e). Upon written notice given the Borrowers' Representative
from time to time by the Administrative Agent, of any assignment or allocation
referenced in Section 2:2-24(d):
(i) Each Borrower shall execute one or more
replacement Revolving Credit
Page: 49
Notes to reflect such changed Revolving Credit Dollar Commitments,
Revolving Credit Commitment Percentages, and identities and shall
deliver such replacement Revolving Credit Notes to the Administrative
Agent (which promptly thereafter shall deliver to the Borrowers'
Representative the Revolving Credit Notes so replaced) provided
however, in the event that a Revolving Credit Note is to be exchanged
following its acceleration or the entry of an order for relief under
the Bankruptcy Code with respect to any Borrower, the Administrative
Agent, in lieu of causing the Borrowers to execute one or more new
Revolving Credit Notes, may issue the Administrative Agent's
Certificate confirming the resulting Revolving Credit Dollar
Commitments and Revolving Credit Percentage Commitments.
(ii) Such change shall be effective from the
effective date specified in such written notice and any Person added as
a Revolving Credit Lender shall have all rights, privileges, and
obligations of a Revolving Credit Lender hereunder thereafter as if
such Person had been a signatory to this Agreement and any other Loan
Document to which a Revolving Credit Lender is a signatory and any
Person removed as a Revolving Credit Lender shall be relieved of any
obligations or responsibilities of a Revolving Credit Lender hereunder
thereafter.
ARTICLE 3: - THE TERM LOAN:
3-1. THE TERM LOAN.
(a) Following their satisfaction of the conditions precedent
included in the 1999 Loan Agreement, the Borrowers borrowed Twenty Five Million
Dollars ($25,000,000.00) from the Term Lender as provided therein.
(b) Following the satisfaction of the Conditions Precedent to
this Amendment and Restatement (Article 4:), the Borrowers shall cause the
prepayment (without premium or penalty) of Five Million Dollars ($5,000,000.00)
following which the then remaining principal balance of the Term Loan (Twenty
Million Dollars ($20,000,000.00) shall be repayable with interest as provided
herein and shall be referred to herein as the "Term Loan".
(c) No proceeds of the Term Loan may be used, nor shall any be
requested, with a view towards the accumulation of any general fund or funded
reserve of the Borrowers other than in the ordinary course of the Borrowers'
business and consistent with the provisions of this Agreement
3-2. THE TERM NOTE. The obligation to repay the Term Loan, with
interest as provided herein, shall be evidenced by a Note (the "Term Note") in
the form of EXHIBIT 3:3-2, annexed hereto, executed by the Borrowers. Neither
the original nor a copy of the Term shall be required, however, to establish or
prove any Liability. Upon the Borrowers' Representative's being provided with an
affidavit, from the Administrative Agent to the effect that said Note has been
lost, mutilated, or destroyed, the Borrowers
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shall execute a replacement thereof and deliver such replacement to the Term
Lender.
3-3. PAYMENT OF PRINCIPAL OF THE TERM LOAN.
(a) Except as provided in Section 3:3-3(b), the Borrowers
may not repay all or any portion of the principal balance of the Term Loan prior
to the repayment in full of all Liabilities under the Revolving Credit and the
termination of any obligation, under the Revolving Credit, of the Administrative
Agent and of any Revolving Credit Lender to make any loans or to provide any
financial accommodations pursuant to this Agreement.
(b) The Borrowers may prepay the Term Loan if the
requirements of Section 3:3- 3(b)(i) or 3:3-3(b)(ii) have been satisfied.
(i) Prepayment of the Term Loan with proceeds of
a Permitted Term Loan Refinancing.
(ii) Satisfaction of each of the following
conditions:
(A) All of the Bonds have been redeemed
in full.
(B) Excess Availability on each of the
thirty days immediately prior to
the date of such prepayment is
equal to or greater than $25
Million.
(C) The Administrative Agent has been
provided with a forecast by the
Borrowers' Representative which
reflects that Excess Availability
of the Revolving Credit through the
Maturity Date will at all times be
equal to or greater than $15
Million.
(c) The Borrowers shall pay the Administrative Agent, for
the account of the Term Lender, the "Term Loan Early Termination Fee" (so
referred to herein) equal to the following percentage of the amount so prepaid
except that no Term Loan Early Termination Fee shall be due and payable in the
event of a prepayment in connection with a refinancing of the Term Loan agented
or provided by BBC, it being understood that BBC has not agreed to provide or to
entertain a request to provide any such refinancing.
(i) 2%: Prepayment on or before January 31, 2002
(ii) 1% Prepayment after January 31, 2002 and on
or before January 31, 2003.
(d) The Borrowers shall repay the then entire unpaid
balance of the Term Loan and all accrued and unpaid interest thereon on the
Termination Date.
3-4 INTEREST ON THE TERM LOAN.
(a) Subject to Sections 3:3-4(c) and 3:3-4(c) the unpaid
principal balance of the Term Loan shall bear interest, until repaid at the
following fixed rates (the "Term Loan Interest Rate"):
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(i) Until December 15, 2002: 17.0%
(ii) From and After December 15, 2002: 16.5%
(b) Interest on the Term Loan, at the Term Loan Interest
Rate, shall be payable as follows:
(i) Accrued interest on the unpaid principal
balance of the Term Loan equal to 13.75% per annum ("Current Pay
Interest") shall be payable monthly in arrears, on the first Business
Day of each month (the "Term Loan Interest Payment Date"), and on the
Maturity Date.
(ii) Subject to Section 3:3-4(b)(ii)(C), accrued
interest on the unpaid principal balance of the Term Loan in excess of
Current Pay Interest (which excess is referred to herein as "PIK
Interest") shall be payable as follows:
(A) The Borrowers shall have the option,
exercisable by irrevocable written notice by the Borrowers'
Representative to the Administrative Agent made at least three
(3) Business Days prior to relevant Term Loan Interest Payment
Date, to pay all or any part of such PIK Interest by adding
the same to the principal balance of the Term Note on that
Term Loan Interest Payment Date.
(B) PIK Interest as to which the option
provided in Section 3:3- 4(b)(ii)(A) is not exercised shall be
paid on the then next Term Loan Interest Payment Date.
(C) At the direction of the Term Lender,
following the occurrence of any Event of Default (and whether
or not Acceleration has taken place), the option provided in
Section 3:3-4(b)(ii)(A) shall terminate and accrued interest
to which such option otherwise could have been exercised shall
be paid on each Term Loan Interest Payment Date.
(c) Following the occurrence of any Event of Default (and
whether or not Acceleration has taken place), at the direction of the Term
Lender, interest shall accrue and shall be payable on the unpaid principal
balance of the Term Loan at the aggregate of the Term Loan Interest Rate plus
two percent (2%) per annum.
3-5. TERM LOAN COMMITMENT FEE. As compensation for the Term
Lender's having committed to make this amendment and restatement of the Term
Loan, the Term Lender has earned the Term Loan Commitment Fee in the amount and
payable as provided in the Fee Letter.
3-6. PAYMENTS ON ACCOUNT OF TERM LOAN. The Borrowers authorize the
Administrative Agent to determine and to pay over directly to the Term Loan
Lender any and all amounts due and payable from time to time under or on account
of the Term Loan as advances under the Revolving Credit
Page: 52
it being understood, however, that the authorization of the Administrative Agent
provided in this Section 3:3-6 shall not excuse the Borrowers from fulfilling
their obligations to the Term Lender on account of the Term Loan nor place any
obligation on the Administrative Agent to do so. The Administrative Agent shall
provide prompt advice to the Borrowers' Representative of any amount which is so
paid over by the Administrative Agent to the Term Lender pursuant to this
Section 3:3-6. The Term Lender shall refund to the Administrative Agent any
overpayment which may have been pursuant to this Section 3:3-6.
ARTICLE 4: - CONDITIONS PRECEDENT:
As a condition to the effectiveness of the amendment and restatement of
this Agreement, each of the documents respectively described in Sections 4:4-1
through and including 4:4-5, (each in form and substance satisfactory to the
Administrative Agent) shall have been delivered to the Administrative Agent, and
the conditions respectively described in Sections 4:4-6 through and including
4:4-10, shall have been satisfied:
4-1. CORPORATE DUE DILIGENCE.
(a) Certificates of corporate good standing for each Borrower,
respectively issued by the Secretary of State for the state in which that
Borrower is incorporated.
(b) Certificates of each Borrower's Clerk of the due adoption,
continued effectiveness, and setting forth the texts of, each corporate
resolution adopted in connection with the establishment of the loan arrangement
contemplated by the Loan Documents and attesting to the true signatures of each
Person authorized as a signatory to any of the Loan Documents.
4-2. OPINION. An opinion of counsel to the Borrowers in form and
substance satisfactory to the Administrative Agent.
4-3. ADDITIONAL DOCUMENTS. Such additional instruments and
documents as the Administrative Agent or its counsel reasonably may require or
request.
4-4. CONSUMMATION OF SHOE DIVISION SALE. The consummation of the
Shoe Division Sale as reasonably determined by the Administrative Agent.
4-5. OFFICERS' CERTIFICATES. Certificates executed by the President
and the Chief Financial Officer of the Borrowers' Representative and stating
that the representations and warranties made by the Borrowers to the Agents and
the Lenders in the Loan Documents are true and complete in all material respects
as of the date of such Certificate, and that no event has occurred which is or
which, solely with the giving of notice or passage of time (or both) would be an
Event of Default.
Page: 53
4-6. REPRESENTATIONS AND WARRANTIES. Each of the representations made
by or on behalf of each Borrower in this Agreement or in any of the other Loan
Documents or in any other report, statement, document, or paper provided by or
on behalf of each Borrower shall be true and complete in all material respects
as of the date as of which such representation or warranty was made.
4-7. MINIMUM DAY ONE EXCESS AVAILABILITY. After giving effect to the
first funding under the Revolving Credit as amended and restatement hereby,
Excess Availability shall not be less than $18,000,000.00.
4-8. ALL FEES AND EXPENSES PAID. All fees due at or immediately after
the first funding under the Revolving Credit as amended and restated hereby and
all costs and expenses incurred by the Administrative Agent, the Collateral
Agent, and the Term Lender in connection with the establishment of the credit
facility contemplated hereby (including the reasonable fees and expenses of
counsel to the Administrative Agent, the Collateral Agent, and the Term Lender)
shall have been paid in full.
4-9. NO BORROWER INDEFAULT. No Borrower is InDefault.
4-10. NO ADVERSE CHANGE. No event shall have occurred or failed to
occur, which occurrence or failure is or could have a materially adverse effect
upon any Borrower's financial condition when compared with such financial
condition at November 30, 2000.
4-11. BENEFIT OF CONDITIONS PRECEDENT. The conditions set forth in
this Article 4: are for the sole benefit of each Agent and each Lender and may
be waived by the Administrative Agent in whole or in part without prejudice to
any Agent or any Lender.
No document shall be deemed delivered to the Administrative Agent, the
Collateral Agent, the Term Lender or any Revolving Credit Lender until received
and accepted by the Administrative Agent at its offices in Boston,
Massachusetts. Under no circumstances shall this Agreement take effect until
executed and accepted by the Administrative Agent at said offices.
ARTICLE 5: - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:
To induce each Lender to establish the credit facilities contemplated
herein and to induce the Revolving Credit Lenders to provide loans and advances
under the Revolving Credit (each of which loans shall be deemed to have been
made in reliance thereupon) and to induce the Term Lender to amend the Term Loan
as contemplated hereby, the Borrowers, in addition to all other representations,
warranties,
Page: 54
and covenants made by any Borrower in any other Loan Document, make those
representations, warranties, and covenants included in this Agreement.
5-1. PAYMENT AND PERFORMANCE OF LIABILITIES. The Borrowers shall
pay each payment Liability when due (or when demanded, if payable on demand) and
shall promptly, punctually, and faithfully perform each other Liability.
5-2. DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS.
(a) Each Borrower presently is and hereafter shall remain in
good standing as a corporation under the laws of the State in which it is
organized, as set forth in the Preamble to this Agreement and is and shall
hereafter remain duly qualified and in good standing in every other State in
which, by reason of the nature or location of each Borrower's assets or
operation of each Borrower's business, such qualification may be necessary,
except where the failure to so qualify would not have a material adverse effect
on the business or assets of that Borrowers. The Borrowers' Representative shall
provide the Administrative Agent with Certificates of such qualification from
the Secretaries of State of each State in which each Borrower is so qualified.
(b) Each Borrower's respective organizational identification
number assigned to it by the State of its incorporation and its respective
federal employer identification number is stated on EXHIBIT 5:5-2, annexed
hereto.
(c) No Borrower shall change its State of organization; any
organizational identification number assigned to that Borrower by that State; or
that Borrower's federal taxpayer identification number on less than sixty (60)
days prior written notice (in reasonable detail) to the Administrative Agent.
(d) Each Affiliate is listed on EXHIBIT 5:5-2. The
Borrowers' Representative shall provide the Administrative Agent with prior
written notice of any entity's becoming or ceasing to be an Affiliate.
(e) Each Borrower has all requisite power and authority to
execute and deliver all Loan Documents to which that Borrower is a party and has
and will hereafter retain all requisite power to perform all Liabilities.
(f) The execution and delivery by each Borrower of each
Loan Document to which it is a party; each Borrower's consummation of the
transactions contemplated by such Loan Documents (including, without limitation,
the creation of Collateral Interests by that Borrower to secure the
Liabilities); each Borrower's performance under those of the Loan Documents to
which it is a party; the borrowings hereunder; and the use of the proceeds
thereof:
(i) Have been duly authorized by all necessary action.
(ii) Do not, and will not, contravene in any material
respect any provision of
Page: 55
any Requirement of Law or obligation of that Borrower, where such
contravention would have a material adverse effect on that Borrower.
(iii) Will not result in the creation or imposition
of, or the obligation to create or impose, any Encumbrance upon any
assets of that Borrower pursuant to any Requirement of Law or
obligation, except pursuant to or as permitted by the Loan Documents.
(g) The Loan Documents have been duly executed and
delivered by each Borrower and are the legal, valid and binding obligations of
each Borrower, enforceable against each Borrower in accordance with their
respective terms , except as such enforceability may be subject to limitations
on the rights and remedies of secured creditors generally imposed under
bankruptcy or insolvency law and that the availability of equitable relief is
subject to the discretion of the court from which such relief is sought.
5-3. TRADE NAMES.
(a) EXHIBIT 5:5-3, annexed hereto, is a listing of:
(i) All names under which any Borrower conducted its
business since June 1, 1998.
(ii) All Persons with whom any Borrower, since June 1,
1998, consolidated or merged, or from whom any Borrower, since June 1,
1998, acquired in a single transaction or in a series of related
transactions substantially all of such Person's assets.
(b) The Borrowers' Representative will provide the
Administrative Agent with not less than twenty-one (21) days prior written
notice (with reasonable particularity) of any change to any Borrower's name from
that under which that Borrower is conducting its business at the execution of
this Agreement and will not effect such change unless each Borrower is then in
compliance with all provisions of this Agreement.
5-4. INFRASTRUCTURE.
(a) Each Borrower has and will maintain a sufficient
infrastructure to conduct its business as presently conducted and as
contemplated to be conducted following its execution of this Agreement.
(b) Each Borrower owns and possesses, or has the right to
use (and will hereafter own, possess, or have such right to use) all patents,
industrial designs, trademarks, trade names, trade styles, brand names, service
marks, logos, copyrights, trade secrets, know-how, confidential information, and
other intellectual or proprietary property of any third Person necessary for
that Borrower's conduct of that Borrower's business except where the failure to
own, possess, or have such right or use will not have more than a de minimis
adverse effect on any Borrower.
(c) The conduct by each Borrower of that Borrower's
business does not presently infringe (nor will any Borrower conduct its business
in the future so as to infringe) the patents, industrial designs, trademarks,
trade names, trade styles, brand names, service marks, logos, copyrights, trade
Page: 56
secrets, know-how, confidential information, or other intellectual or
proprietary property of any third Person except where such infringement will not
have no more than a de minimis adverse effect on that Borrower.
5-5. LOCATIONS.
(a) The Collateral, and the books, records, and papers of
Borrowers' pertaining thereto, are kept and maintained solely at the following
locations:
(i) The Borrowers' Representative's chief
executive offices which are at 555 Turnpike Street, Canton,
Massachusetts 02021.
(ii) Those locations which are listed on EXHIBIT
5:5-5, annexed hereto, which EXHIBIT includes, with respect to each
such location, the name and address of the landlord on the Lease which
covers such location (or an indication that a Borrower owns the subject
location) and of all service bureaus with which any such records are
maintained and the names and addresses of each of the Borrowers'
landlords.
(b) No Borrower shall remove any of the Collateral from
said chief executive office or those locations listed on EXHIBIT 5:5-5 except
for the following purposes:
(i) To accomplish sales of Inventory in the
ordinary course of business.
(ii) To move Inventory from one such location to
another such location.
(iii) To utilize such of the Collateral as is
removed from such locations in the ordinary course of business (such as
motor vehicles).
(iv) Open any Store as permitted by Section 5:5-
6(a) (which relates to additional Stores, in general) or by Section
5:5-6(b) (which relates to a limited number of Stores to be opened and
operated in Canada).
(c) Except where caused by a force majeure, no Borrower
shall cease the conduct of business at any of its present or future Stores for
more than fifteen (15) consecutive days without first furnishing the
Administrative Agent with not less than thirty (30) days prior written notice
thereof.
5-6. STORES.
(a) Each Borrower may commit to or become legally
obligated to open additional Stores in the United States, provided that, with
respect to each additional Store, each of the following conditions has been or
is then satisfied:
(i) That Borrower is in compliance with Section
5:5-25 of this Agreement (which Section 5:5-25 provides, among other
things, that Borrower shall not be the owner of, nor have any
interest in, any property or asset which is not, immediately upon such
acquisition, subject to a perfected security interest in favor of the
Lender, subject only to Permitted Encumbrances) and shall have executed
such additional financing statements, on account of the subject new
location, as may then be required by the Collateral Agent.
Page: 57
(ii) No Borrower is InDefault and no Borrower will
become InDefault by reason of the Borrower's so becoming
obligated.
(b) Each Borrower may commit to or become legally
obligated to open additional Stores in Canada, provided that, with respect to
each additional Store, each of the following conditions has been or is then
satisfied:
(i) The aggregate Retail of Inventory located at
such stores, at any one time, does not exceed $1.6 Million.
(ii) On the request of the Collateral Agent, the
relevant Borrowers shall cooperate with the Collateral Agent in
creating a prior perfected security interest or hypothec, as
applicable, in favor of the Collateral Agent in such Inventory and its
proceeds to secure the Liabilities pursuant to such documentation as is
reasonably satisfactory to the Collateral Agent.
(c) At the Borrowers' Representative's request, the
Administrative Agent shall amend Section 5:5-6(a) so as to include Stores
located in Canada and shall delete Section 5:5-6(b), provided that
(i) The Administrative Agent has received a Host
Store Consent from each Host Store (if any) at which more than five
percent (5%) of any Borrower's Inventory (at Retail) is located in
Canada).
(ii) The relevant Borrowers shall have created a
prior perfected security interest or hypothec, as applicable, in favor
of the Collateral Agent in such Inventory and its proceeds to secure
the Liabilities pursuant to such documentation as is reasonably
satisfactory to the Collateral Agent.
(iii) The Agents shall have received such
additional documentation as is reasonably satisfactory to the Agents
and shall be reasonably satisfied with the structure of the
arrangements between the Agents on the one hand and the relevant
Borrowers on the other.
(iv) No Borrower is then InDefault and none will
be InDefault following the consummation of the actions contemplated by
this Section 5:5-6(c).
(v) The Administrative Agent may undertake the
foregoing pursuant to this Section 5:5-6(c) on its own authority and
without obtaining the Consent of the Majority Lenders.
(vi) The Administrative Agent may condition its
proceeding pursuant to this Section 5:5-6(c) on the Consent of the
Majority Lenders.
(d) Except for assets of the Borrowers which are
maintained at Host Stores, no tangible personal property of any Borrower (beyond
a de minimus amount of such property) is in the care or custody of any third
party or stored or entrusted with a bailee or other third party.
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5-7. TITLE TO ASSETS.
(a) The Borrowers are, and shall hereafter remain, the
owners of the Collateral free and clear of all Encumbrances with the exception
of Permitted Encumbrances.
(b) Except as disclosed on EXHIBIT 5:5-7(b), annexed
hereto, the Borrowers do not have possession of any property on consignment to
the Borrowers and will not have possession of property on consignment hereafter
except on not less than fifteen (15) days prior written notice (with reasonable
particularity) from the Borrowers' Representative, which property on such
consignment shall not have a cost at any one time exceeding three percent (3%)
of the Borrowers' Inventory at Retail.
(c) No Borrower shall acquire or obtain the right to use
any Equipment, the acquisition or right to use of which Equipment is otherwise
permitted by this Agreement, in which Equipment any third party has an interest,
except for:
(i) Equipment which is merely incidental to the
conduct of that Borrower's business; or
(ii) Equipment, the acquisition or right to use of
which has been consented to by the Administrative Agent, which consent
may be conditioned solely upon the Administrative Agent's receipt of an
agreement, substantially in the form of EXHIBIT 5:5-7(c)(ii), annexed
hereto with the third party which has an interest in such Equipment.
Agent.
(d) Except as disclosed on EXHIBIT 5:5-7(d), no Affiliate
(other than J. Baker) which is not a Borrower has, nor will any acquire, any
assets other than of nominal value.
(e) J. Baker does not have any assets which, in
accordance with GAAP, would be required to be reflected on its balance sheet
other than the capital stock which it holds as of the date of this Agreement.
5-8. INDEBTEDNESS.
(a) The Borrowers do not and shall not hereafter have
any Indebtedness other than Permitted Indebtedness.
(b) The Borrowers shall not permit more than twenty five
percent of the aggregate of their indebtedness for the purchase of goods or
services to be more than Thirty (30) days beyond then current trade terms
provided to the subject Borrower by the supplier of such goods.
5-9. INSURANCE.
(a) EXHIBIT 5:5-9, annexed hereto, is a schedule of all
insurance policies owned by the Borrowers or under which any Borrower is the
named insured. Each of such policies is in full force and effect. Neither the
issuer of any such policy nor any Borrower is in default or violation of any
such policy.
(b) The Borrowers shall have and maintain at all times
insurance covering such risks,
Page: 59
in such amounts, containing such terms, in such form, for such periods, and
written by such companies as may be satisfactory to the Administrative Agent.
(c) All insurance carried by the Borrowers shall provide
for a minimum of Thirty (30) days' prior written notice of cancellation to the
Administrative Agent and all such insurance which covers the Collateral shall
include an endorsement in favor of the Administrative Agent, which endorsement
shall provide that the insurance, to the extent of the Administrative Agent's
interest therein, shall not be impaired or invalidated, in whole or in part, by
reason of any act or neglect of any Borrower or by the failure of any Borrower
to comply with any warranty or condition of the policy.
(d) The coverage reflected on EXHIBIT 5:5-9 presently
satisfies the foregoing requirements, it being recognized by each Borrower,
however, that such requirements may change hereafter to reflect changing
circumstances.
(e) The Borrowers' Representative shall furnish the
Administrative Agent from time to time with certificates or other evidence
satisfactory to the Administrative Agent regarding compliance by the Borrowers
with the foregoing requirements.
(f) In the event of the failure by the Borrowers to
maintain insurance as required herein, the Administrative Agent, at its option,
may obtain such insurance, provided, however, the Administrative Agent's
obtaining of such insurance shall not constitute a cure or waiver of any Event
of Default occasioned by the Borrowers' failure to have maintained such
insurance.
5-10. LICENSES. Each license, distributorship, franchise, and
similar agreement issued to, or to which any Borrower is a party is in full
force and effect , except where the failure thereof to be in full force and
effect does not have a material adverse effect on the Borrowers. No party to any
such license or agreement is in default or violation thereof. No Borrower has
received any notice or threat of cancellation of any such license or agreement.
5-11. LEASES. EXHIBIT 5:5-11, annexed hereto, is a schedule of
all presently effective Capital Leases. (Exhibit 5:5-5 includes a list of all
other presently effective Leases). Each of such Leases and Capital Leases is in
full force and effect. No party to any such Lease or Capital Lease is in default
or violation of any such Lease or Capital Lease. No Borrower has received any
notice or threat of cancellation of any such Lease or Capital Lease. Each
Borrower hereby authorizes the Administrative Agent at any time and from time to
time, with the consent of the Borrowers' Representative and at any time
following the occurrence of an Event of Default to contact any of the Borrowers'
respective landlords in order to confirm the Borrowers' continued compliance
with the terms and conditions of the Lease(s) between the subject Borrower and
that landlord and to discuss such issues, concerning the subject Borrower's
occupancy under such Lease(s), as the Administrative Agent may determine.
Page: 60
5-12. REQUIREMENTS OF LAW. Each Borrower is in compliance with, and
shall hereafter comply with and use its assets in compliance with, all
Requirements of Law except where the failure of such compliance will not have
more than a de minimis adverse effect on the Borrowers' business or assets. No
Borrower has received any notice of any violation of any Requirement of Law
(other than of a violation which has no more than a de minimis adverse effect on
the Borrowers' business or assets), which violation has not been cured or
otherwise remedied.
5-13. LABOR RELATIONS.
(a) Except as disclosed on EXHIBIT 5:5-13(a), annexed hereto,
no Borrower is presently a party to any collective bargaining or other labor
contract.
(b) There is not presently pending and, to any Borrower's
knowledge, there is not threatened any of the following:
(i) Any strike, slowdown, picketing, work stoppage,
or material employee grievance process.
(ii) Any proceeding against or affecting any Borrower
relating to the alleged violation of any Applicable Law pertaining to
labor relations or before National Labor Relations Board, the Equal
Employment Opportunity Commission, or any comparable governmental body,
organizational activity, or other labor or employment dispute against
or affecting any Borrower, which, if determined adversely to that
Borrower could have more than a de minimis adverse effect on that
Borrower.
(iii) Any lockout of any employees by any Borrower
(and no such action is contemplated by any Borrower).
(iv) Any application for the certification of a
collective bargaining agent.
(c) To the knowledge of the Borrowers' Representative and
each Borrower, no material event has occurred or circumstance exists which could
provide the basis for any work stoppage or other labor dispute.
(d) Each Borrower:
(i) Has complied in all material respects with all
Applicable Law relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing.
(ii) Is not liable for the payment of more than a de
minimius amount of compensation, damages, taxes, fines, penalties, or
other amounts, however designated, for that Borrower's failure to
comply with any Applicable Law referenced in Section 5:5-13(d)(i).
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5-14. MAINTAIN PROPERTIES. The Borrowers shall:
(a) Keep the Collateral in good order and repair (ordinary
reasonable wear and tear and insured casualty excepted).
(b) Not suffer or cause the waste or destruction of any
material part of the Collateral.
(c) Not use any of the Collateral in violation of any policy
of insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the
Collateral, other than the following:
(i) The sale of Inventory in compliance with this
Agreement.
(ii) The disposal of Equipment which is obsolete,
worn out, or damaged beyond repair, which Equipment is replaced to the
extent necessary to preserve or improve the operating efficiency of any
Borrower.
(iii) The turning over to the Administrative Agent
of all Receipts as provided herein.
(iv) Permitted Asset Dispositions.
(v) The Shoe Division Sale.
5-15. TAXES.
(a) The Borrowers have no knowledge of any material adverse
finding on account of any examination of or with respect to any Borrower
presently being conducted by any taxing authority.
(b) The Borrowers have, and hereafter shall: pay, as they
become due and payable, all taxes and unemployment contributions and other
charges of any kind or nature levied, assessed or claimed against any Borrower
or the Collateral by any person or entity whose claim could result in an
Encumbrance upon any asset of any Borrower or by any governmental authority;
properly exercise any trust responsibilities imposed upon any Borrower by reason
of withholding from employees' pay or by reason of any Borrower's receipt of
sales tax or other funds for the account of any third party; timely make all
contributions and other payments as may be required pursuant to any Employee
Benefit Plan now or hereafter established by any Borrower; and timely file all
tax and other returns and other reports with each governmental authority to whom
any Borrower is obligated to so file except where failure to file would not have
a material adverse effect provided however, nothing included in this Section
5:5-15(b) shall prevent the Borrowers from contesting, in good faith and by
appropriate proceedings, any tax liability claimed against any Borrower, but
only provided that and so long as no tax lien is filed with respect thereto.
(c) At its option, with prior notice to the Borrower's
Representative, the Administrative Agent may pay any tax, charge levied,
assessed, or claimed upon any Borrower or the Collateral by any person or entity
or governmental authority, and make any payments on account of any Borrower's
Employee Benefit Plan as the Administrative Agent , in the Administrative
Agent's discretion, may deem necessary or desirable, to protect the Agents'
Rights and Remedies.
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5-16. NO MARGIN STOCK. No Borrower is engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations U, T, and X of the Board of Governors of the
Federal Reserve System of the United States). No part of the proceeds of any
borrowing hereunder will be used at any time to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
5-17. ERISA. The Borrowers are and shall hereafter remain in
compliance, in all material respects, with ERISA.
5-18. HAZARDOUS MATERIALS. To the Borrowers' knowledge, none of
the real property used or operated by any Borrower contains a material amount of
Hazardous Materials.
5-19. LITIGATION. Except as described in EXHIBIT 5:5-19, annexed
hereto, there is not presently pending or to its knowledge, threatened in
writing, by or against the Borrowers any suit, action, proceeding, or
investigation which, if determined adversely to the Borrowers, would have a
material adverse effect upon the Borrowers' financial condition or ability to
conduct their business as such business is presently conducted or is
contemplated to be conducted in the foreseeable future.
5-20. DIVIDENDS. INVESTMENTS. CORPORATE ACTION.
(a) No Obligor shall
(i) Pay any cash dividend or make any other
distribution in respect of any class of their respective capital stock
except for, and subject to such conditions as apply to, the making of
Permitted Distributions.
(ii) Own, redeem, retire, purchase, or acquire
any of that Person's capital stock.
(iii) Except for (x) Permitted Investments and (y)
capital stock of Affiliates otherwise permitted by this Agreement to be
held by the subject Borrower, invest in or purchase any stock or
securities or rights to purchase any such stock or securities, of any
corporation or other entity, including without limitation, any capital
stock of J. Baker, provided, however:
(A) Any Borrower may maintain Permitted
Investments in the Side Collateral Account at any
time that there has not been an outstanding principal
balance in the Loan Account for not less than Seven
(7) consecutive days and no L/C's are then
outstanding.
(B) J. Baker and any Borrower respectively
may create a wholly owned subsidiary, provided that
(I) The Borrowers' Representative
shall have provided the
Page: 63
Administrative Agent with not less than Thirty (30)
days prior written notice of such creation (with
reasonable detail concerning the facts and
circumstances relating to such subsidiary).
(II) No Borrower is then InDefault
nor on the date on which the subsidiary is so created
and none will become InDefault by reason of such
creation.
(III) Each of the following
conditions is satisfied prior to the date on which
any asset (other than of nominal value) is
transferred to such entity:
(1) Such entity shall have
executed such documentation as the
Administrative Agent reasonably may request
in order for such entity to become (as
designated by the Borrowers' Representative)
a "Borrower" or "Guarantor" hereunder and
shall have created Collateral Interests in
all of its assets to secure the Liabilities.
(2) The holder of all
capital stock of such entity shall have
created a security interest therein to
secure the Liabilities.
(iv) Merge or consolidate or be merged or
consolidated with or into any other corporation or other entity;
provided that nothing in this Agreement shall prevent any Borrower from
merging into any other Borrower.
(v) Consolidate any of that Obligor's operations with
those of any other corporation or other entity.
(vi) Subordinate any debts or obligations owed to
that Obligor by any third party to any other debts owed by such third
party to any other Person.
(vii) Engage in any interest rate swaps, caps, or
similar activities, or any hedging activities other than in the
ordinary course and conduct of that Obligor's business, and then only
with a Lender or any affiliate of a Lender.
(b) In the event that J. Baker determines to modify its
corporate structure with a view toward its obtaining more favorable tax
treatment or for any other reasonable corporate purpose, the Agents, in
their reasonable discretion, will cooperate with J. Baker in effecting
such restructuring, it being understood that :
(i) The Agents' determination to so cooperate in such
restructuring may be conditioned on the Agents' being satisfied that
the secured position of the Collateral Agent, and the Agents' Rights
and Remedies would not be adversely affected by such restructuring and
that such restructuring does not place any material additional
administrative burdens on the Agents.
(ii) The Agents may take action pursuant to this
Section 5:5-20(b) on their own authority and without obtaining the
Consent of the Majority Lenders.
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(iii) The Agents may condition their taking of action
pursuant to this Section 5:5-20(b) on the Consent of the Majority
Lenders.
5-21. LOANS. The Borrowers shall not make any loans to, nor acquire the
Indebtedness of, any Person, provided, however, the foregoing does not prohibit
any of the following:
(a) Subject to such conditions respectively as apply thereto,
the making of Permitted Distributions and Permitted Investments.
(b) Advances to employees of a Borrower for travel and other
business expenses to be incurred by such employees in the ordinary course of the
business of one or more of the Borrowers.
(c) Cash loans to employees of a Borrower not exceeding
$100,000.00 outstanding at any time to any employee nor exceeding $1,000,000 in
the aggregate outstanding at any time.
(d) Advance payments made to the Borrowers' suppliers in the
ordinary course.
(e) Intercompany loans by any Borrower to any direct or
indirect wholly owned subsidiaries of J. Baker, which intercompany loans do not
exceed $1,000,000 in the aggregate outstanding at any time.
5-22. PROTECTION OF ASSETS. The Administrative Agent, in the
Administrative Agent's discretion, and from time to time, may discharge any tax
or Encumbrance on any of the Collateral, or take any other action which the
Administrative Agent may deem necessary or desirable to repair, insure,
maintain, preserve, collect, or realize upon any of the Collateral. The
Administrative Agent shall not have any obligation to undertake any of the
foregoing and shall have no liability on account of any action so undertaken
except where there is a specific finding in a judicial proceeding (in which the
Administrative Agent has had an opportunity to be heard), from which finding no
further appeal is available, that the Administrative Agent had acted in actual
bad faith or in a grossly negligent manner. The Borrowers shall pay to the
Administrative Agent, on demand, or the Administrative Agent, in its discretion,
may add to the Loan Account, all amounts paid or incurred by the Administrative
Agent pursuant to this section 5:5-22.
5-23. LINE OF BUSINESS.
(a) Except as provided in Sections 5:5-23(b) and 5:5-23(c), no
Borrower shall engage in any business other than the business in which it is
currently engaged or a business reasonably related thereto (the conduct of which
reasonably related business is reflected in the Business Plan).
(b) The Borrowers, with the prior written notice to the
Administrative Agent in each instance, may license the use of up to 5% of the
selling space of any Store (measured in terms of square feet) for the operation
of certain departments of their Stores by third parties.
(c) The Borrowers, with the prior written consent of the
Administrative Agent (as to which, see Section 5:5-23(c)(i)), may (x) license
the use of more than 5% of the selling space of any
Page: 65
Store (measured in terms of square feet) for the operation of certain
departments by third parties and (y) franchise to others the right to operate
comparable Stores, it being understood that:
(i) The Administrative Agent's determination to
consent to the Borrowers' activities described in Section 5:5-23(c) may
be conditioned on the Administrative Agent's being satisfied that the
secured position of the Collateral Agent, and the Agents' Rights and
Remedies would not be adversely affected by such restructuring and that
such restructuring does not place any material additional
administrative burdens on the Agents.
(ii) The Administrative Agent may provide such
consent pursuant to this Section 5:5-23(c) on its own authority and
without obtaining the Consent of the Majority Lenders.
(iii) The Administrative Agent may condition its
providing of such consent pursuant to this Section 5:5-23(c) on the
Consent of the Majority Lenders.
5-24. AFFILIATE TRANSACTIONS. No Borrower shall make any payment, nor
give any value to any Affiliate except for
(a) Goods and services actually purchased by that Borrower
from, or sold by that Borrower to, such Affiliate for a price and on terms which
shall
(i) be competitive and fully deductible as an
"ordinary and necessary business expense" and/or fully depreciable
under the Internal Revenue Code of 1986 and the Treasury Regulations,
each as amended; and
(ii) be no less favorable to that Borrower than those
which would have been charged and imposed in an arms length
transaction.
(b) Permitted Overhead Contributions.
(c) Permitted Distributions.
(d) Intercompany loans to the extent permitted by Section
5:5-21(e).
(e) Transfers of Inventory between Borrowers.
5-25. FURTHER ASSURANCES.
(a) Except as permitted by Section 5:5-6(b), no Borrower is
the owner of, nor has it any interest in, any property or asset which,
immediately upon the satisfaction of the conditions precedent to the
effectiveness of the credit facility contemplated hereby (Article 4:) will not
be subject to a perfected Collateral Interest in favor of the Collateral Agent
(subject only to Permitted Encumbrances) to secure the Liabilities.
(b) Except as otherwise permitted by this Agreement, no
Borrower will hereafter acquire any asset or any interest in property which is
not, immediately upon such acquisition, subject to such a perfected Collateral
Interest in favor of the Collateral Agent to secure the Liabilities (subject
only to Permitted Encumbrances).
Page: 66
(c) Each Borrower shall execute and deliver to the
Administrative Agent such instruments, documents, and papers, and shall do all
such things from time to time hereafter as the Administrative Agent may request
to carry into effect the provisions and intent of this Agreement; to protect and
perfect the Collateral Agent's Collateral Interests in the Collateral; and to
comply with all applicable statutes and laws, and facilitate the collection of
the Receivables Collateral. Each Borrower shall execute all such instruments as
may be required by the Administrative Agent with respect to the recordation
and/or perfection of the Collateral Interests created or contemplated herein.
(d) Each Borrower hereby designates the Collateral Agent as
and for that Borrower's true and lawful attorney, with full power of
substitution, to sign and file any financing statements in order to perfect or
protect the Collateral Agent's Collateral Interests in the Collateral.
(e) This Agreement constitutes an authenticated record which
authorizes the Collateral Agent to file such financing statements as the
Collateral Agent determines as appropriate to perfect or protect the Agent's
Collateral Interests created hereby.
(f) A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument executed pursuant to
this Section 5:5-25 shall be sufficient for filing to perfect the security
interests granted herein.
5-26. ADEQUACY OF DISCLOSURE.
(a) All financial statements furnished to each Agent and each
Lender by each Borrower have been prepared in accordance with GAAP consistently
applied and present fairly the condition of the Borrowers at the date(s) thereof
and the results of operations and cash flows for the period(s) covered (provided
however, that unaudited financial statements are subject to normal year end
adjustments and to the absence of footnotes). There has been no change in the
Consolidated financial condition, results of operations, or cash flows of the
Borrowers since the date(s) of such financial statements, other than changes in
the ordinary course of business, which changes have not been materially adverse,
either singularly or in the aggregate other than the Shoe Division Sale.
(b) No Borrower has any contingent obligations or obligation
under any Lease or Capital Lease which is not noted in the Borrowers'
Consolidated financial statements furnished to each Agent and each Lender prior
to the execution of this Agreement.
(c) No document, instrument, agreement, or paper now or
hereafter given to any Agent and any Lender by or on behalf of each Borrower or
any guarantor of the Liabilities in connection with the execution of this
Agreement by each Agent and each Lender (except for any projections provided by
or on behalf of any Borrower) contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements therein not misleading. With the exception of general
market and economic conditions, there is no fact known to any officer of any
Borrower, as of the Restatement Date which has, or which, in the foreseeable
future could have, a
Page: 67
material adverse effect on the financial condition of any Borrower which
has not been disclosed in writing to each Agent and each Lender.
5-27. NO RESTRICTIONS ON LIABILITIES. No Borrower shall enter into or
directly or indirectly become subject to any agreement which prohibits or
restricts, in any manner, any Borrower's:
(a) Creation of, and granting of Collateral Interests in
favor of the Collateral Agent.
(b) Incurrence of Liabilities.
5-28. OTHER COVENANTS. No Borrower shall indirectly do or cause to be
done any act which, if done directly by that Borrower, would breach any covenant
contained in this Agreement.
ARTICLE 6: FINANCIAL REPORTING AND PERFORMANCE COVENANTS:
6-1. MAINTAIN RECORDS. The Borrowers shall:
(a) At all times, keep proper books of account, in which full,
true, and accurate entries shall be made of all of the Borrowers' financial
transactions, all in accordance with GAAP applied consistently with prior
periods to fairly reflect the Consolidated financial condition of the Borrowers
at the close of, and its results of operations for, the periods in question.
(b) Timely provide the Administrative Agent with those
financial reports, statements, and schedules required by this Article 6: or
otherwise, each of which reports, statements and schedules shall be prepared, to
the extent applicable, in accordance with GAAP applied consistently with prior
periods to fairly reflect the Consolidated financial condition of the Borrowers
at the close of, and the results of operations for, the period(s) covered
therein.
(c) At all times, keep accurate current records of the
Collateral including, without limitation, accurate current stock, cost, and
sales records of its Inventory, accurately and sufficiently itemizing and
describing the kinds, types, and quantities of Inventory and the cost and
selling prices thereof.
(d) At all times, retain independent certified public
accountants who are reasonably satisfactory to the Administrative Agent and
instruct such accountants to fully cooperate with, and be available to, the
Administrative Agent to discuss the Borrowers' financial performance, financial
condition, operating results, controls, and such other matters, within the scope
of the retention of such accountants, as may be raised by the Administrative
Agent. Unless an Event of Default has occurred (in which event the following
limit shall not be applicable), the Administrative Agent shall not exercise its
rights under this Section 6:6-1(d) more than three times in a 12 month period.
Page: 68
(e) Not change any Borrower's fiscal year.
6-2. ACCESS TO RECORDS.
(a) Each Borrower shall accord the Administrative Agent with
reasonable access on reasonable notice during customary business hours from time
to time as the Administrative Agent reasonably may require to all properties
owned by or over which any Borrower has control. The Administrative Agent shall
have the right during customary business hours on reasonable notice, and each
Borrower will permit the Administrative Agent from time to time as
Administrative Agent reasonably may request, to examine, inspect, copy, and make
extracts from any and all of the Borrowers' books, records, electronically
stored data, papers, and files. Each Borrower shall make all of that Borrower's
copying facilities available to the Administrative Agent.
(b) Each Borrower hereby authorizes the Administrative Agent
during customary business hours on reasonable notice to:
(i) Inspect, copy, duplicate, review, cause to be
reduced to hard copy, run off, draw off, and otherwise use any and all
computer or electronically stored information or data which relates to
any Borrower, or any service bureau, contractor, accountant, or other
person, and directs any such service bureau, contractor, accountant, or
other person fully to cooperate with the Administrative Agent with
respect thereto.
(ii) Verify at any time the Collateral or any portion
thereof, including verification with Account Debtors, and/or with each
Borrower's computer billing companies, collection agencies, and
accountants and to sign the name of each Borrower on any notice to each
Borrower's Account Debtors or verification of the Collateral.
(c) The Administrative Agent from time to time may designate
one or more representatives to exercise the Administrative Agent's rights under
this Section 6:6-2 as fully as if the Administrative Agent were doing so.
6-3. PROMPT NOTICE TO ADMINISTRATIVE AGENT.
(a) The Borrowers' Representative shall provide the
Administrative Agent with written notice promptly upon its becoming aware of the
occurrence of any of the following events, which written notice shall be with
reasonable particularity as to the facts and circumstances in respect of which
such notice is being given:
(i) Any material adverse change in the business
affairs of any Borrower.
(ii) Any change in the executive officers of J.
Baker.
(iii) Any ceasing of the Borrowers' making of
payment, in the ordinary course, to a material number of its creditors
or except where there is a bona fide dispute with the relevant
creditor, a creditor to which a material amount is owed.
Page: 69
(iv) Except where the same has arisen out of a bona
fide dispute, any failure by the Borrowers to pay rent when due at 10%
or more of the Borrowers' stores, which failure continues for more than
Five (5) Business Days following the day on which such rent first came
due.
(v) Any Borrower's becoming InDefault.
(vi) Any intention on the part of a Borrower to
discharge that Borrower's present independent accountants or any
withdrawal or resignation by such independent accountants from their
acting in such capacity (as to which, see Subsection 6:6-1(d)).
(vii) Any litigation which, if determined adversely
to a Borrower, would have a material adverse effect on the financial
condition of that Borrower.
(b) The Borrowers' Representative shall:
(i) Add the Administrative Agent as an addressee on
all mailing lists maintained by or for any Borrower.
(ii) At the request of the Administrative Agent
provide the Administrative Agent with a copy of the results of any
physical or cycle count of a Borrower's Inventory.
(iii) Provide the Administrative Agent , when
received by any Borrower, with a copy of any management letter or
similar communications from any accountant of that Borrower.
(iv) Provide the Administrative Agent with copies of
all filings, by J. Baker, with the Securities and Exchange Commission,
when so filed by J. Baker.
6-4. BORROWING BASE CERTIFICATE. The Borrowers' Representative shall
provide the Administrative Agent by 1:00 p.m., daily, with a Borrowing Base
Certificate (in the form of EXHIBIT 6:6-4 annexed hereto, as such form may be
revised from time to time by the Administrative Agent). Such Certificate may be
sent to the Administrative Agent by facsimile transmission, provided that the
original thereof is forwarded to the Administrative Agent on the date of such
transmission.
6-5. WEEKLY AND MONTHLY REPORTS. The Borrowers' Representative shall
provide the Administrative Agent with those financial statements and reports
described in EXHIBIT 6:6-5, annexed hereto.
6-6. QUARTERLY REPORTS. Quarterly, within Forty Five (45) days
following the end of each of the Borrowers' fiscal quarters, the Borrowers'
Representative shall provide the Administrative Agent with the following:
(a) An original counterpart of a management prepared
Consolidated financial statement of the Borrowers for the period from the
beginning of the Borrowers' then current fiscal year
Page: 70
through the end of the subject quarter, with comparative information for the
same period of the previous fiscal year, which statement shall include, at a
minimum, a balance sheet, income statement, cash flows and a schedule of
consolidation, as well as a comparison of same store sales and operating results
for the corresponding quarter of the then immediately previous year and to the
year-to-date period and to the Business Plan.
(b) The officer's compliance certificate described in Section 6:6-8.
6-7. ANNUAL REPORTS.
(a) Annually, within ninety (90) days following the end of the
Borrowers' fiscal year, the Borrowers' Representative shall furnish the
Administrative Agent with the following:
(b) An original signed counterpart of the J. Baker's annual
consolidated financial statement (with consolidating schedules), which statement
shall have been prepared by, and bearing the unqualified opinion of, the
Borrowers' independent certified public accountants (i.e. said statement shall
be "certified" by such accountants). Such annual statement shall include, at a
minimum (with comparative information for the then prior fiscal year) a balance
sheet, income statement, statement of changes in shareholders' equity, and cash
flows.
(c) The following Consolidated financial statements for the
Borrowers for the prior fiscal year (each prepared by the Borrowers' independent
accountants): Balance sheet, income statement, statement of changes in
stockholders' equity and cash flow.
(d) A certificate of the Borrowers' independent accountant
which states that in connection with their preparation of such annual financial
statements, such accountants did not note or encounter any fact or circumstance
which would lead them to believe that an Event of Default has occurred by reason
of a breach of any financial covenant included in Section 6:6-11.
6-8. OFFICERS' CERTIFICATES. The Borrowers' Representative shall cause
the Borrowers' Representative's Chief Executive Officer, its President or its
Chief Financial Officer, in each instance, to provide such Person's Certificate
with those monthly, quarterly, and annual statements to be furnished pursuant to
this Agreement, which Certificate shall:
(a) Indicate that the subject statement was prepared in
accordance with GAAP consistently applied and presents fairly the Consolidated
financial condition of the Borrowers at the close of, and the results of the
Borrowers' operations and cash flows for, the period(s) covered, subject,
however to the following:
(i) Usual year end adjustments (this exception shall
not be included in the Certificate which accompanies such annual
statement).
(ii) Material Accounting Changes (in which event,
such Certificate shall
Page: 71
include a schedule (in reasonable detail) of the effect of each such
Material Accounting Change) not previously specifically taken into
account in the determination of the financial performance covenant
imposed pursuant to Section 6:6-11.
(b) Indicate either that (i) no Borrower is InDefault, or (ii)
if such an event has occurred, its nature (in reasonable detail) and the steps
(if any) being taken or contemplated by the Borrowers to be taken on account
thereof.
(c) Include calculations concerning the Borrowers' compliance
(or failure to comply) at the date of the subject statement with each of the
financial performance covenants included in Section 6:6-11 hereof.
6-9. INVENTORIES, APPRAISALS, AND AUDITS.
(a) The Administrative Agent may observe each inventory and
any cycle count of the Collateral which is undertaken on behalf of any Borrower.
No Borrower may change the methodology to be followed in connection with the
conduct of and reporting on the results of such inventory from the methodology
in effect on August 1, 1999. The Borrowers shall conduct not less than one
physical inventory, per Store and per warehouse, per fiscal year. The
Administrative Agent does not contemplate undertaking or requiring any
additional physical inventories by or of the Borrowers, provided, however, the
Administrative Agent may do so if any Borrower becomes InDefault.
(i) On the Administrative Agent's request, the
Borrowers' Representative shall provide the Administrative Agent with a
copy of the preliminary results of each such inventory (as well as of
any other physical inventory undertaken by any Borrower) within ten
(10) days following the completion of such inventory.
(ii) On the Administrative Agent's request, the
Borrowers' Representative shall provide the Administrative Agent with a
reconciliation of the results of each such inventory (as well as of any
other physical inventory undertaken by any Borrower) to that Borrower's
books and records within thirty (30) days following the completion of
such inventory.
(iii) The Administrative Agent, in its discretion, if
any Borrower becomes InDefault, may cause such additional inventories
to be taken as the Administrative Agent determines (each, at the
expense of the Borrowers)
(b) The Administrative Agent contemplates conducting Four (4)
commercial finance audits (in each event, at the Borrowers' expense) of the
Borrowers' books and records during any Twelve (12) month period during which
this Agreement is in effect, but following the occurrence of an Event of
Default, may cause additional such audits to be undertaken (in each event, at
the Borrowers' expense).
(c) The Administrative Agent contemplates obtaining of Three
(3) appraisals (in all events, at the Borrowers' expense) of the Borrowers'
Inventory during any Twelve (12) month period during which this Agreement is in
effect, each conducted by such appraisers as are satisfactory to the
Page: 72
Administrative Agent , but following the occurrence of an Event of Default, may
cause additional such audits to be undertaken (in each event, at the Borrowers'
expense).
6-10. ADDITIONAL FINANCIAL INFORMATION.
(a) In addition to all other information required to be
provided pursuant to this Article 6:, the Borrowers' Representative promptly
shall provide the Administrative Agent (and any guarantor of the Liabilities),
with such other and additional information concerning the Borrowers, the
Collateral, the operation of the Borrowers' business, and the Borrowers'
financial condition, including original counterparts of financial reports and
statements, as the Administrative Agent reasonably may from time to time request
from the Borrowers' Representative.
(b) The Borrowers' Representative may provide the
Administrative Agent, from time to time hereafter, with updated forecasts of the
Borrowers' anticipated performance and operating results.
(c) In all events, the Borrowers' Representative, by no later
than 30 days after the end of the Borrowers' fiscal year, shall furnish the
Administrative Agent with an updated and extended forecast (which shall include,
on a monthly basis, balance sheets, income statements, and cash flow, as well as
of all components of each borrowing base) which shall go out at least through
the end of the then next fiscal year. Such updated and extended forecast shall
be prepared pursuant to a methodology and shall include such assumptions as are
reasonably satisfactory to the Administrative Agent, it being understood that
such forecasts are estimates and not guarantees of actual results.
(d) Each Borrower recognizes that all appraisals, inventories,
analysis, financial information, and other materials which the Administrative
Agent may obtain, develop, or receive with respect to the Borrowers are
confidential to the Administrative Agent and that, except as otherwise provided
herein, no Borrower is entitled to receipt of any of such appraisals,
inventories, analysis, financial information, and other materials, nor copies or
extracts thereof or therefrom.
6-11. FINANCIAL PERFORMANCE COVENANTS. The Borrowers shall observe and
comply with those financial performance covenants set forth on EXHIBIT 6:6-11,
annexed hereto, which compliance shall be determined as if no Material
Accounting Changes had been made (other than any Material Accounting Changes
specifically taken into account in the setting of such covenants). The
Administrative Agent may determine the Borrowers' compliance with such covenants
based upon financial reports and statements provided by the Borrowers'
Representative to the Administrative Agent (whether or not such financial
reports and statements are required to be furnished pursuant to this Agreement)
as well as by reference to interim financial information provided to, or
developed by, the Administrative Agent.
Page: 73
ARTICLE 7: - USE OF COLLATERAL:
7-1. USE OF INVENTORY COLLATERAL.
(a) No Borrower shall engage in
(i) Any sale of the Inventory other than
(A) For fair consideration in the conduct of
the Borrowers' business in the ordinary course.
(B) Permitted Asset Dispositions.
(C) The Shoe Division Sale.
(ii) Sales or other dispositions to creditors.
(iii) Sales or other dispositions in bulk (other
than in the ordinary course).
(iv) Sales of any Collateral in breach of any
provision of this Agreement.
(b) No sale of Inventory shall be on consignment, approval, or
under any other circumstances such that, with the exception of the Borrowers'
customary return policy applicable to the return of inventory purchased by the
Borrowers' retail customers in the ordinary course, such Inventory may be
returned to a Borrower without the consent of the Administrative Agent.
7-2. INVENTORY QUALITY. All Inventory now owned or hereafter
acquired by each Borrower is and will be of good and merchantable quality and
free from defects (other than defects within customary trade tolerances).
7-3. ADJUSTMENTS AND ALLOWANCES. Each Borrower may grant such
allowances or other adjustments to that Borrower's Account Debtors (exclusive of
extending the time for payment of any material Account or Account Receivable,
which shall not be done without first obtaining the Administrative Agent's prior
written consent in each instance) as that Borrower may reasonably deem to accord
with sound business practice, provided, however, at any time that a Borrower is
InDefault, the authority granted the Borrowers pursuant to this Section 7:7-3
may be limited or terminated by the Administrative Agent at any time in the
Administrative Agent's discretion.
7-4. VALIDITY OF ACCOUNTS.
(a) The amount of each Account shown on the books, records,
and invoices of the Borrowers represented as owing by each Account Debtor is and
will be the correct amount actually owing by such Account Debtor and shall have
been fully earned by performance by the Borrowers.
(b) The Borrowers have no knowledge of any impairment of the
validity or collectability of any of the Accounts and shall notify the
Administrative Agent of any such fact immediately after the Borrowers become
aware of any such impairment.
Page: 74
7-5. NOTIFICATION TO ACCOUNT DEBTORS. The Administrative Agent shall
have the right at any time that an Event of Default has occurred to notify any
of the Borrowers' Account Debtors to make payment directly to the Administrative
Agent and to collect all amounts due on account of the Collateral.
ARTICLE 8: - CASH MANAGEMENT. PAYMENT OF LIABILITIES:
8-1 THE BLOCKED ACCOUNT.
(a) On the Restatement Date, the Blocked Account Agreement is
in full force and effect.
(b) As a condition to the effectiveness of the amendment and
restatement of this Agreement, the Borrowers' Representative shall deliver the
following to the Administrative Agent:
(i) Notices to each processor of any of credit card
receipts of any of the Borrowers, each in form satisfactory to the
Agent, to the extent that such notices were not so delivered in
connection with the execution of the 1999 Loan Agreement.
(ii) A notice, addressed generally to the
depositories at which any Borrower maintains a DDA into which proceeds
of the Borrower's sales are deposited, each in form satisfactory to the
Agent, to the extent that such notices were not so delivered in
connection with the execution of the 1999 Loan Agreement.
(c) No Borrower will establish any DDA hereafter (other than
an Exempt DDA) unless, contemporaneous with such establishment, the Borrowers'
Representative delivers to the Administrative Agent a Notification to the
depository at which such DDA is established if the same would have been required
pursuant to Section 8:8-1(b)(ii) if the subject DDA were open on the Restatement
Date.
(d) No Obligor will change its cash concentration procedures
from those in place at the execution of this Agreement unless such change is
coordinated with the Administrative Agent with a view towards the preservation
and protection of the Administrative Agent's rights included in this Article 8:.
8-2. THE CONCENTRATION, BLOCKED, AND OPERATING ACCOUNTS .
(a) The following checking accounts have been or will be
established (and are so referred to herein):
(i) The "Concentration Account" (so referred to
herein): Established by the Administrative Agent with Fleet National
Bank.
(ii) The "Blocked Account" (so referred to herein):
Established by the Borrowers' Representative with Fleet National Bank.
(iii) The "Operating Account" (so referred to
herein): Established by the Borrowers' Representative with Fleet
National Bank.
Page: 75
(b) The contents of each DDA and of the Blocked Account
constitutes Collateral and Proceeds of Collateral. The contents of the
Concentration Account constitutes the Administrative Agent's property.
(c) The Borrowers shall pay all fees and charges of, and
maintain such impressed balances as may be required by the depository in which
any account is opened as required hereby (even if such account is opened by
and/or is the property of the Administrative Agent).
8-3. PROCEEDS AND COLLECTIONS .
(a) All Receipts and all cash proceeds of any sale or
other disposition of any of each Borrower's assets:
(i) Constitute Collateral and proceeds of Collateral.
(ii) Shall be held in trust by the Borrowers for the
Administrative Agent.
(iii) Shall not be commingled with any of any Borrower's
other funds.
(iv) Shall be deposited and/or transferred only to the
Blocked Account or the Concentration Account.
(b) The Borrowers' Representative shall cause the ACH or wire
transfer to the Blocked or the Concentration Account, no less frequently than
daily (and whether or not there is then an outstanding balance in the Loan
Account) of the following:
(i) The then contents of each DDA (other than any
Exempt DDA), each such transfer to be net of any minimum balance, not
to exceed the lesser of $2,500.00 or that amount which the Borrowers'
Representative, in its best business judgement determines as being
required to be maintained in the subject DDA by the bank at which such
DDA is maintained).
(ii) The proceeds of all credit card charges not
otherwise provided for pursuant hereto.
Telephone advice (confirmed by written notice) shall be provided to the
Administrative Agent on each Business Day on which any such transfer is made.
(c) Whether or not any Liabilities are then outstanding, the
Borrowers' Representative shall cause the ACH or wire transfer to the
Concentration Account, no less frequently than daily, of then entire ledger
balance of the Blocked Account, net of such minimum balance, not to exceed the
lesser of $2,500.00 or that amount which the Borrowers' Representative, in its
best business judgement determines as being required to be required to be
maintained in the Blocked Account by the depository which the Blocked Account is
maintained.
(d) In the event that, notwithstanding the provisions of this
Section 8:8-3, any Borrower receives or otherwise has dominion and control of
any Receipts, or any proceeds or collections of any Collateral, such Receipts,
proceeds, and collections shall be held in trust by that Borrower for the
Administrative Agent and shall not be commingled with any of that Borrower's
other funds or deposited in
Page: 76
any account of any Borrower other than as instructed by the Administrative
Agent.
8-4. PAYMENT OF LIABILITIES.
(a) On each Business Day, the Administrative Agent shall apply
the then collected balance of the Concentration Account (net of fees charged,
and of such impressed balances as may be required by the bank at which the
Concentration Account is maintained) First, towards the SwingLine Loans and
Second, towards the unpaid balance of the Loan Account and all other Liabilities
other than principal and interest on the Term Loan, provided, however, for
purposes of the calculation of interest on the unpaid principal balance of the
Loan Account, all payments other than by wire transfer shall be deemed to have
been made One (1) Business Day after such transfer.
(b) The following rules shall apply to deposits and payments
under and pursuant to this Section 8:8-4:
(i) Funds shall be deemed to have been deposited to
the Concentration Account on the Business Day on which
deposited, provided that notice of such deposit is available
to the Administrative Agent by 2:00PM on that Business Day.
(ii) Funds paid to the Administrative Agent, other
than by deposit to the Concentration Account, shall be deemed
to have been received on the Business Day when they are good
and collected funds, provided that notice of such payment is
available to the Administrative Agent by 2:00PM on that
Business Day.
(iii) If notice of a deposit to the Concentration
Account (Section 8:8-4(b)(i)) or payment (Section
8:8-4(b)(ii)) is not available to the Administrative Agent
until after 2:00PM on a Business Day, such deposit or payment
shall be deemed to have been made at 9:00AM on the then next
Business Day.
(iv) All deposits to the Concentration Account and
other payments to the Administrative Agent are subject to
clearance and collection.
(c) The Administrative Agent shall transfer to the Operating
Account any surplus in the Concentration Account remaining after the application
towards the Liabilities referred to in Section 8:8-4(a), above (less those
amount which are to be netted out, as provided therein) provided, however, in
the event that
(i) any Borrower is InDefault; and
(ii) either
(A) one or more L/C's are then
outstanding; or
(B) there is any amount unpaid on
account of the Term Loan,
then the Administrative Agent may establish a funded reserve of up to 110% of
the aggregate of (x) the Stated Amounts of such L/C's plus (y) amounts unpaid on
account of the Term Loan. Such funded reserve shall either be (i) returned to
the Borrowers' Representative provided that no Borrower is InDefault
Page: 77
or (ii) applied towards the Liabilities following Acceleration.
8-5. THE OPERATING ACCOUNT. Except as otherwise specifically provided
in, or permitted by, this Agreement, all checks shall be drawn by the Borrowers'
Representative upon, and other disbursements shall be made by the Borrowers'
Representative solely from, the Operating Account.
ARTICLE 9: - GRANT OF SECURITY INTEREST:
9-1. GRANT OF SECURITY INTEREST. To secure the Borrowers' prompt,
punctual, and faithful performance of all and each of the Liabilities, each
Borrower hereby grants to the Collateral Agent, for the ratable benefit of the
Lenders, a continuing security interest in and to, and assigns to the Collateral
Agent, for the ratable benefit of the Lenders, the following, and each item
thereof, whether now owned or now due, or in which that Borrower has an
interest, or hereafter acquired, arising, or to become due, or in which that
Borrower obtains an interest, and all products, Proceeds, substitutions, and
accessions of or to any of the following (all of which, together with any other
property in which the Collateral Agent may in the future be granted a security
interest, is referred to herein as the "Collateral"):
(a) All Accounts and accounts receivable.
(b) All Inventory.
(c) All General Intangibles.
(d) All Equipment.
(e) All Goods.
(f) All Farm Products.
(g) All Fixtures.
(h) All Chattel Paper.
(i) All Letter-of-Credit Rights.
(j) All Payment Intangibles.
(k) All Supporting Obligations.
(l) All books, records, and information relating to the
Collateral and/or to the operation of each Borrower's
business, and all rights of access to such books,
records, and information, and all property in which
such books, records, and information are stored,
recorded, and maintained.
(m) All Investment Property, Instruments, Documents,
Deposit Accounts, money, policies and certificates of
insurance, deposits, impressed accounts, compensating
balances, cash, or other property.
(n) All insurance proceeds, refunds, and premium rebates,
including, without limitation, proceeds of fire and
credit insurance, whether any of such proceeds,
refunds, and premium rebates arise out of any of the
foregoing. (9:9-1(a) through
Page: 78
9:9-1(m)) or otherwise.
(o) All liens, guaranties, rights, remedies, and
privileges pertaining to any of the foregoing
(9:9-1(a) through 9:9-1(n)), including the right of
stoppage in transit.
9-2. EXTENT AND DURATION OF SECURITY INTEREST.
(a) The security interest created and granted herein is in
addition to, and supplemental of, any security interest previously granted by
any Borrower to the Collateral Agent and shall continue in full force and effect
applicable to all Liabilities until both (a) all Liabilities have been paid
and/or satisfied in full and (b) the security interest created herein is
specifically terminated in writing by a duly authorized officer of the
Collateral Agent.
(b) It is intended that the Collateral Interests created
herein extend to and cover all assets of each Borrower other than the Excluded
Collateral.
(c) It is further intended that, with respect to any term used
herein to describe Collateral, which term is defined in either (or both) the UCC
as in effect on the date when this Agreement was executed by the Borrowers or in
UCC9'99, the meaning given that term shall be the more encompassing of the two
definitions.
(d) The Collateral Agent's Collateral Interest in any
Collateral which is the subject of a transfer pursuant to a Permitted Asset
Disposition shall automatically be released upon the consummation of such
Permitted Asset Disposition.
ARTICLE 10: - ADMINISTRATIVE AGENT AS BORROWER'S ATTORNEY-IN-FACT:
10-1. APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby irrevocably
constitutes and appoints the Collateral Agent as that (acting through any of its
officers) Borrower's true and lawful attorney, with full power of substitution,
following the occurrence of an Event of Default, to convert the Collateral into
cash at the sole risk, cost, and expense of that Borrower, but for the sole
benefit of the Agents and the Lenders. The rights and powers granted the
Collateral Agent by this appointment include but are not limited to the right
and power to:
(a) Prosecute, defend, compromise, or release any action
relating to the Collateral.
(b) Sign change of address forms to change the address to
which each Borrower's mail is to be sent to such address as the Collateral Agent
shall designate; receive and open each Borrower's mail; remove any Receivables
Collateral and Proceeds of Collateral therefrom and turn over the balance of
such mail either to the Borrowers' Representative or to any trustee in
bankruptcy or receiver of the Borrowers' Representative, or other legal
representative of a Borrower whom the Collateral Agent determines to be the
appropriate person to whom to so turn over such mail.
(c) Endorse the name of the relevant Borrower in favor of the
Collateral Agent upon
Page: 79
any and all checks, drafts, notes, acceptances, or other items or instruments;
sign and endorse the name of the relevant Borrower on, and receive as secured
party, any of the Collateral, any invoices, schedules of Collateral, freight or
express receipts, or bills of lading, storage receipts, warehouse receipts, or
other documents of title respectively relating to the Collateral.
(d) Sign the name of the relevant Borrower on any notice to
that Borrower's Account Debtors or verification of the Receivables Collateral;
sign the relevant Borrower's name on any Proof of Claim in Bankruptcy against
Account Debtors, and on notices of lien, claims of mechanic's liens, or
assignments or releases of mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the
payment of any letter of credit and/or banker's acceptance of which any Borrower
is a beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver,
alter or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any customer of each Borrower.
(g) Use, license or transfer any or all General Intangibles of
each Borrower.
10-2. NO OBLIGATION TO ACT. The Collateral Agent shall not be obligated
to do any of the acts or to exercise any of the powers authorized by Section
10:10-1 herein, but if the Collateral Agent elects to do any such act or to
exercise any of such powers, it shall not be accountable for more than it
actually receives as a result of such exercise of power, and shall not be
responsible to any Borrower for any act or omission to act except for any act or
omission to act as to which there is a final determination made in a judicial
proceeding (in which proceeding the Collateral Agent has had an opportunity to
be heard) which determination includes a specific finding that the subject act
or omission to act had been grossly negligent or in actual bad faith or
constituted wilful misconduct.
ARTICLE 11: - EVENTS OF DEFAULT:
The occurrence of any event described in this Article 11: respectively
shall constitute an "Event of Default" herein. Upon the occurrence of any Event
of Default described in Section 11:11-11, any and all Liabilities shall become
due and payable without any further act on the part of the Administrative Agent.
Upon the occurrence of any other Event of Default, the Administrative Agent may,
and on the instruction of the SuperMajority Lenders as provided in Section
14:14-1(b) , or as provided in Section 14:14-1(c) shall, declare any and all
Liabilities shall become immediately due and payable. The occurrence of any
Event of Default shall also constitute, without notice or demand, a default
under all other Loan Documents.
11-1. FAILURE TO PAY THE REVOLVING CREDIT OR THE TERM LOAN. The failure
by any Borrower to pay when due any principal of, interest on, or fees in
respect of, the Revolving Credit or the Term Loan.
Page: 80
11-2. FAILURE TO MAKE OTHER PAYMENTS. The failure by any Borrower, on
three (3) days notice by the Administrative Agent to the Borrowers'
Representative, to discharge any payment Liability then due, other than under
the Revolving Credit or the Term Loan.
11-3. FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD) . The
failure by any Borrower to promptly, punctually, faithfully and timely perform,
discharge, or comply with any covenant or Liability not otherwise described in
Section 11:11-1 or Section 11:11-2 hereof, and included in any of the following
provisions hereof:
Section Relates to :
--------------------------------------------------------
5:5-3(b) Notice of Name Change
5:5-5 Location of Collateral
5:5-7(a) Title to Assets
5:5-8 Indebtedness
5:5-9 Insurance Policies
5:5-15 Pay taxes
5:5-20 Dividends, Investments and Other Corporate
Actions
5:5-24 Affiliate Transactions
5:5-25 Additional Assurances
5:5-2(c) State of Incorporation, State Identification
Number and Taxpayer Identification Number
7:7-1 Use of Collateral
Article 6: Reporting Requirements
(Except two Business Days
grace for all financial
reports other than the
Borrower's daily Borrowing
Base Certificate required
pursuant to Section 6:6-4)
Article 6: Financial Performance Covenants
Article 8: Cash Management
11-4. FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The
failure by any, Borrower, within thirty (30) days following the earlier of any
Borrower's knowledge of a breach of any covenant or Liability not described in
any of Sections 11:11-1, 11:11-2, or 11:11-3 or of its receipt of written notice
from the Administrative Agent of the breach of any of any of such covenants or
Liabilities.
11-5. MISREPRESENTATION. The determination by the Administrative Agent
that any representation or warranty at any time made by any Borrower to any
Agent or any Lender was not true or complete in all material respects when
given.
11-6. ACCELERATION OF OTHER DEBT.. The occurrence of any event such
that Indebtedness of any Borrower in excess of $1,000,000.00 to any creditor
other than any Agent or any Lender could be accelerated unless, prior to the
acceleration of the Liabilities on account of such occurrence, the other
creditor duly waives such default and evidence of such written waiver is
provided to
Page: 81
the Administrative Agent.
11-7. DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any breach of
any covenant or Liability imposed by, or of any default under, any agreement
(including any Loan Document) between any Agent or any Lender and any Borrower
or instrument given by any Borrower to any Agent or any Lender and the expiry,
without cure, of any applicable grace period (notwithstanding that subject Agent
or Lender may not have exercised all or any of its rights on account of such
breach or default) where the result of such breach or default, if exercised
upon, could have more than a de minimis adverse effect on a Borrower.
11-8. UNINSURED CASUALTY LOSS. The occurrence of any uninsured loss,
theft, damage, or destruction of or to any material portion of the Collateral.
11-9. ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.
(a) The service of process upon any Agent or any Lender or any
Participant seeking to attach, by trustee, mesne, or other process, any funds of
any Borrower on deposit with, or assets of any Borrower in the possession of,
that Agent or that Lender or such Participant.
(b) The entry of judgments against any Borrower, not fully
covered by insurance (subject to a reasonable deductible) aggregating more than
$1 Million, which judgments are not satisfied (if a money judgment) or appealed
from (with execution or similar process stayed) within thirty (30) days of
entry.
(c) The entry of any order or the imposition of any other
process having the force of law, the effect of which is to restrain in any
material way the conduct by any Borrower of its business in the ordinary course.
11-10. BUSINESS FAILURE. Any act by, against, or relating to any
Borrower, or its property or assets, which act constitutes the determination, by
any Borrower, to initiate a program of partial or total self-liquidation;
application for, consent to, or sufferance of the appointment of a receiver,
trustee, or other person, pursuant to court action or otherwise, over all, or
any part of any Borrower's property; the granting of any trust mortgage or
execution of an assignment for the benefit of the creditors of any Borrower, or
the occurrence of any other voluntary or involuntary liquidation or extension of
debt agreement for any Borrower; the offering by or entering into by any
Borrower of any composition, extension, or any other arrangement seeking relief
from or extension of the debts of any Borrower; or the initiation of any
judicial or non-judicial proceeding or agreement by, against, or including any
Borrower which seeks or intends to accomplish a reorganization or arrangement
with creditors; and/or the initiation by or on behalf of any Borrower of the
liquidation or winding up of all or any part of any Borrower's business or
operations.
Page: 82
11-11. BANKRUPTCY. Adjudication of bankruptcy or insolvency relative to
any Borrower; the entry of an order for relief or similar order with respect to
any Borrower in any proceeding pursuant to the Bankruptcy Code or any other
federal bankruptcy law; the filing of any complaint, application, or petition by
any Borrower initiating any matter in which any Borrower is or may be granted
any relief from the debts of that Borrower pursuant to the Bankruptcy Code or
any other insolvency statute or procedure; the filing of any complaint,
application, or petition against any Borrower initiating any matter in which
that Borrower is or may be granted any relief from the debts of that Borrower
pursuant to the Bankruptcy Code or any other insolvency statute or procedure,
which complaint, application, or petition is not timely contested in good faith
by that Borrower by appropriate proceedings or, if so contested, is not
dismissed within Sixty (60) days of when filed.
11-12. DEFAULT BY GUARANTOR.
(a) The occurrence of any Guarantor Default.
(b) The occurrence of any event such that any Indebtedness of
JBAK Holdings, Inc. or JBAK Realty, Inc in excess of $1,000,000.00 or which is
secured by the Canton Warehouse could be accelerated.
11-13. INDICTMENT - FORFEITURE. The indictment of, or institution of
any legal process or proceeding against, Revolving Credit Loans, under any
federal, state, municipal, and other civil or criminal statute, rule,
regulation, order, or other requirement having the force of law where the
relief, penalties, or remedies sought or available include the forfeiture of
more than a de minimus part of the property of that Borrower and/or the
imposition of any stay or other order, the effect of which could be to restrain
in any material way the conduct by Revolving Credit Loans of its business in the
ordinary course.
11-14. TERMINATION OF GUARANTY. The termination or attempted
termination of any guaranty by any guarantor of the Liabilities.
11-15. CHALLENGE TO LOAN DOCUMENTS.
(a) Any challenge by or on behalf of the Borrowers'
Representative, any Borrower, or any Guarantor to the validity of any Loan
Document or the applicability or enforceability of any Loan Document strictly in
accordance with the subject Loan Document's terms or which seeks to void, avoid,
limit, or otherwise adversely affect any security interest created by or in any
Loan Document or any payment made pursuant thereto.
(a) Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's terms or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any Loan
Page: 83
Document or any payment made pursuant thereto.
11-16. CHANGE IN CONTROL. Any Change in Control.
ARTICLE 12: - RIGHTS AND REMEDIES UPON DEFAULT:
12-1 Acceleration. Upon the occurrence of any Event of Default as
described in Section 11:11-11, all Indebtedness of the Borrower to the Lenders
shall be immediately due and payable. Upon the occurrence of any Event of
Default other than as described in Section 11:11-11, the Administrative Agent
may (and on the issuance of Acceleration Notice(s) requisite to the causing of
Acceleration, the Administrative Agent shall) declare all Indebtedness of the
Borrower to the Lenders to be immediately due and payable and may exercise all
of the Administrative Agent's Rights and Remedies (and the Collateral Agent may
likewise exercise all of its rights and remedies upon default) as the
Administrative Agent from time to time thereafter determines as appropriate.
12-2. RIGHTS OF ENFORCEMENT. The Collateral Agent shall have all of the
rights and remedies of a secured party upon default under the UCC, in addition
to which the Collateral Agent shall have all and each of the following rights
and remedies:
(a) To give notice to any bank at which any DDA or Blocked
Account is maintained and in which Proceeds of Collateral are deposited, to turn
over such Proceeds directly to the Collateral Agent.
(b) To give notice to any customs broker of any of the
Borrowers to follow the instructions of the Collateral Agent as provided in any
written agreement or undertaking of such broker in favor of the Collateral
Agent.
(c) To collect the Receivables Collateral with or without the
taking of possession of any of the Collateral.
(d) To take possession of all or any portion of the
Collateral.
(e) To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or processing as
the Collateral Agent deems advisable and with or without the taking of
possession of any of the Collateral.
(f) To conduct one or more going out of business sales which
include the sale or other disposition of the Collateral.
(g) To apply the Receivables Collateral or the Proceeds of the
Collateral towards (but not necessarily in complete satisfaction of) the
Liabilities.
(h) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
Page: 84
12.3 SALE OF COLLATERAL.
(a) Any sale or other disposition of the Collateral may be at
public or private sale upon such terms and in such manner as the Collateral
Agent deems advisable, having due regard to compliance with any statute or
regulation which might affect, limit, or apply to the Collateral Agent's
disposition of the Collateral.
(b) The Collateral Agent, in the exercise of the Collateral
Agent's rights and remedies upon default, may conduct one or more going out of
business sales, in the Collateral Agent's own right or by one or more agents and
contractors. Such sale(s) may be conducted upon any premises owned, leased, or
occupied by any Borrower. The Collateral Agent and any such agent or contractor,
in conjunction with any such sale, may augment the Inventory with other goods
(all of which other goods shall remain the sole property of the Collateral Agent
or such agent or contractor). Any amounts realized from the sale of such goods
which constitute augmentations to the Inventory (net of an allocable share of
the costs and reasonable expenses incurred in their disposition) shall be the
sole property of the Collateral Agent or such agent or contractor and neither
any Borrower nor any Person claiming under or in right of any Borrower shall
have any interest therein.
(c) Unless the Collateral is perishable or threatens to
decline speedily in value, or is of a type customarily sold on a recognized
market (in which event the Collateral Agent shall provide the Borrowers'
Representative such notice as may be practicable under the circumstances), the
Collateral Agent shall give the Borrowers' Representative at least ten (10) days
prior written notice of the date, time, and place of any proposed public sale,
and of the date after which any private sale or other disposition of the
Collateral may be made. Each Borrower agrees that such written notice shall
satisfy all requirements for notice to that Borrower which are imposed under the
UCC or other applicable law with respect to the exercise of the Collateral
Agent's rights and remedies upon default.
(d) The Collateral Agent, the Administrative Agent, and any
Lender may purchase the Collateral, or any portion of it at any sale held under
this Article.
(e) If any of the Collateral is sold, leased, or otherwise
disposed of by the Collateral Agent on credit, the Liabilities shall not be
deemed to have been reduced as a result thereof unless and until payment is
finally received thereon by the Collateral Agent.
(f) The Collateral Agent shall turn over to the Administrative
Agent the proceeds of the exercise by the Collateral Agent of its rights and
remedies under this Article 12:. The Administrative Agent shall apply the
proceeds of the Collateral Agent's exercise of its rights and remedies upon
default pursuant to this Article 12: in accordance with Sections 14:14-7 and
14:14-8.
12-4. OCCUPATION OF BUSINESS LOCATION. In connection with the
Collateral Agent's exercise of the Collateral Agent's rights under this Article
12:, the Collateral Agent may enter upon, occupy, and use any premises owned or
occupied by each Borrower, and may exclude each Borrower from such premises or
portion thereof as may have been so entered upon, occupied, or used by the
Page: 85
Collateral Agent. The Collateral Agent shall not be required to remove any of
the Collateral from any such premises upon the Collateral Agent's taking
possession thereof, and may render any Collateral unusable to the Borrowers. In
no event shall the Collateral Agent be liable to any Borrower for use or
occupancy by the Collateral Agent of any premises pursuant to this Article 12:,
nor for any charge (such as wages for any Borrower's employees and utilities)
incurred in connection with the Collateral Agent's exercise of the Collateral
Agent's Rights and Remedies.
12-5. GRANT OF NONEXCLUSIVE LICENSE. Each Borrower hereby grants to the
Collateral Agent a royalty free nonexclusive irrevocable license to use, apply,
and affix any trademark, trade name, logo, or the like in which any Borrower now
or hereafter has rights, such license being with respect to the Collateral
Agent's exercise of the rights hereunder including, without limitation, in
connection with any completion of the manufacture of Inventory or sale or other
disposition of Inventory.
12-6. ASSEMBLY OF COLLATERAL. The Collateral Agent may require any
Borrower to assemble the Collateral and make it available to the Collateral
Agent at the Borrowers' sole risk and expense at a place or places which are
reasonably convenient to both the Collateral Agent and the Borrowers'
Representative.
12-7. RIGHTS AND REMEDIES. The rights, remedies, powers, privileges,
and discretions of the Administrative Agent hereunder (herein, the Agents'
Rights and Remedies") shall be cumulative and not exclusive of any rights or
remedies which it would otherwise have. No delay or omission by an Agent in
exercising or enforcing any of the Agents' Rights and Remedies shall operate as,
or constitute, a waiver thereof. No waiver by an Agent of any Event of Default
or of any default under any other agreement shall operate as a waiver of any
other default hereunder or under any other agreement. No single or partial
exercise of any of the Agents' Rights or Remedies, and no express or implied
agreement or transaction of whatever nature entered into between any Agent and
any person, at any time, shall preclude the other or further exercise of the
Agents' Rights and Remedies. No waiver by any Agent of any of the Agents' Rights
and Remedies on any one occasion shall be deemed a waiver on any subsequent
occasion, nor shall it be deemed a continuing waiver. The Agents' Rights and
Remedies may be exercised at such time or times and in such order of preference
as the Agents may determine. The Agents' Rights and Remedies may be exercised
without resort or regard to any other source of satisfaction of the Liabilities.
Page: 86
ARTICLE 13: - REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:
13-1. REVOLVING CREDIT FUNDING PROCEDURES. Subject to
Section 13:13-2:
(a) The Agent shall advise each Revolving Credit Lender, no
later than 2:00PM on a date on which any Revolving Credit Loan (other than a
SwingLine Loan) is to be made on that date. Such advice, in each instance, may
be by telephone or facsimile transmission, provided that if such advice is by
telephone, it shall be confirmed in writing. Advice of a Revolving Credit Loan
shall include the amount of and interest rate applicable to the subject
Revolving Credit Loan.
(b) Subject to that Revolving Credit Lender's Revolving Credit
Dollar Commitment, each Revolving Credit Lender, by no later than the end of
business on the day on which the subject Revolving Credit Loan is to be made,
shall Transfer that Revolving Credit Lender's Revolving Credit Percentage
Commitment of the subject Revolving Credit Loan to the Administrative Agent.
13-2. SWINGLINE LOANS.
(a) In the event that, when a Revolving Credit Loan is
requested, the aggregate unpaid balance of the SwingLine Loan is less than the
SwingLine Loan Ceiling, then the SwingLine Lender may advise the Administrative
Agent that the SwingLine Lender has determined to include up to the amount of
the requested Revolving Credit Loan as part of the SwingLine Loan. In such
event, the SwingLine Lender shall Transfer the amount of the requested Revolving
Credit Loan to the Administrative Agent.
(b) The SwingLine Loan shall be converted to a Revolving
Credit Loan in which all Revolving Credit Lenders participate as follows:
(i) At any time and from time to time, the SwingLine
Lender may advise the Administrative Agent that all, or any part of the
SwingLine Loan is to be converted to a Revolving Credit Loan in which
all Revolving Credit Lenders participate.
(ii) At the initiation of a Liquidation, the then
entire unpaid principal balance of the SwingLine Loan shall be
converted to a Revolving Credit Loan in which all Revolving Credit
Lenders participate.
In either such event, the Administrative Agent shall advise each Revolving
Credit Lender of such conversion as if, and with the same effect as if such
conversion were the making of a Revolving Credit Loan as provided in Section
13:13-1.
(c) The SwingLine Lender, in separate capacities, may also be
one or more Agents, a Revolving Credit Lender, and the Term Lender.
(d) The SwingLine Lender, in its capacity as SwingLine Lender,
is not a "Revolving Credit Lender" for any of the following purposes:
(i) Except as otherwise specifically provided in the
relevant Section, any
Page: 87
distribution pursuant to Section 14:14-7.
(ii) Determination of whether the requisite Loan Commitments
have Consented to action requiring such Consent.
13-3. ADMINISTRATIVE AGENT'S COVERING OF FUNDINGS:
(a) Each Revolving Credit Lender shall make available to the
Administrative Agent, as provided herein, that Revolving Credit Lender's
Revolving Credit Percentage Commitment of the following:
(i) Each Revolving Credit Loan, up to the maximum
amount of that Revolving Credit Lender's Revolving Credit
Dollar Commitment of the Revolving Credit Loans.
(ii) Up to the maximum amount of that Revolving
Credit Lender's Revolving Credit Dollar Commitment of each L/C
Drawing (to the extent that such L/C Drawing is not "covered"
by a Revolving Credit Loan as provided herein).
(b) In all circumstances, the Administrative Agent may:
(i) Assume that each Revolving Credit Lender, subject
to Section 13:13- 3(a), timely shall make available to the
Administrative Agent that Revolving Credit Lender's Revolving Credit
Percentage Commitment of each Revolving Credit Loan, notice of which is
provided pursuant to Section 13:13-1 and shall make available, to the
extent not "covered" by a Revolving Credit Loan, that Revolving Credit
Lender's Revolving Credit Percentage Commitment of any honoring of an
L/C.
(ii) In reliance upon such assumption, make available
the corresponding amount to the Borrowers.
(iii) Assume that each Revolving Credit Lender timely
shall pay, and shall make available, to the Administrative Agent all
other amounts which that Revolving Credit Lender is obligated to so pay
and/or make available hereunder or under any of the Loan Documents.
(c) In the event that, in reliance upon any of such
assumptions, the Administrative Agent makes available, a Revolving Credit
Lender's Revolving Credit Percentage Commitment of one or more Revolving Credit
Loans, or any other amount to be made available hereunder or under any of the
Loan Documents, which amount a Revolving Credit Lender (a "Delinquent Revolving
Credit Lender") fails to provide to the Administrative Agent within One (1)
Business Day of written notice of such failure, then:
(i) The amount which had been made available by the
Administrative Agent is an " Administrative Agent's Cover" (and is so
referred to herein).
(ii) All interest paid by the Borrowers on account of
the Revolving Credit Loan or coverage of the subject L/C Drawing which
consist of the Administrative Agent's Cover shall be retained by the
Administrative Agent until the Administrative Agent's Cover, with
interest,
Page: 88
has been paid.
(iii) The Delinquent Revolving Credit Lender shall
pay to the Administrative Agent, on demand, interest at a rate equal to
the prevailing federal funds rate on any Administrative Agent's Cover
in respect of that Delinquent Revolving Credit Lender
(iv) The Administrative Agent shall have succeeded to
all rights to payment to which the Delinquent Revolving Credit Lender
otherwise would have been entitled hereunder in respect of those
amounts paid by or in respect of the Borrowers on account of the
Administrative Agent's Cover together with interest until it is repaid.
Such payments shall be deemed made first towards the amounts in respect
of which the Administrative Agent's Cover was provided and only then
towards amounts in which the Delinquent Revolving Credit Lender is then
participating. For purposes of distributions to be made pursuant to
Section 13:13-4(a) (which relates to ordinary course distributions) or
Section 14:14-7 (which relates to distributions of proceeds of a
Liquidation) below, amounts shall be deemed distributable to a
Delinquent Revolving Credit Lender (and consequently, to the
Administrative Agent to the extent to which the Administrative Agent is
then entitled) at the highest level of distribution (if applicable) at
which the Delinquent Revolving Credit Lender would otherwise have been
entitled to a distribution.
(v) Subject to Subsection 13:13-3(c)(iv), the Delinquent
Revolving Credit Lender shall be entitled to receive any payments from
the Borrowers to which the Delinquent Revolving Credit Lender is then
entitled, provided however there shall be deducted from such amount and
retained by the Administrative Agent any interest to which the
Administrative Agent is then entitled on account of Section
13:13-3(c)(ii), above.
(d) A Delinquent Revolving Credit Lender shall not be relieved
of any obligation of such Delinquent Revolving Credit Lender hereunder (all and
each of which shall constitute continuing obligations on the part of any
Delinquent Revolving Credit Lender).
(e) A Delinquent Revolving Credit Lender may cure its status
as a Delinquent Revolving Credit Lender by paying the Administrative Agent the
aggregate of the following:
(i) The Administrative Agent's Cover (to the
extent not previously repaid by the
Borrowers and retained by the Administrative
Agent in accordance with Subsection
13:13-3(c)(iv), above) with respect to that
Delinquent Revolving Credit Lender.
Plus
(ii) The aggregate of the amount payable under
Subsection 13:13-3(c)(iii), above (which
relates to interest to be paid by that
Delinquent Revolving Credit Lender).
Plus
(iii) All such costs and expenses as may be
incurred by the Administrative
Page: 89
Agent in the enforcement of the
Administrative Agent's rights against such
Delinquent Revolving Credit Lender.
13-4. ORDINARY COURSE DISTRIBUTIONS: REVOLVING CREDIT. (This Section
13:13-4 applies unless the provisions of Section 14:14-7 (which relates to
distributions in the event of a Liquidation) becomes operative).
(a) Weekly, on such day as may be set from time to time by the
Administrative Agent (or more frequently at the Administrative Agent's option)
the Administrative Agent and each Revolving Credit Lender shall settle up on
amounts advanced under the Revolving Credit and collected funds received in the
Concentration Account.
(b) The Administrative Agent shall distribute to the SwingLine
Lender and to each Revolving Credit Lender, such Person's respective Pro-Rata
share of interest payments on the Revolving Credit Loans when actually received
and collected by the Administrative Agent (excluding the one Business Day for
settlement provided for in Section 8:8-4(a), which shall be for the account of
the Administrative Agent only). For purposes of calculating interest due to a
Revolving Credit Lender, that Revolving Credit Lender shall be entitled to
receive interest on the actual amount contributed by that Revolving Credit
Lender towards the principal balance of the Revolving Credit Loans outstanding
during the applicable period covered by the interest payment made by the
Borrowers. Any net principal reductions to the Revolving Credit Loans received
by the Administrative Agent in accordance with the Loan Documents during such
period shall not reduce such actual amount so contributed, for purposes of
calculation of interest due to that Revolving Credit Lender, until the
Administrative Agent has distributed to that Revolving Credit Lender its
Pro-Rata share thereof.
(c) The Administrative Agent shall distribute fees paid on
account of the Revolving Credit, as follows:
(i) L/C Fee (Section 2:2-20(a)): Pro-Rata to the
Revolving Credit Lenders.
(ii) Unused Line Fee (Section 2:2-15): Pro-Rata to
the Revolving Credit Lenders.
(iii) Revolving Credit Early Termination Fee (Section
2:2-16) : Pro-Rata to the Revolving Credit Lenders.
(iv) Revolving Credit Commitment Fee (Section 2:2-13)
: As provided in separate letter agreements with the
respective Revolving Credit Lenders.
(d) No Lender shall have any interest in or right to receive
any part of the following:
(i) Any interest which reflects "float" as described
in the proviso included in Section 8:8-4(a), all of which
float shall be for the account of the Administrative Agent
only.
(ii) The Administrative Agent's Fee (Section 2:2-14)
to be paid by the Borrowers to the Administrative Agent.
Page: 90
(iii) Fees described in Section 2:2-20(b) (which
relates to fees associated with, among other things, the issuance of
L/C's): Retained by the Issuer.
(e) No Revolving Credit Lender shall have any interest in or
right to receive any part of Term Loan Fees.
(f) Any amount received by the Administrative Agent or the
Collateral Agent as reimbursement for any cost or expense (including without
limitation, attorneys' reasonable fees) shall be distributed by the
Administrative Agent to that Person which is entitled to such reimbursement as
provided in this Agreement (and if such Person(s) is (are) the Revolving Credit
Lenders, Pro-Rata based upon their respective Revolving Credit Commitment
Percentages at the date on which the expense, in respect of which such
reimbursement is being made, was incurred).
(g) Each distribution pursuant to this Section 13:13-4 is
subject to Section 13:13-3(c), above (which relates to the effect of the failure
of any Revolving Credit Lender to have Transferred to the Administrative Agent
any amount which that Revolving Credit Lender is then obligated to so Transfer
pursuant to the within Agreement).
13-5. ORDINARY COURSE DISTRIBUTIONS : TERM LOAN (This Section 13:13-5
applies unless the provisions of Section 14:14-7 (which relates to distributions
in the event of a Liquidation) becomes operative). The Administrative Agent
shall distribute to the Term Lender payments on account of principal of, and
interest on, the Term Loan and Term Loan Fees as received and collected by the
Administrative Agent from the Borrowers in accordance with the provisions of
this Agreement or as made available by the Administrative Agent as the proceeds
of advances under the Revolving Credit.
ARTICLE 14: - ACCELERATION AND LIQUIDATION:
14-1. ACCELERATION NOTICES
(a) The Administrative Agent may give the Collateral Agent and
Revolving Credit Lenders an Acceleration Notice at any time following the
occurrence of an Event of Default.
(b) The SuperMajority Lenders may give the Administrative
Agent an Acceleration Notice at any time following the occurrence of an Event of
Default. Such notice may be by multiple counterparts, provided that counterparts
executed by the requisite Revolving Credit Lenders are received by the
Administrative Agent within a period of five (5) consecutive Business Days.
(c) The Term Lender may give the Administrative Agent an
Acceleration Notice as follows:
(i) At any time following the occurrence of an Event
of Default which occurs after a BuyOut.
Page: 91
(ii) At any time following the occurrence of an Event
of Default described in Section 11:11-11.
(iii) At any time following the occurrence of an
Event of Default which occurs after the Revolving Credit Loan Debt has
been paid in full, all L/C's have been cash collateralized, and there
is no obligation on the Revolving Credit Lenders to make any further
loans or to provide any further financial accommodation under the
Revolving Credit.
(iv) At any time as permitted pursuant to Section
14:14-2.
14-2. MANDATORY ACCELERATION RIGHT OF TERM LENDER:
(a) The Term Lender may initiate a Standstill Period by
written notice to the Administrative Agent at any time after the occurrence of
any Term Loan Action Event.
(b) Upon the expiry of the Standstill Period, the Term Lender
may give the Administrative Agent and the Collateral Agent an
Acceleration Notice unless either
(i) Acceleration has been stayed by judicial or
statutory process; or
(ii) As applicable:
(A) If the relevant Term Loan Action Event
had been a BaseLine Covenant Breach: no BaseLine Covenant
Breach occurs at any time during the relevant Standstill
Period; or
(B) If the relevant Term Loan Action Event
had been a Minimum Availability Breach: no Minimum
Availability Breach occurs at any time during the relevant
Standstill Period.
(C) If the relevant Term Loan Action Event
is a Term Loan Payment Breach: all then due Term Loan Payments
(other than those which would be due only if the Term Loan
were accelerated) are paid prior to the expiry of the relevant
Standstill Period.
14-3. ACCELERATION Unless stayed by judicial or statutory process, the
Administrative Agent shall Accelerate the Revolving Credit Obligations and the
Term Loan Debt within a commercially reasonable time following:
(a) The Administrative Agent's giving of an Acceleration
Notice to the Collateral Agent and the Revolving Credit Lenders as provided in
Section 14:14-1(a).
(b) The Administrative Agent's receipt of an Acceleration
Notice from the SuperMajority Lenders, in compliance with Section 14:14-1(b).
(c) The Administrative Agent's receipt of an Acceleration
Notice from the Term Lender, in compliance with Section 14:14-1(c).
Page: 92
14-4. INITIATION OF LIQUIDATION Unless stayed by judicial or statutory
process, a Liquidation shall be initiated by the Collateral Agent within a
commercially reasonable time following Acceleration of the Revolving Credit
Obligations and the Term Loan Debt.
14-5. ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION
(a) At the initiation of a Liquidation:
(i) The unpaid principal balance of the SwingLine
Loan (if any) shall be converted, pursuant to Section 13:13-2(b)(ii),
to a Revolving Credit Loan in which all Revolving Credit Lenders
participate.
(ii) The Administrative Agent and the Revolving
Credit Lenders shall "net out" each Revolving Credit Lender's
respective contributions towards the Revolving Credit Loans, so that
each Revolving Credit Lender holds that Revolving Credit Lender's
Revolving Credit Percentage Commitment of the Revolving Credit Loans
and advances.
(b) Following the initiation of a Liquidation, each Revolving
Credit Lender shall contribute, towards any L/C thereafter honored and
not immediately reimbursed by the Borrowers, that Revolving Credit
Lender's Revolving Credit Percentage Commitment of such honoring.
14-6. COLLATERAL AGENT'S CONDUCT OF LIQUIDATION
(a) Any Liquidation shall be conducted by the Collateral
Agent, with the advice and assistance of the Administrative Agent and the
Lenders.
(b) The Collateral Agent may establish one or more Nominees to
"bid in" or otherwise acquire ownership to any Post Foreclosure Asset.
(c) The Collateral Agent shall manage the Nominee and manage
and dispose of any Post Foreclosure Assets with a view towards the realization
of the economic benefits of the ownership of the Post Foreclosure Assets and in
such regard, the Collateral Agent and/or the Nominee may operate, repair,
manage, maintain, develop, and dispose of any Post Foreclosure Asset in such
manner as the Collateral Agent determines as appropriate under the
circumstances.
(d) Each Agent may decline to undertake or to continue taking
a course of action or to execute an action plan (whether proposed by an Agent or
a Lender) unless indemnified to that Agent's satisfaction by the Lenders against
any and all liability and expense which may be incurred by that Agent by reason
of taking or continuing to take that course of action or action plan.
(e) The Administrative Agent and each Lender shall execute all
such instruments and documents not inconsistent with the provisions of this
Agreement as the Administrative Agent and/or the Nominee reasonably may request
with respect to the creation and governance of any Nominee, the conduct of the
Liquidation, and the management and disposition of any Post Foreclosure Asset.
Page: 93
14-7. DISTRIBUTION OF LIQUIDATION PROCEEDS:
(a) The Collateral Agent may establish one or more reasonably
funded reserve accounts into which proceeds of the conduct of any Liquidation
may be deposited in anticipation of future expenses which may be incurred by any
Agent in the exercise of rights as a secured creditor of the Borrowers and prior
claims which the Agents anticipate may need to be paid.
(b) The Collateral Agent shall distribute the proceeds of any
Liquidation to the Administrative Agent.
(c) The Administrative Agent shall distribute the net proceeds
of Liquidation, as distributed to the Administrative Agent by the Collateral
Agent pursuant to Section 14:14-7(b), in accordance with the relative priorities
set forth in Section 14:14-8.
(d) Each Revolving Credit Lender, on the written request of
the Administrative Agent and/or any Nominee, not more frequently than once each
month, shall reimburse the Agents and/or any Nominee, Pro-Rata, for any cost or
expense reasonably incurred by the Agents and/or the Nominee in the conduct of a
Liquidation, which amount is not covered out of current proceeds of the
Liquidation, which reimbursement shall be paid over to and distributed by the
Administrative Agent.
14-8. RELATIVE PRIORITIES TO PROCEEDS OF LIQUIDATION The relative
priorities to the proceeds of a Liquidation are as follows:
(a) To the Agents as reimbursement for all reasonable
third party costs and expenses incurred by the Agents
and to Lenders' Special Counsel and to any funded
reserve established pursuant to Section 14:14-7(a);
and then
(b) To the SwingLine Lender, on account of any SwingLine
loans not converted to Revolving Credit Loans
pursuant to Section 14:14-5(a)(i); and then
(c) To the Revolving Credit Lenders (other than any
Delinquent Revolving Credit Lender), Pro-Rata, to the
unpaid principal balance of Revolving Credit Debt;
and then
(d) To the Revolving Credit Lenders (other than any
Delinquent Revolving Credit Lender), Pro-Rata, to
accrued interest which constitutes Revolving Credit
Debt; and then
(e) To the Revolving Credit Lenders (other than any
Delinquent Revolving Credit Lender), Pro-Rata, to
Revolving Credit Fees, other than the Revolving
Credit Early Termination Fee; and then
(f) To the Term Lender, to the principal balance of the
Term Loan Obligations; and then
(g) To the Term Lender, to accrued interest which
constitutes Term Loan Obligations; and then
Page: 94
(h) To any Delinquent Revolving Credit Lenders, Pro-Rata
to amounts to which such Revolving Credit Lenders
otherwise would have been entitled pursuant to
Sections 14:14-8(c), 14:14-8(d), 14:14-8(e) ; and
then
(i) To the Revolving Credit Lenders, Pro-Rata, to the
extent of the Revolving Credit Early Termination Fee;
and then
(j) To the Term Lender, to any remaining Term Loan
Obligations, including the Term Loan Debt Early
Termination Fee; and then
(k) To any other Liabilities.
ARTICLE 15: - THE AGENTS:
15-1. APPOINTMENT OF THE AGENTS
(a) Each Lender appoints and designates Fleet Retail Finance
Inc. as the "Administrative Agent" hereunder and under the Loan Documents.
(b) Each Lender appoints and designates Fleet Retail Finance
Inc. as the "Collateral Agent" hereunder and under the Loan Documents.
(c) Each Lender authorizes each Agent:
(i) To execute those of the Loan Documents and all
other instruments relating thereto to which that Agent is a party.
(ii) To take such action on behalf of the Lenders and
to exercise all such powers as are expressly delegated to that Agent
hereunder and in the Loan Documents and all related documents, together
with such other powers as are reasonably incident thereto.
15-2. RESPONSIBILITIES OF AGENTS
(a) The Administrative Agent shall have principal
responsibilities for and primary authority for the administration of the credit
facilities contemplated by this Agreement and for all matters for which the
Collateral Agent is not responsible. In all instances where the allocation of
responsibility and authority, as between the Collateral Agent and the
Administrative Agent is in doubt, the Administrative Agent shall be vested with
such responsibility and authority.
(b) The Collateral Agent shall have principal responsibilities
for and primary authority for the conduct of the Liquidation and the
distribution of the proceeds of such Liquidation.
(c) Neither Agent shall have any duties or responsibilities
to, or any fiduciary relationship with, any Lender except for those expressly
set forth in this Agreement.
(d) Neither Agent nor any of its Affiliates shall be
responsible to any Lender for any of the following:
(i) Any recitals, statements, representations or
warranties made by any Borrower or any other Person.
Page: 95
(ii) Any appraisals or other assessments of the
assets of any Borrower or of any other Person responsible for or on
account of the Liabilities.
(iii) The value, validity, effectiveness,
genuineness, enforceability, or sufficiency of the Loan Agreement, the
Loan Documents or any other document referred to or provided for
therein.
(iv) Any failure by any Borrower or any other Person
(other than the subject Agent) to perform its obligations under the
Loan Documents.
(e) Each Agent may employ attorneys, accountants, and other
professionals and agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such attorneys, accountants, and other
professionals or agents or attorneys-in-fact selected by the subject Agent with
reasonable care. No such attorney, accountant, other professional, agent, or
attorney-in-fact shall be responsible for any action taken or omitted to be
taken by any other such Person.
(f) Neither Agent, nor any of its directors, officers, or
employees shall be responsible for any action taken or omitted to be taken or
omitted to be taken by any other of them in connection herewith in reliance upon
advice of their respective counsel nor, in any other event except for any action
taken or omitted to be taken as to which a final judicial determination has been
or is made (in a proceeding in which such Person has had an opportunity to be
heard) that such Person had acted in a grossly negligent manner, in actual bad
faith, or in willful misconduct.
(g) Neither Agent shall have any responsibility in any event
for more funds than that Agent actually receives and collects.
(h) The Agents, in their separate capacities as Lenders, shall
have the same rights and powers hereunder as any other Lender.
15-3. CONCERNING DISTRIBUTIONS BY THE AGENTS
(a) Each Agent, in that Agent's reasonable discretion based
upon that Agent's determination of the likelihood that additional payments will
be received, expenses incurred, and/or claims made by third parties to all or a
portion of such proceeds, may delay the distribution of any payment received on
account of the Liabilities.
(b) Each Agent may disburse funds prior to determining that
the sums which that Agent expects to receive have been finally and
unconditionally paid to that Agent. If and to the extent that Agent does
disburse funds and it later becomes apparent that the Agent did not then receive
a payment in an amount equal to the sum paid out, then any Lender to whom the
Agent made the funds available, on demand from the Agent, shall refund to the
Administrative Agent the sum paid to that person.
(c) If, in the opinion of an Agent, the distribution of any
amount received by that Agent might involve that Agent in liability, or might be
prohibited hereby, or might be questioned by any Person, then that Agent may
refrain from making distribution until that Agent's right to make distribution
Page: 96
has been adjudicated by a court of competent jurisdiction.
(d) The proceeds of any Lender's exercise of any right of, or
in the nature of, set-off shall be deemed, First, to the extent that a Lender is
entitled to any distribution hereunder, to constitute such distribution and
Second, shall be shared with the other Lenders as if distributed pursuant to
(and shall be deemed as distributions under) Section 14:14-8.
(e) Each Lender recognizes that the crediting of the Borrowers
with the "proceeds" of any transaction in which a Post Foreclosure Asset is
acquired is a non-cash transaction and that, in consequence, no distribution of
such "proceeds" will be made by the Administrative Agent to any Lender.
(f) In the event that (x) a court of competent jurisdiction
shall adjudge that any amount received and distributed by the Administrative
Agent is to be repaid or disgorged or (y) the SuperMajority Lenders determine to
effect such repayment or disgorgement, then each Lender to which any such
distribution shall have been made shall repay, to the Agent which had made such
distribution, that Lender's Pro-Rata share of the amount so adjudged or
determined to be repaid or disgorged.
15-4. DISPUTE RESOLUTION: Any dispute among the Lenders and/or any
Agent concerning the interpretation, administration, or enforcement of the
financing arrangements contemplated by this or any other Loan Document or the
interpretation or administration of this or any other Loan Document which cannot
be resolved amicably shall be resolved in the United States District Court for
the District of Massachusetts, sitting in Boston or in the Superior Court of
Suffolk County, Massachusetts, to the jurisdiction of which courts each Lender
hereto hereby submits.
15-5. DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS The Administrative
Agent will forward to each Lender, promptly after the Administrative Agent's
receipt thereof, a copy of each notice or other document furnished to the
Administrative Agent pursuant to this Agreement, including monthly, quarterly,
and annual financial statements received from the Borrowers' Representative
pursuant to Article 6: of this Agreement, other than any of the following:
(a) Routine communications associated with requests for Revolving
Credit Loans and/or the issuance of L/C's.
(b) Routine or nonmaterial communications.
(c) Any notice or document required by any of the Loan Documents to be
furnished to the Lenders by the Borrowers' Representative.
(d) Any notice or document of which the Administrative Agent has
knowledge that such notice or document had been forwarded to the Lenders other
than by the Administrative Agent.
15-6. CONFIDENTIAL INFORMATION
(a) Each Lender will maintain, as confidential, all of the
following:
Page: 97
(i) Proprietary approaches, techniques, and methods
of analysis which are applied by the Administrative Agent in the
administration of the credit facility contemplated by this Agreement.
(ii) Proprietary forms and formats utilized by the
Administrative Agent in providing reports to the Lenders pursuant
hereto, which forms or formats are not of general currency.
(b) Confidential information provided by any Borrower pursuant
to the Loan Documents, other than any information which becomes known to the
general public through sources other than that Lender.
(c) Nothing included herein shall prohibit the disclosure of
any such information as may be required to be provided by judicial process or by
regulatory authorities having jurisdiction over any party to this Agreement.
15-7. RELIANCE BY AGENTS Each Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telex, or
facsimile) reasonably believed by that Agent to be genuine and correct and to
have been signed or sent by or on behalf of the proper person or persons, and
upon advice and statements of attorneys, accountants and other experts selected
by that Agent. As to any matters not expressly provided for in this Agreement,
any Loan Document, or in any other document referred to therein, that Agent
shall in all events be fully protected in acting, or in refraining from acting,
in accordance with the applicable Consent required by this Agreement.
Instructions given with the requisite Consent shall be binding on all Lenders.
15-8. NON-RELIANCE ON AGENTS AND OTHER LENDERS
(a) Each Lender represents to all other Lenders and to the
Agents that such Lender:
(i) Independently and without reliance on any
representation or act by any Agent or by any other Lender, and based on
such documents and information as that Lender has deemed appropriate,
has made such Lender's own appraisal of the financial condition and
affairs of the Borrowers and decision to enter into this Agreement.
(ii) Has relied upon that Lender's review of the Loan
Documents by that Lender and by counsel to that Lender as that Lender
deemed appropriate under the circumstances.
(b) Each Lender agrees that such Lender, independently and
without reliance upon any Agent or any other Lender, and based upon such
documents and information as such Lender shall deem appropriate at the time,
will continue to make such Lender's own appraisals of the financial condition
and affairs of the Borrowers when determining whether to take or not to take any
discretionary action under this Agreement.
Page: 98
(c) Neither Agent in the discharge of that Agent's duties
hereunder, shall be required to make inquiry of, or to inspect the properties or
books of, any Person.
(d) Except for notices, reports, and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder (as to which, see Section 15:15-5), the Agents
shall not have any affirmative duty or responsibility to provide any Lender with
any credit or other information concerning any Person, which information may
come into the possession of Agents or any Affiliate of an Agent.
(e) Each Lender, at such Lender's request, shall have
reasonable access to all nonprivileged documents in the possession of the
Agents, which documents relate to the Agents' performance of their duties
hereunder.
15-9. INDEMNIFICATION Without limiting the liabilities of the Borrowers
under any this or any of the other Loan Documents, each Lender shall indemnify
each Agent, Pro-Rata, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (including attorneys' reasonable fees and expenses and
other out-of-pocket expenditures) which may at any time be imposed on, incurred
by, or asserted against that Agent and in any way relating to or arising out of
this Agreement or any other Loan Document or any documents contemplated by or
referred to therein or the transactions contemplated thereby or the enforcement
of any of terms hereof or thereof or of any such other documents, provided,
however, no Lender shall be liable for any of the foregoing to the extent that
any of the foregoing arises from any action taken or omitted to be taken by the
subject Agent as to which a final judicial determination has been or is made (in
a proceeding in which the subject Agent has had an opportunity to be heard) that
the subject Agent had acted in a grossly negligent manner, in actual bad faith,
or in willful misconduct.
15-10. RESIGNATION OF AGENT
(a) An Agent may resign at any time by giving 60 days prior
written notice thereof to the Lenders and to the other Agent. Upon receipt of
any such notice of resignation, the SuperMajority Lenders shall have the right
to appoint a successor to such Agent (and if no Event of Default has occurred,
with the consent of the Borrowers' Representative, not to be unreasonably
withheld and, in any event, deemed given by the Borrowers' Representative if no
written objection is provided by the Borrowers' Representative to the
(resigning) Agent within seven (7) Business Days notice of such proposed
appointment). If a successor Agent shall not have been so appointed and accepted
such appointment within 30 days after the giving of notice by the resigning
Agent, then the resigning Agent may appoint a successor Agent, which shall be a
financial institution having a combined capital and surplus in excess of
$500,000,000.00. The consent of the Borrowers' Representative otherwise required
by this Section 15:15-10(a) shall not be required if an Event of Default has
occurred.
Page: 99
(b) Upon the acceptance of any appointment as an Agent
hereunder by a successor Agent, such successor shall thereupon succeed to, and
become vested with, all the rights, powers, privileges, and duties of the
(resigning) Agent so replaced, and the (resigning) Agent shall be discharged
from the (resigning) Agent's duties and obligations hereunder, other than on
account of any responsibility for any action taken or omitted to be taken by the
(resigning) Agent as to which a final judicial determination has been or is made
(in a proceeding in which the (resigning) Person has had an opportunity to be
heard) that such Person had acted in a grossly negligent manner or in bad faith.
(c) After any retiring Agent's resignation, the provisions of
this Agreement and of all other Loan Documents shall continue in effect for the
retiring Person's benefit in respect of any actions taken or omitted to be taken
by it while it was acting as an Agent.
ARTICLE 16: - ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:
16-1. ADMINISTRATION OF CREDIT FACILITIES
(a) Except as otherwise specifically provided in this
Agreement, each Agent may take any action with respect to the credit facility
contemplated by the Loan Documents as that Agent determines to be appropriate
within their respective areas of responsibility and authority, as set forth in
Sections 15:15-2(b) and 15:15-2(a), provided, however, neither Agent is under
any affirmative obligation to take any action which it is not required by this
Agreement or the Loan Documents specifically to so take.
(b) Except as specifically provided in the following Sections
of this Agreement, whenever a Loan Document or this Agreement provides that
action may be taken or omitted to be taken in an Agents' discretion, that Agent
shall have the sole right to take, or refrain from taking, such action without,
and notwithstanding, any vote of the Lender:
Actions Described in Section Type of Consent Required
------------------------------------------------------------------
16:16-2 Majority Lenders
16:16-3 SuperMajority Lenders
16:16-4 Certain Consent
16:16-5 Unanimous Consent
16:16-6 Consent of SwingLine Lender
16:16-7 Consent of Term Lender
16:16-8 Consent of the Agents
(c) The rights granted to the Lenders in those sections
referenced in Section 16:16- 1(b) shall not otherwise limit or impair any
Agent's exercise of its discretion under the Loan Documents.
16-2. ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS Except as
Page: 100
otherwise provided in this Agreement, the Consent or direction of the Majority
Lenders is required for any amendment, waiver, or modification of any Loan
Document.
16-3. ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS The
Consent or direction of the SuperMajority Lenders is required as follows:
(a) The Revolving Credit Lenders agree that any loan or
advance under the Revolving Credit which results in a Protective OverAdvance may
be made by the Administrative Agent in its discretion without the Consent of the
Revolving Credit Lenders and that each Revolving Credit Lender shall be bound
thereby, provided, however, the Consent or direction of the SuperMajority
Lenders is required to permit a Protective OverAdvance to be outstanding for
more than 45 consecutive Business Days or more than twice in any twelve month
period.
(b) If any Borrower is then InDefault, the SuperMajority
Lenders may direct the Administrative Agent to suspend the Revolving Credit,
whereupon, as long as a Borrower is InDefault, the only Revolving Credit Loans
which may be made are the following:
(i) Protective OverAdvances.
(ii) Revolving Credit Loans made with Consent of the
SuperMajority Lenders.
(c) If an Event of Default has occurred and not been duly
waived, the SuperMajority Lenders may:
(i) Give the Administrative Agent an Acceleration
Notice in accordance with Section 14:14-1(b).
(ii) Direct the Administrative Agent to increase the
rate of interest to the default rate of interest as provided
in, and to the extent permitted by, this Agreement.
16-4. ACTION REQUIRING CERTAIN CONSENT
(a) The Consent of Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 66-2/3% or more of the Loan
Commitments to make Revolving Credit Loans (other than Loan Commitments held by
a Delinquent Revolving Credit Lender) and of the Term Lender shall be required
for any change to the dates on which any payment of principal of the Term Loan
shall be due and payable or the amount of any such payment.
(b) The consent of the SwingLine Lender and Revolving Credit
Lenders (other than Delinquent Revolving Credit Lenders) holding 51% or more of
the Loan Commitments of the Revolving Credit Lenders (other than any Loan
Commitments held by Delinquent Revolving Credit Lenders) shall be required to
increase the SwingLine Loan Ceiling.
16-5. ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT None of the
following
Page: 101
may take place except with Unanimous Consent:
(a) Any increase in any Revolving Credit Lender's Revolving
Credit Dollar Commitment or Revolving Credit Percentage Commitment (other than
by reason of the application of Section 16:16-11 (which deals with NonConsenting
Revolving Credit Lenders) or Section 17:17-1 (which deals with assignments and
participations)).
(b) Any decrease in any interest rate or fee payable to the
Revolving Credit Lenders on account of the Revolving Credit Loans.
(c) Any extension of the Maturity Date.
(d) Any forgiveness of all or any portion of any payment
Liability.
(e) Any decrease in any interest rate or fee payable under any
of the Loan Documents (other than any Agent's Fee (for which the consent of the
Agents shall also be required)) and of any fee provided for by the Fee Letter
(which may be amended by written agreement between the Borrowers' Representative
on the one hand, and the Administrative Agent and the Term Lender on the other).
(f) Any release of a material portion of the Collateral not
otherwise required or provided for in the Loan Documents or to facilitate a
Liquidation.
(g) Any amendment of the definition of the terms "Borrowing
Base" or "Availability" or of any Definition of any component thereof, such that
more credit would be available to the Borrowers, based on the same assets, as
would have been available to the Borrowers immediately prior to such amendment ,
it being understood, however, that:
(i) The foregoing shall not limit the adjustment by
the Administrative Agent of any Reserve (other than the Loan to Value
Reserve) in the Administrative Agent's administration of the Revolving
Credit as otherwise permitted by this Agreement.
(ii) The foregoing shall not prevent the
Administrative Agent, in its administration of the Revolving Credit,
from restoring any component of Borrowing Base which had been lowered
by the Administrative Agent back to the value of such component, as
stated in this Agreement or to an intermediate value.
(h) Any release of any Person obligated on account of the
Liabilities.
(i) The making of any Revolving Credit Loan which, when made,
exceeds Availability and is not a Protective OverAdvance, provided,
however,
(i) no Consent shall be required in connection with
the making of any Revolving Credit Loan to "cover" any honoring of a
drawing under any L/C; and
(ii) each Lender recognizes that subsequent to the
making of a Revolving Credit Loan which does not constitute a
Protective OverAdvance, the unpaid principal balance of the Loan
Account may exceed Borrowing Base on account of changed circumstances
beyond the control of the Administrative Agent (such as a drop in
collateral value).
Page: 102
(j) The waiver of the obligation of the Borrowers to reduce
the unpaid principal balance of loans under the Revolving Credit to an amount
which does not exceed a Protective OverAdvance or, subject to the time limits
included in Section 16:16-3(a) (which places time and frequency limits on
Protective OverAdvances).
(k) Any amendment of this Article 16:.
(l) Amendment of any of the following Definitions:
"Appraised Inventory Liquidation Value"
"BaseLine Covenant Breach"
"Majority Lender"
"Minimum Availability Breach"
"Term Loan Payment Breach"
"Protective OverAdvance"
"SuperMajority Lenders
"Unanimous Consent"
16-6. ACTIONS REQUIRING SWINGLINE LENDER CONSENT No action, amendment,
or waiver of compliance with, any provision of the Loan Documents or of this
Agreement which affects the SwingLine Lender may be undertaken without the
Consent of the SwingLine Lender.
16-7. ACTIONS REQUIRING TERM LENDER CONSENT None of the following may
be made without the Consent of the Term Lender:
(a) Any increase in any interest rate or fee payable to the
Revolving Credit Lenders on account of the Revolving Credit Loans.
(b) Any amendment, modification, or waiver of any provision of
Article 3: (entitled "The Term Loan").
(c) Any amendment of Section 14:14-2 (which relates to the
circumstances under which the Term Lender may require Acceleration).
(d) Any amendment, modification, or waiver of this Section
16:16-7.
(e) Amendment of any of the following Definitions:
"Loan to Collateral Reserve" (Part B of Definition, only)
"Standstill Period"
16-8. ACTIONS REQUIRING AGENTS' CONSENT
(a) No action, amendment, or waiver of compliance with, any
provision of the Loan Documents or of this Agreement which affects an Agent in
its capacity as an Agent may be undertaken
Page: 103
without the written consent of the Agents.
(b) No action referenced herein which affects the rights,
duties, obligations, or liabilities of an Agent shall be effective without the
written consent of the Agents.
16-9. MISCELLANEOUS ACTIONS
(a) Notwithstanding any other provision of this Agreement, no
single Lender independently may exercise any right of action or enforcement
against or with respect to any Borrower.
(b) Each Agent shall be fully justified in failing or refusing
to take action under this Agreement or any Loan Document on behalf of any Lender
unless that Agent shall first
(i) receive such clear, unambiguous, written
instructions as that Agent deems appropriate; and
(ii) be indemnified to that Agent's satisfaction by
the Lenders against any and all liability and expense which
may be incurred by that Agent by reason of taking or
continuing to take any such action, unless such action had
been grossly negligent, in willful misconduct, or in bad
faith.
(c) Each Agent may establish reasonable procedures for the
providing of direction and instructions from the Lenders to that Agent,
including its reliance on multiple counterparts, facsimile transmissions, and
time limits within which such direction and instructions must be received in
order to be included in a determination of whether the requisite Loan
Commitments has provided its direction, Consent, or instructions.
16-10. ACTIONS REQUIRING BORROWERS' REPRESENTATIVE'S CONSENT
(a) The Borrowers' Representative's consent is required for
any amendment of this Agreement, except that each of the following Articles of
this Agreement may be amended without the consent of the Borrowers'
Representative:
Article Title of Article
------- ----------------
13: Revolving Credit Fundings and Distributions
15: The Agents
(b) The Borrowers' Representative's consent to the
amendment of those provisions referenced in Section 16:16-10(b)
(i) Shall be deemed given unless written objection is
made, within Seven (7) Business Days following the Administrative
Agent's giving notice to the Borrowers' Representative of the proposed
amendment; and
(ii) shall not be required following the
occurrence of any Event of Default.
Page: 104
16-11. NONCONSENTING REVOLVING CREDIT LENDER
(a) In the event that a Revolving Credit Lender (in this
Section 16:16-11, a "NonConsenting Revolving Credit Lender") does not provide
its Consent to a proposal by the Administrative Agent to take action which
requires consent under this Article 16:, then one or more Revolving Credit
Lenders who provided Consent to such action may require the assignment, without
recourse and in accordance with the procedures outlined in Section 17:17-1,
below, of the NonConsenting Revolving Credit Lender's commitment hereunder on
fifteen (15) days written notice to the Administrative Agent and to the
NonConsenting Revolving Credit Lender.
(b) At the end of such fifteen (15) days, and provided that
the NonConsenting Revolving Credit Lender delivers the Revolving Credit Note
held by the NonConsenting Revolving Credit Lender to the Administrative Agent,
the Revolving Credit Lenders who have given such written notice shall Transfer
the following to the NonConsenting Revolving Credit Lender:
(i) Such NonConsenting Revolving Credit Lender's
Pro-Rata share of the principal and interest of the Revolving Credit
Loans to the date of such assignment.
(ii) All fees distributable hereunder to the
NonConsenting Revolving Credit Lender to the date of such assignment.
(iii) Any out-of-pocket costs and expenses for which
the NonConsenting Revolving Credit Lender is entitled to reimbursement
from the Borrowers.
(c) In the event that the NonConsenting Revolving Credit
Lender fails to deliver to the Administrative Agent the Revolving Credit Note
held by the NonConsenting Revolving Credit Lender as provided in Section
16:16-11(b), then:
(i) The amount otherwise to be Transferred to the
NonConsenting Revolving Credit Lender shall be Transferred to the
Administrative Agent and held by the Administrative Agent, without
interest, to be turned over to the NonConsenting Revolving Credit
Lender upon delivery of the Revolving Credit Note held by that
NonConsenting Revolving Credit Lender.
(ii) The Revolving Credit Note held by the
NonConsenting Revolving Credit Lender shall have no force or effect
whatsoever.
(iii) The NonConsenting Revolving Credit Lender shall
cease to be a "Revolving Credit Lender".
(iv) The Revolving Credit Lender(s) which have
Transferred the amount to the Administrative Agent as described above
shall have succeeded to all rights and become subject to all of the
obligations of the NonConsenting Revolving Credit Lender as "Revolving
Credit Lender".
(d) In the event that more than One (1) Revolving Credit
Lender wishes to require such assignment, the NonConsenting Revolving Credit
Lender's commitment hereunder shall be divided among such Revolving Credit
Lenders, pro-rata based upon their respective Revolving Credit Percentage
Commitments, with the Administrative Agent coordinating such transaction.
Page: 105
(e) The Administrative Agent shall coordinate the retirement
of the Revolving Credit Note held by the NonConsenting Revolving Credit Lender
and the issuance of Revolving Credit Notes to those Revolving Credit Lenders
which "take-out" such NonConsenting Revolving Credit Lender, provided, however,
no processing fee otherwise to be paid as provided in Section 17:17-2(b) shall
be due under such circumstances.
16-12. THE BUYOUT:
(a) The Term Lender may (but shall not be obligated to) cause
the assignment to the Term Lender or the Term Lender's designee, by the
Revolving Credit Lenders, of all right, title and interest in, to, arising
under, or in respect of the Revolving Credit Obligations upon five (5) Business
Days prior written notice given at any time either of the following conditions
is satisfied:
(i) The Term Lender has the right, under Section
14:14-1(c), to give an Acceleration Notice.
(ii) The Administrative Agent has declined to
implement or adjust any Availability Reserve or Inventory Reserve
requested by the Term Lender, which request by the Term Lender is with
a view towards maintaining and preserving the Lenders' security and
other collateral interests with respect to the potential impairment of
valuation or priority.
(b) Such assignments shall be effected on the Business Day
next following the expiry of such five (5) Business Days by the execution, by
the Revolving Credit Lenders, of an Assignment and Assumption (in the form of
EXHIBIT 17:17-1, annexed hereto) in exchange for the payment, in immediately
available funds, of the amount of Revolving Credit Obligations (other than the
Revolving Credit Early Termination Fee) as of the date on which such assignment
is made.
(c) In the event that, following the consummation of a BuyOut,
the Term Lender actually receives any Revolving Credit Early Termination Fee
which had been provided for in the Loan Agreement (which receipt, if in
connection with a Liquidation, shall be determined on a last dollar out basis),
then the Term Lender shall pay over such Revolving Credit Early Termination Fee
to the Administrative Agent for distribution to those Persons who were Revolving
Credit Lenders immediately prior to such BuyOut, it being understood that the
Term Lender, in its sole discretion, may waive the entitlement to, or the amount
of, such fee; shall not be under any obligation to prosecute the recovery of
such fee; and may condition its payment over to the Administrative Agent on the
Administrative Agent's providing of such indemnification as is reasonably mutual
satisfactory of the Administrative Agent and the Term Lender.
ARTICLE 17: - ASSIGNMENTS BY LENDERS:
17-1. ASSIGNMENTS AND ASSUMPTIONS:
(a) Except as provided herein, each Revolving Credit Lender
(in this Section 17:17-
Page: 106
1(a), an "Assigning Revolving Credit Lender") may assign
to one or more Eligible Assignees (in this Section 17:17-1(a), each an "Assignee
Revolving Credit Lender") all or a portion of that Revolving Credit Lender's
interests, rights and obligations under this Agreement and the Loan Documents
(including all or a portion of its Commitment) and the same portion of the
Revolving Credit Loans at the time owing to it, and of the Revolving Credit Note
held by the Assigning Revolving Credit Lender, provided that:
(i) The Administrative Agent shall have given its
prior written consent to such assignment, which consent shall not be
unreasonably withheld, but need not be given if the proposed assignment
would result in any resulting Revolving Credit Lender's having a Dollar
Commitment of less than the "minimum hold" amount specified in Section
17:17-1(a)(iii).
(ii) Each such assignment shall be of a constant, and
not a varying, percentage of all the Assigning Revolving Credit
Lender's rights and obligations under this
Agreement.
(iii) Following the effectiveness of such assignment,
the Assigning Revolving Credit Lender's Dollar Commitment (if not an
assignment of all of the Assigning Revolving Credit Lender's
Commitment) shall not be less than $10,000,000.00.
(iv) If no Event of Default has occurred, such
assignment shall be subject to the consent of the Borrowers'
Representative, not to be unreasonably withheld or delayed and which
consent shall be deemed given if no written objection is received
within seven (7) days of the Borrowers' Representative's receipt of
notice of such proposed assignment.
17-2. ASSIGNMENT PROCEDURES. (This Section 17:17-2 describes the
procedures to be followed in connection with an assignment effected pursuant to
this Article 17: and permitted by Section 17:17-1).
(a) The parties to such an assignment shall execute and
deliver to the Administrative Agent, for recording in the Register, an
Assignment and Acceptance substantially in the form of EXHIBIT 17:17-1, annexed
hereto.
(b) The Assigning Revolving Credit Lender shall deliver to the
Administrative Agent, with such Assignment and Acceptance, the Revolving Credit
Note held by the subject Assigning Revolving Credit Lender and the
Administrative Agent's processing fee of $3,000.00, provided, however, no such
processing fee shall be due where the Assigning Revolving Credit Lender is one
of the Revolving Credit Lenders at the initial execution of this Agreement.
(c) The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar list (the
"Register") for the recordation of the names and addresses of the Revolving
Credit Lenders and of the Revolving Credit Percentage Commitment and Revolving
Credit Percentage Commitment of each Revolving Credit Lender. The Register shall
be available for inspection by the Revolving Credit Lenders at any reasonable
time and from time to time
Page: 107
upon reasonable prior notice. In the absence of manifest error, the entries in
the Register shall be conclusive and binding on all Lenders. The Administrative
Agent and the Revolving Credit Lenders may treat each Person whose name is
recorded in the Register as a "Revolving Credit Lender" hereunder for all
purposes of this Agreement.
(d) The Assigning Revolving Credit Lender and Assignee
Revolving Credit Lender, directly between themselves, shall make all appropriate
adjustments in payments for periods prior to the effective date of an Assignment
and Assumption.
17-3. EFFECT OF ASSIGNMENT.
(a) From and after the effective date specified in an Assignment and
Acceptance which has been executed, delivered, and recorded (which effective
date the Administrative Agent may delay by up to Five (5) Business Days after
the delivery of such Assignment and Acceptance):
(i) The Assignee Revolving Credit Lender:
(A) Shall be a party to this Agreement and the Loan
Documents (and to any amendments thereof) as fully as if the
Assignee Revolving Credit Lender had executed each.
(B) Shall have the rights of a Revolving Credit
Lender hereunder to the extent of the Revolving Credit
Percentage Commitment and Revolving Credit Percentage
Commitment assigned by such Assignment and Acceptance.
(ii) The Assigning Revolving Credit Lender shall be released
from the Assigning Revolving Credit Lender's obligations under this
Agreement and the Loan Documents to the extent of the Commitment
assigned by such Assignment and Acceptance.
(iii) The Administrative Agent shall undertake to obtain and
distribute replacement Revolving Credit Notes to the subject Assigning
Revolving Credit Lender and Assignee Revolving Credit Lender.
(b) By executing and delivering an Assignment and Acceptance, the
parties thereto confirm to and agree with each other and with all parties to
this Agreement as to those matters which are set forth in the subject Assignment
and Acceptance.
ARTICLE 18: - NOTICES:
18-1. NOTICE ADDRESSES. All notices, demands, and other communications
made in respect of any Loan Document (other than a request for a loan or advance
or other financial accommodation under the Revolving Credit) shall be made to
the following addresses, each of which may be changed upon seven (7) days
written notice to all others given by certified mail, return receipt requested:
Page: 108
If to either Agent:
Fleet Retail Finance Inc.
40 Broad Street
Boston, Massachusetts 02109
Attention : Sally A.. Sheehan
Director
Fax : 617 434 4339
With a copy to:
Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attention : Richard B. Jacobs, Esquire
Fax : 617 880 3456
If to the Borrowers' Representative
And All Borrowers:
J. Baker, Inc.
555 Turnpike Street
Canton, Massachusetts 02021
Attention : Elizabeth C. White
Fax : 781 821 4867
With copies to: J. Baker, Inc.
555 Turnpike Street
Canton, Massachusetts 02021
Attention : Michael O'Hara, Esquire
Fax : 781 821 0614
Goodwin, Procter & Hoar LP
Exchange Place
Boston, Massachusetts 02109-2881
Attention : Raymond C. Zemlin, P.C.
Fax: : 617 523 1231
18-2. NOTICE GIVEN.
(a) Except as otherwise specifically provided herein, notices
shall be deemed made and correspondence received, as follows (all times being
local to the place of delivery or receipt):
(i) By mail: the sooner of when actually received or
Three (3) days following deposit in the United States mail, postage
prepaid.
(ii) By recognized overnight express delivery: the
Business Day following the day when sent.
(iii) By Hand: If delivered on a Business Day after
9:00 AM and no later than Three (3) hours prior to the close of
customary business hours of the recipient, when delivered. Otherwise,
at the opening of the then next Business Day.
(iv) By Facsimile transmission (which must include a
header on which the party sending such transmission is indicated): If
sent on a Business Day after 9:00 AM and no
Page: 109
later than Three (3) hours prior to the close of customary business
hours of the recipient, one (1) hour after being sent. Otherwise, at
the opening of the then next Business Day.
(b) Rejection or refusal to accept delivery and inability to
deliver because of a changed address or Facsimile Number for which no due notice
was given shall each be deemed receipt of the notice sent.
18-3. WIRE INSTRUCTIONS. Subject to change in the same manner that a
notice address may be changed (as to which, see Section 18:18-1), wire transfers
to the Administrative Agent shall be made in accordance with the following wire
instructions:
Fleet National Bank
ABA No. 011000390
Acct Name: Fleet Retail Finance Inc.
Acct No. : 530-39952
Reference: J. Baker
ARTICLE 19: - TERM:
19-1. TERMINATION OF REVOLVING CREDIT. The Revolving Credit shall
remain in effect (subject to suspension as provided in Section 2:2-6(g) hereof)
until the Termination Date.
19-2. ACTIONS ON TERMINATION.
(a) On the Termination Date, the Borrowers shall pay the
Administrative Agent (whether or not then due), in immediately available funds,
all then Liabilities including, without limitation: the following:
(i) The entire balance of the Loan Account (including
the unpaid principal balance of the Revolving Credit Loans, and the
SwingLine Loan, and the Term Loan ).
(ii) Any then remaining unpaid installments of the
Revolving Credit Commitment Fee.
(iii) Any then remaining unpaid installments of the
Agent's Fee.
(iv) Any payments due on account of the
indemnification obligations included in Section 2:2-11(e).
(v) Any accrued and unpaid Unused Line Fee.
(vi) Any applicable Revolving Credit Early
Termination Fee.
(vii) All accrued and unpaid interest (including all
accrued and unpaid Current Pay Interest and all accrued and unpaid PIK
Interest) on the Term Loan.
(viii) Any then remaining unpaid installments of the
Term Loan Commitment Fee.
(ix) Any accrued and unpaid Term Loan Early
Termination Fee.
Page: 110
(x) All unreimbursed costs and expenses of each Agent
and of Lenders' Special Counsel for which each Borrower is responsible.
(b) On the Termination Date, the Borrowers shall also shall
make such arrangements concerning any L/C's then outstanding as are reasonably
satisfactory to the Administrative Agent (such as their being cash
collateralized at 103 % of their then Stated Amount).
(c) Until such payment (Section 19:19-2(a)) and arrangements
concerning L/C's (Section 19:19-2(b)), all provisions of this Agreement, other
than those included in Article 2: which place any obligation on the
Administrative Agent or any Revolving Credit Lender to make any loans or
advances or to provide any financial accommodations to any Borrower and those
included in Article 3: which place any obligation on the Term Lender to make any
loan or advance or to provide any financial accommodation to any Borrower shall
remain in full force and effect until all Liabilities shall have been paid in
full.
(d) The release by the Collateral Agent of the Collateral
Interests granted the Collateral Agent by the Borrowers hereunder may be upon
such conditions and indemnifications as the Administrative Agent reasonably may
require.
ARTICLE 20: - GENERAL:
20-1. PROTECTION OF COLLATERAL. No Agent has any duty as to the
collection or protection of the Collateral beyond the safe custody of such of
the Collateral as may come into the possession of that Agent.
20-2. PUBLICITY. The Agents (or either of them) and the Term Lender
respectively may issue a "tombstone" notice of the establishment of the credit
facility contemplated by this Agreement and may make reference to each Borrower
(and may utilize any logo or other distinctive symbol associated with each
Borrower) in connection with any advertising, promotion, or marketing undertaken
by the Agents (or either of them) and/or by the Term Lender.
20-3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Borrowers' Representative, each Borrower, and their respective representatives,
successors, and assigns and shall enure to the benefit of each Agent and each
Lender and their respective successors and assigns, provided, however, no
trustee or other fiduciary appointed with respect to any Borrower shall have any
rights hereunder. In the event that any Agent or any Lender assigns or transfers
its rights under this Agreement, the assignee shall thereupon succeed to and
become vested with all rights, powers, privileges, and duties of such assignor
hereunder and such assignor shall thereupon be discharged and relieved from its
duties and obligations hereunder.
Page: 111
20-4. SEVERABILITY. Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Agreement.
20-5. AMENDMENTS. COURSE OF DEALING.
(a) This Agreement and the other Loan Documents incorporate
all discussions and negotiations between each Borrower and each Agent and each
Lender, either express or implied, concerning the matters included herein and in
such other instruments, any custom, usage, or course of dealings to the contrary
notwithstanding. No such discussions, negotiations, custom, usage, or course of
dealings shall limit, modify, or otherwise affect the provisions thereof. No
failure by any Agent or any Lender to give notice to the Borrowers'
Representative of any Borrower's having failed to observe and comply with any
warranty or covenant included in any Loan Document shall constitute a waiver of
such warranty or covenant or the amendment of the subject Loan Document.
(b) Each Borrower may undertake any action otherwise
prohibited hereby, and may omit to take any action otherwise required hereby,
upon and with the express prior written consent of the Administrative Agent.
Subject to Article 16:, no consent, modification, amendment, or waiver of any
provision of any Loan Document shall be effective unless executed in writing by
or on behalf of the party to be charged with such modification, amendment, or
waiver (and if such party is the Administrative Agent then by a duly authorized
officer thereof). Any modification, amendment, or waiver provided by the
Administrative Agent shall be in reliance upon all representations and
warranties theretofore made to the Administrative Agent by or on behalf of the
Borrowers (and any guarantor, endorser, or surety of the Liabilities) and
consequently may be rescinded in the event that any of such representations or
warranties was not true and complete in all material respects when given.
20-6. POWER OF ATTORNEY. In connection with all powers of attorney
included in this Agreement, each Borrower hereby grants unto the Administrative
Agent (acting through any of its officers) full power to do any and all things
necessary or appropriate in connection with the exercise of such powers as fully
and effectually as that Borrower might or could do, hereby ratifying all that
said attorney shall do or cause to be done by virtue of this Agreement. No power
of attorney set forth in this Agreement shall be affected by any disability or
incapacity suffered by any Borrower and each shall survive the same. All powers
conferred upon the Administrative Agent or the Collateral Agent by this
Agreement, being coupled with an interest, shall be irrevocable until this
Agreement is terminated by a written instrument executed by a duly authorized
officer of the Administrative Agent.
20-7. APPLICATION OF PROCEEDS. The proceeds of any collection, sale, or
disposition of the
Page: 112
Collateral, or of any other payments received hereunder, shall be applied
towards the Liabilities in such order and manner as the Administrative Agent
determines in its sole discretion, consistent, however, with Sections 14:14-7
and 14:14-8 and any other applicable provisions of this Agreement. The Borrowers
shall remain liable for any deficiency remaining following such application.
20-8. INCREASED COSTS. If, as a result of any Requirement of Law, or of
the interpretation or application thereof by any court or by any governmental or
other authority or entity charged with the administration thereof, whether or
not having the force of law, which:
(a) subjects any Lender to any taxes or changes the basis of
taxation, or increases any existing taxes, on payments of principal,
interest or other amounts payable by any Borrower to the Administrative
Agent or any Lender under this Agreement (except for taxes on the
Administrative Agent or any Lender based on net income or capital
imposed by the jurisdiction in which the principal or lending offices
of the Administrative Agent or that Lender are located);
(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held by,
or deposits in or for the account of or loans by or any other
acquisition of funds by the relevant funding office of any Lender;
(c). imposes on any Lender any other condition with respect to
any Loan Document; or
(d) imposes on any Lender a requirement to maintain or
allocate capital in relation to the Liabilities;
and the result of any of the foregoing, in such Lender's reasonable opinion, is
to increase the cost to that Lender of making or maintaining any loan, advance
or financial accommodation or to reduce the income receivable by that Lender in
respect of any loan, advance or financial accommodation by an amount which that
Lender deems to be material, then upon written notice from the Administrative
Agent, from time to time, to the Borrowers' Representative (such notice to set
out in reasonable detail the facts giving rise to and a summary calculation of
such increased cost or reduced income), the Borrowers shall forthwith pay to the
Administrative Agent, for the benefit of the subject Revolving Credit Lender,
upon receipt of such notice, that amount which shall compensate the subject
Lender for such additional cost or reduction in income.
20-9. COSTS AND EXPENSES OF THE AGENTS .
(a) The Borrowers shall pay from time to time on demand all
Costs of Collection and all reasonable costs, expenses, and disbursements
(including attorneys' reasonable fees and expenses) which are incurred by each
Agent in connection with the preparation, negotiation, execution, and delivery
of this Agreement and of any other Loan Documents, and all other reasonable
costs, expenses, and disbursements which may be incurred in connection with or
in respect to the credit facility contemplated
Page: 113
hereby or which otherwise are incurred with respect to the Liabilities.
(b) The Borrowers shall pay from time to time on demand all
reasonable costs and expenses (including attorneys' reasonable fees and
expenses) incurred, following the occurrence of any Event of Default, by the
Lenders to Lenders' Special Counsel.
(c) Each Borrower authorizes the Administrative Agent to pay
all such fees and expenses and in the Administrative Agent's discretion, to add
such fees and expenses to the Loan Account.
(d) The undertaking on the part of each Borrower in this
Section 20:20-9 shall survive payment of the Liabilities and/or any termination,
release, or discharge executed by any Agent in favor of any Borrower, other than
a termination, release, or discharge which makes specific reference to this
Section 20:20-9.
20-10. COPIES AND FACSIMILES. Each Loan Document and all documents and
papers which relates thereto which have been or may be hereinafter furnished any
Agent or any Lender may be reproduced by any Lender or by any Agent by any
photographic, microfilm, xerographic, digital imaging, or other process, and
such Person making such reproduction may destroy any document so reproduced. Any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business). Any facsimile which bears proof of transmission shall be binding on
the party which or on whose behalf such transmission was initiated and likewise
shall be so admissible in evidence as if the original of such facsimile had been
delivered to the party which or on whose behalf such transmission was received.
20-11. MASSACHUSETTS LAW. This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the law of The Commonwealth of Massachusetts.
20-12. CONSENT TO JURISDICTION.
(a) Each Borrower agrees that any legal action, proceeding,
case, or controversy against any Borrower with respect to any Loan Document may
be brought in the Superior Court of Suffolk County Massachusetts or in the
United States District Court, District of Massachusetts, sitting in Boston,
Massachusetts, as the Administrative Agent may elect in the Administrative
Agent's sole discretion. By execution and delivery of this Agreement, each
Borrower, for itself and in respect of its property, accepts, submits, and
consents generally and unconditionally, to the jurisdiction of the aforesaid
courts.
(b) Each Borrower WAIVES personal service of any and all
process upon it, and irrevocably consents to the service of process out of any
of the aforementioned courts in any such action
Page: 114
or proceeding by the mailing of copies thereof by certified mail, postage
prepaid, to the Borrowers' Representative at the Borrowers' Representative's
address for notices as specified herein (with a copy forwarded by recognized
overnight delivery service), such service to become effective five (5) Business
Days after such mailing.
(c) Each Borrower WAIVES any objection based on forum non
conveniens and any objection to venue of any action or proceeding instituted
under any of the Loan Documents and consents to the granting of such legal or
equitable remedy as is deemed appropriate by the Court.
(d) Nothing herein shall affect the right of the
Administrative Agent to bring legal actions or proceedings in any other
competent jurisdiction.
(e) Each Borrower agrees that any action commenced by any
Borrower asserting any claim or counterclaim arising under or in connection with
this Agreement or any other Loan Document shall be brought solely in the
Superior Court of Suffolk County Massachusetts or in the United States District
Court, District of Massachusetts, sitting in Boston, Massachusetts, and that
such Courts shall have exclusive jurisdiction with respect to any such action.
20-13. INDEMNIFICATION. The Borrowers' Representative and each Borrower
shall indemnify, defend, and hold each Agent and each Lender and any of their
respective employees, officers, or agents (each, an "Indemnified Person")
harmless of and from any claim brought or threatened against any Indemnified
Person by any Borrower, any guarantor or endorser of the Liabilities, or any
other Person (as well as from attorneys' reasonable fees, expenses, and
disbursements in connection therewith) on account of the relationship of the
Borrowers' Representative, the Borrowers or of any other guarantor or endorser
of the Liabilities, including all costs, expenses, liabilities, and damages as
may be suffered by any Indemnified Person in connection with (x) the Collateral;
(y) the occurrence of any Event of Default; or (z) the exercise of any rights or
remedies under any of the Loan Documents (each of claims which may be defended,
compromised, settled, or pursued by the Indemnified Person with counsel of the
Administrative Agent's selection, but at the expense of the Borrowers'
Representative and the Borrowers) other than any claim as to which a final
determination is made in a judicial proceeding (in which the Administrative
Agent and any other Indemnified Person has had an opportunity to be heard),
which determination includes a specific finding that the Indemnified Person
seeking indemnification had acted in a grossly negligent manner or in actual bad
faith or wilful misconduct. This indemnification shall survive payment of the
Liabilities and/or any termination, release, or discharge executed by the
Administrative Agent in favor of the Borrowers' Representative and/or the
Borrowers, other than a termination, release, or discharge duly executed on
behalf of the Administrative Agent which makes specific reference to this
Section 20:20-13.
20-14. RULES OF CONSTRUCTION. The following rules of construction shall
be applied in the interpretation, construction, and enforcement of this
Agreement and of the other Loan Documents:
Page: 115
(a) Unless otherwise specifically provided for herein,
interest and any fee or charge which is stated as a per annum percentage shall
be calculated based on a 360 day year and actual days elapsed.
(b) Any term used herein to describe Collateral or a Person,
which term is defined in either (or both) the UCC as in effect on the date when
this Agreement was executed by the Borrowers or in UCC9'99, shall be given the
meaning which is the more encompassing of the two definitions.
(c) Words in the singular include the plural and words in the
plural include the singular.
(d) Any reference, herein, to a circumstance or event's having
"more than a de minimis adverse effect" and any similar reference is to a
circumstance or event which (x) in a well managed enterprise, would receive the
active attention of senior management with a view towards its being reversed or
remedied; or (y) if not reversed or remedied could reasonably be expected to
lead to its becoming a material adverse effect.
(e) Cross references to Sections in this Agreement begin with
the Article in which that Section appears, followed by a colon, and then the
Section to which reference is made. (For example, a reference to "Section 5:5-6"
is to Section 5-6, which appears in Article 5 of this Agreement).
(f) Titles, headings (indicated by being underlined or shown
in SMALL CAPITALS) and any Table of Contents are solely for convenience of
reference; do not constitute a part of the instrument in which included; and do
not affect such instrument's meaning, construction, or effect.
(g) The words "includes" and "including" are not
limiting.
(h) Text which follows the words "including, without
limitation" (or similar words) is illustrative and not limitational.
(i) Text which is shown in italics (except for parenthesized
italicized text), shown in bold, shown IN ALL CAPITAL LETTERS, or in any
combination of the foregoing, shall be deemed to be conspicuous.
(j) The words "may not" are prohibitive and not
permissive.
(k) Any reference to a Person's "knowledge" (or words of
similar import) are to such Person's knowledge assuming that such Person has
undertaken reasonable and diligent investigation with respect to the subject of
such "knowledge" (whether or not such investigation has actually been
undertaken).
(l) Terms which are defined in one section of any Loan
Document are used with such definition throughout the instrument in which so
defined.
(m) The symbol "$" refers to United States Dollars.
(n) Unless limited by reference to a particular Section or
provision, any reference to "herein", "hereof", or "within" is to the entire
Loan Document in which such reference is made.
(o) References to "this Agreement" or to any other Loan
Document is to the subject
Page: 116
instrument as amended to the date on which application of such reference is
being made.
(p) Except as otherwise specifically provided, all references
to time are to Boston time.
(q) In the determination of any notice, grace, or other period
of time prescribed or allowed hereunder:
(i) Unless otherwise provided (I) the day of the act,
event, or default from which the designated period of time begins to
run shall not be included and the last day of the period so computed
shall be included unless such last day is not a Business Day, in which
event the last day of the relevant period shall be the then next
Business Day and (II) the period so computed shall end at 5:00 PM on
the relevant Business Day.
(ii) The word "from" means "from and including".
(iii) The words "to" and "until" each mean "to,
but excluding".
(iv) The word "through" means "to and including".
(r) The Loan Documents shall be construed and interpreted in a
harmonious manner and in keeping with the intentions set forth in Section
20:20-15 hereof, provided, however, in the event of any inconsistency between
the provisions of this Agreement and any other Loan Document, the provisions of
this Agreement shall govern and control.
20-15. INTENT. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of all Collateral Interests created by any
Borrower to secure the Liabilities be broadly construed in favor of the
Administrative Agent and that they cover all assets of each Borrower.
(c) All Collateral Interests created in favor of the
Collateral Agent at any time and from time to time by any any secure all
Liabilities, whether now existing or contemplated or hereafter arising.
(d) All reasonable costs, expenses, and disbursements incurred
by any Agent and, to the extent provide in Section 20:20-9 each Lender, in
connection with such Person's relationship(s) with any Borrower shall be borne
by the Borrowers.
(e) Unless otherwise explicitly provided herein, the
Administrative Agent's consent to any action of any Borrower which is prohibited
unless such consent is given may be given or refused by the Administrative Agent
in its sole discretion and without reference to Section 2:2-18 hereof.
20-16. PARTICIPATIONS: Each Lender may sell participations to one or
more financial institutions (each, a "Participant") in that Lender's interests
herein provided that no such participation shall include any provision which
accords that Participant with any rights, vis a vis any Agent, with respect
Page: 117
to any requirement herein for approval by a requisite number or proportion of
the Lenders. No such sale of a participation shall relieve a Lender from that
Lender's obligations hereunder nor obligate any Agent to any Person other than a
Lender.
20-17. RIGHT OF SET-OFF. Any and all deposits or other sums at any time
credited by or due to any Borrower from any Agent or any Lender or any
Participant or from any Affiliate of any of the foregoing, and any cash,
securities, instruments or other property of any Borrower in the possession of
any of the foregoing, whether for safekeeping or otherwise (regardless of the
reason such Person had received the same) to the extent permitted by law, shall
at all times constitute security for all Liabilities and for any and all
obligations of each Borrower to each Agent and such Lender or any Participant or
such Affiliate and following the occurrence of an Event of Default may be
applied or set off against the Liabilities and against such obligations at any
time, whether or not such are then due and whether or not other collateral is
then available to any Agent or that Lender.
20-18. PLEDGES TO FEDERAL RESERVE BANKS: Nothing included in this
Agreement shall prevent or limit any Lender, to the extent that such Lender is
subject to any of the twelve Federal Reserve Banks organized under (s)4 of the
Federal Reserve Act (12 U.S.C. (s)341) from pledging all or any portion of that
Lender's interest and rights under this Agreement, provided, however, neither
such pledge nor the enforcement thereof shall release the pledging Lender from
any of its obligations hereunder or under any of the Loan Documents.
20-19. MAXIMUM INTEREST RATE. Regardless of any provision of any Loan
Document, neither any Agent nor any Lender shall be entitled to contract for,
charge, receive, collect, or apply as interest on any Liability, any amount in
excess of the maximum rate imposed by Applicable Law. Any payment which is made
which, if treated as interest on a Liability would result in such interest's
exceeding such maximum rate shall be held, to the extent of such excess, as
additional collateral for the Liabilities as if such excess were "Collateral."
20-20. WAIVERS.
(a) The Borrowers' Representative and each Borrower (and all
guarantors, endorsers, and sureties of the Liabilities) make each of the waivers
included in Section 20:20-20(b), below, knowingly, voluntarily, and
intentionally, and understands that each Agent and each Lender, in establishing
the facilities contemplated hereby and in providing loans and other financial
accommodations to or for the account of the Borrowers as provided herein,
whether not or in the future, is relying on such waivers.
(b) THE BORROWERS' REPRESENTATIVE, EACH BORROWER, AND EACH
Page: 118
SUCH GUARANTOR, ENDORSER, AND SURETY RESPECTIVELY WAIVES THE FOLLOWING:
(i) Except as otherwise specifically required hereby,
notice of non-payment, demand, presentment, protest and all forms of
demand and notice, both with respect to the Liabilities and the
Collateral.
(ii) Except as otherwise specifically required
hereby, the right to notice and/or hearing prior to an Agent's
exercising of that Agent's rights upon default.
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH ANY AGENT OR ANY LENDER IS OR BECOMES A PARTY
(WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST ANY AGENT
OR ANY LENDER OR IN WHICH ANY AGENT OR ANY LENDER IS JOINED AS A PARTY
LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF,
ANY RELATIONSHIP AMONGST OR BETWEEN THE BORROWERS' REPRESENTATIVE, ANY
BORROWER OR ANY OTHER PERSON AND THE AGENT AND EACH LENDER LIKEWISE
WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH CASE OR
CONTROVERSY).
(iv) Except for manifest error, any defense,
counterclaim, set-off, recoupment, or other basis on which the amount
of any Liability, as stated on the books and records of the
Administrative Agent or any Lender, could be reduced or claimed to be
paid otherwise than in accordance with the tenor of and written terms
of such Liability.
(v) Any claim to consequential, special, or punitive
damages.
Page: 119
THE BORROWERS' REPRESENTATIVE
J. BAKER, INC.
By: /s/ Elizabeth C. White
----------------------------------------
Print Name: Elizabeth C. White
------------------------------------
Title: Chief Financial Officer
-------------------------------------
THE BORROWERS:
MORSE SHOE, INC.
JBI, INC.
JBI APPAREL, INC.
THE CASUAL MALE, INC.
WGS CORP.
TCMB&T, INC.
By: /s/ Elizabeth C. White
----------------------------------------
Name: Elizabeth C. White
--------------------------------------
Title: Chief Financial Officer
-------------------------------------
Signature Page 1
ADMINISTRATIVE AGENT AND COLLATERAL AGENT
FLEET RETAIL FINANCE INC.
By: /s/ Sally A. Sheehan
------------------------------------
Print Name: Sally A Sheehan
----------------------------------
Title: Director
---------------------------------
TERM LENDER
BACK BAY CAPITAL FUNDING LLC
By: /s/ Michael Pizette
------------------------------------
Print Name: Michael Pizette
-----------------------------------
Title: Managing Director
---------------------------------
Signature Page 2
THE REVOLVING CREDIT LENDERS:
FLEET RETAIL FINANCE INC.
By: /s/ Sally A. Sheehan
------------------------------------
Name: Sally A. Sheehan
----------------------------------
Title: Director
---------------------------------
FOOTHILL CAPITAL CORPORATION
By: /s/ Stacy Yucht
------------------------------------
Name: Stacy Yucht
----------------------------------
Title: Vice President
---------------------------------
HELLER FINANCIAL, INC.
By: /s/ Richard Holston
------------------------------------
Name: Richard Holston
----------------------------------
Title: Assistant Vice President
---------------------------------
LASALLE BUSINESS CREDIT, INC
By: /s/ Anthony Lavinio
------------------------------------
Name: Anthony Lavinio
----------------------------------
Title: Assistant Vice President
---------------------------------
NATIONAL CITY COMMERCIAL FINANCE, INC.
By: /s/ Gregory A. Godec
------------------------------------
Name: Gregory A. Godec
----------------------------------
Title: Senior Vice President
---------------------------------
Signature Page 3
IBJ WHITEHALL BUSINESS CREDIT CORP.
By: /s/ John N. Favale
------------------------------------
Name: John N. Favale
----------------------------------
Title: AVP
---------------------------------
ORIX BUSINESS CREDIT, INC.
By: /s/ Michael J. Cox
------------------------------------
Name: Michael J. Cox
----------------------------------
Title: SVP
---------------------------------
SOVEREIGN BANK
By: /s/ Joseph Becker
------------------------------------
Name: Joseph Becker
----------------------------------
Title: SVP
---------------------------------
DEBIS FINANCIAL SERVICES, INC.
By: /s/ James M. Vandervalk
------------------------------------
Name: James M. Vandervalk
----------------------------------
Title: President, Asset Based
Lending Division
---------------------------------
THE PROVIDENT BANK
By: /s/ Jose V. Garde
------------------------------------
Name: Jose V. Garde
----------------------------------
Title: Vice President
---------------------------------
Signature Page 4