SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file Number 0-14681
J. BAKER, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2866591
(State of Incorporation) (I.R.S. Employer Identification Number)
555 Turnpike Street, Canton, Massachusetts 02021
(Address of principal executive offices)
(617) 828-9300
(Registrant's telephone number, including area code)
The registrant (1) has filed all reports to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such period that the registrant was
required to file such reports), and (2) has been subject to filing
such reports for the past 90 days.
YES [ X ] NO [ ]
The number of shares outstanding of the registrant's common stock
as of October 28, 1995 was 13,871,285.
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
October 28, 1995 (unaudited) and January 28, 1995
<TABLE>
<S> <C> <C>
October 28, January 28,
Assets 1995 1995
------- ------------ ------------
Current assets:
Cash and cash equivalents $ 2,660,330 $ 4,915,491
Accounts receivable 36,478,998 25,549,504
Merchandise inventories 327,928,097 333,686,950
Prepaid expenses 10,022,440 8,121,922
Income tax receivable 10,309,691 -
Deferred income taxes 15,920,000 2,120,000
----------- -----------
Total current assets 403,319,556 374,393,867
----------- -----------
Property, plant and equipment, at cost:
Land and buildings 25,040,058 24,988,513
Furniture, fixtures, machinery
and equipment 113,265,193 116,900,087
Leasehold improvements 44,156,476 47,448,521
----------- -----------
182,461,727 189,337,121
Less accumulated depreciation 66,542,480 58,271,956
----------- -----------
Net property, plant
and equipment 115,919,247 131,065,165
----------- -----------
Other assets 67,907,919 73,159,234
----------- -----------
$587,146,722 $578,618,266
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term
debt $ 1,500,000 $ 1,500,000
Accounts payable 124,874,498 120,792,457
Accrued expenses 41,206,318 15,504,950
Income taxes payable - 472,357
----------- -----------
Total current liabilities 167,580,816 138,269,764
----------- -----------
Deferred income taxes 2,136,000 6,136,000
Other liabilities 4,122,200 6,377,762
Long-term debt, net of
current portion 155,000,000 128,300,000
Senior subordinated debt 4,400,741 5,864,835
Convertible subordinated debt 70,353,000 70,353,000
Stockholders' equity 183,553,965 223,316,905
----------- -----------
$587,146,722 $578,618,266
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
J. BAKER, INC. AND SUBSIDIARIES
Statements of Consolidated Earnings
For the quarters ended October 28, 1995 and October 29, 1994
(Unaudited)
<TABLE>
<S> <C> <C>
Quarter Quarter
Ended Ended
10/28/95 10/29/94
--------- ---------
Sales $245,255,488 $262,015,105
Cost of sales 140,655,165 142,666,363
----------- -----------
Gross profit 104,600,323 119,348,742
Selling, administrative and
general expenses 93,583,557 99,803,257
Depreciation and amortization 7,826,000 6,689,277
Restructuring charges 69,300,000 -
----------- -----------
Operating income (loss) (66,109,234) 12,856,208
Net interest expense 2,748,348 2,555,094
----------- -----------
Earnings (loss) before
income taxes (68,857,582) 10,301,114
Income tax expense (benefit) (27,530,000) 3,709,000
----------- -----------
Net earnings (loss) $(41,327,582) $ 6,592,114
============ ============
Net earnings (loss) per
common share:
Primary $ (2.98) $ 0.47
============ ============
Fully diluted $ (2.98) $ 0.40
============ ============
Number of shares used to compute
net earnings (loss) per
common share:
Primary 13,865,879 13,838,427
============ ============
Fully diluted 13,898,865 18,377,716
============ ============
Dividends declared per share $ 0.015 $ 0.015
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
J. BAKER, INC. AND SUBSIDIARIES
Statements of Consolidated Earnings
For the nine months ended October 28, 1995 and October 29, 1994
(Unaudited)
<TABLE>
<S> <C> <C>
Nine Months Nine Months
Ended Ended
10/28/95 10/29/94
----------- -----------
Sales $749,160,219 $739,689,289
Cost of sales 420,825,725 405,831,933
----------- -----------
Gross profit 328,334,494 333,857,356
Selling, administrative and
general expenses 294,039,167 282,218,652
Depreciation and amortization 22,510,000 18,201,989
Restructuring charges 69,300,000 -
----------- -----------
Operating income (loss) (57,514,673) 33,436,715
Net interest expense 8,035,044 6,993,501
----------- -----------
Earnings (loss) before
income taxes (65,549,717) 26,443,214
Income tax expense (benefit) (26,257,000) 9,520,000
------------ ------------
Net earnings (loss) $(39,292,717) $ 16,923,214
============ ============
Net earnings (loss) per common share:
Primary $ (2.84) $ 1.22
============ ============
Fully diluted $ (2.84) $ 1.05
============ ============
Number of shares used to compute net
earnings (loss) per common share:
Primary 13,853,211 13,828,551
============ ============
Fully diluted 13,925,488 18,402,529
============ ============
Dividends declared per share $ 0.045 $ 0.045
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the nine months ended October 28, 1995 and October 29, 1994
(Unaudited)
<TABLE>
<S> <C> <C>
October 28, October 29,
1995 1994
----------- -----------
Cash flows from operating activities:
Net earnings (loss) ($39,292,717) $ 16,923,214
Adjustments to reconcile net
earnings to net cash
used in operating activities:
Depreciation and amortization:
Fixed assets 15,809,000 12,403,570
Deferred charges, intangible
assets and deferred
financing costs 6,736,906 5,837,770
Deferred income taxes (17,800,000) -
Loss on disposal of Fayva
assets 30,845,328 -
Change in:
Accounts receivable (10,929,494) (1,175,016)
Merchandise inventories (4,141,147) (68,943,179)
Prepaid expenses (1,900,518) (2,783,787)
Accounts payable 4,082,041 2,974,623
Accrued expenses 25,701,368 (6,221,113)
Income taxes payable/
receivable (10,782,048) 7,061,915
Other liabilities (2,255,562) (619,985)
----------- -----------
Net cash used in operating
activities (3,926,843) (34,541,988)
----------- -----------
Cash flows from investing activities:
Capital expenditures for:
Property, plant and equipment (21,608,410) (35,201,355)
Other assets (3,624,685) (223,704)
Payments received on note
receivable 2,175,000 -
----------- -----------
Net cash used in investing
activities (23,058,095) (35,425,059)
----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt 26,700,000 70,900,000
Payment of senior subordinated
debt (1,500,000) (2,636,300)
Proceeds from issuance of
common stock 153,269 442,454
Payment of dividends (623,492) (622,540)
----------- -----------
Net cash provided by
financing activities 24,729,777 68,083,614
----------- -----------
Net decrease in cash (2,255,161) (1,883,433)
Cash and cash equivalents at beginning
of year 4,915,491 3,584,032
----------- -----------
Cash and cash equivalents at end
of period $ 2,660,330 $ 1,700,599
============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 6,742,493 $ 6,817,512
============ ============
Cash paid for income
taxes, net $ 2,325,048 $ 1,765,154
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
J. BAKER, INC. AND SUBSIDIARIES
NOTES
1] The accompanying unaudited consolidated financial statements,
in the opinion of management, include all adjustments (which
consist only of recurring accruals) necessary for a fair
presentation of the Company's financial position and results
of operations. The results for the interim periods are not
necessarily indicative of results that may be expected for the
entire fiscal year.
2] Primary earnings per share is based on the weighted average
number of shares of Common Stock outstanding during such period.
Stock options and warrants are excluded from the calculation since
they have less than a 3% dilutive effect.
Fully diluted earnings per share is based on the weighted
average number of shares of Common Stock outstanding during such
period. Included in this calculation is the dilutive effect of
stock options and warrants. The calculation for the quarter and
nine months ended October 29, 1994 also included the dilutive
effect of common stock issuable under the 7% convertible
subordinated notes due 2002. The common stock issuable under the
7% convertible subordinated notes were not included in the
calculation for the quarter and nine months ended October 28, 1995
because they were antidilutive.
3] On September 5, 1995, the Company announced its intent to
dispose of its Fayva footwear division by the end of fiscal 1996.
When the Company acquired Morse Shoe, Inc. ("Morse") in early 1993,
it did so primarily for the strategic fit of the Morse and Baker
licensed footwear divisions. In addition, the Company believed, at
that time, that it could improve the operations of Morse's Fayva
division. Fayva's profitability had suffered in the years prior to
the Company's acquisition of Morse due, in part, to the financial
difficulties of Morse. The Company believed that by bringing
additional financial resources to Fayva, along with making
divisional management changes, it could restore the division to
profitability. However, after operating Fayva for two and one half
years, the Company decided to dispose of Fayva due to the continued
operating losses generated by the division, along with Fayva's
declining market share in an already crowded discount retail
footwear industry.
During the third quarter ended October 28, 1995, the Company
recorded restructuring charges of $69.3 million ($41.6 million or
$3.00 per share on an after tax basis) related to the disposal of
Fayva. Such charges include the costs to exit from and dispose of
the Fayva division, including the loss on the disposal of
inventory, severance payments, the write off of fixed assets and
the costs to dispose of store leases. As part of its Fayva exit
strategy, the Company has engaged a third party to maximize the
Company's net recovery from the liquidation of the Fayva inventory.
The Company has also hired a consultant to mitigate the disposition
costs of the Fayva store leases.
4] On June 23, 1995, Bradlees Stores, Inc. ("Bradlees"), a
licensor of the Company, filed for protection under Chapter
11 of the United States Bankruptcy Code. At the time of the
bankruptcy filing, the Company had outstanding accounts
receivable of approximately $1.9 million due from Bradlees. Under
bankruptcy law, Bradlees has the option of continuing (assuming)
the existing license agreement with the Company or terminating
(rejecting) that agreement. If the license agreement is assumed,
Bradlees must cure all defaults under the agreement and the Company
will collect in full the outstanding past due receivable. The
Company has no assurance that the agreement will be assumed or that
Bradlees will continue in business. Although the Company believes
that the rejection of the license agreement or the cessation of
Bradlees' business is not probable, in the event that the agreement
is rejected or Bradlees does not continue in business, the Company
believes it will have a substantial claim for damages. If such a
claim is necessary, the amount realized by the Company, relative to
the carrying values of Bradlees-related assets, will be based on
the relevant facts and circumstances. The Company does not expect
this filing under the Bankruptcy Code to have a material adverse
effect on future earnings. The Company's sales in the Bradlees
chain for the quarter and nine months ended October 28, 1995 were
$14.5 million and $43.1 million, respectively.
5] On October 18, 1995, Jamesway Corporation ("Jamesway"), a
licensor of the Company, filed for protection under Chapter 11 of
the United States Bankruptcy Code. Jamesway has announced its
intention to liquidate its inventory, fixed assets and real estate
and to cease operation of its business in all of its 90 stores.
The Company is currently participating in the going out of business
sales in an attempt to liquidate its footwear inventory in the 90
Jamesway stores. At the time of the bankruptcy filing, the Company
had outstanding accounts receivable of approximately $1.4 million
due from Jamesway. Since Jamesway has announced its intention to
cease operation of its business, the Company believes that
rejection of its license agreement is probable and that it will
assert a substantial claim for damages. The Company is in the
process of assessing the value of its rejection claim. The Company
does not expect the closing of the Jamesway stores to have a
material adverse effect on future earnings. The Company's sales in
the Jamesway chain for the quarter and nine months ended October
28, 1995 were $6.1 million and $18.9 million, respectively.
6] On November 10, 1993, a federal jury in Minneapolis, MN
returned a verdict assessing royalties of $1,550,000, and
additional damages of $1,500,000, against the Company in a patent
infringement suit brought by Susan Maxwell with respect to a device
used to connect pairs of shoes. Certain post trial motions were
filed by Susan Maxwell seeking treble damages, attorney's fees and
injunctive relief, which motions were granted on March 10, 1995.
Judgment has been entered for Maxwell. The Company has appealed
the judgment and believes it has substantial legal arguments to
justify the judgment being overturned at the appellate level. In
the event the Company were not to prevail, however, total damages,
including attorney's fees and interest, are estimated to be
approximately $10 million.
A complaint was also filed by Susan Maxwell in November, 1992
against Morse Shoe, Inc. ("Morse"), a subsidiary of the Company,
alleging infringement of the patent referred to above. The
discovery phase of the case has concluded, but a trial date has not
yet been set. The Company believes that Ms. Maxwell's recovery
against Morse, if any, will be less than her recovery against the
Company because the number of allegedly infringing pairs of shoes
is substantially less than those involved in the Company's case.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS
OF OPERATIONS.
All references herein to fiscal 1996 and fiscal 1995 relate
to the years ending February 3, 1996 and January 28, 1995,
respectively.
Results of Operations
During the quarter and nine months ended October 28, 1995,
the Company has experienced comparable store sales declines in its
footwear and apparel businesses. Management believes that these
comparable store sales declines are primarily due to the weak
domestic retail environment. While the Company does not expect the
retail sector to rebound quickly, J. Baker has taken steps intended
to manage its businesses in a manner consistent with the soft
economic environment. These steps include reducing estimates of
future sales, cutting expenditures and reducing store openings.
Due to comparable store sales declines, the Company has attempted
to generate additional sales and keep inventories in line by
increasing promotional activities, which have generated additional
markdowns. These additional markdowns were, during the quarter and
nine months ended October 28, 1995, the primary reason for the
increase in the Company's cost of sales. Comparable store sales
declines have also been a reason for the increase in selling,
administrative and general expenses as a percentage of sales.
First Nine Months Fiscal 1996 versus First Nine Months Fiscal 1995
Net sales increased by $9.5 million to $749.2 million in the
first nine months of fiscal 1996 from $739.7 million in the first
nine months of fiscal 1995. Sales in the Company's footwear
operations decreased by $14.8 million due to a sales decrease in
the Company's Fayva division (which is primarily the result of the
closing of all 357 Fayva stores in the third quarter of fiscal
1996), a decrease in wholesale footwear sales (which is the result
of the closing of all wholesale footwear departments serviced by
the Company during the second quarter of fiscal 1995), a 7.2%
decrease in comparable retail footwear store sales (Comparable
retail footwear sales increases/decreases are based upon
comparisons of weekly sales volume in licensed departments, Parade
of Shoes and Fayva shoe stores which were open in corresponding
weeks of the two comparison periods) and a decrease in the number
of discount licensed shoe departments and Parade of Shoes stores in
operation during the first nine months of fiscal 1996 versus the
first nine months of fiscal 1995. This decrease was partially
offset by a sales increase in the Company's SCOA licensed shoe
division as a result of SCOA's beginning business in new
licensed departments since the first quarter of fiscal 1995. Sales
in the Company's specialty apparel operations increased by
$24.3 million due to an increase in the number of Casual Male Big
& Tall stores and Work 'n Gear stores in operation during the first
nine months of fiscal 1996 over the first nine months of fiscal
1995, partially offset by a 2.6% decrease in comparable specialty
apparel store sales. (Comparable specialty apparel store sales
increases/decreases are based upon comparisons of weekly sales
volume in Casual Male Big & Tall stores and Work 'n Gear stores
which were open in corresponding weeks of the two comparison
periods.)
Cost of sales constituted 56.2% of sales in the first nine
months of fiscal 1996 as compared to 54.9% of sales in the first
nine months of fiscal 1995. Cost of sales in the Company's
footwear operations was 57.7% of sales in the first nine months of
fiscal 1996 as compared to 55.8% of sales in the first nine months
of fiscal 1995. The increase in such percentage was primarily
attributable to higher markdowns as a percentage of sales and a
decrease in the initial markup on merchandise purchases, partially
offset by the elimination of wholesale footwear sales, which have
a higher cost of sales than retail sales. Cost of sales in the
specialty apparel operations was 51.1% of sales in the first nine
months of fiscal 1996 which was comparable to the 51.0% of sales in
the first nine months of fiscal 1995.
Selling, administrative and general expenses increased $11.8
million or 4.2% in the first nine months of fiscal 1996 as compared
to the first nine months of fiscal 1995 primarily due to an
increase in the number of licensed departments and specialty
apparel stores in operation, partially offset by a decrease in
overhead expenses. As a percentage of sales, selling,
administrative and general expenses were 39.2% in the first nine
months of fiscal 1996 as compared to 38.2% in the first nine months
of fiscal 1995. Selling, administrative and general expenses in
the Company's footwear operations were 38.2% of sales in the first
nine months of fiscal 1996 as compared to 37.4% of sales in the
first nine months of fiscal 1995. This increase was primarily due
to the elimination of wholesale footwear sales and comparable store
sales declines, partially offset by a relative increase in licensed
footwear sales, which have lower selling, administrative and
general expenses than those in the Company's Parade of Shoes and
Fayva divisions. Selling, administrative and general expenses in
the Company's specialty apparel operations were 42.7% of sales in
the first nine months of fiscal 1996 as compared to 41.3% in the
first nine months of fiscal 1995 primarily due to an increase in
store level expenses from new store openings, coupled with
comparable store sales declines.
Depreciation and amortization expense increased by $4.3
million in the first nine months of fiscal 1996 as compared to the
first nine months of fiscal 1995 due to an increase in average
depreciable and amortizable assets.
During the quarter ended October 28, 1995, the Company
recorded restructuring charges of $69.3 million ($41.6 million on
an after tax basis) related to the disposal of its Fayva footwear
division. Such charges included the costs to exit from and dispose
of Fayva, including the loss on disposal of inventory, severance
payments, the write off of fixed assets and the costs to dispose of
store leases.
As a result of the above described effects, the Company
reported an operating loss of $57.5 million (operating income of
$11.8 million excluding the restructuring charges) in the first
nine months of fiscal 1996 versus operating income of $33.4 million
in the first nine months of fiscal 1995.
Net interest expense increased $1.0 million to $8.0 million
in the first nine months of fiscal 1996 from $7.0 million in the
first nine months of fiscal 1995 primarily due to higher levels of
borrowings and higher interest rates.
For the first nine months of fiscal 1996, the Company
reported a tax benefit of $26.3 million, yielding an effective tax
rate of 40.1%, as compared to tax expense of $9.5 million, yielding
an effective tax rate of 36.0% in the first nine months of fiscal
1995.
Net loss for the first nine months of fiscal 1996 was $39.3
million as compared to net earnings of $16.9 million in the first
nine months of fiscal 1995.
Third Quarter Fiscal 1996 versus Third Quarter Fiscal 1995
Net sales decreased by $16.8 million to $245.3 million in the
third quarter of fiscal 1996 from $262.0 million in the third
quarter of fiscal 1995. Sales in the Company's footwear operations
decreased by $24.7 million primarily due to a sales
decrease in the Company's Fayva division (which is primarily the
result of the closing of all 357 Fayva stores in the third
quarter of fiscal 1996) coupled with a 13.2% decrease in comparable
retail footwear sales. The decrease in footwear sales was
partially offset by a sales increase in the Company's SCOA licensed
shoe division as a result of SCOA's beginning business in new
licensed departments since the third quarter of fiscal 1995. Sales
in the Company's specialty apparel operations increased by $7.9
million due to an increase in the number of Casual Male Big & Tall
stores and Work 'n Gear stores in operation during the third
quarter of fiscal 1996 versus the third quarter of fiscal 1995,
partially offset by a 4.0% decrease in comparable specialty apparel
store sales.
Cost of sales constituted 57.4% of sales in the third quarter
of fiscal 1996 as compared to 54.4% of sales in the third quarter
of fiscal 1995. Cost of sales in the Company's footwear operations
was 59.1% of sales in the third quarter of fiscal 1996 as compared
to 55.4% of sales in the third quarter of fiscal 1995. The
increase in such percentage is primarily attributable to an
increase in markdowns as a percentage of sales and a lower initial
markup on merchandise purchases. Cost of sales in the Company's
specialty apparel operations was 51.9% of sales in the third
quarter of fiscal 1996 as compared to 50.8% of sales in the third
quarter of fiscal 1995 primarily due to higher markdowns as a
percentage of sales and a lower initial markup on merchandise
purchases.
Selling, administrative and general expenses decreased $6.2
million or 6.2% in the third quarter of fiscal 1996 as compared to
the third quarter of fiscal 1995 primarily due to a decrease in
store level expenses and overhead expenses. As a percentage of
sales, selling, administrative and general expenses were 38.2% in
the third quarter of fiscal 1996 as compared to 38.1% in the third
quarter of fiscal 1995. Selling, administrative and general
expenses in the Company's footwear operations were 37.3% of sales
in the third quarter of fiscal 1996 as compared to 37.7% of sales
in the third quarter of fiscal 1995 primarily due to a decrease in
store level expenses. Selling, administrative and general expenses
in the Company's specialty apparel operations were 40.9% of sales
in the third quarter of fiscal 1996 as compared to 39.8% in
the third quarter of fiscal 1995 primarily due to an increase in
store level expenses from new store openings, coupled with
comparable store sales declines.
Depreciation and amortization expense increased by $1.1
million in the third quarter of fiscal 1996 as compared to the
third quarter of fiscal 1995 due to an increase in average
depreciable and amortizable assets.
During the quarter ended October 28, 1995, the Company
recorded restructuring charges of $69.3 million ($41.6 million on
an after tax basis) related to the disposal of its Fayva footwear
division. Such charges included the costs to exit from and dispose
of Fayva, including the loss on disposal of inventory, severance
payments, the write off of fixed assets and the costs to dispose of
store leases.
As a result of the above described effects, the Company
reported an operating loss of $66.1 million (operating income
of $3.2 million excluding the restructuring charges) in the third
quarter of fiscal 1996 versus operating income of $12.9 million in
the third quarter of fiscal 1995.
Net interest expense increased to $2.7 million in the third
quarter of fiscal 1996 from $2.6 million in the third quarter of
fiscal 1995 primarily due to higher levels of borrowings and higher
interest rates.
For the third quarter of fiscal 1996, the Company recorded a
tax benefit of $27.5 million, yielding an effective tax rate of
40.0%, as compared to tax expense of $3.7 million, yielding an
effective tax rate of 36.0% in the third quarter of fiscal 1995.
Net loss for the third quarter of fiscal 1996 was $41.3
million as compared to net earnings of $6.6 million in the third
quarter of fiscal 1995.
Financial Condition
October 28, 1995 versus January 28, 1995
The increase in accounts receivable at October 28, 1995 from
January 28, 1995 is due primarily to seasonal factors, licensed
sales in October being higher than licensed sales in January.
Merchandise inventories at October 28, 1995 were lower than
at January 28, 1995 due to a decrease in the number of stores and
licensed departments in operation at October 28, 1995 as compared
to January 28, 1995, primarily due to the closing of the Fayva
division. The decrease is partially offset by a seasonal increase
in the average inventory per location.
The income tax receivable of $10.3 million at October 28,
1995 is primarily due to the recording of a receivable for the
estimated income tax benefit related to the disposal of the Fayva
division.
Deferred income taxes increased $13.8 million to $15.9
million at October 28, 1995 from $2.1 million at January 28, 1995
due to recording of a current deferred income tax benefit related
to the disposal of the Fayva division.
The $15.1 million decrease in net property, plant and
equipment is the result of the write-off of property, plant and
equipment in the Fayva division and current year depreciation,
partially offset by the Company incurring capital expenditures
of $21.6 million in the first nine months of fiscal 1996, primarily
for the opening of new stores and licensed departments.
The ratio of accounts payable to merchandise inventory was
38.1% at October 28, 1995 as compared to 36.2% at January 28, 1995.
This increase is primarily due to the reduction of inventory as
part of the liquidation of the Company's Fayva division.
The $25.7 million increase in accrued expenses at October 28,
1995 as compared to January 28, 1995 is primarily due to recording
accruals for severance, lease termination costs and other exit
costs for the Fayva division.
Debt increased $25.3 million to $229.8 million at October 28,
1995 from $204.5 million at January 28, 1995 primarily due to
additional borrowings under the Company's revolving line of credit
to meet seasonal working capital needs and to fund capital
expenditures.
Deferred income tax liability decreased by $4.0 million due
to recording the estimated long-term tax benefit related to
the disposal of the Fayva division.
Liquidity and Capital Resources
The Company currently has a $250 million revolving credit
facility on an unsecured basis with Shawmut Bank, N.A., The First
National Bank of Boston, Fleet Bank of Massachusetts, N.A.,
Citizens Savings Bank, NatWest Bank N.A., The Yasuda Trust and
Banking Co., Ltd., Bank Hapoalim B.M., National City Bank,
Columbus, and Standard Chartered Bank (the "Banks"). As amended to
date, the aggregate commitment amount will be reduced by $10
million on each December 29th of 1995 and 1996. Borrowings under
the revolving credit facility bear interest at variable rates and,
at the discretion of the Company, can be in the form of loans,
bankers' acceptances and letters of credit. This facility expires
in June, 1997. As of October 28, 1995, the Company had outstanding
obligations under the revolving credit facility of $225.5 million,
consisting of loans, obligations under bankers' acceptances and
letters of credit.
Following is a table showing actual and planned store
openings by division for fiscal 1996:
<TABLE>
<S> <C> <C> <C>
Actual Openings Planned Openings Total
First - Third Fourth Actual/
Quarter Fiscal Quarter Fiscal Planned
Division 1996 1996 Openings
--------------- ---------------- ---------
Licensed 114 8 122
Parade of Shoes 6 1 7
Casual Male 63 18 81
Work 'n Gear 7 2 9
</TABLE>
Offsetting the above actual and planned store openings, the
Company has closed 73 licensed departments, 12 Parade of Shoes
stores and 1 Work 'n Gear store during the first nine months of
fiscal 1996, and has plans to close approximately an additional 112
licensed departments (including the aforementioned 90 Jamesway
stores) and 18 Parade of Shoes stores during the fourth quarter of
fiscal 1996.
The information on store openings and closings reflects
management's current plans and should not be interpreted as an
assurance of actual future developments.
Also, on September 5, 1995, the Company announced its intent
to dispose of its Fayva footwear division by the end of fiscal
1996. During the third quarter ended October 28, 1995, the Company
recorded restructuring charges of $69.3 million ($41.6 million or
$3.00 per share on an after tax basis) related to the disposal of
Fayva. Such charges include the costs to exit from and dispose of
the Fayva division, including the loss on the disposal of
inventory, severance, the write off of fixed assets and the costs
to dispose of store leases. As part of its Fayva exit strategy,
the Company has engaged a third party to maximize the Company's net
recovery from the liquidation of the Fayva inventory. The Company
has also hired a consultant to mitigate the disposition costs of
the Fayva store leases. The Company expects the Fayva disposal to
generate a positive cash flow impact of approximately $20 million.
The Company believes that amounts which will be available
under its revolving credit facility, along with internally
generated funds, will be sufficient to meet its operating and
capital requirements under ordinary circumstances through the
end of the current fiscal year.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The Exhibits in the Exhibit Index are filed as part of
this report.
(b) No reports on Form 8-K were filed by the registrant
during the quarter for which this report is filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
J. BAKER, INC.
By:/s/Alan I. Weinstein
-------------------------
Alan I. Weinstein
Senior Executive Vice President
and Principal Financial Officer
Date: Canton, Massachusetts
December 12, 1995
By:/s/Philip Rosenberg
-------------------------
Philip Rosenberg
First Senior Vice President and
Treasurer
(Chief Accounting Officer)
Date: Canton, Massachusetts
December 12, 1995
- ------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
___________________
EXHIBITS
Filed with
Quarterly Report on Form 10-Q
of
J. BAKER, INC.
555 Turnpike Street
Canton, MA 02021
For the Quarter ended October 28, 1995
- ------------------------------------------------------------------
EXHIBIT INDEX
-------------
<TABLE>
<S> <C>
Exhibit Page No.
- --------- -------
4. Instruments Defining the Rights of Security Holders,
----------------------------------------------------
Including Indentures
---------------------
(.01) Seventh Amendment to Revolving Credit and *
Loan Agreement by and among JBI, Inc., J. Baker,
Inc. and Shawmut Bank, N.A., et al, dated
November 17, 1995, attached.
(.02) Amendment dated November 13, 1995 to Senior *
Subordinated Note Agreement dated May 1, 1989,
attached.
10. Material Contracts
-------------------
(.01) Agency Agreement by and between Gordon Brothers *
Partners, Inc. and Morse Shoe, Inc., dated
September 22, 1995, attached.
(.02) Amendment to Employment Agreement between J. *
Baker, Inc. and James D. Lee dated November
6, 1995, attached.
(.03) Amendment to Employment Agreement between J. *
Baker, Inc. and Larry I. Kelley dated November 7,
1995, attached.
(.04) Amendment to Employment Agreement between J. *
Baker, Inc. and Stuart M. Needleman dated
November 10, 1995, attached.
(.05) Amendment to Employment Agreement between J. *
Baker, Inc. and Dennis B. Tishkoff dated
November 26, 1995, attached.
(.06) See Exhibit 4.01 and Exhibit 4.02 *
11. Computation of Primary and Fully Diluted Earnings *
-------------------------------------------------
Per Share
----------
27. Financial Data Schedule
-----------------------
</TABLE>
* Included herein
EXHIBIT 4.01
SEVENTH AMENDMENT AGREEMENT
SEVENTH AMENDMENT AGREEMENT dated as of November 17,
1995, among JBI, INC., a Massachusetts corporation (the
"Borrower"); J. BAKER, INC., a Massachusetts corporation
("Baker"); each of the banks that is a signatory hereto
(individually, a "Bank" and, collectively, the "Banks"); and
SHAWMUT BANK, N.A., a national banking association, as agent for
the BANKS (in such capacity, together with its successors in such
capacity, the "Agent").
The Borrower, Baker, the Banks and the Agent are
parties to a Revolving Credit and Loan Agreement dated as of
February 1, 1993 (as amended by the First Amendment and Waiver
Agreement relating thereto dated as of November 19, 1993, by the
Second Amendment Agreement relating thereto dated as of April 29,
1994, by the Third Amendment Agreement relating thereto dated as
of December 1, 1994, by the Fourth Amendment Agreement relating
thereto dated as of March 6, 1995, by the Fifth Amendment
Agreement relating thereto dated as of May 19, 1995 and by the
Sixth Amendment Agreement relating thereto dated as of September
12, 1995, and as in effect on the date hereof, the "Credit
Agreement").
The Borrower and Baker have requested that Banks and
the Agent agree to amend the Credit Agreement and, accordingly,
the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined
in this Agreement, terms defined in the Credit Agreement are used
herein as defined therein.
Section 2. Amendments to the Credit Agreement.
Effective on the Effective Date (as defined in Section 4
hereof), the Credit Agreement shall be amended as follows:
A. Article I of the Credit Agreement shall be amended
by adding thereto the new definitions set forth below (and
inserting the same in the appropriate alphabetical locations):
"CANTON MORTGAGE" shall mean any mortgage, deed of
trust, deed to secure debt of the Borrower of not less than
$10,000,000, or other similar form of instrument required
under applicable law, in form and substance satisfactory to
the MAJORITY BANKS, with respect to the Borrower's
distribution center located in Canton, Massachusetts (and
property directly related thereto).
"COLUMBUS MORTGAGE" shall mean any mortgage, deed of
trust, deed to secure debt of the Borrower of not less than
$6,000,000, or other similar form of instrument required
under applicable law, in form and substance satisfactory to
the MAJORITY BANKS, with respect to the Borrower's
distribution center located in Columbus, Ohio (and property
directly related thereto).
"FAYVA RESTRUCTURING CHARGE" shall mean the
restructuring charge incurred by the Borrower in connection
with the liquidation of MORSE'S Fayva division.
B. Article II of the Credit Agreement shall be amended
by inserting the following at the end thereof:
"2.30 Upon execution and delivery of the CANTON
MORTGAGE or the COLUMBUS MORTGAGE, as the case may be, the
Borrower shall prepay the LOANS and the AGGREGATE COMMITMENT
AMOUNT shall, simultaneously with such prepayment,
automatically be reduced, in an amount equal to the
principal of the indebtedness secured by the CANTON MORTGAGE
or the COLUMBUS MORTGAGE, as the case may be (each such
prepayment to be applied first to the PRIME RATE ADVANCES
then outstanding and then to the LIBO RATE ADVANCES then
outstanding, amounts so paid in respect to the LIBO ADVANCES
to be held by the AGENT in an account (which shall be deemed
to constitute part of the COLLATERAL (as defined in the
SECURITY AGREEMENT)) until the end of the then current
INTEREST PERIOD in respect thereof and applied to such
prepayment on the last day of such INTEREST PERIOD, amounts
in such account to be invested by the AGENT in such money
market instruments as the AGENT may determine, upon terms
and conditions acceptable to the AGENT, and interest thereon
to accrue to the benefit of the BORROWER and to be paid to
the BORROWER on the last day of such INTEREST PERIOD).
2.31 On the date 90 days after the end of the FISCAL
YEAR ending February 1, 1997, the AGGREGATE COMMITMENT
AMOUNT shall be reduced, in an amount equal to 50% of the
excess of the net income for such FISCAL YEAR over
$8,915,000, such reduction to be rounded upwards to the
nearest $100,000.
C. Article IX of the Credit Agreement shall be amended
by inserting the following at the end thereof:
"9.15 Use their best efforts to obtain, not later than
May 1, 1996, a written binding commitment from a lender or
group of lenders to lend the Borrower an aggregate principal
amount of not less than $10,000,000 to be secured solely by
the CANTON MORTGAGE; provided that if a written binding
commitment shall not have been obtained by said date,
BORROWER and BAKER shall use their best efforts to obtain a
written binding commitment within 90 days of said date.
9.16 Use their best efforts to obtain, the mortgage
financing contemplated by Section 9.15 not later than August
1, 1996.
9.17 Use their best efforts to obtain, not later than
August 1, 1996, a written binding commitment from a lender
or group of lenders to lend the Borrower an aggregate
principal amount of not less than $6,000,000 to be secured
solely by the COLUMBUS MORTGAGE; provided that if a written
binding commitment shall not have been obtained by said
date, BORROWER and BAKER shall use their best efforts to
obtain a written binding commitment within 90 days of said
date.
9.18 Use their best efforts to obtain, the mortgage
financing contemplated by Section 9.17 not later than
November 1, 1996.
9.19 Promptly provide to the AGENT copies of all
pertinent documentation relating to the transactions
referred to in Sections 9.15, 9.16, 9.17 and 9.18 hereof."
D. Section 10.01.1 of the Credit Agreement shall be
amended by changing "$175,000,000" in clause (i) thereof to read
"$182,500,000" and by changing "January 31, 1993" in clause (ii)
to read October 30, 1995."
E. Section 10.01.4 of the Credit Agreement shall be
amended in its entirety to read as follows:
"(a) Permit LEVERAGE at any time to exceed, during each
period specified below, the percentage set forth opposite
the reference to such period (subject to clause (b) below):
Period Maximum Leverage
From the first day of
the fiscal quarter
beginning on or about
August 1, 1995 to and
including the last
day of the FISCAL
YEAR ending on or
about January 31, 1997 170%
At all times thereafter 160%
(b) Permit LEVERAGE to exceed, on each date specified
below, the percentage set forth opposite the reference to
such date:
Date Maximum Leverage
February 3, 1996 140%
February 1, 1997 120%
F. Section 10.01.5(a) of the Credit Agreement shall be
amended by inserting the following at the end thereof:
"For purposes of this Section 10.01.5(a) "profit before
any accrual of income tax liability" shall be computed
without deduction for the FAYVA RESTRUCTURING CHARGE."
G. Section 10.01.5(c) of the Credit Agreement shall be
amended in its entirety to read as follows:
"The applicable percentages to be used in
Section 10.01.5(a) shall be as follows for each of the following
respective periods:
Period Minimum Percentage
From the first day of the
fiscal quarter beginning on
or about August 1, 1995 to and
including the last day
of the FISCAL YEAR ending on
or about January 31, 1997 105%
At all times thereafter 115%
H. The first sentence of Section 10.01.6 of the Credit
Agreement shall be amended in its entirety to read as follows:
"In any single FISCAL YEAR, make expenditures for the
purchase, in the ordinary course of business, of fixed
assets, which expenditures, including without limitation
CAPITALIZED LEASE OBLIGATIONS, net capitalized systems
development costs, and the cost of any other intangible
asset in the aggregate exceed the sum of (i) $35,000,000 for
the FISCAL YEAR ending in January, 1996, and (ii)
$20,000,000 for each FISCAL YEAR thereafter."
I. Section 10.01.10(a) of the Credit Agreement shall
be amended by inserting the following at the end thereof:
"For purposes of this Section 10.01.10(a) "operating
net income" shall be computed without deduction for the
FAYVA RESTRUCTURING CHARGE."
J. Section 10.01.10(b) of the Credit Agreement shall
be amended to read in its entirety as follows:
"The applicable percentage to be used in
Section 10.01.10(a) shall be as follows for each of the
following respective periods:
Period Minimum Percentage
From the first day of the
fiscal quarter beginning
on or about August 1, 1995
to and including the
last day of the FISCAL
YEAR ending on or about
February 3, 1996 175%
From the first day of the
FISCAL YEAR beginning
on or about February 4,
1996 to and including the
last day of the FISCAL
YEAR ending on or about
February 1, 1997 180%
At all times thereafter 185%
K. Section 10.03 of the Credit Agreement shall be
amended by (1) deleting "and" at the end of clause (i) thereof,
(2) replacing the period at the end of clause (j) thereof with
";" and (3) inserting new clause (k) and (l) to read in their
entirety as follows:
"(k) INDEBTEDNESS secured by the CANTON MORTGAGE,
provided that the proceeds thereof are used as provided in
Section 2.30 hereof; and
(l) INDEBTEDNESS secured by the COLUMBUS MORTGAGE,
provided that the proceeds thereof are used as provided in
Section 2.30 hereof."
L. Section 10.04 of the Credit Agreement shall be
amended by (1) deleting "and" at the end of clause (g) thereof,
(2) replacing the period at the end of clause (h) thereof with ";
and" and (3) inserting new clause (i) to read in its entirety as
follows:
"(i) LIENS arising pursuant to the CANTON MORTGAGE or
the COLUMBUS MORTGAGE."
M. Article 10 of the Credit Agreement shall be amended
by inserting the following at the end thereof:
"10.17 Permit the FAYVA RESTRUCTURING CHARGE to be
greater than $45,000,000 on an after tax basis."
N. Section 10.01.7 shall be deleted in its entirety.
Section 3. Representations and Warranties. Each of
the Borrower and Baker hereby represents and warrants to the
Banks and the Agent as of the Effective Date that, after giving
effect to the amendments set forth herein and to the other
transactions contemplated hereby, (a) no Default has occurred and
is continuing, (b) the representations and warranties set forth
in Article VIII of the Credit Agreement are true and complete as
if made on and as of the Effective Date and as if each reference
in said Article VIII to "this Agreement" included reference to
this Agreement (provided that the representation and warranty set
forth herein shall not be deemed to be inaccurate solely by
reason of the failure of any information contained in any of
Exhibits G (solely as the information therein relates to
Section 8.04 or 8.05 of the Credit Agreement), N, O, P, Q and R
to the Credit Agreement to remain true), (c) the amendments
contemplated by Section 2 hereof do not require any consent under
any agreement, instrument or other document (including, without
limitation, the Convertible Subordinated Notes, the Senior
Subordinated Notes and the Subordinated Convertible Debentures)
including, without limitation, any consent necessary to cause the
Loans and the Revolving Notes to be Obligations to which the
Subordinated Indebtedness shall be subordinated under the
subordination agreement(s) referred to in Section 1.110 of the
Credit Agreement. The foregoing shall be deemed to be
representations and warranties made in an Operative Document for
purposes of Section 11.01(d) of the Credit Agreement.
Section 4. Conditions Precedent. The Effective Date
shall be the date as of which the Agent notifies the Borrower,
Baker and the Banks in writing that it has received the following
documents, each of which shall be in form and substance
satisfactory to the Agent:
(a) counterparts of this Agreement duly executed and
delivered by each of the parties hereto;
(b) certified copies of the charter and by-laws (or
equivalent documents) of each Obligor (or, in the
alternative, a certification to the effect that none of such
documents has been modified since delivery thereof on the
Closing Date pursuant to the Credit Agreement, and of all
corporate authority for each Obligor (including, without
limitation, board of director resolutions and evidence of
the incumbency (with specimen signature) of officers for
each Obligor) with respect to the execution, delivery and
performance of (i) in the case of the Borrower and Baker,
this Agreement and the Credit Agreement as amended hereby
and (ii) in the case of each other Obligor this Agreement,
and each other document to be delivered by each Obligor from
time to time in connection with the Credit Agreement as
amended hereby (and the Agent and each Bank may conclusively
rely on such certificate until it receives notice in writing
from each Obligor to the contrary);
(c) an opinion, dated the date hereof, of Goodwin,
Procter & Hoar, counsel to the Obligors, substantially in
the form of Exhibit A hereto and covering such matters
relating hereto as the Agent may require (and each Obligor
hereby instructs such counsel to deliver such opinion to the
Banks and the Agent); and
(d) such other documents relating to the transactions
contemplated by this Agreement as the Agent or any Bank or
special counsel to the Agent may reasonably request.
Section 5. References. All references in the Credit
Agreement and in each Operative Document and Financing Agreement
(including references to the Credit Agreement as amended hereby)
to the "Credit Agreement" (and indirect references thereto such
as "hereunder", "hereby", "herein" and "hereof") shall be deemed
to be references to the Credit Agreement as amended hereby.
Section 6. Miscellaneous. Except as expressly herein
provided, the Credit Agreement and all other Operative Documents
and Financing Agreements shall remain unchanged and in full force
and effect. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same amendatory instrument and any of the parties hereto
may execute this Agreement by signing any such counterpart. This
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. This
Agreement shall be governed by, and construed in accordance with,
the law of The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and
year first above written.
JBI, INC.
By /s/ Alan I. Weinstein
-------------------------
Name: Alan I. Weinstein
Title: Senior Executive
Vice President
J. BAKER, INC.
By /s/ Alan I. Weinstein
-------------------------
Name: Alan I. Weinstein
Title: Senior Executive
Vice President
SHAWMUT BANK, N.A.
By /s/ Roger A. Stone
-------------------------
Name: Roger A. Stone
Title: Director
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Mitchell B. Feldman
-------------------------
Name: Mitchell B. Feldman
Title: Managing Director
FLEET BANK OF MASSACHUSETTS, N.A.
By /s/ Fritz Ferbert
-------------------------
Name: Fritz Ferbert
Title: Executive Vice President
NATWEST BANK N.A. (formerly
"National Westminster Bank USA")
By
-------------------------
Name:
Title:
BANK HAPOALIM B.M.
By /s/ Martin B. Goodstine
-------------------------
Name: Martin B. Goodstine
Title: Vice President
By /s/ Paul Bresler
-------------------------
Name: Paul Bresler
Title: Vice President
NATIONAL CITY BANK, COLUMBUS
By /s/ Ralph A. Kaparos
-------------------------
Name: Ralph A. Kaparos
Title: Senior Vice President
STANDARD CHARTERED BANK
By /s/ Kristina McDavid
-------------------------
Name: Kristina McDavid
Title: Vice President
By /s/ Leonardo Tee
-------------------------
Name: Leonardo Tee
Title: Vice President
CITIZENS BANK OF MASSACHUSETTS
By
-------------------------
Name:
Title:
THE YASUDA TRUST AND BANKING
COMPANY, LTD.
By /s/ Rohn Laudenschlager
-------------------------
Name: Rohn Laudenschlager
Title: Senior Vice President
SHAWMUT BANK, N.A.,
as Agent
By /s/ Roger A. Stone
-------------------------
Name: Roger A. Stone
Title: Director
We hereby acknowledge, consent
and agree to the terms of the
foregoing Seventh Amendment
Agreement and confirm that
our obligations under the
Guarantee and the Pledge
Agreement shall remain
unchanged and in full
force and effect.
Dated: November 17, 1995
SPENCER COMPANIES, INC.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
SPENCER NO. 301 CORP.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
JBI HOLDING CO., INC.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: President
THE CASUAL MALE, INC.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
TCMB&T, INC.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
WGS CORP.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
TCM HOLDING COMPANY, INC.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: President
MORSE SHOE, INC.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
BUCKMIN, INC.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
ELM EQUIPMENT CORP.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
JARED CORPORATION
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
MORSE SHOE (CANADA) LTD.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
MORSE SHOE INTERNATIONAL, INC.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
ISAB, INC.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
WHITE CAP FOOTWEAR, INC.
By /s/ Alan I. Weinstein
- ---------------------------
Name: Alan I. Weinstein
Title: Senior Executive Vice President
EXHIBIT 4.02
J. Baker, Inc.
_________________________________________________________________
555 TURNPIKE STREET * CANTON, MA * 02021 * 617-828-9300
November 13, 1995
Massachusetts Mutual Life Insurance Company
MassMutual Participation Investors
1295 State Street
Springfield, MA 01111
RE: 11.21% Senior Subordinated Notes due May 1, 1999 (the
"Notes") issued by JBI, Inc. ("JBI") pursuant to a
Senior Subordinated Note Agreement dated as of May 1,
1989 (the "Agreement", terms defined therein being
used as defined terms herein with the same meaning).
Gentlemen and Ladies:
This is to confirm our agreement under which you have granted
us certain consents and waivers under the Agreement. You are the
holder of certain notes (the "Subject Notes") as listed and
described below:
<TABLE>
<S> <C> <C>
Outstanding
Principal
Holder Number Amount
-------- ------- -----------
Massachusetts Mutual Life IR-10 $2,400,000
Insurance Company
Massachusetts Mutual Life IR-11 $2,400,000
Insurance Company
MassMutual Participation IR-12 $1,200,000
Investors
</TABLE>
On September 5, 1995, J. Baker, Inc. ("Baker") announced its
intention to dispose of its Fayva Footwear division ("Fayva") by
the end of the current fiscal year ("Fiscal 1996"). The
disposition of Fayva includes, without limitation, the liquidation
of existing inventory and fixed assets, the disposition of store
leases and the payment of severance expenses related to the
termination of the Fayva employees. As a result, Baker will take
a significant one-time restructuring charge to earnings to be
recorded in the third and fourth quarters of Fiscal 1996
(the "Fayva Disposition").
Massachusetts Mutual Life
Insurance Company
Massachusetts Participation Investors
November 13, 1995
Page 2
In order to permit Baker to consummate the Fayva Disposition
and for other good and valuable consideration the receipt and
sufficiency of which you hereby acknowledge, by your acceptance
hereof you hereby grant to JBI and Baker the consent and waivers of
the Agreement set forth below.
Baker hereby represents and warrants that to the best of its
knowledge, as of the date hereof, after giving effect to the waiver
provided for herein, no Default or Event of Default exists under
the Agreement.
You hereby waive any default under the provisions of Sections
7.4 and 7.7 of the Agreement which would result from the entering
into or the consummation of the Fayva Disposition. With respect to
Section 7.7(a) of the Agreement, you agree that the restructuring
charge associated with the Fayva Disposition will not be included
in the calculation of Earnings Available for Fixed Charges as set
forth therein. The confirmation contained in this letter is
based upon the facts recited above and is strictly limited to the
facts described. Nothing in this letter is intended to be or shall
be construed to be a waiver of compliance by Baker or JBI with
any provision of the Agreement on an ongoing basis or a
modification of any of the terms, conditions or provisions of the
Agreement.
Please confirm your agreement to the above terms by dating
and signing this letter in the space indicated and returning the
signed copy to the undersigned. Thank you.
Very truly yours,
J. BAKER, INC.
JBI, INC.
By:/s/ Alan I. Weinstein
_________________________
Alan I. Weinstein
Senior Executive Vice President
ACCEPTED AND AGREED TO, UNDER SEAL,
AS A LEGALLY BINDING AGREEMENT:
MASSACHUSETTS MUTUAL LIFE MASSMUTUAL PARTICIPATION
INSURANCE COMPANY INVESTORS
By:/s/ Bruce E. Gaudette By:/s/ Bruce E. Gaudette
_________________________ _________________________
Authorized Officer Authorized Officer
Name: Name:
Title: Vice President Title: Vice President
Date: November 13, 1995 Date: November 13, 1995
EXHIBIT 10.01
AGENCY AGREEMENT
This Agency Agreement is made as of this 22nd day of
September, 1995 by and between Gordon Brothers Partners, Inc., a
Massachusetts corporation with a principal place of business at 40
Broad Street, Boston, Massachusetts, 02109 (the "Agent") and Morse
Shoe, Inc., having offices at 555 Turnpike Street, Canton, MA 02021
(the "Merchant").
WHEREAS, the Merchant operates retail shoe stores under the
Fayva name and desires that the Agent act as the Merchant's
exclusive sales agent for the limited purpose of conducting the
Sale (as hereinafter defined) for the Merchant;
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth hereinafter and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Agent and the Merchant hereby agree as follows:
1. Agency Appointment
The Agent shall serve as the Merchant's exclusive
agent to conduct "store closing", "sale on everything", or
"unrestricted public sale" sales (together, the "Sale") of all
inventory assets as further defined in subsection 2(c) hereof (the
"Merchandise") from Merchant's Fayva retail locations located at
those locations identified in Exhibit 1 (the "Stores").
It is expressly agreed that Agent shall be entitled to advertise
the Sale consistent with the preceding sentence but, in any event,
only in accordance with all applicable laws and regulations and as
permitted under the terms of the leases covering the Stores (the
"Leases").
2. Merchandise
(a) Inventory
The Agent shall cause to be taken a "Retail
Price" physical inventory of the Merchandise, as defined in
subsection 2(b), to be conducted beginning at the close of business
at the Stores on September 23, 1995 (the date of the inventory
taking at a Store being the "Inventory Date"). The Stores shall be
closed, and no sales transacted, during the taking of the
inventory. Merchant and Agent shall jointly employ RGIS to conduct
such inventory, and the costs and fees of such inventory taking
service, including, without limitation, RGIS travel costs, the
hourly rate negotiated by Merchant with RGIS, and the costs of any
special report from RGIS jointly requested by Merchant and Agent,
shall be shared equally by Agent and Merchant. Other than such
costs and fees, each of Merchant and Agent shall bear their own
costs relative to the inventory taking. Merchant and Agent shall
each have representatives present during the inventory taking, and
each shall have the right to review and verify the listing and
tabulation of the inventory count as provided by the inventory
taking service. The procedures to perform the inventory taking and
its verifications are set forth in Exhibit 2(a)(i). Prior to the
inventory taking, Agent shall have reasonable access to all pricing
and cost files of inventories, inter Store transfer logs, markdown
schedules, invoices, style runs and all other documents of Merchant
relative to its inventories.
(b) Valuation
For purposes of this Agreement "Retail
Price" shall mean (i) as to shoe inventory, the ticketed price of
each item of Merchandise (as evidenced on the shoes) as sold at the
Stores at the Inventory Date and (ii) as to non-shoe inventory, the
lowest ticketed price of each item of Merchandise as sold at the
Stores at the Inventory Date, (exclusive in each case of sales,
excise and gross receipts taxes), except for "defective" goods, as
defined in Section 2(c), where "Retail Price" shall mean such value
as Agent and Merchant mutually may agree. Merchandise shall include
"on order" goods, as defined in Section 2(c), where "Retail Price"
shall mean ticketed as if they were at the Stores at the time of
the physical inventory taking consistent with historic and
customary ticketing practices of Merchant and with representations
in Section 7(a)(vi). If any tickets on Merchandise have been
altered, or if two (2) or more tickets appear on Merchandise, then
the lowest ticket price shall be "Retail Price". In no event have
tickets on Merchandise been marked up, or removed and replaced
with higher ticketed prices, within the last sixty (60) days.
(c) Merchandise Subject to this Agreement
(i) For purposes hereof,
(A) Merchandise shall mean
(1) all finished goods located at
the Stores as of the Sale Commencement Date; (as computed based on
the inventory physically counted on the Inventory Date increased
for sales and markdowns (retail reductions) that were recorded from
the Sale Commencement Date to the Inventory Date and decreased for
sales and markdowns that were recorded from the Inventory Date to
the Sale Commencement Date, as applicable);
(2) the receipt of any on-order
goods up until the Inventory Date;
(3) all Fayva finished goods
located in the distribution centerin Canton, MA;
(4) up to $6,000,000 at "Retail
Price" of finished goods purchased from other divisions of
Merchant's parent corporation, J. Baker, Inc., as outlined in
Exhibit 2(c)(i)(A)(4);
(5) "on-order" goods; and
(6) "defective" goods.
(B) "On order" goods are finished goods
inventory delivered F.O.B. Stores at Agent's direction; Merchant
shall use best efforts to ticket prior to delivery the on-order
goods, and to supply tickets for goods which have not been
ticketed. All on-order goods shall be consistent with
representations in Section 7(a)(vii), and shall be delivered in
the amounts and in accordance with the schedule as described in
Exhibit 2(c)(i)(B).
(C) "Defective" goods are goods agreed
upon and identified by Merchant and Agent as defective or otherwise
not salable in the ordinary course during the inventory taking
process because they are ripped, worn, soiled, mismatched, or
contain other similar characteristics. Display Merchandise shall
not be deemed defective per se. If Merchant and Agent cannot agree
on the value of an item that is defective, then such item shall be
excluded from Merchandise for purposes of this Agreement and shall
be removed by Merchant from the Stores at Merchant's expense as
soon thereafter as practical.
(ii)Merchandise shall not include goods retained
by Merchant as bailee; furnishings, fixtures and equipment; and
goods on layaway or held for repair. There are no consigned goods
and Merchant has no leased or licensed departments in the Stores or
special orders. Merchant shall remain responsible for processing
and handling all goods on layaway or held for repair and contracts
relating thereto, and Agent shall have no cost, expense or
responsibility in connection therewith, except Agent shall
cooperate with Merchant in administering layaways, repairs and
similar matters for consumers.
(d) Supplies
Merchant does not represent that adequate
stocks of supplies (e.g. boxes, bags, twine) are or will be
available at the Stores as of the Sale Commencement Date, but Agent
shall have the right to obtain additional supplies from Merchant at
Merchant's cost plus freight charges reasonably needed for Agent's
proper conduct of the Sale.
3. Sale
(a) Term
The Sale shall commence on September 28,
1995 (the "Sale Commencement Date"). The Agent shall complete the
Sale no later than January 15, 1996 and shall have the discretion
to terminate the Sale at any Store at any time within that time
frame (with Agent agreeing to terminate the Sale in a majority of
the Stores by December 31, 1995 subject in any event to Agent's
right to have no less than 400 Store weeks to run the Sale in
January, 1996). The date the Sale ceases to operate at a Store
shall be the "Sale Termination Date". Agent shall provide Merchant
not less than seven (7) days notice prior to the Sale Termination
Date at a Store. The period from the Sale Commencement Date to the
Sale Termination Date as to each Store shall be hereinafter
referred to as the "Sale Term."
(b) Rights of Agent; Final Sales
(i) The Agent shall conduct the Sale
during the Sale Term in the name of and on behalf of the Merchant
in a commercially reasonable manner and in compliance with
applicable laws, regulations and ordinances, and the terms of the
Leases. Subject to the foregoing, the Agent, in the exercise of
its sole discretion, shall be entitled
(A) subject to Section 3(b)(iii), to
establish and implement advertising and promotion programs
consistent with the "store closing", "sale on everything" and
"unrestricted public sale" themes;
(B) to establish Sale prices;
(C) to use, during the Sale Term and for the
sole purpose of selling the Merchandise, without charge, all
furniture, fixtures, equipment, advertising materials, existing
supplies as located at the Stores, intangible assets (including
Merchant's name, logo, and tax I.D. numbers) and other assets of
Merchant (whether owned, leased, or licensed) which will be
returned to Merchant at the end of the Sale Term, to the extent the
same (1) are remaining at the end of the Sale Term in the same
condition as at the date hereof, reasonable wear and tear
excepted, (2) have not been used (e.g. supplies) or (3) otherwise
have not been disposed of through no fault of Agent;
(D) to use the Merchant's personnel
at the Stores' locations, to the extent that the Agent, in the
exercise of its discretion, shall deem appropriate, but Agent
shall comply in all respects with Merchant's human resource
policies which will be disclosed to Agent in writing prior to the
Sale Term;
(E) to have access to the Stores upon
the execution of this Agreement to prepare for the Sale in a manner
so as not to disrupt Merchant's ongoing business operations, and
during the Sale Term to use all Stores keys, case keys, security
codes, and safe and lock combinations to gain access to and to
operate the Stores, and;
(F) to transfer Merchandise between
Stores if legally permissible.
(ii)All sales of Merchandise will be "final
sales" and "as is" and all advertisements and sales receipts will
reflect the same and shall comply with all applicable laws,
regulations and ordinances, and the terms of the Leases. Agent
shall not warrant the Merchandise in any manner, but will pass
manufacturers' warranties to the customers, to the extent
transferable.
(iii)Agent shall submit all advertising for the
Sale to Jerry Socol, via facsimile at facsimile number
617-821-0614 for prior approval, which approval will not be
unreasonably withheld or delayed. The failure by Jerry Socol or his
designee to comment on advertising within two (2) Business Days
(for purposes hereof, Business Days shall mean any weekday so long
as Merchant's office is opened for business) of its submission
shall be deemed to be approval thereof.
(c) Obligations of Agent
(i) During the Sale Term, the Agent shall
collect from sales at the Stores all Sale-related sales, excise and
gross receipts taxes payable to any taxing authorities having
jurisdiction, which taxes shall be added to the sales price and
shall be paid by the customer. The Agent shall wire transfer on a
weekly basis to the Merchant amounts so collected, reconciled
against sales audit information prepared by Merchant and furnished
to the Agent, which shall be delivered with accompanying schedules
to Merchant on a timely basis for payment of taxes. The Agent shall
cooperate fully with Merchant in connection with its compliance
with all state and local sales and other similar taxes applicable
to the transactions contemplated by this Agreement, including,
without limitation, if required by Merchant upon advice of its
accountants or attorneys, by assisting in preparing appropriate
resale certificates. It is acknowledged that Agent is acting as
Merchant's agent, and is not purchasing the Merchandise but only
guaranteeing Agent's performance hereunder as hereinafter
described, except as provided in Section 5(c) hereof. So long as
Agent complies with the provisions of this subsection, the Merchant
shall indemnify and hold harmless the Agent from and against any
and all costs including, but not limited to, reasonable attorneys'
fees, assessments, fines or penalties which the Agent sustains or
incurs as a result or consequence of the failure by the Merchant to
promptly pay such taxes to the proper taxing authorities and/or
the failure by the Merchant to promptly file with such taxing
authorities any and all reports and other documents required, by
applicable law, to be filed with or delivered to such taxing
authorities. The Agent shall indemnify and hold harmless the
Merchant, its affiliates and their respective officers, directors,
and employees from and against any and all costs including, but not
limited to, reasonable attorneys' fees, assessments, fines or
penalties which the Merchant sustains or incurs as a result or
consequence of the failure by Agent to fulfill its obligations
under this Section 3(c)(i).
(ii)The Agent shall pay, or if paid by Merchant,
reimburse Merchant for, Store-level operating expenses of the Sale
which arise during the Sale Term at the Stores, limited to the
following: base payroll and related payroll taxes, workers'
compensation and benefits of Merchant's employees used by Agent
(with such taxes, workers' compensation and benefits being 20% of
base payroll in the aggregate for all such employees used, and
either due or accrued during the period of the Sale); costs of
additional security including, without limitation, courier and
guard service if applicable; fifty percent (50%) of the fees and
costs of the inventory taking service; retention bonuses for
employees as may be paid by Agent as hereinafter provided; on-site
supervision (including base fees and bonuses); inventory insurance;
advertising and signage; long-distance telephone expenses as are
attributable to the Sale; credit card fees, chargebacks and
discounts; bank service charges, costs for additional supplies;
costs of security personnel; fees and charges required to comply
with all laws and regulations applicable to the Sale; Store cash
theft; inter-Store delivery costs as directed by Agent during the
Sale; freight charges for inter-Store deliveries to Stores during
the Sale; and all costs and expenses of providing such additional
services which the Agent in its discretion considers appropriate
(collectively, the "Expenses"). "Expenses" shall not include rent,
percentage rent, HVAC, CAM, building maintenance, real estate
taxes, merchant association dues, Store security systems,
utilities, trash removal and building insurance and structural
repair relating to the Stores ("Occupancy Charges") which will
remain the liability and responsibility of Merchant and which
Merchant represents will be paid when due during and for the Sale
Term. Notwithstanding anything in this Agreement to the contrary,
the Agent's obligation to reimburse Merchant for Expenses shall
survive the term of this Agreement and the termination of the Sale.
"Expenses" specifically excludes costs and expenses for Merchant's
central administrative services necessary for the Sale, including,
but not limited to, MIS services (which includes maintenance and
leases on Store-level POS equipment), payroll processing, inventory
reconciliation, processing and handling, data processing and
standard reporting, all of which Merchant shall provide to Agent,
but only to the extent Merchant does not incur costs in providing
such services that, but for the existence of this Agreement and the
Sale, would not have been incurred. Expenses specifically excludes
any other costs and expenses payable by Merchant and employee
benefit costs (except as noted above). All Expenses shall be paid
to or on behalf of Merchant by Agent on each Wednesday for the
prior week's (i.e. Sunday through Saturday) Expenses. The Agent
will maintain and provide to Merchant sales records to permit
calculation of and compliance with any percentage rent obligations
under Leases.
(iii)During the Sale Term, the Merchant shall
process the base payroll for all Merchant employees utilized by the
Agent at the Stores' locations. Such employees will be identified
by Agent prior to the Sale Commencement Date. Agent may stop using
any such employee at any time during the Sale, and will notify
Merchant at least seven (7) days prior thereto, except "for cause"
such as dishonesty, fraud or breach of employee duties and as to
which "for cause" reasons no notice shall be required, it being
understood that the Agent shall not have any right to hire or
terminate the actual employment by Merchant of its employees. Each
week during the Sale Term the Agent shall pay to Merchant, or shall
deposit to an account designated by the Merchant, the base payroll
plus related payroll taxes, workers' compensation and benefits.
Merchant has provided Agent with base payroll and related payroll
taxes and benefits on Exhibit 3(c)(iii). Merchant shall be
permitted, during the Sale Term to offer employees of the Stores
positions with stores from other divisions of the Merchant to
commence after the Sale Term, but may not actually transfer
employees to other divisions without Agent's consent prior to or
during the Sale Term, which consent will not be unreasonably
withheld after the first nine (9) weeks of the Sale. The Agent
shall not be responsible for reimbursement or payment of any other
compensation or costs due to employees, including but not limited
to vacation pay, severance pay, sick pay (non-exempt only),
leave-of-absence pay, pension benefits or amounts required to be
paid by statute or law (e.g. WARN Act liability) (except as the
same may be payable as "benefits" subject to the limit referred to
in Section 3(c)(ii) hereof). Nothing herein shall make Agent liable
under any collective bargaining or employment agreement, nor shall
Agent be deemed a joint or successor employer. Notwithstanding the
above, Agent shall reimburse Merchant the base payroll and related
payroll taxes, worker's compensation and benefits (limited as
aforesaid) of Merchant's Store managers and assistant Store
managers whose services no longer are needed by Agent, from the
time Agent delivers the aforesaid seven (7) day notice to
December 23, 1995, if after reasonable efforts such managers have
not been reassigned to other Stores remaining open. Agent shall
fund through Merchant's payroll, as an Expense, retention bonuses
at Agent's discretion to Store employees who work during the Sale
Term and do not voluntarily leave employment or are not terminated
"for cause". The allocation of such retention bonuses among such
Store employees at the end of the Sale Term shall be in Agent's
discretion. Agent shall review this plan with Merchant prior to
implementation.
(iv) Except as specifically set forth in this
Agreement, the Agent shall not assume, nor shall its actions be
construed as an assumption of, any of the Merchant's liabilities
or obligations which will be paid or performed by Merchant when
due.
(v) The Agent shall use its due diligence and
reasonable care in the conduct of the Sale and shall leave the
Stores premises broom clean and in the same conditions they
currently are in, reasonable wear and tear excepted.
(vi) The Agent shall indemnify and hold the
Merchant, its affiliates and their respective officers, directors
and employees harmless from and against any and all damages,
claims, costs, expenses and attorneys' fees sustained or incurred
as a result of the Agent's negligence or breach of its obligations
hereunder, including without limitation by reason of enumeration,
Agent's obligation to conduct the Sale in all respects in
accordance with applicable laws and regulations and ordinances and
the terms of the Leases.
4. Proceeds
(a) For purposes of this Agreement, Proceeds
shall mean the total amount (in dollars) of all sales of
Merchandise made under this Agreement (exclusive of sales,
excise and gross receipt taxes; returns, allowances and customer
credits and layaway redemptions). All sales will be made only for
cash, and by credit cards currently accepted by Merchant. The
Agent shall accept Merchant gift certificates and Store credits but
the amount thereof will not be Proceeds, and conditioned upon
arrangements satisfactory to Agent that such amounts will be
reimbursed to Agent by Merchant. During the first thirty (30) days
of the Sale, Agent also shall accept returns of goods sold prior to
the Inventory Date in accordance with Merchant's historic return
policy which Merchant shall provide to Agent prior to the Sale
Commencement Date, conditioned upon arrangements satisfactory to
Agent that amounts reimbursed to the customer will be paid by
Merchant to Agent. Agent shall purchase such returned goods that
are resalable, from Merchant, at 43% of Retail Price multiplied by
the inverse of the prevailing discount at the time of return.
(b) All cash Proceeds shall be deposited in
Merchant's existing Store bank accounts. Merchant will remit all
cash Proceeds transferred from Merchant's Store bank accounts into
Merchant's main bank account. On the day of receipt in Merchant's
main bank account, all such cash Proceeds shall be transferred to
Agent's designated bank account. All credit card Proceeds will be
settled daily and netted against Expenses and reimbursed weekly
upon such procedures mutually accepted by Agent and Merchant.
(c) In order to secure payment of all Secured
Obligations of Merchant to Agent hereunder, Merchant hereby grants
to Agent a security interest in the now owned and hereafter
existing Merchandise and proceeds therefrom, provided, however,
that such security interest will only be granted if the $26.6
million payment provided for in Section 5(b) below is paid to
Merchant by Agent on or before September 28, 1995. Merchant agrees
to execute such instruments as Agent may reasonably request to
record and perfect its security interest, including without
limitation UCC-1 financing statements. Immediately upon the
completion of the Sale and receipt of all sums due Agent hereunder,
Agent shall release its security interest and execute such
documents as Merchant reasonably requests therefor, including,
without limitation, UCC-3 statements.
For purposes of this Agreement, the term "Secured
Obligations" shall mean:
(i) the rights of Agent to conduct the Sale as provided
in this Agreement;
(ii) the right of Agent to reimbursement of the Guaranteed
Amount from the Proceeds of the Sale;
(iii) the right of Agent to all Proceeds in excess of the
Guaranteed Amount and the Recovery Amount, subject to Agent's
obligation to pay Expenses as defined in this Agreement.
5. Payment
(a) Payment Amounts
(i) As a guarantee of performance by
Agent hereunder, the Merchant shall receive from Agent as the
"Guaranteed Amount" the sum of forty three percent (43%) of the
Retail Price of the Merchandise. The Retail Price of the
Merchandise shall be reduced by the hard markdown reserve which
Merchant estimates on September 20, 1995, in accordance with
Merchant's historic and customary practices, to be not less than
$3.825 million. The Agent shall only be committed to provide the
Guaranteed Amount on "on order" Merchandise received in the Stores
in accordance with Exhibit 2(c)(i)(B). Additionally, to the extent
Proceeds exceed fifty five and one half percent (55.5%) of the
Retail Price of Merchandise, then Merchant shall receive sixty
percent (60%) of such excess (the "Recovery Amount").
(ii)The Guaranteed Amount and Recovery Amount in
each case relative to the Stores are conditioned upon the existence
of no less than $62 million but not more than $72 million of in-
Store Merchandise at Retail Price on the Inventory Date; not less
than $21 million but not more than $25.5 million of "on order"
goods constituting Merchandise at Retail Price delivered in
accordance with Exhibit 2(c)(i)(B); not less than $22 million but
not more than $26 million of Merchandise at the Canton, MA
distribution center as of September 28, 1995; which amount includes
not more than $6 million at Retail Price of Merchandise purchased
from other divisions of Merchant. Notwithstanding the foregoing,
Merchandise at Retail Price will not be more than $121 million. In
each case, such Merchandise shall be in conformity with the
representations in Sections 7(a)(vi) and 7(a)(vii) hereof.
(b) Time of Payment
The Agent shall pay to the Merchant by wire
transfer of immediately available funds to an account or accounts
specified by Merchant $26.6 million of the Guaranteed Amount, to be
applied to the Guaranteed Amount for Merchandise at the Stores on
the Inventory Date, based upon Merchant's representations herein,
payable by September 28, 1995 assuming all conditions set forth in
Section 6 have been satisfied. The balance of the Guaranteed Amount
for Merchandise at the Stores shall be paid within two (2) days
after the inventory service issues its final report as agreed by
Agent and Merchant. The Agent shall pay to the Merchant the
Guaranteed Amount as to Merchandise at the Canton, MA distribution
center and "on order" goods constituting Merchandise, upon
reconciliation by Agent and Merchant of the quantities and Retail
Price thereof, in accordance (as to on order Merchandise) with
Exhibit 2 (c)(i)(B), which reconciliations shall be done by each
Wednesday for deliveries to the Stores during the prior week. The
Agent shall make weekly payments of the Recovery Amount when and as
due hereunder. Additionally, Agent will purchase, on a dollar for
dollar basis, all petty cash and safe funds mutually agreed upon by
Agent and Merchant at the time of inventory taking.
Merchant and Agent shall establish mutually
agreeable procedures to track all Sale receipts (inclusive of cash,
credit card and credit sales) from the Sale Commencement Date to
the date that the Agent and Merchant establish the bank account for
a Store as described in Section 4(b). The aggregate of all such
Sale receipts at the Stores (less sales tax) shall be offset from
the Guaranteed Amount payable hereunder, shall be retained by
Merchant, and shall be considered Proceeds for all purposes of this
Agreement.
(c) Agent's Payments
The Merchant shall not be entitled to the
payment of any other monies from the Sale or otherwise, except as
specified in this Agreement. Remaining Proceeds (after payment of
sales taxes, credit card fees, Expenses, the Guaranteed Amount and
Recovery Amount) shall belong to Agent in consideration of goods
and services provided by Agent hereunder. If the Agent has been
unable to sell any Merchandise during the Sale Term despite its
having conducted the Sale in accordance with the terms of this
Agreement, all Merchandise remaining at the conclusion of the Sale
shall become the property of Agent.
6. Conditions and Covenants
The Agent's and Merchant's willingness to enter into
the transaction contemplated hereunder and Agent's and Merchant's
obligations hereunder are directly conditioned upon the
satisfaction, compliance, and completion of the following at the
time or during the time periods indicated unless specifically
waived in writing by both parties:
(a) The Merchant, by the Inventory Date, having
full and complete title to the Merchandise, as to which the
Guaranteed Amount and Recovery Amount is paid, free and clear of
liens, and having granted to Agent a security interest in all
Merchandise in accordance with Section 4(c) hereof.
(b) The Merchant, by the Inventory Date, having
obtained all consents and approvals for Merchant to execute and
perform this Agreement, except those specified in Section 6(d) and
it being understood that Merchant shall not be obligated to seek
any consent of any landlord that would be required under any Lease.
(c) The Merchant, having obtained the consent of
the Banks to the transactions contemplated herein, as required
pursuant to the terms of the Company's Revolving Credit and Loan
Agreement.
(d) The Agent, on behalf of the Merchant, having
obtained all permits, licenses, consents and authorizations to
comply with applicable laws, rules, regulations and court or
administrative orders relating to operating a "store closing"
Sale and transactions contemplated hereby, if Agent decides to
operate the Sale in a manner which would require obtaining such
authorizations.
(e) The Merchant possessing and the Agent having
the right to the undisturbed and unencumbered use and occupancy of,
and the peaceful and quiet possession of, the Stores and assets
currently located thereat and the services provided thereto
throughout the Sale Term, subject, however, to the terms of the
Leases.
(f) The Merchant continuing to operate the
Stores in the ordinary course of business from the date hereof to
the Sale Commencement Date, selling goods during said period at
customary prices, not promoting or advertising any "sales" or
in-Store promotions to the public, (except Merchant's historic and
customary promotions for all its locations) and not making any
personnel moves or changes with respect to employees regularly
employed at the Stores. If any casualty or act of God substantially
inhibits the conduct of business in the ordinary course at a Store,
this Agreement shall terminate as to such Store only. All normal
course permanent markdowns will have been taken by the Inventory
Date on all inventory at the Stores on a consistent basis.
(g) Agent shall have the opportunity to inspect
the Stores and inventory as of the day prior to the Inventory Date.
7. Representations and Warranties
(a) The Merchant hereby makes the following
representations and warranties to the Agent, which shall survive
the execution and delivery of this Agreement:
(i) The Merchant is a corporation, duly
organized, validly existing and in good standing under the laws of
Delaware and has the corporate power and authority to own, lease
and operate its assets, properties and business in the Stores and
to carry on its business in the Stores as now being conducted.
(ii)The Merchant has the right, power and
authority required to execute, deliver and perform fully its
obligations hereunder, subject to the terms of the Leases. This
Agreement has been duly executed and delivered by the Merchant and
constitutes the valid and binding obligation of the Merchant
enforceable in accordance with its terms. No court order or decree
of any federal, state, or local government authority or regulatory
body is in effect that would prevent or impair consummation of the
transactions contemplated by this Agreement, and no consent of any
third party is required therefor, except for consents from
landlords under the Leases and the Banks as defined under the
Company's Revolving Credit and Loan Agreement.
(iii)The Merchant has operated the Stores in the
ordinary course of business consistent with historical operations
and has not conducted any promotions or advertised sales except
promotions and sales in the ordinary course of business from and
after June 15, 1995, all of which promotions and sales ceased as of
September 21, 1995.
(iv) The Merchant is authorized to conduct
business in all states in which Stores are located and to its
knowledge has all licenses, permits and authorizations of
governmental bodies necessary therefor other than those which, if
not possessed, would not have a material adverse affect on
Merchant's business.
(v) The Merchandise is owned free and
clear of liens, claims and encumbrances, except for the lien to be
granted to Agent hereunder.
(vi) Since August 1, 1995, Merchant has
maintained its pricing files of goods in the ordinary course and
prices charged to the public for goods (whether in-Store, by
advertisement or otherwise) are the same as set forth in the said
pricing files as of and for the periods indicated, except for the
promotions and sales described in Section 7(a)(iii). All pricing
files and records since August 1, 1995 as to all goods in the
Stores have been made available to Agent, and are true and accurate
in all material respects as to the actual cost to Merchant for
purchasing the said goods and as to the selling price to the public
therefor as of the dates and for the periods of such files and
records.
(vii) Exhibit 7(a)(vii) sets forth the levels
of "on-order" goods (as to quantity) and the mix of "on-order"
goods (as to the type, category, style, brand and description) as
of the date hereof. Goods that will constitute Merchandise at
Retail Price will be as represented in Section 5 hereof. "On order"
goods constituting Merchandise will, to Merchant's knowledge, be as
represented in Exhibit 7(a)(vii). The Guaranteed Amount and
Recovery Amount have been set in reliance upon this representation
which is material to Agent.
(viii) There has been since 1994 and
currently is, no action, arbitration, suit, notice or legal,
administrative or other proceeding before any court or governmental
body which is pending, or which has been settled or resolved, or to
Merchant's knowledge, which has been threatened against or
affecting Merchant, with respect to the business of Merchant or its
properties which would adversely affect the conduct of the Sale.
(ix) Listed on Exhibit 7(a)(x) are six (6)
reports, each of which has been initialled by Merchant and Agent.
Merchant represents and warrants that the information contained in
such reports is substantially accurate, true and correct in all
material respects as to the matters and for the time periods
therein set forth.
(b) The Agent represents and warrants to
Merchant as follows, which representations and warranties shall
survive the execution of this Agreement:
(i)The Agent is a corporation, duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the power and authority to
consummate the transactions contemplated hereby.
(ii) The Agent has the right, power and authority
to execute and deliver this Agreement and perform its obligations
hereunder and has taken all necessary action required to authorize
the execution, delivery, and performance of this Agreement and no
further approval is required for the Agent to enter into and
deliver this Agreement and to perform its obligations hereunder.
(iii) This Agreement has been duly executed and
delivered by the Agent and constitutes the legal, valid and binding
obligation of the Agent enforceable against the Agent in accordance
with its terms. No court order or decree of any federal, state, or
local governmental authority or regulatory body is in effect that
would prevent or impair or is required for the Agent's consummation
of the transactions contemplated by this Agreement and no consent
of any third party is required therefor. No contract or other
agreement to which the Agent is a party or by which the Agent is
otherwise bound will prevent or impair the consummation of the
transactions contemplated by this Agreement.
(iv) No actions or proceedings have been
instituted by or against the Agent, or have been threatened, which
question the validity of this Agreement or any action taken or
to be taken by the Agent in connection with this Agreement or
that, if adversely determined, would have a material adverse
effect upon the Agent's ability to perform its obligations under
this Agreement.
(v) Any rights conferred upon or granted to
Agent hereunder, including the right to establish and implement
advertising and promotion programs subject to this Agreement, shall
be exercised by Agent in compliance with all federal, state and
local laws and the terms of the Leases, subject to Merchant's
reasonable cooperation if such cooperation is needed to comply with
such laws and Lease terms.
8. Insurance
(a) Until the expiration of the Sale Term, the
Merchant shall continue in force the insurance coverages it
currently has with respect to the Merchandise and the Stores.
The Agent shall reimburse the Merchant for costs of inventory
insurance (which is defined as an Expense) during the Sale Term
upon receipt of an invoice therefor from the Merchant and
shall be named as additional insured thereon.
(b) During the Sale Term, the Agent shall
maintain, at its cost, comprehensive public liability insurance for
injury to persons and property in accordance with Exhibit 8(b)
hereto.
9. Defaults
The following shall be "Events of Default"
hereunder:
(a) The Merchant or Agent shall fail to perform
any material obligation hereunder if such failure remains uncured
seven days after receipt of written notice thereof; or
(b) Any representation or warranty made by
Merchant or Agent proves untrue in any material respect when made;
or
(c) The Sale is terminated at a Store for
reasons other than a default, breach or action by Agent not
authorized hereunder:
Any party's damages or entitlement to equitable relief on
account of an Event of Default shall be determined by a court of
competent jurisdiction in the Commonwealth of Massachusetts.
10. Miscellaneous
(a) All communications provided for pursuant to
this Agreement must be in writing, and mailed by Federal Express or
other overnight delivery services, as follows:
If to the Agent: Gordon Brothers Partners, Inc.
40 Broad Street
Boston, MA 02109
Attn: John A. Kerney
Mitchell H. Cohen
If to the Merchant: Morse Shoe, Inc.
555 Turnpike St.
Canton, MA 02021
Attn: Alan Weinstein
(b) This Agreement shall be construed and
enforced in accordance with the laws of the Commonwealth of
Massachusetts.
(c) This Agreement contains the entire agreement
between the parties hereto, and no variations shall be binding
upon any party unless set forth in a document duly executed by and
on behalf of such party.
(d) No consent or waiver, express or implied, by
any party, to or of any breach or default by the other in the
performance by the other of its obligations hereunder shall be
deemed or construed to be a consent or a waiver to or of any other
breach or default in the performance by such other party of the
same or any other obligations of such party.
Failure on the part of any party to complain of any act or failure
to act by the other party or to declare the other party in default,
irrespective of how long such failure continues, shall not
constitute a waiver by such party of its rights hereunder.
(e) This Agreement shall inure to the benefit of
and be binding upon the undersigned, and their respective
successors and assigns.
(f) This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate
counterparts, each of which counterparts when executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the Agent and Merchant hereby execute
this Agreement by their duly authorized representative as a sealed
instrument as of the day and year first written above.
GORDON BROTHERS PARTNERS, INC.
By:/s/ Michael Frieze
---------------------------
Its: Chief Executive Officer
MORSE SHOE, INC.
By:/s/ Alan I. Weinstein
---------------------------
Its: Senior Executive Vice President
EXHIBIT 10.02
FIRST AMENDMENT
TO EMPLOYMENT AGREEMENT
DATED JANUARY 26, 1995
Reference is made to the Executive Employment Agreement
dated as of January 26, 1995 (the "Agreement") by and between J.
Baker, Inc. and James D. Lee. Pursuant to paragraph 19 of the
Agreement and in order to amend certain provisions of the
Agreement, the Agreement is further amended as follows:
1. Paragraph 9 of the Agreement is hereby amended by
adding the following two subparagraphs:
"(d) Without Cause. During the Term hereof and
prior to any Change of Control of the Company, the Company may
terminate this Agreement at any time without cause. In such event,
the Company shall pay to the Employee, in accordance with the
Company's regular pay intervals for its senior executives, an
amount equal to the greater of (i) the amount of Base Salary the
Employee would have received through the last day of the Term or
(ii) one (1) year of Base Salary.
(e) Change of Control/Change of Management. (i)
In the event the Employee's employment with the Company is
terminated (A) by the Company or (B) by the Employee for "good
reason" within three (3) years after a Change in Control of the
Company occurring during the Term hereof (regardless of whether
such Employee's termination occurs after the expiration of the
Term), or (ii) in the event the Employee's employment is terminated
(C) by the Company (except if such termination is for "cause" as
defined in subparagraph 9(c) hereof) or (D) by the Employee for
good reason within three (3) years after the employment of any of
Messrs. Socol, Weinstein or Levin, respectively, with the Company
has terminated during the Term hereof for any reason including,
without limitation, dismissal, resignation, retirement, death or
termination for any other reason, then, in such event, the Company
shall pay to the Employee an amount, in cash, (the "Severance
Payment") equal to the greater of (i) the amount of Base Salary the
Employee would have received through the last day of the Term or
(ii)
one (1) year of Base Salary. For purposes of this
Agreement "Base Salary" shall mean the Employee's Base Salary as
set forth in subparagraph 3(a) of this Agreement, as such Base
Salary may be increased from time to time. If any of the
termination events set forth in this subparagraph (e) shall occur
during the Term hereof or other applicable time periods, the
provisions of paragraph 7 hereof shall be null and void and have no
further force or effect.
(f) A termination for "good reason" shall be
deemed to have occurred, and the Employee shall be entitled to the
benefits set forth in this paragraph 9, if the Employee voluntarily
terminates his employment after the occurrence of any of the
following events, if either the circumstances set forth in
paragraphs (e)(i) or (e)(ii) has occurred: (i) the assignment to
the Employee of any duties inconsistent with the highest position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities attained by the Employee
during the period of his employment by the Company; (ii) a
relocation of the Employee outside the metropolitan Boston area; or
(iii)
a decrease in the Employee's compensation (including base
salary, bonus or fringe benefits). For purposes hereof, "Change of
Control of the Company" shall have the meaning set forth in the
Company's 1994 Equity Incentive Plan, as approved by the
Stockholders of the Company on June 7, 1994 (and without regard to
any subsequent amendments thereto).
(g) In the event the Employees's employment is
terminated as described in Paragraph 9(e)(i) above, the Severance
Payment shall be made to the Employee in a single lump sum cash
payment. In the event the Employees's employment is terminated
as described in Paragraph 9(e)(ii) above, the Severance Payment
shall be made to the Employee in accordance with the Company's
regular pay intervals for its senior executives beginning
immediately following the Employee's termination of employment
with the Company.
2. All other terms of the Agreement shall remain
unchanged and continue in full force and effect.
J. BAKER, INC.
/s/ Jerry M. Socol November 6, 1995
- ------------------------- ---------------------
By: Jerry M. Socol Date
President and
Chief Executive Officer
/s/ James D. Lee November 6, 1995
- ------------------------- ---------------------
James D. Lee Date
EXHIBIT 10.03
THIRD AMENDMENT
TO EMPLOYMENT AGREEMENT
DATED MARCH 25, 1993
Reference is made to the Executive Employment Agreement
dated as of March 25, 1993 as amended by an Amendment dated April
27, 1994 and a Second Amendment dated May 2, 1995 (the "Agreement")
by and between J. Baker, Inc. and Larry Kelley. Pursuant to
paragraph 19 of the Agreement and in order to further amend certain
provisions of the Agreement, the Agreement is further amended as
follows:
1. Paragraph 9 of the Agreement is hereby amended by
adding the following two subparagraphs:
"(d) Without Cause. During the Term hereof and
prior to any Change of Control of the Company, the Company may
terminate this Agreement at any time without cause. In such event,
the Company shall pay to the Employee, in accordance with the
Company's regular pay intervals for its senior executives, an
amount equal to the greater of (i) the amount of Base Salary the
Employee would have received through the last day of the Term or
(ii) one (1) year of Base Salary.
(e) Change of Control/Change of Management. (i)
In the event the Employee's employment with the Company is
terminated (A) by the Company or (B) by the Employee for "good
reason" within three (3) years after a Change in Control of the
Company occurring during the Term hereof (regardless of whether
such Employee's termination occurs after the expiration of the
Term), or (ii) in the event the Employee's employment is terminated
(C) by the Company (except if such termination is for "cause" as
defined in subparagraph 9(c) hereof) or (D) by the Employee for
good reason within three (3) years after the employment of any of
Messrs. Socol, Weinstein or Levin, respectively, with the Company
has terminated during the Term hereof for any reason including,
without limitation, dismissal, resignation, retirement, death or
termination for any other reason, then, in such event, the Company
shall pay to the Employee an amount, in cash, (the "Severance
Payment") equal to the greater of (i) the amount of Base Salary the
Employee would have received through the last day of the Term or
(ii) one (1) year of Base Salary. For purposes of this Agreement
"Base Salary" shall mean the Employee's Base Salary as set forth in
subparagraph 3(a) of this Agreement, as such Base Salary may be
increased from time to time. If any of the termination events set
forth in this subparagraph (e) shall occur during the Term hereof
or other applicable time periods, the provisions of paragraph 7
hereof shall be null and void and have no further force or effect.
(f) A termination for "good reason" shall be
deemed to have occurred, and the Employee shall be entitled to the
benefits set forth in this paragraph 9, if the Employee voluntarily
terminates his employment after the occurrence of any of the
following events, if either the circumstances set forth in
paragraphs (e)(i) or (e)(ii) has occurred: (i) the assignment to
the Employee of any duties inconsistent with the highest position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities attained by the Employee
during the period of his employment by the Company; (ii) a
relocation of the Employee outside the metropolitan Boston area; or
(iii) a decrease in the Employee's compensation (including base
salary, bonus or fringe benefits). For purposes hereof, "Change of
Control of the Company" shall have the meaning set forth in the
Company's 1994 Equity Incentive Plan, as approved by the
Stockholders of the Company on June 7, 1994 (and without regard to
any subsequent amendments thereto).
(g) In the event the Employees's employment is
terminated as described in Paragraph 9(e)(i) above, the Severance
Payment shall be made to the Employee in a single lump sum cash
payment. In the event the Employees's employment is terminated as
described in Paragraph 9(e)(ii) above, the Severance Payment shall
be made to the Employee in accordance with the Company's regular
pay intervals for its senior executives beginning immediately
following the Employee's termination of employment with the
Company.
2. All other terms of the Agreement shall remain
unchanged and continue in full force and effect.
J. BAKER, INC.
/s/ Jerry M. Socol November 7, 1995
- ------------------------- -------------------------
By: Jerry M. Socol Date
President and
Chief Executive Officer
/s/Larry I. Kelley November 7, 1995
- ------------------------- -------------------------
Larry Kelley Date
EXHIBIT 10.04
SECOND AMENDMENT
TO EMPLOYMENT AGREEMENT
DATED NOVEMBER 1, 1993
Reference is made to the Executive Employment Agreement
dated as of November 1, 1993 as amended by an Amendment dated
February 8, 1995 (the "Agreement") by and between J. Baker, Inc.
and Stuart Needleman. Pursuant to paragraph 19 of the Agreement
and in order to further amend certain provisions of the Agreement,
the Agreement is further amended as follows:
1. Paragraph 9 of the Agreement is hereby amended by
adding the following two subparagraphs:
"(d) Without Cause. During the Term hereof and prior to
any Change of Control of the Company, the Company may terminate
this Agreement at any time without cause. In such event, the
Company shall pay to the Employee, in accordance with the Company's
regular pay intervals for its senior executives, an amount equal to
the greater of (i) the amount of Base Salary the Employee would
have received through the last day of the Term or (ii) one (1) year
of Base Salary.
(e) Change of Control/Change of Management. (i) In the
event the Employee's employment with the Company is terminated (A)
by the Company or (B) by the Employee for "good reason" within
three (3) years after a Change in Control of the Company occurring
during the Term hereof (regardless of whether such Employee's
termination occurs after the expiration of the Term), or (ii) in
the event the Employee's employment is terminated (C) by the
Company (except if such termination is for "cause" as defined in
subparagraph 9(c) hereof) or (D) by the Employee for good reason
within three (3) years after the employment of any of Messrs.
Socol, Weinstein or Levin, respectively, with the Company has
terminated during the Term hereof for any reason including, without
limitation, dismissal, resignation, retirement, death or
termination for any other reason, then, in such event, the Company
shall pay to the Employee an amount, in cash, (the "Severance
Payment") equal to the greater of (i) the amount of Base Salary the
Employee would have received through the last day of the Term or
(ii) one (1) year of Base Salary. For purposes of this Agreement
"Base Salary" shall mean the Employee's Base Salary as set forth in
paragraph 3 of this Agreement, as such Base Salary may be increased
from time to time. If any of the termination events set forth in
this subparagraph (e) shall occur during the Term hereof or other
applicable time periods, the provisions of paragraph 7 hereof shall
be null and void and have no further force or effect.
(f) A termination for "good reason" shall be deemed to
have occurred, and the Employee shall be entitled to the benefits
set forth in this paragraph 9, if the Employee voluntarily
terminates his employment after the occurrence of any of the
following events, if either the circumstances set forth in
paragraphs (e)(i) or (e)(ii) has occurred: (i) the assignment
to the Employee of any duties inconsistent with the highest
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities attained by
the Employee during the period of his employment by the Company;
(ii) a relocation of the Employee outside the metropolitan Boston
area; or (iii) a decrease in the Employee's compensation (including
base salary, bonus or fringe benefits). For purposes hereof,
"Change of Control of the Company" shall have the meaning set forth
in the Company's 1994 Equity Incentive Plan, as approved by the
Stockholders of the Company on June 7, 1994 (and without regard to
any subsequent amendments thereto).
(g) In the event the Employees's employment is
terminated as described in Paragraph 9(e)(i) above, the Severance
Payment shall be made to the Employee in a single lump sum cash
payment. In the event the Employees's employment is terminated as
described in Paragraph 9(e)(ii) above, the Severance Payment shall
be made to the Employee in accordance with the Company's regular
pay intervals for its senior executives beginning immediately
following the Employee's termination of employment with the
Company.
2. All other terms of the Agreement shall remain
unchanged and continue in full force and effect.
J. BAKER, INC.
/s/ Jerry M. Socol November 10, 1995
- ------------------------- -------------------------
By: Jerry M. Socol Date
President and
Chief Executive Officer
/s/ Stuart M. Needleman November 10, 1995
- ------------------------- -------------------------
Stuart Needleman Date
EXHIBIT 10.05
THIRD AMENDMENT
TO EMPLOYMENT AGREEMENT
DATED NOVEMBER 19, 1993
Reference is made to the Executive Employment Agreement
dated as of November 19, 1993 as amended by an Amendment dated
February 8, 1995 and a second Amendment dated April 25, 1995 (the
"Agreement") by and between J. Baker, Inc. and Dennis B. Tishkoff.
Pursuant to paragraph 19 of the Agreement and in order to further
amend certain provisions of the Agreement, the Agreement is further
amended as follows:
1. Paragraph 9 of the Agreement is hereby amended by
adding the following two subparagraphs:
"(e) Without Cause. Notwithstanding the provisions of
subparagraph (d) hereof, during the Term hereof and prior to any
Change of Control of the Company, the Company may terminate this
Agreement at any time without cause. In such event, the Company
shall pay to the Employee, in accordance with the Company's regular
pay intervals for its senior executives, an amount equal to the
greater of (i) the amount of Base Salary the Employee would have
received through the last day of the Term or (ii) one (1) year of
Base Salary.
(f) Change of Control/Change of Management. (i) In the
event the Employee's employment with the Company is terminated (A)
by the Company or (B) by the Employee for "good reason" within
three (3) years after a Change in Control of the Company occurring
during the Term hereof (regardless of whether such Employee's
termination occurs after the expiration of the Term), or (ii) in
the event the Employee's employment is terminated (C) by the
Company (except if such termination is for "cause" as defined in
subparagraph 9(c) hereof) or (D) by the Employee for good reason
within three (3) years after the employment of any of Messrs.
Socol, Weinstein or Levin, respectively, with the Company has
terminated during the Term hereof for any reason including, without
limitation, dismissal, resignation, retirement, death or
termination for any other reason, then, in such event, the Company
shall pay to the Employee an amount, in cash, (the "Severance
Payment") equal to the greater of (i) the amount of Base Salary the
Employee would have received through the last day of the Term or
(ii) one (1) year of Base Salary. For purposes of this Agreement
"Base Salary" shall mean the Employee's Base Salary as set forth in
paragraph 3 of this Agreement, as such Base Salary may be increased
from time to time. If any of the termination events set forth in
this subparagraph (f) shall occur during the Term hereof or other
applicable time periods, the provisions of subparagraph (d) hereof,
if applicable, shall be superseded by the provisions of this
subparagraph (f) and the provisions of paragraph 7 hereof shall be
null and void and have no further force or effect.
(g) A termination for "good reason" shall be deemed to
have occurred, and the Employee shall be entitled to the benefits
set forth in this paragraph 9, if the Employee voluntarily
terminates his employment after the occurrence of any of the
following events, if either the circumstances set forth in
paragraphs (f)(i) or (f)(ii) has occurred: (i) the assignment
to the Employee of any duties inconsistent with the highest
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities attained by
the Employee during the period of his employment by the Company;
(ii) a relocation of the Employee outside the metropolitan
Columbus, Ohio area; or (iii) a decrease in the Employee's
compensation (including base salary, bonus or fringe benefits).
For purposes hereof, "Change of Control of the Company" shall have
the meaning set forth in the Company's 1994 Equity Incentive Plan,
as approved by the Stockholders of the Company on June 7, 1994 (and
without regard to any subsequent amendments thereto).
(h) In the event the Employees's employment is
terminated as described in Paragraph 9(f)(i) above, the Severance
Payment shall be made to the Employee in a single lump sum cash
payment. In the event the Employees's employment is terminated as
described in Paragraph 9(f)(ii) above, the Severance Payment shall
be made to the Employee in accordance with the Company's regular
pay intervals for its senior executives beginning immediately
following the Employee's termination of employment with the
Company.
2. All other terms of the Agreement shall remain
unchanged and continue in full force and effect.
J. BAKER, INC.
/s/ Jerry M. Socol November 26, 1995
- ------------------------- -------------------------
By: Jerry M. Socol Date
President and
Chief Executive Officer
/s/ Dennis B. Tishkoff November 26, 1995
- ------------------------- -------------------------
Dennis B. Tishkoff Date
EXHIBIT 10.06
See Exhibit 4.01 and Exhibit 4.02.
EXHIBIT 11
J. BAKER, INC. AND SUBSIDIARIES
Computation of Primary and Fully Diluted Earnings Per Share*
(Unaudited)
<TABLE>
<S> <C> <C>
Quarter Ended Nine Months Ended
10/28/95 10/29/94 10/28/95 10/29/94
-------- -------- -------- --------
PRIMARY:
Net Earnings (Loss) ($41,327,582) $6,592,114 ($39,292,717) $16,923,214
============ ========== ============ ===========
Weighted average number of common
shares outstanding 13,865,879 13,838,427 13,853,211 13,828,551
============ ========== =========== ==========
Earnings (Loss) Per Share ($2.981) $0.476 ($2.836) $1.224
============ ========== =========== ==========
ASSUMING FULL DILUTION:
Net Earnings (Loss) (1) ($41,327,582) $7,376,114 ($39,292,717) $19,275,214
============= ========== ============ ===========
Weighted average number of common
shares outstanding 13,865,879 13,838,427 13,853,211 13,828,551
Dilutive effect of outstanding
stock options 32,986 198,204 72,277 232,893
Dilutive effect of convertible
subordinated debt - 4,341,085 - 4,341,085
---------- ---------- ---------- ----------
Weighted average number of common
shares as adjusted 13,898,865 18,377,716 13,925,488 18,402,529
========== ========== ========== ==========
Earnings (Loss) Per Share ($2.973) $0.401 ($2.822) $1.047
========== ========== ========= ==========
</TABLE>
(1) For the purpose of calculating fully diluted earnings per
share for the quarter and nine months ended October 29, 1994,
the conversion of the 7% convertible debt results in an after
tax benefit from reduced interest expense.
* This calculation is submitted in accordance with Item
601(b)(11) of Regulation S-K.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF J. BAKER, INC. FOR THE QUARTER ENDED OCTOBER 28, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> OCT-28-1995
<CASH> 2,660,330
<SECURITIES> 0
<RECEIVABLES> 36,478,998
<ALLOWANCES> 0
<INVENTORY> 327,928,097
<CURRENT-ASSETS> 403,319,556
<PP&E> 182,461,727
<DEPRECIATION> (66,542,480)
<TOTAL-ASSETS> 587,146,722
<CURRENT-LIABILITIES> 167,580,816
<BONDS> 229,753,741
<COMMON> 6,935,643
0
0
<OTHER-SE> 176,618,322
<TOTAL-LIABILITY-AND-EQUITY> 587,146,722
<SALES> 749,160,219
<TOTAL-REVENUES> 749,160,219
<CGS> 420,825,725
<TOTAL-COSTS> 420,825,725
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,035,044
<INCOME-PRETAX> (65,549,717)
<INCOME-TAX> (26,257,000)
<INCOME-CONTINUING> (39,292,717)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (39,292,717)
<EPS-PRIMARY> (2.84)
<EPS-DILUTED> (2.84)
</TABLE>
