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 August 3, 1996
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 August
3, 1996 was 13,891,947.
1
<PAGE>
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
August 3, 1996 (unaudited) and February 3, 1996
<TABLE>
<S> <C> <C>
August 3, February 3,
Assets 1996 1996
--------- ----------
Current assets:
Cash and cash equivalents $ 2,510,529 $ 3,287,141
Accounts receivable:
Trade, net 25,883,068 19,514,985
Other 2,295,402 3,219,862
---------- ----------
28,178,470 22,734,847
---------- ----------
Merchandise inventories 309,979,305 285,703,289
Prepaid expenses 11,521,550 8,600,990
Income tax receivable - 7,236,732
Deferred income taxes 7,677,630 9,198,000
----------- -----------
Total current assets 359,867,484 336,760,999
----------- -----------
Property, plant and equipment, at cost:
Land and buildings 25,064,423 25,064,423
Furniture, fixtures and equipment 122,435,700 115,099,770
Leasehold improvements 46,557,047 43,442,932
----------- -----------
194,057,170 183,607,125
Less accumulated depreciation 72,578,717 62,524,262
----------- -----------
Net property, plant and equipment 121,478,453 121,082,863
----------- -----------
Deferred income taxes 6,939,000 6,939,000
Other assets, at cost, less accumulated amortization 55,323,110 61,298,880
------------ ------------
$543,608,047 $526,081,742
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 1,500,000 $ 1,500,000
Accounts payable 95,819,753 105,113,721
Accrued expenses 14,210,468 25,066,874
----------- -----------
Total current liabilities 111,530,221 131,680,595
----------- -----------
Other liabilities 2,649,752 2,598,026
Long-term debt, net of current portion 170,000,000 133,000,000
Senior subordinated debt 2,932,061 4,412,711
Convertible subordinated debt 70,353,000 70,353,000
Stockholders' equity 186,143,013 184,037,410
----------- -----------
$543,608,047 $526,081,742
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
For the quarters ended August 3, 1996 and July 29, 1995
(Unaudited)
<TABLE>
<S> <C> <C>
August 3, 1996 July 29, 1995
-------------- -------------
Sales $231,805,391 $272,520,039
Cost of sales 130,378,579 152,317,734
----------- -----------
Gross profit 101,426,812 120,202,305
Selling, administrative and general expenses 88,310,932 107,353,920
Depreciation and amortization 7,454,120 7,713,000
----------- -----------
Operating income 5,661,760 5,135,385
Net interest expense 3,224,038 2,864,173
----------- -----------
Earnings before income taxes 2,437,722 2,271,212
Taxes on earnings 952,000 874,000
----------- -----------
Net earnings $ 1,485,722 $ 1,397,212
=========== ===========
Net earnings per common share:
Primary $ 0.11 $ 0.10
=========== ===========
Fully diluted $ 0.11 $ 0.10
=========== ===========
Number of shares used to compute net earnings per common share:
Primary 13,891,265 13,847,954
=========== ===========
Fully diluted 13,928,732 13,932,754
=========== ===========
Dividends declared per share $ 0.015 $ 0.015
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
For the six months ended August 3, 1996 and July 29, 1995
(Unaudited)
<TABLE>
<S> <C> <C>
August 3, 1996 July 29, 1995
-------------- -------------
Sales $427,335,600 $503,904,731
Cost of sales 235,287,939 280,170,560
----------- -----------
Gross profit 192,047,661 223,734,171
Selling, administrative and general expenses 167,595,023 200,455,610
Depreciation and amortization 14,662,623 14,684,000
----------- -----------
Operating income 9,790,015 8,594,561
Net interest expense 6,001,733 5,286,696
----------- -----------
Earnings before income taxes 3,788,282 3,307,865
Taxes on earnings 1,477,000 1,273,000
----------- -----------
Net earnings $ 2,311,282 $ 2,034,865
=========== ===========
Net earnings per common share:
Primary $ 0.17 $ 0.15
=========== ===========
Fully diluted $ 0.17 $ 0.15
=========== ===========
Number of shares used to compute net earnings per common share:
Primary 13,882,729 13,846,875
=========== ===========
Fully diluted 13,903,376 13,945,852
=========== ===========
Dividends declared per share $ 0.030 $ 0.030
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the six months ended August 3, 1996 and July 29, 1995
(Unaudited)
<TABLE>
<S> <C> <C>
August 3, 1996 July 29, 1995
-------------- --------------
Cash flows from operating activities:
Net earnings $ 2,311,282 $ 2,034,865
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization:
Fixed assets 10,054,455 10,176,000
Deferred charges, intangible assets and
deferred financing costs 4,627,518 4,531,937
Deferred income taxes 1,520,370 -
Change in:
Accounts receivable (5,443,623) (2,467,552)
Merchandise inventories (24,276,016) (22,395,765)
Prepaid expenses (4,035,130) (1,898,990)
Accounts payable (9,293,968) (5,322,624)
Accrued expenses (10,856,406) (4,136,013)
Income taxes payable/receivable 7,236,732 (879,971)
Other liabilities 111,558 (2,086,561)
---------- ----------
Net cash used in operating
activities (28,043,228) (22,444,674)
----------- -----------
Cash flows from investing activities:
Capital expenditures for:
Property, plant and equipment (10,450,045) (17,339,764)
Other assets (15,660) (3,290,879)
Payments received on notes receivable 2,438,000 1,450,000
---------- -----------
Net cash used in investing activities (8,027,705) (19,180,643)
---------- -----------
Cash flows from financing activities:
Proceeds from long-term debt 37,000,000 40,400,000
Repayment of senior subordinated debt (1,500,000) (1,500,000)
Proceeds from issuance of common stock 210,887 86,228
Payment of dividends (416,566) (415,422)
---------- ----------
Net cash provided by financing activities 35,294,321 38,570,806
---------- ----------
Net decrease in cash (776,612) (3,054,511)
---------- ----------
Cash and cash equivalents at beginning of year 3,287,141 4,915,491
---------- ----------
Cash and cash equivalents at end of period $ 2,510,529 $ 1,860,980
=========== ===========
Supplemental disclosure of cash flow information
Cash paid (received) for:
Interest $ 5,888,750 $ 5,729,970
Income taxes 2,997,370 2,152,971
Income taxes refunded (8,315,483) -
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
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 common
stock issuable under the 7% convertible subordinated notes were not included in
the calculation for the quarter and six months ended August 3, 1996 and July 29,
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 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 of fiscal 1996, 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. Accrued at August 3, 1996 are costs of $2.2
million, primarily related to lease termination costs, which are expected to be
paid by the end of fiscal 1997. As part of its Fayva exit strategy, the Company
engaged a third party to maximize the Company's net recovery from the
liquidation of the Fayva inventory. All of Fayva's inventory was liquidated by
the end of fiscal 1996. The Company also hired a consultant to mitigate the
disposition costs of the Fayva store leases. Sales in the Company's Fayva
division for the quarter and six months ended July 29, 1995 and fiscal year
ended February 3, 1996 were $44.0 million, $81.3 million and $106.0 million,
respectively.
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 $1.8 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 the Company's 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
six months ended August 3, 1996 were $16.6 million and $28.8 million,
respectively.
5] On October 18, 1995, Jamesway Corporation ("Jamesway"), then a licensor of
the Company, filed for protection under Chapter 11 of the United States
Bankruptcy Code and 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. During the quarter ended February 3, 1996, the Company participated in
Jamesway's going out of business sales and liquidated substantially all of its
footwear inventory in the 90 Jamesway stores during the going out of business
sales. At the time of the bankruptcy filing, the Company had outstanding
6
<PAGE>
accounts receivable of approximately $1.4 million due from Jamesway. Since
Jamesway ceased operation of its business, the Company believes that rejection
of its license agreement is probable and has asserted a substantial claim for
damages. 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 six months ended July 29, 1995 and fiscal
year ended February 3, 1996 were $7.1 million, $12.7 million and $24.3 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 was entered for
Maxwell. The Company appealed the judgment. On June 11, 1996, the United States
Court of Appeals for the Federal Circuit reversed the trial court's findings in
part, affirmed the trial court's findings in part and vacated the award to
Maxwell of treble damages, attorney's fees and injunctive relief. Maxwell
subsequently requested a rehearing in banc of the matter which request was
denied by order of the Court dated August 28, 1996. The case has been remanded
to the trial court for a redetermination of damages consistent with the opinion
of the appellate court.
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 Morse trial was stayed pending the outcome
of the J. Baker appeal. In light of the decision of the appellate court, a trial
date may be set in the next several months.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
All references herein to fiscal 1997 and fiscal 1996 relate to the years ending
February 1, 1997 and February 3, 1996, respectively.
Results of Operations
First Six Months Fiscal 1997 versus First Six Months Fiscal 1996
Net sales decreased by $76.6 million to $427.3 million in the first six
months of fiscal 1997 from $503.9 million in the first six months of fiscal
1996. Sales in the Company's footwear operations decreased by $94.8 million to
$300.0 million from $394.8 million primarily due to an $81.3 million sales
decrease in the Company's Fayva division (which is the result of the closing of
all 357 Fayva stores in the third quarter of fiscal 1996), a 2.1% decrease in
comparable footwear store sales (comparable footwear store sales
increases/decreases are based upon comparisons of weekly sales volume in
licensed departments and Parade of Shoes stores which were open in corresponding
weeks of the two comparison periods), and a decrease in the number of discount
licensed shoe departments in operation during the first six months of fiscal
1997 versus the first six months of fiscal 1996 (which was due in large part to
Jamesway ceasing operations). Sales in the Company's apparel operations
increased by $18.2 million to $127.3 million from $109.1 million primarily due
to an increase in the number of Casual Male Big & Tall stores and Work 'n Gear
stores in operation during the first six months of fiscal 1997 over the first
six months of fiscal 1996 and a 2.2% increase in comparable apparel store sales
(comparable 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 55.1% of sales in the first six months of fiscal
1997 as compared to 55.6% of sales in the first six months of fiscal 1996. Cost
of sales in the Company's footwear operations was 56.9% of sales in the first
six months of fiscal 1997 as compared to 57.0% of sales in the first six months
of fiscal 1996. The decrease in such percentage was primarily attributable to
lower markdowns as a percentage of sales and a higher initial markup on
merchandise purchases in the Company's continuing footwear operations, partially
offset by the closing of the Company's Fayva division in the third quarter of
fiscal 1996, which had lower cost of sales as a percentage of sales than the
Company's continuing footwear operations. Cost of sales in the Company's apparel
operations was 50.8% of sales in the first six months of fiscal 1997 as compared
to 50.7% of sales in the first six months of fiscal 1996 primarily due to a
lower initial markup on merchandise purchases partially offset by lower
markdowns as a percentage of sales.
Selling, administrative and general expenses decreased $32.9 million or
16.4% in the first six months of fiscal 1997 as compared to the first six months
of fiscal 1996 primarily due to the closing of the Company's Fayva division in
the third quarter of fiscal 1996. As a percentage of sales, selling,
administrative and general expenses were 39.2% in the first six months of fiscal
1997 as compared to 39.8% in the first six months of fiscal 1996. Selling,
administrative and general expenses in the Company's footwear operations were
37.4% of sales in the first six months of fiscal 1997 as compared to 38.7% of
sales in the first six months of fiscal 1996. This decrease was primarily the
result of the closing of the Company's Fayva division, which had higher selling,
administrative and general expenses as a percentage of sales than the Company's
continuing footwear operations, partially offset by the decline in comparable
footwear store sales. Selling, administrative and general expenses in the
Company's apparel operations were 43.5% of sales in the first six months of
fiscal 1997 as compared to 43.7% of sales in the first six months of fiscal
1996. This decrease was primarily the result of the increase in comparable
apparel store sales.
Depreciation and amortization expense decreased by $21,000 in the first
six months of fiscal 1997 as compared to the first six months of fiscal 1996
primarily due to net depreciable and amortizable assets remaining consistent as
a result of capital expenditures being offset by the write-off of furniture,
fixtures and leasehold improvements as a result of the closing of the Company's
Fayva division in the third quarter of fiscal 1996.
8
<PAGE>
As a result of the above described effects, the Company's operating income
increased by 13.9% to $9.8 million in the first six months of fiscal 1997 from
$8.6 million in the first six months of fiscal 1996. As a percentage of sales,
operating income was 2.3% in the first six months of fiscal 1997 as compared to
1.7% in the first six months of fiscal 1996.
Net interest expense increased $715,000 to $6.0 million in the first six
months of fiscal 1997 from $5.3 million in the first six months of fiscal 1996
primarily due to higher levels of borrowings and higher interest rates.
Taxes on earnings for the first six months of fiscal 1997 were $1.5
million, yielding an effective tax rate of 39.0%, as compared to taxes of $1.3
million, yielding an effective tax rate of 38.5% in the first six months of
fiscal 1996.
Net earnings for the first six months of fiscal 1997 were $2.3 million as
compared to net earnings of $2.0 million in the first six months of 1996, an
increase of 13.6%.
Second Quarter Fiscal 1997 versus Second Quarter Fiscal 1996
Net sales decreased by $40.7 million to $231.8 million in the second
quarter of fiscal 1997 from $272.5 million in the second quarter of fiscal 1996.
Sales in the Company's footwear operations decreased by $48.3 million to $166.8
million from $215.1 million primarily due to a $44.0 million sales decrease in
the Company's Fayva division (which is the result of the aforementioned closing
of all 357 Fayva stores in the third quarter of fiscal 1996), a decrease in the
number of discount licensed shoe departments in operation during the second
quarter of fiscal 1997 versus the second quarter of fiscal 1996 (which was due
in large part to Jamesway ceasing operations) and a 0.8% decrease in comparable
footwear store sales. Sales in the Company's apparel operations increased by
$7.6 million to $65.0 million from $57.4 million primarily due to an increase in
the number of Casual Male Big & Tall stores and Work 'n Gear stores in operation
during the second quarter of fiscal 1997 over the second quarter of fiscal 1996
coupled with a 0.2% increase in comparable apparel store sales.
Cost of sales constituted 56.2% of sales in the second quarter of fiscal
1997 as compared to 55.9% of sales in the second quarter of fiscal 1996. Cost of
sales in the Company's footwear operations was 58.3% of sales in the second
quarter of fiscal 1997 as compared to 57.3% of sales in the second quarter of
fiscal 1996. The increase in such percentage was primarily attributable to the
closing of the Company's Fayva division in the third quarter of fiscal 1996,
which had lower cost of sales as a percentage of sales than the Company's
continuing footwear operations, partially offset by lower markdowns as a
percentage of sales and a higher initial markup on merchandise purchases in the
Company's continuing footwear operations. Cost of sales in the Company's apparel
operations was 51.0% of sales in the second quarter of fiscal 1997 as compared
to 50.6% of sales in the second quarter of fiscal 1996. The increase in such
percentage was primarily attributable to an increase in markdowns as a
percentage of sales partially offset by a higher initial markup on merchandise
purchases.
Selling, administrative and general expenses decreased $19.0 million or
17.7% in the second quarter of fiscal 1997 as compared to the second quarter of
fiscal 1996 primarily due to the closing of the Company's Fayva division in the
third quarter of fiscal 1996. As a percentage of sales, selling, administrative
and general expenses were 38.1% in the second quarter of fiscal 1997 as compared
to 39.4% in the second quarter of fiscal 1996. Selling, administrative and
general expenses in the Company's footwear operations were 35.7% of sales in the
second quarter of fiscal 1997 as compared to 38.1% of sales in the second
quarter of fiscal 1996. This decrease was primarily the result of the closing of
the Company's Fayva division, which had higher selling, administrative and
general expenses as a percentage of sales than the Company's continuing footwear
operations. Selling, administrative and general expenses in the Company's
apparel operations were 44.2% of sales in the second quarter of fiscal 1997
which was comparable to the 44.2% of sales in the second quarter of fiscal 1996.
Depreciation and amortization expense decreased by $259,000 in the second
quarter of fiscal 1997 as compared to the second quarter of fiscal 1996
primarily due to net depreciable assets remaining consistent as a result of
capital expenditures being offset by the write-off of furniture, fixtures and
leasehold improvements as a result of the closing of the Company's Fayva
division in the third quarter of fiscal 1996.
As a result of the above described effects, the Company's operating income
increased by 10.2% to $5.7 million in the second quarter of fiscal 1997 from
$5.1 million in the second quarter of fiscal 1996. As a percentage of sales,
operating income was 2.4% in the second quarter of fiscal 1997 as compared to
1.9% in the second quarter of fiscal 1996.
9
<PAGE>
Net interest expense increased $360,000 to $3.2 million in the second
quarter of fiscal 1997 from $2.9 million in the second quarter of fiscal 1996
primarily due to higher levels of borrowings and higher interest rates.
Taxes on earnings for the second quarter of fiscal 1997 were $952,000,
yielding an effective tax rate of 39.1%, as compared to taxes of $874,000,
yielding an effective tax rate of 38.5% in the second quarter of fiscal 1996.
Net earnings for the second quarter of fiscal 1997 were $1.5 million as
compared to net earnings of $1.4 million in the second quarter of fiscal 1996,
an increase of 6.3%.
Financial Condition
August 3, 1996 versus February 3, 1996
The increase in accounts receivable at August 3, 1996 from February 3,
1996 is primarily due to seasonal factors, licensed sales in July being higher
than licensed sales in January.
Merchandise inventories at August 3, 1996 were higher than at February 3,
1996 primarily due to a seasonal increase in the average inventory level per
location.
The decrease in income tax receivable is due to receipt of the estimated
federal income tax refund recorded at February 3, 1996 which related to the
federal income tax carryback benefits resulting from the disposal of the Fayva
division.
The decrease in other assets is primarily due to the recording of
amortization expense and collections on notes receivable in the first and second
quarters of fiscal 1997.
The ratio of accounts payable to merchandise inventory decreased to 30.9%
at August 3, 1996 as compared to 36.8% at February 3, 1996 primarily due to
seasonal factors and the Company's decision to reduce the average financing
terms of its foreign purchases.
Accrued expenses at August 3, 1996 decreased from the balance at February
3, 1996 primarily due to payments of costs related to the disposal of the Fayva
division.
Debt increased $35.5 million to $243.3 million at August 3, 1996 from
$207.8 million at February 3, 1996 primarily due to additional borrowings under
the Company's revolving line of credit to meet seasonal working capital needs
and to fund capital expenditures.
Liquidity and Capital Resources
The Company currently has a $240 million revolving credit facility on an
unsecured basis with Fleet National Bank, The First National Bank of Boston, The
Yasuda Trust and Banking Co., Ltd., Bank Hapoalim B.M., National City Bank,
Columbus, Standard Chartered Bank and Citizens Savings Bank (the "Banks"). As
amended to date, the aggregate commitment amount will be reduced by $15 million
on November 30, 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 December, 1997. As of August 3, 1996, the Company had outstanding obligations
under the revolving credit facility of $214.7 million, consisting of loans,
obligations under bankers' acceptances and letters of credit.
10
<PAGE>
Following is a table showing actual and planned store openings by division
for fiscal 1997:
<TABLE>
<S> <C> <C> <C>
Actual Openings Planned Openings Total
First - Second Third - Fourth Actual/Planned
Division Quarter Fiscal 1997 Quarters Fiscal 1997 Openings
--------- -------------------- -------------------- --------------
Licensed 52 38 90
Parade of Shoes 42 0 42
Casual Male 27 18 45
Work 'n Gear 0 0 0
</TABLE>
Offsetting the above actual and planned store openings, the Company closed
159 licensed departments, 10 Parade of Shoes stores, 5 Casual Male stores and 3
Work 'n Gear stores during the first and second quarters of fiscal 1997. The
Company has plans to close approximately an additional 26 licensed departments,
1 Parade of Shoes store and 1 Casual Male store during the third and fourth
quarters of fiscal 1997.
The information on store openings and closings reflects management's
current plans and should not be interpreted as an assurance of actual future
developments.
The Company believes that amounts 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.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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 was entered for Maxwell. The
Company appealed the judgment. On June 11, 1996, the United States
Court of Appeals for the Federal Circuit reversed the trial court's
findings in part, affirmed the trial court's findings in part and
vacated the award to Maxwell of treble damages, attorney's fees and
injunctive relief. Maxwell subsequently requested a rehearing in banc
of the matter which request was denied by order of the Court dated
August 28, 1996. The case has been remanded to the trial court for a
redetermination of damages consistent with the opinion of the appellate
court.
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 Morse trial was
stayed pending the outcome of the J. Baker appeal. In light of the
decision of the appellate court, a trial date may be set in the next
several months.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The registrant's annual meeting of stockholders was held on June 5, 1996
(the "Meeting").
(b) Messrs. Sherman N. Baker, Ervin D. Cruce and Melvin M. Rosenblatt were
elected Class I directors at the Meeting for a three year term. The
term of office for the following directors continued after the
Meeting: J. Christopher Clifford, Nancy Ryan, Douglas J. Kahn, David
Pulver, Stanley Simon and Jerry M. Socol.
(c) The stockholders voted on the election of three Class I directors, and
the ratification of the selection of KPMG Peat Marwick LLP as
independent auditors for the fiscal year ending February 1, 1997.
The following votes were cast at the Meeting with respect to each
nominee for Class I director:
<TABLE>
<S> <C> <C>
Total vote for Total vote withheld
each director from each director
--------------- --------------------
Sherman N. Baker 10,579,706 201,430
Ervin D. Cruce 10,746,867 34,269
Melvin M. Rosenblatt 10,746,585 34,551
</TABLE>
The following votes were cast at the Meeting with respect to the
ratification of auditors:
<TABLE>
<S> <C>
For: 10,757,194
Against: 10,124
Abstain: 13,818
</TABLE>
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.
12
<PAGE>
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
September 13, 1996
By:/s/Philip Rosenberg
----------------------
Philip Rosenberg
First Senior Vice President, Treasurer
and Corporate Controller (Chief
Accounting Officer)
Date: Canton, Massachusetts
September 13, 1996
13
<PAGE>
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 August 3, 1996
14
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit Page No.
4. Instruments Defining the Rights of Security Holders, Including Indentures
(.01) Eighth Amendment to Revolving Credit and Loan Agreement by and *
among JBI, Inc., J. Baker, Inc, and Fleet National Bank, et al,
dated as of June 21, 1996, attached.
10. Material Contracts
(.01) Amendment to Employment Agreement between J. Baker, Inc. and *
Larry I. Kelley dated June 5, 1996, attached.
(.02) Promissory Note of Larry I. Kelley in favor of J. Baker, Inc., *
dated August 23, 1996, attached.
(.03) Performance Share Award granted to Jerry M. Socol, dated March 26, *
1996, attached.
(.04) Performance Share Award granted to Alan I. Weinstein, dated *
March 26, 1996, attached.
(.05) Performance Share Award granted to Larry I. Kelley, dated June 5, *
1996, attached.
(.06) Mortgage, Assignment of Leases and Rents and Security Agreement *
from Morse Shoe, Inc. to Fleet National Bank, dated as of June 21,
1996, attached.
(.07) Mortgage, Assignment of Leases and Rents and Security Agreement *
from JBI, Inc. to Fleet National Bank, dated as of June 21,
1996, attached.
(.08) See Exhibit 4.01.
11. Computation of Primary and Fully Diluted Earnings Per Share, attached. *
27. Financial Data Schedule **
</TABLE>
* Included herein
** This exhibit has been filed with the Securities and Exchange
Commission as part of J. Baker, Inc.'s electronic submission of this
Form 10-Q under EDGAR filing requirements. It has not been included
herein.
FIFTH 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, a Second
Amendment dated May 2, 1995, a Third Amendment dated November 7, 1995 and a
Fourth Amendment dated April 5, 1996 (the "Agreement") by and between J. Baker,
Inc. and Larry I. Kelley. Pursuant to paragraph 19 of the Agreement and in order
to further amend certain provisions of the Agreement, the Agreement is hereby
amended as follows:
1. Paragraph 9(e) of the Agreement is hereby amended by deleting the
phrase "one (1) year of Base Salary" in the fourteenth (14th) line thereof and
inserting in its place the phrase "two (2) years Base Salary".
2. All other terms of the Agreement shall remain unchanged and
continue in full force and effect.
J. BAKER, INC.
By: /s/ Jerry M. Socol June 5, 1996
------------------ --------------
Jerry M. Socol Date
President and
Chief Executive Officer
/s/ Larry I. Kelley June 5, 1996
--------------------- --------------
Larry I. Kelley Date
J. Baker, Inc. and Subsidiaries
Promissory Note
Name: Larry I. Kelley Social Security #: ###-##-####
Store or Dept. Name and Location: Casual Male Home Office - Division President
Amount: $75,000.00xx Date: August 23, 1996
For value received, the undersigned Larry I. Kelley (the "Payor") promises to
pay to the order of J. Baker Inc. or its assignees (the "Holder") at 555
Turnpike Street, Canton, MA 02021 or at such other place as may be designated in
writing by the Holder, the principal sum of Seventy Five Thousand Dollars
($75,000.00) Dollars together with interest on the principal balance thereof at
a rate of eight and one-half ( 8.5%) per cent per annum payable in weekly
installments of principal and interest as listed on Schedule "A" attached hereto
commencing September 5, 1996 and on Thursday of each week thereafter until the
entire principal balance of this Note has been repaid. All payments hereunder
shall be by weekly payroll deductions which deductions are hereby authorized by
Payor.
Total repayment (principal plus interest) will be $99,788.68 .
PRE-PAYMENT
The unpaid principal hereof together with all unpaid interest accruing may be
prepaid in whole or in part at any time without premium or penalty. All
prepayments shall be applied first to accrued interest on such prepayment and
second against the principal.
GRANT OF SECURITY INTEREST
To secure the performance of the above obligations, the Payor grants to the
Holder a security interest in the following described collateral (the
"Collateral"), in any additions thereto or substitutions therefor and in any
proceeds thereof:
Common stock of J. Baker, Inc. owned by Payor and stock options in J. Baker,
Inc. granted to Payor.
EVENTS OF DEFAULT
a. The entire unpaid balance of this Note together with accrued interest thereon
shall become immediately due and payable at the option of the Holder, without
notice to the Payor, upon the happening of any one or more of the following
events (an "Event of Default"):
[i] Payor has failed to pay the principal sum or interest on this Note
on the date such payment is due;
[ii] Payor has failed to perform any of the terms, conditions,
covenants or provisions of this Note; or
[iii] Payor's employment with J. Baker Inc. or any of its subsidiaries is
terminated for any reason whatsoever; or
[iv] Breach of any warranty or obligation hereunder with respect to the
Collateral.
b. Upon an Event of Default, and notwithstanding any other interest rate set
forth herein, interest shall accrue on the entire unpaid principal balance of
this Note from and including the date of such default at the annual simple
interest rate of eighteen (18%) percent per annum.
<PAGE>
c. The Payor will pay all costs and expenses of collection including attorney's
fees incurred or paid by the Holder in enforcing this Note or the obligations
hereby evidenced, to the fullest extent permitted by law.
WAIVER OF PRESENTMENT/DEMAND
The Payor hereby waives presentment, demand for payment, notice of dishonor,
protest and notice of protest and any or all other notices or demands in
connection with the delivery, acceptance and performance of this Note. No waiver
of or modification to this Note or any part hereof shall be effective unless
contained in writing signed by the party against whom enforcement of such waiver
or modification is sought.
RIGHT OF SET-OFF
Upon the occurrence and during the continuance of any Event of Default, the
Holder hereby is authorized at any time and from time to time, without notice to
the Payor, to set-off and apply any and all indebtedness at any time owing by
the Holder to or for the credit, account or benefit of the Payor against any and
all of the principal sum or interest now or hereafter existing under this Note
whether or not the Holder shall have declared a default, accelerated the
obligations or made any demand or taken any other action under this Note and
although such obligations may be unmatured. Without limiting the foregoing, the
Payor hereby grants to the Holder a continuing security interest in and to all
such indebtedness in the possession of the Holder and the Payor hereby
authorizes the Holder to set-off and apply such amounts at such times and in
such manner as the Holder may direct pursuant to this Section.
GOVERNING LAW
This Note is a Massachusetts contract, and the rights and obligations of the
parties shall be governed by the laws of the Commonwealth of Massachusetts. In
the event that any provision or clause of this Note conflicts with applicable
law, such conflict shall not affect the other provisions of this Note which can
be given effect without the conflicting provision. The undersigned agrees to
submit to jurisdiction in a court in the Commonwealth of Massachusetts.
The Payor and the Holder hereby waive trial by jury.
EXECUTED AS A SEALED INSTRUMENT THIS 23rd DAY OF August, 1996
Signature of Payor /s/ Larry I. Kelley
-------------------------
Witness to Signature /s/ Karen L. McLain
------------------------
FOR OFFICE USE ONLY:
Authorized Corporate Signature:___________________ Date_____________________
Treasurer/C.F.O.:/s/ Philip Rosenberg Date_____________________
---------------------------
Processed by HR/Payroll___________________________ Date_____________________
<PAGE>
SCHEDULE A
Principal and interest on this note will be repaid as follows, commencing on
September 5, 1996 and on Thursday of each week thereafter until the entire
principal balance of this Note has been repaid.
Year One, payroll deductions of $200.00 per week
Year Two, payroll deductions of $250.00 per week
Year Three, payroll deductions of $300.00 per week
Year Four and thereafter, payroll deductions of $350.00 per week
J. BAKER, INC.
1994 EQUITY INCENTIVE PLAN
PERFORMANCE SHARE AWARD
50,000 Shares March 26, 1996
Pursuant to its 1994 Equity Incentive Plan (the "Plan"), J. Baker, Inc.
(the "Company") hereby grants to Jerry M. Socol, President and Chief Executive
Officer of the Company, a Performance Share Award (the "Award") under which Mr.
Socol may receive, in the aggregate, up to 50,000 shares of common stock of the
Company, par value $.50 (the "Shares"), upon the terms and conditions set forth
in this Award agreement.
1. Shares Subject to the Award. The Award covers an aggregate of up to
50,000 Shares.
2. Performance Term. The Award is linked to a performance term (the
"Performance Term") which begins on March 26, 1996 and ends on April 30, 1997.
3. Performance Measure.
At the end of the Performance Term, the Committee shall determine the
average closing price of the Company's common stock (the "Common Stock") on the
NASDAQ National Market System, or on the principal exchange on which the Common
Stock is traded, for the 15 consecutive trading days ending on April 30, 1997.
The price determined pursuant to the previous sentence shall be known as the
"Target Price". The number of Shares to which Mr. Socol shall be entitled, if
any, under the Award shall be determined in accordance with the following table:
1
<PAGE>
<TABLE>
<S> <C>
Target Price Number of Shares
$ 9.00 25,000
$10.00 31,250
$11.00 37,500
$12.00 43,750
$13.00 50,000
</TABLE>
If the Target Price falls between whole dollar amounts per share, the
number of Shares shall be determined by linear interpolation. For example, a
Target Price of $10.50 would correspond to 34,375 Shares; a Target Price of
$12.63 would correspond to 47,656 Shares.
4. Issuance of Shares. As soon as practicable after the Committee's
determination of the number of Shares to be issued pursuant to an Award under
Section 3, a stock certificate shall be delivered to Mr. Socol for such number
of Shares, provided that (a) the Company shall have received any agreement,
statement or other evidence it may require to satisfy itself that the issuance
of such Shares and any subsequent resale of the Shares will be in compliance
with applicable laws and regulations, (b) arrangements satisfactory to the
Company have been made for the withholding of all taxes required to be withheld
with respect to the Award, and (c) all other conditions to such issuance
contained in the Plan or this Award Agreement have been satisfied.
5. Further Conditions on Issuance of Shares.
(a) Performance Certification. No Shares shall be issued pursuant to
the Award unless the Committee has previously certified in writing to the Board
of Directors the degree to which the performance measure established under
Section 3 was in fact satisfied. For this purpose, approved minutes of a
Committee meeting in which the certification was made shall constitute written
certification.
2
<PAGE>
(b) Continued Employment. No Shares shall be issued pursuant to
the Award unless Mr. Socol remains employed by the Company throughout the
Performance Term.
(c) Change of Control. Notwithstanding the provisions of Section 5(b),
in the event of a Change of Control (as defined in Section 13(c) of the Plan)
occurring during the Performance Term and the termination of Mr. Socol's
employment prior to the end of the Performance Term, the Target Price shall be
determined during the 15 consecutive trading days ending on the date on which
the Change of Control occurs. If the Target Price, as so determined, exceeds
$9.00, Mr. Socol shall be entitled to receive, within 15 days of his termination
of employment, the number of Shares determined pursuant to the table set forth
in Section 3 above. If the Target Price does not exceed $9.00, Mr. Socol shall
not be entitled to receive any Shares pursuant to this Award Agreement.
6. Miscellaneous.
(a) Notices. Any notice required or permitted to be given by the
Company or the Committee pursuant to this Award Agreement shall be deemed given
when personally delivered or deposited in the United States mail, registered or
certified, postage prepaid, addressed to Mr.
Socol at his last address shown on the records of the Company.
(b) No Assignment of Benefits. Mr. Socol's rights under this Award
Agreement shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge prior to the actual issuance
of Shares to Mr. Socol; any attempt to so anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge prior to such receipt shall be void, and the
Company shall not be liable in any manner for or subject to the debts,
contracts, liabilities, engagements or torts of Mr. Socol or any other person.
(c) No Right to Continued Employment. Nothing contained herein confers
upon Mr. Socol the right to be retained in the service of the Company or limits
the right of the Company to discharge or otherwise deal with him without regard
to the existence of this Award Agreement.
3
<PAGE>
(d) Benefits to be Unfunded and Unsecured. This Award Agreement shall
at all times be entirely unfunded, and no provision shall at any time be made
with respect to segregating assets of the Company (including stock) for the
settlement of any Awards hereunder. No person shall have any interest in any
particular assets of the Company (including stock) by reason of this Award
Agreement, and any person claiming rights hereunder shall have only the rights
of a general unsecured creditor of the Company.
(e) Rights as a Shareholder. Mr. Socol shall have no rights as a
shareholder with respect to any Shares hereunder unless and until a certificate
or certificates representing such Shares are duly issued and delivered to him.
Except as otherwise expressly provided in the Plan, no adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such stock certificate or certificates are issued.
(f) The Plan. In the event of any discrepancy or inconsistency between
this Award Agreement and the Plan, the terms and conditions of the Plan shall
control.
(g) Governing Law. This Award Agreement shall be governed by the laws
of the Commonwealth of Massachusetts.
J. BAKER, INC.
By: /s/ Sherman N. Baker
------------------------
Name: Sherman N. Baker
Title: Chairman
Receipt of the foregoing Award Agreement is acknowledged and their terms and
conditions are hereby agreed to:
March 26, 1996 /s/ Jerry M. Socol
----------------------
Date Jerry M. Socol
J. BAKER, INC.
1994 EQUITY INCENTIVE PLAN
PERFORMANCE SHARE AWARD
50,000 Shares March 26, 1996
Pursuant to its 1994 Equity Incentive Plan (the "Plan"), J. Baker, Inc.
(the "Company") hereby grants to Alan I. Weinstein, Senior Executive Vice
President and Chief Financial Officer of the Company, a Performance Share Award
(the "Award") under which Mr. Weinstein may receive, in the aggregate, up to
50,000 shares of common stock of the Company, par value $.50 (the "Shares"),
upon the terms and conditions set forth in this Award agreement.
1. Shares Subject to the Award. The Award covers an aggregate
of up to 50,000 Shares.
2. Performance Term. The Award is linked to a performance term
(the "Performance Term") which begins on March 26, 1996 and ends on April 30,
1998.
3. Performance Measure.
At the end of the Performance Term, the Committee shall determine the
average closing price of the Company's common stock (the "Common Stock") on the
NASDAQ National Market System, or on the principal exchange on which the Common
Stock is traded, for the 15 consecutive trading days ending on April 30, 1998.
The price determined pursuant to the previous sentence shall be known as the
"Target Price". The number of Shares to which Mr. Weinstein shall be entitled,
if any, under the Award shall be determined in accordance with the following
table:
<PAGE>
<TABLE>
<S> <C>
Target Price Number of Shares
$10.00 25,000
$11.00 31,250
$12.00 37,500
$13.00 43,750
$14.00 50,000
</TABLE>
If the Target Price falls between whole dollar amounts per share, the
number of Shares shall be determined by linear interpolation. For example, a
Target Price of $10.50 would correspond to 28,125 Shares; a Target Price of
$12.63 would correspond to 41,438 Shares.
4. Issuance of Shares. As soon as practicable after the Committee's
determination of the number of Shares to be issued pursuant to an Award under
Section 3, a stock certificate shall be delivered to Mr. Weinstein for such
number of Shares, provided that (a) the Company shall have received any
agreement, statement or other evidence it may require to satisfy itself that the
issuance of such Shares and any subsequent resale of the Shares will be in
compliance with applicable laws and regulations, (b) arrangements satisfactory
to the Company have been made for the withholding of all taxes required to be
withheld with respect to the Award, and (c) all other conditions to such
issuance contained in the Plan or this Award Agreement have been satisfied.
5. Further Conditions on Issuance of Shares.
(a) Performance Certification. No Shares shall be issued pursuant to
the Award unless the Committee has previously certified in writing to the Board
of Directors the degree to which the performance measure established under
Section 3 was in fact satisfied. For this purpose, approved minutes of a
Committee meeting in which the certification was made shall constitute written
certification.
<PAGE>
(b) Continued Employment. No Shares shall be issued pursuant to
the Award unless Mr. Weinstein remains employed by the Company throughout the
Performance Term.
(c) Change of Control. Notwithstanding the provisions of Section 5(b),
in the event of a Change of Control (as defined in Section 13(c) of the Plan)
occurring during the Performance Term and the termination of Mr. Weinstein's
employment prior to the end of the Performance Term, the Target Price shall be
determined during the 15 consecutive trading days ending on the date on which
the Change of Control occurs. If the Target Price, as so determined, exceeds
$10.00, Mr. Weinstein shall be entitled to receive, within 15 days of his
termination of employment, the number of Shares determined pursuant to the table
set forth in Section 3 above. If the Target Price does not exceed $10.00, Mr.
Weinstein shall not be entitled to receive any Shares pursuant to this Award
Agreement.
6. Miscellaneous.
(a) Notices. Any notice required or permitted to be given by the
Company or the Committee pursuant to this Award Agreement shall be deemed given
when personally delivered or deposited in the United States mail, registered or
certified, postage prepaid, addressed to Mr. Weinstein at his last address shown
on the records of the Company.
(b) No Assignment of Benefits. Mr. Weinstein's rights under this Award
Agreement shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge prior to the actual issuance
of Shares to Mr. Weinstein; any attempt to so anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge prior to such receipt shall be
void, and the Company shall not be liable in any manner for or subject to the
debts, contracts, liabilities, engagements or torts of Mr. Weinstein or any
other person.
(c) No Right to Continued Employment. Nothing contained herein confers
upon Mr. Weinstein the right to be retained in the service of the Company or
limits the right of the Company to discharge or otherwise deal with him without
regard to the existence of this Award Agreement.
<PAGE>
(d) Benefits to be Unfunded and Unsecured. This Award Agreement shall
at all times be entirely unfunded, and no provision shall at any time be made
with respect to segregating assets of the Company (including stock) for the
settlement of any Awards hereunder. No person shall have any interest in any
particular assets of the Company (including stock) by reason of this Award
Agreement, and any person claiming rights hereunder shall have only the rights
of a general unsecured creditor of the Company.
(e) Rights as a Shareholder. Mr. Weinstein shall have no rights as a
shareholder with respect to any Shares hereunder unless and until a certificate
or certificates representing such Shares are duly issued and delivered to him.
Except as otherwise expressly provided in the Plan, no adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such stock certificate or certificates are issued.
(f) The Plan. In the event of any discrepancy or inconsistency
between this Award Agreement and the Plan, the terms and conditions of the Plan
shall control.
(g) Governing Law. This Award Agreement shall be governed by the
laws of the Commonwealth of Massachusetts.
J. BAKER, INC.
/s/ Jerry M. Socol
---------------------
By: Jerry M. Socol
Name: Jerry M. Socol
Title: President
Receipt of the foregoing Award Agreement is acknowledged and their
terms and conditions are hereby agreed to:
March 26, 1996 /s/ Alan I. Weinstein
-------------------------
Date Alan I. Weinstein
J. BAKER, INC.
1994 EQUITY INCENTIVE PLAN
PERFORMANCE SHARE AWARD
25,000 Shares June 5, 1996
Pursuant to its 1994 Equity Incentive Plan (the "Plan"), J. Baker, Inc.
(the "Company") hereby grants to Larry I. Kelley, President of the Company's
subsidiary, The Casual Male, Inc., a Performance Share Award (the "Award") under
which Mr. Kelley may receive, in the aggregate, up to 50,000 shares of common
stock of the Company, par value $.50 (the "Shares"), upon the terms and
conditions set forth in this Award agreement.
1. Shares Subject to the Award. The Award covers an aggregate
of up to 25,000 Shares.
2. Performance Term. The Award is linked to a performance term
(the "Performance Term") which begins on June 5, 1996 and ends on June 5, 1999.
3. Performance Measure.
At the end of the Performance Term, the Committee shall determine the
average closing price of the Company's common stock (the "Common Stock") on the
NASDAQ National Market System, or on the principal exchange on which the Common
Stock is traded, for the 15 consecutive trading days ending on June 5, 1999. The
price determined pursuant to the previous sentence shall be known as the "Target
Price". The number of Shares to which Mr. Kelley shall be entitled, if any,
under the Award shall be determined in accordance with the following table:
<PAGE>
<TABLE>
<S> <C>
Target Price Number of Shares
$11.00 12,500
$12.00 15,625
$13.00 18,750
$14.00 21,875
$15.00 25,000
</TABLE>
If the Target Price falls between whole dollar amounts per share, the
number of Shares shall be determined by linear interpolation. For example, a
Target Price of $11.50 would correspond to 14,063 Shares; a Target Price of
$14.63 would correspond to 23,844 Shares.
4. Issuance of Shares. As soon as practicable after the Committee's
determination of the number of Shares to be issued pursuant to an Award under
Section 3, a stock certificate shall be delivered to Mr. Kelley for such number
of Shares, provided that (a) the Company shall have received any agreement,
statement or other evidence it may require to satisfy itself that the issuance
of such Shares and any subsequent resale of the Shares will be in compliance
with applicable laws and regulations, (b) arrangements satisfactory to the
Company have been made for the withholding of all taxes required to be withheld
with respect to the Award, and (c) all other conditions to such issuance
contained in the Plan or this Award Agreement have been satisfied.
5. Further Conditions on Issuance of Shares.
(a) Performance Certification. No Shares shall be issued pursuant to
the Award unless the Committee has previously certified in writing to the Board
of Directors the degree to which the performance measure established under
Section 3 was in fact satisfied. For this purpose, approved minutes of a
Committee meeting in which the certification was made shall constitute written
certification.
<PAGE>
(b) Continued Employment. No Shares shall be issued pursuant to
the Award unless Mr. Kelley remains employed by the Company throughout the
Performance Term.
(c) Change of Control. Notwithstanding the provisions of Section 5(b),
in the event of a Change of Control (as defined in Section 13(c) of the Plan)
occurring during the Performance Term and the termination of Mr. Kelley's
employment prior to the end of the Performance Term, the Target Price shall be
determined during the 15 consecutive trading days ending on the date on which
the Change of Control occurs. If the Target Price, as so determined, exceeds
$11.00, Mr. Kelley shall be entitled to receive, within 15 days of his
termination of employment, the number of Shares determined pursuant to the table
set forth in Section 3 above. If the Target Price does not exceed $11.00, Mr.
Kelley shall not be entitled to receive any Shares pursuant to this Award
Agreement.
6. Miscellaneous.
(a) Notices. Any notice required or permitted to be given by the
Company or the Committee pursuant to this Award Agreement shall be deemed given
when personally delivered or deposited in the United States mail, registered or
certified, postage prepaid, addressed to Mr.
Kelley at his last address shown on the records of the Company.
(b) No Assignment of Benefits. Mr. Kelley's rights under this Award
Agreement shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge prior to the actual issuance
of Shares to Mr. Kelley; any attempt to so anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge prior to such receipt shall be void, and the
Company shall not be liable in any manner for or subject to the debts,
contracts, liabilities, engagements or torts of Mr. Kelley or any other person.
(c) No Right to Continued Employment. Nothing contained herein confers
upon Mr. Kelley the right to be retained in the service of the Company or limits
the right of the Company to discharge or otherwise deal with him without regard
to the existence of this Award Agreement.
<PAGE>
(d) Benefits to be Unfunded and Unsecured. This Award Agreement shall
at all times be entirely unfunded, and no provision shall at any time be made
with respect to segregating assets of the Company (including stock) for the
settlement of any Awards hereunder. No person shall have any interest in any
particular assets of the Company (including stock) by reason of this Award
Agreement, and any person claiming rights hereunder shall have only the rights
of a general unsecured creditor of the Company.
(e) Rights as a Shareholder. Mr. Kelley shall have no rights as a
shareholder with respect to any Shares hereunder unless and until a certificate
or certificates representing such Shares are duly issued and delivered to him.
Except as otherwise expressly provided in the Plan, no adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such stock certificate or certificates are issued.
(f) The Plan. In the event of any discrepancy or inconsistency
between this Award Agreement and the Plan, the terms and conditions of the Plan
shall control.
(g) Governing Law. This Award Agreement shall be governed by the
laws of the Commonwealth of Massachusetts.
J. BAKER, INC.
/s/ Jerry M. Socol
-----------------------
By: Jerry M. Socol
Name: Jerry M. Socol
Title: President
Receipt of the foregoing Award Agreement is acknowledged and their
terms and conditions are hereby agreed to:
June 5, 1996 /s/ Larry I. Kelley
-------------------------
Date Larry I. Kelley
================================================================
Date: June 21, 1996
MORTGAGE, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT
FROM
MORSE SHOE, INC.
("Mortgagor")
Address: 555 Turnpike Street, Canton, Massachusetts
TO
FLEET NATIONAL BANK,
a national banking association having its principal office at 1 Federal
Street, MAOF0320, Boston, Massachusetts 02211, as Agent
("Mortgagee")
Mortgage Amount: $25,000,000.00
================================================================
This instrument prepared by, and after recording please
return to:
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
Attn: Regina K. O'Shea, Esq.
RLE\27715_1
<PAGE>
RECITAL
Mortgagor is the owner of the premises described in Schedule A
hereto. Mortgagee, as Agent, JBI, Inc., a Massachusetts corporation
("Borrower"), J. Baker, Inc., a Massachusetts corporation ("J. Baker") and
certain other banks referred to therein 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 relating thereto dated as of March 6, 1995, by the Fifth
Amendment Agreement relating thereto dated as of May 19, 1995, by the Sixth
Amendment Agreement relating thereto dated as of September 12, 1995, by the
Seventh Amendment Agreement relating thereto dated as of November 17, 1995 and
by the Eighth Amendment Agreement dated as of June 21, 1996, and as further
modified and supplemented and in effect from time to time (as so modified,
supplemented and in effect from time to time, the "Credit Agreement"). The
Credit Agreement provides for loans evidenced by one or more promissory notes
(collectively, the "Notes") executed and delivered by Borrower. In order to
further secure the payment of $25,000,000.00 (the "Mortgage Amount") of the
indebtedness evidenced by the Notes and all other obligations of Borrower and J.
Baker under the Credit Agreement, Mortgagor, a subsidiary of Borrower, has duly
authorized the execution and delivery of this Mortgage.
CERTAIN DEFINITIONS
Mortgagor and Mortgagee agree that, unless the context
otherwise specifies or requires, the following terms shall have the meanings
herein specified, such definitions to be applicable equally to the singular and
the plural forms of such terms.
"Chattels" means all fixtures, fittings, appliances,
apparatus, equipment, building materials and components, machinery and articles
of property, of whatever kind or nature, including any replacements, proceeds or
products thereof and additions thereto, other than those owned by lessees or any
other third party unrelated to Mortgagor, now or at any time hereafter actually
affixed or attached to the Premises.
"Events of Default" means the events and circumstances
described as such in Section 2.01 hereof.
"Improvements" means all structures or buildings, and
replacements thereof, to be erected or now or hereafter located
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upon the Premises, including all plant equipment, apparatus, machinery and
fixtures of every kind and nature whatsoever forming part of said structures or
buildings.
"Premises" means the premises described in Schedule A hereto
including all of the easements, rights, privileges and appurtenances (including
air rights) thereunto belonging or in anywise appertaining, and all of the
estate, right, title, interest, claim or demand whatsoever of Mortgagor therein
and in the streets and ways adjacent thereto, either in law or in equity, in
possession or expectancy, now or hereafter acquired, and as used in this
Mortgage, shall, unless the context otherwise requires, be deemed to include the
Improvements.
"Involuntary Rate" means the rate set forth in Section 3.11 of
the Credit Agreement, but in no event to exceed the maximum rate allowed by law.
All terms of this Mortgage which are not defined above shall
have the meaning set forth elsewhere in this Mortgage.
GRANTING CLAUSE
NOW, THEREFORE, Mortgagor, in consideration of the Premises
and in order to secure the payment of both the principal of, and the interest
and any other sums payable on, the Notes or this Mortgage or under the Credit
Agreement and the performance and observance of all the provisions hereof and of
the Notes and of the Credit Agreement, hereby gives, grants, bargains, sells,
warrants, aliens, remises, releases, conveys, assigns, transfers, mortgages,
hypothecates, deposits, pledges, sets over and confirms unto Mortgagee WITH
MORTGAGE COVENANTS, all its estate, right, title and interest in, to and under
any and all of the following described property (the "Mortgaged Property")
whether now owned or held or hereafter acquired:
(i) the Premises;
(ii) the Improvements;
(iii) the Chattels;
(iv) all rents, royalties, issues, profits, revenue,
income and other benefits of the Mortgaged Property (the "Rents") and
all leases of the Mortgaged Property or portions thereof now or
hereafter entered into and all right, title and interest of Mortgagor
thereunder, including, without limitation, cash or securities deposited
thereunder to secure performance by the lessees of their obligations
thereunder, whether such cash or securities are to be held until the
expiration of the terms of such leases
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or applied to one or more of the installments of rent coming due
immediately prior to the expiration of such terms, including, any
guaranties of such leases, all subject, however, to the provisions of
Section 3.01 hereof;
(v) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation
awards, and all rights of Mortgagor to refunds of real estate taxes and
assessments;
TO HAVE AND TO HOLD unto Mortgagee, its successors and assigns
forever.
Notwithstanding any other provision of this Mortgage, the
maximum indebtedness and obligations secured by this Mortgage and that certain
Mortgage, Assignment of Leases and Rents and Security Agreement (the "Ohio
Mortgage") of even date herewith given by Morse Shoe, Inc. to Mortgagee on a
certain parcel of land located at 2035 Innis Road, Columbus, Ohio (this Mortgage
and the Ohio Mortgage, collectively, the "Mortgages") under any contingency do
not and shall not exceed: in the aggregate Twenty-Five Million and 00/100
Dollars ($25,000,000.00) of principal indebtedness under the Notes, the interest
allocable to such indebtedness and those expenditures, reasonably incurred by
Mortgagee pursuant to the Mortgages in protecting the lien of the Mortgages and
protecting the collateral encumbered by the Mortgages. It is expressly agreed
that the Mortgages secure said aggregate amount of principal, interest thereon
and expenses as heretofore described.
ARTICLE I
PARTICULAR COVENANTS OF MORTGAGOR
Mortgagor covenants and agrees as follows:
SECTION 1.01. (a) Mortgagor warrants that it has a good and
marketable title to an indefeasible fee estate in the Premises subject to no
lien, charge or encumbrance except such as are listed as exceptions to title in
Schedule B attached hereto; that it owns the Chattels, all leases and the Rents
in respect of the Mortgaged Property and all other personal property encumbered
hereby free and clear of liens and claims; and that this Mortgage is and will
remain a valid and enforceable lien on the Mortgaged Property subject only to
the exceptions referred to above. Mortgagor has full power and lawful authority
to mortgage the Mortgaged Property in the manner and form herein done or
intended hereafter to be done. Mortgagor will preserve such title, and will
forever warrant and defend the same to Mortgagee and will
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forever warrant and defend the validity and priority of the lien hereof against
the claims of all persons and parties whomsoever.
(b) Mortgagor represents and warrants that to the best of its
knowledge, and with the exception of matters which have been disclosed in
writing to Mortgagee on or before the date hereof, and matters which are of
public record, (i) the Premises and the Improvements thereon, are not currently
contaminated by any hazardous or toxic substances or wastes or their effects (as
defined by applicable law) and (ii) there are no claims, litigation,
administrative or other proceedings, whether actual or threatened, or judgments
or orders, relating to any hazardous or toxic substances or wastes, discharges,
emissions or other forms of pollution relating in any way to the Premises or the
Improvements thereto.
SECTION 1.02. (a) Mortgagor will, at its sole cost and
expense, do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances, mortgages, assignments, notices of assignment, transfers and
assurances as Mortgagee shall from time to time reasonably require, for the
better assuring, conveying, assigning, transferring and confirming unto
Mortgagee the property and rights hereby conveyed or assigned or intended now or
hereafter so to be, or which Mortgagor may be or may hereafter become bound to
convey or assign to Mortgagee, or for carrying out the intention or facilitating
the performance of the terms of this Mortgage, or for filing, registering or
recording this Mortgage and, on demand, will execute and deliver, and hereby
authorizes Mortgagee to execute and file in Mortgagor's name, to the extent it
may lawfully do so, one or more financing statements, chattel mortgages or
comparable security instruments, to evidence or perfect more effectively
Mortgagee's security interest in and the lien hereof upon the Chattels and other
personal property encumbered hereby.
(b) Mortgagor will, at its sole cost and expense, do, execute,
acknowledge and deliver all and every such acts, information reports, returns
and withholding of monies as shall be necessary or appropriate to comply fully,
or to cause full compliance, with all applicable information reporting and
back-up withholding requirements of the Internal Revenue Code of 1986, as
amended (including all regulations promulgated thereunder) in respect of the
Premises and all transactions related to the Premises, and will, upon request,
provide Mortgagee with satisfactory evidence of such compliance and notify
Mortgagee of the information reported in connection with such compliance.
SECTION 1.03. (a) Mortgagor forthwith upon the execution and
delivery of this Mortgage, and thereafter from time to time, will cause (or will
allow Mortgagee to cause) this Mortgage and any security instrument creating a
lien or
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evidencing the lien hereof upon the Chattels and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect the lien hereof upon, and the interest of Mortgagee in, the
Mortgaged Property.
(b) Mortgagor will pay all filing, registration or recording
fees, and all reasonable expenses incident to the execution and acknowledgment
of this Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Chattels, and any instrument of further assurance, and any
expenses (including reasonable attorneys' fees and disbursements) reasonably
incurred by Mortgagee in connection with the loan secured hereby, and will pay
all federal, state, county and municipal stamp taxes and other taxes, duties,
imposts, assessments and charges arising out of or in connection with the
execution and delivery of the Notes, this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Chattels or any instrument
of further assurance.
SECTION 1.04. Mortgagor will cause to be paid the principal
and interest and all other sums to become due in respect of the Notes at the
time and place and in the manner specified in the Notes and the Credit
Agreement, according to the true intent and meaning thereof, all in any coin or
currency of the United States of America which at the time of such payment shall
be legal tender for the payment of public and private debts.
SECTION 1.05. Mortgagor will, so long as it is owner of all or
part of the Mortgaged Property, do all things necessary to preserve and keep in
full force and effect its existence, franchises, rights and privileges as a
business or stock corporation, partnership, trust or other entity under the laws
of the state of its formation and will comply with all regulations, rules,
statutes, orders and decrees of any governmental authority or court applicable
to it or to the Mortgaged Property or any part thereof.
SECTION 1.06. All right, title and interest of Mortgagor in
and to all extensions, improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to, the Mortgaged Property,
hereafter acquired by, or released to, Mortgagor or constructed, assembled or
placed by Mortgagor on the Premises, and all conversions of the security
constituted thereby, immediately upon such acquisition, release, construction,
assembling, placement or conversion, as the case may be, and in each such case,
without any further mortgage, conveyance, assignment or other act by Mortgagor,
shall become subject to the lien of this Mortgage as fully and completely, and
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with the same effect, as though now owned by Mortgagor and specifically
described in the granting clause hereof, but at any and all times Mortgagor will
execute and deliver to Mortgagee any and all such further assurances, mortgages,
conveyances or assignments thereof as Mortgagee may reasonably require for the
purpose of expressly and specifically subjecting the same to the lien of this
Mortgage.
SECTION 1.07. (a) Mortgagor, from time to time when the same
shall become due and payable, will pay and discharge all taxes of every kind and
nature (including real and personal property taxes and income, franchise,
withholding, profits and gross receipts taxes), all general and special
assessments, levies, permits, inspection and license fees, all water and sewer
rents and charges, and all other public charges whether of a like or different
nature, imposed upon or assessed against it or the Mortgaged Property or any
part thereof or upon the revenues, rents, issues, income and profits of the
Mortgaged Property or arising in respect of the occupancy, use or possession
thereof. Mortgagor will, upon Mortgagee's request, deliver to Mortgagee receipts
evidencing the payment of all such taxes, assessments, levies, fees, rents and
other public charges imposed upon or assessed against it or the Mortgaged
Property or the revenues, rents, issues, income or profits thereof.
(b) Mortgagor will pay, from time to time when the same shall
become due, all lawful claims and demands of mechanics, materialmen, laborers,
and others which, if unpaid, might result in, or permit the creation of, a lien
on the Mortgaged Property or any part thereof, or on the revenues, rents,
issues, income and profits arising therefrom and in general will do or cause to
be done everything necessary so that the lien hereof shall be fully preserved,
at the cost of Mortgagor and without expense to Mortgagee.
(c) Nothing in this Section 1.07 shall require the payment or
discharge of any obligation imposed upon Mortgagor by this Section so long as
Mortgagor shall in good faith and at its own expense contest the same or the
validity thereof by appropriate legal proceedings which shall operate to prevent
the collection thereof or other realization thereon and the sale or forfeiture
of the Mortgaged Property or any part thereof to satisfy the same; provided that
during such contest Mortgagor shall, at the option of Mortgagee, provide
security reasonably satisfactory to Mortgagee, assuring the discharge of
Mortgagor's obligation hereunder and of any additional charge, penalty or
expense arising from or incurred as a result of such contest; and provided
further, that if at any time payment of any obligation imposed upon Mortgagor by
clause (a) above shall become necessary to prevent the delivery of a tax deed
conveying the Mortgaged Property or any portion thereof because of non-payment,
then
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Mortgagor shall pay the same in sufficient time to prevent the delivery of such
tax deed.
SECTION 1.08. Mortgagor will pay any taxes, except income
taxes, imposed on Mortgagee by reason of its ownership of this Mortgage.
SECTION 1.09. (a) Mortgagor will keep the Improvements and
Chattels insured against loss by fire, casualty and such other hazards as may be
customarily insured against in the area in which the Premises are located. Such
insurance shall be written in such form as may be customarily used in the state
in which the Premises are located, shall be in an amount equal to no less than
100% of the full replacement value of the Improvements and Chattels, and shall
be issued by a financially responsible insurance company. Such insurance may be
provided under a blanket policy which also covers other property owned or leased
by Mortgagor and its affiliates. A copy of the policy or policies of such
insurance shall be delivered to Mortgagee upon request. Provided no Event of
Default has occurred, any monies received as payment for any loss under any such
insurance shall be paid over to Mortgagor to be applied to expenses incurred by
it in the restoration of the Improvements; provided, however, that any proceeds
of such insurance shall remain subject to the lien established by this Mortgage.
(b) Mortgagor shall give Mortgagee prompt notice of any loss
or casualty affecting the Mortgaged Property. Following any Event of Default,
any monies received as payment for any loss or casualty affecting the Mortgaged
Property shall be paid over to Mortgagee to be applied, at Mortgagee's option,
either to the prepayment of the Notes or to the reimbursement of Mortgagor from
time to time for expenses incurred by it in the restoration of the Improvements.
(c) The Mortgagor hereby represents that no part of the
Mortgaged Property is located in zones identified by the Director of the Federal
Emergency Management Agency as special flood hazard zones described in 12 C.F.R.
S 22.2 and that it has not received prior to the making of the Loan, and the
incurrence of any other indebtedness constituting part of the Obligations,
secured by this Mortgage any notice regarding Federal disaster relief assistance
referred to in the Appendix to 12 C.F.R. Part 22.
SECTION 1.10. If Mortgagor shall fail to perform any of the
covenants contained in Section 1.01, 1.03, 1.07, 1.08, 1.09 or 1.12 and such
failure shall continue for a period of ten (10) days following Mortgagor's
receipt of notice from Mortgagee, Mortgagee may make advances to perform the
same on its behalf, and all sums so advanced shall be a lien upon the Mortgaged
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Property and shall be secured hereby. Mortgagor will repay on demand all sums so
advanced on its behalf together with interest thereon at the Involuntary Rate.
The provisions of this Section 1.10 shall not prevent any default in the
observance of any covenant contained in said Section 1.01, 1.03, 1.07, 1.08,
1.09 or 1.12 from constituting an Event of Default.
SECTION 1.11. (a) Mortgagor will keep adequate records and
books of account in accordance with generally accepted accounting principles and
will permit Mortgagee, by its agents, accountants and attorneys, to visit and
inspect the Mortgaged Property and examine its records and books of account and
to discuss its affairs, finances and accounts with the officers or general
partners, as the case may be, of Mortgagor, at such reasonable times as may be
requested by Mortgagee.
(b) Throughout the term of this Mortgage, Mortgagor, with
reasonable promptness, will deliver to Mortgagee such other information with
respect to Mortgagor and the Mortgaged Property as Mortgagee may reasonably
request from time to time.
SECTION 1.12. (a) Mortgagor will not commit any waste on the
Premises or make any change in the use of the Premises which will in any way
increase any ordinary fire or other hazard arising out of construction or
operation. Mortgagor will, at all times, maintain the Improvements and Chattels
in good operating order and condition and will promptly make, from time to time,
all repairs, renewals, replacements, additions and improvements in connection
therewith which are needful or desirable to such end. The Improvements, shall
not be demolished or substantially altered, nor shall any Chattels be removed
without the prior written consent of Mortgagee except where appropriate
replacements free of superior title, liens and claims are immediately made of
value at least equal to the value of the removed Chattels.
(b) Mortgagor will, at its sole cost and expense, promptly
comply with the order of any governmental authority requiring it to remove, or
cause the removal of, any and all hazardous or toxic substances or wastes or the
effects thereof at any time identified as being on, in, under or affecting the
Premises.
SECTION 1.13. Mortgagor, upon obtaining knowledge of the
institution or pending institution of any proceedings for the condemnation of
the Premises or any portion thereof, will notify Mortgagee thereof. Mortgagee
may participate in any such proceedings and may be represented therein by
counsel of its selection. Mortgagor from time to time will deliver to Mortgagee
all instruments requested by it to permit or facilitate such participation. In
the event of such condemnation proceedings,
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the award or compensation payable is hereby assigned to and shall be paid to
Mortgagee. Mortgagee shall be under no obligation to question the amount of any
such award or compensation and may accept the same in the amount in which the
same shall be paid. The proceeds of any award or compensation so received shall,
at the option of Mortgagee, be applied either to the prepayment of the Notes at
the rate of interest provided therein regardless of the rate of interest payable
on the award by the condemning authority, or shall be paid over to Mortgagor
from time to time for restoration of the Improvements.
SECTION 1.14 (a) Mortgagor will not (i) execute an assignment
of the rents or any part thereof from the Premises without Mortgagee's prior
written consent, (ii) except where the lessee is in default thereunder,
terminate or consent to the cancellation or surrender of any lease of the
Premises or of any part thereof, now existing or hereafter to be made, having an
unexpired term of one (1) year or more, provided, however, that any lease may be
cancelled if promptly after the cancellation or surrender thereof a new lease is
entered into with a new lessee having a credit standing, in the reasonable
judgment of Mortgagee, at least equivalent to that of the lessee whose lease was
cancelled, on substantially the same terms as the terminated or cancelled lease,
and provided, further, that Mortgagor may cancel any lease in order to reclaim
the leased space for its own use, (iii) modify any such lease so as to shorten
the unexpired term thereof or so as to decrease, waive or compromise in any
manner the amount of the rents payable thereunder or materially expand the
obligations of the lessor thereunder, (iv) accept prepayments of any
installments of rents to become due under such leases, except prepayments in the
nature of security for the performance of the lessees thereunder, (v) modify,
release or terminate any guaranties of any such lease, (vi) in any other manner
impair the value of the Mortgaged Property or the security of this Mortgage,
(vii) permit any portion of the Premises to be leased or used for any unlawful
purpose, in any manner which would injure the reputation of the Premises, or in
any manner which would create a nuisance or excessive disturbance for other
tenants at the Premises or (viii) accept the cancellation of any lease unless
any lease cancellation or similar fees payable to Mortgagor are paid over to
Mortgagee.
(b) Mortgagor will not execute any lease of all or a
substantial portion of the Premises except for actual occupancy by the lessee
thereunder, and will at all times promptly and faithfully perform, or cause to
be performed, all of the covenants, conditions and agreements contained in all
leases of the Premises or portions thereof now or hereafter existing, on the
part of the lessor thereunder to be kept and performed and will at all times do
all things necessary to compel performance by the lessee under each lease of all
obligations, covenants and
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agreements by such lessee to be performed thereunder. If any of such leases
provide for the giving by the lessee of certificates with respect to the status
of such leases, Mortgagor shall exercise its right to request such certificates
within five (5) days of any demand therefor by Mortgagee.
(c) Each lease of the Premises, or of any part thereof entered
into after the date hereof, shall provide that, in the event of the enforcement
by Mortgagee of the remedies provided for by law or by this Mortgage, the lessee
thereunder will, upon request of any person succeeding to the interest of
Mortgagor as a result of such enforcement, automatically become the lessee of
said successor in interest, without change in the terms or other provisions of
such lease, provided, however, that said successor in interest shall not be
bound by any payment of rent or additional rent for more than one (1) month in
advance, except prepayments in the nature of security for the performance by
said lessee of its obligations under said lease. Each lease entered into after
the date hereof shall also provide that, upon request by said successor in
interest, such lessee shall execute and deliver an instrument or instruments
confirming such attornment.
ARTICLE II
EVENTS OF DEFAULT AND REMEDIES
SECTION 2.01. If one or more of the following Events of
Default shall happen, that is to say:
(a) an Event of Default shall occur under the Credit
Agreement; or
(b) if default shall be made in the payment of any tax
required by Section 1.07 to be paid and said default shall have
continued for a period of twenty (20) days; or
(c) if default shall be made in the due observance or
performance of any covenant or agreement on the part of Mortgagor
contained in Section 1.01, 1.03, 1.08 or 1.09, and such default shall
have continued for a period of twenty (20) days after notice thereof
shall have been given to Mortgagor by Mortgagee. For the purposes of
this clause if any representation made in Section 1.01 hereof shall be
incorrect, it shall be deemed to be a default; or
(d) if default shall be made in the due observance or
performance of any other covenant, condition or agreement in
this Mortgage and such default shall have continued for a
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period of thirty (30) days after notice thereof shall have
been given to Mortgagor by Mortgagee; or
(e) if by order of a court of competent jurisdiction,
a trustee, receiver or liquidator of the Mortgaged Property
or any part thereof, shall be appointed; or
(f) if there should occur a default which is not cured within
the applicable grace period, if any, under any other mortgage or deed
of trust of all or part of the Mortgaged Property regardless of whether
any such other mortgage or deed of trust is prior or subordinate to
this Mortgage; it being further agreed by Mortgagor that an Event of
Default hereunder shall constitute an Event of Default under any such
other mortgage or deed of trust held by Mortgagee; or
(g) if Mortgagor shall transfer, or agree to transfer, in any
manner, either voluntarily or involuntarily, by operation of law or
otherwise, all or any portion of the Mortgaged Property, or any
interest therein (including any air or development rights) in violation
of Sections 2.30 and 10.01.8 of the Credit Agreement. If Mortgagor
seeks to transfer the Mortgaged Property subject to the Mortgage, then
the consent of the Mortgagee shall be required. Mortgagee may grant or
deny such consent in its sole discretion and, if consent should be
given, any such transfer shall be subject to this Mortgage and any
other documents which evidence or secure the loan secured hereby, and
any such transferee shall assume all of Mortgagor's obligations
hereunder and thereunder and agree to be bound by all provisions and
perform all obligations contained herein and therein. Consent to one
such transfer shall not be deemed to be a waiver of the right to
require consent to future or successive transfers. As used herein
"transfer" shall include, without limitation, any sale, assignment,
lease or conveyance (excluding any such transfer to J. Baker or any of
its subsidiaries) except leases for occupancy subordinate to this
Mortgage and to all advances made and to be made hereunder;
(h) except as permitted in accordance with Section 10.04(i) of
the Credit Agreement, if Mortgagor shall encumber, or agree to
encumber, in any manner, either voluntarily or involuntarily, by
operation of law or otherwise, all or any portion of the Mortgaged
Property, or any interest therein (including any air or development
rights) without, in any such case, the prior written consent of
Mortgagee. Mortgagee may grant or deny such consent in its sole
discretion and, if consent should be given, any such encumbrance shall
be subject to this Mortgage and any other documents which evidence or
secure the loan secured
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hereby. Consent to one such encumbrance shall not be deemed to be a
waiver of the right to require consent to future or successive
encumbrances. As used herein "encumber" shall include, without
limitation, the placing or permitting the placing of any mortgage, deed
of trust, assignment of rents or other security device which is not
permitted by Section 10.04(i) of the Credit Agreement;
(i) the failure to OBSERVE THE STATUTORY CONDITIONS subject to
the applicable notice and cure provisions in the Credit Agreement.
then and in every such case:
I. (a) Upon the occurrence of any Event of Default described
in paragraphs (d) through (g) of this Section 2.01, the entire
principal of the Notes then outstanding (if not then due and payable),
and all accrued and unpaid interest thereon, shall be due and payable
immediately, anything in the Notes or in this Mortgage to the contrary
notwithstanding.
(b) During the continuance of any such Event of
Default other than those described in paragraphs (d) through (g) of
this Section 2.01, Mortgagee, by notice given to Mortgagor, may declare
the entire principal of the Notes then outstanding (if not then due and
payable), and all accrued and unpaid interest thereon, to be due and
payable immediately, and upon any such declaration the principal of the
Notes and said accrued and unpaid interest shall become and be
immediately due and payable, anything in the Notes or in this Mortgage
to the contrary notwithstanding;
II. During the continuance of any such Event of Default,
Mortgagee personally, or by its agents or attorneys, may enter into and
upon all or any part of the Premises, and each and every part thereof,
and is hereby given a right and license and appointed Mortgagor's
attorney-in-fact to do so, and may exclude Mortgagor, its agents and
servants wholly therefrom; and having and holding the same, may use,
operate, manage and control the Premises and conduct the business
thereof, either personally or by its superintendents, managers, agents,
servants, attorneys or receivers; and upon every such entry, Mortgagee,
at the expense of the Mortgaged Property, from time to time, either by
purchase, repairs or construction, may maintain and restore the
Mortgaged Property, whereof it shall become possessed as aforesaid; and
likewise, from time to time, at the expense of the Mortgaged Property,
Mortgagee may make all necessary or proper repairs, renewals and
replacements and such useful alterations, additions, betterments and
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improvements thereto and thereon as to it may seem advisable; and in
every such case Mortgagee shall have the right to manage and operate
the Mortgaged Property and to carry on the business thereof and
exercise all rights and powers of Mortgagor with respect thereto either
in the name of Mortgagor or otherwise as it shall deem best; and
Mortgagee shall be entitled to collect and receive the Rents and every
part thereof, all of which shall for all purposes constitute property
of Mortgagor; and in furtherance of such right Mortgagee may collect
the rents payable under all leases of the Premises directly from the
lessees thereunder upon notice to each such lessee that an Event of
Default exists hereunder accompanied by a demand on such lessee for the
payment to Mortgagee of all rents due and to become due under its
lease, and Mortgagor FOR THE BENEFIT OF MORTGAGEE AND EACH SUCH LESSEE
hereby covenants and agrees that the lessee shall be under no duty to
question the accuracy of Mortgagee's statement of default and shall
unequivocally be authorized to pay said rents to Mortgagee without
regard to the truth of Mortgagee's statement of default and
notwithstanding notices from Mortgagor disputing the existence of an
Event of Default such that the payment of rent by the lessee to
Mortgagee pursuant to such a demand shall constitute performance in
full of the lessee's obligation under the lease for the payment of
rents by the lessee to Mortgagor; and after deducting the expenses of
conducting the business thereof and of all maintenance, repairs,
renewals, replacements, alterations, additions, betterments and
improvements and amounts necessary to pay for taxes, assessments,
insurance and prior or other proper charges upon the Mortgaged Property
or any part thereof, as well as just and reasonable compensation for
the services of Mortgagee and for all attorneys, counsel, agents,
clerks, servants and other employees by it engaged and employed,
Mortgagee shall apply the moneys arising as aforesaid, as set forth in
the Credit Agreement.
III. Mortgagee, with or without entry, personally or
by its agents or attorneys, insofar as applicable, may:
(1) sell the Mortgaged Property and all estate, right, title
and interest, claim and demand therein, at public auction at
such time and place upon such terms and conditions as
Mortgagee may deem expedient or as may be required or
permitted by applicable law, having first given such notice
prior to the sale of such time, place and terms by publication
in one or more newspapers published or having a general
circulation in the county or counties of the state in which
the Mortgaged Property is located as may be required or
permitted by law and by such other methods, if any, Mortgagee
may
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deem desirable or as may be required or permitted by
applicable law. In the event of any sale of all or part of the
Mortgaged Property under the terms of this Mortgagee,
Mortgagor shall pay (in addition to taxable costs) all other
fees and commissions permitted by statute or custom to be
paid, reasonable attorneys' fees and all expenses incurred in
obtaining or continuing abstracts of title for the purpose of
any such sale; or
(2) institute proceedings for the complete or partial
foreclosure of this Mortgage; or
(3) take such steps to protect and enforce its rights whether
by action, suit or proceeding in equity or at law for the
specific performance of any covenant, condition or agreement
in the Notes or in this Mortgage, or in aid of the execution
of any power herein granted, or for any foreclosure hereunder,
or for the enforcement of any other appropriate legal or
equitable remedy or otherwise as Mortgagee shall elect.
(4) Mortgagee may exercise the STATUTORY POWER OF
SALE.
SECTION 2.02. (a) Mortgagee may adjourn from time to time any
sale by it to be made under or by virtue of this Mortgage by announcement at the
time and place appointed for such sale or for such adjourned sale or sales; and,
except as otherwise provided by an applicable provision of law, Mortgagee,
without further notice or publication, may make such sale at the time and place
to which the same shall be so adjourned.
(b) Upon the completion of any sale or sales made by Mortgagee
under or by virtue of this Article II, Mortgagee, or an officer of any court
empowered to do so, shall execute and deliver to the accepted purchaser or
purchasers a good and sufficient instrument or instruments conveying, assigning
and transferring all estate, right, title and interest in and to the property
and rights sold. Mortgagee is hereby appointed the true and lawful attorney
irrevocable of Mortgagor, in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Mortgaged Property and
rights so sold and for that purpose Mortgagee may execute all necessary
instruments of conveyance, assignment and transfer, and may substitute one or
more persons with like power, Mortgagor hereby ratifying and confirming all that
its said attorney or such substitute or substitutes shall lawfully do by virtue
hereof. Nevertheless, Mortgagor, if requested by Mortgagee, shall ratify and
confirm any such sale or sales by executing and delivering to Mortgagee or to
such purchaser or purchasers all such instruments as may be
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advisable, in the judgment of Mortgagee, for the purpose, and as may be
designated in such request. Any such sale or sales made under or by virtue of
this Article II, whether made under the power of sale herein granted or under or
by virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, shall operate to divest all the estate, right, title, interest, claim and
demand whatsoever, whether at law or in equity, of Mortgagor in and to the
properties and rights so sold, and shall be a perpetual bar both at law and in
equity against Mortgagor and against any and all persons claiming or who may
claim the same, or any part thereof from, through or under Mortgagor.
(c) In the event of any sale or sales made under or by virtue
of this Article II (whether made under the power of sale herein granted or under
or by virtue of judicial proceedings or of a judgment or decree of foreclosure
and sale), the entire principal of, and interest on, the Notes, if not
previously due and payable, and all other sums required to be paid by Mortgagor
pursuant to this Mortgage, immediately thereupon shall, anything in the Notes or
in this Mortgage to the contrary notwithstanding, become due and payable.
(d) The purchase money, proceeds or avails of any sale or
sales made under or by virtue of this Article II, together with any other sums
which then may be held by Mortgagee under this Mortgage, whether under the
provisions of this Article II or otherwise, shall, subject to the terms of the
Credit Agreement, which shall control, be applied as follows:
First: To the payment of the costs and expenses of
such sale, including reasonable compensation to Mortgagee, its
agents and counsel, and of any judicial proceedings wherein
the same may be made, and of all expenses, liabilities and
advances made or incurred by Mortgagee under this Mortgage,
together with interest at the Involuntary Rate on all advances
made by Mortgagee, and of all taxes, assessments or other
charges, except any taxes, assessments or other charges
subject to which the Mortgaged Property shall have been sold.
Second: To the payment of that portion of the
Mortgage Amount then due, owing or unpaid with respect to the
Notes for principal and interest, with interest on the unpaid
principal at the Involuntary Rate from and after the happening
of any Event of Default described in clause (a) of Section
2.01 hereof from the due date of any such payment of principal
until the same is paid.
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Third: To the payment of any other sums required to
be paid by Mortgagor pursuant to any provision of this
Mortgage including all expenses, liabilities and advances made
or incurred by Mortgagee under this Mortgage or in connection
with the enforcement thereof, together with interest at the
Involuntary Rate on all such advances.
Fourth: To the payment of the surplus, if any, to
whomsoever may be lawfully entitled to receive the
same.
(e) Upon any sale or sales made under or by virtue of this
Article II, whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, Mortgagee may bid for and acquire the Mortgaged Property or any part
thereof and in lieu of paying cash therefor may make settlement for the purchase
price by crediting upon the indebtedness secured by this Mortgage the net sales
price after deducting therefrom the expenses of the sale and the costs of the
action and any other sums which Mortgagee is authorized to deduct under this
Mortgage.
SECTION 2.03. (a) In case an Event of Default described in
clause (a) of Section 2.01 hereof shall have happened and be continuing, then,
upon written demand of Mortgagee, Mortgagor will pay or cause to be paid to
Mortgagee that portion of the Mortgage Amount which then shall have become due
and payable with respect to the Notes, for principal or interest or both, as the
case may be, and after the happening of said Event of Default will also pay or
cause to be paid to Mortgagee interest at the Involuntary Rate on the then
unpaid principal of the Notes, and the sums required to be paid by Mortgagor
pursuant to any provision of this Mortgage, and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of collection,
including reasonable compensation to Mortgagee, its agents and counsel and any
expenses incurred by Mortgagee hereunder. In the event Mortgagor shall fail
forthwith to pay or cause to be paid such amounts upon such demand, Mortgagee
shall be entitled and empowered to institute such action or proceedings at law
or in equity as may be advised by its counsel for the collection of the sums so
due and unpaid, and may prosecute any such action or proceedings to judgment or
final decree, and may enforce any such judgment or final decree against
Mortgagor and collect, out of the property of Mortgagor wherever situated, as
well as out of the Mortgaged Property, in any manner provided by law, moneys
adjudged or decreed to be payable.
(b) Mortgagee shall be entitled to recover judgment as
aforesaid either before, after or during the pendency of any
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proceedings for the enforcement of the provisions of this Mortgage; and the
right of Mortgagee to recover such judgment shall not be affected by any entry
or sale hereunder, or by the exercise of any other right, power or remedy for
the enforcement of the provisions of this Mortgage, or the foreclosure of the
lien hereof; and in the event of a sale of the Mortgaged Property, and of the
application of the proceeds of sale, as in this Mortgage provided, to the
payment of the debt hereby secured, Mortgagee shall be entitled to enforce
payment of, and to receive all amounts then remaining due and unpaid upon, the
Notes, and to enforce payment of all other charges, payments and costs due under
this Mortgage, and shall be entitled to recover judgment for any portion of the
debt remaining unpaid, with interest at the Involuntary Rate. In case of
proceedings against Mortgagor in insolvency or bankruptcy or any proceedings for
its reorganization or involving the liquidation of its assets, then Mortgagee
shall be entitled to prove the whole amount of principal and interest due upon
the Notes to the full amount thereof, and all other payments, charges and costs
due under this Mortgage, without deducting therefrom any proceeds obtained from
the sale of the whole or any part of the Mortgaged Property, provided, however,
that in no case shall Mortgagee receive a greater amount than such principal and
interest and such other payments, charges and costs from the aggregate amount of
the proceeds of the sale of the Mortgaged Property and the distribution from the
estate of Mortgagor.
(c) No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor or Borrower shall affect in any manner or to any extent,
the lien of this Mortgage upon the Mortgaged Property or any part thereof, or
any liens, rights, powers or remedies of Mortgagee hereunder, but such liens,
rights, powers and remedies of Mortgagee shall continue unimpaired as before.
(d) Any moneys thus collected by Mortgagee under this Section
2.03 shall be applied by Mortgagee in accordance with the provisions of the
Credit Agreement.
SECTION 2.04. After the happening of any Event of Default and
immediately upon the commencement of any action, suit or other legal proceedings
by Mortgagee to obtain judgment for the principal of, or interest on, the Notes
and other sums required to be paid or caused to be paid by Mortgagor pursuant to
any provision of this Mortgage, or of any other nature in aid of the enforcement
of the Notes or of this Mortgage, Mortgagor will (a) waive the issuance and
service of process and enter its voluntary appearance in such action, suit or
proceeding and (b) if required by Mortgagee, consent to the appointment of a
receiver or receivers of all or part of the Mortgaged Property
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and of any or all of the Rents in respect thereof. No waiver contained hereunder
shall be deemed made under the Credit Agreement unless such waiver is also
provided for therein. After the happening of any Event of Default and during its
continuance, or upon the commencement of any proceedings to foreclose this
Mortgage or to enforce the specific performance hereof or in aid thereof or upon
the commencement of any other judicial proceeding to enforce any right of
Mortgagee, Mortgagee shall be entitled, as a matter of right, if it shall so
elect, without the giving of notice to any other party and without regard to the
adequacy or inadequacy of any security for the indebtedness secured hereby,
forthwith either before or after declaring the unpaid principal of the Notes to
be due and payable, to the appointment of such a receiver or receivers.
SECTION 2.05. Notwithstanding the appointment of any receiver,
liquidator or trustee of Mortgagor, or any of its property, or of the Mortgaged
Property or any part thereof, Mortgagee shall be entitled to retain possession
and control of all property now or hereafter held under this Mortgage.
SECTION 2.06. No remedy herein conferred upon or reserved to
Mortgagee is intended to be exclusive of any other remedy or remedies, and each
and every such remedy shall be cumulative, and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute. No delay or omission of Mortgagee to exercise any right or power
accruing upon any Event of Default shall impair any such right or power, or
shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and every power and remedy given by this Mortgage to
Mortgagee may be exercised from time to time as often as may be deemed expedient
by Mortgagee. Nothing in this Mortgage or in the Notes shall affect the
obligation of Borrower to pay the principal of, and interest on, the Notes in
the manner and at the time and place therein respectively expressed.
SECTION 2.07. Mortgagor will not at any time insist upon, or
plead, or in any manner whatever claim or take any benefit or advantage of any
stay or extension or moratorium law, any exemption from execution or sale of the
Mortgaged Property or any part thereof, wherever enacted, now or at any time
hereafter in force, which may affect the covenants and terms of performance of
this Mortgage, nor claim, take or insist upon any benefit or advantage of any
law now or hereafter in force providing for the valuation or appraisal of the
Mortgaged Property, or any part thereof, prior to any sale or sales thereof
which may be made pursuant to any provision herein, or pursuant to the decree,
judgment or order of any court of competent jurisdiction; nor, after any such
sale or sales, claim or exercise any right under any statute heretofore or
hereafter enacted to redeem the
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property so sold or any part thereof and Mortgagor hereby expressly waives all
benefit or advantage of any such law or laws, and covenants not to hinder, delay
or impede the execution of any power herein granted or delegated to Mortgagee,
but to suffer and permit the execution of every power as though no such law or
laws had been made or enacted. Mortgagor, for itself and all who may claim under
it, waives, to the extent that it lawfully may, all right to have the Mortgaged
Property marshaled upon any foreclosure hereof. No waiver contained hereunder
shall be deemed made under the Credit Agreement unless such waiver is also
provided for therein.
SECTION 2.08. During the continuance of any Event of Default
and pending the exercise by Mortgagee of its right to exclude Mortgagor from all
or any part of the Premises, Mortgagor agrees to pay the fair and reasonable
rental value for the use and occupancy of the Premises or any portion thereof
which are in its possession for such period and, upon default of any such
payment, will vacate and surrender possession of the Premises to Mortgagee or to
a receiver, if any, and in default thereof may be evicted by any summary action
or proceeding for the recovery of possession of premises for nonpayment of rent,
however designated.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. This Mortgage constitutes a present and absolute
assignment of all of the Rents now or hereafter accruing, provided, however,
that Mortgagee hereby grants to Mortgagor the right and license to collect and
receive the Rents as they become due, and not in advance, so long as no Event of
Default exists hereunder. Immediately upon the occurrence of any such Event of
Default, the foregoing right and license shall be automatically terminated and
of no further force or effect. Nothing contained in this Section 3.01 or
elsewhere in this Mortgage shall be construed to make Mortgagee a mortgagee in
possession unless and until Mortgagee actually takes possession of the Mortgaged
Property, nor to obligate Mortgagee to take any action or incur any expense or
discharge any duty or liability under or in respect of any leases or other
agreements relating to the Mortgaged Property or any part thereof.
SECTION 3.02. This Mortgage constitutes a security agreement
under the applicable Uniform Commercial Code with respect to the Chattels and
such other of the Mortgaged Property which is personal property. In addition to
the rights and remedies granted to Mortgagee by other applicable law or by this
Mortgage, Mortgagee shall have all of the rights and remedies
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with respect to the Chattels and such other personal property as are granted to
a secured party under the applicable Uniform Commercial Code. Upon Mortgagee's
request, Mortgagor shall promptly and at its expense assemble the Chattels and
such other personal property and make the same available to Mortgagee at a
convenient place acceptable to Mortgagee. Mortgagor shall pay to Mortgagee on
demand, with interest at the Involuntary Rate, any and all expenses, including
attorneys' fees, incurred by Mortgagee in protecting its interest in the
Chattels and such other personal property and in enforcing its rights with
respect thereto. Any notice of sale, disposition or other intended action by
Mortgagee with respect to the Chattels and such other personal property sent to
Mortgagor in accordance with the provision hereof at least five days prior to
such action shall constitute reasonable notice to Mortgagor. The proceeds of any
such sale or disposition, or any part thereof, may be applied by Mortgagee to
the payment of the indebtedness secured hereby in such order and proportions as
Mortgagee in its discretion shall deem appropriate.
SECTION 3.03. In the event any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Mortgage, but this Mortgage shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein or therein.
SECTION 3.04. No provision of this Mortgage may be changed,
waived, discharged or terminated orally or by any other means except an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. Any agreement hereafter made
by Mortgagor and Mortgagee relating to this Mortgage shall be superior to the
rights of the holder of any intervening or subordinate lien or encumbrance.
SECTION 3.05. All notices hereunder shall be in writing and
shall be deemed to have been sufficiently given or served for all purposes when
received by registered or certified mail, if to Mortgagor at its address above
stated, Attention: General Counsel and if to Mortgagee, to the attention of its
Real Estate Finance office at 1 Federal Street, MAOF0320, Boston, Massachusetts
02211, or at such other address of which a party shall have notified the party
giving such notice in writing.
SECTION 3.06. All of the grants, covenants, terms, provisions
and conditions herein shall run with the land and shall apply to, bind and inure
to the benefit of, the successors and assigns of Mortgagor and the successors
and assigns of Mortgagee.
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<PAGE>
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SECTION 3.07. Anything herein or in the Notes to the contrary
notwithstanding, the obligations of the Mortgagor under this Mortgage and the
Notes shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt of any such payment by the Mortgagee would
be contrary to the provisions of law applicable to the Mortgagee limiting the
maximum rate of interest that may be charged or collected by the Mortgagee.
SECTION 3.08. This Mortgage may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original; and all such counterparts shall together constitute but one and
the same mortgage.
SECTION 3.09. Mortgagor and Mortgagee shall, upon their mutual
agreement to do so, execute such documents as may be necessary in order to
effectuate the modification of this Mortgage, including the execution of
substitute mortgages, so as to create two or more liens on the Mortgaged
Property in such amounts as may be mutually agreed upon but in no event to
exceed, in the aggregate, the Mortgage Amount; in such event, Mortgagor
covenants and agrees to pay the reasonable fees and expenses of Mortgagee and
its counsel in connection with any such modification.
SECTION 3.10. Mortgagor recognizes that Mortgagee may sell and
transfer interests in the loan to one or more participants and that all
documentation, financial statements, appraisals and other data, or copies
thereof, relevant to Mortgagor, any Guarantor of the loan, may be exhibited to
and retained by any such participant or prospective participant.
SECTION 3.11. Unless expressly provided otherwise, in the
event that ownership of this Mortgage and title to the fee and/or leasehold
estates in the Premises encumbered hereby shall become vested in the same person
or entity, this Mortgage shall not merge in said title but shall continue to be
and remain a valid and subsisting lien on said estates in the Premises for the
amount secured hereby.
SECTION 3.12. TO THE FULLEST EXTENT PERMITTED BY LAW,
MORTGAGOR HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
BROUGHT BY MORTGAGOR OR MORTGAGEE INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR IN CONNECTION WITH THIS MORTGAGE
AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY. MORTGAGOR HEREBY IRREVOCABLY
UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY FORECLOSURE OR SIMILAR ACTION OR
PROCEDURE BROUGHT BY MORTGAGEE ASSERTING AN EVENT OF DEFAULT UNDER CLAUSE (A) OF
SECTION 2.01 OF THIS MORTGAGE, ANY AND EVERY RIGHT IT MAY HAVE TO (I) INJUNCTIVE
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RELIEF, (II) A TRIAL BY JURY, (III) INTERPOSE ANY COUNTERCLAIM THEREIN AND (IV)
HAVE THE SAME CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR
PROCEEDING. NOTHING HEREIN CONTAINED SHALL PREVENT OR PROHIBIT MORTGAGOR FROM
INSTITUTING OR MAINTAINING A SEPARATE ACTION AGAINST MORTGAGEE WITH RESPECT TO
ANY ASSERTED CLAIM. NO WAIVER CONTAINED HEREUNDER SHALL BE DEEMED MADE UNDER THE
CREDIT AGREMEENT UNLESS SUCH WAIVER IS ALSO PROVIDED FOR THEREIN.
SECTION 3.13. The information set forth on the cover hereof is
hereby incorporated herein.
SECTION 3.14. THIS MORTGAGE SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MASSACHUSETTS.
SECTION 3.15. Mortgagee agrees that, for payment of the Notes,
Mortgagee will look to the Mortgaged Property (as defined in this Mortgage) and
such other collateral as is provided for in the Credit Agreement and as may now
or hereafter be given to secure the payment of the Notes.
SECTION 3.16. Upon satisfaction of the Notes, or the
occurrence of any event which requires Mortgagee to discharge this Mortgage
pursuant to the terms of the Credit Agreement, Mortgagee shall promptly execute
and deliver deed of discharge and release of this Mortgage.
[signature pages follow]
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<PAGE>
IN WITNESS WHEREOF, this Mortgage has been duly executed by
Mortgagor.
MORSE SHOE, INC.
/s/ Alan I. Weinstein
----------------------------
Senior Executive Vice President
Attest:
/s/ Barry J. Barth
- ---------------------
RLE\27715_1
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
SS.:
COUNTY OF NORFOLK
On this 21st day of June 1996, before me personally
appeared Alan I. Weinstein, who being by me duly sworn, did say
that he/she is the Sr. Exec. V.P. of Morse Shoe, Inc., and
acknowledged such instrument to be the free act and deed of such
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
/s/ Evelyn S. Clegg
---------------------------
Notary Public
My Commission Expires: 5/24/2002
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<PAGE>
SCHEDULE A
That certain parcel of land situate in CANTON in the County of
Norfolk, Commonwealth of Massachusetts, bounded and described as follows:
Easterly by Turnpike Street, nine hundred sixty eight
and 03/100 (968.03) feet Southerly by Lot 31 and by lots numbered 3 and
4, as indicated on plan filed with Certificate No. 90699, twelve
hundred fifteen and 57/100 (1215.57) feet;
Northwesterly, two hundred eighty and 85/100
(280.85) feet and
Southwesterly, five hundred thirty three and 54/100
(533.54) feet by land now or formerly of Marie T.
Coen;
Northerly, four hundred ninety five and 66/100
(495.66) feet and
Northwesterly, two hundred ninety eight and 43/100
(298.43) feet by land now or formerly of Wampatuck Country Club; and
Northerly by land now or formerly of Forbal Corp.
and by lot numbered 1, as indicated on plan filed with
Certificate No. 71138, eight hundred forty four and 96/100
(844.96) feet.
Said parcel comprises lot numbered 2 on a plan drawn by L.W.
DeCelle, Jr., Surveyor, dated June 14, 1962 as approved by the Land Court, filed
in the Land Registration Office as No. 18675E, a copy of a portion of which is
filed in Norfolk Registry District with Certificate No. 71138, Book 356; lot
numbered 5 on a plan drawn by Norwood Engineering Co. Inc., Surveyors, dated
March 17, 1971, as approved by said Court, filed in the Land Registration Office
as No. 18675G, a copy of a portion of which is filed in Norfolk Registry
District with Certificate No. 90699, Book 454; and parcel shown on a plan drawn
by L.W. DeCelle, Jr. Surveyor, dated April 30, 1962, as modified and approved by
said Court, filed in the Land Registration Office as No. 31525A, a copy of a
portion of which is filed in Norfolk Registry District with Certificate No.
74298, Book 372.
That certain parcel of land situated off Turnpike Street,
Canton, Norfolk County, Massachusetts, bounded and
described as follows:
EASTERLY by land now or formerly of Joseph F. Jones,
eight hundred fifty three and 56/100 (853.56)
feet;
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<PAGE>
SOUTHERLY by land now or formerly of Boston Sand &
Gravel Co., Inc. six hundred ninety five and
52/100 (695.52) feet;
WESTERLY seven hundred nine and 96/100 (709.96) feet;
and
NORTHERLY four hundred ninety eight and 55/100 (498.55)
feet by land now or formerly of Wampatuck Country
Club of Canton, Inc.
Said land is shown on a plan drawn by Lawrence W. DeCelle,
Jr., Surveyor, dated March 1970, filed in the Land Court, a copy of a portion of
which is recorded with Norfolk Registry of Deeds as Plan No. 70 of 1971.
For title see Land Court Confirmation Decree in Case
No. 36613, recorded with Norfolk County Registry of Deeds, Book
4714, Page 352.
RLE\27715_1
================================================================
Date: June 21, 1996
MORTGAGE, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT
FROM
JBI, INC.
("Mortgagor")
Address: 555 Turnpike Street, Canton, Massachusetts
TO
FLEET NATIONAL BANK,
a national banking association having its principal office at 1 Federal
Street, MAOF0320, Boston, Massachusetts 02211, as Agent
("Mortgagee")
Mortgage Amount: $25,000,000.00
================================================================
This instrument prepared by, and after recording please return
to:
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
Attn: Regina K. O'Shea, Esq.
RLE\27311_4
<PAGE>
RECITAL
Mortgagor is the owner of the premises described in Schedule A
hereto. Mortgagor, Mortgagee, as Agent, J. Baker, Inc., a Massachusetts
corporation ("J. Baker") and certain other banks referred to therein 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 relating thereto dated as of March 6,
1995, by the Fifth Amendment Agreement relating thereto dated as of May 19,
1995, by the Sixth Amendment Agreement relating thereto dated as of September
12, 1995, by the Seventh Amendment Agreement relating thereto dated as of
November 17, 1995 and by the Eighth Amendment Agreement dated as of June 21,
1996, and as further modified and supplemented and in effect from time to time
(as so modified, supplemented and in effect from time to time, the "Credit
Agreement"). The Credit Agreement provides for loans evidenced by one or more
promissory notes (collectively, the "Notes") executed and delivered by
Mortgagor. In order to further secure the payment of $25,000,000.00 (the
"Mortgage Amount") of the indebtedness evidenced by the Notes and all other
obligations of Mortgagor and J. Baker under the Credit Agreement, Mortgagor has
duly authorized the execution and delivery of this Mortgage.
CERTAIN DEFINITIONS
Mortgagor and Mortgagee agree that, unless the context
otherwise specifies or requires, the following terms shall have the meanings
herein specified, such definitions to be applicable equally to the singular and
the plural forms of such terms.
"Chattels" means all fixtures, fittings, appliances,
apparatus, equipment, building materials and components, machinery and articles
of property, of whatever kind or nature, including any replacements, proceeds or
products thereof and additions thereto, other than those owned by lessees or any
other third party unrelated to Mortgagor, now or at any time hereafter actually
affixed or attached to the Premises.
"Events of Default" means the events and circumstances
described as such in Section 2.01 hereof.
"Improvements" means all structures or buildings, and
replacements thereof, to be erected or now or hereafter located upon the
Premises, including all plant equipment, apparatus,
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<PAGE>
- 2 -
machinery and fixtures of every kind and nature whatsoever forming part of said
structures or buildings.
"Premises" means the premises described in Schedule A hereto
including all of the easements, rights, privileges and appurtenances (including
air rights) thereunto belonging or in anywise appertaining, and all of the
estate, right, title, interest, claim or demand whatsoever of Mortgagor therein
and in the streets and ways adjacent thereto, either in law or in equity, in
possession or expectancy, now or hereafter acquired, and as used in this
Mortgage, shall, unless the context otherwise requires, be deemed to include the
Improvements.
"Involuntary Rate" means the rate set forth in Section 3.11 of
the Credit Agreement, but in no event to exceed the maximum rate allowed by law.
All terms of this Mortgage which are not defined above shall
have the meaning set forth elsewhere in this Mortgage.
GRANTING CLAUSE
NOW, THEREFORE, Mortgagor, in consideration of the Premises
and in order to secure the payment of both the principal of, and the interest
and any other sums payable on, the Notes or this Mortgage or under the Credit
Agreement and the performance and observance of all the provisions hereof and of
the Notes and of the Credit Agreement, hereby gives, grants, bargains, sells,
warrants, aliens, remises, releases, conveys, assigns, transfers, mortgages,
hypothecates, deposits, pledges, sets over and confirms unto Mortgagee WITH
MORTGAGE COVENANTS, all its estate, right, title and interest in, to and under
any and all of the following described property (the "Mortgaged Property")
whether now owned or held or hereafter acquired:
(i) the Premises;
(ii) the Improvements;
(iii) the Chattels;
(iv) all rents, royalties, issues, profits, revenue,
income and other benefits of the Mortgaged Property (the "Rents") and
all leases of the Mortgaged Property or portions thereof now or
hereafter entered into and all right, title and interest of Mortgagor
thereunder, including, without limitation, cash or securities deposited
thereunder to secure performance by the lessees of their obligations
thereunder, whether such cash or securities are to be held until the
expiration of the terms of such leases or applied to one or more of the
installments of rent coming
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due immediately prior to the expiration of such terms, including, any
guaranties of such leases, all subject, however, to the provisions of
Section 3.01 hereof;
(v) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation
awards, and all rights of Mortgagor to refunds of real estate taxes and
assessments;
TO HAVE AND TO HOLD unto Mortgagee, its successors and assigns
forever.
Notwithstanding any other provision of this Mortgage, the
maximum indebtedness and obligations secured by this Mortgage and that certain
Mortgage, Assignment of Leases and Rents and Security Agreement (the "Mass
Mortgage") of even date herewith given by Morse Shoe, Inc. to Mortgagee on a
certain parcel of land located at 555 Turnpike Street, Canton, Massachusetts
(this Mortgage and the Mass Mortgage, collectively, the "Mortgages") under any
contingency do not and shall not exceed: in the aggregate Twenty-Five Million
and 00/100 Dollars ($25,000,000.00) of principal indebtedness under the Notes,
the interest allocable to such indebtedness and those expenditures, reasonably
incurred by Mortgagee pursuant to the Mortgages in protecting the lien of the
Mortgages and protecting the collateral encumbered by the Mortgages. It is
expressly agreed that the Mortgages secure said aggregate amount of principal,
interest thereon and expenses as heretofore described.
ARTICLE I
PARTICULAR COVENANTS OF MORTGAGOR
Mortgagor covenants and agrees as follows:
SECTION 1.01. (a) Mortgagor warrants that it has a good and
marketable title to an indefeasible fee estate in the Premises subject to no
lien, charge or encumbrance except such as are listed as exceptions to title in
Schedule B attached hereto; that it owns the Chattels, all leases and the Rents
in respect of the Mortgaged Property and all other personal property encumbered
hereby free and clear of liens and claims; and that this Mortgage is and will
remain a valid and enforceable lien on the Mortgaged Property subject only to
the exceptions referred to above. Mortgagor has full power and lawful authority
to mortgage the Mortgaged Property in the manner and form herein done or
intended hereafter to be done. Mortgagor will preserve such title, and will
forever warrant and defend the same to Mortgagee and will
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forever warrant and defend the validity and priority of the lien hereof against
the claims of all persons and parties whomsoever.
(b) Mortgagor represents and warrants that to the best of its
knowledge, and with the exception of matters which have been disclosed in
writing to Mortgagee on or before the date hereof, and matters which are of
public record, (i) the Premises and the Improvements thereon, are not currently
contaminated by any hazardous or toxic substances or wastes or their effects (as
defined by applicable law) and (ii) there are no claims, litigation,
administrative or other proceedings, whether actual or threatened, or judgments
or orders, relating to any hazardous or toxic substances or wastes, discharges,
emissions or other forms of pollution relating in any way to the Premises or the
Improvements thereto.
SECTION 1.02. (a) Mortgagor will, at its sole cost and
expense, do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances, mortgages, assignments, notices of assignment, transfers and
assurances as Mortgagee shall from time to time reasonably require, for the
better assuring, conveying, assigning, transferring and confirming unto
Mortgagee the property and rights hereby conveyed or assigned or intended now or
hereafter so to be, or which Mortgagor may be or may hereafter become bound to
convey or assign to Mortgagee, or for carrying out the intention or facilitating
the performance of the terms of this Mortgage, or for filing, registering or
recording this Mortgage and, on demand, will execute and deliver, and hereby
authorizes Mortgagee to execute and file in Mortgagor's name, to the extent it
may lawfully do so, one or more financing statements, chattel mortgages or
comparable security instruments, to evidence or perfect more effectively
Mortgagee's security interest in and the lien hereof upon the Chattels and other
personal property encumbered hereby.
(b) Mortgagor will, at its sole cost and expense, do, execute,
acknowledge and deliver all and every such acts, information reports, returns
and withholding of monies as shall be necessary or appropriate to comply fully,
or to cause full compliance, with all applicable information reporting and
back-up withholding requirements of the Internal Revenue Code of 1986, as
amended (including all regulations promulgated thereunder) in respect of the
Premises and all transactions related to the Premises, and will, upon request,
provide Mortgagee with satisfactory evidence of such compliance and notify
Mortgagee of the information reported in connection with such compliance.
SECTION 1.03. (a) Mortgagor forthwith upon the execution and
delivery of this Mortgage, and thereafter from time to time, will cause (or will
allow Mortgagee to cause) this Mortgage and any security instrument creating a
lien or
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evidencing the lien hereof upon the Chattels and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect the lien hereof upon, and the interest of Mortgagee in, the
Mortgaged Property.
(b) Mortgagor will pay all filing, registration or recording
fees, and all reasonable expenses incident to the execution and acknowledgment
of this Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Chattels, and any instrument of further assurance, and any
expenses (including reasonable attorneys' fees and disbursements) reasonably
incurred by Mortgagee in connection with the loan secured hereby, and will pay
all federal, state, county and municipal stamp taxes and other taxes, duties,
imposts, assessments and charges arising out of or in connection with the
execution and delivery of the Notes, this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Chattels or any instrument
of further assurance.
SECTION 1.04. Mortgagor will punctually pay the principal and
interest and all other sums to become due in respect of the Notes at the time
and place and in the manner specified in the Notes and the Credit Agreement,
according to the true intent and meaning thereof, all in any coin or currency of
the United States of America which at the time of such payment shall be legal
tender for the payment of public and private debts.
SECTION 1.05. Mortgagor will, so long as it is owner of all or
part of the Mortgaged Property, do all things necessary to preserve and keep in
full force and effect its existence, franchises, rights and privileges as a
business or stock corporation, partnership, trust or other entity under the laws
of the state of its formation and will comply with all regulations, rules,
statutes, orders and decrees of any governmental authority or court applicable
to it or to the Mortgaged Property or any part thereof.
SECTION 1.06. All right, title and interest of Mortgagor in
and to all extensions, improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to, the Mortgaged Property,
hereafter acquired by, or released to, Mortgagor or constructed, assembled or
placed by Mortgagor on the Premises, and all conversions of the security
constituted thereby, immediately upon such acquisition, release, construction,
assembling, placement or conversion, as the case may be, and in each such case,
without any further mortgage, conveyance, assignment or other act by Mortgagor,
shall become subject to the lien of this Mortgage as fully and completely, and
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with the same effect, as though now owned by Mortgagor and specifically
described in the granting clause hereof, but at any and all times Mortgagor will
execute and deliver to Mortgagee any and all such further assurances, mortgages,
conveyances or assignments thereof as Mortgagee may reasonably require for the
purpose of expressly and specifically subjecting the same to the lien of this
Mortgage.
SECTION 1.07. (a) Mortgagor, from time to time when the same
shall become due and payable, will pay and discharge all taxes of every kind and
nature (including real and personal property taxes and income, franchise,
withholding, profits and gross receipts taxes), all general and special
assessments, levies, permits, inspection and license fees, all water and sewer
rents and charges, and all other public charges whether of a like or different
nature, imposed upon or assessed against it or the Mortgaged Property or any
part thereof or upon the revenues, rents, issues, income and profits of the
Mortgaged Property or arising in respect of the occupancy, use or possession
thereof. Mortgagor will, upon Mortgagee's request, deliver to Mortgagee receipts
evidencing the payment of all such taxes, assessments, levies, fees, rents and
other public charges imposed upon or assessed against it or the Mortgaged
Property or the revenues, rents, issues, income or profits thereof.
(b) Mortgagor will pay, from time to time when the same shall
become due, all lawful claims and demands of mechanics, materialmen, laborers,
and others which, if unpaid, might result in, or permit the creation of, a lien
on the Mortgaged Property or any part thereof, or on the revenues, rents,
issues, income and profits arising therefrom and in general will do or cause to
be done everything necessary so that the lien hereof shall be fully preserved,
at the cost of Mortgagor and without expense to Mortgagee.
(c) Nothing in this Section 1.07 shall require the payment or
discharge of any obligation imposed upon Mortgagor by this Section so long as
Mortgagor shall in good faith and at its own expense contest the same or the
validity thereof by appropriate legal proceedings which shall operate to prevent
the collection thereof or other realization thereon and the sale or forfeiture
of the Mortgaged Property or any part thereof to satisfy the same; provided that
during such contest Mortgagor shall, at the option of Mortgagee, provide
security reasonably satisfactory to Mortgagee, assuring the discharge of
Mortgagor's obligation hereunder and of any additional charge, penalty or
expense arising from or incurred as a result of such contest; and provided
further, that if at any time payment of any obligation imposed upon Mortgagor by
clause (a) above shall become necessary to prevent the delivery of a tax deed
conveying the Mortgaged Property or any portion thereof because of non-payment,
then
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Mortgagor shall pay the same in sufficient time to prevent the delivery of such
tax deed.
SECTION 1.08. Mortgagor will pay any taxes, except income
taxes, imposed on Mortgagee by reason of its ownership of this Mortgage.
SECTION 1.09. (a) Mortgagor will keep the Improvements and
Chattels insured against loss by fire, casualty and such other hazards as may be
customarily insured against in the area in which the Premises are located. Such
insurance shall be written in such form as may be customarily used in the state
in which the Premises are located, shall be in an amount equal to no less than
100% of the full replacement value of the Improvements and Chattels, and shall
be issued by a financially responsible insurance company. Such insurance may be
provided under a blanket policy which also covers other property owned or leased
by Mortgagor and its affiliates. A copy of the policy or policies of such
insurance shall be delivered to Mortgagee upon request. Provided no Event of
Default has occurred, any monies received as payment for any loss under any such
insurance shall be paid over to Mortgagor to be applied to expenses incurred by
it in the restoration of the Improvements; provided, however, that any proceeds
of such insurance shall remain subject to the lien established by this Mortgage.
(b) Mortgagor shall give Mortgagee prompt notice of any loss
or casualty affecting the Mortgaged Property. Following any Event of Default,
any monies received as payment for any loss or casualty affecting the Mortgaged
Property shall be paid over to Mortgagee to be applied, at Mortgagee's option,
either to the prepayment of the Notes or to the reimbursement of Mortgagor from
time to time for expenses incurred by it in the restoration of the Improvements.
(c) The Mortgagor hereby represents that no part of the
Mortgaged Property is located in zones identified by the Director of the Federal
Emergency Management Agency as special flood hazard zones described in 12 C.F.R.
S 22.2 and that it has not received prior to the making of the Loan, and the
incurrence of any other indebtedness constituting part of the Obligations,
secured by this Mortgage any notice regarding Federal disaster relief assistance
referred to in the Appendix to 12 C.F.R. Part 22.
SECTION 1.10. If Mortgagor shall fail to perform any of the
covenants contained in Section 1.01, 1.03, 1.07, 1.08, 1.09 or 1.12 and such
failure shall continue for a period of ten (10) days following Mortgagor's
receipt of notice from Mortgagee, Mortgagee may make advances to perform the
same on its behalf, and all sums so advanced shall be a lien upon the Mortgaged
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Property and shall be secured hereby. Mortgagor will repay on demand all sums so
advanced on its behalf together with interest thereon at the Involuntary Rate.
The provisions of this Section 1.10 shall not prevent any default in the
observance of any covenant contained in said Section 1.01, 1.03, 1.07, 1.08,
1.09 or 1.12 from constituting an Event of Default.
SECTION 1.11. (a) Mortgagor will keep adequate records and
books of account in accordance with generally accepted accounting principles and
will permit Mortgagee, by its agents, accountants and attorneys, to visit and
inspect the Mortgaged Property and examine its records and books of account and
to discuss its affairs, finances and accounts with the officers or general
partners, as the case may be, of Mortgagor, at such reasonable times as may be
requested by Mortgagee.
(b) Throughout the term of this Mortgage, Mortgagor, with
reasonable promptness, will deliver to Mortgagee such other information with
respect to Mortgagor and the Mortgaged Property as Mortgagee may reasonably
request from time to time.
SECTION 1.12. (a) Mortgagor will not commit any waste on the
Premises or make any change in the use of the Premises which will in any way
increase any ordinary fire or other hazard arising out of construction or
operation. Mortgagor will, at all times, maintain the Improvements and Chattels
in good operating order and condition and will promptly make, from time to time,
all repairs, renewals, replacements, additions and improvements in connection
therewith which are needful or desirable to such end. The Improvements, shall
not be demolished or substantially altered, nor shall any Chattels be removed
without the prior written consent of Mortgagee except where appropriate
replacements free of superior title, liens and claims are immediately made of
value at least equal to the value of the removed Chattels.
(b) Mortgagor will, at its sole cost and expense, promptly
comply with the order of any governmental authority requiring it to remove, or
cause the removal of, any and all hazardous or toxic substances or wastes or the
effects thereof at any time identified as being on, in, under or affecting the
Premises.
SECTION 1.13. Mortgagor, upon obtaining knowledge of the
institution or pending institution of any proceedings for the condemnation of
the Premises or any portion thereof, will notify Mortgagee thereof. Mortgagee
may participate in any such proceedings and may be represented therein by
counsel of its selection. Mortgagor from time to time will deliver to Mortgagee
all instruments requested by it to permit or facilitate such participation. In
the event of such condemnation proceedings,
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the award or compensation payable is hereby assigned to and shall be paid to
Mortgagee. Mortgagee shall be under no obligation to question the amount of any
such award or compensation and may accept the same in the amount in which the
same shall be paid. The proceeds of any award or compensation so received shall,
at the option of Mortgagee, be applied either to the prepayment of the Notes at
the rate of interest provided therein regardless of the rate of interest payable
on the award by the condemning authority, or shall be paid over to Mortgagor
from time to time for restoration of the Improvements.
SECTION 1.14 (a) Mortgagor will not (i) execute an assignment
of the rents or any part thereof from the Premises without Mortgagee's prior
written consent, (ii) except where the lessee is in default thereunder,
terminate or consent to the cancellation or surrender of any lease of the
Premises or of any part thereof, now existing or hereafter to be made, having an
unexpired term of one (1) year or more, provided, however, that any lease may be
cancelled if promptly after the cancellation or surrender thereof a new lease is
entered into with a new lessee having a credit standing, in the reasonable
judgment of Mortgagee, at least equivalent to that of the lessee whose lease was
cancelled, on substantially the same terms as the terminated or cancelled lease,
and provided, further, that Mortgagor may cancel any lease in order to reclaim
the leased space for its own use, (iii) modify any such lease so as to shorten
the unexpired term thereof or so as to decrease, waive or compromise in any
manner the amount of the rents payable thereunder or materially expand the
obligations of the lessor thereunder, (iv) accept prepayments of any
installments of rents to become due under such leases, except prepayments in the
nature of security for the performance of the lessees thereunder, (v) modify,
release or terminate any guaranties of any such lease, (vi) in any other manner
impair the value of the Mortgaged Property or the security of this Mortgage,
(vii) permit any portion of the Premises to be leased or used for any unlawful
purpose, in any manner which would injure the reputation of the Premises, or in
any manner which would create a nuisance or excessive disturbance for other
tenants at the Premises or (viii) accept the cancellation of any lease unless
any lease cancellation or similar fees payable to Mortgagor are paid over to
Mortgagee.
(b) Mortgagor will not execute any lease of all or a
substantial portion of the Premises except for actual occupancy by the lessee
thereunder, and will at all times promptly and faithfully perform, or cause to
be performed, all of the covenants, conditions and agreements contained in all
leases of the Premises or portions thereof now or hereafter existing, on the
part of the lessor thereunder to be kept and performed and will at all times do
all things necessary to compel performance by the lessee under each lease of all
obligations, covenants and
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agreements by such lessee to be performed thereunder. If any of such leases
provide for the giving by the lessee of certificates with respect to the status
of such leases, Mortgagor shall exercise its right to request such certificates
within five (5) days of any demand therefor by Mortgagee.
(c) Each lease of the Premises, or of any part thereof entered
into after the date hereof, shall provide that, in the event of the enforcement
by Mortgagee of the remedies provided for by law or by this Mortgage, the lessee
thereunder will, upon request of any person succeeding to the interest of
Mortgagor as a result of such enforcement, automatically become the lessee of
said successor in interest, without change in the terms or other provisions of
such lease, provided, however, that said successor in interest shall not be
bound by any payment of rent or additional rent for more than one (1) month in
advance, except prepayments in the nature of security for the performance by
said lessee of its obligations under said lease. Each lease entered into after
the date hereof shall also provide that, upon request by said successor in
interest, such lessee shall execute and deliver an instrument or instruments
confirming such attornment.
ARTICLE II
EVENTS OF DEFAULT AND REMEDIES
SECTION 2.01. If one or more of the following Events of
Default shall happen, that is to say:
(a) an Event of Default shall occur under the Credit
Agreement; or
(b) if default shall be made in the payment of any tax
required by Section 1.07 to be paid and said default shall have
continued for a period of twenty (20) days; or
(c) if default shall be made in the due observance or
performance of any covenant or agreement on the part of Mortgagor
contained in Section 1.01, 1.03, 1.08 or 1.09, and such default shall
have continued for a period of twenty (20) days after notice thereof
shall have been given to Mortgagor by Mortgagee. For the purposes of
this clause if any representation made in Section 1.01 hereof shall be
incorrect, it shall be deemed to be a default; or
(d) if default shall be made in the due observance or
performance of any other covenant, condition or agreement in this
Mortgage and such default shall have continued for a
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period of thirty (30) days after notice thereof shall have
been given to Mortgagor by Mortgagee; or
(e) if by order of a court of competent jurisdiction,
a trustee, receiver or liquidator of the Mortgaged Property
or any part thereof, shall be appointed; or
(f) if there should occur a default which is not cured within
the applicable grace period, if any, under any other mortgage or deed
of trust of all or part of the Mortgaged Property regardless of whether
any such other mortgage or deed of trust is prior or subordinate to
this Mortgage; it being further agreed by Mortgagor that an Event of
Default hereunder shall constitute an Event of Default under any such
other mortgage or deed of trust held by Mortgagee; or
(g) if Mortgagor shall transfer, or agree to transfer, in any
manner, either voluntarily or involuntarily, by operation of law or
otherwise, all or any portion of the Mortgaged Property, or any
interest therein (including any air or development rights) in violation
of Sections 2.30 and 10.01.8 of the Credit Agreement. If Mortgagor
seeks to transfer the Mortgaged Property subject to the Mortgage, then
the consent of the Mortgagee shall be required. Mortgagee may grant or
deny such consent in its sole discretion and, if consent should be
given, any such transfer shall be subject to this Mortgage and any
other documents which evidence or secure the loan secured hereby, and
any such transferee shall assume all of Mortgagor's obligations
hereunder and thereunder and agree to be bound by all provisions and
perform all obligations contained herein and therein. Consent to one
such transfer shall not be deemed to be a waiver of the right to
require consent to future or successive transfers. As used herein
"transfer" shall include, without limitation, any sale, assignment,
lease or conveyance (excluding any such transfer to J. Baker or any of
its subsidiaries) except leases for occupancy subordinate to this
Mortgage and to all advances made and to be made hereunder;
(h) except as permitted in accordance with Section 10.04(i) of
the Credit Agreement, if Mortgagor shall encumber, or agree to
encumber, in any manner, either voluntarily or involuntarily, by
operation of law or otherwise, all or any portion of the Mortgaged
Property, or any interest therein (including any air or development
rights) without, in any such case, the prior written consent of
Mortgagee. Mortgagee may grant or deny such consent in its sole
discretion and, if consent should be given, any such encumbrance shall
be subject to this Mortgage and any other documents which evidence or
secure the loan secured
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hereby. Consent to one such encumbrance shall not be deemed to be a
waiver of the right to require consent to future or successive
encumbrances. As used herein "encumber" shall include, without
limitation, the placing or permitting the placing of any mortgage, deed
of trust, assignment of rents or other security device which is not
permitted by Section 10.04(i) of the Credit Agreement;
(i) the failure to OBSERVE THE STATUTORY CONDITIONS subject to
the applicable notice and cure provisions in the Credit Agreement.
then and in every such case:
I. (a) Upon the occurrence of any Event of Default described
in paragraphs (d) through (g) of this Section 2.01, the entire
principal of the Notes then outstanding (if not then due and payable),
and all accrued and unpaid interest thereon, shall be due and payable
immediately, anything in the Notes or in this Mortgage to the contrary
notwithstanding.
(b) During the continuance of any such Event of
Default other than those described in paragraphs (d) through (g) of
this Section 2.01, Mortgagee, by notice given to Mortgagor, may declare
the entire principal of the Notes then outstanding (if not then due and
payable), and all accrued and unpaid interest thereon, to be due and
payable immediately, and upon any such declaration the principal of the
Notes and said accrued and unpaid interest shall become and be
immediately due and payable, anything in the Notes or in this Mortgage
to the contrary notwithstanding;
II. During the continuance of any such Event of Default,
Mortgagee personally, or by its agents or attorneys, may enter into and
upon all or any part of the Premises, and each and every part thereof,
and is hereby given a right and license and appointed Mortgagor's
attorney-in-fact to do so, and may exclude Mortgagor, its agents and
servants wholly therefrom; and having and holding the same, may use,
operate, manage and control the Premises and conduct the business
thereof, either personally or by its superintendents, managers, agents,
servants, attorneys or receivers; and upon every such entry, Mortgagee,
at the expense of the Mortgaged Property, from time to time, either by
purchase, repairs or construction, may maintain and restore the
Mortgaged Property, whereof it shall become possessed as aforesaid; and
likewise, from time to time, at the expense of the Mortgaged Property,
Mortgagee may make all necessary or proper repairs, renewals and
replacements and such useful alterations, additions, betterments and
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improvements thereto and thereon as to it may seem advisable; and in
every such case Mortgagee shall have the right to manage and operate
the Mortgaged Property and to carry on the business thereof and
exercise all rights and powers of Mortgagor with respect thereto either
in the name of Mortgagor or otherwise as it shall deem best; and
Mortgagee shall be entitled to collect and receive the Rents and every
part thereof, all of which shall for all purposes constitute property
of Mortgagor; and in furtherance of such right Mortgagee may collect
the rents payable under all leases of the Premises directly from the
lessees thereunder upon notice to each such lessee that an Event of
Default exists hereunder accompanied by a demand on such lessee for the
payment to Mortgagee of all rents due and to become due under its
lease, and Mortgagor FOR THE BENEFIT OF MORTGAGEE AND EACH SUCH LESSEE
hereby covenants and agrees that the lessee shall be under no duty to
question the accuracy of Mortgagee's statement of default and shall
unequivocally be authorized to pay said rents to Mortgagee without
regard to the truth of Mortgagee's statement of default and
notwithstanding notices from Mortgagor disputing the existence of an
Event of Default such that the payment of rent by the lessee to
Mortgagee pursuant to such a demand shall constitute performance in
full of the lessee's obligation under the lease for the payment of
rents by the lessee to Mortgagor; and after deducting the expenses of
conducting the business thereof and of all maintenance, repairs,
renewals, replacements, alterations, additions, betterments and
improvements and amounts necessary to pay for taxes, assessments,
insurance and prior or other proper charges upon the Mortgaged Property
or any part thereof, as well as just and reasonable compensation for
the services of Mortgagee and for all attorneys, counsel, agents,
clerks, servants and other employees by it engaged and employed,
Mortgagee shall apply the moneys arising as aforesaid, as set forth in
the Credit Agreement.
III. Mortgagee, with or without entry, personally or
by its agents or attorneys, insofar as applicable, may:
(1) sell the Mortgaged Property and all estate, right, title
and interest, claim and demand therein, at public auction at
such time and place upon such terms and conditions as
Mortgagee may deem expedient or as may be required or
permitted by applicable law, having first given such notice
prior to the sale of such time, place and terms by publication
in one or more newspapers published or having a general
circulation in the county or counties of the state in which
the Mortgaged Property is located as may be required or
permitted by law and by such other methods, if any, Mortgagee
may
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deem desirable or as may be required or permitted by
applicable law. In the event of any sale of all or part of the
Mortgaged Property under the terms of this Mortgagee,
Mortgagor shall pay (in addition to taxable costs) all other
fees and commissions permitted by statute or custom to be
paid, reasonable attorneys' fees and all expenses incurred in
obtaining or continuing abstracts of title for the purpose of
any such sale; or
(2) institute proceedings for the complete or partial
foreclosure of this Mortgage; or
(3) take such steps to protect and enforce its rights whether
by action, suit or proceeding in equity or at law for the
specific performance of any covenant, condition or agreement
in the Notes or in this Mortgage, or in aid of the execution
of any power herein granted, or for any foreclosure hereunder,
or for the enforcement of any other appropriate legal or
equitable remedy or otherwise as Mortgagee shall elect.
(4) Mortgagee may exercise the STATUTORY POWER OF
SALE.
SECTION 2.02. (a) Mortgagee may adjourn from time to time any
sale by it to be made under or by virtue of this Mortgage by announcement at the
time and place appointed for such sale or for such adjourned sale or sales; and,
except as otherwise provided by an applicable provision of law, Mortgagee,
without further notice or publication, may make such sale at the time and place
to which the same shall be so adjourned.
(b) Upon the completion of any sale or sales made by Mortgagee
under or by virtue of this Article II, Mortgagee, or an officer of any court
empowered to do so, shall execute and deliver to the accepted purchaser or
purchasers a good and sufficient instrument or instruments conveying, assigning
and transferring all estate, right, title and interest in and to the property
and rights sold. Mortgagee is hereby appointed the true and lawful attorney
irrevocable of Mortgagor, in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Mortgaged Property and
rights so sold and for that purpose Mortgagee may execute all necessary
instruments of conveyance, assignment and transfer, and may substitute one or
more persons with like power, Mortgagor hereby ratifying and confirming all that
its said attorney or such substitute or substitutes shall lawfully do by virtue
hereof. Nevertheless, Mortgagor, if requested by Mortgagee, shall ratify and
confirm any such sale or sales by executing and delivering to Mortgagee or to
such purchaser or purchasers all such instruments as may be
RLE\27311_4
<PAGE>
- 15 -
advisable, in the judgment of Mortgagee, for the purpose, and as may be
designated in such request. Any such sale or sales made under or by virtue of
this Article II, whether made under the power of sale herein granted or under or
by virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, shall operate to divest all the estate, right, title, interest, claim and
demand whatsoever, whether at law or in equity, of Mortgagor in and to the
properties and rights so sold, and shall be a perpetual bar both at law and in
equity against Mortgagor and against any and all persons claiming or who may
claim the same, or any part thereof from, through or under Mortgagor.
(c) In the event of any sale or sales made under or by virtue
of this Article II (whether made under the power of sale herein granted or under
or by virtue of judicial proceedings or of a judgment or decree of foreclosure
and sale), the entire principal of, and interest on, the Notes, if not
previously due and payable, and all other sums required to be paid by Mortgagor
pursuant to this Mortgage, immediately thereupon shall, anything in the Notes or
in this Mortgage to the contrary notwithstanding, become due and payable.
(d) The purchase money, proceeds or avails of any sale or
sales made under or by virtue of this Article II, together with any other sums
which then may be held by Mortgagee under this Mortgage, whether under the
provisions of this Article II or otherwise, shall, subject to the terms of the
Credit Agreement, which shall control, be applied as follows:
First: To the payment of the costs and expenses of
such sale, including reasonable compensation to Mortgagee, its
agents and counsel, and of any judicial proceedings wherein
the same may be made, and of all expenses, liabilities and
advances made or incurred by Mortgagee under this Mortgage,
together with interest at the Involuntary Rate on all advances
made by Mortgagee, and of all taxes, assessments or other
charges, except any taxes, assessments or other charges
subject to which the Mortgaged Property shall have been sold.
Second: To the payment of that portion of the
Mortgage Amount then due, owing or unpaid with respect to the
Notes for principal and interest, with interest on the unpaid
principal at the Involuntary Rate from and after the happening
of any Event of Default described in clause (a) of Section
2.01 hereof from the due date of any such payment of principal
until the same is paid.
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<PAGE>
- 16 -
Third: To the payment of any other sums required to
be paid by Mortgagor pursuant to any provision of this
Mortgage including all expenses, liabilities and advances made
or incurred by Mortgagee under this Mortgage or in connection
with the enforcement thereof, together with interest at the
Involuntary Rate on all such advances.
Fourth: To the payment of the surplus, if any, to
whomsoever may be lawfully entitled to receive the
same.
(e) Upon any sale or sales made under or by virtue of this
Article II, whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, Mortgagee may bid for and acquire the Mortgaged Property or any part
thereof and in lieu of paying cash therefor may make settlement for the purchase
price by crediting upon the indebtedness secured by this Mortgage the net sales
price after deducting therefrom the expenses of the sale and the costs of the
action and any other sums which Mortgagee is authorized to deduct under this
Mortgage.
SECTION 2.03. (a) In case an Event of Default described in
clause (a) of Section 2.01 hereof shall have happened and be continuing, then,
upon written demand of Mortgagee, Mortgagor will pay to Mortgagee that portion
of the Mortgage Amount which then shall have become due and payable with respect
to the Notes, for principal or interest or both, as the case may be, and after
the happening of said Event of Default will also pay to Mortgagee interest at
the Involuntary Rate on the then unpaid principal of the Notes, and the sums
required to be paid by Mortgagor pursuant to any provision of this Mortgage, and
in addition thereto such further amount as shall be sufficient to cover the
costs and expenses of collection, including reasonable compensation to
Mortgagee, its agents and counsel and any expenses incurred by Mortgagee
hereunder. In the event Mortgagor shall fail forthwith to pay such amounts upon
such demand, Mortgagee shall be entitled and empowered to institute such action
or proceedings at law or in equity as may be advised by its counsel for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against Mortgagor and collect, out of the property of Mortgagor
wherever situated, as well as out of the Mortgaged Property, in any manner
provided by law, moneys adjudged or decreed to be payable.
(b) Mortgagee shall be entitled to recover judgment as
aforesaid either before, after or during the pendency of any
proceedings for the enforcement of the provisions of this
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<PAGE>
- 17 -
Mortgage; and the right of Mortgagee to recover such judgment shall not be
affected by any entry or sale hereunder, or by the exercise of any other right,
power or remedy for the enforcement of the provisions of this Mortgage, or the
foreclosure of the lien hereof; and in the event of a sale of the Mortgaged
Property, and of the application of the proceeds of sale, as in this Mortgage
provided, to the payment of the debt hereby secured, Mortgagee shall be entitled
to enforce payment of, and to receive all amounts then remaining due and unpaid
upon, the Notes, and to enforce payment of all other charges, payments and costs
due under this Mortgage, and shall be entitled to recover judgment for any
portion of the debt remaining unpaid, with interest at the Involuntary Rate. In
case of proceedings against Mortgagor in insolvency or bankruptcy or any
proceedings for its reorganization or involving the liquidation of its assets,
then Mortgagee shall be entitled to prove the whole amount of principal and
interest due upon the Notes to the full amount thereof, and all other payments,
charges and costs due under this Mortgage, without deducting therefrom any
proceeds obtained from the sale of the whole or any part of the Mortgaged
Property, provided, however, that in no case shall Mortgagee receive a greater
amount than such principal and interest and such other payments, charges and
costs from the aggregate amount of the proceeds of the sale of the Mortgaged
Property and the distribution from the estate of Mortgagor.
(c) No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect in any manner or to any extent, the lien of
this Mortgage upon the Mortgaged Property or any part thereof, or any liens,
rights, powers or remedies of Mortgagee hereunder, but such liens, rights,
powers and remedies of Mortgagee shall continue unimpaired as before.
(d) Any moneys thus collected by Mortgagee under this Section
2.03 shall be applied by Mortgagee in accordance with the provisions of the
Credit Agreement.
SECTION 2.04. After the happening of any Event of Default and
immediately upon the commencement of any action, suit or other legal proceedings
by Mortgagee to obtain judgment for the principal of, or interest on, the Notes
and other sums required to be paid by Mortgagor pursuant to any provision of
this Mortgage, or of any other nature in aid of the enforcement of the Notes or
of this Mortgage, Mortgagor will (a) waive the issuance and service of process
and enter its voluntary appearance in such action, suit or proceeding and (b) if
required by Mortgagee, consent to the appointment of a receiver or receivers of
all or part of the Mortgaged Property and of any or all of the Rents in respect
thereof. No waiver contained
RLE\27311_4
<PAGE>
- 18 -
hereunder shall be deemed made under the Credit Agreement unless such waiver is
also provided for therein. After the happening of any Event of Default and
during its continuance, or upon the commencement of any proceedings to foreclose
this Mortgage or to enforce the specific performance hereof or in aid thereof or
upon the commencement of any other judicial proceeding to enforce any right of
Mortgagee, Mortgagee shall be entitled, as a matter of right, if it shall so
elect, without the giving of notice to any other party and without regard to the
adequacy or inadequacy of any security for the indebtedness secured hereby,
forthwith either before or after declaring the unpaid principal of the Notes to
be due and payable, to the appointment of such a receiver or receivers.
SECTION 2.05. Notwithstanding the appointment of any receiver,
liquidator or trustee of Mortgagor, or any of its property, or of the Mortgaged
Property or any part thereof, Mortgagee shall be entitled to retain possession
and control of all property now or hereafter held under this Mortgage.
SECTION 2.06. No remedy herein conferred upon or reserved to
Mortgagee is intended to be exclusive of any other remedy or remedies, and each
and every such remedy shall be cumulative, and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute. No delay or omission of Mortgagee to exercise any right or power
accruing upon any Event of Default shall impair any such right or power, or
shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and every power and remedy given by this Mortgage to
Mortgagee may be exercised from time to time as often as may be deemed expedient
by Mortgagee. Nothing in this Mortgage or in the Notes shall affect the
obligation of Mortgagor to pay the principal of, and interest on, the Notes in
the manner and at the time and place therein respectively expressed.
SECTION 2.07. Mortgagor will not at any time insist upon, or
plead, or in any manner whatever claim or take any benefit or advantage of any
stay or extension or moratorium law, any exemption from execution or sale of the
Mortgaged Property or any part thereof, wherever enacted, now or at any time
hereafter in force, which may affect the covenants and terms of performance of
this Mortgage, nor claim, take or insist upon any benefit or advantage of any
law now or hereafter in force providing for the valuation or appraisal of the
Mortgaged Property, or any part thereof, prior to any sale or sales thereof
which may be made pursuant to any provision herein, or pursuant to the decree,
judgment or order of any court of competent jurisdiction; nor, after any such
sale or sales, claim or exercise any right under any statute heretofore or
hereafter enacted to redeem the property so sold or any part thereof and
Mortgagor hereby
RLE\27311_4
<PAGE>
- 19 -
expressly waives all benefit or advantage of any such law or laws, and covenants
not to hinder, delay or impede the execution of any power herein granted or
delegated to Mortgagee, but to suffer and permit the execution of every power as
though no such law or laws had been made or enacted. Mortgagor, for itself and
all who may claim under it, waives, to the extent that it lawfully may, all
right to have the Mortgaged Property marshaled upon any foreclosure hereof. No
waiver contained hereunder shall be deemed made under the Credit Agreement
unless such waiver is also provided for therein.
SECTION 2.08. During the continuance of any Event of Default
and pending the exercise by Mortgagee of its right to exclude Mortgagor from all
or any part of the Premises, Mortgagor agrees to pay the fair and reasonable
rental value for the use and occupancy of the Premises or any portion thereof
which are in its possession for such period and, upon default of any such
payment, will vacate and surrender possession of the Premises to Mortgagee or to
a receiver, if any, and in default thereof may be evicted by any summary action
or proceeding for the recovery of possession of premises for nonpayment of rent,
however designated.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. This Mortgage constitutes a present and absolute
assignment of all of the Rents now or hereafter accruing, provided, however,
that Mortgagee hereby grants to Mortgagor the right and license to collect and
receive the Rents as they become due, and not in advance, so long as no Event of
Default exists hereunder. Immediately upon the occurrence of any such Event of
Default, the foregoing right and license shall be automatically terminated and
of no further force or effect. Nothing contained in this Section 3.01 or
elsewhere in this Mortgage shall be construed to make Mortgagee a mortgagee in
possession unless and until Mortgagee actually takes possession of the Mortgaged
Property, nor to obligate Mortgagee to take any action or incur any expense or
discharge any duty or liability under or in respect of any leases or other
agreements relating to the Mortgaged Property or any part thereof.
SECTION 3.02. This Mortgage constitutes a security agreement
under the applicable Uniform Commercial Code with respect to the Chattels and
such other of the Mortgaged Property which is personal property. In addition to
the rights and remedies granted to Mortgagee by other applicable law or by this
Mortgage, Mortgagee shall have all of the rights and remedies with respect to
the Chattels and such other personal property as
RLE\27311_4
<PAGE>
- 20 -
are granted to a secured party under the applicable Uniform Commercial Code.
Upon Mortgagee's request, Mortgagor shall promptly and at its expense assemble
the Chattels and such other personal property and make the same available to
Mortgagee at a convenient place acceptable to Mortgagee. Mortgagor shall pay to
Mortgagee on demand, with interest at the Involuntary Rate, any and all
expenses, including attorneys' fees, incurred by Mortgagee in protecting its
interest in the Chattels and such other personal property and in enforcing its
rights with respect thereto. Any notice of sale, disposition or other intended
action by Mortgagee with respect to the Chattels and such other personal
property sent to Mortgagor in accordance with the provision hereof at least five
days prior to such action shall constitute reasonable notice to Mortgagor. The
proceeds of any such sale or disposition, or any part thereof, may be applied by
Mortgagee to the payment of the indebtedness secured hereby in such order and
proportions as Mortgagee in its discretion shall deem appropriate.
SECTION 3.03. In the event any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Mortgage, but this Mortgage shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein or therein.
SECTION 3.04. No provision of this Mortgage may be changed,
waived, discharged or terminated orally or by any other means except an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. Any agreement hereafter made
by Mortgagor and Mortgagee relating to this Mortgage shall be superior to the
rights of the holder of any intervening or subordinate lien or encumbrance.
SECTION 3.05. All notices hereunder shall be in writing and
shall be deemed to have been sufficiently given or served for all purposes when
received by registered or certified mail, if to Mortgagor at its address above
stated, Attention: General Counsel and if to Mortgagee, to the attention of its
Real Estate Finance office at 1 Federal Street, MAOF0320, Boston, Massachusetts
02211, or at such other address of which a party shall have notified the party
giving such notice in writing.
SECTION 3.06. All of the grants, covenants, terms, provisions
and conditions herein shall run with the land and shall apply to, bind and inure
to the benefit of, the successors and assigns of Mortgagor and the successors
and assigns of Mortgagee.
RLE\27311_4
<PAGE>
- 21 -
SECTION 3.07. Anything herein or in the Notes to the contrary
notwithstanding, the obligations of the Mortgagor under this Mortgage and the
Notes shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt of any such payment by the Mortgagee would
be contrary to the provisions of law applicable to the Mortgagee limiting the
maximum rate of interest that may be charged or collected by the Mortgagee.
SECTION 3.08. This Mortgage may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original; and all such counterparts shall together constitute but one and
the same mortgage.
SECTION 3.09. Mortgagor and Mortgagee shall, upon their mutual
agreement to do so, execute such documents as may be necessary in order to
effectuate the modification of this Mortgage, including the execution of
substitute mortgages, so as to create two or more liens on the Mortgaged
Property in such amounts as may be mutually agreed upon but in no event to
exceed, in the aggregate, the Mortgage Amount; in such event, Mortgagor
covenants and agrees to pay the reasonable fees and expenses of Mortgagee and
its counsel in connection with any such modification.
SECTION 3.10. Mortgagor recognizes that Mortgagee may sell and
transfer interests in the loan to one or more participants and that all
documentation, financial statements, appraisals and other data, or copies
thereof, relevant to Mortgagor, any Guarantor of the loan, may be exhibited to
and retained by any such participant or prospective participant.
SECTION 3.11. Unless expressly provided otherwise, in the
event that ownership of this Mortgage and title to the fee and/or leasehold
estates in the Premises encumbered hereby shall become vested in the same person
or entity, this Mortgage shall not merge in said title but shall continue to be
and remain a valid and subsisting lien on said estates in the Premises for the
amount secured hereby.
SECTION 3.12. TO THE FULLEST EXTENT PERMITTED BY LAW,
MORTGAGOR HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
BROUGHT BY MORTGAGOR OR MORTGAGEE INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR IN CONNECTION WITH THIS MORTGAGE
AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY. MORTGAGOR HEREBY IRREVOCABLY
UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY FORECLOSURE OR SIMILAR ACTION OR
PROCEDURE BROUGHT BY MORTGAGEE ASSERTING AN EVENT OF DEFAULT UNDER CLAUSE (A) OF
SECTION 2.01 OF THIS MORTGAGE, ANY AND EVERY RIGHT IT MAY HAVE TO (I) INJUNCTIVE
RLE\27311_4
<PAGE>
- 22 -
RELIEF, (II) A TRIAL BY JURY, (III) INTERPOSE ANY COUNTERCLAIM THEREIN AND (IV)
HAVE THE SAME CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR
PROCEEDING. NOTHING HEREIN CONTAINED SHALL PREVENT OR PROHIBIT MORTGAGOR FROM
INSTITUTING OR MAINTAINING A SEPARATE ACTION AGAINST MORTGAGEE WITH RESPECT TO
ANY ASSERTED CLAIM. NO WAIVER CONTAINED HEREUNDER SHALL BE DEEMED MADE UNDER THE
CREDIT AGREMEENT UNLESS SUCH WAIVER IS ALSO PROVIDED FOR THEREIN.
SECTION 3.13. The information set forth on the cover hereof is
hereby incorporated herein.
SECTION 3.14. THIS MORTGAGE SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO.
SECTION 3.15. Mortgagee agrees that, for payment of the Notes,
Mortgagee will look to the Mortgaged Property (as defined in this Mortgage) and
such other collateral as is provided for in the Credit Agreement and as may now
or hereafter be given to secure the payment of the Notes.
SECTION 3.16. Upon satisfaction of the Notes, or the
occurrence of any event which requires Mortgagee to discharge this Mortgage
pursuant to the terms of the Credit Agreement, Mortgagee shall promptly execute
and deliver deed of discharge and release of this Mortgage.
[signature pages follow]
RLE\27311_4
<PAGE>
IN WITNESS WHEREOF, this Mortgage has been duly executed by
Mortgagor.
JBI, Inc.
/s/ Alan I. Weinstein
-----------------------------
Senior Executive Vice President
Attest:
/s/ Barry J. Barth
- ----------------------
RLE\27311_4
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
SS.:
COUNTY OF NORFOLK
On this 21st day of June 1996, before me personally
appeared Alan I. Weinstein, who being by me duly sworn, did say
that he/she is the Sr. Exec. V.P. of JBI, Inc., and acknowledged
such instrument to be the free act and deed of such corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
/s/ Evelyn S. Clegg
--------------------------
Notary Public
My Commission Expires: 5/24/2002
RLE\27311_4
<PAGE>
SCHEDULE A
PARCEL ONE
Situated in the State of Ohio, County of Franklin, and being part in the City of
Columbus and part in Clinton Township in Section 1, Township 1, Range 18, United
States Military Lands and being part of Parcel One, a 15.411 acre tract, and
part of Parcel Two, a 6.032 acre tract conveyed to Gallenkamp Leasing Corp. as
the same are set forth in Deeds of Record in Deed Book 3696, page 106, and Deed
Book 3615, page 721, Records of the Recorder's Office, Franklin County, Ohio and
being more particularly described as follows:
Beginning at the intersection of the southerly right-of-way line of Innis Road
as established by Deed of Record in Deed Book 1302, page 369, with the westerly
right-of-way of Conrail (Penn Central) C.A. & C. Railroad) a 66 foot
right-of-way, said point being 35 feet, measured at right angles from the
centerline of Innis Road and in the northerly line of said 15.411 acre tract;
thence with said westerly right-of-way and the east line of said 15.411 acre
tract and 6.032 acre tract,
South 10o 39' 00" West a distance of 871.22 feet to a point, said point being
the southeast corner of said 6.032 acre tract; thence with the south line of
said 6.032 acre tract,
North 18o 32' 00" West a distance of 108.84 feet to a point and west a distance
of 878.80 feet to a point, said point being the southeast corner of a 50 feet
ingress-egress easement to Cleveland Avenue and Innis Road of Record in Deed
Book 3696, page 103 and the southeast corner of a 50 foot ingress/egress
easement to Innis Road granted herein; thence with the east line of said
easements and through said 6.032 acre tract and 15.411 acre tract,
North a distance of 748.05 feet to a point in the south right of way of Innis
Road previously referenced, thence with said south right-of-way, being 40 feet
south measured at right angles to the centerline of Innis Road,
East a distance of 344.28 feet to an angle point in said right-
of-way; thence,
North a distance of 5.00 feet to an angle point in said right of way being 35
feet measured at right angles to the centerline of Innis Road, thence with said
right-of-way,
East a distance of 730.12 feet to a point of beginning containing 17.3739 acres
more or less.
RLE\27311_4
<PAGE>
TOGETHER WITH the following 50 foot wide ingress-egress easement west of and
adjacent to the west line of the 17.3739 acres hereinbefore described and being
more particularly described as follows:
Being part of that 7.655 acre tract conveyed by Deed of record in Deed Book
3615, page 721 to 725 and being part of that 50 foot easement granted in Deed
Book 3696, page 103 and being 50 feet off the east side of said 7.655 acre
tract,
Beginning at the northeast corner of said 7.655 acre tract being also the
northeast corner of said easement of Deed Book 3696, page 103 and being also the
northwest corner of the hereinbefore described 17.3739 acre tract; thence with
the west line of said 17.3739 acre tract and the common east line of said 7.655
acre tract and easement,
South a distance of 748.05 feet to a point being the southeast corner of said
7.655 acres and easement and the southwest corner of hereinbefore mentioned
6.032 acre tract of record in Deed Book 3696, page 106; thence, with the south
line of said 6.032 acre tract, said 7.655 acre tract and 50 foot easement,
West a distance of 50 feet to a point; thence, through said 7.655 acre tract
following a west line of said previously mentioned 50 foot easement,
North a distance of 748.05 feet to a point, being in the south right-of-way of
Innis Road, 40 feet, measured at right angles from the centerline thereof, and
being in the north line of said 7.655 acre tract and a northwest corner of a 50
foot easement; thence with the right-of-way of Innis Road,
East a distance of 50.00 feet to a point of beginning of this easement
containing 0.8586 acres more or less.
PARCEL TWO
Situated in the State of Ohio, Franklin County, Clinton Township and being a
5280 Square Foot exception to a 7.769 Acre tract described in Deed Book 3696,
page 106 of the Franklin County Recorders Office and being further described as
follows:
Commencing at the northeast corner of the aforementioned 7.769 Acre tract thence
South 00o 00' 00" West, 63.00 feet to a point marked by an iron pin, the POINT
OF BEGINNING of the herein described exception;
thence, South 00o 00' 00" West, 440.00 feet to a point marked by
an iron pin;
thence, South 90o 00" 00" West, 12.00 feet to a point marked by
an iron pin;
RLE\27311_4
<PAGE>
thence, North 00o 00' 00" East, 440.00 feet to a point marked by
an iron pin;
thence, North 90o 00' 00" East, 12.00 feet to the point of beginning.
Containing 5280 square feet of land.
RLE\27311_4
EXHIBIT 10.08
SEE EXHIBIT 4.01
EXHIBIT 11
J. BAKER, INC. AND SUBSIDIARIES
Computation of Primary and Fully Diluted Earnings Per Share*
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Quarter Ended Six Months Ended
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
---------- ----------- ---------- -----------
PRIMARY:
Net Earnings $1,485,722 $1,397,212 $ 2,311,282 $ 2,034,865
========= ========= ========== ==========
Weighted average number of common
shares outstanding 13,891,265 13,847,954 13,882,729 13,846,875
========== ========== ========== ==========
Earnings Per Share $0.110 $0.101 $0.166 $0.147
========== ========== ========== ==========
ASSUMING FULL DILUTION:
Net Earnings $1,485,722 $1,397,212 $ 2,311,282 $ 2,034,865
========= ========= ========== ==========
Weighted average number of common
shares outstanding 13,891,265 13,847,954 13,882,729 13,846,875
Dilutive effect of outstanding stock options 37,467 84,800 20,647 98,977
---------- ---------- ----------- ----------
Weighted average number of common
shares as adjusted 13,928,732 13,932,754 13,903,376 13,945,852
========== ========== ========== ==========
Earnings Per Share $0.110 $0.100 $0.166 $0.146
========== ========== ========== ==========
</TABLE>
* 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 AUGUST 3, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> AUG-03-1996
<CASH> 2,510,529
<SECURITIES> 0
<RECEIVABLES> 31,287,775
<ALLOWANCES> 3,109,305
<INVENTORY> 309,979,305
<CURRENT-ASSETS> 359,867,484
<PP&E> 194,057,170
<DEPRECIATION> 72,578,717
<TOTAL-ASSETS> 543,608,047
<CURRENT-LIABILITIES> 111,530,221
<BONDS> 243,285,061
0
0
<COMMON> 6,945,974
<OTHER-SE> 179,197,039
<TOTAL-LIABILITY-AND-EQUITY> 543,608,047
<SALES> 427,335,600
<TOTAL-REVENUES> 427,335,600
<CGS> 235,287,939
<TOTAL-COSTS> 235,287,939
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,001,733
<INCOME-PRETAX> 3,788,282
<INCOME-TAX> 1,477,000
<INCOME-CONTINUING> 2,311,282
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
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