FORBEARANCE AGREEMENT
THIS AGREEMENT, made on this 18th day of February, 1999 between
Blue Fish Clothing, Inc. ("Blue Fish"), having a principal place of
business located at #3 6th Street, Frenchtown, New Jersey (the
"Business Premises"); Sovereign Bank ("Sovereign"), successor by
merger to Carnegie Bank, N.A. ("Carnegie") having a place of business
located at 619 Alexander Road, Princeton, New Jersey; Jennifer P.
Barclay ("Barclay" or "Guarantor") having a residence located at 189
County Line Road, Durham, Pennsylvania (the "Residence");
WHEREAS, on February 9, 1996, Blue Fish executed and delivered a
Revolving Note (the "February 1996 Note") and Loan And Security
Agreement (the "February 1996 Agreement") to Carnegie in the
principal amount of One Million ($1,000,000.00) Dollars; and
WHEREAS, pursuant to the terms of the February 1996 Agreement,
Blue Fish's obligations under the February 1996 Note and its other
present and future obligations to Carnegie were secured by certain
specified collateral, including but not limited to, Inventory,
Accounts, General Intangibles and the proceeds thereof (the
"Collateral"); and
WHEREAS, Carnegie's security interest in the Collateral was duly
perfected through the filing of UCC-1 Financing Statements; and
WHEREAS, on February 9, 1996, Barclay executed and delivered a
Guaranty Of Payment to Carnegie for all amounts due and owing by Blue
Fish to Carnegie (the "February 1996 Guaranty"); and
WHEREAS, on February 9, 1996, Blue Fish executed and delivered a
Business Manager Agreement (the "February 1996 Business Manager
Agreement") to Carnegie, which February 1996 Business Manager
Agreement governed the purchase and sale of Blue Fish's accounts
receivables to Carnegie in an amount up to One Million
($1,000,000.00) Dollars; and
WHEREAS, in order to further secure its obligations under the
February 1996 Business Manager Agreement, Blue Fish granted to
Carnegie a security interest in certain of its property, including,
but not limited to, its present and future accounts, contract rights
in the Reserve and Reserve Account (as those terms are defined in the
February 1996 Business Manager Agreement)(the "Business Manager
Collateral"); and
WHEREAS, Carnegie's security interest in the Business Manager
Collateral was duly perfected through the filing of UCC-1 Financing
Statements; and
WHEREAS, on December 17, 1996, Blue Fish executed and delivered
a Business Manager Agreement (the "December 1996 Business Manager
Agreement") to Carnegie, which December 1996 Business Manager
Agreement governed the purchase and sale of Blue Fish's accounts
receivables to Carnegie in an amount up to One Million Five Hundred
Thousand ($1,500,000.00) Dollars; and
WHEREAS, in order to further secure its obligations under the
December 1996 Business Manager Agreement, Blue Fish granted to
Carnegie a security interest in certain of its property, including
but not limited to its present and future accounts, contract rights
and in the Reserve and Reserve Account (as those terms are defined in
the Business Manager Agreement)(the "December 1996 Business Manager
Collateral"); and
WHEREAS, on December 17, 1996, Barclay executed and delivered a
Guaranty Agreement to Carnegie wherein she guaranteed the amounts
owed by Blue Fish to Carnegie under the December 1996 Business
Manager Agreement; and
WHEREAS, Carnegie's security interest in the December 1996
Business Manager Collateral was duly perfected through the filing of
UCC-1 Financing Statements; and
WHEREAS, on February 9, 1997, the February 1996 Note and
February 1996 Agreement were modified pursuant to a Note And Loan And
Security Agreement Extension Agreement (the "February 1997
Modification Agreement") in which agreement certain repayment terms
were modified as more fully set forth therein; and
WHEREAS, on February 9, 1997, Barclay executed and delivered a
Reaffirmation Of Guaranty for her obligations to Carnegie; and
WHEREAS, on June 25, 1997, Blue Fish executed and delivered a
Promissory Note (the "Promissory Note") and Business Loan Agreement
to Carnegie in the principal amount of Eight Hundred Thousand
($800,000.00) Dollars; and
WHEREAS, in order to further secure the amounts due under the
Promissory Note, Blue Fish granted Carnegie a security interest in a
Certificate of Deposit #100019396 for Eight Hundred Forty-Two
Thousand ($842,000.00) Dollars (the "CD") and certain other
collateral as more fully set forth in that June 25, 1997 Assignment
Of Deposit Account; and
WHEREAS, on June 25, 1997, Barclay executed and delivered a
Commercial Guaranty for her obligations to Carnegie due under the
Promissory Note; and
WHEREAS, on June 27, 1997, the February 1996 Note, as modified
and February 1996 Agreement, as modified were again modified pursuant
to a Note And Loan And Security Agreement Modification Agreement (the
"June 1997 Modification Agreement") in which agreement among other
things the principal amount due under the February 1996 Note, as
modified was reduced to Five Hundred Thousand ($500,000.00) Dollars;
and
WHEREAS, on June 27, 1997, Barclay executed and delivered a
Reaffirmation Of Guaranty for her obligations to Carnegie; and
WHEREAS, on September 30, 1997, Blue Fish executed and delivered
an Amendment To Assignment Of Deposit Account (the "Deposit Account
Amendment") in which amendment Five Hundred and Forty-Two Thousand
($542,000.00) Dollars was released from the CD to it; and
WHEREAS, on September 30, 1997, Blue Fish executed and delivered
an Agreement For Cross-Default And Cross-Collateralization (the
"Cross-Collateral Agreement"); and
WHEREAS, on September 30, 1997, Barclay executed and delivered
to Carnegie a Consent And Reaffirmation Of Individual Guarantors in
which Barclay's obligations under her June 25, 1997 Guaranty were
reaffirmed to Carnegie; and
WHEREAS, on March 12, 1998, Blue Fish executed and delivered a
Business Manager Agreement (the "March 1998 Business Manager
Agreement") to Carnegie, which March 1998 Business Manager Agreement
governed the purchase and sale of Blue Fish's accounts receivables to
Carnegie in an amount up to One Million Five Hundred Thousand
($1,500,000.00) Dollars; and
WHEREAS, in order to further secure its obligations under the
March 1998 Business Manager Agreement, Blue Fish granted to Carnegie
a security interest in certain of its property, including but not
limited to its present and future accounts, contract rights in the
Reserve and Reserve Account (as those terms are defined in the March
1998 Business Manager Agreement)(the "March 1998 Business Manager
Collateral"); and
WHEREAS, Carnegie's security interest in the March 1998 Business
Manager Collateral was duly perfected through the filing of UCC-1
Financing Statements; and
WHEREAS, on April 30, 1998, the February 1996 Note, as modified
and February 1996 Agreement, as modified were again modified pursuant
to a Note And Loan And Security Agreement Modification Agreement (the
"April 1998 Modification Agreement") in which agreement among other
things the principal amount due under the February 1996 Note, as
modified was increased to One Million ($1,000,000.00) Dollars; and
WHEREAS, Sovereign has succeeded to Carnegie's right, title and
interest in the February 1996 Note, as modified, February 1996
Agreement, as modified and all related loan documents with respect
thereto, including Barclay's Guaranty, as reaffirmed, the Promissory
Note and Business Loan Agreement and all related loan documents
thereto, including Barclay's Commercial Guaranty, as reaffirmed and
the March 1998 Business Manager Agreement and all related loan
documents thereto (all collectively subsequently referred to as the
"Loan Documents"); and
WHEREAS, on January 19, 1999, Sovereign deeming certain events
of default as defined in the Loan Documents to have occurred,
forwarded a default letter to Blue Fish and Barclay demanding all
amounts due under the Loan Documents and terminating the March 1998
Business Manager Agreement; and
WHEREAS, as of January 15, 1999, the sum of Two Million, Nine
Hundred Sixty-Four Thousand, Eight Hundred and One and 00/100
($2,964,801.00) Dollars was due and owing by Blue Fish and Barclay
under the Loan Documents; and
WHEREAS, Sovereign has since exercised its rights under the Loan
Documents and received the amounts from the CD, Reserve Account and
Reserve (as defined in the March 1998 Business Manager Agreement);
and
WHEREAS, without waiving its rights and remedies against Blue
Fish and Barclay regarding their default and the termination of the
March 1998 Business Manager Agreement, Sovereign has funded as of
January 29, 1999 an additional sum of One Hundred Thousand
($100,000.00) Dollars to Blue Fish through the sale of Blue Fish's
accounts receivables, which purchase and sale was governed and is to
be governed under the terms of the March 1998 Business Manager
Agreement as reinstated in accordance with the terms of this
Agreement; and
WHEREAS, Blue Fish, Sovereign and Barclay have since commenced
negotiations regarding the payment of the amounts due Sovereign under
the Loan Documents; and
WHEREAS, as of February 2, 1999, the sum of Two Million, Six
Hundred Twenty-Seven Thousand, Nine Hundred and 10/100
($2,627,900.10) Dollars is due and owing under the Loan Documents;
and
WHEREAS, Blue Fish, Sovereign and Barclay are desirous of
entering into the within Forbearance Agreement and have accordingly
set forth the terms of said agreement below; and
WHEREAS, Sovereign has agreed to forbear from proceeding in any
legal or other action against Blue Fish and Barclay for ninety (90)
days from February 2, 1999 upon the below stated terms and
conditions; and
WHEREAS, Blue Fish, Sovereign and Barclay have agreed to the
terms set forth below:
NOW THEREFORE, in consideration for the mutual premises set
forth herein and other good and valuable consideration, the receipt
and sufficiency is hereby acknowledged, the parties to this Agreement
do hereby agree to the terms set forth below.
1. WHEREAS CLAUSES. The above referenced Whereas clauses are
hereby incorporated by reference in all respects.
2. FORBEARANCE PERIOD
a. Subject to the Events Of Default set forth in Paragraph 14
below, Sovereign hereby agrees to forbear from taking any further
legal action against Blue Fish and Barclay for a period of ninety
(90) days from February 2, 1999 (the "Forbearance Period"), except
that Sovereign shall be entitled to take such action as is required
to effectuate the terms of this Agreement, including but limited to
recording the Mortgage (defined below) against the Residence and
filing UCC-2 Continuation Statements, as necessary. Sovereign agrees
that the contract rate(s) of interest under the Loan Documents and
not the Default Rate (s) of interest shall be applicable during the
Forbearance Period.
3. STIPULATION OF DEFAULT
a. Blue Fish and Barclay hereby stipulate, acknowledge and
confirm that they are in default under the Loan Documents based upon
Blue Fish's present financial condition and that Sovereign's ability
to receive the amounts it is owed by Blue Fish and Barclay under the
Loan Documents has been materially impaired.
b. Blue Fish and Barclay admit and agree that Sovereign's
actions of placing them in default under the Loan Documents were reasonable
and made in good faith.
c. By the execution of this Agreement, Blue Fish and Barclay
waive their right to challenge their default under the Loan Documents
in any future judicial or other proceeding whether formal or informal.
4. LOAN AMOUNT
a. Blue Fish, Barclay and Sovereign stipulate that the amount
of Two Million, Six Hundred Twenty-Seven Thousand, Nine Hundred and
20/100 ($2,627,900.20) Dollars is due and owing as of February 2,
1999 under the Loan Documents, exclusive of attorneys fees and costs
incurred by Sovereign (the "Loan Amount") itemized as follows:
Loan #500006024
Principal $434,322.71
Interest $485.39
Total $434,808.10
Per Diem $95.31
Loan # 500005095
Principal $1,000,000.00
Interest $4,250.00
Total $1,004,250.00
Per Diem $236.11
Loan # 500005803
Repurchase Obligation $1,188,842.10
Total of all three loans $2,627,900.20
as of February 2, 1999
5. MORTGAGE ON RESIDENCE
a. As additional consideration for Sovereign to enter into
this Agreement, Barclay shall upon the execution of this Agreement
execute and deliver a mortgage on the Residence for Two Hundred
Thousand ($200,00.00) Dollars to partially secure the amounts due and
owing by her under the guaranties she executed and delivered to
Carnegie for the obligations of Blue Fish (the "Mortgage").
b. The Mortgage shall be in recordable form and shall be in a
form acceptable to Sovereign.
c. Barclay acknowledges and agrees that she has received
ample consideration for her execution and delivery of the Mortgage to
Sovereign.
d. During the Forbearance Period and any written extensions
thereof and so long as there is no default under this Agreement,
Sovereign will not institute an action to foreclose on the Mortgage.
e. Barclay warrants and represents that there are no liens
against the Residence as of February 11, 1999 except for the liens
("Prior Mortgage Liens") and indebtedness ("Prior Mortgage
Indebtedness") as follows:
Chase Manhattan Mortgage Corporation
Loan Number: 8506042732
Principal Balance on 01/12/99: $234,676.67
First Mortgage
Chase Manhattan Mortgage Corporation
Home Equity Line of Credit: 008041013031
As of 2/5/99 payoff was: $100,721.92
Second Mortgage
f.1) Sovereign agrees to discharge the Mortgage upon the
receipt of other replacement collateral acceptable to it from
Barclay.
f.2) In the event the Residence is sold for Four Hundred Fifty
Thousand ($450,000.00) Dollars, the proceeds from the sale shall be
distributed in the following order:
Cost of sale
Prior mortgage liens
$27,500.00 to Sovereign
Remaining proceeds up to $50,000.00 to Barclay
Remainder of proceeds to Sovereign
f.3) In the event the Residence is sold for a purchase price
greater than Four Hundred Fifty Thousand ($450,000.00) Dollars, the
proceeds shall be distributed in the following order:
Costs of sale
Prior Mortgage Liens
$50,000.00 to Barclay, subject to paragraph f.3d)
Remainder of proceeds to Sovereign in an amount not
less than $27,500.00
f.4) In the event the Residence is sold for a purchase price
less than Four Hundred Fifty Thousand ($450,000.00) Dollars, the
proceeds shall be distributed in the following order:
Cost of sale
Prior Mortgage Liens
$50,000.00 less the difference between Four Hundred
Fifty Thousand ($450,000.00) Dollars and the
purchase price of the Residence, to Barclay.
Remainder of proceeds to Sovereign
f.5) Except as provided in f.6), Sovereign shall not be
obligated to discharge the Mortgage unless the purchase price for the
Residence is a least Four Hundred Fifty Thousand ($450,000.00)
Dollars.
Sovereign agrees to discharge the Mortgage on the
Residence for a Fifty Thousand ($50,000.00) Dollar
payment from assets other than from Blue Fish or from
a sale of the Residence
Sovereign agrees to subordinate the Mortgage to the
additional sum of Thirty Thousand ($30,000.00) Dollars
above the Prior Mortgage Liens provided that upon the
sale of the Residence the amount to which Sovereign
subordinated up to the said Thirty Thousand ($30,000.00)
Dollars shall be deducted from the sales proceeds to
which Barclay is entitled under this paragraph f.
The proceeds which Barclay receives from the sale of
the Residence shall be exempt from execution by Sovereign
g. Barclay agrees and covenants to use her best efforts to
make her payments on the lien obligations described in Paragraph 5e
above in the ordinary course in accordance with the respective
agreements and to not further encumber the Residence except as
provided in this Forbearance Agreement.
h. Barclay agrees and covenants to continue to maintain insurance
on the Residence in an amount equal to the fair market value of the
Residence.
1) Within ten (10) days of the date of the execution of this
Agreement, Barclay shall deliver to Sovereign at the address stated
below a Declaration of said insurance policy naming Sovereign as an
additional loss payee therein with a term on the policy extending
through December 31, 1999.
2) Barclay shall renew said insurance policy when it comes due
and shall be responsible for all payments for premiums.
3) This provision shall survive the termination of this
Agreement.
6. LIENS
a. Blue Fish and Barclay stipulate, agree and confirm that
Sovereign has a duly perfected first lien on the Collateral and March
1998 Business Manager Collateral (collectively referred to as the
"Collateral") for the Loan Amount.
b. Blue Fish and Barclay acknowledge and consent that this
admission set forth in Paragraph 6a. of this Forbearance Agreement
may be used in any subsequent legal proceeding, including a bankruptcy
case to establish Sovereign's allowed lien.
c. Blue Fish and Barclay covenant not to challenge and are
estopped from challenging Sovereign's lien on the Collateral in any
subsequent legal proceeding, including a bankruptcy case.
d. Blue Fish and Barclay covenant and agree to execute such
other documents as reasonably requested by Sovereign to enable it to
continue to have a duly perfected first lien in the Collateral,
including but not limited to UCC-2 Continuation Statements and to
carry out the terms of this Agreement.
e. Blue Fish and Barclay agree to support the validity of
Sovereign's security interest in the Collateral should any third
party challenge same in any subsequent legal proceeding, including a
bankruptcy case.
7. BUSINESS MANAGER AGREEMENT
a. Without waiving Blue Fish's default under the Loan
Documents, Sovereign hereby reinstates and agrees to extend the term
of the March 1998 Business Manager Agreement through the Forbearance
Period only in accordance with the terms of this Forbearance
Agreement. Sovereign hereby agrees during the Forbearance Period to
purchase under the terms of the March 1998 Business Manager Agreement
Blue Fish's accounts receivables other than those previously financed
as purchase orders ("Non Purchase Order Receivables")at the rate of
eighty-five (85%) percent of their face amount up to the aggregate of
One Million Five Hundred Thousand ($1,500,000.00) Dollars, inclusive
of the amounts already purchased by Sovereign to February 2, 1999,
which balance was One Million, One Hundred Eighty-Eight Thousand,
Eight Hundred Forty-Two and 10/100 ($1,188,842.10) Dollars. The Two
Hundred Sixty-Three Thousand ($263,000.00) Dollars for the purchase
order financing remaining outstanding as of the date of this
Forbearance Agreement shall be paid in accordance with Exhibit A
attached hereto.
b. Blue Fish shall also be responsible for all fees which are
allowable under the March 1998 Business Manager Agreement and same
shall be deducted from advances by Sovereign to Blue Fish.
c. The monies received by Sovereign through the collection of
the accounts receivables in excess of the cost to purchase same shall
be applied by Sovereign in its sole discretion to the outstanding
loan obligations of Blue Fish.
d. Except as provided for in this Agreement, all other terms
and conditions of the March 1998 Business Manager Agreement shall
govern the proposed purchase and sale of Blue Fish's accounts
receivables.
8. RELEASE OF SOVEREIGN
a. Blue Fish and Barclay and their successors and assigns, do
hereby remise, release and forever discharge Sovereign, Carnegie,
their officers, directors and employees, of and from any and all
manner of actions, causes, claims, liabilities, suits and causes of
action, asserted or unasserted relating to the Loan Documents from
the beginning of the world to the date of this Agreement.
b. Upon the execution of this Agreement, Blue Fish and
Barclay shall execute General Releases to Sovereign, Carnegie, their
officers, directors and employees in forms acceptable to Sovereign.
c. Blue Fish and Barclay acknowledge and agree that they have
received ample consideration for executing the releases, including
but not limited to, Sovereign entering into this Agreement.
9. JURISDICTION AND VENUE This Agreement shall be construed
under the laws of the State Of New Jersey without regard to its
conflict of interest law principals. All suits, proceedings and
other actions relating to, arising out of or in connection with this
Agreement shall be submitted to the jurisdiction of the courts of the
State Of New Jersey, with venue for all such suits, proceedings and
other actions to be in Hunterdon County, New Jersey, except for any
legal action with respect to the Mortgage which shall be venued in
Bucks County, Pennsylvania and be governed by Pennsylvania law.
10. NO FUTURE OBLIGATION Blue Fish and Barclay acknowledge that
Sovereign is under no obligation to extend or modify the Loan
Documents beyond the Forbearance Period. In the event that the Loan
Amount has not been paid by Blue Fish and/or Barclay on or before the
expiration of the Forbearance Period, then immediately upon the
expiration of the Forbearance Period, Sovereign shall be entitled to
proceed with its rights under the Loan Documents, Mortgage and state
law to collect same.
11. FURTHER ASSURANCE At the closing of this Agreement or within
three (3) business days after written request by Sovereign after
closing, Blue Fish will execute and deliver to Sovereign, separate
and apart from this Agreement, Estoppel Affidavits as to Blue Fish's
lease obligations as to the Business Premises located at 79 Trenton
Avenue and No.3 Sixth Street in Frenchtown, New Jersey. Blue Fish
and Barclay shall execute such other documents as may be reasonably
required by Sovereign to effectuate the terms of this Agreement.
12. NO WAIVER The obligations of Sovereign hereunder shall not
prejudice nor act as a waiver of Sovereign's right to enforce any
such right or remedy in the event of a default described with
specificity in paragraph 14 below after the expiration of the
Forbearance Period.
13. REPRESENTATIONS Blue Fish and Barclay, individually and
jointly, as may be applicable, represent and warrant to Sovereign
that:
a. They agree to the modifications of the Loan Documents as
set forth herein and have reasonably requested Sovereign to forbear
from exercising its rights and remedies under the Loan Documents and
that such request is in the best interests of each of them.
b. They will execute from time to time such agreements,
instruments or other documents as reasonably requested by Sovereign
to effectuate the terms of this Agreement, including but not limited
to creating and perfecting Sovereign's security interests set forth
in the Loan Documents and this Agreement.
c. They hereby reaffirm, ratify and acknowledge that all the
terms and conditions of the Loan Documents are valid, binding and in
full force and effect, they acknowledge that they were in default
under the terms of the Loan Documents prior to January 19, 1999 and
that the monetary obligations thereunder are and will continue to be
due and payable subject to the terms of this Agreement. They further
reaffirm that they are indebted to Sovereign as set forth in
Paragraph 4 of this Agreement, together with interest, late charges,
attorneys fees, fees, advances and other charges which continue to
accrue thereon in accordance with the Loan Documents.
d. They will promptly furnish to Sovereign such additional
financial or other information as Sovereign may reasonably request
from time to time to verify compliance with this Agreement, or to
ascertain whether any event of default has occurred.
e. They represent and warrant that they have not been coerced
or in any way unduly influenced into signing this Agreement or any
other document required herein, and that such signature is the
voluntary act of each of them, following consultation with counsel of
their respective choice. They further represent and warrant that the
consideration given by Sovereign to them hereunder has resulted in a
material benefit to each of them and represents good and valuable
consideration for their signature.
f. There are no claims to reduce or dispute the amount due
nor do any of them have any claims of any other nature against
Sovereign or any defenses, setoffs, or counterclaims (i) in
connection with any of their obligations under the Loan Documents and
(ii) to the exercise by Sovereign of any of its rights under the Loan
Documents
g. The Loan Documents and this Agreement executed by or on
behalf of Sovereign and Blue Fish and Barclay have been duly executed
and delivered by the parties thereto, and each constitutes a legal,
valid, and binding obligation of each of them, enforceable in
accordance with its respective terms (subject to any applicable
bankruptcy, insolvency, moratorium or other similar laws affecting
generally the enforcement of creditors' rights).
h. Upon the execution of this Agreement, Blue Fish shall
tender to Sovereign a Resolution of its Board Of Directors
authorizing Blue Fish to enter into this Forbearance Agreement and
such other acts as are reasonably necessary to effectuate the terms
of this Agreement. During the Forbearance Period, Sovereign agrees
that it shall not disclose and shall keep confidential the terms of
this Forbearance Agreement unless Blue Fish consents in writing to
the disclosure by Sovereign of the contents of the Forbearance
Agreement, except to the extent disclosure is required by any
statute, ordinance, regulation or court rule.
i. Blue Fish and Barclay agree to all reasonable conditions
required by Sovereign to protect Sovereign's rights under the Loan
Documents, including its Collateral and proceeds thereof.
j. No information, exhibit or report furnished by Blue Fish
to Sovereign in connection with the negotiations of this Agreement
contains any material misstatement of fact or omits to state any fact
necessary to make the statements contained therein not misleading.
k. Blue Fish consents and agrees to provide to Sovereign on a
weekly basis during the Forbearance Period, a report as to Blue
Fish's cash flow, including sales, collections and costs incurred.
l. Blue Fish consents and agrees to provide to Sovereign
during the Forbearance Period on a monthly basis commencing thirty
days from the date of the execution of this Agreement, a report as to
the amount of inventory with a break down of raw materials, work in
progress and finished goods, valuing each and providing the locations
of said inventory.
m. Blue Fish shall allow Sovereign and its agents to inspect
the Collateral upon being provided with at least one business day's
prior notice.
n. Barclay reaffirms and renews the terms of and agrees that
her Guaranties of the amounts due under the Loan Documents shall
remain in full force and effect and will not be discharged except
upon the complete performance of the obligations thereunder including
the payment obligation in accordance with their terms.
o. Blue Fish and Barclay hereby ratify, affirm and
acknowledge that the statements contained in this Agreement are true,
accurate and correct, the breach of which shall constitute an event
of default under the Agreement.
p. The representations and warranties of Blue Fish set forth
in this Agreement shall specifically survive the closing of this
Agreement.
q. Other than as reflected in the liabilities contained in
the Financial Statements of Blue Fish provided to Sovereign, there
are no claims, losses, contingencies, litigation or proceeding
whether or not pending, threatened or imminent against or otherwise
affecting it that involves the possibility of any judgment or
liability not fully covered by insurance or that may result in a
material adverse change in the business, properties or condition
(financial or otherwise) of any of them, except as follows:
1) Holdings Corporation vs. Blue Fish Clothing, Inc.
Index No. 100882/99
Supreme Court of the State of New York
County of New York
Amount of Claim: $13,824.11(original claim)
$82,069.70 plus costs/fees (amended claim)
Status: Pending trial and motion to remove to Supreme
Court of New York
2) Staffing Alternatives vs. Blue Fish Clothing, Inc.
Docket No. L-681-98
Superior Court of New Jersey
Law Division - Hunterdon County
Amount of Claim: $12,725.89
Status: Pending Summary Judgment
3) Insight Direct USA, Inc., an Arizona Corporation vs.
Blue Fish Clothing, Inc.
Case No. CV98-19888
Superior Court for the State of Arizona
County of Maricopa
Amount of Claim: $6,576.99 plus 18% interest plus
cost/fees
Status: Will defend upon transfer to New Jersey
4) Continental Fabrics, Inc. vs. Blue Fish Clothing, Inc.
Docket No. L-748-98
Superior Court of New Jersey
Law Division - Hunterdon County
Amount of Claim:$39,059.22 plus interest to date of
judgment plus costs/fees
Status: Motion to Dismiss to be filed
5) Newark Morning Ledger Co. vs. Blue Fish Clothing, Inc.
Docket No. DC-1358-98
Superior Court of New Jersey
Law Division - Hunterdon County
Amount of Claim: $1,459.04 plus interest plus costs/fees
($1,551.39)
Status: Judgment for $1,459.04
6) Ivanyi Distributor vs. Blue Fish Clothing, Inc.
Docket No.: Unknown
Jurisdiction: Florida
Amount of Claim: unfair trade practices damage claim
Status: Action being defended by Robert Brochin, Esquire
of Morgan, Lewis & Bockius
7) First Union Leasing Group formerly Meridian Leasing,
Inc. v. Blue Fish Clothing, Inc. and Jennifer
Barclay, I/J/S Docket No. HNT L-58-99
Amount of Claim: $23,298.97
Status: Action 2/2/99 and shall be defended
8) Bowne of Boston, Inc v. Blue Fish Clothing, Inc.
Docket No. L-56-99
Amount of Claim: $12,956.50
Status: Action 2/2/99 and shall be defended
(ii) Chicago Exchange Delisting
r. Blue Fish shall maintain all its deposit accounts in New
Jersey and Pennsylvania at Sovereign, except for the payroll accounts
and the Frenchtown Retail Account (Disbursement Account), at Hudson
United Bank (the "Hudson Accounts"). For those deposit accounts
maintained by Blue Fish outside of New Jersey and Pennsylvania, and
the Hudson Accounts, Blue Fish shall provide to Sovereign a list of
those accounts, the approximate present amount in each account, the
account number, the name of the bank and the bank's location to
Sovereign within seven days of the date of the execution of this
Agreement and each month thereafter during the term of this
Agreement; provided further that in the deposit accounts held by Blue
Fish outside of New Jersey and Pennsylvania and into which proceeds
from Sovereign's Collateral is deposited, it shall designate those
accounts "Proceeds Account/Sovereign Bank". Blue Fish is entitled to
use those accounts in the ordinary course of its business without
Sovereign's consent, but shall not deposit monies which are not
proceeds of Sovereign's Collateral into said accounts.
14. EVENTS OF DEFAULT The occurrence of any one or more of the
following events shall constitute an event of default ("Event of
Default") hereunder:
a. A proceeding being filed or commenced against Blue Fish
and Barclay for dissolution or liquidation; or Blue Fish and/or
Barclay make an assignment for the benefit of creditors, or a
petition in bankruptcy is filed by Blue Fish and/or Barclay, or they
apply for or permits the appointment of a receiver or trustee for any
or all of its property, assets or rights, or any such receiver or
trustee shall have been appointed for any or all of its property,
assets or rights.
b. Failure of Blue Fish and/or Barclay to pay when due any
sum which they are required to pay or perform when due in accordance
with the terms of this Agreement.
c. Failure of Blue Fish and/or Barclay to perform or
observe any other term, covenant, warrant or agreement contained in
the Loan Documents, as modified by this Agreement. Pre-existing
events of default under the Loan Documents which predate this
Forbearance Agreement and are continuing shall not constitute
Event(s) Of Default hereunder.
d. If the Loan Documents or this Agreement at any time after
execution and delivery to Sovereign, and for any reason, shall cease
to be in full force and effect or shall be declared to be null and
void.
e. The breach of any representation, warranty, covenant or
obligation made by Blue Fish and/or Barclay, or the submission of any
fraudulent statements made by or on behalf of any of them to
Sovereign, whether in this Agreement or any financial information.
f. Any civil or criminal indictment, charge or other
proceeding filed or commenced against Blue Fish and/or Barclay for
which forfeiture of property is a penalty, or which results in
incarceration.
g. The commencement of a business license revocation
proceeding by any governmental agency.
h. The death of Barclay
i. Any sale, transfer or other disposition of (other than a
bona fide sale of Blue Fish), or the voluntary placement of any
additional liens or encumbrances upon any property securing the
obligations of the Loan Documents, except upon prior written consent
of Sovereign.
j. The future entry of one or more final judgments in New
Jersey aggregating in excess of Thirty-Five Thousand ($35,000.00)
Dollars or final judgments aggregating in excess of Fifty Thousand
($50,000.00) Dollars in all states against Blue Fish and/or Barclay.
15. REMEDIES UPON DEFAULT Upon the occurrence of an Event of
Default, Sovereign may, in its sole and absolute discretion, do any
one or more of the following on notice to Blue Fish and Barclay,
which notice shall state with specificity the basis for the default:
a. Enforce the Loan Documents in accordance with their terms
without regard to this Agreement.
b. Exercise any and all rights and remedies pursuant to the
Loan Documents in such manner as Sovereign in its sole and absolute
discretion determines.
c. Institute litigation on the Loan Documents and foreclose
the Mortgage and immediately proceed towards a foreclosure or law
judgment.
d. Exercise any and all other rights not specified herein to
which Sovereign may be permitted or entitled to so exercise in
accordance with any statute or law, including the right of setoff.
e. Enter onto the manufacturing, retail and any other
location in which the Collateral is held to the extent legally
allowable and take control of said Collateral to liquidate same in
accordance with the self-help provisions of the Uniform Commercial
Code as enacted in the respective jurisdictions.
16. GENERAL PROVISIONS The following general provisions shall be
incorporated in this Agreement.
a. The failure of Sovereign at any time or times hereafter to
require strict performance by Blue Fish and/or Barclay of any of the
provisions, warranties, terms and conditions contained in this
Agreement or in the Loan Documents shall not waive, prejudice, affect
or diminish any right of Sovereign at any time or times hereafter to
demand strict performance thereof, and no rights of Sovereign
hereunder shall be deemed to have been waived by any act or knowledge
of Sovereign, its agents, officers or employees, unless such waiver
is contained in an instrument in writing signed by an officer of
Sovereign and directed to the Blue Fish and/or Barclay specifying
such waiver. No waiver by Sovereign of any of its rights shall
operate as a waiver of any other of its rights or any of its rights
on a future occasion. Sovereign does not waive any defaults under
the Loan Documents, whether prior to or after the execution of this
Agreement. Sovereign reserves all rights, as set forth in the Loan
Documents, except as modified by this Agreement.
b. This Forbearance Agreement , the mortgage, all other
documents to be executed in accordance with the forbearance agreement
and any exhibits in addition to the Loan Documents, as modified by
this Agreement, shall constitute the full, entire and integrated
agreement between the parties hereto with respect to the subject
matter hereof and supersedes all other oral and written prior
negotiations, correspondence, understandings and agreements among the
parties hereto respecting the subject matter hereof.
c. Any provision of this Agreement which is held by a court
of competent jurisdiction to be prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability,
without invalidating or rendering unenforceable the remaining
provisions of this Agreement.
d. No provision of this Agreement may be amended, waived or
otherwise modified without the prior written consent of all of the
parties hereto. The waiver by any party hereto of a breach of any
provision or condition contained in this Agreement shall not operate
or be construed as a waiver of any subsequent breach or of any other
conditions hereof.
e. Each reference herein to Sovereign shall be deemed to
include its successors and/or assigns.
f. This Agreement may be executed in one (1) or more
counterparts, each of which when executed, shall be deemed to be an
original. Such counterparts shall together, constitute one (1) and
the same Agreement.
g. Blue Fish and Barclay may not assign any of their rights
or delegate any of their obligations hereunder without the prior
written consent of Sovereign.
h. If prior thereto and/or at any time hereafter, Sovereign
shall employ counsel in connection with this Agreement to commence,
defend or intervene, file a petition, complaint, answer, motion or
other pleadings, or take any other action in or with respect to any
suit or proceeding (bankruptcy or otherwise) relating to this
Agreement, the Loan Documents or enforce any rights of Sovereign
hereunder, whether before or after the occurrence of any Event of
Default, or collect any amount due under this Agreement, then, any
such event, Blue Fish and/or Barclay agree to pay reasonable
attorney's fees of an attorney of Sovereign's sole choosing (whether
or not such attorney is a regularly salaried employee of Sovereign),
and any expenses, costs and charges related thereto and such fees and
costs shall be part of the obligations under the Loan Documents.
i. Each reference to Blue Fish and/or Barclay shall be deemed
to include their successors and/or assigns, as applicable, all of
whom shall be bound by the provisions thereof, including but not
limited to a trustee in bankruptcy.
j. Blue Fish and/or Barclay shall not hold Sovereign liable
due to any action or failure to act by Sovereign, under, and agree
that no claim may be made by any of them or any specified person, or
any other person against Sovereign or the affiliates, directors,
officers, employees, attorneys or agents of Sovereign for any special
indirect or consequential damages or, to the fullest extent permitted
by law, for any punitive damages in respect of any claim or action
(whether based on contract, tort, statutory liability, or any other
ground) based, on arising out of or related to Loan Documents from
the beginning of the world to the date of this Agreement or any act,
omission or event occurring in connection therewith, and Blue Fish
and/or Barclay hereby waive, release and agree never to sue upon any
claim for any such damages, whether such claim now exists or
hereafter arises and whether or not it is now known or suspected to
exist in its favor, except that nothing shall be construed as a
waiver of Blue Fish's and/or Barclay rights against Sovereign for any
breach of this Agreement. This provision shall survive the
termination or expiration of this Agreement and the Loan Documents.
k. The Loan Documents shall continue to remain valid and in
full force and effect and secured by the Collateral and the Mortgage,
to the extent provided in said mortgage..
17. NOTICES
a. All notices under this Agreement shall be served on the
following persons via facsimile with confirmation of copy via regular
mail and certified mail or recognized overnight carrier, effective
the date of sending, and/or by regular mail effective three (3) days
from date of mailing to:
To Sovereign:
Christopher Tonkovich, Vice President
Sovereign Bank
619 Alexander Road
Princeton, New Jersey 08540
with a copy to:
Michael Kahme, Esquire
Hill Wallack
202 Carnegie Center
Princeton, New Jersey 08543-5226
To Blue Fish:
Jennifer P. Barclay
Blue Fish Clothing, Inc.
#3 Sixth Street
Frenchtown, New Jersey 08825
with a copy to :
John T. Carroll, Esquire
Swartz, Campbell & Detweiler
1601 Market Street, 34th Floor
Philadelphia, PA 19103-2316
To Jennifer P. Barclay:
Jennifer P. Barclay
189 County Line Road
Durham, Pennsylvania 18077
18. NO JURY TRIAL BLUE FISH AND BARCLAY HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND MUTUALLY WAIVE TRIAL BY JURY IN
RESPECT OF ANY CIVIL LITIGATION BASED HEREIN, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE LOAN DOCUMENTS OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (VERBAL AND
WRITTEN), OR ACTIONS OF BLUE FISH AND BARCLAY. THIS ARTICLE IS A
MATERIAL INDUCEMENT TO SOVEREIGN'S WILLINGNESS TO ENTER INTO THIS
AGREEMENT.
ATTEST SOVEREIGN BANK
/s/ Sharon Lee Williams /s/ Christopher Tonkovich
_______________________ ____________________________
Sharon Lee Williams Christopher Tonkovich
Assistant Treasurer Vice President
ATTEST BLUE FISH CLOTHING, INC.
/s/ Jennifer P. Barclay /s/ Jeffrey L. Haims
_______________________ ____________________________
Jennifer P. Barclay Jeffrey L Haims, President
Chairman
WITNESS
/s/ Jeffrey L. Haims /s/ Jennifer P. Barclay
_______________________ ____________________________
Jennifer P. Barclay, Guarantor