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Exhibit 10.14
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THIRD AMENDMENT TO
LOAN AND SECURITY AGREEMENT
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........................, 1996
Effective:......................., 1996
THIS THIRD AMENDMENT is made to the May 31, 1995 Loan and Security
Agreement (the "LOAN AGREEMENT") between
GBFC, Inc., a Delaware corporation with its principal
executive offices at 40 Broad Street, Boston, Massachusetts, as agent
for the ratable benefit of the "LENDERS" (in such capacity, the
"AGENT"), being:
GBFC, Inc.
and
Foothill Capital Corporation, a California
corporation with its principal executive offices at 11111
Santa Monica Boulevard, #1500 Los Angeles, California
90025-3333
and
JBM Retail Company, Inc. (hereinafter, the "BORROWER"), a
Delaware corporation with its principal executive offices at 13801
Northwest 14th Street, Sunrise, Florida 33323
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom, and shall take effect as of the date indicated above,
WITNESSETH:
1. AGREEMENT TO AMEND
Provided each of those "Conditions to Amendment" set forth in Section
2, below, is satisfied on or before July 19, 1996, the Loan Agreement shall be
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amended, as set forth below, such amendment to take effect as of
.................... 1996.
SECTION 1-4(B)(I) of the Loan Agreement is amended to read as follows:
(b)(i)(A) Subject to the terms and conditions
of the within Agreement, the Lenders will provide the Borrower with
the loan so requested, as follows:
(I) If such request is made at a
time when there is, or within the then immediately preceding
Fourteen (14) days had been, an unpaid principal balance in
the Loan Account, and if such request is received by 3:00 p.m.
on a Business Day (defined below), such loan will be made by
the end of business on the Business Day next following;
otherwise, by the end of business on the Business Day second
next following.
(II) At all other times, by the end
of business on the third Business Day after (and not
including) the day on which such request is made, except that
the very first loan which is made under the Revolving Credit
shall be made on the Business Day next following that on which
such loan otherwise would have been made under the foregoing
timetable.
(B) On not less than Five (5) days prior
notice in each instance, the Funding Agent may revise the above
schedule, by which loans shall be made, from time to time.
SECTION 1-8(A) of the Loan Agreement is amended to read as follows:
(a) Except as otherwise provided in Subsection (b), below, the
unpaid principal balance of the Loan Account shall bear interest, until repaid
(calculated based upon a 360-day year and actual days elapsed), floating as
follows:
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(i) From the date of execution of the within Agreement
until the effective date of the Third Amendment to the within
Agreement: at the aggregate of Base plus One and One-Half Percent
(1.5%) per annum.
(ii) From the effective date of the Third Amendment to the
within Agreement until the later of the Termination Date or the date
on which all Liabilities have been paid and any obligation of the
Lenders to provide loans and advances under the Revolving Credit and
financial accommodations to or for the account of the Borrower have
terminated: at the aggregate of Base plus One Quarter of One Percent
(0.25%) per annum, provided, however, in the event that the weighted
average unpaid principal balance of the Loan Account for any
Utilization Period is greater than Fifty Percent (50%) of the Loan
Ceiling, the Borrower shall pay the Lenders, within Two (2) weeks
following the end of such Utilization Period, an amount equal to the
difference between interest, as accrued during that Utilization Period
and interest which would have accrued if the interest rate, during
that Utilization Period had been the aggregate of Base plus One Half
of One Percent (0.50%) per annum.
SECTION 1-9 of the Loan Agreement is amended to read as follows:
1-9. Commitment, Facility and Unused Line Fees.
(a) As compensation for the Lenders' commitment included herein to
make loans and advances to the Borrower and as compensation for the Lenders'
maintenance of sufficient funds available for such purpose, the Lenders have
earned a COMMITMENT FEE (so referred to herein) of One Million Three Hundred
Thousand Dollars ($1,300,000.00). The Commitment Fee shall be payable in Three
(3) installments, the first of which, in the sum of $450,000.00, shall be
payable on the date on which the within Agreement is executed and the second of
which, in the sum of $450,000.00, shall be payable on May 31, 1996, and the
third of which, in the sum of $400,000.00, shall be payable on May 31, 1997,
provided, however, in the event of the acceleration of the Liabilities on
account of the occurrence of any Event of Default, the Lenders shall not be
entitled to any installment of the Commitment Fee other than any unpaid
installment of the Commitment Fee for which the due date has
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occurred on or prior to the date of such acceleration, provided further it is
understood that $900,000.00 of the Commitment Fee has previously been paid.
(b)(i) The Borrower shall pay the Agent, on account of the routine
day to day administration of the Revolving Credit, a FACILITY FEE (so referred
to herein) of $11,000 per month for the period beginning with the execution of
the within Agreement and ending on May 31, 1997 and $8,000.00 per month for
the period beginning on June 1, 1997 and ending on the Termination Date. Such
Facility Fee shall be payable monthly, with the first such Facility Fee payable
at the execution of the within Agreement, and all subsequent Facility Fees
payable on the first day of each month thereafter, other than June 1, 1995
(provided, however, the failure to have made such payment on such first day of
the month shall not constitute an Event of Default if such first day is not a
Business Day and such payment is made on the then next succeeding Business
Day).
(ii) In the event of the termination of the Revolving
Credit on account of the Borrower's having given a Termination Notice,
there shall be paid to the Agent (in addition to any then accrued but
unpaid monthly Facility Fees), in lieu of any monthly Facility Fees
which would have come due and payable thereafter, an amount equal to
the greater of (A) or (B), below:
(A) The lesser of (I) the aggregate amount of the
monthly Facility Fees (without giving effect to any changes
made pursuant to Paragraph (c), below), which would be paid
during the three calender months following the subject
Termination Date specified in such termination Notice, or (II)
the aggregate amount of the monthly Facility Fees (without
giving effect to any changes made pursuant to Paragraph (c),
below), which would be paid during the period between the
subject Termination Date specified in such termination Notice
and the Maturity Date; or
(B) $132,000.00 minus the aggregate amount of the
monthly Facility Fees paid between June 1, 1996 and the
subject Termination Date specified in such Termination Notice.
(ii) In the event of the acceleration of the Liabilities
on account of the occurrence of an Event of Default, there shall be
paid to the Agent (in addition to any
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then accrued but unpaid monthly Facility Fees), in lieu of any monthly
Facility Fees which would have come due and payable thereafter, an
amount equal to Thirty-Three Thousand Dollars ($33,000.00).
(c) Upon and following the occurrence of any Suspension Event, the
Agent may alter the amount of the Facility Fee reasonably to reflect any
increased administration required by reason of changes to the Borrower's
financial and business circumstances evidenced by such occurrence. Such
increased Facility Fee may include charges on a per diem, hourly, or other
basis to reflect such increased administration. The Agent shall provide the
Borrower with notice of any alteration of the Facility Fee.
(d) The Borrower shall pay the Agent, on the Seventh day of each
October, January, April, and July to occur after July 1, 1996 (or on the then
next succeeding Business Day, if such Seventh day is not a Business Day), and
on the Termination Date, a fee for the unused portion of the Revolving Credit,
which fee is equal to One Quarter of One Percent (0.25%) per annum of the
difference between (x) the Loan Ceiling and (y) the weighted average unpaid
principal balance of the Loan Account during the then most recently completed
Three (3) calendar months (with respect to those payments due on the Seventh
day of each such October, January, April, and July) and for the period
commencing with the first day after the then most recently completed Three (3)
calendar months for which such fee has been paid and ending on the Termination
Date (with respect to the payment due on the Termination Date).
(e) The Borrower shall not be entitled to any credit, rebate or
repayment of any Commitment Fee, Facility Fee, fee for the unused portion of
the Revolving Credit, or other fee previously earned pursuant to this Section
notwithstanding any termination of the within Agreement or suspension or
termination of the Lenders' obligation to make loans and advances hereunder.
SECTION 1-11(A) of the Loan Agreement is amended to read as follows:
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(a) Prior to the issuance of any L/C, the Borrower shall pay to
the Agent a fee for each L/C equal to the following:
(i) Standbys: Greater of $1,000.00 or One Percent (1%)
per annum of the Stated Amount of that L/C.
(ii) Documentaries:
(A) Initial Expiry of less than Ninety (90) days:
Greater of $1,000.00 or 0.40% per annum of
the Stated Amount of that L/C, provided,
however, in the event of the amendment of any
documentary L/C so that its expiry is greater
than Ninety (90) days from when first issued,
the Borrower shall pay the Agent,
contemporaneous with such amendment, the
difference between the fee paid pursuant to
this Subsection and the fee which would have
been paid, pursuant to Subsection (B) below,
if the fee paid at the issuance of the
subject L/C had been determined in accordance
with the provisions of Subsection (B), below.
(B) Initial Expiry of Ninety (90) to One Hundred
Eighty (180) days: Greater of $1,000.00 or
0.50% per annum of the Stated Amount of that
L/C.
SECTION 1-12(A) of the Loan Agreement is amended to read as follows:
(a) No L/C (whether as issued or as amended) shall have
an expiry which is later than the following:
(i) Documentaries: The sooner of One Hundred
Eighty (180) days following initial issuance or Thirty (30) days prior
to the Maturity Date.
(ii) Standbys: Thirty (30) days prior to the
Maturity Date.
ARTICLE 3 of the Loan Agreement is amended such that the following
Definitions, which appear therein, respectively read as
follows:
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"ADMINISTRATIVE FACILITY FEE": Deleted.
"APPLICABLE ADVANCE RATE": The following percentages of the Cost (net
of Inventory Reserves) for those of the following categories
of domestic inventory of the Borrower and of Jan Bell deemed
eligible for borrowing by the Agent, which rates and
categories are subject to revision from time to time by the
Agent in the Agent's discretion (based upon reappraisals
conducted pursuant to Section 9-11(a), below, or otherwise to
reflect changed circumstances):
CATEGORY PERCENTAGE
(%)
Gems 38.7
Gold 69.6
Watches 24.2
Fragrances 44.9
Collectibles 35.4
Sunglasses 40.6
Writing 51.5
Instruments
"COMMITMENT" "COMMITMENT PERCENTAGE": As follows:
LENDER COMMITMENT COMMITMENT
PERCENTAGE
GBFC, INC. $ 5,000,000.00 12.5
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Foothill Capital $35,000,000.00 87.5
"CONSOLIDATED TANGIBLE NET WORTH": at any time,
(a) Total stockholders' equity of Jan Bell and its
subsidiaries at such time as would appear on a consolidated balance sheet for
such Persons prepared in accordance with GAAP, except that such total
shareholders' equity shall be calculated without regard to any foreign currency
translation gains or losses which, under GAAP, would be required to be taken by
such Persons after June 30, 1996.
minus
(b) The net book value at such time (after deducting
related depreciation, obsolescence, amortization, valuation and other proper
reserves) of all Intangible Assets of Jan Bell and its subsidiaries at such
time as would appear on a consolidated balance sheet for such Persons prepared
in accordance with GAAP.
minus
(c) the Excess Foreign Asset Amount at such time.
"INVENTORY RESERVES": Such Reserves as may be established from time
to time by the Agent in the Agent's discretion with respect to
the determination of the salability of the Acceptable
Inventory or which reflect such other factors as affect the
market value of the Acceptable Inventory [including, declines
in the spot market price of precious metals]. Initially,
Inventory Reserves include 1% of Cost to cover consolidation
costs.
"LOAN CEILING": Forty Million Dollars ($40,000,000.00).
"TERMINATION DATE": The soonest of (a) the Maturity Date; (b) the
date set by the Borrower in a Termination Notice; (c) the
occurrence of any
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Event of Default referred to in Section 10-10; or (d) the
date, written notice of which is given by the Agent to the
Borrower following the occurrence of any Event of Default,
other than any Event of Default referred to in Section 10-10.
ARTICLE 3 of the Loan Agreement is further amended by adding the
following definitions, each in alphabetical order, therein:
"EBITDA": the Borrower's earnings from operations before
interest, taxes, depreciation, and amortization, each as
defined in accordance with GAAP, without regard to any foreign
currency translations gains or losses.
"FACILITY FEE": Is defined in Section 1-9.
"MATURITY DATE": May 31, 1998.
"TERMINATION NOTICE": irrevocable written notice given by the
Borrower to the Agent in which notice the Borrower sets a
Termination Date, which date shall be the last day of a month
and shall be not less than Sixty (60) days following the date
on which such written notice is given.
"UTILIZATION PERIOD": the period commencing on each July 1 after (and
not including) July 1, 1995 and ending at the sooner of the
then next June 30 or the Termination Date.
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SECTION 5-23(A) of the Loan Agreement is amended to read as follows:
(a) On or before May 15, 1996, the Borrower shall have
provided to the Agent the following, each duly executed on behalf of the
signatories thereto and each in form reasonably satisfactory to the Agent:
(i) Guaranties by each Significant Foreign
Subsidiary, secured by such security, mortgage, and collateral
interests in the assets thereof as may be satisfactory to the Agent,
which interests shall be first and only except as to Permitted
Encumbrances and as otherwise provided in the Intercreditor Agreement.
(ii) Customary due diligence items with respect to
the items referenced in Subsection (a), above.
(iii) A Mortgage (similar to that provided to the
holders of the Notes) of the land, with the improvements thereon,
located in Sunrise, Florida, and owned by Jan Bell, which Mortgage may
be filed for record by the Lenders' Agent only in the event of, and
following, the occurrence of a Suspension Event.
(b) Until such time as the Borrower has furnished the
Agent with the items required pursuant to Section 5-23(a), above, the Borrower
shall not take any steps not taken on or prior to the date on which the within
Agreement is executed to create, grant, or perfect any Encumbrance on any or
all of the capital stock of any Significant Foreign Subsidiary to, or for the
benefit of, the holders of the Notes.
SECTIONS 7-2 AND 7-3 of the Loan Agreement are amended to read as
follows:
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7-2. The Blocked, Concentration and Funding Accounts. (a) The
following checking accounts have been or will be established (and are so
referred to herein):
(i) The BLOCKED ACCOUNT: Established
with NationsBank (Account No. 3750683305).
(ii) The CONCENTRATION ACCOUNT:
Established by the Funding Agent, initially with Chemical Bank
(Account No. 323-266193), but subject to change, from time to time, on
written notice by the Funding Agent to the Borrower.
(iii) The FUNDING ACCOUNT: Established by
Jan Bell with NationsBank (Account No 3750188716).
(b) The contents of the Blocked Account and of the
Concentration Account respectively constitute Collateral and Proceeds of
Collateral.
(c) The Borrower shall pay all fees and charges of, and
maintain such impressed balances as may be required by, any bank in which any
account is opened as required hereby (even if such account is opened by the
Agent or the Funding Agent).
7-3. Proceeds and Collection of Accounts. (a) All Receipts
constitute Collateral and proceeds of Collateral and shall be held in trust by
the Borrower for the Agent and the Lenders; shall not be commingled with any of
the Borrower's other funds; and shall be deposited and/or transferred only to a
DDA as to which a then effective notice (in the form of EXHIBIT 7-1, annexed
hereto) has been forwarded to the depository at which such DDA is maintained.
(b) (i) The Borrower shall cause the transfer to the
Blocked Account, no less frequently than daily, of
(A) An amount equal to the then contents
of each DDA (net of such minimum balance, not to exceed the
minimum amount which may be required by the depository at
which the subject DDA is maintained), other than (A) any Local
DDA and
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(B) the Funding Account; and
(B) The proceeds of all credit card
charges not otherwise provided for pursuant to Section
7-1(b)(i), above.
(ii) Except as provided in Subsection (c), below,
the Borrower shall cause the transfer to the Funding Account, on each
banking day, of the available balance of the Blocked Account (net of
chargebacks to the Blocked Account).
(c) The Funding Agent may give notice to the bank at
which the Blocked Account is maintained revoking the transfer arrangements
described in Subsection (b)(ii), above, and requiring the wire transfer of the
then available balance of the Blocked Account (likewise net of such
chargebacks, and also net of a minimum balance of $100,000.00 to be maintained
in the Blocked Account) to the Concentration Account at any time that either
(i) the unpaid principal balance in the Loan
Account exceeds 50 percent of "Availability"; or
(ii) a Suspension Event has occurred.
Telephone advice (confirmed by written notice by the Borrower) shall be
provided to the Lender on each Business Day on which a transfer is made.
(d) In the event that, notwithstanding the provisions of
this Section 7-3 the Borrower receives or otherwise has dominion and control of
any Receipts, or any proceeds or collections of any Collateral other than as
provided in Subsections (b) and (c), above, such Receipts, proceeds, and
collections shall be held in trust by the Borrower for the Lender and shall not
be commingled with any of the Borrower's other funds or deposited in any
account of the Borrower other than as provided in this Section 7-3.
(e) The Borrower acknowledges that Jan Bell is also
obligated to follow the procedures set forth in Sections 7-3(a) through (d)
hereof with respect to all proceeds and collections of its Accounts and that
such proceeds and collections shall be applied towards the Liabilities in
accordance with the provisions of Section 7-4 hereof.
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EXHIBIT 9-12(A) to the Loan Agreement is amended to read in the form
of EXHIBIT 9-12(a), annexed hereto.
SECTION 10-2(A) of the Loan Agreement is amended to read as follows:
(a) The failure by the Borrower to promptly, punctually,
faithfully and timely perform, discharge, or comply with any covenant or
Liability not otherwise described in Section 10-1 above, and included in any of
the following provisions hereof:
Section Relates to :
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5-4 Location of Collateral
5-5 Title to Assets
5-6 Indebtedness
5-8 Insurance Policies
5-9 Sam's Club Warehouse Agreement
5-13 Pay taxes
5-18 Dividends and Investments
5-19 Loans
5-22 Affiliate Transactions
5-23 Post Closing Documentation
Article 7 Cash Management
9-12 Financial Performance Covenants
ARTICLE 14 of the Loan Agreement is amended by the addition of the
following as Section 14-14A thereto, to be located between
Sections 14-14 and 14-15 of the Loan Agreement.
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between Sections 14-14 and 14-15 of the Loan Agreement
14-14A. Consent to Jurisdiction. (a) Any legal action, proceeding,
case, or controversy with respect to the within Agreement or any other Loan
Document against the Borrower, Jan Bell, or any other Person obligated on
account of the Liabilities, 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 Agent may elect in its
sole discretion. By execution and delivery of the Third Amendment to the
within Agreement, the Borrower, Jan Bell, and each such Person respectively for
itself and in respect of its property, accepts, submits, and consents generally
and unconditionally, to the jurisdiction of the aforesaid courts.
(b) The Borrower, Jan Bell, and each such Person WAIVES,
at the option of the Agent, any objection based on forum non conveniens and any
objection to venue of any action or proceeding instituted under or with respect
to the within Agreement or any other Loan Document and consents to the granting
of such legal or equitable remedy as is deemed appropriate by the Court.
(c) The Borrower, Jan Bell, and each such Person agrees
that any action commenced by any of them asserting any claim or counterclaim
arising under or in connection with the within 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.
CONDITIONS TO EFFECTIVENESS OF AMENDMENT
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The within Amendment shall be effective if each of the following
conditions is satisfied on or before July 19, 1996 and on the date on which
such amendment is to take effect, no Suspension Event (as defined in the Loan
Agreement) is extant:
(a) Receipt by the Agent of Certificates, executed by the
respective Secretaries of the Borrower and of Jan Bell Marketing, Inc. ("JAN
BELL"), setting forth the texts of the resolutions adopted by the Directors of
those corporations respectively to the Borrower's execution of, and Jan Bell's
consent to the execution of, the within Amendment, and attesting to the
authority of the persons who executed the within Amendment on behalf of the
Borrower and consented to such execution on behalf of Jan Bell.
(b) Receipt by the Agent of a Certificate, executed by the
Borrower's President and its Chief Financial Officer, respectively confirming
that no Suspension Event is then extant.
(c) Receipt by the Agent of an opinion of counsel to the
Borrower and to Jan Bell as to the due execution and effectiveness of the within
Amendment and of the consent thereto on behalf of Jan Bell (which opinion is
subject only to the same qualifications as had
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been included in the opinion delivered by that counsel at the initial execution
of the Loan Agreement).
The Borrower hereby represents that no Suspension Event has occurred.
Except as amended hereby, all terms and provisions of the Loan
Agreement shall remain in full force and effect as executed.
This Third Amendment, which shall be governed, construed, and enforced
in accordance with the laws of The Commonwealth of Massachusetts, may be
executed in multiple counterparts which, taken together, shall constitute one
and the same agreement.
JBM RETAIL COMPANY, INC.
("BORROWER")
By
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The "AGENT"
GBFC, INC.
By
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The "LENDERS"
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GBFC, INC. FOOTHILL CAPITAL CORPORATION
By By
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CONSENT BY GUARANTORS
The undersigned, Guarantors of the Liabilities (as defined in their
respective Guaranties of such Liabilities to the Agent and the Lenders) of the
Borrower to the Agent and the Lenders, respectively consent to the foregoing
Amendment, but recognize that such consent is not necessary in order for such
Guaranties to remain effective, as to all such Liabilities.
JAN BELL MARKETING, INC. JBM VENTURE CO., INC.
By By
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ULTIMATE FINE JEWELRY JEWELRY DEPOT, INC.
INTERNATIONAL, INC.
By By
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JBM INTERNATIONAL, INC.
By
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