LOAN AND SECURITY AGREEMENT
~~~~~~~~~~~~~~~~~~
GBFC, INC.
FLEET NATIONAL BANK
Agents
GBFC, Inc.
Fleet National Bank
The Lenders
~~~~~~~~~~~~~~~~~~
JBI, INC.
Lead Borrower for
JBI, INC.
▇▇▇▇▇ SHOE, INC.
JBI HOLDING COMPANY, INC.
The Borrowers
............
219156.7
/ 2 /
/ May 30, 1997 /
TABLE OF CONTENTS
ARTICLE 1 - THE REVOLVING CREDIT
1-1. Establishment of Revolving Credit...............................................................8
1-2. Advances in Excess of Maximum Loan Exposure....................................................10
1-3. Risks of Value of Inventory....................................................................10
1-4. Reserves. Changes to Reserves..................................................................10
1-5. Requests for Revolving Credit Loans............................................................11
1-6. Interest Rates.................................................................................11
1-7. Requests for L/C's.............................................................................12
1-8. General Procedures Under Revolving Credit......................................................13
1-9. The Loan Account...............................................................................14
1-10. Revolving Credit Notes.........................................................................15
1-11. Payment and Prepayment of Loan Account.........................................................16
1-12. Changed Circumstances..........................................................................16
1-13. Increased Costs................................................................................17
1-14. Certain Fees...................................................................................18
1-15. Fees For L/C's.................................................................................19
1-16. Concerning L/C's...............................................................................20
1-17. Agents' Discretion.............................................................................22
1-18 Lenders' Commitments...........................................................................23
1-19. Designation of Lead Borrower as Borrowers' Agent..............................................25
ARTICLE 2 - GRANT OF SECURITY INTEREST
2-1. Grant of Security Interest.....................................................................25
2-2. Extent and Duration of Security Interest.......................................................26
ARTICLE 3 - DEFINITIONS.
ARTICLE 4 - CONDITIONS PRECEDENT.
4-1. Corporate Due Diligence........................................................................48
4-2. Opinion........................................................................................48
4-3. Guaranties.....................................................................................49
4-4. Additional Documents...........................................................................49
4-6. Representations and Warranties.................................................................49
4-7 Certain Conditions Satisfied...................................................................49
4-8. Minimum Excess Availability....................................................................50
4-9. No Event of Default............................................................................50
4-10. No Adverse Change..............................................................................50
ARTICLE 5 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
5-1. Payment and Performance of Liabilities.........................................................51
5-2. Due Organization - Corporate Authorization - No Conflicts......................................51
5-3. Trade Names....................................................................................52
5-4. Locations......................................................................................52
5-6. Indebtedness...................................................................................53
5-7. Insurance Policies.............................................................................54
5-10. Maintain Properties............................................................................55
5-11. Pay Taxes......................................................................................56
5-12. No Margin Stock................................................................................56
5-13. ERISA..........................................................................................57
5-14. Hazardous Materials............................................................................57
5-15. Litigation.....................................................................................57
5-16. Dividends or Investments.......................................................................57
5-17. Loans..........................................................................................58
5-18. Protection of Assets...........................................................................58
5-19. Line of Business...............................................................................59
5-20. Affiliate Transactions.........................................................................59
5-21. Additional Assurances..........................................................................59
5-22. Adequacy of Disclosure.........................................................................60
5-23. Other Covenants................................................................................60
ARTICLE 6 - USE AND COLLECTION OF COLLATERAL.
6-1. Use of Collateral. ............................................................................61
6-2. Inventory Quality..............................................................................61
6-3. Adjustments and Allowances.....................................................................61
6-4. Validity of Accounts...........................................................................61
6-5. Notification to Account Debtors................................................................61
ARTICLE 7 - CASH MANAGEMENT.
7-1. The Concentration and the Funding Accounts.....................................................62
7-2. Proceeds and Collection of Accounts............................................................62
7-3. Interim Cash Management Procedures.............................................................62
7-4. Payment of Liabilities.........................................................................62
ARTICLE 8 - ADMINISTRATIVE AGENT AS BORROWERS' ATTORNEY-IN-FACT.
8-1. Appointment as Attorney-In-Fact................................................................63
8-2. No Obligation to Act...........................................................................64
ARTICLE 9 - FINANCIAL AND OTHER REPORTING REQUIREMENTS/FINANCIAL COVENANTS
9-1. Maintain Records...............................................................................65
9-2. Access to Records..............................................................................65
9-3. Immediate Notice to Administrative Agent.......................................................66
9-4. Weekly Reports.................................................................................67
9-6. Quarterly Reports..............................................................................68
9-7. Annual Reports.................................................................................68
9-8. Officers' Certificates.........................................................................69
9-9. Inventories, Appraisals, and Audits............................................................69
9-10. Additional Financial Information...............................................................70
9-11. Financial Performance Covenants................................................................70
ARTICLE 10 - EVENTS OF DEFAULT
10-2. Failure to Perform Liabilities.................................................................71
10-3. Misrepresentation..............................................................................72
10-4. Acceleration of Other Debt. Termination of Host Store Agreements...............................72
10-5. Related Party Defaults.........................................................................72
10-6. Casualty Loss. Non-Ordinary Course Sales.......................................................73
10-7. Judgment. Restraint of Business...............................................................73
10-8. Business Failure...............................................................................73
10-9. Bankruptcy.....................................................................................73
10-10. Indictment - Forfeiture.......................................................................74
10-11. Default by Guarantor or Related Entity.........................................................74
10-12. Challenge to Loan Documents....................................................................74
10-13. Change in Control..............................................................................74
ARTICLE 11 - RIGHTS AND REMEDIES UPON DEFAULT
11-1. Rights of Enforcement..........................................................................75
11-2. Sale of Collateral.............................................................................75
11-3. Occupation of Business Location................................................................76
11-4. Grant of Nonexclusive License..................................................................76
11-5. Assembly of Collateral.........................................................................77
11-6. Rights and Remedies............................................................................77
ARTICLE 12 - NOTICES.
12-1. Notice Addresses...............................................................................78
12-2. Notice Given...................................................................................78
ARTICLE 13 - TERM
13-1. Termination of Revolving Credit................................................................79
13-2. Effect of Termination..........................................................................79
14-1. Protection of Collateral.......................................................................79
14-2. Successors and Assigns.........................................................................79
14-3. Severability...................................................................................80
14-4. Amendments. Course of Dealing.................................................................80
14-5. Power of Attorney..............................................................................80
14-6. Application of Proceeds........................................................................80
14-7. Costs and Expenses of Agents and Lenders.......................................................80
14-8. Copies and Facsimiles..........................................................................81
14-9. Massachusetts Law..............................................................................81
14-10 Consent to Jurisdiction........................................................................81
14-11. Indemnification................................................................................81
14-12. Rules of Construction..........................................................................82
14-13. Intent.........................................................................................82
14-14. Maximum Interest Rate..........................................................................82
14-15. Waivers........................................................................................82
EXHIBITS
1-10 : Revolving Credit Note
4-3 : Guarantors
4-4(f) : Tax Sharing Agreement
5-2 : Related Entities
5-3 : Trade Names.
5-4 : Locations.
5-5 : Encumbrances on Collateral.
5-6 : Indebtedness.
5-7 : Insurance Policies.
5-8 : Host Store Agreements.
5-15 : Litigation
5-21(c) : Overhead Expense Allocation Protocol
5-22(a) : Changes in Financial Condition
5-22(b) : Contingent Obligations Not in Footnotes
6-4(c) : Surety Bonds
7-1 : DDA's.
9-4 : Borrowing Base Certificate
9-11(a) : Financial Performance Covenants
9-11(b) : Business Plan.
LOAN AND SECURITY AGREEMENT
..........., 1997
THIS AGREEMENT is made between
The "Agents", who are:
GBFC, Inc., a Delaware corporation with its principal
executive offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, as
Administrative Agent (so referred to herein) for the ratable benefit of
the Lenders; and
Fleet National Bank, a national banking association with
offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, as Co-Agent (so
referred to herein) for the ratable benefit of the Lenders;
and
The "Lenders", who are, at present:
GBFC, Inc., a Delaware corporation with offices at ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and
Fleet National Bank, a national banking association with offices at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇,
and
JBI, Inc. (hereinafter, in such capacity, the "Lead
Borrower"), a Massachusetts corporation with its principal executive
offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, as agent
for the "Borrowers", being the following:
JBI, Inc.;
▇▇▇▇▇ Shoe, Inc. (a Delaware corporation with its principal
executive offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, 02012); and
JBI Holding Company, Inc. (a Delaware corporation
with its principal executive offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,▇▇,▇▇▇▇▇),
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
ARTICLE 1 - THE REVOLVING CREDIT
Establishment of Revolving Credit
(a) The Lenders hereby severally (and not jointly)
establish a revolving line of credit (the "Revolving Credit") in the Borrowers'
favor pursuant to which each Lender, subject to, and in accordance with, the
within 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, in each instance equal to
that Lender's Commitment Percentage of Availability, up to the maximum
amount of that Lender's Commitment. The amount of the Revolving Credit shall
be determined by the Administrative Agent's reference to Availability,
calculated by the Administrative Agent based upon such information as may
then have been provided to the Administrative Agent pursuant to the within
Agreement or otherwise developed by the Administrative Agent. All of the
Borrowers' Liabilities under this Agreement are payable as
provided herein.
(b)) As used herein, the term "Availability" refers at any
time to the lesser of (i) or (ii), below, where:
(i) Is the result of:
(A) The Loan Ceiling.
Minus
(B) The then unpaid principal balance of the Loan Account.
Minus
(C) The then aggregate of such Availability Reserves as may have been
established by the Administrative Agent as provided herein.
Minus
(D) The then outstanding Stated Amount of all L/C's.
(ii) Is the result of:
(A) Up the lesser of
(I) (1) During the calendar months of November and
December: Twelve Million Dollars ($12,000,000.00).
(2) At all other times: Ten Million Dollars
($10,000,000.00)
or
(II) Eighty-Five Percent (85%)
of the face amount of
Acceptable Accounts.
Plus
(B) Up to the following percentage of the Retail of Acceptable Inventory:
(I) Through June 30, 1997: 30%.
(II) After June 30, 1997 : 25%.
Plus
(C) Up to the lesser of
(I) Seven Million Five Hundred Thousand Dollars ($7,500,000.00).
or
(II) the following percentage of the Cost of Acceptable
In-Transit Inventory:
(1) Through June 30, 1997: 55%.
(2) After June 30, 1997 : 50%.
Minus
(D) The then unpaid principal balance of the Loan Account.
Minus
(E) The then aggregate of such Availability Reserves as may have been
established by the Lender as provided herein.
Minus
(F) The then outstanding Stated Amount of all L/C's.
(c) Availability shall be based upon Borrowing Certificates
furnished as provided in Section 9-4, below.
(d) The proceeds of borrowings under the Revolving Credit
shall be used solely to retire a portion of the senior credit facility of ▇.
▇▇▇▇▇ as in effect prior to the execution of the with Agreement and the
establishment of the Casual Male Credit Facility and thereafter for: working
capital purposes of the Borrower; Capital Expenditures; and general corporate
purposes, all solely to the extent otherwise permitted by the within Agreement.
. No Lender has any obligation to provide credit to the Borrowers such
that the principal balance of ure the Loan Account exceeds Maximum Loan
Exposure. The making of loans, advances, and credits and the providing of
financial accommodations by the Lenders such that Maximum Loan Exposure is
exceeded is for the benefit of the Borrowers and does not affect the obligations
of the Borrowers hereunder; such loans constitute Liabilities. The making of any
such loans, advances, and credits and the providing of financial accommodations
in excess of Availability on any one occasion shall not obligate any Agent or
any Lender to make any such loans, credits, or advances or to provide any
financial accommodation on any other occasion nor to permit such loans, credits,
or advances to remain outstanding.
Risks of Value of Inventory.nventorThe Administrative Agent's reference
to a given asset in connection with the Lenders' 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 any Agent or any Lender relative to the actual
value of the asset in question. All risks concerning the saleability of
Inventory are and remain upon the Borrowers. All Collateral secures the prompt,
punctual, and faithful performance of the Liabilities whether or not relied upon
by any Agent or any Lender in connection with the making of loans, credits, and
advances and the providing of financial accommodations under the Revolving
Credit.
.-4. (a)▇▇▇▇▇.The following are the initial Inventory Reserves:serves
(i) Shrinkage: $1,000,000.00 at Retail.
(i) Vendor reserves and customs duties, with respect to Acceptable In-Transit
Inventory: 11% of the Cost of such Inventory.
(iii) Freight variances reflected in the Borrowers' "dummy warehouse account":
100% of such variances.
(b) At the execution of the within Agreement, there are
no Availability Reserves.
(c) The Administrative Agent will not establish any
Reserve except with not less than Five (5) days prior notice to the Lead
Borrower of the Administrative Agent's intention to do so.
Requests for Revolving Credit Loans.
(a) Subject to the limitations included herein, the
Borrower shall have the option to elect an interest rate and Interest
Period to be applicable to a Revolving Credit Loan by giving the
Administrative Agent notice no later than the following:
(i) If such Loan is, or is to be converted to a Base
Rate 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.
(ii) If such Loan is, or is to be continued as a
Eurodollar Loan: By 1:00PM Three (3) Business Days before the end of
the then applicable Interest Period.
(iii) If such Loan is to be converted to a Eurodollar
Loan: By 1:00PM Three (3) Business Days before the day on which such
conversion is to take place.
(b) Provided that there is sufficient Availability to support
the same, (but subject, however, to Subsection 1-8(d), below (which deals with
the effect of a Suspension Event)), a loan or advance under the Revolving Credit
so requested by the Lead Borrower shall be made by the transfer of the proceeds
of such loan or advance to the Funding Account or as otherwise instructed by the
Lead Borrower.
.-6. Interest Rates1
(a) Each Revolving Credit Loan shall bear interest at the Base
Rate unless timely notice is given (as provided in Section 1-5(a)), that the
subject Revolving Credit Loan (or a portion thereof) is, or is to be converted,
to be a Eurodollar Loan.
(b) Subject to the provisions hereof, the Lead Borrower, by
notice to the Administrative Agent, may cause all or a part of the unpaid
principal balance of the Loan Account to bear interest at the Base Rate or the
Eurodollar Rate as specified from time to time by the Lead Borrower. 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".
(c) The Borrower shall not select, renew, or convert any
interest rate for a Revolving Credit Loan such that there are more than Eight
(8) interest rates applicable to the Revolving Credit Loans at any one time.
(d) Eurodollar Loans shall each be in an amount of not
less than $1,000,000.00 and $100,000.00 increments in excess of such minimum.
(e) The Borrower shall pay interest on each Revolving Credit
Loan in arrears on the applicable Interest Payment Date for that Revolving
Credit Loan, in addition to which accrued and unpaid interest shall be paid on
the Termination Date and on the End Date, and following the occurrence of any
Event of Default, with such frequency as may be determined by the Administrative
Agent.
(f) The margins, applicable to the various interest options
available to the Borrowers pursuant hereto, are subject to change as described
on the Pricing Grid.
(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, at rate which is the aggregate of the
then applicable interest rate for Base Rate Loans (as determined from the
Pricing Grid) plus Two percent (2%) per annum.
Requests for L/C's. r L/C'sThe Lead Borrower may request that the
Administrative Agent cause the issuance of L/C's for the account of a Borrower.
(a) 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 Lead Borrower, provided that if so
issued:
(i) The aggregate Stated Amount of all L/C's
does not exceed Twenty Million Dollars ($20,000,000.00).
(ii) The expiry of the L/C is not later than the
earlier of Thirty (30) days prior to the Maturity Date or the
following:
(A) Standby's: One (1) year from initial issuance.
(B) Documentary's: 180 days from initial issuance of the subject L/C.
(iii) Maximum Loan Exposure would not be exceeded.
(c) The Borrower on whose account an L/C is being issued shall
execute such documentation to apply for and support the issuance of an L/C as
may be required by the L/C Issuer.
(d) No Borrower shall have any recourse to any Agent or any
Lender on account of any action taken or omitted to be taken under and in
connection with the application for, issuance of, or honoring of a drawing
under, any L/C and any drafts and documents which relate thereto, except for any
action taken or omitted to be taken 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.
(e) The Borrowers shall reimburse the L/C Issuer, immediately
upon the drawing under any L/C, for the amount of such drawing. In the event
that the Borrowers fail to so reimburse the L/C Issuer, the Borrowers
immediately shall reimburse the Lenders for the amount of such drawing. To the
extent which the Borrowers fail to so reimburse the L/C Issuer or the Lenders,
the Administrative Agent, without the request of the Lead Borrower or any of the
Borrowers, may cause the advance under the Revolving Credit any amount which the
Borrowers are so obligated to pay to the Lenders or the L/C Issuer, or for which
the Borrowers, the L/C Issuer, or the Lenders become obligated on account of, or
in respect to, any L/C. Such advance shall be made whether or not a Suspension
Event is then extant or such advance would result in Maximum Loan Exposure's
being exceeded. Such action shall not constitute a waiver of the Administrative
Agent's rights under Section 1-11(b), below.
General Procedures Under Revolving Creditng Credit
(a) The Administrative Agent may rely on any request for
a loan or advance or financial accommodation which the Administrative Agent,
in good faith, believes to have been made by a person duly authorized to act
on behalf of the Lead Borrower and may decline to make any such requested
loan or advance 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 may be satisfactory to the
Administrative Agent.
(b) A request by the Lead Borrower for any financial
accommodation under the Revolving Credit or of the issuance of an L/C shall be
irrevocable and shall constitute certification by the Lead Borrower that as of
the date of such request, each of the following is true and correct:
(c) Each Borrower is in compliance with, and has not
breached, in any material respect,
any of, its covenants contained in this Agreement.
(i) Each representation, not relating to a specific
date, which is made herein or in any of the Loan Documents (defined
below) 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
material adverse and (B) to the extent that such representations and
warranties expressly relate to a then earlier date).
(ii) No Suspension Event is then extant.
(d) Upon the occurrence from time to time of any Suspension
Event, the Administrative Agent may suspend the Revolving Credit immediately and
the Lenders shall not be obligated, during such suspension, to make any loans or
to provide any financial accommodation hereunder.
(e) A loan or advance shall be deemed to have been made
under the Revolving Credit upon:
(i) The Administrative Agent's initiation of the
transfer of the proceeds of such loan or advance in accordance with the Lead
Borrower's instructions (if such loan or advance is of funds requested by the
Lead Borrower).
(ii) The charging of the amount of such loan to the
Loan Account, made in accordance with this Agreement (in all other
circumstances).
(f) There shall not be any recourse to, nor liability of,
any Agent or any Lender on account of
(i) any delay beyond the reasonable control of
that Agent or that Lender in the making of any loan or advance requested under
the Revolving Credit;
(ii) any delay beyond the reasonable control of
that Agent or that Lender in the proceeds of any such loan or advance
constituting collected funds; or
(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 and timely initiated by the
Administrative Agent in accordance with wire instructions provided to
the Administrative Agent by the Borrower.
(g) Each Borrower shall immediately become indebted to the
Agents and the Lenders for the amount of each loan under or pursuant to
this Agreement when such loan is deemed to have been made.
The Loan Account. Account
(a) The Administrative Agent shall keep a record (the "Loan
Account") of: all loans made under the Revolving Credit; all debits owed on
account of the Liabilities; and all credits against such amounts so owed.
(b) Except as otherwise provided herein, all interest,
fees, service charges, costs, and expenses for which the Borrowers are obligated
hereunder are payable on demand. The Administrative Agent,
(i) without the request of the Lead Borrower, may
advance under the Revolving Credit, when due, any such interest and any
fees, and service charges specifically due to an Agent or a Lender
pursuant to the Loan Documents; and
(ii) unless an Event of Default has occurred
(following which, the Administrative Agent may advance any of the
following without prior notice to the Lead Borrower) , upon not less
than Seven (7) days notice to the Lead Borrower, may advance any such
interest, fees, service charge, costs, and expenses not described in
Section (i) which is not paid by the Borrowers when due.
In both instances ((i) and (ii)), the Administrative Agent may charge the same
to the Loan Account when so advanced, even if Maximum Loan Exposure is thereby
exceeded. No such action shall constitute a waiver of any Borrower's obligations
under Section 1-11(b), below. Any amount which is added to the principal balance
of the Loan Account as provided in this Subsection shall bear interest at the
interest rate applicable from time to time to the unpaid principal balance of
the Loan Account.
(c) All credits against the Liabilities shall be conditional
upon final payment of the items giving rise to such credits. The amount of any
item credited against the Liabilities which is charged back against any Agent or
any 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) In the determination of Availability, the Administrative
Agent may deem fees, service charges, accrued interest, and other payments as
having been advanced under the Revolving Credit whether or not such amounts are
then due and payable.
(e) Any statement rendered by any Agent or any Lender to the
Lead Borrower concerning the Liabilities shall be considered correct and
accepted by all Obligors and shall be conclusively binding upon all Obligors
unless the Lead Borrower 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.
. The 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 1-10, annexed hereto, executed
by the Borrower, one payable to each Lender. Neither the original nor a copy of
any Revolving Credit Note shall be required, however, to establish or prove any
Liability.
Payment and Prepayment of 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. Such payments shall be applied first to Base Rate Loans and only then
to Eurodollar Loans.
(b) The Borrowers, without notice or demand from any Agent or
any Lender, shall pay the Administrative Agent that amount, from time to time,
which is necessary so that the principal balance of the Loan Account does not
exceed Maximum Loan Exposure. Such payments shall be applied first to Base Rate
Loans and only then to Eurodollar Loans.
(c) The Borrowers shall repay the then entire unpaid balance
of the Loan Account and all other Liabilities on the Termination Date.
(d) The Borrowers shall indemnify each Lender and hold each
Lender harmless from and against any loss, cost or expense (including loss of
anticipated profits) which such Lender may sustain or incur (including, without
limitation, by virtue of acceleration after the occurrence of any Event of
Default) as a consequence of
(i) default by any Borrower in payment of the
principal amount of or any interest on any Eurodollar Loans as and when
due and payable, including any such loss or expense arising from
interest or fees payable by such Lender to lenders of funds obtained by
it in order to maintain its Eurodollar Loans;
(ii) default by the Borrower in making a borrowing or
conversion after the Lead Borrower 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; or
(iii) the making of any payment of a Eurodollar Loan
or the making of any conversion of any such Loan to a Base Rate Loan on
a day that is not the last day of the applicable Interest Period with
respect thereto, including interest or fees payable by such Lender to
lenders of funds obtained by it in order to maintain any such Loans.
. In the event that:umstances1-12.Changed Circumstances
(a) on any day on which the rate for a Eurodollar Loan would
otherwise be set, the Administrative Agent shall have determined in good faith
(which determination shall be final and conclusive) that adequate and fair means
do not exist for ascertaining such rate; or
(b) at any time the Administrative Agent shall have determined
in good faith (which determination shall be final and conclusive) that:
(i) the continuation of or conversion of any
Revolving Credit Loan to a Eurodollar Loan has been made impracticable
or unlawful by the occurrence of a contingency that materially and
adversely affects the applicable market or compliance by the
Administrative Agent or any Lender in good faith with any applicable
law or governmental regulation, guideline or order or interpretation or
change thereof by any governmental authority charged with the
interpretation or administration thereof or with any request or
directive of any such governmental authority (whether or not having the
force of law); or
(ii) the indices on which the interest rates for
Eurodollar Loans shall no longer represent the effective cost to the
Administrative Agent or any Lender for U.S. dollar deposits in the
interbank market for deposits in which it regularly participates;
then, and in any such event, the Administrative Agent shall forthwith so notify
the Lead Borrower thereof. Until the Administrative Agent notifies the Lead
Borrower that the circumstances giving rise to such notice no longer apply, the
obligation of the Administrative Agent and of the Lenders to make Eurodollar
Loans of the type affected by such changed circumstances or to permit the
Borrowers to select the affected interest rate as otherwise applicable to any
Revolving Credit Loans shall be suspended. If at the time the Administrative
Agent so notifies the Lead Borrower, the Lead Borrower had previously given the
Administrative Agent notice with respect to one or more Eurodollar Loans, but
such Eurodollar Loans had not yet been made, then such notification by the Lead
Borrower shall be deemed to have not been made.
Increased Costs. If, as a result of any change to any requirement of
law, and if, as a result 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 Agent or any Lender to any new taxes or
changes the basis of taxation, or increases any existing taxes, on payments of
principal, interest or other amounts payable by the Borrower to any Agent or any
Lender under this Agreement (except for taxes on an Agent's or any Lender's
overall net income or capital imposed by the jurisdiction in which that Agent or
that Lender's principal or lending offices 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; or
(c) 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 the Administrative Agent's reasonable opinion, is to increase the
cost to any Lender of making or maintaining any loan, advance or financial
accommodation or to reduce the income receivable by any Agent or any Lender in
respect of any the credit facility contemplated hereby by an amount which the
Administrative Agent deems to be material, then upon the Administrative Agent's
giving written notice thereof, from time to time, to the Borrower (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 Agent
or Lender, upon receipt of such notice, that amount which shall compensate the
subject Agent or Lender for such additional cost or reduction in income. In the
absence of manifest error, any such determination of increased costs or reduced
income which would be the subject of this Section 1-13, if done by the
Administrative Agent in good faith, shall be conclusive and binding on the
Borrowers.
Certain Fees. (a) As compensation for the Lenders' respective
commitments included herein to make loans and advances to the Borrowers and as
compensation for the Lenders' respective maintenance of sufficient funds
available for such purpose, the Borrowers shall pay the Administrative Agent,
for the account of the Lenders, an Upfront Fee (so referred to herein) of
$137,500.00. One Half of the Upfront Fee had been paid prior to the execution of
the within Agreement and One Half shall be paid immediately following such
execution.
(b) The Borrowers shall pay the Administrative Agent a
Collateral Management Fee (so referred to herein) based upon $7,000.00 per month
for the period beginning with the execution of the within Agreement and ending
on the later of the Maturity Date or the End Date.
(i) Such Fee shall be payable in monthly installments
in advance, except that, in the event of the early termination of the
Revolving Credit (other than the refinancing of the Revolving Credit in
which both Agents are lenders (as to which, see Subsection 1-14(b)(ii),
below) for any reason, the aggregate of (A) any accrued and unpaid
installments (for such purpose, without regard to any increase in such
installments, as provided in Section 1-14(c), below) plus (B) the
monthly installments which would fall due between the date of such
early termination and the Maturity Date shall be immediately due and
payable.
(ii) In the event of the refinancing of the Revolving
Credit in which both Agents are lenders, then any installments of the
Collateral Management Fee not due and payable on or prior to the date
of the consummation of such refinancing shall be waived.
(c) Upon and following the occurrence of any Suspension Event,
the Administrative Agent may alter the amount of the Collateral Management Fee
reasonably to reflect any increased administration required by reason of changes
to the Borrowers' financial and business circumstances evidenced by such
occurrence. Such increased Collateral Management Fee may include charges on a
per diem, hourly, or other basis to reflect such increased administration, and
shall have a reasonable relationship to the increased administrative burdens
place on the Administrative Agent.
(d) On the first day of each of the Borrower's fiscal quarter,
and on the End Date, the Borrower shall pay the Lender a Line Fee (so referred
to herein) equal to the following per annum percentage of the average
difference, during the period since such fee had then previously been paid,
between the (x) Loan Ceiling minus the average Stated Amount of all L/C's
outstanding during the subject period and (y) the unpaid principal balance of
the Loan Account :
(i) For the quarter ending on or about October 31, 1997 : 0.375%.
(ii) For quarters thereafter, as set pursuant to the Pricing Grid.
(e) In addition to any other right to which the Administrative
Agent is then entitled on account thereof, the Administrative Agent may assess
an additional fee payable by the Borrowers on account of the accommodation, by
the Administrative Agent, from time to time, of the Lead Borrower's request that
the Administrative Agent and the Lenders depart or dispense with one or more of
the administrative provisions of the within Agreement and/or waive any
Borrower's failure to comply with any of such provisions. The inclusion of the
foregoing right on the part of the Administrative Agent to assess a fee does not
constitute an obligation, on the part of the Administrative Agent or any Lender,
to waive any provision of the within Agreement under any circumstances. The
assessment of any such fee in any particular circumstance shall not constitute
the waiver of any breach of the within Agreement on account of which such fee
was assessed nor a course of action on which any Borrower may rely.
(f) Except as otherwise provided in Section 1-14(b), above,
the Borrowers shall not be entitled to any credit, rebate or repayment of any
Upfront Fee, Collateral Management Fee, or other fee previously earned by the
Lenders or the Administrative Agent 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.
Fees For L/C's.or L/C's-15. Fees For L/C's
(a) The Borrowers shall pay the Administrative Agent,
quarterly in arrears, on the first Business Day of each quarter hereof, and on
the End Date, an L/C Fee equal to the following per annum rate (determined, with
respect to each L/C based on the actual number of days outstanding and a 360 day
year) of the aggregate Stated Amount of such L/C's outstanding at any time
during the then immediately prior quarter or period :
(i) Documentary L/C's: One and One Quarter Percent (1.25%) .
(ii) Standby L/C's : The Eurodollar Margin in effect on the first
Business Day of the subject quarter, as determined based on the Pricing Grid.
(b) In addition to the fees to be paid as provided in
Subsection 1-15(a), above, the Borrowers shall pay to the Administrative Agent
(or to the L/C Issuer if so requested by the Administrative Agent), on demand,
all issuance, processing, negotiation, amendment, and administrative fees and
other similar amounts charged by the L/C Issuer on account of, or in respect to,
any L/C, which amounts shall be based on the L/C Issuer's then standard rates
and fees.
Concerning L/C's. L/C's-16. Concerning L/C's
(a) None of the L/C Issuer, the L/C Issuer's correspondents,
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 the Borrowers.
(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 L/C 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 Lead Borrower may instruct the L/C Issuer concerning
the designation of any advising bank, paying bank, and negotiating bank, those
banks so designated by the Lead Borrower, it being understood that the L/C
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 L/C Issuer shall have
discharged the L/C 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). None of any Agent or any
Lender, nor the L/C Issuer shall have any responsibility 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 Lender's, and the L/C 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 L/C Issuer and the Borrower, the L/C
will be governed by the Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce, Publication No. 500, and any subsequent
revisions thereof.
(g) If any change in any law, executive order or regulation,
or any directive of any administrative or governmental authority (whether or not
having the force of law), or in the interpretation thereof by any court or
administrative or governmental authority charged with the administration
thereof, 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 L/C Issuer or with respect to
which any Agent or any Lender or any L/C Issuer has an obligation to
lend to fund drawings under any L/C; or
(ii) impose on any L/C Issuer any other condition
or requirements relating to any such letters of credit;
and the result of any of the foregoing, in the reasonable opinion of the subject
L/C Issuer, is to increase the cost to that L/C Issuer of issuing or maintaining
any L/C or to reduce the income receivable by that L/C Issuer (which increase in
cost or decrease in income shall be the result of such L/C Issuer's reasonable
allocation among that L/C Issuer's letter of credit customers of the aggregate
of such cost increases and reduction in income resulting from such events),
then, upon the Administrative Agent's providing the Lead Borrower with a
certificate of an officer of the subject L/C Issuer describing such change in
law, executive order, regulation, directive, or interpretation thereof, its
effect on such L/C Issuer, and the basis for determining such increased costs or
reduced income and its allocation among that L/C Issuer's letter of credit
customers, the Borrowers shall forthwith pay to the Administrative Agent, for
the benefit of the subject L/C Issuer, that amount which shall compensate such
L/C Issuer for such increased cost or reduction in income. In the absence of
manifest error, an L/C Issuer's determination of increased costs or reduced
income which would be the subject of this Section 1-16(g) and the allocation, if
any, of such costs and reduction among the Borrowers and other letter of credit
customers of such L/C Issuer, if done in good faith and made on an equitable
basis and in accordance with the officer's certificate, shall be conclusive and
binding on the Borrowers.
(h) The obligations of the Borrowers under the within
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 the within
Agreement, any L/C, or any other agreement or instrument relating
thereto.
(ii) Any Borrower's consent to the amendment or
waiver of any 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 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.
(i) Each L/C Issuer shall be deemed to have agreed as follows:
(i) That any action taken or omitted by that L/C Issuer,
that L/C 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 L/C Issuer,
the L/C 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 L/C Issuer, the L/C 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 L/C 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.
. 7. Agents' Discretion
(a) Each reference in the Loan Documents to an Agent's
exercise of discretion or the like hall be to the exercise of such judgement,
in good faith, based upon that Agent's consideration of any such factor as that
Person, taking into account information of which that Person then has actual
knowledge, believes:
(i) Will or reasonably could be expected to affect,
in more than a de minimus manner, the value of the Collateral, the
enforceability of the Agent's security and collateral interests
therein, or the amount which the Agent would likely realize therefrom
(taking into account delays which possibly be encountered in the
Agent's realizing upon the Collateral and likely Costs of Collection).
(ii) Indicates that any report or financial
information delivered to any Agent or any Lender by or on behalf of any
Obligor is incomplete, inaccurate, or misleading in any material manner
or was not prepared in accordance with the requirements of the within
Agreement.
(iii) Constitutes a Suspension Event.
(b) In the exercise of such judgement, each Agent also
may take into account any of the following factors:
(i) Those included in, or tested by, the
definitions of "Acceptable Inventory," "Retail," 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.
(iv) The existence of any Suspension Event .
(c) The burden of establishing any Agent's failure to have
acted in a reasonable manner in the that Person's exercise of discretion shall
be the Obligors'.
Lenders' Commitments.mitments
(a) The obligations of each Lender are several and not joint.
No Lender shall have any obligation to make any loan or advance under the
Revolving Credit in excess of (i) the lesser of that Lender's Commitment
Percentage of the subject loan or advance or of Availability or (ii) in excess
of that Lender's Commitment,
(b) No Lender shall have any liability to the Lead Borrower or
to any Borrower on account of the failure of any other 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.
(c) The Dollar Commitments, Commitment Percentages, and
identities of the Lenders (but not the overall Commitment) may be changed, from
time to time by the reallocation of Dollar Commitments and Commitment
Percentages amongst the Lenders or with other Persons who determine to become
"Lenders", provided, however, any such reallocation shall be on a pro-rata basis
such that each reallocated Dollar Commitment to any Person remains the same
percentage of the overall Commitment (in terms of dollars) as the reallocated
Commitment Percentage is to such Person. Upon written notice given the Lead
Borrower from time to time by the Administrative Agent, of any such change,
(i) The Lead Borrower shall cause the execution of
replacement Revolving Credit Notes by each of the Borrowers to reflect
such changed Dollar Commitments, Commitment Percentages, and
identities, and the delivery of such replacement Revolving Credit Notes
to the Agent (which promptly thereafter shall deliver to the Lead
Borrower 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 new Revolving Credit Notes, may issue
the Administrative Agent's Certificate confirming the resulting
Commitments and Commitment Percentages.
(Ii) Such change shall be effective from the effective date
specified in such written notice and any Person added as a "Lender"
shall have all rights and privileges of a "Lender" hereunder thereafter
as if such Person had been a signatory to the within Agreement and any
other Loan Document to which a Lender is a signatory and any person
removed as a "Lender" shall be relieved of any obligations or
responsibilities of a "Lender" hereunder thereafter.
(d) The Lead Borrower and each Borrower recognizes that each
Agent's exercise of any reasonable discretion accorded to that Agent herein and
of its rights, remedies, powers, privileges, and discretions with respect to the
Lead Borrower and each Borrower is subject to a certain Agency Agreement amongst
the Agents and the Lenders. Under said Agency Agreement, the following actions
require the consent of all Lenders:
(i) Amendment of any rate of interest.
(ii) Amendment of the Loan Ceiling.
(iii) Amendment of the date on which or by which any
payment required under the Loan Documents is due.
(iv) Amendment of any fee required to be paid
under the Loan Documents.
(v) The increase of any advance rate.
(vi) Release of the Administrative Agent's
security interest in a material portion
of the Collateral not otherwise permitted under the Loan Documents.
(vii) Release of any Obligor's obligations under
the Loan Documents.
(viii) Amendment of this Section 1-18(d).
Except for those actions described above, any amendment, consent, or waiver any
provision of the Loan Documents shall require the consent of Lenders holding not
less than 66-2/3% of the Percentage Commitments.
1-19. Designation of Lead Borrower as Borrowers' Agent.
BorrowersDesignation of Lead Borrower as Borrowers' Agent.
(a) Each Borrower hereby designates the Lead Borrower 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 the same uses as those
set forth in Section 1-1(d), above. As the disclosed principal for its agent,
each Borrower shall be obligated to the Administrative Agent, the Co-Agent and
the Lenders on account of loans and advances so made under the Revolving Credit
as if made directly by the Lenders to that Borrower, notwithstanding the manner
by which such loans and advances are recorded on the books and records of the
Lead Borrower and of any Borrower.
(b) The proceeds of each of such loans and advances shall be
deposited into the Funding Account or as otherwise indicated by the Lead
Borrower. None of the Administrative Agent, the Co-Agent, or any Lender shall
have any obligation to see to the application of such proceeds.
ARTICLE 2 - GRANT OF SECURITY INTEREST
.-1. To secure the Liabilities, each Borrower hereby grants to the
Administrative Agent, for the ratable benefit of the Agents and the Lenders, a
security interest in and assigns to the Administrative Agent , 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 Administrative 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 Fixtures;
(g) All Chattel Paper;
(h) All books, records, and information relating to the
Collateral and/or to the operation of the 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;
(i) All Investment Property, Instruments, Documents of
Title, Documents, policies and certificates of
insurance, Securities, deposits, deposit accounts,
impressed accounts, compensating balances, money,
cash, or other property;
(j) 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 (2-1(a) through 2-1(i)) or otherwise;
(k) All liens, guaranties, rights, remedies, and
privileges pertaining to any of the foregoing (2-1(a)
through 2-1(i)), including the right of stoppage in
transit.
Extent and Duration of Security Interest. The within grant of a
security interest is in addition to, and supplemental of, any security interest
previously granted by any of the Borrowers to the Administrative Agent and shall
continue in full force and effect applicable to all Liabilities until all
Liabilities have been irrevocably paid and/or satisfied in full and any
obligation of the Administrative Agent or any Lender to provide financial
accommodations to any of the Borrowers shall have been terminated.
ARTICLE 3 - DEFINITIONS.ARTICLE 3 - DEFINITIONS.
As herein used, the following terms have the following meanings or are
defined in the section of the within Agreement so indicated:
"Acceptable Accounts": The face amount of a Borrower's accounts
receivable owed by an Acceptable Host Store on account of the
retail sale of inventory by that Borrower at the subject
Acceptable Host Store (net of of rent, fees, and other amounts
due and payable to the subject account debtor under the
subject lease, license, or other agreement between that
Borrower and the subject Acceptable Host Store) in which
account receivable the Administrative Agent has a first and
only valid and perfected priority security interest and which
account receivable, the Administrative Agent, in its
reasonable discretion, deems eligible for borrowing. Without
limiting the generality of the foregoing, the following
describe certain accounts receivable which the Administrative
Agent may determine, in the exercise of such reasonable
discretion, as not constituting "Acceptable Accounts":
(a) All accounts receivable of any Host Store, any
part of whose accounts receivable (other than any Pre-Petition
Accounts Receivable) due to any Borrower is more than Seven
(7) Business Days past due in accordance with the payment
terms of the lease, license, or other agreement between that
Borrower and the subject Acceptable Host Store.
(b) All Pre-Petition Accounts Receivable.
(c) In the discretion of the Agents, exercisable at
any time during the first Twenty (20) Business Days following
the subject bankruptcy filing, all Post-Petition Accounts
Receivable.
(d) Any account receivable, to the extent of any
disputed amount or amount claimed by the subject account
debtor as being subject to any chargeback, offset, or contra
or is otherwise disputed.
(e) Any account owed by any account debtor located in
Indiana or Minnesota (or any other state having requirements
similar to those set forth below), unless the relevant
Borrower (i) has received a certificate of authority to do
business and is in good standing in such jurisdiction and (ii)
has filed a Notice of Business Activities Report with the
appropriate state offices for the then current year.
"Acceptable Host Store": (a) A Key Host Store which has executed
a Host Store Consent.
(b) Until July 15, 1997, any Host Store which is not a Key Host
Store.
(c) After July 15, 1997, any Host Store which has executed a
Host Store Consent.
"Acceptable In-Transit Inventory": Such of the Borrowers' Inventory
(net of Inventory Reserves) which the Administrative Agent
determines, in the exercise of the Administrative Agent's
reasonable discretion to be acceptable for borrowing, which
Inventory is not then at an Acceptable Host Store or at the
Canton Warehouse or in transit between any of said locations,
as to which Inventory, the Administrative Agent either (a) has
a perfected security interest which is prior and superior to
all security interests, claims, and Encumbrances or (b) is
otherwise reasonably satisfied that the interests of the
Administrative Agent therein are sufficiently protected (such
as by being named in a letter from the Borrowers to the
Administrative Agent as consignee on, or having possession or
control of the documents of title applicable to, such
Inventory or such inventory's being en route to a customs
broker which is party to an agreement with the Administrative
Agent which is reasonably satisfactory to the Administrative
Agent ) so as to include such Inventory in the calculation of
"Availability".
"Acceptable Inventory": Such of the Borrowers' Inventory (net of
Inventory Reserves), which Inventory is either at an
Acceptable Host Store or at the Canton Warehouse (or is in
transit between any of such locations) as to which Inventory,
the Administrative Agent has a perfected security interest
which is prior and superior to all security interests, claims,
and Encumbrances.
"Accounts" and "Accounts Receivable" include, without limitation,
"accounts" as defined in the UCC, and also all: accounts,
accounts receivable, amounts due from Host Stores, credit card
receipts, notes, drafts, acceptances, and other forms of
obligations and receivables and rights to payment whether or
not yet earned by performance.
"ACH": Automated clearing house.
"Account Debtor": Has the meaning given that term in the UCC.
"Administrative Agent": Is defined in the Preamble.
"Administrative Agent's Rights and Remedies": Is defined in Section 11-6.
"Affiliate": Means, with respect to any two Persons, a relationship
where one directly or indirectly has Control of the other or
an interest of not less than 25% of the other or where not
less than 25% of their respective ownership is directly or
indirectly held by the same third Person.
"Agents": The Administrative Agent and the Co-Agent.
"Availability": Is defined in Section 1-1(b).
"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 Administrative 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) Chargebacks and set offs.
(ii) Taxes and other governmental
charges, including, ad valorem,
sales, personal property, and other
taxes which may have priority over
the security interests of the
Administrative Agent in the
Collateral.
At the execution of this Agreement, there are no Availability
Reserves.
"Average Excess Availability": The numerical average, for the period
for which "Average Excess Availability" is being determined,
of Excess Availability on each day during such period.
"Bankruptcy Code": Title 11, U.S.C., as amended from time to time.
"Base": The greater, on any day, of (a) the annual rate of interest
announced from time to time by BankBoston, N.A. at its head
office in Boston, Massachusetts, as its "Base Rate" or (b) the
aggregate of the Federal Funds Effective Rate plus One Half
Percent (0.5%) per annum (rounded upwards, if necessary, to
the next 1/8th of 1% per annum). 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 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 Rate Loan": Any Revolving Credit Loan, while bearing interest at
the Base Rate.
"Base Rate": The aggregate (calculated based on a 360 day year
and actual days elapsed) of Base plus the applicable Base Margin.
"Base Margin": The per annum percentage to be added to Base, as
determined pursuant to the Pricing Grid.
"BaseLine Quarter": Defined in the Definition of "Pricing Grid".
"Borrowers": Defined in the Preamble.
"Borrowing Base": On any day, the aggregate of those components of
"Availability" described in Sections 1-1(b)(ii)(A) Plus
1-1(b)(ii)(B) Plus 1-1(b)(ii)(C).
"BusinessDay": 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
Administrative Agent is not open to the general public to
conduct business.
"Business Plan": The Borrowers' business plan annexed hereto as
EXHIBIT 9-11 and any revision, amendment, or update of such business plan.
"Canton Warehouse": The warehouse located at the ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇.
"Capital Expenditures": The expenditure of funds or the incurrence of
liabilities, other than prepaid
loan fees, which may be capitalized in accordance with GAAP.
"Capital Lease": Any lease which may be capitalized in accordance with
GAAP.
"Cash Management Date": July 31, 1997.
"Casual Male": The Casual Male, Inc., a Massachusetts corporation.
"Casual Male Credit Facility": The credit facility established on or
about May 30, 1997 among The Casual Male and others, on the
one hand and Fleet National Bank as Administrative Agent and
others, on the other, as such credit facility may be amended
from time to time hereafter.
"Change in Control": The occurrence of any 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, which group or Person was not a
holder of any issued or outstanding stock of ▇. ▇▇▇▇▇ on May
1, 1997, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission) of 20% or
more of the issued and outstanding capital stock of ▇. ▇▇▇▇▇
having the right, under ordinary circumstances, to vote for
the election of directors of ▇. ▇▇▇▇▇.
(b) The acquisition, by any group of persons (within
the meaning of the Securities Exchange Act of 1934, as
amended) or by any Person, which group or Person was a holder
of 5% or more of the issued or outstanding stock of ▇. ▇▇▇▇▇
on May 1, 1997 of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission) of 49%
or more of the issued and outstanding capital stock of ▇.
▇▇▇▇▇ having the right, under ordinary circumstances, to vote
for the election of directors of ▇. ▇▇▇▇▇.
(c) More than half of the persons who were directors
of ▇. ▇▇▇▇▇ on the first day of any period consisting of
Twelve (12) consecutive calendar months (the first of which
Twelve (12) month periods commencing with the first day of the
month during which the within Agreement was executed), cease,
for any reason other than death or disability, to be directors
of ▇. ▇▇▇▇▇.
"Chattel Paper": Has the meaning given that term in the UCC.
"Co-Agent": Is defined in the Preamble.
"Collateral": Is defined in Section 2-1.
"Collateral Management Fee": Is defined in Section 1-14.
"Commitment" and "Commitment Percentage": Subject to Section 1-18, above:
---------------------------- ----------------------------------------------------- ---------------------
LENDER DOLLAR COMMITMENT PERCENTAGE
COMMITMENT
---------------------------- ----------------------------------------------------- ---------------------
---------------------------- ------------------------- --------------------------- ---------------------
Through June 30, 1997 July 1, 1997 to Maturity
Date
---------------------------- ------------------------- --------------------------- ---------------------
---------------------------- ------------------------- --------------------------- ---------------------
GBFC, Inc. $27,500,000.00 $25,000,000.00 50%
---------------------------- ------------------------- --------------------------- ---------------------
---------------------------- ------------------------- --------------------------- ---------------------
Fleet National Bank 27,500,000.00 25,000,000.00 50%
---------------------------- ------------------------- --------------------------- ---------------------
"Concentration Account": Is defined in Section 7-1.
"Consolidated": When used to modify a financial term, test, statement,
or report, refers to the application or preparation of such
term, test, statement, or report (as appropriate) based upon
the consolidation, in accordance with GAAP, of the financial
condition or operating results of the Borrowers.
"Cost": The calculated cost of purchases, as determined from
Borrowers' purchase orders, based upon the Borrowers'
accounting practices, known to the Agents, which practices are
in effect on May 1, 1997. With the exception of freight and
duty, "Cost" does not include inventory capitalization costs
nor other non-purchase charges used in the Borrowers'
determination of cost of goods sold.
"Cost Factor": The result of 1 minus the Borrowers' then cumulative
markup percentage derived from the Borrowers' purchase
journals, on a rolling 12 month basis.
"Costs of Collection" includes, without limitation, all attorneys'
reasonable fees and reasonable out-of-pocket expenses incurred
by the each Agent's (and following the occurrence of any Event
of Default any Lender's) attorneys, and all reasonable
out-of-pocket costs incurred by any Agent (and following the
occurrence of any Event of Default by any Lender) including,
without limitation, reasonable costs and reasonable expense
associated with travel, which costs and expenses are directly
or indirectly related to or in respect of the: administration
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 Administrative Agent's Rights and Remedies and/or any of
the Administrative Agent's rights and remedies against any
other person liable in respect of the Liabilities (whether or
not suit is instituted in connection with such efforts).
"Documents": Has the meaning given that term in the UCC.
"Documents of Title": Has the meaning given that term in the UCC.
"EBITDA":The Borrowers' Consolidated earnings from continuing
operations, before interest, taxes, depreciation, and
amortization, each as determined in accordance with GAAP
except that, in all events, Permitted Overhead Contributions
shall be deemed expenses for purposes of determining the
Borrowers' Consolidated earnings from continuing operations.
"Employee Benefit Plan": As defined in ERISA.
"Encumbrance": each of the following:
(a) Any security interest, mortgage, pledge,
hypothecation, lien, attachment, or charge of any kind; the
interest of a lessor under a Capital Lease; sale of accounts
receivable or chattel paper; or any other arrangement which
constitutes an interest in property to secure an obligation;
each of the foregoing whether consensual or non-consensual.
(b) The filing of any financing statement under
the UCC or comparable law of any jurisdiction.
"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 any of the Borrowers hereunder shall have
been irrevocably terminated.
"Environmental Laws": (a) All laws and regulations which regulate or
relate to environmental protection
and/or Hazardous Materials, as is now or hereafter in effect;
and (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 motor
vehicles, machinery, store fixtures, furniture, and other
goods used in the operation or
furtherance of the Borrower's business.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate": Any Person which is under common control with any
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.
"Eurodollar Loan": Any Revolving Credit Loan bearing interest
at the Eurodollar Rate.
"Eurodollar Margin": The per annum number of basis points to be
added to the Eurodollar Offer Rate, as determined pursuant to the Pricing Grid.
"Eurodollar Offer Rate": That rate of interest (rounded upwards, if
necessary, to the next 1/100 of 1%) determined by the
Administrative Agent to be the highest prevailing rate per
annum at which deposits on U.S. Dollars are offered to
BankBoston, N.A., by first-class banks in the Eurodollar
market in which BankBoston, N.A. participates at 10:00AM
(Boston Time) not less Two (2) Business Days before the first
day of the Interest Period for the subject Eurodollar Loan,
for a deposit approximately in the amount of the subject loan
for a period of time approximately equal to such Interest
Period.
"Eurodollar Rate": That per annum rate determined as the aggregate of
the Eurodollar Offer Rate plus the applicable Eurodollar
Margin, except that, in the event that it is determined by the
Administrative Agent that any Lender may be subject to the
Reserve Percentage, the Eurodollar Rate shall mean, with
respect to any Eurodollar Loans then outstanding (from the
date on which that Reserve Percentage first became applicable
to such loans), and with respect to all Eurodollar 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:
Eurodollar Offer Rate
1 minus Reserve Percentage
(b) the applicable Eurodollar Margin.
"Events of Default": Is defined in Article 10. Each reference herein
to an "Event of Default" is to an Event of Default not then
duly waived by the Lender (as to which due waiver, see Section
14-4(b)). 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 incurred by any Lender
prior to such waiver).
"Excess Availability": The result, on any day, of (a) Borrowing Base
minus the aggregate of (b) (i) the principal balance of the
Loan Account, plus (ii) the Stated Amount of all L/C's.
"Federal Funds Effective Rate": For any day, a fluctuating per annum
interest rate equal to the weighted average of the rates on
overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as
published on that date (or on the then next succeeding
Business Day, if not one) by the Federal Reserve Bank of New
York, provided that if such a rate is not so published for a
day which is a Business Day, "Federal Funds Effective Rate"
shall be the average of quotations for such day on such
transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by the
Administrative Agent.
"Fixtures": Has the meaning given that term in the UCC.
"Funding Account": Is defined in Section 7-1.
"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.
"General Intangibles" includes, without limitation, "general
intangibles" as defined in the UCC; and also all: Host Store
Agreements; rights to payment; goodwill; causes of action;
judgments; franchises; license agreements; computer records;
rights of access to computer service bureaus; trade secrets;
copyrights and derivative works and interests; trade names,
trademarks, service marks, and all good will relating thereto;
applications for registration of the foregoing; and all other
intellectual property.
"Goods": Has the meaning given that term in the UCC.
"Gross Margin": With respect to the subject accounting period for which
being calculated, the following (determined in accordance with GAAP):
Sales (Minus) Cost of Goods Sold
Sales
"Guarantors": Those Persons who, from time to time, guaranty the
Liabilities. (Initially, those Persons listed on EXHIBIT 4-3, annexed hereto).
"Hazardous Materials:" Any (a) hazardous materials, hazardous waste,
hazardous or toxic substances, petroleum products, which (as
to any of the foregoing) are 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 operates a retail shoe department as a so-called
"licensed department".
"Host Store Agreement": Any lease, license, or similar agreement
with any Host Store pursuant to which a Borrower operates or is to operate a
retail shoe department as a so-called "licensed department".
"Host Store Consent": An agreement by a Key Host Store or by a Host
Store (a) delivered to the Administrative Agent prior to the
execution of the within Agreement or (b) which, following such
execution, the Administrative Agent determines (in the
Administrative Agent's discretion) as including reasonable
safeguards and protections concerning the interests of the
Agents and the Lenders in the assets and operations of that
Borrower.
"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.
"Indebtedness" of any Person shall also include:
(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 and
other than the guaranty, by one Borrower, of
the obligations of another Borrower).
(z) The Indebtedness of a
partnership or joint venture in which such
Person is a general partner or joint
venturer.
"Indemnified Person": Is defined in Section 14-11.
"Instruments": Has the meaning given that term in the UCC.
"Interest Payment Date": With reference to:
(a) Any Eurodollar Loan: the last day of the
Interest Period relating thereto, the Termination Date, and the End Date.
(b) Any Base Rate Loan: the first day of each
month; the Termination Date; and the End Date.
"InterestPeriod": (a) With respect to each Eurodollar Loan: Subject to
Subsection (d), below, the period commencing on the date of
the making or continuation of, or conversion to, such
Eurodollar Loan and ending one, two, or three months
thereafter, as the Lead Borrower may elect by notice (pursuant
to Section 1-5(a)) to the Administrative Agent.
(b) With respect to each Base Rate Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of or conversion to such Base Rate
Loan and ending on that date (i) as of which the subject Base
Rate Loan is converted to a Eurodollar Loan, as the Lead
Borrower may elect by notice (pursuant to Section 1-5(a)) to
the Administrative Agent, or (ii) on which the subject Base
Rate 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 Rate
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 Eurodollar
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 (v), below, any
Interest Period applicable to a Eurodollar 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) Subject to Subsection (vi), any
Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(v) Except as provided in Subsection (vi),
below, the Borrower shall not request any Eurodollar
Loan which would have an Interest Period of less than
one (1) month.
(vi) For the periods (A) commencing with the
execution of the within Agreement and ending on June
30, 1997 and (B) consisting of the last month prior
to the Maturity Date, the Borrower may request
Eurodollar Loans otherwise permitted by this
Agreement, but with Interest Periods of 7, 14, and 21
days.
(vii) The number of Interest Periods in
effect at any one time is subject to Section 1-6(c),
above.
"Inventory" includes, without limitation, "inventory" as defined in the
UCC and also all: packaging, advertising, and shipping
materials related to any of the foregoing, and all names or
marks affixed or to be affixed thereto for identifying or
selling the same; Goods held for sale or lease or furnished or
to be furnished under a contract or contracts of sale or
service by the Borrower, or used or consumed or to be used or
consumed in the Borrower's business; Goods of said description
in transit: returned, repossessed and rejected Goods of said
description; and all documents (whether or not negotiable)
which represent any of the foregoing.
" 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 Acceptable
Inventory or which reflect such other factors as affect the
market value of the Acceptable Inventory. Without limiting the
generality of the foregoing, Inventory Reserves may include
(but are not limited to) reserves based on the following:
(i) Obsolescence (determined 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.
At the execution of this Agreement, the only Inventory
Reserves are those set forth in Section 1-4(a), above.
"Investment Property": Has the meaning given that term in the UCC.
"▇. ▇▇▇▇▇": ▇. ▇▇▇▇▇, Inc., a Massachusetts corporation.
"Key Host Stores": ▇▇▇▇ Department Stores; Bradlees, Inc.;
Hills Department Stores, Inc.; Rose's Stores, Inc.; and Shopko Stores, Inc.
"L/C": Any letter of credit, the issuance of which is procured by the
Administrative Agent for the account of any Borrower.
"L/C Issuer": Any Lender or affiliate from time to time
selected by the Lead Borrower.
"Lead Borrower": Is defined in the Preamble.
"Lenders": Defined in the Preamble to the within Agreement
"Liabilities" (in the singular, "Liability") includes, without
limitation, all and each of the following, whether now
existing or hereafter arising:
(a) Any and all direct and indirect liabilities,
debts, and obligations of the Lead Borrower or any Borrower to
any Agent or any Lender, each of every kind, nature, and
description owing on account of the within Agreement or any
other Loan Document or any service or accommodation provided
to, or for the account of any Borrower pursuant to the within
Agreement or any other Loan Document, including cash
management services or the issuance of any L/C .
(b) Each obligation to repay any loan, advance,
indebtedness, note, overdraft, or similar amount now or
hereafter owing by the Lead Borrower or 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, or contingent.
(c) All notes and other obligations of the Lead
Borrower or any Borrower now or hereafter assigned to or held
by any Agent, or any Lender, each of every kind, nature, and
description.
(d) All interest, fees, and charges and other amounts
which may be charged by any Agent, or any Lender to the Lead
Borrower or any Borrower and/or which may be due from the Lead
Borrower or any Borrower to any Agent or any Lender from time
to time.
(e) All costs and expenses incurred or paid by any
Agent or any Lender in respect of any agreement between the
Lead Borrower or any Borrower on the one hand and any Agent
and/or any Lender on the other or instrument furnished by the
Lead Borrower or any Borrower to any Agent or any Lender
(including, without limitation, Costs of Collection,
attorneys' reasonable fees, and all court and litigation costs
and reasonable expense).
(f) Any and all covenants of the Lead Borrower or any
Borrower to or with any Agent or any Lender and any and all
obligations of the Lead Borrower or any Borrower to act or to
refrain from acting in accordance with any agreement between
the Lead Borrower or any Borrower and any Agent or any Lender
or instrument furnished by the Lead Borrower or any Borrower
to any Agent or any Lender.
"Line Fee": Is defined in Section 1-14(d).
"Loan Account": Is defined in Section 1-9.
"Loan Ceiling": $55,000,000.00: From the execution of the within
Agreement until June 30, 1997.
$50,000,000.00: July 1, 1997 to Maturity Date.
"Loan Documents": The within Agreement, each instrument and document
executed and/or delivered as contemplated by Article 4 or
Section 5-21, below, and each other instrument or document
from time to time executed and/or delivered in connection with
the arrangements contemplated hereby, as each may be amended
from time to time.
"Maturity Date": May 31, 2000.
"Maximum Loan Exposure": The lesser, on any day, of the amount
determined in accordance with (a) Section 1-1(b)(i), or (b) Section 1-1(b)(ii),
above.
"Obligor": Individually (in the singular): Each Borrower and each Guarantor.
Collectively, all of the Borrowers and all of the Guarantors.
"Operating Cash Flow": The result of, for the same period in respect to
which "Operating Cash Flow" is determined, of (a) EBITDA minus
(b) Capital Expenditures paid in cash minus (c) income tax
payments made.
"Permitted Distributions": Payments of each of the following:
(a) Towards regularly scheduled payments of interest on
▇. ▇▇▇▇▇'▇ 7% Convertible Subordinated Notes due 2002, the lesser, for any
fiscal year of the following:
(i) $2,500,000.00.
(ii) 50% of interest accrued on such Notes during the subject fiscal year
(b) Towards regularly scheduled payments of interest on, and principal
of, JBI, Inc.'s $35,000,000.00 11.21% Senior Subordinated Notes
due 1999.
(c) Towards regularly scheduled payments of interest on
▇▇▇▇▇ Shoe, Inc.'s Subordinated Convertible
Debentures due 2002, which Debentures are subject of
a certain First Supplemental Indenture dated as of
January 28, 1993.
(d) Towards dividends declared and paid by ▇. ▇▇▇▇▇, the lesser of
the following for any fiscal year:
(i) 50% of such dividends
(ii), $450,000.00. provided, however, in the event that the
holders of ▇. ▇▇▇▇▇'▇ 7%
Convertible Subordinated Notes due 2002
convert all or a portion of such Notes to
common stock of ▇. ▇▇▇▇▇, then such
$450,000.00 shall be increased by the an
amount equal to the reduction (if any) in
the distributions permitted pursuant to
Subsection (a) of this Definition.
(d) Dividends, declared and made after March 31, 1998,
not exceeding a cumulative aggregate of $1,000,000.00
and not otherwise described in this Definition,
provided that each of the following conditions is
satisfied: (i) After giving effect to such dividends,
the ratio of Operating Cash Flow to
Total Debt Service for the then most recently
completed four fiscal quarters
is not less than 1.25 : 1.00.
(ii) Average Excess Availability, during the
fiscal quarter immediately prior to that
during which such payment is to be made, is
not less than $10,000,000.00.
(iii) Excess Availability, after giving effect to
the payment of such dividend, is not less
than $10,000,000.00.
(e) Permitted Overhead Contributions.
"Permitted Encumbrances": Encumbrances in favor of any Borrower on all
or part of the assets of any other Borrower securing
Indebtedness owing by one Borrower to another Borrower;
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 40 days
from the date of creation thereof in respect of obligations
not overdue; 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 a 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 a 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; Encumbrances in favor of the
Administrative Agent under the Loan Documents; Encumbrances to
secure Indebtedness permitted by Section 5-6(c), below, but
such Encumbrances shall extend only to the assets as acquired
and not to any other property of the Borrower.
"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 ▇▇▇▇▇'▇
Investors Services, Inc., and not less than "A 1" if rated by
Standard and Poor's; investments in common and preferred stock
traded on national securities exchanges, provided that the
aggregate amount at any one time invested does not exceed
$50,000.00; additional investments in the capital stock of any
other Borrower; capital contributions permitted pursuant to
Section 5-16(c)(ii); and loans permitted pursuant to Section
5-17.
"Permitted Overhead Contributions": Each of the following:
(a) Payments to ▇. ▇▇▇▇▇ towards corporate overhead, not
to exceed the lesser of
(i) Those amounts agreed to, for any fiscal
quarter, by the Borrowers and ▇.
▇▇▇▇▇ (subject to those limitations as are
included in the overhead expense allocation
protocol set forth in EXHIBIT 5-21(c),
below) or
(ii) The following aggregate for the fiscal year
indicated:
1998: $18,000,000.00.
1999: 18,800,000.00
2000: 19,600,000.00
(b) Towards rent under the lease of the Canton Warehouse.
"Person": Any natural person, and any corporation, limited liability
company, trust, partnership, joint
venture, or other enterprise or entity.
Post-Petition Accounts Receivable:"Any account receivable due from any
Host Store or other Account Debtor and incurred subsequent to
the date on which any order for relief, under the Bankruptcy
Code, was entered with respect to such Host Store or other
Account Debtor.
"Pre-Petition Accounts Receivable:"Any account receivable due from any
Host Store or other Account Debtor and incurred prior to the
date on which any order for relief, under the Bankruptcy Code,
was entered with respect to such Host Store or other Account
Debtor.
"Pricing Grid": Until the tenth Business Day after the end of the
Borrowers' fiscal quarter ending on
or about the last day of October, 1997, the Eurodollar Margin,
Base Margin, and Line Fee shall be as follows:
------------------------------------------ -------------------------------------------- ----------------------------
EURODOLLAR MARGIN BASE MARGIN LINE FEE
(Basis Points) (Basis Points) (Percentage)
------------------------------------------ -------------------------------------------- ----------------------------
------------------------------------------ -------------------------------------------- ----------------------------
225 50 0.375%
------------------------------------------ -------------------------------------------- ----------------------------
For periods commencing after the Borrower's fiscal
quarter ending on or about the last day of October, 1997, the
Eurodollar Margin, Base Margin, and Line Fee shall be
determined based upon Average Excess Availability for the
fiscal quarter then most recently completed (the "BaseLine
Quarter"); shall be effective from the tenth Business Day
after the end of the BaseLine Quarter until the ninth Business
Day of the then following quarter; and shall be as follows:
--------------------------------- ------------------------------ ---------------------------- ----------------------
AVERAGE EXCESS AVAILABILITY EURODOLLAR MARGIN (Basis BASE MARGIN LINE FEE (Percentage)
($Million) Points) (Basis Points)
--------------------------------- ------------------------------ ---------------------------- ----------------------
--------------------------------- ------------------------------ ---------------------------- ----------------------
Less than $10 225 50 0.375
--------------------------------- ------------------------------ ---------------------------- ----------------------
--------------------------------- ------------------------------ ---------------------------- ----------------------
$10 to less than $15 200 25 .25
--------------------------------- ------------------------------ ---------------------------- ----------------------
--------------------------------- ------------------------------ ---------------------------- ----------------------
$15 and over 175 0 .25
--------------------------------- ------------------------------ ---------------------------- ----------------------
"Proceeds": include, without limitation, "Proceeds" as defined in the
UCC (defined below), and each type
of property described in Section 2-1, above.
"Receipts": All cash, cash equivalents, checks, and credit card slips
and receipts as arise out of the
sale of the Collateral.
"Receivables Collateral": That portion of the Collateral which consists
of the Borrower's Accounts, Accounts Receivable, contract
rights, General Intangibles, Chattel Paper, Instruments,
Documents of Title, Documents, Securities, letters of credit
for the benefit of the Borrower, and bankers' acceptances held
by any Borrower, and any rights to payment.
"Related Entity": refers to (a) any Affiliate; and (b) any Person
(other than a Borrower or a natural person) which: could have
such Person's tax returns or financial statements consolidated
with the Borrower's; could be a member of the same controlled
group of corporations (Section 1563(a)(1), (2) and (3) of the
Internal Revenue Code of 1986, as amended from time to time)
of which the Borrower is a member; or Controls or is
Controlled by any Borrower or any Affiliate of any Borrower.
"Requirement of Law": as to any Person: all (a)(i) statutes and
regulations and (ii) court orders and injunctions,
arbitrator's decisions, and/or similar rulings, in each
instance by any governmental authority, or other body which
has jurisdiction over such Person, or any property of such
Person, or of any other Person for whose conduct such Person
would be responsible; and (b) that Person's organizational
documents, 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
a 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 that Lender
with respect to "Eurocurrency liabilities" as defined in such
regulations. The Reserve Percentage applicable to a particular
Eurodollar 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.
"Retail": As reflected in the Borrowers' stock ledger, being
the Cost of Acceptable Inventory
divided by the Cost Factor.
"Revolving Credit": Is defined in Section 1-1.
"Revolving Credit Loans": Is defined in Section 1-6(b).
"Revolving Credit Note": Is defined in Section 1-10.
"Securities": Has the meaning given that term in the UCC.
"Side Collateral Account": An account established by the Lead Borrower
with BankBoston, N.A., the
contents of which shall be pledged to the Administrative
Agent and which may consist of cash
and Permitted Investments.
"Stated Amount": The maximum amount for which an L/C may be honored.
"Suspension Event": Any occurrence, circumstance, or state of facts
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 absolutely cured
within any applicable grace period.
"Termination Date": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 10-9, below; or
(c) the Administrative Agent's notice to the Lead Borrower
setting the Termination Date on account of the occurrence of
any Event of Default other than as described in Section 10-9,
below.
"Total Debt Service": The aggregate, for the same period in respect
to which "Total Debt Service" is determined, of the following:
(a) interest and fees payable with respect to borrowed money
(including all interest (and to the extent not included in the
determination of EBITDA, fees) payable on account of the
credit facility contemplated by the within Agreement other
than (i) any amortization of the Upfront Fee; any fees on
account of L/C's; and other fees, but only if the amount of
such fees are deducted as an expense in the calculation of
EBITDA) plus (b) principal payments due or to become due on
account of indebtedness for borrowed money (other than
ordinary course repayments of the Loan Account from
collections of accounts receivable and scheduled reductions in
Availability) or any Capital Lease plus (c) without
duplication of amounts described in Clauses (a) and (b) of
this Definition, Permitted Distributions to the extent not
included in the determination of EBITDA.
"UCC": The Uniform Commercial Code as presently in effect in
Massachusetts (Mass. Gen. Laws,
Ch. 106).
"Upfront Fee": Is defined in Section 1-14.
ARTICLE 4 - CONDITIONS PRECEDENT.
The effectiveness of this Agreement is conditioned upon the delivery of
the documents respectively described in Section 4-1 through and including 4-5,
each in form and substance satisfactory to the Administrative Agent, and
satisfaction of the conditions respectively described in Sections 4-6 through
and including 4-9:
Corporate Due Diligence. igence.-1. Corporate Due Diligence.
(a) Certificates of corporate good standing issued, with
respect to each Obligor, by the respective Secretaries of State for the States
under whose law the Obligors are organized.
(b) Certificates of due qualification, in good standing,
issued by the Secretary(ies) of State of each State in which the nature of an
Obligor's business conducted or assets owned could require such qualification.
(c) Certificates of the Obligor's respective Secretaries or
Clerk's 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.
Opinion. An opinion of counsel to the Obligors in form and substance
reasonably satisfactory to the Agents .
Guaranties arantieThe unlimited Guaranty by each of those Persons
listed on EXHIBIT 4-3, annexed hereto, which Guaranty, in the case of ▇. ▇▇▇▇▇,
shall be secured by a first and only perfected security interest in all capital
stock of the Borrower, JBI, Inc.
Additional Documents. Such additional instruments and documents as the
Agents, and their counsel reasonably may require or request (each in form
satisfactory to the Agents), including, without limitation, the following:
(a) A Pledge Agreement pursuant to which JBI, Inc., creates a
first and only perfected security interest security interest, in favor of the
Administrative Agent (for the ratable benefit of the Agents and the Lenders) in
all capital stock of all other Borrowers.
(b) A Letter, from Fleet National Bank, pursuant to which
Fleet National Bank, as issuer, prior to the date of the within Agreement, of
certain letters of credit for the account of JBI, Inc. and The Casual Male, will
not look to JBI, Inc. for reimbursement in the event of any drawing under such
letters of credit.
(c) Agreements with the Escrow Agents holding certain funds in
connection with the sales of Shoe Corporation of America and Parade of Shoes.
(d) An Agreement with the Borrowers' customs broker.
(e) Agreements with each of the Key Host Stores.
(f) A Tax Sharing Agreement (substantially in the form of
EXHIBIT 4-4(f), annexed hereto) amongst the Borrowers and all Related Entities.
(g) A "Blocked Account Agreement" with Fleet National Bank.
4-5 Officers' Certificates. Certificates executed by the respective
Presidents and the Chief Financial Officers of each Borrower and stating that
the representations and warranties made by that Borrower in the Loan Documents
are true and correct, in all material respects, as of the date of such
Certificate, and that no Suspension Event has occurred.
. 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 any or on behalf of that Borrower
shall be true and complete as of the date as of which such representation or
warranty was made.
.
-7 Each of the following events shall have been consummated on terms
and condition which are satisfactory to the Agents and their counsel and the
following conditions shall be have satisfied:
(a) The retirement in full of the credit facility between
Casual Male and .........
(b) Completion of the review, by the Agents and their
counsel, of all material contracts
to which any Borrower is a party (including all material leases (so-called)
between any Borrower and a Host Store.
(c) Receipt of satisfactory agreements with all Key Host
Stores.
(d) Completion of review, by the Agents and their
counsel, of all documentation relating
to: ▇. ▇▇▇▇▇'▇ Convertible Subordinated Notes due 2002; ▇. ▇▇▇▇▇'▇ $35 Million
Convertible Subordinated Notes;
the mortgage financing which is secured by the Canton Warehouse; and the
execution of such intercreditor
agreement, with respect thereto, as may be satisfactory to the Agents and their
counsel.
Minimum Excess Availability.labilitThe Borrowers shall have provided
the Administrative Agent with a Borrowing Base Certificate (in the form of
EXHIBIT 9-4, annexed hereto), on which "Availability", after giving effect to
the initial advances to be made under, and in connection with the establishment
of, the credit facility contemplated hereby, is not less than $10,000,000.00
No Event of Default. No event shall have occurred, or failed to occur,
which occurrence or which failure constitutes, or which, solely with the passage
of time or the giving of notice (or both) would constitute, an Event of Default.
No Adverse Change. No event shall have occurred or failed to occur,
since February 1, 1997, which occurrence or failure is or would likely have a
materially adverse effect upon the Borrower's or any Obligor's financial
condition, operating results, or cash flows from their financial condition at
the end of the Borrower's fiscal year in January, 1997.
No document shall be deemed delivered to any Agent or any Lender until received
and accepted by the Administrative Agent at its head offices in Boston,
Massachusetts. Under no circumstances will the within Agreement take effect
until executed and accepted by the Administrative Agent at said head office.
ARTICLE 5 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
To induce each Agent and each Lender to establish the loan arrangement
contemplated herein and to make loans and advances and to provide financial
accommodations under the Revolving Credit (each of which loans shall be deemed
to have been made in reliance thereupon), the Borrowers, in addition to all
other representations, warranties, and covenants made in any other Loan
Document, respectively make those representations, warranties, and covenants
included in the within Agreement.
Payment and Performance of Liabilities. Each Borrower shall pay each
Liability when due (or when demanded if payable on demand) and shall promptly,
punctually, and faithfully perform each other Liability.
5-2. Due Organization - Corporate Authorization -
Authoriza. on - No Conflicts
(a) Each Borrower is and shall remain in good standing as a
corporation in the state of its organization, as referenced in the Preamble, and
is and shall remain duly qualified and in good standing in every other State in
which, by reason of the nature or location of that Borrower's assets or
operation of that Borrower's business, such qualification may be necessary,
except where the failure to so qualify would have a Material Adverse Effect on
the business or assets of that Borrower.
(b) Each Related Entity is listed on EXHIBIT 5-2, annexed
hereto. The Lead Borrower shall
provide the Administrative Agent with prior written notice of any entity's
becoming or ceasing to be a Related
Entity. The aggregate assets of all Guarantors other than ▇. ▇▇▇▇▇, Inc. is,
and shall remain, less than
$100,000.00, plus the value (if any) of the claim of ▇▇▇▇▇ Shoe (Canada) Ltd.
against Hudsons Bay Company.
(c) Each Borrower has all requisite corporate power and
authority to execute and deliver to the Lender those Loan Documents to which
that Borrower is a party and has and will retain all requisite corporate power
to perform the Liabilities.
(d) Each Borrower's: execution and delivery of each Loan
Document to which it is a party;
performance under those of the Loan Documents to which it is a party; and
borrowing hereunder and use of the
proceeds thereof:
(i) has been duly authorized by all necessary
corporate action;
(ii) does not, and will not, contravene in any
material respect any provision of
any Requirement of Law where such contravention would have more than a
de minimus adverse effect on the
Borrowers;
(iii) does not, and will not, contravene in any
material respect any material
obligation of that Borrower; and
(iv) will not result in the creation or
imposition of, or the obligation to
create or impose, any Encumbrance
upon any assets of that Borrower
except pursuant to the Loan
Documents.
(e) The Loan Documents have been duly executed and delivered
by the Lead Borrower and each Obligor and are the legal, valid and binding
obligations of the Lead Borrower and each Obligor, enforceable against each in
accordance with their respective terms.
Trade Names. e Names.-3. Trade Names.
(a) EXHIBIT 5-3, annexed hereto, is a listing of:
(i) All names under which any Borrower ever conducted its business.
(ii) All entities and/or persons with whom any Borrower ever
consolidated or merged, or from whom any Borrower ever acquired in a
single transaction or in a series of related transactions substantially
all of such entity's or person's assets.
(b) Except (i) upon not less than twenty-one (21) days prior
written notice given the Administrative Agent , and (ii) in compliance with all
other provisions of the within Agreement, no Borrower will undertake or commit
to undertake any action such that the results of that action, if undertaken
prior to the date of this Agreement, would have been reflected on EXHIBIT 5-3.
(c) Each Borrower owns and possesses, or has the right to use
all material 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.
(d) The conduct by each Borrower of that Borrower's business
does not infringe on the patents, industrial designs, trademarks, trade names,
trade styles, brand names, service marks, logos, copyrights, trade secrets,
know-how, confidential information, or other intellectual or proprietary
property of any third Person.
Locations.ocations -4. Locations.
(a) The Collateral, and the books, records, and papers of the
Borrowers pertaining thereto, are kept and maintained solely at the chief
executive offices of the Lead Borrower, as stated in the Preamble of this
Agreement, and at those locations which are listed on EXHIBIT 5-4, annexed
hereto, which EXHIBIT includes all service bureaus with which any such records
are maintained and the names and addresses of each of the landlords or Host
Stores (as applicable) of each Borrower Except (i) to accomplish sales of
Inventory in the ordinary course of business; (ii) to utilize such of the
Collateral as is removed from such locations in the ordinary course of business
(such as motor vehicles); no Borrower shall remove any Collateral from said
chief executive offices or those locations listed on EXHIBIT 5-4.
(b) No Borrower will make any material alterations,
modifications, or amendments of any Host Store Agreement with any Key Host
Store, other than the extension of the term of such Host Store Agreement.
5-5. Title to Assets.
(a) Each Borrower is, and shall hereafter remain, the owner of
the Collateral free and clear of all Encumbrances with the exceptions of the
following:
(i) The security interest created herein.
(ii) Those Encumbrances (if any) listed on
EXHIBIT 5-5, annexed hereto.
(iii) Permitted Encumbrances.
(iv) Prior claims to the escrow accounts
established in connection with
transactions with Shoe Corporation of America and Parade of Shoes.
(b) No Borrower has any property on consignment.
Indebtedness. No Borrower has and none shall hereafter have any
Indebtedness with the exceptions of:
(a) Any Indebtedness to the Lenders .
(b) The Indebtedness (if any) listed on EXHIBIT 5-6,
annexed hereto.
(c) Indebtedness, not to exceed Two Million Dollars
($2,000,000.00) in the aggregate
outstanding at any one time outstanding, on account of Capital Leases.
(d) The Liabilities constitute
(i) "Secured Indebtedness" within the meaning of the
Indenture dated June 12, 1992 relating to the issuance of ▇.▇▇▇▇▇'▇ 7%
Convertible Subordinated Notes due 2002.
(ii) "Funded Debt" within the meaning of the
Indenture dated May 1, 1989, as modified by that certain Letter dated
February 24, 1997, relating to JBI, Inc.'s $35,000,000.00 11.21% Senior
Subordinated Notes due 1999.
(iii) "Senior Debt" within the meaning of
Subordinated Convertible Debentures due 2002 issued by ▇▇▇▇▇ Shoe, Inc.
in an aggregate principal amount outstanding on the Closing Date of
Three Hundred and Fifty Three Thousand ($353,000.00) Dollars.
Insurance Policies.Policies-7. Insurance Policies
(a) EXHIBIT 5-7, annexed hereto, is a schedule of all
insurance policies owned by any Borrower 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) Each Borrower shall have and maintain at all times
insurance covering such risks, in such amounts, containing such terms, in such
form, for such periods, and written by such companies as may be satisfactory to
the Agent. The coverage reflected on EXHIBIT 5-7 presently satisfies the
foregoing requirements, it being recognized by the Borrowers, however, that the
Administrative Agent, in the exercise of its reasonable discretion, may
determine different requirements hereafter to reflect changing circumstances.
All insurance carried by each Borrower shall provide for a minimum of twenty
(20) days' 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. In the event of the failure by any Borrower 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 that Borrower's failure to have maintained such insurance. The
Lead Borrower shall furnish to the Administrative Agent certificates or other
evidence satisfactory to the Lender regarding compliance by the Borrowers with
the foregoing insurance provisions.
(c) The Lead Borrower shall advise the Administrative Agent of
each claim which affects Collateral having a Cost in excess of $500,000.00 and,
following the occurrence of any Event of Default, will permit the Administrative
Agent, at the Administrative Agent's option in each instance, to the exclusion
of all Borrowers, to conduct the adjustment of each such claim (and of all
claims following the occurrence of any Suspension Event). Each hereby appoints
the Administrative Agent as that Borrower's attorney in fact, effective upon the
occurrence of an Event of Default, to obtain, adjust, settle, and cancel any
insurance described in this section and to endorse in favor of the
Administrative Agent any and all drafts and other instruments with respect to
such insurance. The within appointment, being coupled with an interest, is
irrevocable until this Agreement is terminated by a written instrument executed
by a duly authorized officer of the Administrative Agent. 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 Administrative Agent had acted in actual bad faith or in a
grossly negligent manner or in willful misconduct. The Administrative Agent may
apply any proceeds of such insurance against the Liabilities, whether or not
such have matured, in such order of application as the Administrative Agent may
determine.
5-8. Host Store Agreements
(a) Prior to the execution of the within Agreement, the Lead
Borrower provided the Administrative Agent with complete copies of all Host
Store Agreements, as amended to date and of all instruments and documents which
may modify any of such Host Store Agreements.
(b) EXHIBIT 5-8, annexed hereto, is a schedule of all
presently effective Host Store Agreements and Capital Leases, each of which is
in full force and effect. No Borrower has received any notice or threat of
cancellation of any such Host Store Agreement or Capital Lease. Each Borrower
hereby authorizes the Administrative Agent, at any time with the consent of the
Lead Borrower and at all times after the occurrence of an Event of Default, to
contact any Host Store of any Borrower in order to confirm that Borrower's
continued compliance with the terms and conditions of the Host Store Agreements
between that Borrower and that landlord or Host Store and to discuss such issues
in connection therewith, as the Administrative Agent may determine.
5-9. Requirements of Law. Each Borrower is and shall remain, and use
its assets, in compliance, in all material effects, with all Requirements of
Law. No Borrower has received written notice of any violation of any Requirement
of Law, which violation has not been cured or otherwise remedied, which
violation, if not so cured or remedied, could have a Material Adverse Effect on
the Borrowers.
Maintain Properties. The Borrowers shall:in Properties
(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
the within 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 the Borrowers.
(iii) The turning over to the Administrative Agent
of all Receipts as provided
herein.
Pay Taxes. Taxes.-11. Pay 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) Each Borrower has and 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 that 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; timely make all contributions and other payments as may be
required pursuant to any Employee Benefit Plan now or hereafter established by
that Borrower; and timely file all tax and other returns and other reports with
each governmental authority to whom that Borrower is obligated to so file except
where failure to file would not have a material adverse effect.
(c) At its option, with prior notice to the Lead Borrower, 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 Administrative Agent's Rights and
Remedies.
No Margin Stock.inNo Borrower is engaged in the business of extending
credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulations G.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.
ERISA. The Borrowers are and shall hereafter remain in compliance, in
all material respects, with ERISA.
Hazardous Materials. To the Borrower's knowledge, none of the real
property used or operated by any
Borrower contains any material amount of Hazardous Materials.
Litigation. Except as disclosed on EXHIBIT 5-15, annexed hereto, there
is not presently pending or threatened by or against any Borrower any suit,
action, proceeding, or investigation which, if determined adversely to that
Borrower, would have a material adverse effect upon that Borrower's financial
condition or ability to conduct its business as such business is presently
conducted or is contemplated to be conducted in the foreseeable future.
Dividends or Investments. No Borrower shall Dividends or Investments
(a) Pay any cash dividend or make any other distribution in
respect of any class of that Borrower's capital stock except for, and subject to
such conditions as apply to, the making of Permitted Distributions.
(b) Own, redeem, retire, purchase, or acquire any of that
Borrowers' capital stock.
(c) 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 ▇. ▇▇▇▇▇,
provided, however,
(i) any Borrower may maintain Permitted Investments
in the Side Collateral Account and also at any time that there has not
been an outstanding principal balance in the Loan Account for not less
than Seven (7) days and no L/C's are then outstanding; and
(ii) any Borrower may create a wholly owned
subsidiary, provided that
(A) The Lead Borrower shall have
provided the 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).
(B) No Event of Default is extant on the
date on which the subsidiary is so created and none will occur
by reason of such creation.
(C) 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:
(I) Such entity shall have executed
such documentation as the Administrative Agent
reasonably may request in order for such entity to
become a "Borrower" hereunder.
(II) The holder of all capital stock
of such entity shall have created a security interest
therein to secure the Liabilities.
(d) 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.
(e) Consolidate any of that Borrower's operations with
those of any other corporation or
other entity.
(f) Except as provided in Section 5-16(c)(ii), above,
organize or create any Related
Entity.
(g) Subordinate any debts or obligations owed to that Borrower
by any third party to any other debts owed by such third party to any other
Person.
(h) Engage in any interest rate swaps, caps, or similar
activities, or any hedging activities other than in the ordinary course and
conduct of that Borrower's business, and then only with a Lender or any
affiliate of a Lender.
Loans. No Borrower shall make any loans to or acquire the Indebtedness
of, any Person except for 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) Loans to employees of a Borrower not exceeding $75,000.00
outstanding at any time to any employee nor exceeding $300,000 in the aggregate
outstanding at any time.
Protection of Assets. The Administrative Agent, at the Administrative
Agent's discretion, at any time that a Suspension Event is extant, may discharge
any tax or Encumbrance on any of the Collateral, or take any other action that
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 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 Administrative Agent had acted in actual bad
faith or in a grossly negligent manner or in willful misconduct. The Borrowers
shall pay to the Administrative Agent, on demand, or the Lender, in its
discretion, may add to the Loan Account, all amounts paid or incurred by the
Administrative Agent, the Funding Administrative Agent, and each Lender pursuant
to this section. The obligation of the Borrowers to pay such amounts is a
Liability.
Line of Business. No Borrower shall engage in any business other than
the business in which it is currently engaged or a business reasonably related
thereto.
Affiliate Transactions. No Borrower shall give any value to any
Related Entity except for:
(a) Goods and services actually purchased by that
Borrower from, or sold by that Borrower
to, such Related Entity for a price which shall be competitive and not differ
from that which would have been charged in an arms length transaction.
(b) Permitted Overhead Contributions.
(c) Permitted Distributions.
21. Additional Assurances.5-21. Additional Assurances.
(a) No Borrower has any interest in any Collateral which is
not subject to a first priority perfected security interest in favor of the
Administrative Agent (subject only to Encumbrances (if any) permitted by Section
5-5, above) to secure the Liabilities and none will hereafter acquire any
interest in property which is not, immediately upon such acquisition, subject to
such a prior perfected security interest (subject to Encumbrances (if any)
permitted pursuant to Section 5-5, above).
(b) Each Borrower shall execute such instruments, and shall do
all such things as the Administrative Agent may request to carry into effect the
provisions and intent of this Agreement and to protect the Administrative
Agent's security interest in the Collateral.
(c) No Borrower may amend the Tax Sharing Agreement (EXHIBIT
4-4(f)) nor the Overhead Expense Allocation Protocol (EXHIBIT 5-21(c)) without
the prior written consent of the Administrative Agent, which consent will not be
unreasonably withheld.
(d) A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument executed pursuant to
this Section shall be sufficient for filing to perfect the security interests
granted herein.
Adequacy of Disclosure. ▇▇▇▇▇▇-22.Adequacy of Disclosure
(a) All financial statements furnished to any Agent or any
Lender by ▇. ▇▇▇▇▇ or by or on behalf of any Borrower have been prepared in
accordance with GAAP (except for the absence of footnotes and subject to year
end adjustments) consistently applied and present fairly the condition of that
Borrower at the date(s) thereof and the results of operations and cash flows for
the period(s) covered. Except as disclosed on EXHIBIT 5-22(a), annexed hereto,
between February 1, 1997 and the date of this Agreement, there has been no
change in the financial condition, results of operations, or cash flows of any
Borrower since, other than changes in the ordinary course of business, which
changes have not been materially adverse, either singularly or in the aggregate.
(b) Except as disclosed on EXHIBIT 5-22(b), annexed hereto, no
Borrower has any contingent obligations not noted in that Borrower's financial
statements furnished to the Administrative Agent and each Lender.
(c) No paper now or hereafter given any Agent or any Lender by
or on behalf of any Borrower or any guarantor of the Liabilities 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.
(d) With the exception of general market and economic
conditions, there is no fact known to any officer of any Borrower, on the date
on which the within Agreement was executed, which has, or which, in the
foreseeable future could reasonably be expected to have, a material adverse
effect on the financial condition of that Borrower or any such guarantor which
has not been disclosed in writing to the Administrative Agent and each Lender.
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 - USE AND COLLECTION OF COLLATERAL.ARTICLE 6 - USE AND COLLECTION OF
COLLATERAL.
Use of Collateral. ▇▇▇▇▇▇▇.▇▇ Borrower shall engage in any sale of the
Inventory other than for fair
consideration in the conduct of that Borrower's business in the ordinary course.
Inventory Quality. Quality-All Inventory now owned or hereafter
acquired by each Borrower is intended to be of good and merchantable quality and
free from defects (other than defects within customary trade tolerances).
Adjustments and Allowances. During the existence of a Suspension Event,
no Borrower may grant any adjustment of more than a de minimus nature to any
Account owed to that Borrower by any of its Account Debtors, which adjustment is
not in keeping with prior practice and the course of dealing between that
Borrower and the subject Account Debtor without the prior written consent of the
Administrative Agent in each instance.
Validity of Accounts. ccounts-4. Validity of Accounts
(a) The amount of each Account, as shown on a Borrower's
books, is and will be correct and shall have been fully earned by performance.
(b) The Lead Borrower shall advise the Administrative Agent
upon any Borrower's obtaining knowledge of the impairment of the validity or
collectibility of any Account or of a material portion of the Accounts.
(c) Except as otherwise provided in EXHIBIT 6-4(c) , annexed
hereto, no Borrower shall post any bond to secure that Borrower's performance
under any agreement to which that Borrower is a party nor cause any surety,
guarantor, or other third party obligee to become liable to perform any
obligation of that Borrower (other than to the Agent) in the event of that
Borrower's failure so to perform.
Notification to Account Debtors. The Administrative Agent shall have
the right at any time a Suspension Event has occurred, to notify the Account
Debtors of each Borrower to make payment directly to the Administrative Agent
and to collect all amounts due on account of the Collateral.
ARTICLE 7 - CASH MANAGEMENT.ARTICLE 7 - CASH MANAGEMENT.
The Concentration and the Funding Accounts. counts-1.
(a) On or before the Cash Management Date, the following
checking accounts will be
established (and are so referred to herein):
(i) The Concentration Account: Established by
the Administrative Agent with a
Lender.
(ii) The Funding Account: Established by the
Lead Borrower with one of the Agents.
(b) The contents of the Concentration Account constitutes
property of the Administrative
Agent which it is holding for the ratable benefit of the Lenders.
(c) The Lead Borrower shall pay all fees and charges of, and
maintain such impressed balances as may be required by the Lender or by any bank
in which any account is opened as required hereby (even if such account is
opened by the Administrative Agent ).
Proceeds and Collection of Accounts. countsOn or before the Cash
Management Date, and at all times thereafter, each Borrower shall cause each
Host Store to pay all amounts owed by that Host Store to such lockbox or
remittance account as may from time to time be required by the Administrative
Agent. Such lock box or remittance account shall be swept to the Concentration
Account with such frequency as may from time to time be determined by the
Administrative Agent.
Interim Cash Management Procedures. Until the implementation of the
cash management procedures set forth in Sections 7-1 and 7-2, above, each
Borrower shall cause all Receipts of such Borrower, consisting of collected
funds, to be forwarded daily to the Borrower's operating account with Fleet
National Bank, with the aggregate of such Receipts, when they become collected
funds in such operating account, then wire transferred from that account to the
Concentration Account.
Payment of Liabilities.bilities-4. Payment of Liabilities
(a) On each Business Day, the Administrative Agent shall
apply, towards the Liabilities, 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) in the following
order:
(i) Costs and expenses of any Agent or any
Lender, to the extent the Borrowers are
obligated to reimburse that Agent or Lender for the same.
(ii) Interest and fees then due and payable.
(iii) Towards the unpaid principal balance of Base
Rate Loans.
(iv) Towards unreimbursed honorings of L/C's (to
the extent that the amount of such
honorings were not converted to Revolving Credit Loans).
(v) To the Side Collateral Account.
(b) The Administrative Agent shall transfer to the Funding
Account any cash contents of the Side Collateral Account, upon the request of
the Lead Borrower, provided, however,
(i) In the event that both (A) a Suspension Event has
occurred and (B) one or more L/C's are then outstanding, the
Administrative Agent may maintain, in the Side Collateral Account, a
funded reserve of up to 105% of the aggregate Stated Amounts of such
L/C's.
(ii) The aggregate of collected funds on deposit
in the Funding Account shall not
exceed $250,000.00 at any one time.
ARTICLE 8 - ADMINISTRATIVE AGENT AS BORROWERS' ATTORNEY-IN-FACT.
Appointment as Attorney-In-Fact.-InEach Borrower hereby irrevocably
constitutes and appoints the Lender as the Borrower's true and lawful attorney,
effective (with the exception of Section 8-1(h)) only upon the occurrence of an
Event of Default and appoints the Administrative Agent as that Borrower's true
and lawful attorney, with full power of substitution, to convert the Collateral
into cash at the sole risk, cost, and expense of the Borrower, but for the sole
benefit of the Agent and each Administrative Agent. The rights and powers
granted the Agent by the within 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 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 Lead Borrower or
to any trustee in bankruptcy, receiver, assignee for the benefit of creditors of
the Lead Borrower, or other legal representative of the Lead Borrower whom the
Agent determines to be the appropriate person to whom to so turn over such mail.
(c) Endorse the name of the appropriate Borrower in favor of
the Administrative Agent upon any and all checks, drafts, notes, acceptances, or
other items or instruments; sign and endorse the name of the appropriate
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 appropriate Borrower on any notice to
that Borrower's Account Debtors or verification of the Receivables Collateral;
sign the appropriate 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.
(g) Use, license or transfer any or all General
Intangibles of any Borrower.
(h) The designation of the Lender as the Borrower's
attorney in fact pursuant to this
Section 8-1(h) is effective immediately upon execution of the within Agreement):
Sign and file or record any financing or other statements in order to perfect or
protect the Agent's security interest in the Collateral.
No Obligation to Act. The Administrative Agent shall not be obligated
to act as authorized herein, but if the Administrative Agent does so, it shall
not be accountable for more than it actually receives and shall not be
responsible to the Lead Borrower or any Borrower 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 Administrative 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
willful misconduct.
ARTICLE 9 - FINANCIAL AND OTHER REPORTING REQUIREMENTS/FINANCIAL
COVENANTS
Maintain Records. Each Borrower shall at all times
(a) Keep proper books of account, in which full, true, and
accurate entries shall be made of all of that Borrower's transactions, all in
accordance with GAAP applied consistently with prior periods to fairly reflect
the financial condition of that Borrower at the close of, and its results of
operations for, the periods in question.
(b) 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.
(c) Retain KPMG Peat Marwick LLP or any other 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 that Borrower's 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.
(d) Not change that Borrower's fiscal year.
(e) Not change that Borrower's taxpayer identification number.
Access to Records. Records-2. Access to Records
(a) Each Borrower shall accord the Administrative Agent and
the Administrative Agent's representatives with reasonable access from time to
time as the Administrative Agent and such representatives may require to all
properties owned by or over which that Borrower has control. The Administrative
Agent, and the Administrative Agent's representatives, shall have the right, and
each Borrower will permit the Lender and such representatives from time to time
as the Administrative Agent and such representatives may request, to examine,
inspect, copy, and make extracts from any and all of the books, records,
electronically stored data, papers, and files of that Borrower and of each
Related Entity. Each Borrower shall, and shall cause each Related Entity to,
make all of such Person's copying facilities available to the Administrative
Agent.
(b) Each Borrower hereby authorizes the Administrative Agent
and the Administrative Agent's representatives 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
that Borrower, or to any Related Entity, which information or data is
in the possession of that Borrower or any Related Entity 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 and the Administrative Agent's
representatives with respect thereto.
(ii) Verify at any time the Collateral or any portion
thereof, including verification with Account Debtors, and/or with that
Borrower's computer billing companies, collection agencies, and
accountants and to sign the name of that Borrower on any notice to that
Borrower's Account Debtors or verification of the Collateral.
-3. Immediate Notice to Administrative Agent.9-3.
(a) The Lead Borrower shall provide the Administrative
Agent with written notice (with reasonable particularity) immediately upon
the occurrence of any of the following:
(i) Any: material change in the business affairs of
any Borrower, including, by way of examples, any change in a Borrower's
Executive Officers; event, with respect to any Host Store, which might
have an adverse effect on the financial condition of that Host Store or
ability of that Host Store to discharge its obligations under the Host
Store Agreement between the Host Store and that Borrower; event which
might have an adverse effect to any material contract with any supplier
of Inventory to a Borrower.
(ii) The occurrence of any Suspension Event.
(iii) 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 9-1(c)).
(iv) Any litigation which, if determined adversely to
a Borrower, would have a material adverse effect on the financial
condition of that Borrower.
(b) The Lead Borrower shall:
(i) Add the Administrative Agent as an addressee
on all mailing lists maintained by or for any Borrower.
(ii) Advise the Administrative Agent promptly
following the completion of any physical or cycle count of a Borrower's
Inventory and, at the request of the Administrative Agent, provide the
Administrative Agent with a copy of the results of that count.
(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 ▇. ▇▇▇▇▇, with
the Securities and Exchange Commission, when so filed by ▇. ▇▇▇▇▇.
(v) Provide the Administrative Agent with a copy of
each annual forecast when prepared by any Borrower, when so prepared.
Weekly Reports. Weekly, on Wednesday of each week (as of the then
immediately preceding Saturday) the Lead Borrower shall provide the
Administrative Agent with the following (each in such form as may be specified
from time to time by the Administrative Agent ):
(a) A Borrowing Base Certificate (in the form of EXHIBIT 9-4
annexed hereto, as such form may be revised from time to time by the
Administrative Agent).
(b) A Report of In transit Inventory at Cost (Summary Page Only).
(c) An Accounts Receivable Aging.
Each of such reports shall 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.
9-5. Monthly Reports.
(a) Monthly, the Lead Borrower shall provide the
Administrative Agent with original counterparts of the following (each in such
form as the Administrative Agent from time to time may specify):
(i) Within Fifteen (15) days of the end of the
previous month:
(A) Inventory Certificate (signed by
each Borrowers' President or Chief
Financial Officer) concerning the Borrowers' Inventory.
(B) An aging of the Borrowers' Inventory.
(C) An Open to Buy Report on which is shown
whether inventory levels are adequate to meet sales
projections.
(D) An Inventory Position Report.
(E) A Merchandise Analysis Summary by
Hierarchy by Major Account.
(F) A Report of Year to Date Sales and
Markdowns by Department in Total and Major Account.
(G) A Report of Year to Date Damages by
Department in Total.
(ii) Within Thirty (30) days of the end of the
previous month:
(A) Reconciliations of the above described
Inventory Reports and inventory Certificate (Section
9-5(a)(i)(A)) to Availability and to the general ledger as of
the end of the subject month.
(B) A Gross Margin Reconciliation and
Inventory/Gross Margin Report.
(C) A schedule of purchases from the
Borrowers' ten largest vendors (in terms of year to date purchases), which
schedule shall be in such form as may be satisfactory to the Administrative
Agent and shall include year to date cumulative purchases and an
aging of payables to each such vendor.
(D) An aging of the Borrowers' accounts payable.
(E) A Store Activity Report.
(F) A Comparison of Same Store Results by Host Store.
(iii) Within Thirty Five (35) days of the end of
the previous month, an internally
prepared Consolidated financial statement (with consolidating schedules) of the
Borrowers' financial condition and the results of its operations for, the period
ending with the end of the subject month, which financial statement shall
include, at a minimum, a balance sheet, income statement (on Host Store account
specific and on a "consolidated" basis), and comparison of same store sales for
the corresponding month of the then immediately previous year, as well as to the
Business Plan, with said balance sheet and income statement to show
amortization, depreciation, and capital expenditures.
(b) For purposes of Section 9-5(a), above, the first "previous
month" in respect of which the items required by that Section shall be provided
shall be April, 1997.
Quarterly Reports. Reports-Quarterly, within Forty Five (45) days
following the end of each of the Borrowers' first three fiscal quarters, the
Lead Borrower shall provide the Administrative Agent with an original
counterpart of a management prepared consolidated financial statement of ▇.
▇▇▇▇▇ (with consolidating schedules) for the period from the beginning of the
Borrowers' then current fiscal year 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 (on a
Key Host Store specific and on a "consolidated" basis), and cash flows and
comparisons for the corresponding quarter of the then immediately previous year,
as well as to the Business Plan.
. 7. Annually, within ninety (90) days following the end of the
Borrowers' fiscal year, the Lead
Borrower shall furnish the Administrative Agent with the following:
(a) An original signed counterpart of the ▇. ▇▇▇▇▇'▇ 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.
(b) 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.
(c) 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.
Officers' Certificates. The Lead Borrower shall cause the Lead
Borrower's President, Chief Financial Officer, or other senior officer
reasonably acceptable to the Agents, to provide such Person's Certificate with
those monthly, quarterly, and annual statements to be furnished pursuant to this
Agreement, which Certificate shall be in such form as the Administrative Agent
reasonably may request concerning (a) the preparation of the subject statement
in accordance with GAAP; (b) whether any Suspension Event has occurred (and if
so, the details thereof); and (c) calculations to determine whether the
Borrowers are in compliance at the date of the subject statement with each of
the financial performance covenants included in Section 9-11, below.
Inventories, Appraisals, and Audits.
(a) The Administrative Agent may observe each inventory
any cycle count of the Collateral
which is undertaken on behalf of any. 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 May 1, 1997.
(b) The Administrative Agent contemplates Four (4) commercial
finance audits during any Twelve (12) month period during which the within
Agreement is in effect, and following the occurrence of any Suspension Event,
may conduct additional audits. The Administrative Agent does not contemplate
undertaking or requiring any physical inventories, provided, however, the
Administrative Agent, following the occurrence of any Suspension Event, may do
so.
(c) The Administrative Agent from time to time may undertake
"mystery shopping" (so-called) visits to all or any of the Borrower's business
premises. The Administrative Agent shall provide the Lead Borrower with a copy
of any non-company confidential results of such mystery shopping.
(d) The Borrowers shall pay the reasonable out-of-pocket costs
of all inventory counts, audits, and visits conducted by the Administrative
Agent pursuant hereto.
Additional Financial Information.
(a) In addition to all other information required to be
provided pursuant to this Article
9, the Lead Borrower 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
may from time to time reasonably request from the Lead Borrower.
(b) The Lead Borrower may provide the Administrative Agent,
from time to time hereafter, with updated Business Plans. In all events, the
Lead Borrower, no sooner than Ninety (90) nor later than Sixty (60) days prior
to the end of each of the Borrowers' fiscal years, shall furnish the
Administrative Agent with an updated and extended Business Plan which shall go
out at least through the end of the then next fiscal year and shall include the
Borrower's forecast for the subject period covered by such Business Plan. In
each event, such updated and extended Business Plans shall be prepared following
a methodology which is consistent with the methodology employed in prior
Business Plans provided to the Administrative Agent. The Administrative Agent,
following the receipt of any of such Business Plans, may, but shall not be under
any obligation to, revise the financial performance covenants included on
EXHIBIT 9-11, annexed hereto, provided, however, in the event that the Lead
Borrower does not consent to such revisions, the then most recently effective
financial performance covenants shall remain in effect for the cognate future
periods not then covered by such covenants (e.g., a covenant applicable to
January of one year will be applicable to January of the then following year).
. The Borrower shall observe and comply with those financial
performance covenants set forth on EXHIBIT 9-11(a), annexed hereto, certain of
which covenants are based on the Business Plan set forth on EXHIBIT 9-11(b),
annexed hereto. The Administrative Agent may determine the Borrower's compliance
with such covenants based upon financial reports and statements provided by the
Borrower to the Lender (whether or not such financial reports and statements are
required to be furnished pursuant to the within Agreement) as well as by
reference to interim financial information provided to, or developed by, the
Administrative Agent.
ARTICLE 10 - EVENTS OF DEFAULT.
The occurrence of any event described in this Article 10 respectively
shall constitute an "Event of Default" herein. Upon the occurrence of any Event
of Default described in Section 10-9, any and all Liabilities shall become due
and payable without any further act on the part of the Administrative Agent or
any Lender. Upon the occurrence of any other Event of Default, any and all
Liabilities shall become immediately due and payable, at the option of the
Administrative Agent and without notice or demand. The occurrence of any Event
of Default shall also constitute, without notice or demand, a default under all
other agreements between the Administrative Agent or any Lender and any Borrower
and instruments and papers given the Administrative Agent or any Lender by any
Borrower, whether such agreements, instruments, or papers now exist or hereafter
arise.
10-1 Failure to Pay. The failure by any Borrower to pay when due
(or on demand, if payable on
demand) any payment Liability.
10-2. Failure to Perform Liabilities.
(a) The failure by any Borrower to promptly, punctually,
faithfully and timely perform, discharge, or comply with any covenant included
in any of the following provisions hereof:
Section: Relates to:
5-4 Location of Collateral
5-5 Title to Assets
5-6 Indebtedness
5-7 Insurance Policies
5-11 Pay taxes
5-20 Affiliate Transactions
5-21 Additional Assurances
Article 7 Cash Management
Article 9 Financial Reporting
Requirements and Financial Performance
Covenants
(b) The failure by any Borrower, within Twenty (20) days of
the sooner of (i) the Lead Borrower's knowledge of the subject failure or (ii)
the Administrative Agent's written notice to the Lead Borrower, to cure that
Borrower's failure to promptly, punctually and faithfully perform, discharge, or
comply with any covenant or Liability not described in any of Section 10-1 or
Subsection 10-2(a), above.
Misrepresentation.entation-The determination by the Administrative
Agent that any representation or warranty at any time made by the Lead Borrower
or any Borrower to any Agent or any Lender, was not true or complete in all
material respects when given.
10-4. Acceleration of Other Debt. Termination of Host Store
Agreements
(a) The occurrence of any event such that
(i) any Indebtedness of any Borrower to any creditor
other than the 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 the Administrative Agent; and/or
(ii) without the consent of that Borrower, any
Acceptable Host Store Agreement could be terminated , unless such
occurrence is immaterial or prior to the acceleration of the
Liabilities on account of such occurrence, the subject Host Store duly
waives such default and evidence of such written waiver is provided to
the Administrative Agent; and/or
(iii) without the consent of that Borrower, any
Host Store Agreement is terminated;
and/or
(iv) the indebtedness of JBAK Canton Realty, Inc.
which is secured by the Canton Warehouse could be accelerated, unless,
prior to the acceleration of the Liabilities on account of such
occurrence, the holder of such indebtedness duly waives such default
and evidence of such written waiver is provided to the Administrative
Agent.
Related Party Defaults Defaults-5. Related Party Defaults
(a) The occurrence of any event such that the indebtedness of
Casual Male under the Casual Male Credit Facility could be accelerated.
(b) The entry of an order for relief under the Bankruptcy
Code with respect to The Casual
Male.
(c) The failure, by the Casual Male, timely to make any
payment of the same or similar type as are described in the Definition of
"Permitted Distributions" and/or "Permitted Overhead Contributions" herein.
(d) The failure of any party thereto to observe and comply
with all terms, conditions, and provisions of the Overhead Expense Allocation
Protocol (EXHIBIT 5-21(c)) and the Tax Sharing Agreement (EXHIBIT 4-4(f).
Casualty Loss. Non-Ordinary Course ▇▇▇▇▇.▇▇ The occurrence of any (a)
uninsured loss, theft, damage, or destruction of or to any material portion of
the Collateral, or (b) sale (other than sales in the ordinary course of
business) of any material portion of the Collateral.
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 of the Borrowers on deposit with, or assets of that Borrower in the
possession of, any Agent or any Lender or such Participant.
(b)The entry of judgments against the Borrower not fully
covered by insurance (subject to a reasonable deductible) aggregating more than
$500,000.00, which judgments are not satisfied (if money judgments) or appealed
from (with execution or similar process stayed) within Thirty (30) days of their
entry, provided, however, the entry of money judgments aggregating in excess of
$500,000.00 which are not so timely appealed from (with execution or similar
process stayed) or are not so satisfied, shall not constitute an "Event of
Default" for so long as, following the entry of such judgments, the amount
determined in accordance with Section 1-1(b)(ii), above, is not less than 150%
of the aggregate of such judgments.
(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.
Business Failure. Failure-8The application for, consent to, or
sufferance of the appointment of a receiver, trustee, or other person over any
material part of any Borrower's property; or the offering by or entering into by
any Borrower of any arrangement seeking relief from or extension of that
Borrower's debts.
Bankruptcy. The entry of an order for relief or similar order with
respect to any Borrower in any proceeding pursuant to The Bankruptcy Code; and
the filing of any pleading against any Borrower initiating any matter in which
that Borrower is or may be granted any relief from its debts pursuant to the
Bankruptcy Code or any insolvency procedure, which pleading is not timely
contested, or if timely contested, is not dismissed within Thirty (30) days of
having been filed.
Indictment - Forfeiture. The indictment of, or institution of any
legal process or proceeding against, any Borrower, 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 the Borrowers 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 that Borrower of its business in the ordinary course.
Default by Guarantor or Related Entity. The occurrence of any event
described in Section 10-8 or 10-9 with respect to any guarantor of the
Liabilities, or the occurrence of any of such events with respect to any parent,
subsidiary, or Related Entity.
Challenge to Loan Documents. (a) Any challenge by or on behalf of the
Lead Borrower or any Borrower 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.
(b) 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
Document or any payment made pursuant thereto.
13. Change in Control.
(a) Except as permitted herein, any change in the ownership of
the capital stock of the Borrowers such that the holders of 100% of the capital
stock of each of the Borrowers, at May 1, 1997 are not the holders of 100% of
such capital stock thereafter.
(b) Any Change in Control with respect to ▇. ▇▇▇▇▇.
.RTICLE 11 - RIGHTS AND REMEDIES UPON DEFAULT
Upon the occurrence of any Event of Default and at any time thereafter,
the Administrative Agent shall have the following rights and remedies in
addition to all rights, remedies, powers, privileges, and discretions available
to the Administrative Agent prior to such occurrence.
Rights of Enforcement. The Administrative Agent shall have all of the
rights and remedies of a secured party upon default under the UCC, in addition
to which the Administrative Agent shall have all and each of the following
rights and remedies:
(a) To collect the Receivables Collateral with or without
the taking of possession of any of the Collateral.
(b) To take possession of all or any portion of the
Collateral.
(c) 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 Administrative Agent deems advisable and with or without the taking of
possession of any of the Collateral.
(d) To conduct one or more going out of business sales
which include the sale or other disposition of the Collateral.
(e) To apply the Receivables Collateral or the proceeds
of the Collateral towards (but not necessarily in complete satisfaction of)
the Liabilities.
(f) To exercise all or any of the rights, remedies,
powers, privileges, and discretions
under all or any of the Loan Documents.
2. 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 reasonable manner as the
Administrative Agent deems advisable, having due regard to compliance with any
statute or regulation which might affect, limit, or apply to the Administrative
Agent's disposition of the Collateral.
(b) The Administrative Agent, in the reasonable exercise of
the Administrative Agent's rights and remedies upon default, may conduct one or
more going out of business sales, in the Administrative Agent's own right or by
one or more Administrative Agents and contractors. To the extent permitted by
the subject landlord or Host Store, such sale(s) may be conducted upon any
premises owned, leased, or occupied by any Borrower. The Administrative Agent
and any such Administrative 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 Administrative Agent or such Administrative
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 expense incurred in their disposition) shall be the sole
property of the Administrative Agent or such Administrative 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 Administrative Agent shall provide the Borrower with
such notice as may be practicable under the circumstances), the Administrative
Agent shall give the Lead Borrower at least seven (7) 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 Administrative Agent's rights and remedies
upon default.
(d) Any Agent and any Lender may purchase the Collateral,
or any portion of it at any sale held under this Article.
(e) The Administrative Agent shall apply the proceeds of any
exercise of the Administrative Agent's Rights and Remedies under this Article 11
towards the Liabilities in such manner, and with such frequency, as the
Administrative Agent reasonably determines.
Occupation of Business Location.LocIn connection with the
Administrative Agent's exercise of the Administrative Agent's rights under this
Article 11, the Administrative Agent, to the extent permitted by the subject
landlord or Host Store, 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
Administrative Agent . The Administrative Agent shall not be required to remove
any of the Collateral from any such premises upon the Administrative Agent's
taking possession thereof, and may render any Collateral unusable to all
Borrowers. In no event shall the Administrative Agent be liable to any Borrower
for use or occupancy by the Administrative Agent of any premises pursuant to
this Article 11, nor for any charge (such as wages for a Borrower's employees
and utilities) incurred in connection with the Administrative Agent's exercise
of the Administrative Agent's Rights and Remedies.
Grant of Nonexclusive License. LiceEach Borrower hereby grants to the
Administrative Agent a royalty free nonexclusive irrevocable license to use,
apply, and affix any trademark, tradename, logo, or the like in which that
Borrower now or hereafter has rights, such license being with respect to the
Administrative 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.
Assembly of Collateral.llatThe Administrative Agent may require the
Borrowers to assemble the Collateral and make it available to the Administrative
Agent at the Borrowers' sole risk and expense at a place or places which are
reasonably convenient to both the Administrative Agent and Borrowers.
Rights and Remedies.RemedieThe rights, remedies, powers, privileges,
and discretions of the Administrative Agent hereunder (herein, the "
Administrative Agent's Rights and Remedies") shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have. No delay or
omission by the Administrative Agent in exercising or enforcing any of the
Administrative Agent's Rights and Remedies shall operate as, or constitute, a
waiver thereof. No waiver by the Administrative Agent of any Event of Default or
of any default under any other agreement with the Administrative Agent shall
operate as a waiver of any other default hereunder or under any other agreement.
No single or partial exercise of any of the Administrative Agent's Rights or
Remedies, and no express or implied agreement or transaction of whatever nature
entered into between the Administrative Agent and any person, at any time, shall
preclude the other or further exercise of the Administrative Agent's Rights and
Remedies. No waiver by the Administrative Agent of any of the Administrative
Agent's Rights and Remedies on any one occasion shall be deemed a waiver on any
subsequent occasion, nor shall it be deemed a continuing waiver. All of the
Administrative Agent's Rights and Remedies and all of the Administrative Agent's
rights, remedies, powers, privileges, and discretions under any other agreement
or transaction are cumulative, and not alternative or exclusive, and may be
exercised by the Administrative Agent at such time or times and in such order of
preference as the Administrative Agent in its sole discretion may determine. The
Administrative Agent's Rights and Remedies may be exercised without resort or
regard to any other source of satisfaction of the Liabilities.
ARTICLE 12 - NOTICES.
Notice Addresses. All notices, demands, and other communications made
in respect of this Agreement (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:
If to the Administrative Agent: GBFC, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Vice President
Fax : ▇▇▇ ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Esq.
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax : ▇▇▇ ▇▇▇-▇▇▇▇
If to the Lead Borrower or
Any Borrower: JBI, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax : ▇▇▇ ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
Fax : ▇▇▇ ▇▇▇-▇▇▇▇
Notice Given. (a) Notices shall be deemed given at the sooner of when
actually received or (i) if by mail: Three (3) days following deposit in the
United States mail, postage prepaid; (ii) By 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); and (iv) By Facsimile transmission: If
sent 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, 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.
ARTICLE 13 - TERM.RTICLE 13 - TERM
Termination of Revolving Credit.g CThe Revolving Credit shall remain in
effect (subject to suspension as provided in Section 1-8(d), above) until the
Termination Date.
Effect of Termination. Upon the termination of Revolving Credit, the
Borrowers shall pay to the Administrative Agent (whether or not then due), in
immediately available funds, all then Liabilities. All provisions of this
Agreement, other than any which place an obligation on any Agent or any Lender
to make loans or provide financial accommodations under the Revolving Credit or
otherwise, shall remain in full force and effect until all Liabilities shall
have been paid and provided for in full.
ARTICLE 14 - GENERAL.
Protection of Collateral.llThe Administrative Agent has no 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 the Administrative Agent
and shall have no duty as to the preservation of rights against prior parties or
any other rights pertaining thereto. The Administrative Agent may include
reference to all or any of the Borrowers (and may utilize any logo or other
distinctive symbol associated with any of the Borrowers) in connection with any
advertising, promotion, or marketing undertaken by the Administrative Agent .
Successors and Assigns. AssThis Agreement shall be binding upon the
Lead Borrower, each Borrower, and their respective representatives, successors,
and assigns and shall enure to the benefit of each Agent and each Lender and the
respective successors and assigns of each provided, however, no trustee or other
fiduciary appointed with respect to the any Borrower or any 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.
Severability.rabilAny 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.
Amendments. Course of Dealing.
(a) The Loan Documents incorporate all discussions and
negotiations between the parties concerning the matters included therein. No
such discussions and negotiations, nor any custom, usage, or course of dealings
shall limit, modify, or otherwise affect the provisions thereof. No failure to
give notice to the Lead Borrower or any Borrower of that Person'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) The Lead Borrower and any Borrower may undertake any
action otherwise prohibited hereby, and may omit to take any action otherwise
required hereby, with the express prior written consent of the Administrative
Agent . 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.
Power of Attorney. All powers conferred upon the Administrative 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.
Application of Proceeds. The proceeds of any disposition of the
Collateral and of any other payments received on account of the Liabilities
shall be applied toward the Liabilities in such order and manner as the
Administrative Agent determines in its reasonable discretion. Each Borrower
shall remain liable for any deficiency remaining following such application.
Costs and Expenses of Agents and Lenders. LeThe Borrowers shall pay on
demand all Costs of Collection and all reasonable out-of-pocket expenses of each
Agent and each Lender and any Participant in connection with the preparation,
execution, and delivery of this Agreement and of any other Loan Documents,
whether now existing or hereafter arising, and all other reasonable
out-of-pocket expenses which may be incurred by each Agent and by and each
Lender and any Participant in preparing or amending this Agreement and all other
agreements, instruments, and documents related thereto, or otherwise incurred
with respect to the Liabilities. The Borrowers specifically authorize the
Administrative Agent to pay all such fees and expenses and in the Administrative
Agent's reasonable discretion, to add such fees and expenses to the Loan
Account.
.4-8. This Agreement and all documents which relate thereto, which have
been or may be hereinafter furnished any Agent or any Lender may be reproduced
by that Person or by the Administrative Agent by any photographic, microfilm,
xerographic, digital imaging, or other process, and that Person 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.
Massachusetts Law.etts Law-This Agreement and all rights and
obligations hereunder, including matters of construction, validity, and
performance, shall be governed by the laws of The Commonwealth of Massachusetts.
Consent to Jurisdiction. All legal matters which relate to the
relationship contemplated by the Loan Documents 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 reasonable
discretion. The Lead Borrower and each Borrower submits to the jurisdiction of
said courts.
Indemnification.fiThe Lead Borrower and each Borrower respectively
shall indemnify, defend, and hold the each Agent and each Lender and any
Participant and any employee, officer, or Administrative Agent of any of the
foregoing (each, an "Indemnified Person") harmless of and from any claim brought
or threatened against any Indemnified Person by the Borrower, any guarantor or
endorser of the Liabilities, or any other Person (as well as from attorneys'
reasonable fees and expenses in connection therewith) on account of the
relationship of the Lead Borrower and the Borrowers or of any other guarantor or
endorser of the Liabilities with any Agent or any Lender and/or any syndication,
by any Agent or any Lender of all or any part of the credit facility
contemplated hereby (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) 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 bad
faith or in willful misconduct. The within indemnification shall survive payment
of the Liabilities and/or any termination, release, or discharge executed by the
Administrative Agent in favor of the Lead Borrower or any Borrower.
Rules of Construction. (a) Words in the singular include the plural
and words in the plural include the singular.
(b) The words: "includes" and "including" are not
limiting; "may not" are prohibitive and not permissive; and "or" is not
exclusive.
(c) References to "herein", "hereof", and "within" are to this entire
Loan Agreement and not merely the provision in which such reference is included.
(d) Except as otherwise specifically provided, all references to
time are to Boston time.
Intent. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of the security interests created by this
Agreement be broadly construed in favor of the Administrative Agent.
(c) The security interests created by this Agreement
secure all Liabilities, whether now existing or hereafter arising.
Maximum Interest Rate. Regardless of any provision of any Loan
Document, none of any Agent or 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."
15. Waivers
(a) The Lead Borrower and each Borrower (and all guarantors,
endorsers, and sureties of the Liabilities) make each of the waivers included in
Subsection 14-15(b), below, knowingly, voluntarily, and intentionally, and
understands that each Agent and each Lender, in entering into the financial
arrangements 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 LEAD BORROWER AND EACH BORROWER, AND EACH SUCH
GUARANTOR, ENDORSER, AND SURETY RESPECTIVELY WAIVES THE FOLLOWING:
(i) 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 LEAD BORROWER OR ANY BORROWER
OR ANY OTHER PERSON AND ANY AGENT OR ANY LENDER (AND EACH AGENT AND
EACH LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY
SUCH CASE OR CONTROVERSY).
(ii) Any claim to consequential, special, or punitive damages.
The Lead Borrower
JBI, INC.
By/s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
The Borrowers
JBI, INC. ▇▇▇▇▇ SHOE, INC.
By /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By/s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President Title: Executive Vice President
JBI HOLDING COMPANY, INC.
By /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
The Administrative Agent The Co-Agent
GBFC, INC. FLEET NATIONAL BANK
By/s/▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Print Name:_________________________ Name____________________________
Title:________________________________ Title____________________________
The
Lenders
GBFC,
INC
By /s/▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Print Name:__________________________
Title:_______________________________
FLEET NATIONAL BANK
By/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Print Name:_________________________
Title:______________________________