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 May 3, 1997
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 May 3,
1997, was 13,894,410.
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J. BAKER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
May 3, 1997 (unaudited) and February 1, 1997
<TABLE>
<S> <C> <C>
May 3, February 1,
Assets 1997 1997
------- -----------
Current assets:
Cash and cash equivalents $ 2,197,884 $ 3,969,116
Accounts receivable:
Trade, net 18,075,556 14,771,734
Other 1,598,922 1,737,786
----------- ----------
19,674,478 16,509,520
----------- ----------
Merchandise inventories 165,421,322 146,045,496
Prepaid expenses 8,101,203 6,031,033
Deferred income taxes 37,548,000 37,548,000
Assets held for sale - 62,255,582
----------- -----------
Total current assets 232,942,887 272,358,747
----------- -----------
Property, plant and equipment, at cost:
Land and buildings 19,340,925 19,340,925
Furniture, fixtures and equipment 76,173,544 74,244,548
Leasehold improvements 24,002,860 23,100,973
---------- ----------
119,517,329 116,686,446
Less accumulated depreciation and amortization 42,494,053 40,032,801
----------- -----------
Net property, plant and equipment 77,023,276 76,653,645
----------- -----------
Deferred income taxes 26,199,000 26,199,000
Other assets, at cost, less accumulated amortization 13,383,394 7,309,411
----------- -----------
$349,548,557 $382,520,803
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 2,023,941 $ 2,012,327
Accounts payable 58,121,690 57,006,085
Accrued expenses 15,192,382 29,837,310
Income taxes payable 1,465,897 1,380,664
----------- ----------
Total current liabilities 76,803,910 90,236,386
----------- ----------
Other liabilities 3,316,581 6,203,073
Long-term debt, net of current portion 125,552,251 140,787,673
Senior subordinated debt 1,461,086 2,951,411
Convertible subordinated debt 70,353,000 70,353,000
Stockholders' equity 72,061,729 71,989,260
----------- -----------
$349,548,557 $382,520,803
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
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J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
For the quarters ended May 3, 1997 and May 4, 1996
(Unaudited)
<TABLE>
<S> <C> <C>
Quarter Quarter
Ended Ended
May 3, 1997 May 4, 1996
----------- -----------
Sales $137,350,261 $195,530,209
Cost of sales 75,352,452 104,909,360
----------- -----------
Gross profit 61,997,809 90,620,849
Selling, administrative and general expenses 55,694,829 79,284,091
Depreciation and amortization 2,653,393 7,208,503
---------- ----------
Operating income 3,649,587 4,128,255
Net interest expense 3,207,576 2,777,695
---------- ---------
Earnings before income taxes 442,011 1,350,560
Income tax expense 173,000 525,000
---------- ---------
Net earnings $ 269,011 $ 825,560
=========== ===========
Net earnings per common share:
Primary $ 0.02 $ 0.06
=========== ===========
Fully diluted $ 0.02 $ 0.06
=========== ===========
Number of shares used to compute net earnings per common share:
Primary 13,892,969 13,874,323
=========== ===========
Fully diluted 13,931,335 13,941,926
=========== ===========
Dividends declared per share $ 0.015 $ 0.015
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the quarters ended May 3, 1997 and May 4, 1996
(Unaudited)
<TABLE>
<S> <C> <C>
May 3, 1997 May 4, 1996
----------- -----------
Cash flows from operating activities:
Net earnings $ 269,011 $ 825,560
Adjustments to reconcile net earnings to cash
used in operating activities:
Depreciation and amortization:
Fixed assets 2,459,480 4,960,063
Deferred charges, intangible assets and
deferred financing costs 203,588 2,258,115
Deferred income taxes - 1,284,922
Change in:
Accounts receivable (3,889,958) (8,576,911)
Merchandise inventories (26,620,927) (30,758,819)
Prepaid expenses (2,070,170) (1,153,719)
Accounts payable 1,115,605 (3,724,739)
Accrued expenses (12,844,928) (7,296,164)
Income taxes payable/receivable 85,233 7,236,732
Other liabilities 143,424 73,328
----------- -----------
Net cash used in operating
activities (41,149,642) (34,871,632)
----------- -----------
Cash flows from investing activities: Capital expenditures for:
Property, plant and equipment (2,829,111) (5,530,766)
Other assets (148,464) (459,801)
Payments received on notes receivable 725,000 1,713,000
---------- ----------
Net cash used in investing activities (2,252,575) (4,277,567)
---------- ----------
Cash flows from financing activities:
Repayment of senior debt (1,500,000) (1,500,000)
Proceeds (repayment) of other long-term debt (15,100,000) 39,000,000
Repayment of mortgage payable (123,808) -
Payment of mortgage escrow (78,912) -
Proceeds from sales of footwear businesses 58,630,247 -
Proceeds from issuance of common stock 11,856 115,621
Payment of dividends (208,398) (208,192)
---------- ----------
Net cash provided by financing activities 41,630,985 37,407,429
---------- ----------
Net decrease in cash (1,771,232) (1,741,770)
Cash and cash equivalents at beginning of year 3,969,116 3,287,141
---------- ----------
Cash and cash equivalents at end of period $ 2,197,884 $ 1,545,371
=========== ===========
Supplemental disclosure of cash flow information Cash paid (received) for:
Interest $ 2,032,569 $ 1,528,273
Income taxes 87,767 318,829
Income taxes refunded - (8,315,483)
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements
4
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J. BAKER, INC. AND SUBSIDIARIES
NOTES
1] The accompanying unaudited consolidated financial statements, in the opinion
of management, include all adjustments 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 was not included in
the calculation for the quarters ended May 3, 1997 and May 4, 1996 because its
effect would be antidilutive.
3] During the fourth quarter of fiscal 1997, the Company restructured its
footwear operations. In connection with the restructuring, the Company has begun
to downsize its Licensed Discount footwear division, and, in March, 1997, the
Company completed the sales of its Shoe Corporation of America ("SCOA") and
Parade of Shoes divisions.
On March 5, 1997, the Company announced that it had sold its SCOA division
to an entity formed by CHB Capital Partners of Denver, Colorado along with
Dennis B. Tishkoff, President of SCOA, and certain members of SCOA management.
Net cash proceeds from the transaction of approximately $38.6 million (which
exclude a $1.7 million payment expected to be received during the second quarter
of fiscal 1998) were used to pay down the Company's bank debt. Sales in the
Company's SCOA division totaled $9.5 million and $44.7 million for the quarters
ended May 3, 1997 and May 4, 1996, respectively.
On March 10, 1997, the Company completed the sale of its Parade of Shoes
division to Payless ShoeSource, Inc. of Topeka, Kansas. Net cash proceeds from
the transaction of approximately $20 million were used to pay down the Company's
bank debt. Sales in the Company's Parade of Shoes division totaled $8.2 million
and $27.7 million for the quarters ended May 3, 1997 and May 4, 1996,
respectively.
4] On May 30, 1997, the Company refinanced its $145 million revolving line of
credit into two separate revolving credit facilities, both of which are
guaranteed by J. Baker, Inc. One facility, which will be used to finance the
Company's apparel businesses, is a $100 million revolving credit facility on a
generally unsecured basis with Fleet National Bank, BankBoston, N.A., The Chase
Manhattan Bank, Imperial Bank, USTrust and Wainwright Bank & Trust Company. The
aggregate commitment amount under this revolving credit facility will be reduced
by $10 million, $12.5 million and $12.5 million on December 31, 1997, December
31, 1998 and December 31, 1999, respectively. Borrowings under this revolving
credit facility bear interest at variable rates and can be in the form of loans,
bankers' acceptances and letters of credit. This facility expires on May 31,
2000.
To finance its Licensed Discount footwear business, the Company obtained a
$55 million revolving credit facility, secured by substantially all of the
assets of the Licensed Discount division, with GBFC, Inc. and Fleet National
Bank. The aggregate commitment amount under this revolving credit facility will
be reduced by $5 million on June 30, 1997. Aggregate borrowings under this
facility are limited by a formula based on various percentages of eligible
inventory, in-transit inventory and accounts receivable. Borrowings under this
revolving credit facility bear interest at variable rates and can be in the form
of loans or letters of credit. This facility expires on May 31, 2000.
5] 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)
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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 ended May 3, 1997 were $9.4 million.
6] 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. Jamesway liquidated its inventory, fixed assets and real estate
and ceased operation of its business in all of its 90 stores. 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 accounts receivable of approximately $1.4 million due from
Jamesway. Because Jamesway ceased operation of its business, the Company's
license agreement was rejected. The Company has negotiated a settlement of the
amount of its claim with Jamesway, which has been approved by the Bankruptcy
Court. The Jamesway plan of liquidation was confirmed on June 6, 1997, and it is
anticipated that partial distributions of the amount owed to the Company under
the settlement will be made during the second and fourth quarters of fiscal
1998.
7] 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. Maxwell petitioned the
United States Supreme Court for a writ of certiorari to hear the case, which
petition was denied on March 17, 1997. 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., 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 action of the Supreme Court and the remand to
the trial court, it is not clear when a trial date will be set for the Morse
case.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
All references herein to fiscal 1998 and fiscal 1997 relate to the years ending
January 31, 1998 and February 1, 1997, respectively.
Results of Operations
First Quarter Fiscal 1998 versus First Quarter Fiscal 1997
Net sales decreased by $58.1 million to $137.4 million in the first
quarter of fiscal 1998 from $195.5 million in the first quarter of fiscal 1997.
Sales in the Company's apparel operations increased by $3.7 million primarily
due to an increase in the number of Casual Male Big & Tall stores in operation
during the first quarter of fiscal 1998 over the first quarter of fiscal 1997
and a 0.2% 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). On a pro forma basis,
excluding the sales in the Company's SCOA and Parade of Shoes divisions of $17.7
million and $72.4 million for the quarters ended May 3, 1997 and May 4, 1996,
respectively, sales in the Company's ongoing Licensed Discount footwear
operation decreased by $7.2 million primarily due to a decrease in the number of
licensed discount shoe departments in operation during the first quarter of
fiscal 1998 versus the first quarter of fiscal 1997 and a 3.1% decrease in
comparable retail footwear store sales (Comparable retail footwear store sales
increases/decreases are based upon comparisons of weekly sales volume in
licensed shoe departments which were open in corresponding weeks of the two
comparison periods.)
Cost of sales constituted 54.9% of sales in the first quarter of fiscal
1998 as compared to 53.7% of sales in the first quarter of fiscal 1997. Cost of
sales in the Company's apparel operations was 52.7% of sales in the first
quarter of fiscal 1998 as compared to 50.6% of sales in the first quarter of
fiscal 1997. The increase in such percentage was primarily attributable to
higher markdowns as a percentage of sales and a lower initial markup on
merchandise purchases. Cost of sales in the Company's footwear operations was
56.8% of sales in the first quarter of fiscal 1998 as compared to 55.1% of sales
in the first quarter of fiscal 1997. The increase in such percentage was
primarily due to the increased proportion of Licensed Discount sales to total
footwear sales in the first quarter of fiscal 1998 versus the first quarter of
fiscal 1997. Licensed Discount sales have a higher cost of sales than the
aggregate cost of sales in the divested SCOA and Parade of Shoes divisions.
Selling, administrative and general expenses decreased $23.6 million or
29.8% in the first quarter of fiscal 1998 as compared to the first quarter of
fiscal 1997 primarily due to the divestitures of the Company's SCOA and Parade
of Shoes divisions in March, 1997 and the downsizing of the Company's
administrative areas and facilities. As a percentage of sales, selling,
administrative and general expenses were 40.5% of sales in the first quarter of
fiscal 1998 which was comparable to the 40.5% of sales in the first quarter of
fiscal 1997. Selling, administrative and general expenses in the Company's
apparel operations were 41.2% of sales in the first quarter of fiscal 1998 as
compared to 42.8% of sales in the first quarter of fiscal 1997. This decrease
was primarily due to a lower corporate overhead allocation, as a portion of the
first quarter of fiscal 1998 corporate overhead costs were allocated to the
Company's divested SCOA and Parade of Shoes divisions. Selling, administrative
and general expenses in the Company's footwear operations were 39.9% of sales in
the first quarter of fiscal 1998 as compared to 39.5% of sales in the first
quarter of fiscal 1997. This increase was primarily due to higher selling,
administrative and general expenses as a percentage of sales in the divested
SCOA and Parade of Shoes divisions during the first quarter of fiscal 1998
versus the first quarter of fiscal 1997.
Depreciation and amortization expense decreased by $4.6 million in the
first quarter of fiscal 1998 as compared to the first quarter of fiscal 1997
primarily due to the write-off of certain fixed and intangible assets in the
fourth quarter of fiscal 1997 related to the overall restructuring of the
Company's footwear divisions. This decrease was partially offset by capital
expenditures for depreciable and amortizable assets.
As a result of the above described effects, the Company's operating income
decreased by 11.6% to $3.6 million in the first quarter of fiscal 1998 from $4.1
million in the first quarter of fiscal 1997. As a percentage of
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sales, operating income was 2.7% in the first quarter of fiscal 1998 as compared
to 2.1% in the first quarter of fiscal 1997.
Net interest expense increased $430,000 to $3.2 million in the first
quarter of fiscal 1998 from $2.8 million in the first quarter of fiscal 1997
primarily due to higher interest rates.
Taxes on earnings for the first quarter of fiscal 1998 were $173,000
yielding an effective tax rate of 39.1%, as compared to taxes of $525,000,
yielding an effective tax rate of 38.9% in the first quarter of fiscal 1997.
Net earnings for the first quarter of fiscal 1998 were $269,000 as
compared to net earnings of $826,000 in the first quarter of fiscal 1997, a
decrease of 67.4%.
Financial Condition
May 3, 1997 versus February 1, 1997
The increase in accounts receivable at May 3, 1997 from February 1, 1997
is primarily due to seasonal factors, licensed sales in April being higher than
licensed sales in January.
Merchandise inventories at May 3, 1997 were higher than at February 1,
1997 primarily due to a seasonal increase in the average inventory level per
location.
Assets held for sale decreased to zero from the $62.3 million balance at
February 1, 1997 due to receipt of the cash proceeds from the divestitures of
the SCOA and Parade of Shoes divisions in March, 1997.
The increase in other assets is primarily the result of the establishment
of escrow accounts related to the divestitures of the SCOA and Parade of Shoes
divisions.
The ratio of accounts payable to merchandise inventory was 35.1% at May 3,
1997 as compared to 39.0% at February 1, 1997. This decrease is primarily due to
an increase in direct import purchases, which are paid for sooner than domestic
purchases, coupled with the Company's decision to eliminate bankers' acceptance
financing of foreign purchases in its footwear business. The ratio of accounts
payable to merchandise inventory was 32.0% at May 4, 1996.
Accrued expenses at May 3, 1997 decreased from the balance at February 1,
1997 primarily due to payments of costs related to the restructuring of the
Company's footwear operations, including the divestitures of the SCOA and Parade
of Shoes divisions and the downsizing and restructuring of the Licensed Discount
division and the Company's administrative areas and facilities.
Other liabilities at May 3, 1997 decreased from the balance at February 1,
1997 due to payment of $3.0 million to former stockholders of SCOA in order to
satisfy a contractual contingent payment obligation, based on earnings, to such
former SCOA stockholders.
Debt decreased $16.7 million to $197.4 million at May 3, 1997 from $214.1
million at February 1, 1997 due to the use of the net cash proceeds from both
the SCOA and Parade of Shoes transactions to pay down the Company's bank debt.
The decrease was partially offset by additional borrowings to meet seasonal
working capital needs and to fund capital expenditures.
Liquidity and Capital Resources
On May 30, 1997, the Company refinanced its $145 million revolving line of
credit into two separate revolving credit facilities, both of which are
guaranteed by J. Baker, Inc. One facility, which will be used to finance the
Company's apparel businesses, is a $100 million revolving credit facility on a
generally unsecured basis with Fleet National Bank, BankBoston, N.A., The Chase
Manhattan Bank, Imperial Bank, USTrust and Wainwright Bank & Trust Company. The
aggregate commitment amount under this revolving credit facility will be reduced
by $10 million, $12.5 million and $12.5 million on December 31, 1997, December
31, 1998 and December 31, 1999,
8
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respectively. Borrowings under this revolving credit facility bear interest at
variable rates and can be in the form of loans, bankers' acceptances and letters
of credit. This facility expires on May 31, 2000.
To finance its Licensed Discount footwear business, the Company obtained a
$55 million revolving credit facility, secured by substantially all of the
assets of the Licensed Discount division, with GBFC, Inc. and Fleet National
Bank. The aggregate commitment amount under this revolving credit facility will
be reduced by $5 million on June 30, 1997. Aggregate borrowings under this
facility are limited by a formula based on various percentages of eligible
inventory, in-transit inventory and accounts receivable. Borrowings under this
revolving credit facility bear interest at variable rates and can be in the form
of loans or letters of credit. This facility expires on May 31, 2000.
Aggregate borrowings under the Company's revolving lines of credit totaled
$128.0 million and $128.7 million as of May 3, 1997 and May 30, 1997,
respectively, consisting of loans and obligations under letters of credit.
Following is a table showing actual and planned store openings by division
for fiscal 1998:
<TABLE>
<S> <C> <C> <C>
Actual Openings Planned Openings Total
First Second - Fourth Actual/Planned
Division Quarter Fiscal 1998 Quarter Fiscal 1998 Openings
-------- ------------------- ------------------- --------------
Casual Male 17 23 40
Work 'n Gear 0 2 2
Licensed 4 7 11
</TABLE>
Offsetting the above actual and planned store openings, the Company closed
1 Casual Male store and 78 licensed departments during the first quarter of
fiscal 1998. The Company has plans to close approximately an additional 2 Casual
Male stores and 7 licensed departments during the second through fourth quarters
of fiscal 1998.
This Form 10-Q contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results could differ materially from
those set forth in the forward-looking statements and may fluctuate between
operating periods. 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 actual number of store openings and closings
will depend on the availability of attractively priced sites for openings of
apparel stores, the ability of the Company to negotiate leases on favorable
terms, operating results of each site and the actions of the Company's
licensors.
The Company believes that amounts available under its revolving credit
facilities, 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.
9
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The Exhibits in the Exhibit Index are filed as part of this report.
(b) A report on Form 8-K was filed by the Registrant on March 20, 1997
concerning the sale by the Registrant of substantially all of the
assets of its Shoe Corporation of America division and of the sale of
the Registrant's Parade of Shoes division.
A report on Form 8-K/A was filed by the Registrant on May 16, 1997
amending the Form 8-K filed on March 20, 1997 to include the
Registrant's Pro Forma consolidated condensed balance sheet at February
1, 1997 and the Pro Forma consolidated statements of earnings for the
year ended February 1, 1997 giving effect to the dispositions by the
Registrant of its SCOA and Parade of Shoes divisions.
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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
President and Chief Executive Officer
Date: Canton, Massachusetts
June 12, 1997
By:/s/Philip Rosenberg
Philip Rosenberg
Executive Vice President, Chief Financial
Officer and Treasurer
Date: Canton, Massachusetts
June 12, 1997
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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 May 3, 1997
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EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit Page No.
- ------- -------
10. Material Contracts
(.01) Credit Agreement by and among the Casual Male, Inc., TCM Holding *
Co., Inc., WGS Corp., TCMB&T, Inc. and J. Baker, Inc., and Fleet
National Bank and BankBoston, N.A., et al, dated May 30, 1997,
attached.
(.02) Loan and Security Agreement between JBI, Inc., Morse Shoe, Inc. *
and JBI Holding Company, Inc., and GBFC, Inc. and Fleet National
Bank, dated May 30, 1997, attached.
(.03) Asset Purchase Agreement, dated as of March 5, 1997, by and between **
Shoe Corporation of America, Inc. and JBI, Inc.
11. Computation of Primary and Fully Diluted Earnings Per Share, attached. *
-----------------------------------------------------------
27. Financial Data Schedule ***
-----------------------
</TABLE>
* Included herein
** Filed as an exhibit to Form 8-K on March 20, 1997 and incorporated herein by
reference thereto.
** 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.
CREDIT AGREEMENT
By and Among
THE CASUAL MALE, INC.,
TCM HOLDING CO., INC.,
WGS CORP.,
TCMB&T, INC.,
J. BAKER, INC.,
FLEET NATIONAL BANK AS ADMINISTRATIVE AGENT,
BANKBOSTON, N.A. AS DOCUMENTATION AGENT,
AND
THE OTHER LENDERS WHICH ARE OR MAY BECOME PARTIES HERETO
WITH
FLEET AND BANCBOSTON SECURITIES, INC. AS ARRANGERS
Dated: May 30, 1997
<PAGE>
TABLE OF CONTENTS
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Loan Request
SCHEDULES
Schedule 1 - Lending Institutions
Schedule 2 - Definitions and Rules of Interpretation
Schedule 4.8 - Existing Letters of Credit
Schedule 7.2 - Ownership Interests
Schedule 7.4 - Owned Assets not listed on Balance Sheet
Schedule 7.5 - Contingent Liabilities
Schedule 7.8 - Litigation
Schedule 7.15 - Permitted Transactions
Schedule 8.17 - Corporate Overhead
Schedule 9.1 - Permitted Indebtedness
Schedule 9.2 - Permitted Liens
Schedule 9.3 - Permitted Investments
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is made as of the 30th day of May, 1997, by and
among THE CASUAL MALE, INC. ("Casual Male"), TCM HOLDING CO., INC. ("TCM"), WGS
CORP. ("WGS") and TCMB&T, INC. ("TCMB&T" and, together with Casual Male, TCM and
WGS, the "Borrowers" and each, singularly, a "Borrower") and J. BAKER, INC. (the
"Guarantor"), each a Massachusetts corporation, except for TCM which is a
Delaware corporation, and each having its principal place of business at 555
Turnpike Street, Canton, Massachusetts 02021, or 65 Sprague Street, Hyde Park,
Massachusetts 02136, FLEET NATIONAL BANK ("Fleet"), BANKBOSTON, N.A.
("BankBoston") and the other lending institutions listed on Schedule 1 attached
hereto (collectively, the "Lenders"), Fleet as Administrative Agent for itself
and the other Lenders (in such capacity, the "Administrative Agent") and
BankBoston as Documentation Agent for itself and the other Lenders (in such
capacity, the "Documentation Agent").
ss. DEFINITIONS AND RULES OF INTERPRETATION.
ss. Definitions.
Except as otherwise expressly provided herein, all capitalized terms
used in this Credit Agreement, the exhibits hereto and any notes, certificates,
reports or other documents or instruments made or delivered pursuant to or in
connection with this Credit Agreement shall have the meanings set forth for such
terms in Schedule 2 hereto.
ss.1.2 Rules of Interpretation.
Except as otherwise expressly provided herein, the rules of
interpretation set forth in Schedule 2 hereto shall apply to this Credit
Agreement, the exhibits hereto and any notes, certificates, reports or other
documents or instruments made or delivered pursuant to or in connection with
this Credit Agreement.
ss. THE REVOLVING CREDIT FACILITY.
ss. Commitment to Lend.
Subject to the terms and conditions set forth in this Credit
Agreement, each of the Lenders severally agrees to lend to the Borrowers and the
Borrowers may borrow, repay, and reborrow from time to time between the Closing
Date and the Maturity Date upon notice by the Borrowers to the Administrative
Agent given in accordance with ss.2.7, such sums as are requested by the
Borrowers up to a maximum aggregate amount outstanding (after giving effect to
all amounts requested) at any one time
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2
equal to such Lender's Commitment minus such Lender's Commitment Percentage of
the sum of the Maximum Drawing Amount, the Acceptance Face Amount and all Unpaid
Reimbursement Obligations; provided that the outstanding aggregate amount of all
Loans (after giving effect to all amounts requested) plus the Maximum Drawing
Amount, plus the Acceptance Face Amount, plus all Unpaid Reimbursement
Obligations shall not at any time exceed the Total Commitment. The Loans shall
be made pro rata in accordance with each Lender's Commitment Percentage. Each
request for a Loan hereunder shall constitute a representation and warranty by
the Obligors that the conditions set forth in ss.11 and ss.12, in the case of
the initial Loans to be made on the Closing Date, and ss.12, in the case of all
other Loans, have been satisfied on the date of such request.
ss. Facility Fee.
The Borrowers agree to pay to the Administrative Agent for the
respective accounts of the Lenders in accordance with their respective
Commitment Percentages a facility fee on the Total Commitment, whether used or
unused, at a rate per annum equal to the Facility Fee Rate. The facility fee
shall be payable quarterly in arrears on the first day of each calendar quarter
for the immediately preceding calendar quarter (or portion thereof) commencing
on the first such date following the date hereof, with a final payment on the
later of the (a) Maturity Date and (b) the date the Obligations are paid in
full. The facility fee provided in this Section shall accrue at all times after
the Closing Date (including at any time during which one or more of the
conditions in ss.12 are not met), until the later of the (a) Maturity Date and
(b) the date on which the Total Commitment is no longer in effect and the
Obligations shall have been paid in full; provided, however, that after the
Maturity Date the facility fee shall be calculated at the Facility Fee Rate on
the outstanding principal amount of the Loans plus any Unpaid Reimbursement
Obligations; and further provided, that in no event shall the continued accrual
of the facility fee after the Maturity Date be construed as a waiver of the
absolute and unconditional obligations of the Borrowers to repay the Obligations
in full on the Maturity Date.
ss. Voluntary Reduction of Total Commitment.
The Borrowers shall have the right at any time and from time to time
upon five (5) Business Days' prior written notice to the Administrative Agent to
reduce by $1,000,000 or any greater integral multiple thereof or terminate
entirely the Total Commitment, whereupon the Commitments of the Lenders shall be
reduced pro rata in accordance with their respective Commitment Percentages of
the amount specified in such notice or, as the case may be, terminated. Promptly
after receiving any notice from the Borrowers delivered pursuant to this ss.2.3,
the Administrative Agent will notify the Lenders of the substance thereof. Upon
the effective date of any such reduction or termination, the Borrowers shall pay
to the Administrative Agent for the respective accounts of the Lenders the full
amount of any facility fee then accrued on the amount of the reduction. No
reduction or termination of the Commitments may be reinstated.
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3
ss. Mandatory Reduction of Total Commitment.
On each of the dates set forth in the table below (each such date
being hereinafter referred to as a "Commitment Reduction Date"), the Total
Commitment shall be automatically reduced by the amount (the"Reduction Amount")
set forth opposite such date in the column headed "Reduction Amount"
set forth below, to the amount set forth opposite such date in the column headed
"Total Commitment" set forth below:
Date Reduction Amount Total Commitment
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
December 31, 1997 $10,000,000 $90,000,000
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
December 31, 1998 $12,500,000 $77,500,000
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
December 31, 1999 $12,500,000 $65,000,000
- -----------------------------------------------------------------------------
ss. The Notes.
The Loans shall be evidenced
by separate promissory notes of the Borrowers in substantially the form of
Exhibit A hereto (each a "Note"), dated as of the Closing Date and completed
with appropriate insertions. One Note shall be payable to the order of each
Lender in a principal amount equal to such Lender's Commitment or, if less, the
outstanding amount of all Loans made by such Lender, plus interest accrued
thereon, as set forth below. Each Borrower irrevocably authorizes each Lender to
make or cause to be made, at or about the time of the Drawdown Date of any Loan
or at the time of receipt of any payment of principal on such Lender's Note, an
appropriate notation on such Lender's Note Record reflecting the making of such
Loan or (as the case may be) the receipt of such payment. The outstanding amount
of the Loans set forth on such Lender's Note Record shall be prima facie
evidence, absent manifest error, of the principal amount thereof owing and
unpaid to such Lender, but the failure to record, or any error in so recording,
any such amount on such Lender's Note Record shall not limit or otherwise affect
the obligations of the Borrowers hereunder or under any Note to make payments of
principal of or interest on any Note when due.
ss. Interest on Loans.
Except as otherwise provided in ss.5.10,
Each Base Rate Loan shall bear interest for the period commencing with the
Drawdown Date thereof and ending on the last day of the Interest Period with
respect thereto at the rate of the Base Rate from time to time in effect plus
the Applicable Margin.
Each LIBOR Rate Loan shall bear interest for the period commencing with the
Drawdown Date thereof and ending on the last day of the Interest Period with
respect thereto at the rate of the LIBOR Rate determined for such Interest
Period plus the Applicable Margin.
<PAGE>
The Borrowers promise to pay interest on each Loan in arrears on each Interest
Payment Date with respect thereto.
ss. Requests for Loans.
The Borrowers shall give to the Administrative Agent written notice
in the form of Exhibit D hereto (or telephonic notice confirmed in a writing in
the form of Exhibit D hereto) of each Loan requested hereunder (a "Loan
Request") (a) not later than 1:00 p.m., Boston time, on the Business Day of the
proposed Drawdown Date of any Base Rate Loan and (b) not less than three (3) and
not more than five (5) LIBOR Business Days prior to the proposed Drawdown Date
of any LIBOR Rate Loan. Each such notice shall specify (i) the principal amount
of the Loan requested, (ii) the proposed Drawdown Date of such Loan, (iii) the
Interest Period for such Loan and (iv) the Type of such Loan. Promptly upon
receipt of any such notice, the Administrative Agent shall notify each of the
Lenders thereof. Each Loan Request shall be irrevocable and binding on each
Borrower and shall obligate the Borrowers to accept the Loan requested from the
Lenders on the proposed Drawdown Date. Each Loan Request shall be in a minimum
aggregate amount of $1,000,000 or a larger integral multiple of $100,000
thereof.
ss. Conversion Options.
The Borrowers may elect from time to time to convert any
outstanding Loan to a Loan of another Type, provided that (i) with respect to
any such conversion of a Loan to a Base Rate Loan, the Borrowers shall give the
Administrative Agent not less than one (1) and not more than five (5) Business
Days' prior written notice of such election; (ii) with respect to any such
conversion of a Base Rate Loan to a LIBOR Rate Loan, the Borrowers shall give
the Administrative Agent no less than three (3) and not more than five (5) LIBOR
Business Days' prior written notice of such election; (iii) with respect to any
such conversion of a LIBOR Rate Loan into a Loan of another Type, such
conversion shall only be made on the last day of the Interest Period with
respect thereto and (iv) no Loan may be converted into a LIBOR Rate Loan when
any Default or Event of Default has occurred and is continuing. On the date on
which such conversion is being made each Lender shall take such action as is
necessary to transfer its Commitment Percentage of such Loans to its Domestic
Lending Office or its LIBOR Lending Office, as the case may be. All or any part
of outstanding Loans of any Type may be converted into a Loan of another Type as
provided herein, provided that (i) any partial conversion shall be in an
aggregate principal amount of $1,000,000 or a larger integral multiple of
$100,000. Each Conversion Request relating to the conversion of a Loan to a
LIBOR Rate Loan shall be irrevocable by the Borrowers and (ii) with respect to
LIBOR Rate Loans, there shall be no more than six (6) separate Interest Periods
in effect at any one time.
Any Loan of any Type may be continued as a Loan of the same Type upon
the expiration of an Interest Period with respect thereto by compliance by the
Borrowers with the notice provisions contained in ss.2.8(a); provided that no
LIBOR Rate Loan may be continued as such when any Default or Event of Default
has occurred and is continuing, but shall be automatically converted to a Base
Rate Loan on the last day of the first Interest Period relating thereto ending
during the continuance of any Default or Event of Default of which officers of
the Administrative Agent active upon the Borrowers' account have actual
knowledge. The Administrative Agent shall notify the Lenders promptly when any
such automatic conversion contemplated by this ss.2.8 is scheduled to occur.
<PAGE>
5
Any conversion to or from LIBOR Rate Loans shall be in such amounts and
be made pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of all LIBOR Rate Loans having the same Interest
Period shall not be less than $1,000,000 or a whole multiple of $100,000 in
excess thereof.
ss. Funds for Loans.
Not later than 2:00 p.m. (Boston, Massachusetts time) on the proposed Drawdown
Date of any Loan, each of the Lenders will make available to the Administrative
Agent, at the Administrative Agent's Head Office, in immediately available
funds, the amount of such Lender's Commitment Percentage of the amount of the
requested Loans. Upon receipt from each Lender of such amount, and upon receipt
of the documents required by (i) ss.ss.11 and 12 in the case of initial Loans,
and (ii) ss.12 for all other Loans, and the satisfaction of the other conditions
set forth therein, to the extent applicable, the Administrative Agent will make
available to the Borrowers the aggregate amount of such Loans made available to
the Administrative Agent by the Lenders. The failure or refusal of any Lender to
make available to the Administrative Agent at the aforesaid time and place on
any Drawdown Date the amount of such Lender's Commitment Percentage of the
requested Loans shall not relieve any other Lender from its several obligation
hereunder to make available to the Administrative Agent the amount of such other
Lender's Commitment Percentage of any requested Loans.
The Administrative Agent may, unless notified to the contrary by any Lender
prior to a Drawdown Date, assume that such Lender has made available to the
Administrative Agent on such Drawdown Date the amount of such Lender's
Commitment Percentage of the Loans to be made on such Drawdown Date, and the
Administrative Agent may (but it shall not be required to), in reliance upon
such assumption, make available to the Borrowers a corresponding amount. If any
Lender makes available to the Administrative Agent such amount on a date after
such Drawdown Date, such Lender shall pay to the Administrative Agent on demand
an amount equal to the product of (i) the average, computed for the period
referred to in clause (iii) below, of the weighted average interest rate paid by
the Administrative Agent for federal funds acquired by the Administrative Agent
during each day included in such period, times (ii) the amount of such Lender's
Commitment Percentage of such Loans, times (iii) a fraction, the numerator of
which is the number of days that elapse from and including such Drawdown Date to
the date on which the amount of such Lender's Commitment Percentage of such
Loans shall become immediately available to the Administrative Agent, and the
denominator of which is 365. A statement of the Administrative Agent submitted
to such Lender with respect to any amounts owing under this paragraph shall be
prima facie evidence of the amount due and owing to the Administrative Agent by
such Lender. If the amount of such Lender's Commitment Percentage of such Loans
is not made available to the Administrative Agent by such Lender within three
(3) Business Days following such Drawdown Date, the Administrative Agent shall
be entitled to recover such amount from the Borrowers on demand, with interest
thereon at the rate per annum applicable to the Loans made on such Drawdown
Date.
ss. REPAYMENT OF THE REVOLVING CREDIT LOANS.
ss. Maturity.
The Borrowers absolutely and unconditionally and jointly and
severally promise to pay on the Maturity Date, and there shall become absolutely
due and payable on the Maturity Date, all of the Loans outstanding on such date,
together with any and all accrued and unpaid interest thereon and all fees and
<PAGE>
6
reasonable expenses incurred by the Lenders and Agents in connection therewith
and payable by the Borrowers hereunder.
ss. Mandatory Repayments of Loans.
If at any time the outstanding amount of the Loans, the Maximum
Drawing Amount, the Acceptance Face Amount and all Unpaid Reimbursement
Obligations exceeds an amount equal to the Total Commitment, then the Borrowers
shall immediately pay the amount of such excess to the Administrative Agent for
the respective accounts of the Issuing Bank, the Acceptance Bank and the Lenders
for application: first, to any Unpaid Reimbursement Obligations; second, to the
Loans; and third, to provide to the Administrative Agent cash collateral for
Reimbursement Obligations as contemplated by ss.4.3(b) and (c). Each payment of
any Unpaid Reimbursement Obligations or prepayment of Loans shall be allocated
among the Issuing Bank, the Acceptance Bank and the Lenders, in proportion, as
nearly as practicable, to each Reimbursement Obligation or (as the case may be)
the respective unpaid principal amount of each Lender's Note, with adjustments
to the extent practicable to equalize any prior payments or repayments not
exactly in proportion.
ss. Optional Repayments of Loans.
The Borrowers shall have the right, at their election, to repay the
outstanding amount of the Loans, as a whole or in part, at any time without
penalty or premium, provided that any full or partial prepayment of the
outstanding amount of any LIBOR Rate Loans pursuant to this ss.3.3 may be made
only on the last day of the Interest Period relating thereto. The Borrowers
shall give the Administrative Agent, no later than 2:00 p.m., Boston time, on
the date of the proposed prepayment prior telephonic notice (with such notice to
be confirmed in writing by the Borrowers) of any proposed prepayment pursuant to
this ss.3.3 of Base Rate Loans, and not less than three (3) and not more than
five (5) LIBOR Business Days' notice of any proposed prepayment pursuant to this
ss.3.3 of LIBOR Rate Loans, in each case specifying the proposed date of
prepayment of Loans and the principal amount to be prepaid. Each such partial
prepayment of the Loans shall be in a minimum amount of $1,000,000 or a larger
integral multiple of $100,000, and shall be applied, in the absence of
instruction by the Borrowers, first to the principal of Base Rate Loans and then
to the principal of LIBOR Rate Loans. Each partial prepayment shall be allocated
among the Lenders, in proportion, as nearly as practicable, to the respective
unpaid principal amount of each Lender's Note, with adjustments to the extent
practicable to equalize any prior repayments not exactly in proportion.
ss. LETTERS OF CREDIT AND BANKERS' ACCEPTANCES.
ss. Letter of Credit Commitments.
Subject to the terms and conditions hereof and the execution
and delivery by the Borrowers of a letter of credit application on the Issuing
Bank's customary form (a "Letter of Credit Application"), the Issuing Bank on
behalf of the Lenders and in reliance upon the agreement of the Lenders set
forth in ss.4.1(d) and upon the representations and warranties of the Obligors
contained herein, agrees, in its individual capacity, to issue, extend and renew
for the account of the Borrowers one or more standby or documentary letters of
credit (individually, a "Letter of Credit"), in such form as may be requested
from time to time by the Borrowers and agreed to by the Issuing Bank; provided,
however, that, after giving effect to such request, (i) the sum of the aggregate
Maximum Drawing Amount and all Unpaid Reimbursement Obligations shall not exceed
$25,000,000 at any one time and (ii) the sum of (A)
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7
the Maximum Drawing Amount of all Letters of Credit, (B) all Unpaid
Reimbursement Obligations, (C) the Acceptance Face Amount, and (D) the principal
amount of all Loans outstanding shall not exceed the Total Commitment, and
further provided, (x) no standby Letter of Credit shall have an expiry date
later than the date which is one year from the issuance thereof, and (y) no
documentary Letter of Credit shall have any expiry date which is later than the
date which is one hundred and eighty (180) days after the issuance thereof.
Upon receipt of a Letter of Credit Application, the Issuing
Bank shall notify the Administrative Agent by telephone of such application to
determine that after giving effect to the issuance of the requested Letter of
Credit (and the Administrative Agent will make reasonable efforts to reply as
promptly as is practicable to such notification), (i) the sum of the aggregate
Maximum Drawing Amount and all Unpaid Reimbursement Obligations shall not exceed
$25,000,000 at any one time and (ii) the sum of (A) the Maximum Drawing Amount
of all Letters of Credit, (B) all Unpaid Reimbursement Obligations, (C) the
Acceptance Face Amount, and (D) the principal amount of all Loans outstanding
shall not exceed the Total Commitment. Additionally, each Lender which is
designated by the Borrowers as an Issuing Bank, the Borrowers and the
Administrative Agent shall negotiate in good faith to establish additional
written procedures with respect to the issuance of Letters of Credit to reduce
the risk that Letters of Credit will be issued which would cause (i) the sum of
the aggregate Maximum Drawing Amount and all Unpaid Reimbursement Obligations to
exceed $25,000,000 at any one time and (ii) the sum of (A) the Maximum Drawing
Amount of all Letters of Credit, (B) all Unpaid Reimbursement Obligations, (C)
the Acceptance Face Amount, and (D) the principal amount of all Loans
outstanding to exceed the Total Commitment. Notwithstanding the foregoing, the
Borrowers acknowledge that it is the unconditional obligation of the Borrowers
to ensure that at no time shall (i) the sum of the aggregate Maximum Drawing
Amount and all Unpaid Reimbursement Obligations exceed $25,000,000 at any one
time and (ii) the sum of (A) the Maximum Drawing Amount of all Letters of
Credit, (B) all Unpaid Reimbursement Obligations, (C) the Acceptance Face
Amount, and (D) the principal amount of all Loans outstanding does not exceed
the Total Commitment, and that if at any time there shall be a failure to comply
with the foregoing, the Borrowers shall be required to immediately comply with
ss.3.2.
Each Letter of Credit Application shall be completed to the
satisfaction of the Issuing Bank. In the event that any provision of any Letter
of Credit Application shall be inconsistent with any provision of this Credit
Agreement, then the provisions of this Credit Agreement shall, to the extent of
any such inconsistency, govern.
Upon notification of such Letter of Credit Application by the
Issuing Bank, the Administrative Agent shall notify each Lender of its pro rata
participation interest in the Letter of Credit to be issued. Each Letter of
Credit issued, extended or renewed hereunder shall, among other things, (i)
provide for the payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein, and (ii) have an expiry date no later than the date which is
twenty (20) days (or, if the beneficiary is located outside of the United States
of America, thirty (30) days) prior to the Maturity Date. Each Letter of Credit
so issued, extended or renewed shall be subject to the Uniform Customs.
Each Lender severally agrees that it shall be absolutely
liable, without regard to the occurrence of any Default or Event of Default or
any other condition precedent whatsoever, to the extent of such Lender's
Commitment Percentage, to reimburse the Issuing Bank on demand for the amount of
each draft paid by the Issuing Bank under each Letter of Credit to the extent
that such amount is not
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8
reimbursed by the Borrowers pursuant to ss.4.3 (such agreement for a Lender
being called herein the "Letter of Credit Participation" of such Lender).
Each such payment made by a Lender shall be treated as the
purchase by such Lender of a participating interest in the Borrowers'
Reimbursement Obligation under ss.4.3 in an amount equal to such payment. Each
Lender shall share in accordance with its participating interest in any interest
which accrues pursuant to ss.4.3.
ss. Bankers' Acceptance Facility.
Subject to the terms and conditions set forth in this Credit Agreement
and the execution by the Borrowers of an Acceptance Agreement in the Acceptance
Bank's customary form (the "Acceptance Agreement"), upon the written request of
the Borrowers, the Acceptance Bank, on behalf of the Lenders, and in reliance
upon the agreement of the Lenders set forth in ss.4.2(b) hereof and upon the
representations and warranties of the Borrowers contained herein, agrees, in its
individual capacity, to discount Eligible Drafts for the account of the
Borrowers (all such accepted and discounted Eligible Drafts whether heretofore
or hereafter issued being referred to individually as a "Bankers' Acceptance"
and collectively as the "Bankers' Acceptances"); provided, however, that (i) any
Bankers' Acceptance issued shall provide for a maturity date not longer than one
hundred and twenty (120) days; (ii) in no event shall such maturity extend
beyond the Maturity Date; (iii) after giving effect to such request, the sum of
(A) the Maximum Drawing Amount (B) the Acceptance Face Amount, (C) all Unpaid
Reimbursement Obligations, and (D) the amount of any Loans outstanding shall not
exceed the Total Commitment; and (iv) the Acceptance Bank shall not accept an
Eligible Draft if the face amount of all outstanding drafts accepted by the
Acceptance Bank which are of the type described in paragraph 7 of Section 13 of
the Federal Reserve Act (12 U.S.C. ss.372), as amended from time to time, or any
successor statute, would cause the Acceptance Bank to violate any limitation
imposed upon it under said paragraph or would cause the Acceptance Bank to
violate such limitation if all such drafts were sold by the Acceptance Bank in
the secondary market. To expedite the acceptance and discounting of Eligible
Drafts, the Borrowers shall provide to the Acceptance Bank fully executed
drafts, which shall be blank as to dates and amounts. The Borrowers may request
the Acceptance Bank to accept and discount an Eligible Draft by submitting to
the Acceptance Bank at least one (1) Business Day prior to the proposed date of
acceptance and discounting a bankers' acceptance application in the Acceptance
Bank's customary form, completed to the satisfaction of the Acceptance Bank and
accompanied by such documents as may be required by the Acceptance Bank to
establish that the drafts to be accepted and discounted will (if accepted and
endorsed by a member bank of the Federal Reserve System) be eligible for
discount by such Federal Reserve Bank. The Acceptance Bank shall make available
to the Borrowers at the time of acceptance of each Eligible Draft and upon the
satisfaction of the conditions set forth in ss.11 (but only in the case of the
first Loan or Credit Instrument to be made or issued hereunder) and ss.12
hereof, an amount equal to the discounted value of such Eligible Draft based on:
(x) the stated maturity date of such Eligible Draft, (y) the face amount of such
Eligible Draft, and (z) a rate (computed on the basis of a year of three hundred
sixty (360) days for the actual days elapsed) equal to the sum of (a) the per
annum average discount rate quoted to the Acceptance Bank on the day an Eligible
Draft is presented for discount by the Acceptance Bank's bankers' acceptance
traders for acceptances which are of the type described in paragraph 7 of
section 13 of the Federal Reserve Act (12 U.S.C. ss.372), as amended from time
to time, or any successor statute and which approximate the face amount and
mature on the maturity date of such Eligible Draft plus (b) the Applicable
Commission (the "Bankers Acceptance Fee").
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9
Upon receipt of such bankers' acceptance application, the
Acceptance Bank shall notify the Administrative Agent by telephone of such
application to determine that after giving effect to the issuance of the
requested bankers' acceptance (and the Administrative Agent will make reasonable
efforts to reply as promptly as is practicable to such notification), the sum of
(A) the Maximum Drawing Amount (B) the Acceptance Face Amount, (C) all Unpaid
Reimbursement Obligations, and (D) the amount of any Loans outstanding shall not
exceed the Total Commitment. Additionally, each Lender which is designated by
the Borrowers as an Acceptance Bank, the Borrowers and the Administrative Agent
shall negotiate in good faith to establish additional written procedures with
respect to the issuance of Bankers' Acceptance to reduce the risk that Bankers'
Acceptances will be issued which would cause (i) the sum of the aggregate
Maximum Drawing Amount and all Unpaid Reimbursement Obligations to exceed
$25,000,000 at any one time and (ii) the sum of (A) the Maximum Drawing Amount
of all Letters of Credit, (B) all Unpaid Reimbursement Obligations, (C) the
Acceptance Face Amount, and (D) the principal amount of all Loans outstanding to
exceed the Total Commitment. Notwithstanding the foregoing, the Borrowers
acknowledge that it is the unconditional obligation of the Borrowers to ensure
that at no time shall (i) the sum of the aggregate Maximum Drawing Amount and
all Unpaid Reimbursement Obligations exceed $25,000,000 at any one time and (ii)
the sum of (A) the Maximum Drawing Amount of all Letters of Credit, (B) all
Unpaid Reimbursement Obligations, (C) the Acceptance Face Amount, and (D) the
principal amount of all Loans outstanding the Total Commitment does not exceed
the Total Commitment and that if at any time there shall be a failure to comply
with the foregoing, the Borrowers shall be required to immediately comply with
ss.3.2.
Upon notification of such bankers' acceptance application by the
Acceptance Bank, the Administrative Agent shall notify each Lender of its pro
rata share of the Bankers' Acceptance. Subject to the terms and conditions
hereof, each Lender severally agrees that it shall participate in any Bankers'
Acceptances upon notification by the Administrative Agent that the Acceptance
Bank has received an application for acceptance and discounting of an Eligible
Draft in form and substance satisfactory to the Acceptance Bank and the
Administrative Agent. The Acceptance Bank agrees to furnish the Administrative
Agent and each of the Lenders a copy of each Bankers' Acceptance promptly after
issuance. Each Lender severally agrees that it shall be absolutely liable,
without regard to the occurrence of any Default or Event of Default or any other
condition precedent whatsoever to the extent of such Lender's Commitment
Percentage, to reimburse the Acceptance Bank on demand for the amount of each
draft paid by the Acceptance Bank under each Bankers' Acceptance to the extent
such amount is not reimbursed by the Borrowers pursuant to ss.4.3 hereof (such
amount for a Lender being called herein the "Bankers' Acceptance Participation"
of such Lender).
Each such payment made by a Lender shall be treated as the purchase by
such Lender of a participating interest in the Borrowers' Reimbursement
Obligation under ss.4.3 hereof in an amount equal to such payment. Each Lender
shall share in accordance with its participating interest in any interest which
accrues pursuant to ss.4.3 hereof.
In addition to Acceptance Bank's normal discount of Bankers'
Acceptances, the Borrowers shall pay to the Administrative Agent, for the
accounts of the Acceptance Bank and the Lenders in accordance with their
respective Commitment Percentages, a commission (the "Applicable Commission")
for each Bankers' Acceptance issued pursuant to this Credit Agreement at an
annual rate on the face amount of each Bankers' Acceptance equal to the
Applicable Margin for LIBOR Rate Loans on the face amount of each such Bankers'
Acceptance.
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10
ss. Reimbursement Obligation of the Borrowers.
In order to induce the Acceptance Bank and the Issuing Bank to issue,
extend and renew each Credit Instrument and the Lenders to participate therein,
the Borrowers hereby agree to reimburse or pay to the Acceptance Bank and the
Issuing Bank, for the account of the Acceptance Bank, the Issuing Bank or the
Lenders (as the case may be), with respect to each Credit Instrument issued,
extended or renewed by the Acceptance Bank or the Issuing Bank hereunder,
except as otherwise expressly provided in ss.4.3(b) and (c),
on each date that any draft presented under such Letter of Credit is
honored by the Issuing Bank, or the Issuing Bank otherwise makes a
payment with respect thereto, or, in the case of Bankers' Acceptances,
on the maturity date of such Bankers' Acceptances, (i) the amount paid
by the Issuing Bank under or with respect to such Letter of Credit,
and, with respect to the Bankers' Acceptances, the amount of such
Bankers' Acceptances then maturing, and (ii) the amount of any taxes,
fees, charges or other costs and expenses whatsoever incurred by the
Acceptance Bank, the Issuing Bank or any Lender in connection with any
payment made by the Acceptance Bank or the Issuing Bank under, or with
respect to, such Credit Instruments,
upon the reduction (but not termination) of the Total
Commitment to an amount less than the Maximum Drawing Amount plus the
Acceptance Face Amount, plus all unpaid Reimbursement Obligations, an
amount equal to such difference, which amount shall be held by the
Acceptance Bank or the Issuing Bank (as the case may be) for the
benefit of the Lenders, the Acceptance Bank and the Issuing Bank as
cash collateral for all Reimbursement Obligations, and
upon the termination of the Total Commitment, or the
acceleration of the Reimbursement Obligations with respect to all
Credit Instruments in accordance with ss.15, an amount equal to the
then Maximum Drawing Amount on all Letters of Credit, plus the
Acceptance Face Amount, which amount shall be held by the Acceptance
Bank or the Issuing Bank (as the case may be) for the benefit of the
Lenders, the Acceptance Bank and the Issuing Bank as cash collateral
for all Reimbursement Obligations.
Each such payment shall be made to the Acceptance Bank or the Issuing
Bank (as the case may be) at the Acceptance Bank's or the Issuing Bank's head
office in immediately available funds. Interest on any and all amounts remaining
unpaid by the Borrowers under this ss.4.3 at any time from the date such amounts
become due and payable (whether as stated in this ss.4.3, by acceleration or
otherwise) until payment in full (whether before or after judgment) shall be
payable to Acceptance Bank or the Issuing Bank on demand at the rate specified
in ss.5.10 for overdue principal on the Loans.
ss. Credit Instrument Payments.
If any draft shall be presented or other demand for payment shall be
made under any Letter of Credit, the Issuing Bank shall notify the Borrowers of
the date and amount of the draft presented or demand for payment and of the date
and time when it expects to pay such draft or honor such demand for payment. If
the Borrowers fail to reimburse the Issuing Bank as provided in ss.4.3 on or
before the date that such draft is paid or other payment is made by the Issuing
Bank, or, with respect to Bankers' Acceptances, if the Borrowers fail to
reimburse the Acceptance Bank upon the maturity of such Bankers' Acceptances,
the Issuing Bank or the Acceptance Bank may at any time thereafter notify the
Lenders of the amount of any such Unpaid Reimbursement Obligation. No later than
3:00 p.m. (Boston time) on
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11
the Business Day next following the receipt of such notice, each Lender shall
make available to the Issuing Bank or the Acceptance Bank (as the case may be),
at its head office, in immediately available funds, such Lender's Commitment
Percentage of such Unpaid Reimbursement Obligation, together with an amount
equal to the product of (a) the average, computed for the period referred to in
clause (c) below, of the weighted average interest rate paid by the Issuing Bank
for federal funds acquired by the Issuing Bank or the Acceptance Bank during
each day included in such period, times (b) the amount equal to such Lender's
Commitment Percentage of such Unpaid Reimbursement Obligation, times (c) a
fraction, the numerator of which is the number of days that elapse from and
including the date the Issuing Bank or the Acceptance Bank paid the draft
presented for honor or otherwise made payment to the date on which such Lender's
Commitment Percentage of such Unpaid Reimbursement obligation shall become
immediately available to the Issuing Bank, and the denominator of which is 360.
The responsibility of the Issuing Bank and the Acceptance Bank to the Borrowers
and the Lenders shall be only to determine that the documents (including each
draft) delivered under each Credit Instrument in connection with such
presentment shall be in conformity in all material respects with such Credit
Instrument.
ss. Obligations Absolute.
The Borrowers' obligations under this ss.4 shall be joint and several
and absolute and unconditional under any and all circumstances and irrespective
of the occurrence of any Default or Event of Default or any condition precedent
whatsoever or any setoff, counterclaim or defense to payment which any Borrower
may have or have had against the Issuing Bank, the Acceptance Bank any Lender or
any beneficiary of a Credit Instrument. Each of the Borrowers further agrees
with the Issuing Bank, the Acceptance Bank and the Lenders that the Issuing
Bank, the Acceptance Bank and the Lenders shall not be responsible for, and the
Borrowers' Reimbursement Obligations under ss.4.3 shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute between or among
the Borrowers, the beneficiary of any Credit Instrument or any financing
institution or other party to which any Credit Instrument may be transferred or
any claims or defenses whatsoever of the Borrowers against the beneficiary of
any Credit Instrument or any such transferee, provided, however, that the
Acceptance Bank or the Issuing Bank acts in good faith and in compliance with
all applicable foreign and domestic laws. The Acceptance Bank, the Issuing Bank
and the Lenders shall not be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Credit Instrument. Each of the Borrowers
agrees that any action taken or omitted by the Acceptance Bank, the Issuing Bank
or any Lender under or in connection with each Credit Instrument and the related
drafts and documents, if done in good faith and in compliance with all
applicable foreign and domestic laws, shall be binding upon the Borrowers and
shall not result in any liability on the part of the Acceptance Bank, the
Issuing Bank or any Lender to the Borrowers. Notwithstanding the foregoing, the
Borrowers shall not be required to indemnify any Lender, the Acceptance Bank or
the Issuing Bank for any claims, damages, losses, liabilities, costs or expenses
to the extent that a court of competent jurisdiction makes a final unappealable
determination that such claims, damages, losses, liabilities, costs or expenses
were caused by (i) the willful misconduct or gross negligence of the Acceptance
Bank or Issuing Bank in determining whether a request presented under any Credit
Instrument complied with the terms of such Credit Instrument or (ii) the
Acceptance Bank or the Issuing Bank's bad faith failure to pay under any Credit
Instrument after the presentation of it to of a request strictly complying with
the terms and conditions of such Credit Instrument.
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12
ss. Reliance by Issuer.
To the extent not inconsistent with ss.4.5, the Acceptance Bank or
the Issuing Bank shall be entitled to rely, and shall be fully protected in
relying upon, any Credit Instrument, draft, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Acceptance Bank or the Issuing
Bank. The Acceptance Bank or the Issuing Bank shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first have received such advice or concurrence of the Majority Banks as it
reasonably deems appropriate or it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Acceptance Bank and the Issuing Bank shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement in accordance with a
request of the Majority Banks, and such request and any action taken or failure
to act pursuant thereto shall be binding upon the Lenders and all future holders
of the Notes or of a Credit Instrument Participation.
ss. Letter of Credit Fee.
(a) The Borrowers shall, on the date of issuance or any extension or
renewal of any Letter of Credit and at such other time or times as such charges
are customarily made by the Issuing Bank, pay a fee (in each case, a "Letter of
Credit Fee") to the Issuing Bank (a) annually in advance (with the first such
payment due upon the issuance thereof and thereafter on each successive
anniversary that such Letter of Credit is outstanding) in respect of each
standby Letter of Credit, an amount equal to the Applicable Margin for LIBOR
Rate Loans then in effect per annum multiplied by the Maximum Drawing Amount of
such standby Letter of Credit plus (i) the Issuing Bank's customary issuance
fee, and (ii) a fronting fee to the Issuing Bank equal to one-quarter of one
percent (0.25%) per annum on the Maximum Drawing Amount of such standby Letter
of Credit; and (b) in respect of each documentary Letter of Credit a negotiation
fee equal to one-quarter of one percent (0.25%) of the face amount of such
documentary Letter of Credit payable upon presentation plus the Issuing Bank's,
customary issuance fee, such Letter of Credit Fee (but not such issuance,
amendment, fronting or negotiation fee) to be for the accounts of the Lenders in
accordance with their respective Commitment Percentages. Amounts paid by the
Borrowers in respect of Letter of Credit Fees shall be non-refundable.
Notwithstanding the foregoing, if there is a reduction in the Maximum Drawing
Amount of any Letter of Credit (other than commercial or documentary Letters of
Credit), the Borrowers will receive on a per diem basis a pro-rata refund of the
fees (excluding any fronting fee or customary issuance fee) paid in connection
with such Letter of Credit as set forth in this ss.4.7.
(b) With respect to all fees payable by the Borrowers to the Issuing
Bank for the account of the Lenders hereunder, the Issuing Bank will, at the end
of each month, deliver to the Administrative Agent, for the account of the
Lenders, all fees paid by the Borrowers to the Issuing Bank during such month.
Promptly after its receipt of such fees, the Agent will distribute to each
Lender, to the extent of such Lender's Commitment Percentage therein, all such
fees paid to the Agent by the Issuing Bank. In the event that the Issuing Bank
makes a refund of fees to the Borrowers pursuant to ss.4.7(a), and upon the
Lenders' receipt of notice of such refund by the Issuing Bank, each of the
Lenders will promptly make available to the Issuing Bank, at its head office, in
immediately available funds, such Lender's
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13
Commitment Percentage of any such refunded fees; provided, however, that the
Lenders shall not be required to reimburse the Issuing Bank for their respective
Commitment Percentage for any refund to the extent that the Issuing Bank has
not, on the date the Borrowers have received a refund of fees, delivered the
fees in question to the Administrative Agent for distribution to the Lenders
pursuant to the provisions of this clause (b).
ss.
Existing Letters of Credit.
The Borrowers and the Lenders agree that the letters of credit
described on Schedule 4.8 hereto (the "Existing Letters of Credit"), which
Existing Letters of Credit have previously been issued by Fleet or its
affiliates either (a) for the account of the Borrowers, or (b) for the account
of one or more affiliates of the Borrowers, shall be deemed Letters of Credit
issued under and governed by this Credit Agreement, that this Credit Agreement
supersedes any and all prior agreements between the Borrowers and Fleet with
respect to the Existing Letters of Credit, and that all the Existing Letters of
Credit shall be subject to and governed by the terms of this Credit Agreement.
As to the letters of credit referred to in clause (b) of the preceding sentence,
the Borrowers acknowledge that (i) although the account parties for each of such
letters of credit were affiliates of the Borrowers, each of such letters of
credit was issued exclusively to secure payment obligations of one or more of
the Borrowers to trade vendors or to otherwise finance the working capital needs
of the Borrowers, (ii) the reimbursement of the issuer or issuers thereof for
drawings upon each of such letters of credit was unconditionally guaranteed by
the Borrowers, which guarantee obligations continue to be in full force and
effect as of and until the time that this Agreement is being executed, and (iii)
as between the Borrowers and the affiliates that were the account parties with
respect to each of such letters of credit, it has been agreed that the Borrowers
shall be obligated to reimburse the issuers thereof for any drawings thereon.
ss. CERTAIN GENERAL PROVISIONS.
ss. Agents' Fees.
The Borrowers shall pay to the Agents the fees set forth in the Fee Letter.
ss. Funds for Payments.
All payments of principal, interest, Reimbursement
Obligations, facility fees, Letter of Credit Fees and any other amounts due
hereunder or under any of the other Loan Documents shall be made to the
Administrative Agent, for the respective accounts of the Lenders, the Acceptance
Bank, the Issuing Bank and the Agents, as the case may be, at such location that
the Administrative Agent may from time to time designate, in each case in
Dollars in immediately available funds.
All payments by the Borrowers hereunder and under any of the
other Loan Documents shall be made without setoff or counterclaim and free and
clear of and without deduction for any taxes, levies, imposts, duties, charges,
fees, deductions, withholdings, compulsory loans, restrictions or conditions of
any nature now or hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein unless the
Borrowers are compelled by law to make such deduction or withholding. If any
such obligation is imposed upon the Borrowers with respect to any amount payable
by it hereunder or under any of the other Loan Documents, the Borrowers will
<PAGE>
14
pay to the Administrative Agent, for the account of the Lenders or (as the case
may be) the Administrative Agent, on the date on which such amount is due and
payable hereunder or under such other Loan Document, such additional amount in
Dollars as shall be necessary to enable the Lenders or the Administrative Agent
to receive the same net amount which the Lenders or the Administrative Agent
would have received on such due date had no such obligation been imposed upon
the Borrowers. The Borrowers will deliver promptly to the Administrative Agent
certificates or other valid vouchers for all taxes or other charges deducted
from or paid with respect to payments made by the Borrowers hereunder or under
such other Loan Document.
ss. Computations.
All computations of interest on the Loans and of facility fees,
Bankers' Acceptance Fees, Letter of Credit Fees or other fees shall, unless
otherwise expressly provided herein, be based on a 360-day year and paid for the
actual number of days elapsed. Except as otherwise provided in the definition of
the term "Interest Period" with respect to LIBOR Rate Loans, whenever a payment
hereunder or under any of the other Loan Documents becomes due on a day that is
not a Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension. The
outstanding amount of the Loans as reflected on the Note Records from time to
time shall be considered prima facie evidence, absent manifest error, of the
principal amount thereof owing and unpaid to such Lender unless within five (5)
Business Days after receipt of any notice by the Administrative Agent or any of
the Lenders of such outstanding amount, the Administrative Agent or such Lender
shall notify the Borrowers to the contrary.
ss. Inability to Determine LIBOR Rate.
In the event, prior to the commencement of any Interest Period
relating to any LIBOR Rate Loan, the Administrative Agent shall determine in
good faith or be notified by the Majority Lenders in good faith that adequate
and reasonable methods do not exist for ascertaining the LIBOR Rate that would
otherwise determine the rate of interest to be applicable to any LIBOR Rate Loan
during any Interest Period, the Administrative Agent shall forthwith give notice
of such determination (which shall be conclusive and binding on the Borrowers
and the Lenders) to the Borrowers and the Lenders. In such event (a) any Loan
Request or Conversion Request with respect to LIBOR Rate Loans shall be
automatically withdrawn and shall be deemed a request for Base Rate Loans, (b)
each LIBOR Rate Loan will automatically, on the last day of the then current
Interest Period relating thereto, become a Base Rate Loan, and (c) the
obligations of the Lenders to make LIBOR Rate Loans shall be suspended until the
Administrative Agent or the Majority Lenders determines that the circumstances
giving rise to such suspension no longer exist, whereupon the Administrative
Agent shall so notify the Borrowers and the Lenders.
ss. Illegality.
Notwithstanding any other provisions herein, if any present or
future law, regulation, treaty or directive or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
LIBOR Rate Loans, such Lender shall forthwith give notice of such circumstances
to the Borrowers and the other Lenders and thereupon (a) the commitment of such
Lender to make LIBOR Rate Loans or convert Loans of another Type to LIBOR Rate
Loans shall forthwith be suspended and (b) such Lender's Loans then outstanding
as LIBOR Rate Loans, if any, shall be converted automatically to Base Rate Loans
on the last day of each Interest Period applicable to such LIBOR Rate Loans or
within such
<PAGE>
15
earlier period as may be required by law. The Borrowers hereby agree promptly to
pay the Administrative Agent for the account of such Lender, upon demand by such
Lender, any additional amounts necessary to compensate such Lender for any costs
incurred by such Lender in making any conversion in accordance with this ss.5.5,
including any interest or fees payable by such Lender to lenders of funds
obtained by it in order to make or maintain its LIBOR Loans hereunder.
ss. Additional Costs, Etc.
If any future applicable law or any change in any present law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to any Lender
or the Administrative Agent by any central bank or other fiscal, monetary or
other authority (whether or not having the force of law), shall:
subject any Lender, the Agents, the Acceptance Bank or the
Issuing Bank to any tax, levy, impost, duty, charge, fee, deduction or
withholding of any nature with respect to this Credit Agreement, the other Loan
Documents, any Credit Instrument, such Lender's Commitment, Loans or Credit
Instrument Participations (other than taxes based upon or measured by the income
or profits of such Lender, the Administrative Agent, the Acceptance Bank or the
Issuing Bank), or
materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Lender of the principal of or the
interest on any Loans or Credit Instrument Participation or any other amounts
payable to any Lender, the Agents, the Acceptance Bank or the Issuing Bank under
this Credit Agreement or any of the other Loan Documents, or
impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or letters of credit issued by,
or commitments of an office of any Lender, the Acceptance Bank or the Issuing
Bank, or
impose on any Lender, the Agents, the Acceptance Bank or the
Issuing Bank any other conditions or requirements with respect to this Credit
Agreement, the other Loan Documents, any Credit Instrument, the Loans, such
Lender's Commitment or Credit Instrument Participations, or any class of loans,
letters of credit, bankers' acceptances or commitments of which any of the Loans
or such Lender's Commitment or Credit Instrument Participation forms a part, and
the result of any of the foregoing is
(i) to increase the cost to the Acceptance
Bank or the Issuing Bank or any Lender of making,
funding, issuing, renewing, extending or maintaining
any of the Loans or such Lender's Commitment, any
Credit Instrument or any Credit Instrument
Participation, or
(ii) to reduce the amount of principal,
interest, Reimbursement Obligation or other amount
payable to such Lender, the Agents, the Acceptance
Bank or the Issuing Bank hereunder on account of such
Lender's Commitment, any Credit Instrument, any of
the Loans or any Credit Instrument Participation, or
<PAGE>
16
(iii) to require such Lender, the Agents,
the Acceptance Bank or the Issuing Bank to make any
payment or to forego any interest or Reimbursement
Obligation or other sum payable hereunder, the amount
of which payment or foregone interest or
Reimbursement Obligation or other sum is calculated
by reference to the gross amount of any sum
receivable or deemed received by such Lender, the
Agents, the Acceptance Bank or the Issuing Bank from
the Borrowers hereunder,
then, and in each such case, the Borrowers will, upon demand made by such
Lender, the Agents, the Acceptance Bank or the Issuing Bank (as the case may be)
at any time and from time to time and as often as the occasion therefor may
arise, pay to such Lender, the Agents, the Acceptance Bank or the Issuing Bank
such additional amounts as will be sufficient to compensate such Lender, the
Agent, the Acceptance Bank or the Issuing Bank for such additional cost,
reduction, payment or foregone interest or Reimbursement Obligation or other
sum.
ss. Capital Adequacy.
If after the date hereof the Acceptance Bank, the Issuing Bank, any
Lender or the Administrative Agent determines that (a) the adoption of or change
in any law, governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law) regarding capital requirements for
banks or bank holding companies or any change in the interpretation or
application thereof by a court or governmental authority with appropriate
jurisdiction, or (b) compliance by the Acceptance Bank, the Issuing Bank or such
Lender or any corporation controlling the Acceptance Bank, the Issuing Bank or
such Lender with any law, governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) of any such entity regarding
capital adequacy, has the effect of reducing the return on such Lender's
Commitment, Loans or Credit Instrument Participation to a level below that which
the Acceptance Bank, the Issuing Bank or such Lender could have achieved but for
such adoption, change or compliance (taking into consideration the Acceptance
Bank, the Issuing Bank's or such Lender's then existing policies with respect to
capital adequacy and assuming full utilization of such entity's capital) by any
amount deemed by the Acceptance Bank, the Issuing Bank or such Lender to be
material, then the Acceptance Bank, the Issuing Bank or such Lender may notify
the Borrowers of such fact. To the extent that the amount of such reduction in
the return on capital is not reflected in the Base Rate (if relating to Loans or
Unpaid Reimbursement Obligations) or the Bankers' Acceptance Fee (if relating to
the Bankers' Acceptances), the Borrowers, the Acceptance Bank, the Issuing Bank
or such Lender shall thereafter attempt to negotiate in good faith an adjustment
to the compensation payable hereunder which will adequately compensate such
lender for such reduction. If the Borrowers, the Acceptance Bank, the Issuing
Bank or such Lender are unable to agree to such adjustment within thirty (30)
days of the day on which the Borrowers receive such notice, then the fees
payable hereunder shall increase by an amount which will, in the Acceptance
Bank's, the Issuing Bank's or such Lender's reasonable determination, be
sufficient to compensate the Acceptance Bank, the Issuing Bank or the such
Lender for the amount of such reduction in the return on capital as and when
such reduction is evidenced by calculations, in reasonable detail, presented by
the Acceptance Bank, the Issuing Bank or such Lender of a certificate in
accordance with ss.5.8 hereof. The Acceptance Bank, the Issuing Bank and each
Lender shall allocate such cost increases among its customers in good faith and
on an equitable basis.
<PAGE>
17
ss. Certificate.
The Agents, the Acceptance Bank, the Issuing Bank or the Lenders
shall provide to the Borrowers a certificate setting forth any additional
amounts payable pursuant to ss.ss.5.6 or 5.7 and a brief explanation of such
amounts which are due, and such certificate shall be conclusive, absent manifest
error, that such amounts are due and owing.
ss. Indemnity.
Each Borrower agrees to indemnify each Lender and to hold each
Lender harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Lender may sustain or incur as a consequence of
(a) default by the Borrowers in payment of the principal amount of or any
interest on any LIBOR Rate Loans as and when due and payable, including any such
loss or expense arising from interest or fees payable by such Lender to lenders
of funds obtained by it in order to maintain its LIBOR Rate Loans, (b) default
by the Borrowers in making a borrowing or conversion after the Borrowers have
given (or is deemed to have given) a Loan Request, notice or a Conversion
Request relating thereto in accordance with ss.2.7 or ss.2.8 or (c) the making
of any payment of a LIBOR Rate Loan or the making of any conversion of any such
Loan to a Base Rate Loan on a day that is not the last day of the applicable
Interest Period with respect thereto, including interest or fees payable by such
Lender to lenders of funds obtained by it in order to maintain any such Loans.
ss. Interest After Default.
Overdue principal and (to the extent permitted by applicable law)interest on the
Loans and all other overdue amounts payable hereunder or under any of the other
Loan Documents shall bear interest compounded monthly and payable on demand at a
rate per annum equal to three percent (3%) above the Base Rate from time to time
in effect plus the Applicable Margin until such amount shall be paid in full
(after as well as before judgment).
During the continuance of any Event of Default the principal of the Loans not
overdue or any other amounts payable under any of the other Loan Documents
shall, until such Event of Default has been cured or remedied or such Event of
Default has been waived by the Majority Lenders pursuant to ss.27, bear interest
at a rate per annum equal to the rate of interest applicable to overdue
principal pursuant to ss.5.10(a) hereof.
ss. Concerning Joint and Several Liability of the Borrowers.
Each of the Borrowers is accepting joint and several liability
hereunder in consideration of the financial accommodations to be provided by the
Agents, the Acceptance Bank, the Issuing Bank and the Lenders under this
Agreement, for the mutual benefit, directly and indirectly, of each of the
Borrowers and in consideration of the undertakings of each of the Borrowers to
accept joint and several liability for the obligations of each of them.
Each of the Borrowers, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with each other Borrower, with respect to
the payment and performance of all of the Obligations, it being the intention of
the parties hereto that all the Obligations shall be the joint and several
obligations of all of the Borrowers without preferences or distinction among
them.
<PAGE>
18
If and to the extent that any of the Borrowers shall fail to
make any payment with respect to any of the Obligations as and when due or to
perform any of such Obligations in accordance with the terms thereof, then in
each such event each other Borrower will make such payment with respect to, or
perform, such Obligation.
The obligations of each Borrower under the provisions of this
ss.5.11 constitute the absolute and unconditional obligations of such Borrower
enforceable against it to the full extent permitted under the terms hereof,
irrespective of the validity, regularity or enforceability of this Agreement or
any other circumstance whatsoever.
Except as otherwise expressly provided for herein, each
Borrower hereby waives notice of acceptance of its joint and several liability,
notice of the Loans made under this Agreement, notice of the occurrence of any
Default or Event of Default, or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by the Agent, the
Acceptance Bank, the Issuing Bank or the Lenders under or in respect of any of
the Obligations, any requirement of diligence or to mitigate damages and,
generally, all demands, notices and other formalities of every kind in
connection with this Agreement. Each Borrower hereby assents to, and waives
notice of, any extension or postponement of the time for the payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by the Agent, the Acceptance Bank, the
Issuing Bank or the Lenders at any time or times in respect of any default by
any Obligor in the performance or satisfaction of any term, covenant, condition
or provision of this Agreement, any and all other indulgences whatsoever by the
Agent, the Acceptance Bank, the Issuing Bank or the Lenders in respect of any of
the obligations hereunder, and the taking, addition, substitution or release, in
whole or in part, at any time or times, of any security for any of such
obligations or the addition, substitution or release, in whole or in part, of
any Obligor. Without limiting the generality of the foregoing, each Borrower
assents to any other action or delay in acting or failure to act on the part of
the Agent, the Acceptance Bank, the Issuing Bank or the Lenders including,
without limitation, any failure strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this ss.5.11, afford grounds
for terminating, discharging or relieving such Borrower, in whole or in part,
from any of its Obligations under this ss.5.11, it being the intention of each
Borrower that, so long as any of the Obligations remain unsatisfied, the
Obligations of such Borrower under this ss.5.11 shall not be discharged except
by performance and then only to the extent of such performance. The joint and
several liability of the Borrowers hereunder shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, membership, constitution or place of formation of any
Obligor or the Agent, the Acceptance Bank, the Issuing Bank or the Lenders. If
at any time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by the
Agent, the Acceptance Bank, the Issuing Bank or the Lenders upon the insolvency,
bankruptcy or reorganization of any of the Obligors, or otherwise, the
provisions of this ss.5.11 will forthwith be reinstated in effect, as though
such payment had not been made.
ss. Interest.
In no event shall the amount of interest due or payable
hereunder or under the Notes exceed the maximum rate of interest allowed by
applicable law and, in the event any such payment is inadvertently made by the
Borrowers or inadvertently received by the Administrative Agent, the Acceptance
Bank, the Issuing Bank or any Lender, then such excess sum shall be credited as
a payment of principal, unless the Borrowers shall notify the Administrative
Agent, the Acceptance Bank, the Issuing
<PAGE>
19
Bank or such Lender in writing that it elects to have such excess returned
forthwith. It is the express intent hereof that the Borrowers not pay and none
of the Administrative Agent, the Acceptance Bank, the Issuing Bank or the
Lenders receive, directly or indirectly in any manner whatsoever, interest in
excess of that which may legally be paid by the Borrowers under applicable law.
Notwithstanding the use by the Lenders of the Base Rate and
the LIBOR Rate as reference rates for the determination of interest on the
Loans, the Lenders shall be under no obligation to obtain funds from any
particular source in order to charge interest to the Borrowers at interest rates
related to such reference rates.
ss. COLLATERAL SECURITY.
The Obligations shall be secured by a perfected first priority
security interest in all of the issued and outstanding capital stock of each
Borrower pursuant to the terms of the Security Documents.
ss. REPRESENTATIONS AND WARRANTIES.
Each Apparel Obligor represents and warrants to the Lenders, the
Agents, the Acceptance Bank and the Issuing Bank as follows:
ss. Corporate Authority; Ownership.
Incorporation; Good Standing. Each Apparel Obligor (i) is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation, (ii) has all requisite corporate power to own its
property and conduct its business as now conducted and as presently
contemplated, and (iii) is in good standing as a foreign corporation and is duly
authorized to do business in each jurisdiction where a failure to be so
qualified would have a materially adverse effect on the business, assets or
financial condition of such Apparel Obligor.
Authorization. The execution, delivery and performance of this
Credit Agreement and the other Loan Documents to which each Apparel Obligor is
or is to become a party, and the performance by each such Person of all of its
agreements and obligations under each of such documents, and the transactions
contemplated hereby and thereby (i) are within the corporate authority of each
such Person, (ii) have been duly authorized by all necessary corporate
proceedings, (iii) do not conflict with or result in any breach or contravention
of any provision of law, statute, rule or regulation to which any Apparel
Obligor is subject or any judgment, order, writ, injunction, license or permit
applicable to such Person, (iv) do not conflict with any provision of the
corporate charter or bylaws of, any agreement or other instrument binding upon,
or trust agreement of, such Person and (v) do not require any approval, consent,
order, authorization or license by, or giving notice to, or taking any other
action with respect to, any governmental or regulatory authority or agency under
any provision of any applicable law.
Enforceability. The execution and delivery of this Credit
Agreement and the other Loan Documents to which each Apparel Obligor is or is to
become a party will result in valid and legally binding obligations of such
Person enforceable against such Person in accordance with the respective terms
and provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency,
<PAGE>
20
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that availability of
the remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.
ss. No Business Activity; Subsidiaries.
Except as set forth on Schedule 7.2, or as a result of transactions
occurring after the Closing Date permitted by ss.9.3 and ss.9.5, no Apparel
Obligor owns or holds of record and/or beneficially (whether directly or
indirectly) any shares of any class in the capital of any other corporations or
any legal and/or beneficial interests in any corporation, partnership, limited
liability company, business trust or joint venture or in any other
unincorporated trade or business enterprise (excluding certain immaterial
investments having a value not exceeding $50,000).
ss. Governmental Approvals.
The execution, delivery and performance by each of the Apparel
Obligors of any of the Loan Documents to which any such Apparel Obligors is or
is to become a party and the transactions contemplated hereby and thereby do not
require the approval or consent of, or filing with, any governmental agency or
authority other than those already obtained. Each of the Apparel Obligors holds
all material licenses, permits and other certificates required for the operation
of its business. Each of the Apparel Obligors is in compliance in all material
respects with all applicable state and Federal filing and operating
requirements, including all regulations governing equal employment opportunity.
ss. Title to Properties; Leases.
Except as indicated on Schedule 7.4 hereto, the Apparel Obligors own
all of the assets reflected in the balance sheets of the Apparel Obligors as at
the Balance Sheet Date or acquired since that date (except property and assets
sold or otherwise disposed of in the ordinary course of business since that date
or Permitted Dispositions), subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens.
ss. Financial Statements.
There has been furnished to each of the Lenders consolidated
and consolidating balance sheets of the Guarantor and its Subsidiaries as at
February 1, 1997 and the consolidated and consolidating statements of income and
cash flow of the Guarantor and its Subsidiaries, each for the fiscal year then
ended, in each case audited and certified by KPMG Peat Marwick. Such balance
sheets and statements of income and cash flow of the Guarantor and their
Subsidiaries shall have been prepared in accordance with generally accepted
accounting principles and fairly present the financial condition of the
Guarantor and their Subsidiaries as at the close of business on the date thereof
and the results of operations for the fiscal year then ended. Except as set
forth on Schedule 7.5, there are no contingent liabilities of the Guarantor as
of such date involving material amounts (other than guaranties of obligations of
Borrowers), known to the officers of such Person, which were not disclosed in
such balance sheets and the notes related thereto.
<PAGE>
21
There has been furnished to each of the Lenders an unaudited
combined balance sheet of the Borrowers and combined statements of income and
cash flow of the Borrowers, each as at the Balance Sheet Date. Such balance
sheet and statements of income and cash flow shall have been prepared in
accordance with generally accepted accounting principles (except for the absence
of footnotes) and fairly present the financial condition of the Borrowers as at
the close of business on the date thereof. Except as set forth on Schedule 7.5,
there are no contingent liabilities of any Borrower or any of its Subsidiaries
as of such date involving material amounts which were not disclosed in such
balance sheets of the Borrowers or the notes related thereto.
ss. No Material Changes, Etc.
Except as set forth on Schedule 7.6, since the Balance Sheet Date
there has occurred no materially adverse change in the financial condition or
business of any Apparel Obligor as shown on or reflected in the balance sheets
of the Apparel Obligors as at the Balance Sheet Date, or the statements of
income and cash flow for the fiscal year then ended, other than changes in the
ordinary course of business that have not had any materially adverse effect
either individually or in the aggregate on the business or financial condition
of the Apparel Obligors.
ss. Franchises, Patents, Copyrights, Etc.
The Apparel Obligors possess all material franchises, patents,
copyrights, trademarks, trade names, licenses and permits, and rights in respect
of the foregoing, adequate for the conduct of their respective businesses
substantially as now conducted without known conflict with any rights of others.
ss. Litigation.
Except as set forth on Schedule 7.8, there are no actions, suits,
proceedings or investigations of any kind pending or, to the best knowledge of
the Obligors after due inquiry, threatened against any Apparel Obligor or before
any court, tribunal or administrative agency or board that, if adversely
determined, would likely, either in any case or in the aggregate, materially
adversely affect the properties, assets, financial condition or business of any
Apparel Obligor or materially impair the right of any Apparel Obligor to carry
on business substantially as now conducted by them, or result in any material
liability not adequately covered by insurance, or for which adequate reserves
are not maintained on the combined balance sheet of the Apparel Obligors, or
which question the validity of this Credit Agreement or any of the other Loan
Documents or any action taken or to be taken pursuant hereto or thereto.
ss. No Materially Adverse Contracts, Etc.
None of the Apparel Obligors are subject to any charter, corporate
or other legal restriction, or any judgment, decree, order, rule or regulation
that has or is expected in the future to have a materially adverse effect on the
business, assets or financial condition of any of such Persons. None of the
Apparel Obligors are a party to any contract or agreement that has or is
expected to have any materially adverse effect on the business of any of such
Persons.
ss. Compliance with Other Instruments, Laws, Etc.
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22
None of the Apparel Obligors are in material violation of any
provision of their respective charter documents, bylaws, or any agreement or
instrument to which any of them may be subject or by which any of them or any of
their properties may be bound or any decree, order, judgment, statute, license,
rule or regulation, in any of the foregoing cases in a manner that could result
in the imposition of material penalties or materially and adversely affect the
financial condition, properties or business of any of such Persons.
ss. Tax Status.
The Guarantor and each of its Subsidiaries (a) has made or filed all
federal income tax returns, reports and declarations and, has made or filed all
state and other tax returns, reports and declarations required by any
jurisdiction to which any of them is subject (to the extent that any failure to
make or file any such tax returns, reports and declarations would have,
individually or in the aggregate, a materially adverse effect on the financial
condition, properties or business of any such Person), (b) has paid all taxes
and other governmental assessments and charges shown or determined to be due on
such returns, reports and declarations, except those being contested in good
faith and by appropriate proceedings and (c) has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and to the best knowledge of each Obligor after
due and diligent inquiry, there is no basis for any such claim.
ss. No Event of Default.
No Default or Event of Default has occurred and is continuing.
ss. Holding Company and Investment Company Acts.
None of the Apparel Obligors are a "holding company", or a
"subsidiary company" of a "holding company", or an affiliate" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act of
1935; nor are any of them an "investment company", or an "affiliated company" or
a "principal underwriter" of an "investment company", as such terms are defined
in the Investment Company Act of 1940.
ss. Absence of Financing Statements, Etc.
To the best of the Apparel Obligors' knowledge, except with respect
to Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property owned by any Apparel Obligor or any rights relating
thereto.
ss. Certain Transactions.
Except as set forth on Schedule 7.15, none of the officers,
directors, or employees of any of the Apparel Obligors is presently a party to
any material transaction with any Apparel Obligor (other than for services as
employees, officers and directors or for management services), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director
<PAGE>
23
or such employee or, to the knowledge of the Apparel Obligors, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
ss. Employee Benefit Plans.
In General. Each Employee Benefit Plan and each Guaranteed
Pension Plan has been maintained and operated in compliance in all material
respects with the provisions of ERISA and, to the extent applicable, the Code,
including but not limited to the provisions thereunder respecting prohibited
transactions and the bonding of fiduciaries and other persons handling plan
funds as required by ss.412 of ERISA. Each Obligor has heretofore delivered to
the Administrative Agent, when requested by the Administrative Agent, the most
recently completed annual report, Form 5500, with all required attachments, and
actuarial statement required to be submitted under ss.103(d) of ERISA, with
respect to each Guaranteed Pension Plan.
Terminability of Welfare Plans. No Employee Benefit Plan,
which is an employee welfare benefit plan within the meaning of ss.3(1) or
ss.3(2)(B) of ERISA, provides benefit coverage subsequent to termination of
employment, except as required by Title I, Part 6 of ERISA or the applicable
state insurance laws. The Obligors may terminate each such Plan at any time (or
at any time subsequent to the expiration of any applicable bargaining agreement)
in the discretion of the Obligors without liability to any Person other than for
claims arising prior to termination.
Guaranteed Pension Plans. Each contribution required to be
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien provisions
of ss.302(f) of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan, and neither the Obligors
nor any ERISA Affiliate is obligated to or has posted security in connection
with an amendment to a Guaranteed Pension Plan pursuant to ss.307 of ERISA or
ss.401(a)(29) of the Code. No liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred by any
Obligor, or any ERISA Affiliate with respect to any Guaranteed Pension Plan and
there has not been any ERISA Reportable Event (other than an ERISA Reportable
Event as to which the requirement of thirty (30) days notice has been waived),
or any other event or condition which presents a material risk of termination of
any Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each
Guaranteed Pension Plan, and on the actuarial methods and assumptions employed
for that valuation, the aggregate benefit liabilities of all such Guaranteed
Pension Plans determined on an ongoing funding basis (and not on a termination
basis) did not exceed the aggregate value of the assets of all such Guaranteed
Pension Plans, disregarding for this purpose the benefit liabilities and assets
of any Guaranteed Pension Plan with assets in excess of benefit liabilities.
Multiemployer Plans. No Obligor or any ERISA Affiliate has
incurred any material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under ss.4201 of ERISA or as a result of a sale of assets
described in ss.4204 of ERISA. No Obligor or any ERISA Affiliate has been
notified that any Multiemployer Plan is in reorganization or insolvent under and
within the meaning of ss.4241 or ss.4245 of ERISA or is at risk of entering
reorganization or becoming insolvent, or that any Multiemployer Plan intends to
terminate or has been terminated under ss.4041A of ERISA.
<PAGE>
24
ss. Regulations U and X.
The proceeds of the Loans shall be used (i) to refinance on the
Closing Date a portion of the Indebtedness of JBI, Inc. under the JBI Credit
Agreement and (ii) for working capital and general corporate purposes. The
Borrowers will obtain Letters of Credit solely for working capital and other
general corporate purposes. No portion of any Loan is to be used, and no portion
of any Letter of Credit is to be obtained, for the purpose of purchasing or
carrying any "margin security" or "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. Parts 221 and 224.
ss. Environmental Compliance.
Each Obligor has determined that (a) neither the Apparel Obligors
nor any operator of the Real Estate or any operations thereon, is in material
violation, or alleged material violation, of any Environmental Laws and (b) none
of the Real Estate owned by the Guarantor or any Subsidiary contains any
material amount of any Hazardous Substances.
ss. Fiscal Year.
The fiscal year of each of the Apparel Obligors ends on the Saturday
closest to January 31, of each calendar year.
ss. Loans as Senior Indebtedness.
All obligations and liabilities of the Apparel Obligors to the
Acceptance Bank, the Issuing Bank and/or the Lenders in respect of the principal
of and interest on the Loans and all Reimbursement Obligations under the Credit
Instruments will constitute "Senior Indebtedness", "Senior Debt" or "Superior
Indebtedness" under the terms of each of the documents or instrument evidencing,
or pursuant to which there is issued indebtedness which purports to be
Subordinated Debt.
ss. Other Representations.
Each of the representations and warranties made by each of the
Apparel Obligors or any other Person in any of the Loan Documents to which any
such Person is a party, was true and correct in all material respects when made
and continues to be true and correct in all material respects on the Closing
Date, except to the extent that any of such representations and warranties may
have been affected by the consummation of the transactions contemplated and
permitted or required by the Loan Documents.
ss. Solvency.
As of the Closing Date and after giving effect to the transactions
contemplated by the Loan Documents (including, without limitation, the
conversion into equity of all intercompany loans owing by any of the Borrowers
to any Subsidiary of the Guarantor (other than the Borrowers as of the Balance
Sheet Date)), (i) the property of each Obligor, at a fair valuation, will exceed
its debt; (ii) the capital of each Obligor will not be unreasonably small to
conduct its business; (iii) each Obligor will not have incurred debts, or have
intended to incur debts, beyond its ability to pay such debts as they mature;
and (iv) the present fair, saleable value of the assets of each Obligor will be
materially greater than the amount that will be required to pay its probable
liabilities (including debts) as they become absolute and
<PAGE>
25
matured. For purposes of this ss.7.22, "debt" means any liability on a claim,
and "claim" means (i) the right to payment, whether or not such right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
undisputed, legal, equitable, secured or unsecured, or (ii) the right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, undisputed, secured or
unsecured.
ss. Bankers' Acceptances.
With respect to each draft accepted and discounted for a Borrower's
account by the Acceptance Bank, on behalf of the Lenders, that (i) each such
draft is an Eligible Draft; (ii) each such draft will grow out of one or more
transactions involving the importation or exportation of goods between two
countries or the domestic shipment of goods within the United States pursuant to
a contract in existence at the time of creation of such Bankers' Acceptance;
(iii) each such draft will finance a current shipment of goods; (iv) each such
draft of such Borrower as exporter/seller will have a tenor reasonably
commensurate with usual credit terms or six months, whichever is shorter; (v)
each such draft of such Borrower as importer/ purchaser will have a tenor
reasonably commensurate with the anticipated time of receipt of the goods plus
the anticipated time for preparing the goods for distribution into the channels
of trade or thirty (30) days, whichever is shorter; (vi) on the date of
acceptance of such draft, no other financing is or will be outstanding in
respect of such transaction during the period from the date of such draft until
the maturity thereof; (vii) all necessary licenses for the exportation,
importation and payment of the purchase price and related costs of shipment will
have been obtained; (viii) a description of goods being shipped, the actual or
anticipated date of shipment, value of the shipment and the addresses to which
and from which shipment will be made, has been furnished to the Acceptance Bank
for each such transaction; (ix) additional information about each such
transaction, including documents or copies of documents, will be furnished
promptly upon such Acceptance Bank's request and (x) on the date of acceptance
of such draft, such goods will be in the channels of trade and no other
financing will be existence for such transaction.
ss. Full Disclosure.
All information heretofore furnished by any Apparel Obligor to any
Lender or the Administrative Agent in connection with the Loan Documents was,
and all such information hereafter furnished by any Apparel Obligor to any
Lender or Administrative Agent will be, true and accurate in all material
respects or based on reasonable estimates on the date as of which such
information is stated or certified.
ss. AFFIRMATIVE COVENANTS OF THE APPAREL OBLIGORS.
Each Apparel Obligor covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation, Credit Instrument or Note is outstanding or any
Lender has any obligation to make any Loans or the Acceptance Bank or Issuing
Bank has any obligation to issue, extend or renew any Credit Instrument:
ss. Punctual Payment.
The Borrowers will duly and punctually pay or cause to be paid the
principal and interest on the Loans, all Reimbursement Obligations, the Letter
of Credit Fees, the facility fees, the Agents' fees and all other amounts
provided for in this Credit Agreement and the other Loan Documents to which any
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26
Borrower or any of its Subsidiaries is a party, all in accordance with the terms
of this Credit Agreement and such other Loan Documents.
ss. Maintenance of Office.
Each Apparel Obligor will maintain its chief executive office at 555
Turnpike Street, Canton, Massachusetts 02021 or 65 Sprague Street, Hyde Park,
Massachusetts 02136, or at such other place in the United States of America as
such Apparel Obligor shall designate upon written notice to the Administrative
Agent, where notices, presentations and demands to or upon such Apparel Obligor
in respect of the Loan Documents to which such Obligor is a party may be given
or made.
ss. Records and Accounts.
Each Apparel Obligor will (a) keep true and accurate records and
books of account in which full, true and correct entries will be made in
accordance with generally accepted accounting principles and (b) maintain
adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties,
contingencies, and other reserves.
ss. Financial Statements, Certificates and Information.
The Obligors will deliver to each of the Lenders:
as soon as practicable, but in any event not later than ninety
(90) days after the end of each fiscal year of the Obligors, the
consolidated and consolidating (in the case of the Guarantor and its
Subsidiaries) and the combined (in the case of the Borrowers and their
Subsidiaries) balance sheets as at the end of such year, and the
related consolidated and consolidating (in the case of the Guarantor
and its Subsidiaries) and combined (in the case of the Borrowers and
Subsidiaries) statements of income and statements of cash flow, for
such year, each setting forth in comparative form the figures for the
previous fiscal year and all such statements to be in reasonable
detail, prepared in accordance with generally accepted accounting
principles, and certified without qualification by KPMG Peat Marwick or
by other independent certified public accountants satisfactory to the
Administrative Agent, together with a written statement from such
accountants to the effect that they have read a copy of this Credit
Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default or Event
of Default, or, if such accountants shall have obtained knowledge of
any then existing Default or Event of Default they shall disclose in
such statement any such Default or Event of Default; provided that such
accountants shall not be liable to the Lenders for failure to obtain
knowledge of any Default or Event of Default;
as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the first three fiscal
quarters of the Obligors, copies of the unaudited consolidated and
consolidating (in the case of the Guarantor and its Subsidiaries) and
combined (in the case of the Borrowers and their Subsidiaries) balance
sheets as at the end of such quarter, and the related consolidated and
combined statements of income and statements of cash flow for the
portion of Obligors' fiscal year then elapsed, all in reasonable detail
and prepared in accordance with generally accepted accounting
principles, together with a certification by the principal financial or
accounting officer of each Obligor that the information contained in
such financial statements
<PAGE>
27
fairly presents the financial position of the Obligors and their
Subsidiaries on the date thereof (subject to year-end adjustments);
as soon as practicable, but in any event within forty-five
(45) days after the end of each month in each fiscal year of the
Obligors or in the case of the last month of each fiscal year, within
ninety (90) days, unaudited monthly consolidated (in the case of the
Guarantor and its Subsidiaries) and combined (in the case of the
Borrowers and their Subsidiaries) financial statements for such month
prepared in accordance with generally accepted accounting principles,
together with a certification by the principal financial or accounting
officer of each Obligor that the information contained in such
financial statements fairly presents the financial condition of the
Obligors and their Subsidiaries on the date thereof (subject to
year-end adjustments);
simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by
the principal financial or accounting officer of each Obligor in
substantially the form of Exhibit B hereto and setting forth in
reasonable detail computations evidencing compliance with the covenants
contained in ss.10 and (if applicable) reconciliations to reflect
changes in generally accepted accounting principles since the Balance
Sheet Date;
as soon as practicable and in any event no later than sixty
(60) days after the beginning of each fiscal year of the Obligors, a
quarterly consolidated and consolidating plan and financial forecast
for such fiscal year, including, without limitation, (i) forecasted
consolidated and consolidating balance sheets and forecasted
consolidated and consolidating statements of income and cash flows of
the Guarantor and its Subsidiaries for such fiscal year, and (ii) such
other projections as the Agents or any Lender may request;
upon the request of the Administrative Agent or any Lender,
copies of all compliance certificates and other reports and information
required to be delivered to the lenders under the Licensed Shoe Debt;
contemporaneously with the filing or mailing thereof,
copies of all material of a financial nature filed with the
Securities and Exchange Commission by the Guarantor or sent to the
stockholders of the Guarantor; and
from time to time such other financial data and information
(including accountants, management letters) as the Administrative Agent
or any Lender may reasonably request.
ss. Notices.
Defaults. The Apparel Obligors will promptly notify the Administrative
Agent and each of the Lenders in writing of the occurrence of any Default or
Event of Default. If any Person shall give any notice or take any other action
in respect of a claimed default (whether or not constituting an Event of
Default) under (i) this Credit Agreement or (ii) any other note, evidence of
indebtedness, indenture or other obligation to which or with respect to which
any Apparel Obligors is a party or obligor, whether as principal, guarantor,
surety or otherwise, the Obligors shall forthwith give written notice thereof to
the Administrative Agent and each of the Lenders, describing the notice or
action and the nature of the claimed default; provided, however, that no notice
shall be required to be given if the occurrence of the
<PAGE>
28
default under any such note, evidence of indebtedness, indenture or other
obligation referred to in clause (ii) above would not result in an Event of
Default under ss.14.1(f) and would not have a material adverse effect on the
business and financial condition of Apparel Obligors.
Notice of Litigation and Judgments. The Apparel Obligors will give
notice to the Administrative Agent and each of the Lenders in writing within
twenty (20) days of becoming aware of any litigation or proceedings threatened
in writing or any pending litigation and proceedings affecting any of the
Apparel Obligors or to which any of such Persons is or becomes a party involving
an uninsured claim against such Apparel Obligors that could reasonably be
expected to have a materially adverse effect on any of such Persons and stating
the nature and status of such litigation or proceedings. The Apparel Obligors
shall give notice to the Administrative Agent and each of the Lenders, in
writing, in form and detail satisfactory to the Administrative Agent, within
twenty (20) days of any judgment not covered by insurance, final or otherwise,
against any of the Apparel Obligors in an amount in excess of $500,000.
ss. Corporate Existence; Maintenance of Properties.
The Apparel Obligors will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence,
and reasonably necessary to preserve their respective rights and franchises.
Each of the Apparel Obligors (a) will cause all of its properties used or useful
in the conduct of their respective businesses to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment,
(b) will use reasonable efforts, consistent with its strategic goals, to cause
to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times,
and (c) will continue to engage primarily in the businesses of the same general
type now conducted by them and in related businesses.
ss. Insurance.
The Apparel Obligors will maintain with financially sound and
reputable insurers insurance with respect to their respective properties and
businesses against such casualties and contingencies as shall be in accordance
with the general practices of businesses engaged in similar activities in
similar geographic areas and in amounts, containing such terms, in such forms
and for such periods as may be reasonable and prudent.
ss. Taxes.
Subject to provisions of the Tax Sharing Agreement, the Guarantor
will, and will cause each of its Subsidiaries to, duly pay and discharge, or
cause to be paid and discharged, before the same shall become overdue, all
taxes, assessments and other governmental charges imposed upon it and its real
properties, sales and activities, or any part thereof, or upon the income or
profits therefrom, as well as all claims for labor, materials, or supplies that
if unpaid might by law become a lien or charge upon any of its property;
provided that any such tax, assessment, charge, levy or claim need not be paid
if (a) the validity or amount thereof shall currently be contested in good faith
by appropriate proceedings and if the Guarantor or such Subsidiary shall have
set aside on its books adequate reserves with respect thereto or (b) to the
extent that the failure to do so could not be expected to result in a materially
adverse effect on the Guarantor's business or the business of any Borrower; and
provided further that the Guarantor and each of its Subsidiaries will pay all
such taxes, assessments, charges, levies or claims forthwith upon the
commencement of proceedings to foreclose any lien that may have attached as
security therefor.
<PAGE>
29
ss. Inspection of Properties and Books, Etc.
General. Upon five (5) Business Days' prior notice, by the
Administrative Agent or any of the Lenders to the Apparel Obligors, the Lenders,
through the Administrative Agent or any of the Lenders' other designated
representatives, shall be permitted to visit and inspect any of the properties
of the Apparel Obligors, to examine the books of account of such Persons (and to
make copies thereof and extracts therefrom), and to discuss the affairs,
finances and accounts of such Persons with, and to be advised as to the same by,
its and their officers, all during normal business hours and at such reasonable
intervals as the Administrative Agent or any Lender may reasonably request;
provided, however, that in the event an Event of Default shall have occurred and
be continuing, no prior notice will be required for any such visit or
inspection.
Communications with Accountants. The Obligors authorize the Agents and,
if accompanied by the Agents, the Lenders to communicate directly with any
independent certified public accountants for the Guarantor or any of its
Subsidiaries and authorizes such accountants to disclose to the Administrative
Agent and the Lenders any and all financial statements and copies of any
management letter with respect to the business, financial condition and other
affairs of the Guarantor or any of its Subsidiaries. At the request of the
Administrative Agent, the Obligors shall cause to be delivered letters addressed
to such accountants instructing them to comply with the provisions of this
ss.8.9(b).
ss. Compliance with Laws, Contracts, Licenses, and Permits.
Each of the Apparel Obligors will (a) comply in all material
respects with the applicable laws and regulations wherever its business is
conducted, including all Environmental Laws, (b) comply with the provisions of
its charter documents and by-laws, (c) comply in all material respects with all
agreements and instruments by which it or any of its properties may be bound and
(d) comply in all material respects with all applicable decrees, orders, and
judgments, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a materially adverse effect on the
businesses of such Apparel Obligors. If any authorization, consent, approval,
permit or license from any officer, agency or instrumentality of any government
shall become necessary or required in order that any Apparel Obligor may fulfill
any of its obligations hereunder or any of the other Loan Documents to which
such Person is a party, such Apparel Obligor will immediately take or cause to
be taken all reasonable steps within the power of such Apparel Obligor to obtain
such authorization, consent, approval, permit or license and furnish the
Administrative Agent and the Lenders with evidence thereof. Without limiting the
foregoing, each of the Apparel Obligors will continuously hold all permits and
licenses required for the operation of its business, in all material respects,
including, without limitation all licenses, permits and other certificates
required by any Federal, state or local authority in connection with the
ownership and operation of its business.
ss. Employee Benefit Plans.
The Guarantor will, and will cause each of its Subsidiaries to, (i)
promptly upon filing the same with the Department of Labor or Internal Revenue
Service, furnish to the Administrative Agent, if requested by the Administrative
Agent, a copy of the most recent actuarial statement required to be submitted
under ss.103(d) of ERISA and Annual Report, Form 5500, with all required
attachments, in respect of each Guaranteed Pension Plan and (ii) promptly upon
receipt or dispatch, furnish to the Administrative Agent any notice, report or
demand sent or received in respect of a Guaranteed Pension
<PAGE>
30
Plan under ss.ss.302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or
in respect of a Multiemployer Plan, under ss.ss.4041A, 4202, 4219, 4242, or 4245
of ERISA.
ss. Use of Proceeds.
Each Borrower will use the proceeds of the Loans solely (i) to
refinance on the Closing Date a portion of the Indebtedness of JBI, Inc. under
the JBI Credit Agreement and (ii) for working capital and general corporate
purposes. The Borrowers will obtain Letters of Credit solely for working capital
and general corporate purposes.
ss. Further Assurances.
The Apparel Obligors will cooperate with the Lenders and the
Administrative Agent and execute such further instruments and documents as the
Lenders or the Administrative Agent shall reasonably request to carry out to
their satisfaction the transactions contemplated by this Credit Agreement and
the other Loan Documents.
ss. Payment of Wages.
Each Borrower shall at all times comply, in all material respects,
with the requirements of the Fair Labor Standards Act, as amended, including,
without limitation, the provisions of such Act relating to the payment of
minimum and overtime wages as the same may become due from time to time.
ss. Maintenance of Corporate Separateness.
The Guarantor will, and will cause each of its Subsidiaries to,
satisfy customary corporate formalities, including the holding of regular board
of directors' and shareholders' meetings or action by directors or shareholders
without a meeting and the maintenance of corporate offices and records. None of
the Borrowers nor any of their respective Subsidiaries shall make any payment to
a creditor of any other Person in respect of any liability (other than those
liabilities set forth on Schedule 7.5) of any such other Person, and no bank
account of any Borrower or any of its Subsidiaries shall be commingled with any
bank account of any other Person that is not a Borrower. Any financial
statements distributed to any creditors of any Subsidiaries of the Guarantor
(other than the Borrowers and their Subsidiaries) shall clearly establish or
indicate the corporate separateness of such Subsidiary from the Borrowers and
their respective Subsidiaries. Finally, neither the Guarantor nor any of its
Subsidiaries shall take any action, or conduct its affairs in a manner, which is
likely to result in the corporate existence of the Guarantor or any of its
Subsidiaries being ignored, or in the assets and liabilities of the Borrowers or
any of their respective Subsidiaries being substantively consolidated with those
of any other Subsidiaries of the Guarantor in a bankruptcy, reorganization or
other insolvency proceeding.
ss. Cash Management System.
The Borrowers will, and will cause each of their Subsidiaries to,
utilize and maintain the Cash Management System for all deposits made by any of
them. The Cash Management System shall be operated solely for the business of
the Borrowers and their Subsidiaries.
<PAGE>
31
ss. Corporate Overhead.
The Guarantor will cause each of the Borrowers to, maintain the
manner and allocation of such Person's corporate overhead and expense as between
such Persons and its Affiliates consistent with the past practices of the
Borrowers and are as set forth on Schedule 8.17 hereto.
ss. Lender Meeting.
The Obligors will, if requested by the Administrative Agent, (a)
participate in a meeting of the Lenders once during each fiscal year, as well as
such other times as may be reasonable during the occurrence or continuance of an
Event of Default, and (b) participate in all meetings of the Lenders necessary
(in the opinion of the Agents and the Arrangers) to syndicate successfully the
Total Commitment, each such meeting to be held at a location and a time selected
by the Agents and the Lenders in consultation with the Obligors.
ss. CERTAIN NEGATIVE COVENANTS OF THE APPAREL OBLIGORS.
Each Apparel Obligor covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation, Credit Instrument or Note is outstanding or any
Lender has any obligation to make any Loans or the Acceptance Bank or Issuing
Bank has any obligation to issue, extend or renew any Credit Instrument:
ss. Restrictions on Indebtedness.
The Apparel Obligors will not create, incur, assume, guarantee or be
or remain liable, contingently or otherwise, with respect to any Indebtedness
other than:
Indebtedness to the Lenders and the Administrative Agent
arising under any of the Loan Documents;
current liabilities of such Apparel Obligor incurred in the
ordinary course of business not incurred through (i) the borrowing of
money, or (ii) the obtaining of credit except for credit on an open
account basis customarily extended and in fact extended in connection
with normal purchases of goods and services;
Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of ss.8.8;
Indebtedness in respect of judgments or awards that have been
in force for less than the applicable period for taking an appeal so
long as execution is not levied thereunder or in respect of which such
Borrower or such Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which
a stay of execution shall have been obtained pending such appeal or
review;
endorsements for collection, deposit or negotiation and warranties
of products or services, in each case incurred in the ordinary course of
business;
<PAGE>
32
obligations under Capitalized Leases not exceeding $2,500,000
in aggregate amount for all Apparel Obligors at any time outstanding;
Indebtedness incurred in connection with the acquisition after
the date hereof of any real or personal property by such Apparel
Obligor, provided that the aggregate principal amount of all such
Indebtedness of all Apparel Obligors shall not exceed the aggregate
amount of $1,000,000 at any one time; and further, provided that the
aggregate amount of indebtedness permitted under this clause (g) and
the immediately preceding clause (f) of this ss.9.1 shall not at any
time together exceed $2,500,000.
Indebtedness of the Guarantor under its License Shoe Guaranty;
Indebtedness existing on the date hereof and listed and
described on Schedule 9.1 hereto;
obligations of any Apparel Obligor under any lease treated as an
operating lease;
Indebtedness to any Lender under interest rate swap agreements
or similar interest rate protection agreements;
Indebtedness of the Guarantor under any guarantee of the
obligations of its Subsidiaries provided, that such obligations are
incurred in the ordinary course of business and not incurred (i)
through the borrowing of money, or (ii) through the obtaining of credit
(except for credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods and
services) or (iii) under Capitalized Leases or under similar financing
arrangements; and
Indebtedness of any Apparel Obligor, existing as of
the Closing Date, in connection with the Subordinated Debt.
ss. Restrictions on Liens.
The Apparel Obligors will not (a) create or incur or suffer to be
created or incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (d) suffer to exist
for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; (e) sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles, chattel paper or
instruments, with or without recourse; or (f) enter into or permit to exist any
arrangement or agreement which directly or indirectly prohibits any Apparel
Obligor from creating or incurring any lien, encumbrance, mortgage, pledge,
charge, restriction or other security interest of any kind, other than pursuant
to the Security Documents and Permitted Restrictions; provided that the Apparel
Obligors may create or incur or suffer to be created or incurred or to exist:
<PAGE>
33
liens to secure taxes, assessments and other
government charges in respect of obligations not overdue or
being contested in good faith and with the Apparel Obligors
maintaining reserves required under generally accepted
accounting principles, or liens on properties other than Real
Estate to secure claims for labor, material or supplies in
respect of obligations not overdue;
deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment
insurance, old age pensions or other social security
obligations;
liens on properties in respect of judgments or awards,
the Indebtedness with respect to which is permitted by
ss.9.1(d);
liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties in existence
less than 120 days from the date of creation thereof in
respect of obligations not overdue;
encumbrances on Real Estate consisting of easements,
rights of way, zoning restrictions, restrictions on the use of
real property and defects and irregularities in the title
thereto, landlord's or lessor's liens under leases to which
such Apparel Obligor is a party, and other liens or
encumbrances none of which in the opinion of such Apparel
Obligor interferes materially with the use of the property
affected in the ordinary conduct of the business of such
Apparel Obligor, which defects do not individually or in the
aggregate have a materially adverse effect on the business of
such Apparel Obligor individually or of such Apparel Obligor
on a consolidated basis;
liens existing on the date hereof and listed on
Schedule 9.2 hereto;
purchase money security interests in or purchase
money mortgages on real or personal property acquired after
the date hereof to secure purchase money Indebtedness of the
type and amount permitted by ss.9.1(g), incurred in connection
with the acquisition of such property, which security
interests or mortgages cover only the real or personal
property so acquired;
encumbrances arising as a result of the operation of
Section 503(b) of the Bankruptcy Code; and
liens in favor of the Administrative Agent for the
benefit of the Lenders and the Administrative Agent under the
Loan Documents.
ss. Restrictions on Investments.
The Apparel Obligors will not make or permit to exist or to remain
outstanding any Investment except:
Investments in marketable direct or guaranteed obligations of
the United States of America that mature within one (1) year from the
date of purchase by such Apparel Obligor;
<PAGE>
34
Investments in demand deposits, certificates of deposit,
bankers acceptances and time deposits of United States banks having
total assets in excess of $2,000,000,000;
Investments in securities commonly known as "commercial paper"
issued by a corporation organized and existing under the laws of the
United States of America or any state thereof that at the time of
purchase have been rated and the ratings for which are not less than "P
1" if rated by Moody's Investors Services, Inc., and not less than "A
1" if rated by Standard and Poor's;
Investments existing on the date hereof and listed on Schedule 9.3 hereto;
extensions of trade credit in the ordinary course of business; and
investments in: (i) bankers' acceptances having a maturity of
not more than one hundred and eighty (180) days and created by United
States commercial banks (having a combined capital surplus in of
$50,000,000); (ii) Eurodollar deposits; and (iii) common and preferred
stock traded on national securities exchanges so long as the aggregate,
at any one time invested under subclause (iii) of this clause (f) does
not exceed $50,000 in the aggregate;
(g) capital contributions which are permitted pursuant to ss.9.5.1(b);
(h) additional investments in the capital stock, or other beneficial
interests of, any other Apparel Obligor; and
(i) loans or advances made by any Borrower to any other Borrower;
(j) advances to employees of the Apparel Obligors for travel and other
business expenses to be incurred in the ordinary course of business;
(k) loans to employees of the Apparel Obligors of not more than $75,000
outstanding, in the aggregate, to any one employee or $500,000 outstanding, in
the aggregate, at any one time;
provided, however, that nothing in ss.ss.9.2, 9.3 and 9.5.2 shall
restrict or limit the rights of any Apparel Obligor to sublet any store or
facility.
ss. Distributions.
The Borrowers will not make any Distributions; provided, however,
that (a) the Borrowers may, from time to time, make a Permitted Distribution so
long as (i) no Default or Event of Default shall have occurred and be continuing
on the date of the payment of any Permitted Stock Dividend under the Loan
Documents (or would result therefrom); (ii) the Guarantor receives a
simultaneous Distribution from its Subsidiaries (other than the Borrowers or any
Subsidiary of the Borrowers) in an equivalent amount as such Permitted
Distribution, and (iii) the ability of any Subsidiary of the Guarantor (other
than the Borrowers and the Borrowers' Subsidiaries) to make Distributions to the
Guarantor under any other agreement is not restricted in any manner, and (b) the
Borrowers and its Subsidiaries may make payments to the Guarantor to the extent
necessary to permit the Guarantor to discharge that portion of the consolidated
tax liabilities of the Guarantor and its Subsidiaries which are attributable
solely to the income
<PAGE>
35
and operations of the Borrowers and the Borrowers' Subsidiaries and consistent
with the terms of the Tax Sharing Agreement.
ss. Merger, Consolidation and Disposition of Assets.
Mergers and Acquisitions.
(a) The Guarantor will not, and will not permit any of its
Subsidiaries to, become a party to any merger or consolidation, or
agree to or effect any asset acquisition or equity acquisition (other
than the acquisition of assets in the ordinary course of business
consistent with past practices) except that, so long as no Default or
Event of Default has occurred or is continuing, or would exist after
giving effect thereto:
(i) any Borrower may merge into a Borrower,
(ii) any Subsidiary which is not a Borrower (or a Subsidiary of a Borrower)
may merge into another Subsidiary which is not a Borrower (or a Subsidiary of a
Borrower),
(iii) the Guarantor or any Subsidiary which is not a
Borrower (or a Subsidiary of a Borrower) may enter into asset
or stock acquisitions of Persons in the same or a similar line
of business or distribution channels as the Guarantor and its
Subsidiaries (a "Permitted Acquisition") where (A) the
Guarantor has provided the Administrative Agent with ten (10)
Business Days prior written notice of such Permitted
Acquisition, which notice shall include a reasonably detailed
description of such Permitted Acquisition; (B) the business to
be acquired would not subject the Agents, the Acceptance Bank,
the Issuing Bank or the Lenders to regulatory or third party
approvals in connection with the exercise of its rights and
remedies under this Credit Agreement or any other Loan
Document; (C) no contingent obligations or liabilities will be
incurred or assumed in connection with such Permitted
Acquisition which could be expected to have a material adverse
effect on the business, assets or financial condition of any
of the Apparel Obligors; (D) the Guarantor shall have provided
the Administrative Agent with such other information as was
reasonably requested by the Agents; and (E) the Obligors have
demonstrated to the reasonable satisfaction of the Agents,
based on a pro forma Compliance Certificate, compliance with
ss.10 on a pro forma basis immediately prior to and after
giving effect to such Permitted Acquisition.
(b) The Borrowers will not, and will not permit any of their
Subsidiaries to, create or acquire any Subsidiaries except, so long as
no Default or Event of Default has occurred or is continuing, or would
exist after giving effect thereto, any Borrower may create or acquire a
Subsidiary so long as:
the issued and outstanding capital stock or other equity interests of all
classes of such Subsidiary is one hundred percent (100%) owned by such Borrower;
<PAGE>
36
(ii) the aggregate of all capital contributions by
the Guarantor or the Borrower, or any combination thereof, to
all Subsidiaries of the Borrowers created after the Closing
Date, does not exceed $1,000,000;
(iii) such Subsidiary shall, at the election of the
Majority Lenders, become either a guarantor of the Obligations
or a Borrower hereunder and, contemporaneously therewith,
shall execute such documents in connection therewith as the
Agents may require;
(iv) all issued and outstanding capital stock or
other equity interests of all classes of such Subsidiary are,
contemporaneously therewith, pledged to the Administrative
Agent for the benefit of the Lenders as security for the
payment and performance of the Obligations, pursuant to
documentation satisfactory to the Agents; and
(v) in connection with the foregoing subclauses (iii)
and (iv), and contemporaneously therewith, the Borrowers shall
deliver or cause to be delivered to the Agents and the Lenders
all such instruments and documents (including legal opinions)
as the Agents shall reasonably request to evidence compliance
with this ss.9.5.1(b) and the other terms hereof.
Disposition of Assets.
The Guarantor will not, and will not permit any of its
Subsidiaries to, become a party to or agree to or effect any Asset Sale
without the prior written consent of the Majority Lenders except that,
so long as no Default or Event of Default has occurred or is
continuing, or would exist after giving effect thereto (i) the
Guarantor may sell any Subsidiary which is not a Borrower or a
Subsidiary of a Borrower and (ii) the Guarantor and any Subsidiary
which is not a Borrower or a Subsidiary of a Borrower may consummate
any Asset Sale (each, a "Permitted Disposition"); provided, that (a)
the Guarantor has provided the Administrative Agent with ten (10)
Business Days prior written notice of any such Permitted Disposition,
which notice shall include a reasonably detailed description of such
Permitted Disposition; and (b) the Obligors have demonstrated to the
reasonable satisfaction of the Agents, based on a pro forma Compliance
Certificate, compliance with ss.10 on a pro forma basis immediately
prior to and after giving effect to such Permitted Disposition.
ss. Sale and Leaseback.
The Apparel Obligors will not enter into any arrangement, directly
or indirectly, whereby any Apparel Obligors shall sell or transfer any property
owned by it for more than ninety (90) days in order then or thereafter to lease
such property or lease other property that such Apparel Obligor intends to use
for substantially the same purpose as the property being sold or transferred.
ss. Employee Benefit Plans.
No Obligor or any ERISA Affiliate will:
<PAGE>
37
engage in any "prohibited transaction" within the meaning of
ss.406 of ERISA or ss.4975 of the Code which could result in a material
liability for such Obligor or any of its Subsidiaries; or
permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in ss.302 of ERISA,
whether or not such deficiency is or may be waived; or
fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which,
could result in the imposition of a lien or encumbrance on the assets
of such Borrower or any of its Subsidiaries pursuant to ss.302(f) or
ss.4068 of ERISA; or
any Guaranteed Pension Plan in circumstances requiring the posting of security
pursuant to ss.307 of ERISA or ss.401(a)(29) of the Code; or
permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of ss.4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities.
Additional Shares.
No Borrower will at any time, nor will any Borrower cause or permit
any of its Subsidiaries at any time, to sell or offer to sell any shares of any
class of capital stock, or any other securities, of such Borrower or any
Subsidiary.
ss. Changes in Terms of Subordinated Debt.
No Obligor will, and none will permit any of its Subsidiaries to,
make any changes relating to the interest rate, maturity, scheduled
amortization, notice to the Lenders and the Administrative Agent of defaults,
events of default or intended accelerations, subordination or any other
provision of any promissory note, indenture, agreement or other instrument
evidencing or governing any Subordinated Debt.
ss. Change of Fiscal Year.
None of the Apparel Obligors shall change its fiscal year.
ss. Total Commitment Amount.
The Borrowers shall not cause or permit the sum of the outstanding
amount of all Loans, the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations to exceed the Total Commitment.
ss. Amendments or Waivers of Certain Documents.
After the Closing Date, (a) none of the Apparel Obligors, without
the prior written consent of the Majority Lenders, which consent shall not be
unreasonably withheld (but which may be withheld if the effect of any amendment,
supplement, change or waiver would be adverse to the Lenders or the
<PAGE>
38
Apparel Obligors), amend, supplement, change or waive compliance with or consent
to departures from the terms of its certificate of incorporation or bylaws or
any agreement entered into by any such Person with respect to its equity
interests which change, amendment, supplement or waiver would have a material
adverse effect on the financial condition, assets or business of any Apparel
Obligor or adversely affect the rights, remedies or benefits available to the
Agents, the Issuing Bank, the Acceptance Bank or any Lender under any Loan
Document, (b) the Apparel Obligors shall not amend, supplement, change or waive
compliance with or consent to a departure from, or consent to any action or
failure to act under, any of the terms or provisions of any Subordinated Debt or
the Licensed Shoe Guaranty, or any other material contract, lease, license or
agreement of such Person and (c) the Apparel Obligors shall not amend,
supplement, change or waive compliance with or consent to a departure from, or
consent to any action or failure to act under, the Tax Sharing Agreement.
ss. Limitation on Other Restrictions on Amendment of Loan Documents.
The Apparel Obligors will not enter into, suffer to exist or become
or remain subject to any agreement or instrument to which such Person is a party
or by which such Person or any property of such Person (now owned or hereafter
acquired) may be subject or bound, except for the Loan Documents, that would
prohibit or restrict in any manner (directly or indirectly and including by way
of covenant representation or warranty or event of default), or require the
consent of any Person to, any amendment to, or waiver or consent to departure
from the terms of, any of the Loan Documents.
ss. Purchase of Ineligible Securities.
The Obligors will not, and will not permit any of their Subsidiaries to,
directly or indirectly, use any portion of the Loans or Letter of Credit
proceeds (a) knowingly to purchase Ineligible Securities from a Section 20
Subsidiary during any period in which such Section 20 Subsidiary makes a market
in such Ineligible Securities, (b) knowingly to purchase during the underwriting
or placement period Ineligible Securities being underwritten or privately placed
by a Section 20 Subsidiary, or (c) to make payments of principal or interest on
Ineligible Securities underwritten or privately placed by a Section 20
Subsidiary and issued by or for the benefit of the Borrowers, any other
Subsidiary or any Affiliates.
ss. FINANCIAL COVENANTS OF THE APPAREL OBLIGORS.
Each Apparel Obligor covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation or Note is outstanding or any Lender has any
obligation to make any combined Loans or the Administrative Agent or Issuing
Bank has any obligation to issue, extend or renew any Credit Instruments:
<PAGE>
39
ss. Fixed Charge Coverage Ratio.
The Borrowers will not permit the Fixed Charge Coverage Ratio at the
end of any fiscal quarter ending during any period described below to be less
than the ratio set forth opposite such period below:
=========================================================================
Period Ratio
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Fiscal quarter ending May 3, 1997 1.00 to 1
- ----------------------------------------------------------------------------
Two consecutive fiscal quarters ending August 2, 1997 1.00 to 1
- ---------------------------------------------------------------------------
Three consecutive fiscal quarters ending November 1, 1997 1.00 to 1
- ----------------------------------------------------------------------------
Each period of four consecutive fiscal
quarters ending February 1, 1998
through October 31, 1998 1.25 to 1
- ----------------------------------------------------------------------------
Each period of four consecutive fiscal quarters ending 1.35 to 1
January 31, 1999 through October 30, 1999
- ----------------------------------------------------------------------------
Each period of four consecutive fiscal
quarters ending thereafter 1.45 to 1
- ----------------------------------------------------------------------------
ss. Leverage Ratio.
The Borrowers will not
permit the Leverage Ratio as at the end of any fiscal quarter ending during any
period described below to be greater than the ratio set forth opposite such
period below:
=============================================================================
Period Ratio
- ----------------------------------------------------------------------------
Fiscal quarter ended February 1, 1998 2.00 to 1
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
February 2, 1998 through October 31, 1998 3.00 to 1
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
November 1, 1998 through January 31, 1999 1.75 to 1
- ----------------------------------------------------------------------------
- ---------------------------------------------------------------------------
February 1, 1999 through October 30, 1999 2.75 to 1
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
October 31, 1999 and thereafter 1.50 to 1
- ----------------------------------------------------------------------------
ss. Consolidated Tangible Net Worth.
The Obligors will not permit the Consolidated Tangible Net Worth of
the Guarantor and its Subsidiaries at any time to be less than the sum of (a)
$65,713,184, plus (b) on a cumulative basis, 75% of positive Consolidated Net
Income of the Guarantor and its Subsidiaries for each fiscal quarter beginning
with the fiscal quarter ended May 2, 1997, plus (c) 100% of the proceeds of
any sale by the
<PAGE>
40
Guarantor of equity securities issued by the Guarantor from and after February
2, 1997, less (d) the Permitted Stock Dividends made from and after February
2, 1997, plus (e) any increase in the Guarantor's net worth resulting from a
conversion of any "convertible" debt securities issued by the Guarantor.
ss. Combined Tangible Net Worth.
The Borrowers will not permit the Combined Tangible Net Worth of
the Borrowers and their Subsidiaries at any time to be less than the sum of
(a) $23,600,144, plus (b) on a cumulative basis, 75% of positive Combined Net
Income of the Borrowers and their Subsidiaries for each fiscal quarter
beginning with the fiscal quarter ended May 2, 1997, plus (c) 100% of the
proceeds of any sale by any Borrower of equity securities issued by Borrowers
from and after February 2, 1997, less (d) the Permitted Distributions made
from and after February 2, 1997, plus (e) any amortization of the contra
account of the Borrowers, described on their combined balance sheet as the
"intercompany account" which results in an increase to shareholder's equity.
ss. Capital Expenditures; Capitalized Leases.
None of the Apparel Obligors will make Capital Expenditures plus
Capitalized Lease expenditures (including the "face amount" of Capitalized
Leases) that exceed, in the aggregate for all Apparel Obligors (a) $9,000,000
in the aggregate during the fiscal year of the Borrowers ending January 31,
1998 and (b) $10,000,000 in the aggregate during each fiscal year of the
Borrowers ending after February 1, 1998.
ss. INITIAL CLOSING CONDITIONS.
The obligations of the Lenders to make the initial Loans and of the
Acceptance Bank or Issuing Bank to issue any initial Credit Instruments, shall
be subject to the satisfaction of the following conditions precedent on or
prior to the Closing Date:
ss. Loan Documents.
Each of the Loan Documents shall have been duly executed and
delivered by the respective parties thereto, shall be in full force and effect
and shall be in form and substance satisfactory to each of the Lenders. Each
Lender shall have received a fully executed copy of each such document,
certified as true and correct by the Obligors.
ss. Certified Copies of Charter Documents.
The Administrative Agent shall have received from each of the
Apparel Obligors a copy, certified by a duly authorized officer of such Person
to be true and complete on the Closing Date, of each of (a) its charter or
other incorporation documents as in effect on such date of certification, and
(b) its by-laws as in effect on such date.
ss. Corporate, Action.
All corporate action necessary for the valid execution, delivery
and performance by each Apparel Obligor of this Credit Agreement and the other
Loan Documents to which it is or is to become
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41
a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Agents shall have been provided to the Administrative
Agent.
ss. Incumbency Certificates.
The Administrative Agent shall have received from each of the
Apparel Obligors an incumbency certificate, dated as of the Closing Date,
signed by a duly authorized officer of such Person, and giving the name and
bearing a specimen signature of each individual who shall be authorized: (a)
to sign, in the name and on behalf of Person, each of the Loan Documents to
which such Person is or is to become a party; (b) in the case of such
Borrower, to make Loan Requests and apply for Credit Instruments; and (c) to
give notices and to take other action on such Persons' behalf under the Loan
Documents.
ss. Legality of Transactions.
No change in applicable law shall have occurred as a consequence of
which it shall have become and continue to be unlawful (a) for any Lender or
the Administrative Agent to perform any of its agreements or obligations under
any of the Loan Documents to which any such Person is a party on the Closing
Date or (b) for any Obligor or any of its Subsidiaries to perform any of its
agreements or obligations under any of the Loan Documents to which it is a
party on the Closing Date.
ss. Validity of Liens.
The Security Documents shall be effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable first security interest in and lien upon the Collateral. All
deliveries of (a) certificates representing all of the outstanding capital
stock of the Borrowers and (b) duly executed stock powers relating to such
capital stock to the Administrative Agent to perfect such security interests
shall have been duly effected.
ss. UCC Search Results.
The Administrative Agent shall have received UCC searches with
respect to the Obligors, indicating no liens other than Permitted Liens and
otherwise in form and substance satisfactory to the Administrative Agent.
ss. Proceedings and Documents.
All corporate, partnership, governmental and other proceedings in
connection with the transactions contemplated by the Loan Documents and all
instruments and documents incidental thereto, shall be in form and substance
reasonably satisfactory to the Lenders and the Lenders shall have received all
such counterpart originals or certified or other copies of all such
instruments and documents as the Lenders shall have reasonably requested.
ss. Financial Condition.
The Lenders shall be satisfied that the financial statements
referred to in ss.7.5 fairly present the business and financial condition of
the Obligors, as at and for the periods ending on the respective dates
thereof, and that, except for changes described in writing to the Lenders and
acceptable to them,
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42
there has been no material adverse change in the assets, business or financial
condition of any Obligor since the applicable dates set forth in ss.7.5
hereof.
ss. Opinion of Counsel.
Each of the Lenders and the Agents shall have received a favorable
legal opinion addressed to the Lenders and the Agents, dated as of the Closing
Date, in form and substance satisfactory to the Lenders and the Agents, from
Goodwin, Procter & Hoar LLP, counsel to the Obligors.
ss. Payment of Agents' Fees.
The Borrowers shall have paid the fees to the Agents pursuant to ss.5.1.
ss. Payoff Letter.
The Administrative Agent shall have received a payoff letter from
Fleet, as agent to the Banks named therein, indicating the amount of the loan
obligations of the Borrowers to Fleet, as agent to the Banks named therein, to
be discharged on the Closing Date and an acknowledgment by Fleet, as agent to
the Banks named therein, that upon receipt of such funds the JBI Credit
Agreement, and all Obligations thereunder (as defined therein) will have
terminated, and it will forthwith execute and deliver to the Administrative
Agent for filing all termination statements and take such other actions as may
be necessary to discharge all mortgages, deeds of trust and security interests
granted by the Borrowers or any of their Subsidiaries in favor of Fleet, as
agent to the Banks named therein.
ss. Disbursement Instructions.
The Administrative Agent shall have received disbursement
instructions from the Borrowers regarding use of proceeds of the initial
Loans.
ss. Senior Indebtedness.
The Administrative Agent shall have received evidence satisfactory
to it that all of the Obligations constitute "Senior Indebtedness," "Senior
Debt," or "Superior Indebtedness" under the Subordinated Debt.
ss. Certified Copies of Subordinated Debt Documents.
The Administrative Agent shall have received from the Apparel
Obligors a copy, certified by a duly authorized officer to be true and
complete on the Closing Date, of all documents evidencing or otherwise related
to Subordinated Debt.
ss. Licensed Shoe Debt.
The Administrative Agent shall have received evidence satisfactory
to it that the Licensed Shoe division of the Guarantor shall have consummated
its financing arrangements with respect to the Licensed Shoe Debt, the
documentation evidencing the Licensed Shoe Debt to be in form and substance
satisfactory to the Administrative Agent.
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43
ss. Cash Management System.
The Borrowers and their Subsidiaries shall have created a cash
management system (the "Cash Management System") satisfactory to the Agents,
and all agreements related thereto shall have been delivered to the Agents and
shall be satisfactory to the Agents.
ss. Tax Sharing Agreement.
The Administrative Agent shall have received a fully executed copy
of the Tax Sharing Agreement, in form and substance satisfactory to the Agents
in all respects.
ss. CONDITIONS TO ALL BORROWINGS.
The obligations of the Lenders to make any Loan, and the Acceptance
Bank or Issuing Bank to issue, extend or renew any Credit Instruments in each
case whether on or after the Closing Date, shall also be subject to the
satisfaction of the following conditions precedent:
ss. Representations True; No Event of Default.
Each of the representations and warranties of the Apparel Obligors
contained in this Credit Agreement, the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and shall also be true
at and as of the time of the making of such Loan or the issuance, extension or
renewal of such Credit Instrument, with the same effect as if made at and as of
that time (except to the extent of changes resulting from transactions
contemplated or permitted by this Credit Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing.
ss. No Legal Impediment.
No change shall have occurred in any law or regulations thereunder
or interpretations thereof that in the reasonable opinion of any Lender would
make it illegal for such Lender to make such Loan or participate in the
issuance, extension or renewal of such Credit Instrument, or in the opinion of
the Acceptance Bank or the Issuing Bank would make it illegal for the Acceptance
Bank or the Issuing Bank to issue, extend or renew such Credit Instruments.
ss. Governmental Regulation.
Each Lender shall have received such statements in substance and
form reasonably satisfactory to such Lender as such Lender shall require for the
purpose of compliance with any applicable regulations of the Comptroller of the
Currency or the Board of Governors of the Federal Reserve System.
ss. Proceedings and Documents.
All proceedings in connection with the transactions contemplated by
this Credit Agreement, the other Loan Documents and all other documents incident
thereto shall be reasonably satisfactory in substance and in form to the Lenders
and to the Administrative Agent and the Administrative Agent's
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44
Special Counsel, and the Lenders, the Administrative Agent and such counsel
shall have received all information and such counterpart originals or certified
or other copies of such documents as the Administrative Agent may reasonably
request.
ss. GUARANTY.
ss. Guaranty Of Payment And Performance.
For value received and hereby acknowledged and as an inducement to
the Lenders to make the Loans to the Borrowers, the Guarantor hereby
unconditionally guarantees to the Administrative Agent and the Lenders the full
and punctual payment in cash when due (whether at maturity, by acceleration or
otherwise), and the performance, of all of the Obligations, whether direct or
indirect, absolute or contingent, due or to become due, secured or unsecured,
now existing or hereafter arising or acquired. The guaranty contained herein is
an absolute, unconditional and continuing guaranty of the full and punctual
payment in cash and performance of the Obligations and not of their
collectability only and is in no way conditioned upon any requirement that the
Administrative Agent and/or the Lenders first attempt to collect any of the
Obligations from any of the Borrowers or resort to any security or other means
of obtaining their payment. Should any of the Borrowers default in the payment
or performance of any of the Obligations, the obligations of the Guarantor
hereunder shall become immediately due and payable to the Administrative Agent
and the Lenders, without demand or notice of any nature, all of which are
expressly waived by the Guarantor. Payments by the Guarantor hereunder may be
required by the Administrative Agent and the Lenders on any number of occasions.
ss. Guarantor's Agreement To Pay.
The Guarantor further agrees, as a principal obligor and not as a
guarantor only, to pay to the Administrative Agent, on behalf of the Lenders, on
demand, all costs and expenses (including court costs and reasonable legal
expenses) incurred or expended by the Administrative Agent, the Acceptance Bank,
the Issuing Bank and/or the Lenders, on behalf of the Lenders in connection with
the enforcement or collection of the Obligations and the guaranty contained
herein, together with interest on amounts recoverable under the Guaranty
contained herein from the time such amounts become due until payment, at the
rate per annum equal to three percent (3%) above the Base Rate from time to time
in effect plus the Applicable Margin; provided that if such interest exceeds the
maximum amount permitted to be paid under applicable law, then such interest
shall be reduced to such maximum permitted amount.
ss. Unlimited Guaranty.
The liability of the Guarantor hereunder shall be unlimited.
ss. Waivers By the Guarantor; Administrative Agent's and Lenders' Freedom To Act
The Guarantor agrees that the Obligations will be paid and performed
strictly in accordance with their respective terms regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Administrative Agent and Lenders with respect
thereto. The Guarantor waives presentment, demand, protest, notice of
acceptance, notice of Obligations incurred and all other notices of any kind,
all defenses which may be available by virtue of any valuation, stay, moratorium
law or other similar law now or hereafter in effect, any right to require the
marshalling of assets of any of the Borrowers, and all suretyship defenses
generally. Without limiting the generality
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45
of the foregoing, the Guarantor agrees to the provisions of any instrument
evidencing, securing or otherwise executed in connection with any Obligation and
agrees that the obligations of the Guarantor hereunder shall not be released or
discharged, in whole or in part, or otherwise affected by (i) the failure of the
Agents, the Acceptance Bank, the Issuing Bank and/or the Lenders to assert any
claim or demand or to enforce any right or remedy against any of the Borrowers;
(ii) any extensions or renewals of any Obligation; (iii) any rescissions,
waivers, amendments or modifications of any of the terms or provisions of any
agreement evidencing, securing or otherwise executed in connection with any
Obligation; (iv) the substitution or release of any entity primarily or
secondarily liable for any Obligation; (v) the adequacy of any rights the
Administrative Agent, the Acceptance Bank, the Issuing Bank or the Lenders may
have against any collateral or other means of obtaining repayment of the
Obligations; (vi) the impairment of any collateral securing the Obligations,
including without limitation the failure to perfect or preserve any rights the
Administrative Agent, the Acceptance Bank, the Issuing Bank or the Lenders might
have in such collateral or the substitution, exchange, surrender, release, loss
or destruction of any such collateral; or (vii) any other act or omission which
might in any manner or to any extent vary the risk of the Guarantor or otherwise
operate as a release or discharge of the Guarantor, all of which may be done
without notice to the Guarantor.
ss. Unenforceability Of Obligations Against Borrowers.
If for any reason any of the Borrowers has no legal existence or is
under no legal obligation to discharge any of the Obligations, or if any of the
Obligations have become irrecoverable from the Borrowers by operation of law or
for any other reason, the guaranty contained herein shall nevertheless be
binding on the Guarantor to the same extent as if the Guarantor at all times had
been the principal obligor on all such Obligations. In the event that
acceleration of the time for payment of the Obligations is stayed upon the
insolvency, bankruptcy or reorganization of any of the Obligors, or for any
other reason, all such amounts otherwise subject to acceleration under the terms
of any agreement evidencing, securing or otherwise executed in connection with
any Obligation shall be immediately due and payable by the Guarantor.
ss. Subrogation; Subordination.
Until the payment and performance in full in cash of all
Obligations, the Guarantor shall not exercise any rights against any Borrower
arising as a result of payment by the Guarantor hereunder, by way of subrogation
or otherwise, and will not prove any claim in competition with the
Administrative Agent and/or the Lenders or any of their affiliates in respect of
any payment hereunder in bankruptcy or insolvency proceedings of any nature; the
Guarantor will not claim any set-off or counterclaim against any Borrower in
respect of any liability of the Guarantor to any Guarantor; and the Guarantor
waives any benefit of and any right to participate in any collateral which may
be held by the Administrative Agent, any Lender or any such affiliate. The
payment of any amounts due with respect to any indebtedness of the Borrowers now
or hereafter held by the Guarantors is hereby subordinated to the prior payment
in full in cash of the Obligations. The Guarantor agrees that it will not
demand, sue for or otherwise attempt to collect any such indebtedness of the
Borrowers to the Guarantor until the Obligations shall have been paid in full in
cash. If, notwithstanding the foregoing sentence, the Guarantor shall collect,
enforce or receive any amounts in respect of such indebtedness, such amounts
shall be collected, enforced and received by the Guarantor as trustee for the
Administrative Agent and the Lenders and be paid over to the Administrative
Agent on account of the Obligations without affecting in any manner the
liability of the Guarantor under the other provisions of the guaranty contained
herein.
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46
ss. Termination; Reinstatement.
The guaranty contained herein shall remain in full force and effect
until the Obligations have been indefeasibly paid in full in cash. The guaranty
contained herein shall continue to be effective or be reinstated, if at any time
any payment made or value received with respect to an Obligation is rescinded or
must otherwise be returned by the Administrative Agent, the Acceptance Bank, the
Issuing Bank or any Lender upon the insolvency, bankruptcy or reorganization of
any of the Borrowers, or otherwise, all as though such payment had not been made
or value received.
ss. Miscellaneous.
The rights and remedies herein provided are cumulative and not
exclusive of any remedies provided by law or any other agreement, and the
guaranty contained herein shall be in addition to any other guaranty of the
Obligations.
ss. EVENTS OF DEFAULT; ACCELERATION; ETC.
ss. Events of Default and Acceleration.
If any of the following events ("Events of Default" or, if the
giving of notice or the lapse of time or both is required, then, prior to such
notice or lapse of time, "Defaults") shall occur:
any
Borrower shall fail to pay any principal of the Loans or any
Reimbursement Obligation when the same shall become due and payable,
whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment;
any Borrower or any of its Subsidiaries shall fail to pay any
interest on the Loans, the facility fee, the Bankers' Acceptance Fees,
any Letter of Credit Fee, the Agents' fees, or other sums due hereunder
or under any of the other Loan Documents, after the same shall become
due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment,
and such failure shall continue unremedied for a period of five (5)
days;
any Obligor shall fail to comply with any of its covenants
contained in (i) ss.10, or (ii) ss.9 and such default shall continue
unremedied for a period of ten (10) days after notice of such default
is given to the Borrowers by the Administrative Agent or any Lender;
any Apparel Obligor shall fail to perform any term, covenant
or agreement contained herein or in any of the other Loan Documents
(other than those specified elsewhere in this ss.14.1) for thirty (30)
days after written notice of such failure has been given to such
Obligor by the Administrative Agent;
any representation or warranty of any Obligor in this Credit
Agreement or any of the other Loan Documents or in any other document
or instrument delivered pursuant to or in connection with this Credit
Agreement shall prove to have been false in any material respect upon
the date when made or deemed to have been made or repeated;
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47
The Guarantor or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace (not to exceed
thirty (30) days), (i) any Indebtedness with an outstanding principal
amount in excess of $1,000,000, (ii) any Indebtedness under the
Licensed Shoe Debt, or (iii) any obligations in respect of any
operating leases where the remaining lease payments (under one or more
operating leases) would, in the aggregate, be in excess of $1,000,000,
or fail to observe or perform any term, covenant or agreement contained
in any agreement by which it is bound, evidencing or securing any such
Indebtedness described in subclauses (i) or (ii) of this clause (f), or
any such operating lease described in subclause (iii) of this clause
(f) for such period of time as would permit (assuming the giving of
appropriate notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity thereof or
otherwise act to enforce any rights and remedies thereunder, unless,
prior to termination of the Commitments and/or acceleration pursuant to
this ss.14.1, the holder or holders of such obligations shall have, in
writing, waived such default and a copy of such waiver of default shall
have been furnished to the Administrative Agent;
the Guarantor or any of its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of any such Person or of any
substantial part of the assets of such Person or shall commence any
case or other proceeding relating to the Guarantor or any of its
Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
law of any jurisdiction, now or hereafter in effect, or shall take any
action to authorize or in furtherance of any of the foregoing, or if
any such petition or application shall be filed or any such case or
other proceeding shall be commenced against the Guarantor or any of its
Subsidiaries and the Guarantor or any of its Subsidiaries shall
indicate its approval thereof, consent thereto, acquiescence therein or
otherwise remain undismissed for a period of sixty (60) days;
a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Guarantor or any
of its Subsidiaries bankrupt or insolvent, or approving a petition in
any such case or other proceeding, or a decree or order for relief is
entered in respect of the Guarantor or any of its Subsidiaries in an
involuntary case under federal bankruptcy laws as now or hereafter
constituted (which order is not dismissed within sixty (60) days after
the entry thereof);
there shall remain in force, undischarged, unsatisfied,
unstayed for more than sixty (60) days, whether or not consecutive, any
final judgment (unless bonded pending appeal) against the Apparel
Obligors that, with other outstanding final judgments, undischarged,
against the Borrower or any of its Subsidiaries exceeds in $500,000 the
aggregate;
the holders of all or any part of Subordinated Debt shall
accelerate the maturity of all or any part of the Subordinated Debt or
the Subordinated Debt shall be prepaid, redeemed or repurchased in
whole or in part; provided, however, that a conversion of the
Subordinated Notes into equity interests in the Guarantor (pursuant to
the terms of the indenture under which the Subordinated Notes were
issued) shall not constitute a prepayment, redemption or repurchase of
such Subordinated Notes;
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if any of the Loan Documents, including without limitation,
the guaranty provisions contained within the Credit Agreement, shall be
canceled, terminated, revoked or rescinded otherwise than in accordance
with the terms thereof or with the express prior written agreement,
consent or approval of the Lenders, or any action at law, suit or in
equity or other legal proceeding to cancel, revoke or rescind any of
the Loan Documents shall be commenced by or on behalf of the Guarantor
or any of its Subsidiaries party thereto or any of their respective
stockholders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid
or unenforceable in accordance with the terms thereof;
with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Lenders shall
have determined in their reasonable discretion that such event
reasonably could be expected to result in liability of the Obligors or
any of their Subsidiaries to the PBGC or such Guaranteed Pension Plan
in an aggregate amount exceeding $1,000,000 and such event in the
circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan; or a trustee shall
have been appointed by the United States District Court to administer
such Plan; or the PBGC shall have instituted proceedings to terminate
such Guaranteed Pension Plan;
the Borrowers shall be enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory
agency from conducting any material part of its business and such order
shall continue in effect for more than thirty (30) days;
there shall occur any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty, which in
any such case causes, for more than sixty (60) consecutive days, the
complete cessation of revenue producing activities at a material number
of facilities of the Guarantor or any of its Subsidiaries if such event
or circumstance is not covered by business interruption insurance and
has a material adverse effect on the business or financial condition of
the Borrowers taken as a whole;
except as permitted under ss.9.5,
the Guarantor shall, at any time, legally or beneficially own
directly or indirectly, less than one hundred percent of the issued and
outstanding capital stock of any Borrower, on a fully diluted basis; or
except as permitted under ss.9.5,
Casual Male shall, at any time, legally or beneficially own
less than one hundred percent of the issued and outstanding capital
stock of each of TCM and TCMB&T, on a fully diluted basis;
then, and in any such event, so long as the same may be continuing, the
Administrative Agent may, and upon the request of the Majority Lenders shall, by
notice in writing to the Borrowers declare all amounts owing with respect to
this Credit Agreement, the Notes and the other Loan Documents and all
Reimbursement Obligations to be, and they shall thereupon forthwith become,
immediately due and
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49
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Borrowers; provided that in the event
of any Event of Default specified in ss.ss.14.1(g), 14.1(h) or 14.1(k), all such
amounts shall become immediately due and payable automatically and without any
requirement of notice from the Administrative Agent or any Lender; provided
further that in the event of any Event of Default specified in ss.ss.14.1(g),
14.1(h) or 14.1(k), the Total Commitments of the Lenders shall immediately
terminate and all such amounts owing shall become immediately due and payable
automatically and without any requirement of notice from the Administrative
Agent or the Lenders. No remedy herein conferred upon the Lenders is intended to
be exclusive of any other remedy and each and every 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 or any other provision of
law.
ss. Termination of Commitments.
If any one or more of the Events of Default specified in ss.14.1(g),
ss.14.1(h) or ss.14.1(k) shall occur, any unused portion of the Total Commitment
hereunder shall forthwith terminate and each of the Lenders shall be relieved of
all further obligations to make Loans to the Borrowers and the Acceptance Bank
and the Issuing Bank shall be relieved of all further obligations to issue,
extend or renew Credit Instruments and the Borrowers shall pay to the
Administrative Agent an amount equal to the sum of the Maximum Drawing Amount,
plus, the Acceptance Face Amount, plus all Unpaid Reimbursement Obligations to
be held by the Administrative Agent as cash collateral as contemplated by
ss.4.3(c). If any other Event of Default shall have occurred and be continuing,
or if on any Drawdown Date or other date for issuing, extending or renewing any
Credit Instrument the conditions precedent to the making of the Loans to be made
on such Drawdown Date or (as the case may be) to issuing, extending or renewing
such Credit Instrument on such date are not satisfied, the Administrative Agent
may and, upon the request of the Majority Lenders, shall, by notice to the
Borrowers, terminate the unused portion of the credit hereunder, and upon such
notice being given such unused portion of the credit hereunder shall terminate
immediately and each of the Lenders shall be relieved of all further obligations
to make Loans and the Acceptance Bank and the Issuing Bank shall be relieved of
all further obligations to issue, extend or renew Credit Instruments and the
Borrowers shall pay to the Administrative Agent an amount equal to the sum of
the Maximum Drawing Amount, plus, the Acceptance Face Amount, plus all Unpaid
Reimbursement Obligations to be held by the Administrative Agent as cash
collateral as contemplated by ss.4.3(c). No termination of the credit hereunder
shall relieve any Borrower or any of its Subsidiaries of any of the Obligations.
ss. Remedies.
In case any one or more of the Events of Default shall have occurred
and be continuing, and whether or not the Lenders shall have accelerated the
maturity of the Loans pursuant to ss.14.1, the Administrative Agent, may, with
the consent of the Majority Lenders but not otherwise, proceed to protect and
enforce the Lenders' rights by suit in equity, action at law or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Credit Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to the Lenders are evidenced,
including as permitted by applicable law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Lender. No remedy herein conferred upon any
Lender, Acceptance Bank, Issuing Bank or the Administrative Agent or the holder
of any Note or purchaser of any Credit Instrument Participation is intended to
be exclusive of any other remedy and each
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50
and every 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 or any other provision of law.
ss. Distribution of Collateral Proceeds.
In the event that, following the occurrence or during the
continuance of any Default or Event of Default, the Administrative Agent, the
Acceptance Bank, the Issuing Bank or any Lender, as the case may be, receives
any monies in connection with the enforcement of any of the Security Documents,
or otherwise with respect to the realization upon any of the Collateral, such
monies shall be distributed for application as follows:
First, to the payment of, or (as the case may be) the
reimbursement of the Agents for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agents in connection with the collection of such
monies by the Agents, for the exercise, protection or enforcement by
the Agents of all or any of the rights, remedies, powers and privileges
of the Agents under this Credit Agreement or any of the other Loan
Documents or in respect of the Collateral or in support of any
provision of adequate indemnity to the Agents against any taxes or
liens which by law shall have, or may have, priority over the rights of
the Agents to such monies;
Second, to all other Obligations in such order or preference
as the Majority Lenders may determine; provided, however, that
distributions in respect of such obligations shall be made (i) pari
passu among Obligations with respect to the Agents' fees payable
pursuant to ss.5.1 and all other Obligations and (ii) Obligations owing
to the Lenders with respect to each type of Obligation such as
interest, principal, fees and expenses, shall be made among the Lenders
pro rata; and provided, further, that the Administrative Agent may in
its discretion make proper allowance to take into account any
Obligations not then due and payable;
Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Lenders and the
Administrative Agent of all of the Obligations, to the payment of any
obligations required to be paid pursuant to ss.9-504(1)(c) of the
Uniform Commercial Code of the Commonwealth of Massachusetts as in
effect from time to time; and
Fourth, the excess, if any, shall be returned to the Borrowers
or to such other Persons as are entitled thereto.
ss. SETOFF.
Regardless of the adequacy of any collateral, during the continuance
of any Event of Default, any deposits or other sums credited by or due from any
of the Lenders to any Obligor and any securities or other property of such
Obligor in the possession of such Lender may be applied to or set off by such
Lender against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of such Obligor to such Lender. Each of the Lenders agrees
with each other Lender that (a) if an amount to be set off is to be applied to
Indebtedness of the Obligors to such Lender, other than Indebtedness evidenced
by the Notes held by such Lender or constituting Reimbursement Obligations owed
to such Lender, such amount shall be applied ratably to such other Indebtedness
and to the Indebtedness evidenced by all such Notes held by such Lender or
constituting Reimbursement Obligations owed to such Lender, and (b) if such
Lender shall
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51
receive from any Obligor, whether by voluntary payment, exercise of the right of
setoff, counterclaim, cross action, enforcement of the claim evidenced by the
Notes held by, or constituting Reimbursement Obligations owed to, such Lender by
proceedings against such Obligor at law or in equity or by proof thereof in
bankruptcy, reorganization, liquidation, receivership or similar proceedings, or
otherwise, and shall retain and apply to the payment of the Note or Notes held
by, or Reimbursement Obligations owed to, such Lender any amount in excess of
its ratable portion of the payments received by all of the Lenders with respect
to the Notes held by, and Reimbursement Obligations owed to, all of the Lenders,
such Lender will make such disposition and arrangements with the other Lenders
with respect to such excess, either by way of distribution, pro tanto assignment
of claims, subrogation or otherwise as shall result in each Lender receiving in
respect of the Notes held by it or Reimbursement Obligations owed to it, its
proportionate payment as contemplated by this Credit Agreement; provided that if
all or any part of such excess payment is thereafter recovered from such Lender,
such disposition and arrangements shall be rescinded and the amount restored to
the extent of such recovery, but without interest.
ss. THE AGENTS.
ss. Authorization.
The Administrative Agent is authorized to take such action on behalf
of each of the Acceptance Bank, the Issuing Bank and the Lenders and to exercise
all such powers as are hereunder and under any of the other Loan Documents and
any related documents delegated to the Administrative Agent, together with such
powers as are reasonably incident thereto, provided that no duties or
responsibilities not expressly assumed herein or therein shall be implied to
have been assumed by the Administrative Agent. The relationship between the
Administrative Agent and the Acceptance Bank, the Issuing Bank and the Lenders
is and shall be that of agent and principal only, and nothing contained in this
Credit Agreement or any of the other Loan Documents shall be construed to
constitute the Administrative Agent as a trustee for any Acceptance Bank, the
Issuing Bank or Lender. The Documentation Agent shall have no independent
powers, duties or obligations under this Credit Agreement.
ss. Employees and Agents.
The Administrative Agent may exercise its powers and execute its
duties by or through employees or agents and shall be entitled to take, and to
rely on, advice of counsel concerning all matters pertaining to its rights and
duties under this Credit Agreement and the other Loan Documents. The
Administrative Agent may utilize the services of such Persons as the
Administrative Agent in its sole discretion may reasonably determine, and all
reasonable fees and expenses of any such Persons shall be paid by the Borrowers.
ss. No Liability.
No Agent nor any of its shareholders, directors, officers or
employees nor any other Person assisting them in their duties nor any agent or
employee thereof, shall be liable for any waiver, consent or approval given or
any action taken, or omitted to be taken, in good faith by it or them hereunder
or under any of the other Loan Documents, or in connection herewith or
therewith, or be responsible for the consequences of any oversight or error of
judgment whatsoever, except that any Agent or such other Person, as the case may
be, may be liable for losses due to its willful misconduct or gross negligence.
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52
ss. No Representations.
(a) The Agents shall not be responsible for the execution or
validity or enforceability of this Credit Agreement, the Notes, any Credit
Instrument, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the Notes, or
for the value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing with respect to the
Notes, or for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or instrument
hereafter furnished to it by or on behalf of the Obligors or any of their
Subsidiaries, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or in
any instrument at any time constituting, or intended to constitute, collateral
security for the Notes or to inspect any of the properties, books or records of
the Obligors or any of their Subsidiaries. The Agents shall not be bound to
ascertain whether any notice, consent, waiver or request delivered to it by the
Obligors or any holder of any of the Notes shall have been duly authorized or is
true, accurate and complete. No Agent has made or does it now make any
representations or warranties, express or implied, nor does it assume any
liability to the Lenders, with respect to the credit worthiness or financial
condition of the Obligors or any of their Subsidiaries. Each Acceptance Bank,
Issuing Bank and Lender acknowledges that it has, independently and without
reliance upon the Agents, the Arrangers, any Lender or any of their Affiliates,
and based upon such information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this Credit Agreement.
(b) For purposes of determining compliance with the conditions
specified in ss.11 hereof of each Lender that has executed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter either sent (or made available) by any Agent to
such Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory to
such Lender, unless an officer of the Administrative Agent contemplated by the
Loan Documents shall have received notice from such Lender prior to the Closing
Date specifying its objection thereto and such objection shall not have been
withdrawn by notice to the Administrative Agent to that effect on or prior to
the Closing Date.
ss. Payments.
A payment by the Obligors to the Administrative Agent hereunder or any
of the other Loan Documents for the account of the Acceptance Bank, the Issuing
Bank or any Lender shall constitute a payment to such Acceptance Bank, Issuing
Bank or Lender. The Administrative Agent agrees promptly to distribute to each
of the Acceptance Bank, the Issuing Bank and/or Lender such Acceptance Bank,
Issuing Bank and/or Lender's pro rata share of payments received by the
Administrative Agent for the account of the Lenders except as otherwise
expressly provided herein or in any of the other Loan Documents.
If in the opinion of the Administrative Agent the distribution of any
amount received by it in such capacity hereunder, under the Notes or under any
of the other Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and distributed by the
Administrative Agent is to be repaid, each Person to whom any such distribution
shall have been made shall either repay to the Administrative Agent its
proportionate
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53
share of the amount so adjudged to be repaid or shall pay over the same in such
manner and to such Persons as shall be determined by such court.
Notwithstanding anything to the contrary contained in this Credit
Agreement or any of the other Loan Documents, any Acceptance Bank, Issuing Bank
and/or Lender that fails (i) to make available to the Administrative Agent its
pro rata share of any Loan or to purchase a Credit Instrument Participation or
(ii) to comply with the provisions of ss.15 with respect to making dispositions
and arrangements with the other Lenders, where such Acceptance Bank, Issuing
Bank and/or Lender's share of any payment received, whether by setoff or
otherwise, is in excess of its pro rata share of such payments due and payable
to all of the Lenders, in each case as, when and to the full extent required by
the provisions of this Credit Agreement, shall be deemed delinquent (a
"Delinquent Lender") and shall be deemed a Delinquent Lender until such time as
such delinquency is satisfied. A Delinquent Lender shall be deemed to have
assigned any and all payments due to it from the Borrowers, whether on account
of outstanding Loans, Unpaid Reimbursement Obligations, interest, fees or
otherwise, to the remaining nondelinquent Lenders for application to, and
reduction of, their respective pro rata shares of all outstanding Loans and
Unpaid Reimbursement Obligations. The Delinquent Lender hereby authorizes the
Administrative Agent to distribute such payments to the nondelinquent Lenders in
proportion to their respective pro rata shares of all outstanding Loans and
Unpaid Reimbursement Obligations. A Delinquent Lender shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of the
assigned payments to all outstanding Loans and Unpaid Reimbursement Obligations
of the nondelinquent Lenders, the Lenders' respective pro rata shares of all
outstanding Loans and Unpaid Reimbursement Obligations have returned to those in
effect immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
ss. Holders of Notes.
The Administrative Agent may deem and treat the payee of any Note or
the purchaser of any Credit Instrument Participation as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been furnished in
writing with a different name by such payee or by a subsequent holder, assignee
or transferee.
ss. Indemnity.
The Acceptance Bank, the Issuing Bank and/or Lenders ratably agree
hereby to indemnify and hold harmless the Agents and the Arrangers from and
against any and all claims, actions and suits (whether groundless or otherwise),
losses, damages, costs, expenses (including any expenses for which the Agents or
the Arrangers have not been reimbursed by the Borrowers as required by ss.17),
and liabilities of every nature and character arising out of or related to this
Credit Agreement, the Notes, or any of the other Loan Documents or the
transactions contemplated or evidenced hereby or thereby, or the Agents' or
Arrangers' actions taken hereunder or thereunder, except to the extent that any
of the same shall be directly caused by an Agent's or Arranger's willful
misconduct or gross negligence.
ss. Agents as Lenders.
In their respective individual capacities, Fleet National Bank and
BankBoston, N.A. shall each have the same obligations and the same rights,
powers and privileges in respect to its respective Commitment and the Loans made
by it, and as the holder of any of the Notes and as the purchaser of
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54
any Credit Instrument Participation, as it would have were it not also the
Administrative Agent and Documentation Agent, respectively.
ss. Resignation.
Any Agent may resign at any time by giving sixty (60) days' prior
written notice thereof to the Acceptance Bank, the Issuing Bank, the Lenders and
the Borrowers. Upon any such resignation, the Majority Lenders shall have the
right, in consultation with the Borrowers, to appoint a successor Agent. Unless
a Default or Event of Default shall have occurred and be continuing, such
successor Agent shall be reasonably acceptable to the Borrowers. If no successor
Agent shall have been so appointed by the Majority Lenders and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a financial institution
having a rating of not less than "A" or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
ss. Notification of Defaults and Events of Default.
Each Acceptance Bank, Issuing Bank and Lender hereby agrees that,
upon learning of the existence of a Default or an Event of Default, it shall
promptly notify the Administrative Agent thereof. The Administrative Agent
hereby agrees that upon receipt of any notice under this ss.16.10 it shall
promptly notify the Acceptance Bank, the Issuing Bank and the others Lenders (as
the case may be) of the existence of such Default or Event of Default.
ss. Duties in the Case of Enforcement.
In case of one or more Events of Default have occurred and shall be
continuing, and whether or not acceleration of the Obligations shall have
occurred, the Administrative Agent shall, if (a) so requested by the Majority
Lenders and (b) the Lenders have provided to the Administrative Agent such
additional indemnities and assurances against expenses and liabilities as the
Administrative Agent may reasonably request, proceed to enforce the provisions
of the Security Documents authorizing the sale or other disposition of all or
any part of the Collateral and exercise all or any such other legal and
equitable and other rights or remedies as it may have in respect of such
Collateral. The Majority Lenders may direct the Administrative Agent in writing
as to the method and the extent of any such sale or other disposition, the
Lenders hereby agreeing to indemnify and hold the Administrative Agent, harmless
from all liabilities incurred in respect of all actions taken or omitted in
accordance with such directions, provided that the Administrative Agent need not
comply with any such direction to the extent that the Administrative Agent
reasonably believes the Administrative Agent's compliance with such direction to
be unlawful or commercially unreasonable in any applicable jurisdiction. Each
Lender agrees that, notwithstanding any other term to the contrary contained
herein, it will not have any right individually to enforce or seek to enforce
this Agreement or any of the other Loan Documents or to realize upon any
Collateral for the Loans, it being understood and agreed that such rights and
remedies may be exercised only by the Administrative Agent.
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55
ss. EXPENSES.
The Borrowers agree to pay (a) the reasonable out-of-pocket costs of
producing and reproducing this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein, (b) any taxes (including
any interest and penalties in respect thereto) payable by any Agent, any of the
Lenders, the Acceptance Bank, the Issuing Bank or any of their affiliates (other
than taxes based upon any Agent's, any Lender's, the Acceptance Bank, the
Issuing Bank or any affiliate's net income) on or with respect to the
transactions contemplated by this Credit Agreement (the Borrowers hereby
agreeing to indemnify the each Agent, each Lender, the Acceptance Bank, the
Issuing Bank and each affiliate with respect thereto), (c) the reasonable
out-of-pocket fees, expenses and disbursements of the Administrative Agent's
Special Counsel or any local counsel to the Administrative Agent incurred in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, and
amendments, modifications, approvals, consents or waivers hereto or hereunder,
(d) the reasonable out-of-pocket fees, expenses and disbursements incurred by
the Agents and the Arrangers in connection with the preparation, syndication,
administration or interpretation of the Loan Documents and other instruments
mentioned herein, including all commercial finance examination charges, (e) all
reasonable out-of-pocket expenses (including without limitation reasonable
attorneys' fees and costs, which attorneys may be employees of the
Administrative Agent, and reasonable consulting, accounting, appraisal,
investment banking and similar professional fees and charges) incurred by the
Administrative Agent in connection with (i) the out-of-pocket expenses incurred
in connection with the enforcement of or preservation of rights under any of the
Loan Documents against the Obligors or any of their Subsidiaries or the
administration thereof after the occurrence of a Default or Event of Default and
(ii) any out-of-pocket expenses incurred in connection with litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way related
to any Lender's, any Agent's, the Acceptance Bank, the Issuing Bank or any of
their affiliates relationship with the Borrowers or any of their Subsidiaries,
(f) in the event that a Default or Event of Default shall have occurred and be
continuing, all reasonable out-of-pocket expenses (including without limitation
reasonable attorneys' fees and costs, which attorneys may be employees of any
Lender, any Agent, the Issuing Bank or the Acceptance Bank, and reasonable
consulting, accounting, appraisal, investment banking and similar professional
fees and charges) incurred by any Lender, any Agent, the Issuing Bank or the
Acceptance Bank, in connection with (i) the out-of-pocket expenses incurred in
connection with the enforcement of or preservation of rights under any of the
Loan Documents against the Obligors or any of their Subsidiaries or the
administration thereof after the occurrence of a Default or Event of Default and
(ii) any out- of-pocket expenses incurred in connection with litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way related
to any Lender's, any Agent's, the Acceptance Bank, the Issuing Bank or any of
their affiliates relationship with the Borrowers or any of their Subsidiaries
and (g) all reasonable fees, expenses and disbursements of any Lender or any
Agent incurred in connection with UCC searches, UCC filings or mortgage
recordings. The covenants of this ss.17 shall survive payment or satisfaction of
all other Obligations.
ss. INDEMNIFICATION.
The Obligors agree to indemnify and hold harmless the Agents, the
Arrangers, the Lenders, the Acceptance Bank, the Issuing Bank and their
affiliates from and against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Credit
Agreement or any of the other Loan Documents or the transactions contemplated
hereby including, without limitation, (a) any actual or proposed use by the
Borrowers or any of their Subsidiaries of the proceeds of any of the Loans or
any
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56
Credit Instrument, (b) the syndication of the credit facility contemplated
hereby and by the other Loan Documents (c) the Obligors or any of their
Subsidiaries entering into or performing this Credit Agreement or any of the
other Loan Documents or (d) with respect to the Apparel Obligors and their
respective properties and assets, the violation of any Environmental Law, in
each case including, without limitation, the reasonable fees and disbursements
of counsel incurred in connection with any such investigation, litigation or
other proceeding. In litigation, or the preparation therefor, the Agents, the
Arrangers, the Lenders, the Acceptance Bank, the Issuing Bank and their
affiliates shall be entitled to select their own counsel and, in addition to the
foregoing indemnity, the Obligors agree to pay promptly the reasonable fees and
expenses of such counsel. If, and to the extent that the obligations of the
Obligors under this ss.18 are unenforceable for any reason, the Obligors hereby
agree to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The covenants contained
in this ss.18 shall survive payment or satisfaction in full of all other
Obligations provided, however, that the Obligors and their Subsidiaries shall
have no obligation hereunder to any Agent or any Arranger, Issuing Bank,
Acceptance Bank or Lender with respect to indemnified liabilities arising from
the gross negligence or willful misconduct of any such Agent, Arranger or any
such Issuing Bank, Acceptance Bank or Lender.
ss. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made
herein, in the Notes, in any of the other Loan Documents or in any documents or
other papers delivered by or on behalf of the Obligors or any of their
Subsidiaries pursuant hereto shall be deemed to have been relied upon by the
Acceptance Bank, the Issuing Bank, the Lenders and the Agents, notwithstanding
any investigation heretofore or hereafter made by any of them, and shall survive
the making by the Lenders of any of the Loans and the Acceptance Bank's and the
Issuing Bank's issuance, extension or renewal of any Credit Instrument, as
herein contemplated, and shall continue in full force and effect so long as any
Credit Instrument or amount due under this Credit Agreement or the Notes or any
of the other Loan Documents remains outstanding or any Lender has any obligation
to make any Loans hereunder or the Acceptance Bank or the Issuing Bank has any
obligation to issue, extend or renew any Credit Instrument, and for such further
time as may be otherwise expressly specified in this Credit Agreement. All
statements contained in any certificate or other paper delivered to any Lender
or any Agent at any time by or on behalf of any Obligor or any of its
Subsidiaries pursuant hereto or in connection with the transactions contemplated
hereby shall constitute representations and warranties by such Obligor or such
Subsidiary hereunder.
ss. ASSIGNMENT AND PARTICIPATION.
ss. Conditions to Assignment by Lenders.
Except as provided herein, each Lender may assign to one or more
Eligible Assignees all or a portion of its interests, rights and obligations
under this Credit Agreement (including all or a portion of its Commitment
Percentage and Commitment and the same portion of the Loans at the time owing to
it and the Notes held by it and its participation interest in the risk relating
to any Credit Instrument); provided that (a) each of the Issuing Bank, the
Administrative Agent and, if no Event of Default shall have occurred and be
continuing, the Obligors, shall have given its prior written consent to such
assignment (such consents not to be unreasonably withheld), (b) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Lender's rights and obligations under this Credit Agreement, (c) each
assignment shall be in an amount not less than $5,000,000, or such lesser
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57
amount provided that both Agents have given their prior written consent to any
such lesser amount and further provided, that any such lesser amounts assigned
to an Eligible Assignee shall in the aggregate equal not less than $5,000,000,
and (d) the parties to such assignment shall execute and deliver to the
Administrative Agent, for recording in the Register (as hereinafter defined), an
Assignment and Acceptance, substantially in the form of Exhibit C hereto (an
"Assignment and Acceptance"), together with any Notes subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, (i) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder, and (ii) the assigning Lender shall, to the extent provided in
such assignment and upon payment to the Administrative Agent of the registration
fee referred to in ss.20.3, be released from its obligations under this Credit
Agreement.
ss. Certain Representations and Warranties; Limitations; Covenants.
By executing and delivering an Assignment and Acceptance, the
parties to the assignment thereunder confirm to and agree with each other and
the other parties hereto as follows: (a) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, the assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto; (b) the
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Obligors and their
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations, or the performance or observance by the Obligors and
their Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations of any of their obligations under this Credit
Agreement or any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (c) such assignee confirms that it has
received a copy of this Credit Agreement, together with copies of the most
recent financial statements referred to in ss.7.5 and ss.8.4 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (d) such
assignee will, independently and without reliance upon the assigning Lender, the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Credit Agreement; (e)
such assignee represents and warrants that it is an Eligible Assignee; (f) such
assignee appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under this Credit Agreement and
the other Loan Documents as are delegated to the Administrative Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto; (g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Credit Agreement are
required to be performed by it as a Lender; (h) such assignee represents and
warrants that it is legally authorized to enter into such Assignment and
Acceptance; and (i) such assignee acknowledges that it has made arrangements
with the assigning Lender satisfactory to such assignee with respect to its pro
rata share of Letter of Credit Fees in respect of outstanding Credit
Instruments.
ss. Register.
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The Administrative Agent shall maintain a copy of each Assignment
and Acceptance delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Lenders and the Commitment
Percentage of, and principal amount of the Loans owing to, and Credit Instrument
Participations purchased by, the Lenders from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Obligors, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Credit Agreement. The Register shall be available for inspection by the Obligors
and the Lenders at any reasonable time and from time to time upon reasonable
prior notice. Upon each such recordation, the assigning Lender agrees to pay to
the Administrative Agent a registration fee in the sum of $2,500.00.
ss. New Notes.
Upon its receipt of an Assignment and Acceptance executed by the
parties to such assignment, together with each Note subject to such assignment,
the Administrative Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrowers and the
Lenders (other than the assigning Lender). Within ten (10) days after receipt of
such notice, the Borrowers, at their own expense, shall execute and deliver to
the Administrative Agent, in exchange for each surrendered Note, a new Note to
the order of such Eligible Assignee in an amount equal to the amount assumed by
such Eligible Assignee pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained some portion of its obligations hereunder, a new
Note to the order of the assigning Lender in an amount equal to the amount
retained by it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an aggregate principal
amount equal to the aggregate principal amount of the surrendered Notes, shall
be dated the effective date of such in Assignment and Acceptance and shall
otherwise be substantially the form of the assigned Notes.
ss. Participations.
Each Lender may sell participations to one or more banks or other
entities in all or a portion of such Lender's rights and obligations under this
Credit Agreement and the other Loan Documents; provided that (a) any such sale
or participation shall not affect the rights and duties of the selling Lender
hereunder to the Borrowers and (b) the only rights granted to the participant
pursuant to such participation arrangements with respect to waivers, amendments
or modifications of the Loan Documents shall be the rights to approve waivers,
amendments or modifications that would reduce the principal of or the interest
rate on any Loans, extend the term or increase the amount of the Commitment of
such Lender as it relates to such participant, reduce the amount of any facility
fees or Letter of Credit Fees or Bankers' Acceptance Fees to which such
participant is entitled or extend any regularly scheduled payment date for
principal or interest.
ss. Disclosure.
The Obligors agree that in addition to disclosures made in
accordance with standard and customary banking practices any Lender may disclose
information obtained by such Lender pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
participants shall agree in writing (a) to treat in confidence such information,
(b) not to disclose such information to a third party and (c) not to make use of
such information for purposes of transactions unrelated to such contemplated
assignment or participation.
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ss. Assignee or Participant Affiliated with the Obligors.
If any assignee Lender is an Affiliate of the Obligors, then any
such assignee Lender shall have no right to vote as a Lender hereunder or under
any of the other Loan Documents for purposes of granting consents or waivers or
for purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Administrative Agent
pursuant to ss.14.1 or ss.14.2, and the determination of the Majority Lenders
shall for all purposes of this Agreement and the other Loan Documents be made
without regard to such assignee Lender's interest in any of the Loans. If any
Lender sells a participating interest in any of the Loans or Reimbursement
Obligations to a participant, and such participant is an Obligor or an Affiliate
of an Obligor, then such transferor Lender shall promptly notify the
Administrative Agent of the sale of such participation. A transferor Lender
shall have no right to vote as a Lender hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Administrative Agent pursuant to ss.14.1 or
ss.14.2 to the extent that such participation is beneficially owned by any
Obligor or any Affiliate of such Obligor, and the determination of the Majority
Lenders shall for all purposes of this Agreement and the other Loan Documents be
made without regard to the interest of such transferor Lender in the Loans to
the extent of such participation.
ss. Miscellaneous Assignment Provisions.
If any assignee Lender is not incorporated under the laws of the
United States of America or any state thereof, it shall, prior to the date on
which any interest or fees are payable hereunder or under any of the other Loan
Documents for its account, deliver to the Borrowers and the Administrative Agent
certification as to its exemption from deduction or withholding of any United
States federal income taxes. If Fleet transfers all of its interest, rights and
obligations under this Credit Agreement, the Administrative Agent shall, in
consultation with the Borrowers and with the consent of the Borrowers and the
Majority Lenders, appoint another Lender to act as a reference bank hereunder.
Anything contained in this ss.20 to the contrary notwithstanding, any Lender may
at any time pledge all or any portion of its interest and rights under this
Credit Agreement (including all or any portion of its Notes) to any of the
twelve Federal Reserve Lenders organized under ss.4 of the Federal Reserve Act,
12 U.S.C. ss.341. No such pledge or the enforcement thereof shall release the
pledgor Lender from its obligations hereunder or under any of the other Loan
Documents.
ss. Assignment by Obligors.
No Obligor shall assign or transfer any of its rights or obligations
under any of the Loan Documents without the prior written consent of each of the
Lenders.
ss. Marshalling; Payments Set Aside.
Neither the Agents not any Lender shall be under any obligation to
marshal any assets in favor of the Obligors or any other party or against or in
payment of any or all of the Obligations. To the extent that any Obligor makes a
payment or payments to the Administrative Agent or any Lender (or to the
Administrative Agent for the benefit of any Lender), or the Administrative Agent
or any Lender enforces any security interest or exercises rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any
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60
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement setoff had not
occurred.
ss. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes or any Letter of Credit Application shall be in
writing and shall be delivered in hand, mailed by United States registered or
certified first class mail, postage prepaid, sent by overnight courier, or sent
by telegraph, telecopy, facsimile or telex and confirmed by delivery via courier
or postal service, addressed as follows:
if to the Obligors, 555 Turnpike Street, Canton, Massachusetts
02021, Attention: Mr. Philip G. Rosenberg, Chief Financial Officer, or
at such other address for notice as the Obligors shall last have
furnished in writing to the Person giving the notice, with a copy
delivered to Goodwin, Procter & Hoar LLP, Exchange Place, Boston,
Massachusetts 02109, Attention:
Raymond C. Zemlin, Esq.;
if to the Administrative Agent, at One Federal Street, Boston,
Massachusetts 02110, Attention: Gerald Sheehan, Assistant Vice
President, or such other address for notice as the Administrative Agent
shall last have furnished in writing to the Person giving the notice;
if to the Documentation Agent, at 100 Federal Street, Boston,
Massachusetts 02110, Attention: Linda H. Thomas, Managing Director,
or such other address for notice as the Documentation Agent shall last
have furnished in writing to the Person giving the notice; and
if to any Lender, at such Lender's address set forth on
Schedule 1 hereto, or such other address for notice as such Lender
shall have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
ss. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS, ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
<PAGE>
61
SAID COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS
OR CHOICE OF LAW). EACH OBLIGOR AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS
OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS
IN ANY SUCH SUIT BEING MADE UPON THE OBLIGORS BY MAIL AT THE ADDRESS SPECIFIED
IN ss.21. EACH OBLIGOR HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT IN THE COMMONWEALTH OF
MASSACHUSETTS OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
ss. HEADINGS.
The captions in this Credit Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
ss. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
ss. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in ss.27.
ss. WAIVER OF JURY TRIAL.
Each Obligor, as an inducement to the Administrative Agent and the
Lenders to enter into this Credit Agreement, hereby waives its right to a jury
trial with respect to any action or claim arising out of any dispute in
connection with this Credit Agreement, the Notes or any of the other Loan
Documents, any rights or obligations hereunder or thereunder or the performance
of which rights and obligations. Except as prohibited by law, each Obligor
hereby waives any right it may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages. Each Obligor (a) certifies that no representative, agent or attorney of
any Lender or the Administrative Agent has represented, expressly or otherwise,
that such Lender or the Administrative Agent would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that the
Administrative Agent and the Lenders have been induced to enter into this Credit
Agreement, the other Loan Documents to which it is a party and by, among other
things, the waivers and certifications contained herein.
ss. CONSENTS, AMENDMENTS, WAIVERS, ETC.
<PAGE>
62
Neither this Credit Agreement, any of the Loan Documents, nor any
term hereof or thereof may be amended, nor may any provision hereof or thereof
be waived, except by an instrument in writing signed by the Majority Lenders
and, in the case of an amendment, by the Obligors, except that in the event of
(i) any increase in the amount of any Commitment (other than by way of
assignment pursuant to ss.20 hereof), (ii) any delay or extension in the terms
of or any scheduled reduction of Commitments or repayment of the Loans as
provided in ss.2.4 hereof, (iii) any reduction in principal, interest or fees
due hereunder or postponement of the payment thereof, (iv) any release of any
portion of the Collateral for the Loans except as permitted in ss.9.5 hereof,
(v) any waiver of any Default or Event of Default due to the failure by the
Obligors to pay any sum due to any of the Lenders hereunder, (vi) any release of
the Guarantor hereunder or under any of the Loan Documents, or (vii) any
amendment of this ss.27 or of the definition of Majority Lenders or of any
portion of this Credit Agreement as they relate to the relative priorities of
payment among the Obligations or of the amount of the Administrative Agent's
fee, any such amendment or waiver or consent may be made only by an instrument
in writing signed by each of the Lenders and, in the case of an amendment, by
the Obligors.
Any amendment to any provision hereunder or under any other Loan Document
governing the rights, obligations or liabilities of any Agent or the Issuing
Bank, including, without limitation, Bankers' Acceptance fees, the Letter of
Credit Fees in each case in its capacity as such, will be effective only if any
instrument in writing has been signed by such affected Person. No waiver shall
extend to or affect any obligation not expressly waived or impair any right
consequent thereon. No course of dealing or delay or omission on the part of the
Administrative Agent or any Lender in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
the Obligors shall entitle the Obligors to other or further notice or demand in
similar or other circumstances.
ss. TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.
(a) Each of the Obligors acknowledges that from time to time
financial advisory, investment banking and other services may be offered or
provided to the Obligors or one or more of their Subsidiaries (in connection
with this Credit Agreement or otherwise) by any Section 20 Subsidiary and each
of the Obligors hereby authorizes each Lender to share any information delivered
to such Lender by the Section 20 Subsidiary pursuant to this Credit Agreement,
or in connection with the decision of such Lender to enter into this Credit
Agreement, to any such Section 20 Subsidiary, it being understood that any such
Section 20 Subsidiary receiving such information shall be bound by the
confidentiality provisions of this Credit Agreement. Such authorization shall
survive the repayment of the Loans and Reimbursement Obligations and the
termination of the Commitments.
(b) Each of the Lenders and the Agents agree (on behalf of
itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Guarantor or the Borrowers pursuant
to this Credit Agreement that is identified by such Person as being confidential
at the time the same is delivered to the Lenders or the Administrative Agent,
provided that nothing herein shall limit the disclosure of any such information
(i) after such information shall have become public (other than through a
violation of this ss.28, (ii) to the extent required by statute, rule,
regulation or judicial process, (iii) to counsel for any of the Lenders or the
Agents, (iv) to bank examiners (or any other regulatory authority having
jurisdiction over any Lender or Agent), or to auditors or accountants, (v) to
the Agents or any other Lender, (vi) in connection with any
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63
litigation to which any one or more of the Lenders or the Agents is a party, or
in connection with the enforcement of rights or remedies hereunder or under any
other Loan Document, (vii) to a Subsidiary or affiliate of any such Lender as
provided in paragraph (a) above or (viii) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) first executes and delivers to the
respective Lender a Confidentiality Agreement in form and substance satisfactory
to the Agents (a "Confidentiality Agreement") (or executes and delivers to such
Lender an acknowledgment to the effect that it is bound by the provisions of
this ss.28(b), which acknowledgment may be included as part of the respective
assignment or participation agreement pursuant to which such assignee or
participant acquires an interest in the Loans or Credit Instrument hereunder);
provided, further, that (x) unless specifically prohibited by applicable law or
court order, each Lender and the Agents shall, prior to disclosure thereof,
notify the Borrowers of any request for disclosure of any such non-public
information (A) by any governmental agency or representative thereof (other than
any such request in connection with an examination of the financial condition of
such Lender by such governmental agency) or (B) pursuant to legal process and
(y) in no event shall any Lender or the Agents be obligated or required to
return any materials furnished by the Guarantor or the Borrowers. The
obligations of each Lender under this ss.28 shall supersede and replace the
obligations of such Lender under the confidentiality letter in respect of this
financing signed and delivered by such Lender to the Borrowers prior to the date
hereof, in addition, the obligations of any assignee that has executed a
Confidentiality Agreement shall be superseded by this ss.28 upon the date upon
which such assignee becomes a Lender hereunder pursuant to ss.20 hereof.
ss. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
ss. NOTICE FROM BORROWERS.
Any notice given or made by any Borrower under this Credit Agreement
or any of the other Loan Documents shall be deemed to have been given or made by
all of the Borrowers.
IN WITNESS WHEREOF, the undersigned have caused this Credit Agreement
to be duly executed as a sealed instrument as of the date first set forth above.
THE CASUAL MALE, INC.
By:/s/ Philip Rosenberg
Its: Executive Vice President
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64
TCM HOLDING CO., INC.
By:/s/ Philip Rosenberg
Its: Executive Vice President
WGS CORP.
By:/s/ Philip Rosenberg
Its: Executive Vice President
TCMB&T, INC.
By:/s/ Philip Rosenberg
Its: Executive Vice President
J. BAKER, INC.
By:/s/ Philip Rosenberg
Its: Executive Vice President
FLEET NATIONAL BANK,
individually and as Administrative Agent
By: /s/Richard Seufert
Its Vice President
BANKBOSTON, N.A.,
individually and as Documentation Agent
By: /s/Linda Thomas
Its Managing Director
<PAGE>
65
THE CHASE MANHATTAN BANK
By: /s/Roger A. Stone
Its Senior Vice President
IMPERIAL BANK
By: James Higgins
Its Vice President
USTRUST
By: /s/Thomas F. Macina
Its Vice President
WAINWRIGHT BANK &
TRUST COMPANY
By:/s/Robert F. Goyette
Its Senior Vice President
LOAN AND SECURITY AGREEMENT
~~~~~~~~~~~~~~~~~~
GBFC, INC.
FLEET NATIONAL BANK
Agents
GBFC, Inc.
Fleet National Bank
The Lenders
~~~~~~~~~~~~~~~~~~
JBI, INC.
Lead Borrower for
JBI, INC.
MORSE SHOE, INC.
JBI HOLDING COMPANY, INC.
The Borrowers
............
219156.7
<PAGE>
/ 2 /
/ May 30, 1997 /
<TABLE>
<S> <C>
TABLE OF CONTENTS
ARTICLE 1 - THE REVOLVING CREDIT
1-1. Establishment of Revolving Credit...............................................................8
1-2. Advances in Excess of Maximum Loan Exposure....................................................10
1-3. Risks of Value of Inventory....................................................................10
1-4. Reserves. Changes to Reserves..................................................................10
1-5. Requests for Revolving Credit Loans............................................................11
1-6. Interest Rates.................................................................................11
1-7. Requests for L/C's.............................................................................12
1-8. General Procedures Under Revolving Credit......................................................13
1-9. The Loan Account...............................................................................14
1-10. Revolving Credit Notes.........................................................................15
1-11. Payment and Prepayment of Loan Account.........................................................16
1-12. Changed Circumstances..........................................................................16
1-13. Increased Costs................................................................................17
1-14. Certain Fees...................................................................................18
1-15. Fees For L/C's.................................................................................19
1-16. Concerning L/C's...............................................................................20
1-17. Agents' Discretion.............................................................................22
1-18 Lenders' Commitments...........................................................................23
1-19. Designation of Lead Borrower as Borrowers' Agent..............................................25
ARTICLE 2 - GRANT OF SECURITY INTEREST
2-1. Grant of Security Interest.....................................................................25
2-2. Extent and Duration of Security Interest.......................................................26
ARTICLE 3 - DEFINITIONS.
ARTICLE 4 - CONDITIONS PRECEDENT.
4-1. Corporate Due Diligence........................................................................48
4-2. Opinion........................................................................................48
4-3. Guaranties.....................................................................................49
4-4. Additional Documents...........................................................................49
4-6. Representations and Warranties.................................................................49
4-7 Certain Conditions Satisfied...................................................................49
4-8. Minimum Excess Availability....................................................................50
4-9. No Event of Default............................................................................50
4-10. No Adverse Change..............................................................................50
ARTICLE 5 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
5-1. Payment and Performance of Liabilities.........................................................51
5-2. Due Organization - Corporate Authorization - No Conflicts......................................51
5-3. Trade Names....................................................................................52
5-4. Locations......................................................................................52
5-6. Indebtedness...................................................................................53
5-7. Insurance Policies.............................................................................54
5-10. Maintain Properties............................................................................55
5-11. Pay Taxes......................................................................................56
5-12. No Margin Stock................................................................................56
5-13. ERISA..........................................................................................57
5-14. Hazardous Materials............................................................................57
5-15. Litigation.....................................................................................57
5-16. Dividends or Investments.......................................................................57
5-17. Loans..........................................................................................58
5-18. Protection of Assets...........................................................................58
5-19. Line of Business...............................................................................59
5-20. Affiliate Transactions.........................................................................59
5-21. Additional Assurances..........................................................................59
5-22. Adequacy of Disclosure.........................................................................60
5-23. Other Covenants................................................................................60
ARTICLE 6 - USE AND COLLECTION OF COLLATERAL.
6-1. Use of Collateral. ............................................................................61
6-2. Inventory Quality..............................................................................61
6-3. Adjustments and Allowances.....................................................................61
6-4. Validity of Accounts...........................................................................61
6-5. Notification to Account Debtors................................................................61
ARTICLE 7 - CASH MANAGEMENT.
7-1. The Concentration and the Funding Accounts.....................................................62
7-2. Proceeds and Collection of Accounts............................................................62
7-3. Interim Cash Management Procedures.............................................................62
7-4. Payment of Liabilities.........................................................................62
ARTICLE 8 - ADMINISTRATIVE AGENT AS BORROWERS' ATTORNEY-IN-FACT.
8-1. Appointment as Attorney-In-Fact................................................................63
8-2. No Obligation to Act...........................................................................64
ARTICLE 9 - FINANCIAL AND OTHER REPORTING REQUIREMENTS/FINANCIAL COVENANTS
9-1. Maintain Records...............................................................................65
9-2. Access to Records..............................................................................65
9-3. Immediate Notice to Administrative Agent.......................................................66
9-4. Weekly Reports.................................................................................67
9-6. Quarterly Reports..............................................................................68
9-7. Annual Reports.................................................................................68
9-8. Officers' Certificates.........................................................................69
9-9. Inventories, Appraisals, and Audits............................................................69
9-10. Additional Financial Information...............................................................70
9-11. Financial Performance Covenants................................................................70
ARTICLE 10 - EVENTS OF DEFAULT
10-2. Failure to Perform Liabilities.................................................................71
10-3. Misrepresentation..............................................................................72
10-4. Acceleration of Other Debt. Termination of Host Store Agreements...............................72
10-5. Related Party Defaults.........................................................................72
10-6. Casualty Loss. Non-Ordinary Course Sales.......................................................73
10-7. Judgment. Restraint of Business...............................................................73
10-8. Business Failure...............................................................................73
10-9. Bankruptcy.....................................................................................73
10-10. Indictment - Forfeiture.......................................................................74
10-11. Default by Guarantor or Related Entity.........................................................74
10-12. Challenge to Loan Documents....................................................................74
10-13. Change in Control..............................................................................74
ARTICLE 11 - RIGHTS AND REMEDIES UPON DEFAULT
11-1. Rights of Enforcement..........................................................................75
11-2. Sale of Collateral.............................................................................75
11-3. Occupation of Business Location................................................................76
11-4. Grant of Nonexclusive License..................................................................76
11-5. Assembly of Collateral.........................................................................77
11-6. Rights and Remedies............................................................................77
ARTICLE 12 - NOTICES.
12-1. Notice Addresses...............................................................................78
12-2. Notice Given...................................................................................78
ARTICLE 13 - TERM
13-1. Termination of Revolving Credit................................................................79
13-2. Effect of Termination..........................................................................79
14-1. Protection of Collateral.......................................................................79
14-2. Successors and Assigns.........................................................................79
14-3. Severability...................................................................................80
14-4. Amendments. Course of Dealing.................................................................80
14-5. Power of Attorney..............................................................................80
14-6. Application of Proceeds........................................................................80
14-7. Costs and Expenses of Agents and Lenders.......................................................80
14-8. Copies and Facsimiles..........................................................................81
14-9. Massachusetts Law..............................................................................81
14-10 Consent to Jurisdiction........................................................................81
14-11. Indemnification................................................................................81
14-12. Rules of Construction..........................................................................82
14-13. Intent.........................................................................................82
14-14. Maximum Interest Rate..........................................................................82
14-15. Waivers........................................................................................82
EXHIBITS
1-10 : Revolving Credit Note
4-3 : Guarantors
4-4(f) : Tax Sharing Agreement
5-2 : Related Entities
5-3 : Trade Names.
5-4 : Locations.
5-5 : Encumbrances on Collateral.
5-6 : Indebtedness.
5-7 : Insurance Policies.
5-8 : Host Store Agreements.
5-15 : Litigation
5-21(c) : Overhead Expense Allocation Protocol
5-22(a) : Changes in Financial Condition
5-22(b) : Contingent Obligations Not in Footnotes
6-4(c) : Surety Bonds
7-1 : DDA's.
9-4 : Borrowing Base Certificate
9-11(a) : Financial Performance Covenants
9-11(b) : Business Plan.
</TABLE>
<PAGE>
LOAN AND SECURITY AGREEMENT
..........., 1997
THIS AGREEMENT is made between
The "Agents", who are:
GBFC, Inc., a Delaware corporation with its principal
executive offices at 40 Broad Street, Boston, Massachusetts, as
Administrative Agent (so referred to herein) for the ratable benefit of
the Lenders; and
Fleet National Bank, a national banking association with
offices at One Federal Street, Boston, Massachusetts, as Co-Agent (so
referred to herein) for the ratable benefit of the Lenders;
and
The "Lenders", who are, at present:
GBFC, Inc., a Delaware corporation with offices at 40
Broad Street, Boston, Massachusetts 02109; and
Fleet National Bank, a national banking association with offices at One Federal
Street, Boston, Massachusetts,
and
JBI, Inc. (hereinafter, in such capacity, the "Lead
Borrower"), a Massachusetts corporation with its principal executive
offices at 555 Turnpike Street, Canton, Massachusetts, 02012, as agent
for the "Borrowers", being the following:
JBI, Inc.;
Morse Shoe, Inc. (a Delaware corporation with its principal
executive offices at 555 Turnpike Street, Canton, Massachusetts, 02012); and
JBI Holding Company, Inc. (a Delaware corporation
with its principal executive offices at 900 Market Street, Wilmington,DE,19801),
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
ARTICLE 1 - THE REVOLVING CREDIT
Establishment of Revolving Credit
(a) The Lenders hereby severally (and not jointly)
establish a revolving line of credit (the "Revolving Credit") in the Borrowers'
favor pursuant to which each Lender, subject to, and in accordance with, the
within Agreement, acting through the Administrative Agent, shall make loans
and advances and otherwise provide financial accommodations to and for
the account of the Borrowers as provided herein, in each instance equal to
that Lender's Commitment Percentage of Availability, up to the maximum
amount of that Lender's Commitment. The amount of the Revolving Credit shall
be determined by the Administrative Agent's reference to Availability,
calculated by the Administrative Agent based upon such information as may
then have been provided to the Administrative Agent pursuant to the within
Agreement or otherwise developed by the Administrative Agent. All of the
Borrowers' Liabilities under this Agreement are payable as
provided herein.
(b)) As used herein, the term "Availability" refers at any
time to the lesser of (i) or (ii), below, where:
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<S> <C>
(i) Is the result of:
(A) The Loan Ceiling.
Minus
(B) The then unpaid principal balance of the Loan Account.
Minus
(C) The then aggregate of such Availability Reserves as may have been
established by the Administrative Agent as provided herein.
Minus
(D) The then outstanding Stated Amount of all L/C's.
(ii) Is the result of:
(A) Up the lesser of
(I) (1) During the calendar months of November and
December: Twelve Million Dollars ($12,000,000.00).
(2) At all other times: Ten Million Dollars
($10,000,000.00)
or
(II) Eighty-Five Percent (85%)
of the face amount of
Acceptable Accounts.
Plus
(B) Up to the following percentage of the Retail of Acceptable Inventory:
(I) Through June 30, 1997: 30%.
(II) After June 30, 1997 : 25%.
Plus
(C) Up to the lesser of
(I) Seven Million Five Hundred Thousand Dollars ($7,500,000.00).
or
(II) the following percentage of the Cost of Acceptable
In-Transit Inventory:
(1) Through June 30, 1997: 55%.
(2) After June 30, 1997 : 50%.
Minus
(D) The then unpaid principal balance of the Loan Account.
Minus
(E) The then aggregate of such Availability Reserves as may have been
established by the Lender as provided herein.
Minus
(F) The then outstanding Stated Amount of all L/C's.
</TABLE>
(c) Availability shall be based upon Borrowing Certificates
furnished as provided in Section 9-4, below.
(d) The proceeds of borrowings under the Revolving Credit
shall be used solely to retire a portion of the senior credit facility of J.
Baker as in effect prior to the execution of the with Agreement and the
establishment of the Casual Male Credit Facility and thereafter for: working
capital purposes of the Borrower; Capital Expenditures; and general corporate
purposes, all solely to the extent otherwise permitted by the within Agreement.
. No Lender has any obligation to provide credit to the Borrowers such
that the principal balance of ure the Loan Account exceeds Maximum Loan
Exposure. The making of loans, advances, and credits and the providing of
financial accommodations by the Lenders such that Maximum Loan Exposure is
exceeded is for the benefit of the Borrowers and does not affect the obligations
of the Borrowers hereunder; such loans constitute Liabilities. The making of any
such loans, advances, and credits and the providing of financial accommodations
in excess of Availability on any one occasion shall not obligate any Agent or
any Lender to make any such loans, credits, or advances or to provide any
financial accommodation on any other occasion nor to permit such loans, credits,
or advances to remain outstanding.
Risks of Value of Inventory.nventorThe Administrative Agent's reference
to a given asset in connection with the Lenders' making of loans, credits, and
advances and the providing of financial accommodations under the Revolving
Credit and/or the monitoring of compliance with the provisions hereof shall not
be deemed a determination by any Agent or any Lender relative to the actual
value of the asset in question. All risks concerning the saleability of
Inventory are and remain upon the Borrowers. All Collateral secures the prompt,
punctual, and faithful performance of the Liabilities whether or not relied upon
by any Agent or any Lender in connection with the making of loans, credits, and
advances and the providing of financial accommodations under the Revolving
Credit.
.-4. (a)erves.The following are the initial Inventory Reserves:serves
(i) Shrinkage: $1,000,000.00 at Retail.
(i) Vendor reserves and customs duties, with respect to Acceptable In-Transit
Inventory: 11% of the Cost of such Inventory.
(iii) Freight variances reflected in the Borrowers' "dummy warehouse account":
100% of such variances.
(b) At the execution of the within Agreement, there are
no Availability Reserves.
(c) The Administrative Agent will not establish any
Reserve except with not less than Five (5) days prior notice to the Lead
Borrower of the Administrative Agent's intention to do so.
Requests for Revolving Credit Loans.
(a) Subject to the limitations included herein, the
Borrower shall have the option to elect an interest rate and Interest
Period to be applicable to a Revolving Credit Loan by giving the
Administrative Agent notice no later than the following:
(i) If such Loan is, or is to be converted to a Base
Rate Loan: By 1:00PM on the Business Day on which the subject Revolving
Credit Loan is to be made or is to be so converted.
(ii) If such Loan is, or is to be continued as a
Eurodollar Loan: By 1:00PM Three (3) Business Days before the end of
the then applicable Interest Period.
(iii) If such Loan is to be converted to a Eurodollar
Loan: By 1:00PM Three (3) Business Days before the day on which such
conversion is to take place.
(b) Provided that there is sufficient Availability to support
the same, (but subject, however, to Subsection 1-8(d), below (which deals with
the effect of a Suspension Event)), a loan or advance under the Revolving Credit
so requested by the Lead Borrower shall be made by the transfer of the proceeds
of such loan or advance to the Funding Account or as otherwise instructed by the
Lead Borrower.
.-6. Interest Rates1
(a) Each Revolving Credit Loan shall bear interest at the Base
Rate unless timely notice is given (as provided in Section 1-5(a)), that the
subject Revolving Credit Loan (or a portion thereof) is, or is to be converted,
to be a Eurodollar Loan.
(b) Subject to the provisions hereof, the Lead Borrower, by
notice to the Administrative Agent, may cause all or a part of the unpaid
principal balance of the Loan Account to bear interest at the Base Rate or the
Eurodollar Rate as specified from time to time by the Lead Borrower. For ease of
reference and administration, each part of the Loan Account which bears interest
at the same interest and for the same Interest Period is referred to herein as
if it were a separate "Revolving Credit Loan".
(c) The Borrower shall not select, renew, or convert any
interest rate for a Revolving Credit Loan such that there are more than Eight
(8) interest rates applicable to the Revolving Credit Loans at any one time.
(d) Eurodollar Loans shall each be in an amount of not
less than $1,000,000.00 and $100,000.00 increments in excess of such minimum.
(e) The Borrower shall pay interest on each Revolving Credit
Loan in arrears on the applicable Interest Payment Date for that Revolving
Credit Loan, in addition to which accrued and unpaid interest shall be paid on
the Termination Date and on the End Date, and following the occurrence of any
Event of Default, with such frequency as may be determined by the Administrative
Agent.
(f) The margins, applicable to the various interest options
available to the Borrowers pursuant hereto, are subject to change as described
on the Pricing Grid.
(g) Following the occurrence of any Event of Default (and
whether or not the Administrative Agent exercises the Administrative Agent's
rights on account thereof), all Revolving Credit Loans shall bear interest, at
the option of the Administrative Agent, at rate which is the aggregate of the
then applicable interest rate for Base Rate Loans (as determined from the
Pricing Grid) plus Two percent (2%) per annum.
Requests for L/C's. r L/C'sThe Lead Borrower may request that the
Administrative Agent cause the issuance of L/C's for the account of a Borrower.
(a) Each such request shall be in such manner as may from time
to time be reasonably acceptable to the Administrative Agent.
(b) The Administrative Agent will endeavor to cause the
issuance of any L/C so requested by the Lead Borrower, provided that if so
issued:
(i) The aggregate Stated Amount of all L/C's
does not exceed Twenty Million Dollars ($20,000,000.00).
(ii) The expiry of the L/C is not later than the
earlier of Thirty (30) days prior to the Maturity Date or the
following:
(A) Standby's: One (1) year from initial issuance.
(B) Documentary's: 180 days from initial issuance of the subject L/C.
(iii) Maximum Loan Exposure would not be exceeded.
(c) The Borrower on whose account an L/C is being issued shall
execute such documentation to apply for and support the issuance of an L/C as
may be required by the L/C Issuer.
(d) No Borrower shall have any recourse to any Agent or any
Lender on account of any action taken or omitted to be taken under and in
connection with the application for, issuance of, or honoring of a drawing
under, any L/C and any drafts and documents which relate thereto, except for any
action taken or omitted to be taken except where there is a specific finding in
a judicial proceeding (in which the Administrative Agent has had an opportunity
to be heard), from which finding no further appeal is available, that the
subject action or omission to act had been in actual bad faith or grossly
negligent or constituted willful misconduct.
(e) The Borrowers shall reimburse the L/C Issuer, immediately
upon the drawing under any L/C, for the amount of such drawing. In the event
that the Borrowers fail to so reimburse the L/C Issuer, the Borrowers
immediately shall reimburse the Lenders for the amount of such drawing. To the
extent which the Borrowers fail to so reimburse the L/C Issuer or the Lenders,
the Administrative Agent, without the request of the Lead Borrower or any of the
Borrowers, may cause the advance under the Revolving Credit any amount which the
Borrowers are so obligated to pay to the Lenders or the L/C Issuer, or for which
the Borrowers, the L/C Issuer, or the Lenders become obligated on account of, or
in respect to, any L/C. Such advance shall be made whether or not a Suspension
Event is then extant or such advance would result in Maximum Loan Exposure's
being exceeded. Such action shall not constitute a waiver of the Administrative
Agent's rights under Section 1-11(b), below.
General Procedures Under Revolving Creditng Credit
(a) The Administrative Agent may rely on any request for
a loan or advance or financial accommodation which the Administrative Agent,
in good faith, believes to have been made by a person duly authorized to act
on behalf of the Lead Borrower and may decline to make any such requested
loan or advance or to provide any such financial accommodation pending the
Administrative Agent's being furnished with such documentation concerning
that person's authority to act as may be satisfactory to the
Administrative Agent.
(b) A request by the Lead Borrower for any financial
accommodation under the Revolving Credit or of the issuance of an L/C shall be
irrevocable and shall constitute certification by the Lead Borrower that as of
the date of such request, each of the following is true and correct:
(c) Each Borrower is in compliance with, and has not
breached, in any material respect,
any of, its covenants contained in this Agreement.
(i) Each representation, not relating to a specific
date, which is made herein or in any of the Loan Documents (defined
below) is then true and correct in all material respects as of and as
if made on the date of such request (except (A) to the extent of
changes resulting from transactions contemplated or permitted by this
Agreement or the other Loan Documents and changes occurring in the
ordinary course of business which singly or in the aggregate are not
material adverse and (B) to the extent that such representations and
warranties expressly relate to a then earlier date).
(ii) No Suspension Event is then extant.
(d) Upon the occurrence from time to time of any Suspension
Event, the Administrative Agent may suspend the Revolving Credit immediately and
the Lenders shall not be obligated, during such suspension, to make any loans or
to provide any financial accommodation hereunder.
(e) A loan or advance shall be deemed to have been made
under the Revolving Credit upon:
(i) The Administrative Agent's initiation of the
transfer of the proceeds of such loan or advance in accordance with the Lead
Borrower's instructions (if such loan or advance is of funds requested by the
Lead Borrower).
(ii) The charging of the amount of such loan to the
Loan Account, made in accordance with this Agreement (in all other
circumstances).
(f) There shall not be any recourse to, nor liability of,
any Agent or any Lender on account of
(i) any delay beyond the reasonable control of
that Agent or that Lender in the making of any loan or advance requested under
the Revolving Credit;
(ii) any delay beyond the reasonable control of
that Agent or that Lender in the proceeds of any such loan or advance
constituting collected funds; or
(iii) any delay in the receipt, and/or any loss, of
funds which constitute a loan or advance under the Revolving Credit,
the wire transfer of which was properly and timely initiated by the
Administrative Agent in accordance with wire instructions provided to
the Administrative Agent by the Borrower.
(g) Each Borrower shall immediately become indebted to the
Agents and the Lenders for the amount of each loan under or pursuant to
this Agreement when such loan is deemed to have been made.
The Loan Account. Account
(a) The Administrative Agent shall keep a record (the "Loan
Account") of: all loans made under the Revolving Credit; all debits owed on
account of the Liabilities; and all credits against such amounts so owed.
(b) Except as otherwise provided herein, all interest,
fees, service charges, costs, and expenses for which the Borrowers are obligated
hereunder are payable on demand. The Administrative Agent,
(i) without the request of the Lead Borrower, may
advance under the Revolving Credit, when due, any such interest and any
fees, and service charges specifically due to an Agent or a Lender
pursuant to the Loan Documents; and
(ii) unless an Event of Default has occurred
(following which, the Administrative Agent may advance any of the
following without prior notice to the Lead Borrower) , upon not less
than Seven (7) days notice to the Lead Borrower, may advance any such
interest, fees, service charge, costs, and expenses not described in
Section (i) which is not paid by the Borrowers when due.
In both instances ((i) and (ii)), the Administrative Agent may charge the same
to the Loan Account when so advanced, even if Maximum Loan Exposure is thereby
exceeded. No such action shall constitute a waiver of any Borrower's obligations
under Section 1-11(b), below. Any amount which is added to the principal balance
of the Loan Account as provided in this Subsection shall bear interest at the
interest rate applicable from time to time to the unpaid principal balance of
the Loan Account.
(c) All credits against the Liabilities shall be conditional
upon final payment of the items giving rise to such credits. The amount of any
item credited against the Liabilities which is charged back against any Agent or
any Lender for any reason or is not so paid shall be a Liability and shall be
added to the Loan Account, whether or not the item so charged back or not so
paid is returned.
(d) In the determination of Availability, the Administrative
Agent may deem fees, service charges, accrued interest, and other payments as
having been advanced under the Revolving Credit whether or not such amounts are
then due and payable.
(e) Any statement rendered by any Agent or any Lender to the
Lead Borrower concerning the Liabilities shall be considered correct and
accepted by all Obligors and shall be conclusively binding upon all Obligors
unless the Lead Borrower provides the Administrative Agent with written
objection thereto within thirty (30) days from the mailing of such statement,
which written objection shall indicate, with particularity, the reason for such
objection. In the absence of manifest error, the Loan Account and the
Administrative Agent's books and records concerning the loan arrangement
contemplated herein and the Liabilities shall be prima facie evidence and proof
of the items described therein.
. The obligation to repay loans and advances under the Revolving
Credit, with interest as provided herein, shall be evidenced by Notes (each, a
"Revolving Credit Note") in the form of EXHIBIT 1-10, annexed hereto, executed
by the Borrower, one payable to each Lender. Neither the original nor a copy of
any Revolving Credit Note shall be required, however, to establish or prove any
Liability.
Payment and Prepayment of Loan Account.
(a) The Borrowers may repay all or any portion of the
principal balance of the Loan Account from time to time until the Termination
Date. Such payments shall be applied first to Base Rate Loans and only then
to Eurodollar Loans.
(b) The Borrowers, without notice or demand from any Agent or
any Lender, shall pay the Administrative Agent that amount, from time to time,
which is necessary so that the principal balance of the Loan Account does not
exceed Maximum Loan Exposure. Such payments shall be applied first to Base Rate
Loans and only then to Eurodollar Loans.
(c) The Borrowers shall repay the then entire unpaid balance
of the Loan Account and all other Liabilities on the Termination Date.
(d) The Borrowers shall indemnify each Lender and hold each
Lender harmless from and against any loss, cost or expense (including loss of
anticipated profits) which such Lender may sustain or incur (including, without
limitation, by virtue of acceleration after the occurrence of any Event of
Default) as a consequence of
(i) default by any Borrower in payment of the
principal amount of or any interest on any Eurodollar Loans as and when
due and payable, including any such loss or expense arising from
interest or fees payable by such Lender to lenders of funds obtained by
it in order to maintain its Eurodollar Loans;
(ii) default by the Borrower in making a borrowing or
conversion after the Lead Borrower has given (or is deemed to have
given) a request for a Revolving Credit Loan or a request to convert a
Revolving Credit Loan from one applicable interest rate to another; or
(iii) the making of any payment of a Eurodollar Loan
or the making of any conversion of any such Loan to a Base Rate Loan on
a day that is not the last day of the applicable Interest Period with
respect thereto, including interest or fees payable by such Lender to
lenders of funds obtained by it in order to maintain any such Loans.
. In the event that:umstances1-12.Changed Circumstances
(a) on any day on which the rate for a Eurodollar Loan would
otherwise be set, the Administrative Agent shall have determined in good faith
(which determination shall be final and conclusive) that adequate and fair means
do not exist for ascertaining such rate; or
(b) at any time the Administrative Agent shall have determined
in good faith (which determination shall be final and conclusive) that:
(i) the continuation of or conversion of any
Revolving Credit Loan to a Eurodollar Loan has been made impracticable
or unlawful by the occurrence of a contingency that materially and
adversely affects the applicable market or compliance by the
Administrative Agent or any Lender in good faith with any applicable
law or governmental regulation, guideline or order or interpretation or
change thereof by any governmental authority charged with the
interpretation or administration thereof or with any request or
directive of any such governmental authority (whether or not having the
force of law); or
(ii) the indices on which the interest rates for
Eurodollar Loans shall no longer represent the effective cost to the
Administrative Agent or any Lender for U.S. dollar deposits in the
interbank market for deposits in which it regularly participates;
then, and in any such event, the Administrative Agent shall forthwith so notify
the Lead Borrower thereof. Until the Administrative Agent notifies the Lead
Borrower that the circumstances giving rise to such notice no longer apply, the
obligation of the Administrative Agent and of the Lenders to make Eurodollar
Loans of the type affected by such changed circumstances or to permit the
Borrowers to select the affected interest rate as otherwise applicable to any
Revolving Credit Loans shall be suspended. If at the time the Administrative
Agent so notifies the Lead Borrower, the Lead Borrower had previously given the
Administrative Agent notice with respect to one or more Eurodollar Loans, but
such Eurodollar Loans had not yet been made, then such notification by the Lead
Borrower shall be deemed to have not been made.
Increased Costs. If, as a result of any change to any requirement of
law, and if, as a result of the interpretation or application thereof by any
court or by any governmental or other authority or entity charged with the
administration thereof, whether or not having the force of law, which:
(a) subjects any Agent or any Lender to any new taxes or
changes the basis of taxation, or increases any existing taxes, on payments of
principal, interest or other amounts payable by the Borrower to any Agent or any
Lender under this Agreement (except for taxes on an Agent's or any Lender's
overall net income or capital imposed by the jurisdiction in which that Agent or
that Lender's principal or lending offices are located);
(b) imposes, modifies or deems applicable any reserve, cash
margin, special deposit or similar requirements against assets held by, or
deposits in or for the account of or loans by or any other acquisition of funds
by the relevant funding office of any Lender; or
(c) imposes on any Lender a requirement to maintain or
allocate capital in relation to the Liabilities; and the result of any of the
foregoing, in the Administrative Agent's reasonable opinion, is to increase the
cost to any Lender of making or maintaining any loan, advance or financial
accommodation or to reduce the income receivable by any Agent or any Lender in
respect of any the credit facility contemplated hereby by an amount which the
Administrative Agent deems to be material, then upon the Administrative Agent's
giving written notice thereof, from time to time, to the Borrower (such notice
to set out in reasonable detail the facts giving rise to and a summary
calculation of such increased cost or reduced income), the Borrowers shall
forthwith pay to the Administrative Agent, for the benefit of the subject Agent
or Lender, upon receipt of such notice, that amount which shall compensate the
subject Agent or Lender for such additional cost or reduction in income. In the
absence of manifest error, any such determination of increased costs or reduced
income which would be the subject of this Section 1-13, if done by the
Administrative Agent in good faith, shall be conclusive and binding on the
Borrowers.
Certain Fees. (a) As compensation for the Lenders' respective
commitments included herein to make loans and advances to the Borrowers and as
compensation for the Lenders' respective maintenance of sufficient funds
available for such purpose, the Borrowers shall pay the Administrative Agent,
for the account of the Lenders, an Upfront Fee (so referred to herein) of
$137,500.00. One Half of the Upfront Fee had been paid prior to the execution of
the within Agreement and One Half shall be paid immediately following such
execution.
(b) The Borrowers shall pay the Administrative Agent a
Collateral Management Fee (so referred to herein) based upon $7,000.00 per month
for the period beginning with the execution of the within Agreement and ending
on the later of the Maturity Date or the End Date.
(i) Such Fee shall be payable in monthly installments
in advance, except that, in the event of the early termination of the
Revolving Credit (other than the refinancing of the Revolving Credit in
which both Agents are lenders (as to which, see Subsection 1-14(b)(ii),
below) for any reason, the aggregate of (A) any accrued and unpaid
installments (for such purpose, without regard to any increase in such
installments, as provided in Section 1-14(c), below) plus (B) the
monthly installments which would fall due between the date of such
early termination and the Maturity Date shall be immediately due and
payable.
(ii) In the event of the refinancing of the Revolving
Credit in which both Agents are lenders, then any installments of the
Collateral Management Fee not due and payable on or prior to the date
of the consummation of such refinancing shall be waived.
(c) Upon and following the occurrence of any Suspension Event,
the Administrative Agent may alter the amount of the Collateral Management Fee
reasonably to reflect any increased administration required by reason of changes
to the Borrowers' financial and business circumstances evidenced by such
occurrence. Such increased Collateral Management Fee may include charges on a
per diem, hourly, or other basis to reflect such increased administration, and
shall have a reasonable relationship to the increased administrative burdens
place on the Administrative Agent.
(d) On the first day of each of the Borrower's fiscal quarter,
and on the End Date, the Borrower shall pay the Lender a Line Fee (so referred
to herein) equal to the following per annum percentage of the average
difference, during the period since such fee had then previously been paid,
between the (x) Loan Ceiling minus the average Stated Amount of all L/C's
outstanding during the subject period and (y) the unpaid principal balance of
the Loan Account :
(i) For the quarter ending on or about October 31, 1997 : 0.375%.
(ii) For quarters thereafter, as set pursuant to the Pricing Grid.
(e) In addition to any other right to which the Administrative
Agent is then entitled on account thereof, the Administrative Agent may assess
an additional fee payable by the Borrowers on account of the accommodation, by
the Administrative Agent, from time to time, of the Lead Borrower's request that
the Administrative Agent and the Lenders depart or dispense with one or more of
the administrative provisions of the within Agreement and/or waive any
Borrower's failure to comply with any of such provisions. The inclusion of the
foregoing right on the part of the Administrative Agent to assess a fee does not
constitute an obligation, on the part of the Administrative Agent or any Lender,
to waive any provision of the within Agreement under any circumstances. The
assessment of any such fee in any particular circumstance shall not constitute
the waiver of any breach of the within Agreement on account of which such fee
was assessed nor a course of action on which any Borrower may rely.
(f) Except as otherwise provided in Section 1-14(b), above,
the Borrowers shall not be entitled to any credit, rebate or repayment of any
Upfront Fee, Collateral Management Fee, or other fee previously earned by the
Lenders or the Administrative Agent pursuant to this Section notwithstanding any
termination of the within Agreement or suspension or termination of the Lenders'
obligation to make loans and advances hereunder.
Fees For L/C's.or L/C's-15. Fees For L/C's
(a) The Borrowers shall pay the Administrative Agent,
quarterly in arrears, on the first Business Day of each quarter hereof, and on
the End Date, an L/C Fee equal to the following per annum rate (determined, with
respect to each L/C based on the actual number of days outstanding and a 360 day
year) of the aggregate Stated Amount of such L/C's outstanding at any time
during the then immediately prior quarter or period :
(i) Documentary L/C's: One and One Quarter Percent (1.25%) .
(ii) Standby L/C's : The Eurodollar Margin in effect on the first
Business Day of the subject quarter, as determined based on the Pricing Grid.
(b) In addition to the fees to be paid as provided in
Subsection 1-15(a), above, the Borrowers shall pay to the Administrative Agent
(or to the L/C Issuer if so requested by the Administrative Agent), on demand,
all issuance, processing, negotiation, amendment, and administrative fees and
other similar amounts charged by the L/C Issuer on account of, or in respect to,
any L/C, which amounts shall be based on the L/C Issuer's then standard rates
and fees.
Concerning L/C's. L/C's-16. Concerning L/C's
(a) None of the L/C Issuer, the L/C Issuer's correspondents,
or any advising, negotiating, or paying bank with respect to any L/C shall be
responsible in any way for:
(i) The performance by any beneficiary under
any L/C of that beneficiary's obligations to the Borrowers.
(ii) The form, sufficiency, correctness, genuineness,
authority of any person signing; falsification; or the legal effect of;
any documents called for under any L/C if (with respect to the
foregoing) such documents on their face appear to be in order.
(b) The L/C Issuer may honor, as complying with the terms of
any L/C and of any drawing thereunder, any drafts or other documents otherwise
in order, but signed or issued by an administrator, executor, conservator,
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, liquidator, receiver, or other legal representative of the party
authorized under such L/C to draw or issue such drafts or other documents.
(c) The Lead Borrower may instruct the L/C Issuer concerning
the designation of any advising bank, paying bank, and negotiating bank, those
banks so designated by the Lead Borrower, it being understood that the L/C
Issuer shall honor such designation to the extent then practicable.
(d) All directions, correspondence, and funds transfers
relating to any L/C are at the risk of the Borrowers. The L/C Issuer shall have
discharged the L/C Issuer's obligations under any L/C which, or the drawing
under which, includes payment instructions, by the initiation of the method of
payment called for in, and in accordance with, such instructions (or by any
other commercially reasonable and comparable method). None of any Agent or any
Lender, nor the L/C Issuer shall have any responsibility for any inaccuracy,
interruption, error, or delay in transmission or delivery by post, telegraph or
cable, or for any inaccuracy of translation.
(e) Each Agent's, each Lender's, and the L/C Issuer's rights,
powers, privileges and immunities specified in or arising under this Agreement
are in addition to any heretofore or at any time hereafter otherwise created or
arising, whether by statute or rule of law or contract.
(f) Except to the extent otherwise expressly provided
hereunder or agreed to in writing by the L/C Issuer and the Borrower, the L/C
will be governed by the Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce, Publication No. 500, and any subsequent
revisions thereof.
(g) If any change in any law, executive order or regulation,
or any directive of any administrative or governmental authority (whether or not
having the force of law), or in the interpretation thereof by any court or
administrative or governmental authority charged with the administration
thereof, shall either:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirements against letters of credit
heretofore or hereafter issued by any L/C Issuer or with respect to
which any Agent or any Lender or any L/C Issuer has an obligation to
lend to fund drawings under any L/C; or
(ii) impose on any L/C Issuer any other condition
or requirements relating to any such letters of credit;
and the result of any of the foregoing, in the reasonable opinion of the subject
L/C Issuer, is to increase the cost to that L/C Issuer of issuing or maintaining
any L/C or to reduce the income receivable by that L/C Issuer (which increase in
cost or decrease in income shall be the result of such L/C Issuer's reasonable
allocation among that L/C Issuer's letter of credit customers of the aggregate
of such cost increases and reduction in income resulting from such events),
then, upon the Administrative Agent's providing the Lead Borrower with a
certificate of an officer of the subject L/C Issuer describing such change in
law, executive order, regulation, directive, or interpretation thereof, its
effect on such L/C Issuer, and the basis for determining such increased costs or
reduced income and its allocation among that L/C Issuer's letter of credit
customers, the Borrowers shall forthwith pay to the Administrative Agent, for
the benefit of the subject L/C Issuer, that amount which shall compensate such
L/C Issuer for such increased cost or reduction in income. In the absence of
manifest error, an L/C Issuer's determination of increased costs or reduced
income which would be the subject of this Section 1-16(g) and the allocation, if
any, of such costs and reduction among the Borrowers and other letter of credit
customers of such L/C Issuer, if done in good faith and made on an equitable
basis and in accordance with the officer's certificate, shall be conclusive and
binding on the Borrowers.
(h) The obligations of the Borrowers under the within
Agreement with respect to L/C's are absolute, unconditional, and irrevocable and
shall be performed strictly in accordance with the terms hereof under all
circumstances, whatsoever including, without limitation, the following:
(i) Any lack of validity or enforceability or
restriction, restraint, or stay in the enforcement of the within
Agreement, any L/C, or any other agreement or instrument relating
thereto.
(ii) Any Borrower's consent to the amendment or
waiver of any departure from, any L/C.
(iii) The existence of any claim, set-off, defense,
or other right which any Borrower may have at any time against the
beneficiary of any L/C.
(iv) Any honoring of a drawing under any L/C, which
drawing possibly could have been dishonored based upon a strict
construction of the terms of the L/C.
(i) Each L/C Issuer shall be deemed to have agreed as follows:
(i) That any action taken or omitted by that L/C Issuer,
that L/C Issuer's correspondents, or any advising, negotiating or paying bank
with respect to any L/C and the related drafts and documents, shall be done
in good faith and in compliance with foreign or domestic laws.
(ii) That the Borrowers shall not be required to indemnify the L/C Issuer,
the L/C Issuer's correspondents, or any advising, negotiating or paying
bank with respect to any L/C for any claims, damages, losses, liabilities,
costs or expenses to the extent, caused by (x) the willful misconduct or gross
negligence of the L/C Issuer, the L/C Issuer's correspondents, or any advising,
negotiating or paying bank with respect to any L/C in determining whether
a request presented under any Letter of Credit complied with the terms
of such Letter of Credit or (y) the L/C Issuer's failure to pay under
any Letter of Credit after the presentation to it of a request strictly
complying with the terms and conditions of such Letter of Credit.
. 7. Agents' Discretion
(a) Each reference in the Loan Documents to an Agent's
exercise of discretion or the like hall be to the exercise of such judgement,
in good faith, based upon that Agent's consideration of any such factor as that
Person, taking into account information of which that Person then has actual
knowledge, believes:
(i) Will or reasonably could be expected to affect,
in more than a de minimus manner, the value of the Collateral, the
enforceability of the Agent's security and collateral interests
therein, or the amount which the Agent would likely realize therefrom
(taking into account delays which possibly be encountered in the
Agent's realizing upon the Collateral and likely Costs of Collection).
(ii) Indicates that any report or financial
information delivered to any Agent or any Lender by or on behalf of any
Obligor is incomplete, inaccurate, or misleading in any material manner
or was not prepared in accordance with the requirements of the within
Agreement.
(iii) Constitutes a Suspension Event.
(b) In the exercise of such judgement, each Agent also
may take into account any of the following factors:
(i) Those included in, or tested by, the
definitions of "Acceptable Inventory," "Retail," and "Cost".
(ii) Material changes in or to the mix of the Borrowers' Inventory.
(iii) Seasonality with respect to the Borrowers' Inventory and patterns of
retail sales.
(iv) The existence of any Suspension Event .
(c) The burden of establishing any Agent's failure to have
acted in a reasonable manner in the that Person's exercise of discretion shall
be the Obligors'.
Lenders' Commitments.mitments
(a) The obligations of each Lender are several and not joint.
No Lender shall have any obligation to make any loan or advance under the
Revolving Credit in excess of (i) the lesser of that Lender's Commitment
Percentage of the subject loan or advance or of Availability or (ii) in excess
of that Lender's Commitment,
(b) No Lender shall have any liability to the Lead Borrower or
to any Borrower on account of the failure of any other Lender to provide any
loan or advance under the Revolving Credit nor any obligation to make up any
shortfall which may be created by such failure.
(c) The Dollar Commitments, Commitment Percentages, and
identities of the Lenders (but not the overall Commitment) may be changed, from
time to time by the reallocation of Dollar Commitments and Commitment
Percentages amongst the Lenders or with other Persons who determine to become
"Lenders", provided, however, any such reallocation shall be on a pro-rata basis
such that each reallocated Dollar Commitment to any Person remains the same
percentage of the overall Commitment (in terms of dollars) as the reallocated
Commitment Percentage is to such Person. Upon written notice given the Lead
Borrower from time to time by the Administrative Agent, of any such change,
(i) The Lead Borrower shall cause the execution of
replacement Revolving Credit Notes by each of the Borrowers to reflect
such changed Dollar Commitments, Commitment Percentages, and
identities, and the delivery of such replacement Revolving Credit Notes
to the Agent (which promptly thereafter shall deliver to the Lead
Borrower the Revolving Credit Notes so replaced) provided however, in
the event that a Revolving Credit Note is to be exchanged following its
acceleration or the entry of an order for relief under the Bankruptcy
Code with respect to any Borrower, the Administrative Agent, in lieu of
causing the Borrowers to execute new Revolving Credit Notes, may issue
the Administrative Agent's Certificate confirming the resulting
Commitments and Commitment Percentages.
(Ii) Such change shall be effective from the effective date
specified in such written notice and any Person added as a "Lender"
shall have all rights and privileges of a "Lender" hereunder thereafter
as if such Person had been a signatory to the within Agreement and any
other Loan Document to which a Lender is a signatory and any person
removed as a "Lender" shall be relieved of any obligations or
responsibilities of a "Lender" hereunder thereafter.
(d) The Lead Borrower and each Borrower recognizes that each
Agent's exercise of any reasonable discretion accorded to that Agent herein and
of its rights, remedies, powers, privileges, and discretions with respect to the
Lead Borrower and each Borrower is subject to a certain Agency Agreement amongst
the Agents and the Lenders. Under said Agency Agreement, the following actions
require the consent of all Lenders:
(i) Amendment of any rate of interest.
(ii) Amendment of the Loan Ceiling.
(iii) Amendment of the date on which or by which any
payment required under the Loan Documents is due.
(iv) Amendment of any fee required to be paid
under the Loan Documents.
(v) The increase of any advance rate.
(vi) Release of the Administrative Agent's
security interest in a material portion
of the Collateral not otherwise permitted under the Loan Documents.
(vii) Release of any Obligor's obligations under
the Loan Documents.
(viii) Amendment of this Section 1-18(d).
Except for those actions described above, any amendment, consent, or waiver any
provision of the Loan Documents shall require the consent of Lenders holding not
less than 66-2/3% of the Percentage Commitments.
1-19. Designation of Lead Borrower as Borrowers' Agent.
BorrowersDesignation of Lead Borrower as Borrowers' Agent.
(a) Each Borrower hereby designates the Lead Borrower as that
Borrower's agent to obtain loans and advances under the Revolving Credit, the
proceeds of which shall be available to each Borrower for the same uses as those
set forth in Section 1-1(d), above. As the disclosed principal for its agent,
each Borrower shall be obligated to the Administrative Agent, the Co-Agent and
the Lenders on account of loans and advances so made under the Revolving Credit
as if made directly by the Lenders to that Borrower, notwithstanding the manner
by which such loans and advances are recorded on the books and records of the
Lead Borrower and of any Borrower.
(b) The proceeds of each of such loans and advances shall be
deposited into the Funding Account or as otherwise indicated by the Lead
Borrower. None of the Administrative Agent, the Co-Agent, or any Lender shall
have any obligation to see to the application of such proceeds.
ARTICLE 2 - GRANT OF SECURITY INTEREST
.-1. To secure the Liabilities, each Borrower hereby grants to the
Administrative Agent, for the ratable benefit of the Agents and the Lenders, a
security interest in and assigns to the Administrative Agent , the following,
and each item thereof, whether now owned or now due, or in which that Borrower
has an interest or hereafter acquired, arising, or to become due, or in which
that Borrower obtains an interest, and all products, Proceeds, substitutions,
and accessions of or to any of the following (all of which, together with any
other property in which the Administrative Agent may in the future be granted a
security interest, is referred to herein as the "Collateral"):
(a) All Accounts and Accounts Receivable;
(b) All Inventory;
(c) All General Intangibles;
(d) All Equipment;
(e) All Goods;
(f) All Fixtures;
(g) All Chattel Paper;
(h) All books, records, and information relating to the
Collateral and/or to the operation of the Borrower's
business, and all rights of access to such books,
records, and information, and all property in which
such books, records, and information are stored,
recorded, and maintained;
(i) All Investment Property, Instruments, Documents of
Title, Documents, policies and certificates of
insurance, Securities, deposits, deposit accounts,
impressed accounts, compensating balances, money,
cash, or other property;
(j) All insurance proceeds, refunds, and premium rebates,
including, without limitation, proceeds of fire and
credit insurance, whether any of such proceeds,
refunds, and premium rebates arise out of any of the
foregoing (2-1(a) through 2-1(i)) or otherwise;
(k) All liens, guaranties, rights, remedies, and
privileges pertaining to any of the foregoing (2-1(a)
through 2-1(i)), including the right of stoppage in
transit.
Extent and Duration of Security Interest. The within grant of a
security interest is in addition to, and supplemental of, any security interest
previously granted by any of the Borrowers to the Administrative Agent and shall
continue in full force and effect applicable to all Liabilities until all
Liabilities have been irrevocably paid and/or satisfied in full and any
obligation of the Administrative Agent or any Lender to provide financial
accommodations to any of the Borrowers shall have been terminated.
ARTICLE 3 - DEFINITIONS.ARTICLE 3 - DEFINITIONS.
As herein used, the following terms have the following meanings or are
defined in the section of the within Agreement so indicated:
"Acceptable Accounts": The face amount of a Borrower's accounts
receivable owed by an Acceptable Host Store on account of the
retail sale of inventory by that Borrower at the subject
Acceptable Host Store (net of of rent, fees, and other amounts
due and payable to the subject account debtor under the
subject lease, license, or other agreement between that
Borrower and the subject Acceptable Host Store) in which
account receivable the Administrative Agent has a first and
only valid and perfected priority security interest and which
account receivable, the Administrative Agent, in its
reasonable discretion, deems eligible for borrowing. Without
limiting the generality of the foregoing, the following
describe certain accounts receivable which the Administrative
Agent may determine, in the exercise of such reasonable
discretion, as not constituting "Acceptable Accounts":
(a) All accounts receivable of any Host Store, any
part of whose accounts receivable (other than any Pre-Petition
Accounts Receivable) due to any Borrower is more than Seven
(7) Business Days past due in accordance with the payment
terms of the lease, license, or other agreement between that
Borrower and the subject Acceptable Host Store.
(b) All Pre-Petition Accounts Receivable.
(c) In the discretion of the Agents, exercisable at
any time during the first Twenty (20) Business Days following
the subject bankruptcy filing, all Post-Petition Accounts
Receivable.
(d) Any account receivable, to the extent of any
disputed amount or amount claimed by the subject account
debtor as being subject to any chargeback, offset, or contra
or is otherwise disputed.
(e) Any account owed by any account debtor located in
Indiana or Minnesota (or any other state having requirements
similar to those set forth below), unless the relevant
Borrower (i) has received a certificate of authority to do
business and is in good standing in such jurisdiction and (ii)
has filed a Notice of Business Activities Report with the
appropriate state offices for the then current year.
"Acceptable Host Store": (a) A Key Host Store which has executed
a Host Store Consent.
(b) Until July 15, 1997, any Host Store which is not a Key Host
Store.
(c) After July 15, 1997, any Host Store which has executed a
Host Store Consent.
"Acceptable In-Transit Inventory": Such of the Borrowers' Inventory
(net of Inventory Reserves) which the Administrative Agent
determines, in the exercise of the Administrative Agent's
reasonable discretion to be acceptable for borrowing, which
Inventory is not then at an Acceptable Host Store or at the
Canton Warehouse or in transit between any of said locations,
as to which Inventory, the Administrative Agent either (a) has
a perfected security interest which is prior and superior to
all security interests, claims, and Encumbrances or (b) is
otherwise reasonably satisfied that the interests of the
Administrative Agent therein are sufficiently protected (such
as by being named in a letter from the Borrowers to the
Administrative Agent as consignee on, or having possession or
control of the documents of title applicable to, such
Inventory or such inventory's being en route to a customs
broker which is party to an agreement with the Administrative
Agent which is reasonably satisfactory to the Administrative
Agent ) so as to include such Inventory in the calculation of
"Availability".
"Acceptable Inventory": Such of the Borrowers' Inventory (net of
Inventory Reserves), which Inventory is either at an
Acceptable Host Store or at the Canton Warehouse (or is in
transit between any of such locations) as to which Inventory,
the Administrative Agent has a perfected security interest
which is prior and superior to all security interests, claims,
and Encumbrances.
"Accounts" and "Accounts Receivable" include, without limitation,
"accounts" as defined in the UCC, and also all: accounts,
accounts receivable, amounts due from Host Stores, credit card
receipts, notes, drafts, acceptances, and other forms of
obligations and receivables and rights to payment whether or
not yet earned by performance.
"ACH": Automated clearing house.
"Account Debtor": Has the meaning given that term in the UCC.
"Administrative Agent": Is defined in the Preamble.
"Administrative Agent's Rights and Remedies": Is defined in Section 11-6.
"Affiliate": Means, with respect to any two Persons, a relationship
where one directly or indirectly has Control of the other or
an interest of not less than 25% of the other or where not
less than 25% of their respective ownership is directly or
indirectly held by the same third Person.
"Agents": The Administrative Agent and the Co-Agent.
"Availability": Is defined in Section 1-1(b).
"Availability Reserves: Such reserves as the Administrative Agent from
time to time determines in the Administrative Agent's
reasonable discretion as being appropriate to reflect the
impediments to the Administrative Agent's ability to realize
upon the Collateral. Without limiting the generality of the
foregoing, Availability Reserves may include (but are not
limited to) reserves based on the following:
(i) Chargebacks and set offs.
(ii) Taxes and other governmental
charges, including, ad valorem,
sales, personal property, and other
taxes which may have priority over
the security interests of the
Administrative Agent in the
Collateral.
At the execution of this Agreement, there are no Availability
Reserves.
"Average Excess Availability": The numerical average, for the period
for which "Average Excess Availability" is being determined,
of Excess Availability on each day during such period.
"Bankruptcy Code": Title 11, U.S.C., as amended from time to time.
"Base": The greater, on any day, of (a) the annual rate of interest
announced from time to time by BankBoston, N.A. at its head
office in Boston, Massachusetts, as its "Base Rate" or (b) the
aggregate of the Federal Funds Effective Rate plus One Half
Percent (0.5%) per annum (rounded upwards, if necessary, to
the next 1/8th of 1% per annum). In the event that said bank
(or any such successor) ceases to announce such a rate, "Base"
shall refer to that rate or index announced or published from
time to time as the Administrative Agent, in good faith,
designates as the functional equivalent to said Base Rate .
Any change in "Base" shall be effective, for purposes of the
calculation of interest due hereunder, when such change is
made effective generally by the bank on whose rate or index
"Base" is being set.
"Base Rate Loan": Any Revolving Credit Loan, while bearing interest at
the Base Rate.
"Base Rate": The aggregate (calculated based on a 360 day year
and actual days elapsed) of Base plus the applicable Base Margin.
"Base Margin": The per annum percentage to be added to Base, as
determined pursuant to the Pricing Grid.
"BaseLine Quarter": Defined in the Definition of "Pricing Grid".
"Borrowers": Defined in the Preamble.
"Borrowing Base": On any day, the aggregate of those components of
"Availability" described in Sections 1-1(b)(ii)(A) Plus
1-1(b)(ii)(B) Plus 1-1(b)(ii)(C).
"BusinessDay": Any day other than (a) a Saturday or Sunday; (b) any
day on which banks in Boston, Massachusetts generally are not
open to the general public for the purpose of conducting
commercial banking business; or (c) a day on which the
Administrative Agent is not open to the general public to
conduct business.
"Business Plan": The Borrowers' business plan annexed hereto as
EXHIBIT 9-11 and any revision, amendment, or update of such business plan.
"Canton Warehouse": The warehouse located at the 555 Turnpike Street,
Canton, Massachusetts.
"Capital Expenditures": The expenditure of funds or the incurrence of
liabilities, other than prepaid
loan fees, which may be capitalized in accordance with GAAP.
"Capital Lease": Any lease which may be capitalized in accordance with
GAAP.
"Cash Management Date": July 31, 1997.
"Casual Male": The Casual Male, Inc., a Massachusetts corporation.
"Casual Male Credit Facility": The credit facility established on or
about May 30, 1997 among The Casual Male and others, on the
one hand and Fleet National Bank as Administrative Agent and
others, on the other, as such credit facility may be amended
from time to time hereafter.
"Change in Control": The occurrence of any of the following:
(a) The acquisition, by any group of persons (within
the meaning of the Securities Exchange Act of 1934, as
amended) or by any Person, which group or Person was not a
holder of any issued or outstanding stock of J. Baker on May
1, 1997, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission) of 20% or
more of the issued and outstanding capital stock of J. Baker
having the right, under ordinary circumstances, to vote for
the election of directors of J. Baker.
(b) The acquisition, by any group of persons (within
the meaning of the Securities Exchange Act of 1934, as
amended) or by any Person, which group or Person was a holder
of 5% or more of the issued or outstanding stock of J. Baker
on May 1, 1997 of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission) of 49%
or more of the issued and outstanding capital stock of J.
Baker having the right, under ordinary circumstances, to vote
for the election of directors of J. Baker.
(c) More than half of the persons who were directors
of J. Baker on the first day of any period consisting of
Twelve (12) consecutive calendar months (the first of which
Twelve (12) month periods commencing with the first day of the
month during which the within Agreement was executed), cease,
for any reason other than death or disability, to be directors
of J. Baker.
"Chattel Paper": Has the meaning given that term in the UCC.
"Co-Agent": Is defined in the Preamble.
"Collateral": Is defined in Section 2-1.
"Collateral Management Fee": Is defined in Section 1-14.
"Commitment" and "Commitment Percentage": Subject to Section 1-18, above:
<TABLE>
<S> <C> <C> <C>
---------------------------- ----------------------------------------------------- ---------------------
LENDER DOLLAR COMMITMENT PERCENTAGE
COMMITMENT
---------------------------- ----------------------------------------------------- ---------------------
---------------------------- ------------------------- --------------------------- ---------------------
Through June 30, 1997 July 1, 1997 to Maturity
Date
---------------------------- ------------------------- --------------------------- ---------------------
---------------------------- ------------------------- --------------------------- ---------------------
GBFC, Inc. $27,500,000.00 $25,000,000.00 50%
---------------------------- ------------------------- --------------------------- ---------------------
---------------------------- ------------------------- --------------------------- ---------------------
Fleet National Bank 27,500,000.00 25,000,000.00 50%
---------------------------- ------------------------- --------------------------- ---------------------
</TABLE>
"Concentration Account": Is defined in Section 7-1.
"Consolidated": When used to modify a financial term, test, statement,
or report, refers to the application or preparation of such
term, test, statement, or report (as appropriate) based upon
the consolidation, in accordance with GAAP, of the financial
condition or operating results of the Borrowers.
"Cost": The calculated cost of purchases, as determined from
Borrowers' purchase orders, based upon the Borrowers'
accounting practices, known to the Agents, which practices are
in effect on May 1, 1997. With the exception of freight and
duty, "Cost" does not include inventory capitalization costs
nor other non-purchase charges used in the Borrowers'
determination of cost of goods sold.
"Cost Factor": The result of 1 minus the Borrowers' then cumulative
markup percentage derived from the Borrowers' purchase
journals, on a rolling 12 month basis.
"Costs of Collection" includes, without limitation, all attorneys'
reasonable fees and reasonable out-of-pocket expenses incurred
by the each Agent's (and following the occurrence of any Event
of Default any Lender's) attorneys, and all reasonable
out-of-pocket costs incurred by any Agent (and following the
occurrence of any Event of Default by any Lender) including,
without limitation, reasonable costs and reasonable expense
associated with travel, which costs and expenses are directly
or indirectly related to or in respect of the: administration
of the Liabilities; negotiation, documentation, and amendment
of any Loan Document; or efforts to preserve, protect,
collect, or enforce the Collateral, the Liabilities, and/or
the Administrative Agent's Rights and Remedies and/or any of
the Administrative Agent's rights and remedies against any
other person liable in respect of the Liabilities (whether or
not suit is instituted in connection with such efforts).
"Documents": Has the meaning given that term in the UCC.
"Documents of Title": Has the meaning given that term in the UCC.
"EBITDA":The Borrowers' Consolidated earnings from continuing
operations, before interest, taxes, depreciation, and
amortization, each as determined in accordance with GAAP
except that, in all events, Permitted Overhead Contributions
shall be deemed expenses for purposes of determining the
Borrowers' Consolidated earnings from continuing operations.
"Employee Benefit Plan": As defined in ERISA.
"Encumbrance": each of the following:
(a) Any security interest, mortgage, pledge,
hypothecation, lien, attachment, or charge of any kind; the
interest of a lessor under a Capital Lease; sale of accounts
receivable or chattel paper; or any other arrangement which
constitutes an interest in property to secure an obligation;
each of the foregoing whether consensual or non-consensual.
(b) The filing of any financing statement under
the UCC or comparable law of any jurisdiction.
"End Date": The date upon which both (a) all Liabilities have been
paid in full and (b) all obligations of any Lender to make
loans and advances and to provide other financial
accommodations to any of the Borrowers hereunder shall have
been irrevocably terminated.
"Environmental Laws": (a) All laws and regulations which regulate or
relate to environmental protection
and/or Hazardous Materials, as is now or hereafter in effect;
and (b) the common law relating
to damage to Persons or property from Hazardous Materials.
"Equipment": Includes, without limitation, "equipment" as defined
in the UCC, and also all motor
vehicles, machinery, store fixtures, furniture, and other
goods used in the operation or
furtherance of the Borrower's business.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate": Any Person which is under common control with any
Borrower within the meaning of Section 4001 of ERISA or is
part of a group which includes any Borrower and which would be
treated as a single employer under Section 414 of the Internal
Revenue Code of 1986, as amended.
"Eurodollar Loan": Any Revolving Credit Loan bearing interest
at the Eurodollar Rate.
"Eurodollar Margin": The per annum number of basis points to be
added to the Eurodollar Offer Rate, as determined pursuant to the Pricing Grid.
"Eurodollar Offer Rate": That rate of interest (rounded upwards, if
necessary, to the next 1/100 of 1%) determined by the
Administrative Agent to be the highest prevailing rate per
annum at which deposits on U.S. Dollars are offered to
BankBoston, N.A., by first-class banks in the Eurodollar
market in which BankBoston, N.A. participates at 10:00AM
(Boston Time) not less Two (2) Business Days before the first
day of the Interest Period for the subject Eurodollar Loan,
for a deposit approximately in the amount of the subject loan
for a period of time approximately equal to such Interest
Period.
"Eurodollar Rate": That per annum rate determined as the aggregate of
the Eurodollar Offer Rate plus the applicable Eurodollar
Margin, except that, in the event that it is determined by the
Administrative Agent that any Lender may be subject to the
Reserve Percentage, the Eurodollar Rate shall mean, with
respect to any Eurodollar Loans then outstanding (from the
date on which that Reserve Percentage first became applicable
to such loans), and with respect to all Eurodollar Loans
thereafter made, an interest rate per annum equal the sum of
(a) plus (b), where:
(a) is the decimal equivalent of the following fraction:
Eurodollar Offer Rate
1 minus Reserve Percentage
(b) the applicable Eurodollar Margin.
"Events of Default": Is defined in Article 10. Each reference herein
to an "Event of Default" is to an Event of Default not then
duly waived by the Lender (as to which due waiver, see Section
14-4(b)). In the event of such due waiver, the so-waived Event
of Default shall be deemed never to have occurred (other than
with respect to any Costs of Collection incurred by any Lender
prior to such waiver).
"Excess Availability": The result, on any day, of (a) Borrowing Base
minus the aggregate of (b) (i) the principal balance of the
Loan Account, plus (ii) the Stated Amount of all L/C's.
"Federal Funds Effective Rate": For any day, a fluctuating per annum
interest rate equal to the weighted average of the rates on
overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as
published on that date (or on the then next succeeding
Business Day, if not one) by the Federal Reserve Bank of New
York, provided that if such a rate is not so published for a
day which is a Business Day, "Federal Funds Effective Rate"
shall be the average of quotations for such day on such
transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by the
Administrative Agent.
"Fixtures": Has the meaning given that term in the UCC.
"Funding Account": Is defined in Section 7-1.
"GAAP": Principles which are consistent with those promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors (or successors) in effect and applicable to that
accounting period in respect of which reference to GAAP is
being made.
"General Intangibles" includes, without limitation, "general
intangibles" as defined in the UCC; and also all: Host Store
Agreements; rights to payment; goodwill; causes of action;
judgments; franchises; license agreements; computer records;
rights of access to computer service bureaus; trade secrets;
copyrights and derivative works and interests; trade names,
trademarks, service marks, and all good will relating thereto;
applications for registration of the foregoing; and all other
intellectual property.
"Goods": Has the meaning given that term in the UCC.
"Gross Margin": With respect to the subject accounting period for which
being calculated, the following (determined in accordance with GAAP):
Sales (Minus) Cost of Goods Sold
Sales
"Guarantors": Those Persons who, from time to time, guaranty the
Liabilities. (Initially, those Persons listed on EXHIBIT 4-3, annexed hereto).
"Hazardous Materials:" Any (a) hazardous materials, hazardous waste,
hazardous or toxic substances, petroleum products, which (as
to any of the foregoing) are defined or regulated as a
hazardous material in or under any Environmental Law and (b)
oil in any physical state.
"Host Store": An entity which operates a retail store at which a
Borrower operates a retail shoe department as a so-called
"licensed department".
"Host Store Agreement": Any lease, license, or similar agreement
with any Host Store pursuant to which a Borrower operates or is to operate a
retail shoe department as a so-called "licensed department".
"Host Store Consent": An agreement by a Key Host Store or by a Host
Store (a) delivered to the Administrative Agent prior to the
execution of the within Agreement or (b) which, following such
execution, the Administrative Agent determines (in the
Administrative Agent's discretion) as including reasonable
safeguards and protections concerning the interests of the
Agents and the Lenders in the assets and operations of that
Borrower.
"Indebtedness": All indebtedness and obligations of or assumed by any
Person on account of or in respect to any of the following:
(a) In respect of money borrowed (including
any indebtedness which is non-recourse to the credit
of such Person but which is secured by an Encumbrance
on any asset of such Person) whether or not evidenced
by a promissory note, bond, debenture or other
written obligation to pay money.
(b) In connection with any letter of credit
or acceptance transaction (including, without
limitation, the face amount of all letters of credit
and acceptances issued for the account of such Person
or reimbursement on account of which such Person
would be obligated).
(c) In connection with the sale or discount
of accounts receivable or chattel paper of such
Person.
(d) On account of deposits or advances.
(e) As lessee under Capital Leases.
"Indebtedness" of any Person shall also include:
(x) Indebtedness of others secured
by an Encumbrance on any asset of such
Person, whether or not such Indebtedness is
assumed by such Person.
(y) Any guaranty, endorsement,
suretyship or other undertaking pursuant to
which that Person may be liable on account
of any obligation of any third party (other
than on account of the endorsement of checks
and other items in the ordinary course and
other than the guaranty, by one Borrower, of
the obligations of another Borrower).
(z) The Indebtedness of a
partnership or joint venture in which such
Person is a general partner or joint
venturer.
"Indemnified Person": Is defined in Section 14-11.
"Instruments": Has the meaning given that term in the UCC.
"Interest Payment Date": With reference to:
(a) Any Eurodollar Loan: the last day of the
Interest Period relating thereto, the Termination Date, and the End Date.
(b) Any Base Rate Loan: the first day of each
month; the Termination Date; and the End Date.
"InterestPeriod": (a) With respect to each Eurodollar Loan: Subject to
Subsection (d), below, the period commencing on the date of
the making or continuation of, or conversion to, such
Eurodollar Loan and ending one, two, or three months
thereafter, as the Lead Borrower may elect by notice (pursuant
to Section 1-5(a)) to the Administrative Agent.
(b) With respect to each Base Rate Loan: Subject to
Subsection (c), below, the period commencing on the date of
the making or continuation of or conversion to such Base Rate
Loan and ending on that date (i) as of which the subject Base
Rate Loan is converted to a Eurodollar Loan, as the Lead
Borrower may elect by notice (pursuant to Section 1-5(a)) to
the Administrative Agent, or (ii) on which the subject Base
Rate Loan is paid by the Borrowers.
(c) The setting of Interest Periods is in all
instances subject to the following:
(i) Any Interest Period for a Base Rate
Loan which would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day.
(ii) Any Interest Period for a Eurodollar
Loan which would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding
Business Day, unless that succeeding Business Day is
in the next calendar month, in which event such
Interest Period shall end on the last Business Day of
the month during which the Interest Period ends.
(iii) Subject to Subsection (v), below, any
Interest Period applicable to a Eurodollar Loan,
which Interest Period begins on a day for which there
is no numerically corresponding day in the calendar
month during which such Interest Period ends, shall
end on the last Business Day of the month during
which that Interest Period ends.
(iv) Subject to Subsection (vi), any
Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(v) Except as provided in Subsection (vi),
below, the Borrower shall not request any Eurodollar
Loan which would have an Interest Period of less than
one (1) month.
(vi) For the periods (A) commencing with the
execution of the within Agreement and ending on June
30, 1997 and (B) consisting of the last month prior
to the Maturity Date, the Borrower may request
Eurodollar Loans otherwise permitted by this
Agreement, but with Interest Periods of 7, 14, and 21
days.
(vii) The number of Interest Periods in
effect at any one time is subject to Section 1-6(c),
above.
"Inventory" includes, without limitation, "inventory" as defined in the
UCC and also all: packaging, advertising, and shipping
materials related to any of the foregoing, and all names or
marks affixed or to be affixed thereto for identifying or
selling the same; Goods held for sale or lease or furnished or
to be furnished under a contract or contracts of sale or
service by the Borrower, or used or consumed or to be used or
consumed in the Borrower's business; Goods of said description
in transit: returned, repossessed and rejected Goods of said
description; and all documents (whether or not negotiable)
which represent any of the foregoing.
" Inventory Reserves": Such Reserves as may be established from
time to time by the Administrative Agent in the Administrative
Agent's reasonable discretion with respect to the
determination of the saleability, at retail, of the Acceptable
Inventory or which reflect such other factors as affect the
market value of the Acceptable Inventory. Without limiting the
generality of the foregoing, Inventory Reserves may include
(but are not limited to) reserves based on the following:
(i) Obsolescence (determined based upon
Inventory on hand beyond a given
number of days).
(ii) Seasonality.
(iii) Shrinkage.
(iv) Imbalance.
(v) Change in Inventory character.
(vi) Change in Inventory composition
(vii) Change in inventory mix.
(viii) Markdowns (both permanent and point
of sale)
(ix) Retail markons and markups
inconsistent with prior period
practice and performance; industry
standards; current business plans;
or advertising calendar and planned
advertising events.
At the execution of this Agreement, the only Inventory
Reserves are those set forth in Section 1-4(a), above.
"Investment Property": Has the meaning given that term in the UCC.
"J. Baker": J. Baker, Inc., a Massachusetts corporation.
"Key Host Stores": Ames Department Stores; Bradlees, Inc.;
Hills Department Stores, Inc.; Rose's Stores, Inc.; and Shopko Stores, Inc.
"L/C": Any letter of credit, the issuance of which is procured by the
Administrative Agent for the account of any Borrower.
"L/C Issuer": Any Lender or affiliate from time to time
selected by the Lead Borrower.
"Lead Borrower": Is defined in the Preamble.
"Lenders": Defined in the Preamble to the within Agreement
"Liabilities" (in the singular, "Liability") includes, without
limitation, all and each of the following, whether now
existing or hereafter arising:
(a) Any and all direct and indirect liabilities,
debts, and obligations of the Lead Borrower or any Borrower to
any Agent or any Lender, each of every kind, nature, and
description owing on account of the within Agreement or any
other Loan Document or any service or accommodation provided
to, or for the account of any Borrower pursuant to the within
Agreement or any other Loan Document, including cash
management services or the issuance of any L/C .
(b) Each obligation to repay any loan, advance,
indebtedness, note, overdraft, or similar amount now or
hereafter owing by the Lead Borrower or any Borrower to any
Agent, or any Lender (including all future advances whether or
not made pursuant to a commitment by any Agent, or any
Lender), whether or not any of such are liquidated,
unliquidated, primary, secondary, secured, unsecured, direct,
indirect, absolute, or contingent.
(c) All notes and other obligations of the Lead
Borrower or any Borrower now or hereafter assigned to or held
by any Agent, or any Lender, each of every kind, nature, and
description.
(d) All interest, fees, and charges and other amounts
which may be charged by any Agent, or any Lender to the Lead
Borrower or any Borrower and/or which may be due from the Lead
Borrower or any Borrower to any Agent or any Lender from time
to time.
(e) All costs and expenses incurred or paid by any
Agent or any Lender in respect of any agreement between the
Lead Borrower or any Borrower on the one hand and any Agent
and/or any Lender on the other or instrument furnished by the
Lead Borrower or any Borrower to any Agent or any Lender
(including, without limitation, Costs of Collection,
attorneys' reasonable fees, and all court and litigation costs
and reasonable expense).
(f) Any and all covenants of the Lead Borrower or any
Borrower to or with any Agent or any Lender and any and all
obligations of the Lead Borrower or any Borrower to act or to
refrain from acting in accordance with any agreement between
the Lead Borrower or any Borrower and any Agent or any Lender
or instrument furnished by the Lead Borrower or any Borrower
to any Agent or any Lender.
"Line Fee": Is defined in Section 1-14(d).
"Loan Account": Is defined in Section 1-9.
"Loan Ceiling": $55,000,000.00: From the execution of the within
Agreement until June 30, 1997.
$50,000,000.00: July 1, 1997 to Maturity Date.
"Loan Documents": The within Agreement, each instrument and document
executed and/or delivered as contemplated by Article 4 or
Section 5-21, below, and each other instrument or document
from time to time executed and/or delivered in connection with
the arrangements contemplated hereby, as each may be amended
from time to time.
"Maturity Date": May 31, 2000.
"Maximum Loan Exposure": The lesser, on any day, of the amount
determined in accordance with (a) Section 1-1(b)(i), or (b) Section 1-1(b)(ii),
above.
"Obligor": Individually (in the singular): Each Borrower and each Guarantor.
Collectively, all of the Borrowers and all of the Guarantors.
"Operating Cash Flow": The result of, for the same period in respect to
which "Operating Cash Flow" is determined, of (a) EBITDA minus
(b) Capital Expenditures paid in cash minus (c) income tax
payments made.
"Permitted Distributions": Payments of each of the following:
(a) Towards regularly scheduled payments of interest on
J. Baker's 7% Convertible Subordinated Notes due 2002, the lesser, for any
fiscal year of the following:
(i) $2,500,000.00.
(ii) 50% of interest accrued on such Notes during the subject fiscal year
(b) Towards regularly scheduled payments of interest on, and principal
of, JBI, Inc.'s $35,000,000.00 11.21% Senior Subordinated Notes
due 1999.
(c) Towards regularly scheduled payments of interest on
Morse Shoe, Inc.'s Subordinated Convertible
Debentures due 2002, which Debentures are subject of
a certain First Supplemental Indenture dated as of
January 28, 1993.
(d) Towards dividends declared and paid by J. Baker, the lesser of
the following for any fiscal year:
(i) 50% of such dividends
(ii), $450,000.00. provided, however, in the event that the
holders of J. Baker's 7%
Convertible Subordinated Notes due 2002
convert all or a portion of such Notes to
common stock of J. Baker, then such
$450,000.00 shall be increased by the an
amount equal to the reduction (if any) in
the distributions permitted pursuant to
Subsection (a) of this Definition.
(d) Dividends, declared and made after March 31, 1998,
not exceeding a cumulative aggregate of $1,000,000.00
and not otherwise described in this Definition,
provided that each of the following conditions is
satisfied: (i) After giving effect to such dividends,
the ratio of Operating Cash Flow to
Total Debt Service for the then most recently
completed four fiscal quarters
is not less than 1.25 : 1.00.
(ii) Average Excess Availability, during the
fiscal quarter immediately prior to that
during which such payment is to be made, is
not less than $10,000,000.00.
(iii) Excess Availability, after giving effect to
the payment of such dividend, is not less
than $10,000,000.00.
(e) Permitted Overhead Contributions.
"Permitted Encumbrances": Encumbrances in favor of any Borrower on all
or part of the assets of any other Borrower securing
Indebtedness owing by one Borrower to another Borrower;
Encumbrances on properties to secure taxes, assessments and
other government charges or claims for labor, material or
supplies in respect of obligations not then overdue; deposits
or pledges made in connection with, or to secure payment of,
workmen's compensation, unemployment insurance, old age
pensions or other social security obligations; Encumbrances of
carriers, warehousemen, mechanics and materialmen, and other
like Encumbrances on properties in existence less than 40 days
from the date of creation thereof in respect of obligations
not overdue; Encumbrances on properties consisting of
easements, rights of way, zoning restrictions, restrictions on
the use of real property and defects and irregularities in the
title thereto, landlord's or lessor's Encumbrances under
leases to which a Borrower is a party, and other minor
Encumbrances or encumbrances none of which interferes
materially with the use of the property affected in the
ordinary conduct of the business of a Borrower, which defects
do not individually or in the aggregate have a materially
adverse effect on the business of any Borrower individually or
of the Borrowers as a whole; Encumbrances in favor of the
Administrative Agent under the Loan Documents; Encumbrances to
secure Indebtedness permitted by Section 5-6(c), below, but
such Encumbrances shall extend only to the assets as acquired
and not to any other property of the Borrower.
"Permitted Investments": marketable direct or guaranteed obligations of
the United States of America that mature within one (1) year
from the date of purchase by a Borrower; demand deposits,
certificates of deposit, bankers acceptances and time deposits
of United States banks having total assets in excess of
$1,000,000,000.00; securities commonly known as "commercial
paper" issued by a corporation organized and existing under
the laws of the United States of America or any state thereof
that at the time of purchase have been rated and the ratings
for which are not less than "P 1" if rated by Moody's
Investors Services, Inc., and not less than "A 1" if rated by
Standard and Poor's; investments in common and preferred stock
traded on national securities exchanges, provided that the
aggregate amount at any one time invested does not exceed
$50,000.00; additional investments in the capital stock of any
other Borrower; capital contributions permitted pursuant to
Section 5-16(c)(ii); and loans permitted pursuant to Section
5-17.
"Permitted Overhead Contributions": Each of the following:
(a) Payments to J. Baker towards corporate overhead, not
to exceed the lesser of
(i) Those amounts agreed to, for any fiscal
quarter, by the Borrowers and J.
Baker (subject to those limitations as are
included in the overhead expense allocation
protocol set forth in EXHIBIT 5-21(c),
below) or
(ii) The following aggregate for the fiscal year
indicated:
1998: $18,000,000.00.
1999: 18,800,000.00
2000: 19,600,000.00
(b) Towards rent under the lease of the Canton Warehouse.
"Person": Any natural person, and any corporation, limited liability
company, trust, partnership, joint
venture, or other enterprise or entity.
Post-Petition Accounts Receivable:"Any account receivable due from any
Host Store or other Account Debtor and incurred subsequent to
the date on which any order for relief, under the Bankruptcy
Code, was entered with respect to such Host Store or other
Account Debtor.
"Pre-Petition Accounts Receivable:"Any account receivable due from any
Host Store or other Account Debtor and incurred prior to the
date on which any order for relief, under the Bankruptcy Code,
was entered with respect to such Host Store or other Account
Debtor.
"Pricing Grid": Until the tenth Business Day after the end of the
Borrowers' fiscal quarter ending on
or about the last day of October, 1997, the Eurodollar Margin,
Base Margin, and Line Fee shall be as follows:
<TABLE>
<S> <C> <C>
- ------------------------------------------ -------------------------------------------- ----------------------------
EURODOLLAR MARGIN BASE MARGIN LINE FEE
(Basis Points) (Basis Points) (Percentage)
- ------------------------------------------ -------------------------------------------- ----------------------------
- ------------------------------------------ -------------------------------------------- ----------------------------
225 50 0.375%
- ------------------------------------------ -------------------------------------------- ----------------------------
</TABLE>
For periods commencing after the Borrower's fiscal
quarter ending on or about the last day of October, 1997, the
Eurodollar Margin, Base Margin, and Line Fee shall be
determined based upon Average Excess Availability for the
fiscal quarter then most recently completed (the "BaseLine
Quarter"); shall be effective from the tenth Business Day
after the end of the BaseLine Quarter until the ninth Business
Day of the then following quarter; and shall be as follows:
<TABLE>
<S> <C> <C> <C>
- --------------------------------- ------------------------------ ---------------------------- ----------------------
AVERAGE EXCESS AVAILABILITY EURODOLLAR MARGIN (Basis BASE MARGIN LINE FEE (Percentage)
($Million) Points) (Basis Points)
- --------------------------------- ------------------------------ ---------------------------- ----------------------
- --------------------------------- ------------------------------ ---------------------------- ----------------------
Less than $10 225 50 0.375
- --------------------------------- ------------------------------ ---------------------------- ----------------------
- --------------------------------- ------------------------------ ---------------------------- ----------------------
$10 to less than $15 200 25 .25
- --------------------------------- ------------------------------ ---------------------------- ----------------------
- --------------------------------- ------------------------------ ---------------------------- ----------------------
$15 and over 175 0 .25
- --------------------------------- ------------------------------ ---------------------------- ----------------------
</TABLE>
"Proceeds": include, without limitation, "Proceeds" as defined in the
UCC (defined below), and each type
of property described in Section 2-1, above.
"Receipts": All cash, cash equivalents, checks, and credit card slips
and receipts as arise out of the
sale of the Collateral.
"Receivables Collateral": That portion of the Collateral which consists
of the Borrower's Accounts, Accounts Receivable, contract
rights, General Intangibles, Chattel Paper, Instruments,
Documents of Title, Documents, Securities, letters of credit
for the benefit of the Borrower, and bankers' acceptances held
by any Borrower, and any rights to payment.
"Related Entity": refers to (a) any Affiliate; and (b) any Person
(other than a Borrower or a natural person) which: could have
such Person's tax returns or financial statements consolidated
with the Borrower's; could be a member of the same controlled
group of corporations (Section 1563(a)(1), (2) and (3) of the
Internal Revenue Code of 1986, as amended from time to time)
of which the Borrower is a member; or Controls or is
Controlled by any Borrower or any Affiliate of any Borrower.
"Requirement of Law": as to any Person: all (a)(i) statutes and
regulations and (ii) court orders and injunctions,
arbitrator's decisions, and/or similar rulings, in each
instance by any governmental authority, or other body which
has jurisdiction over such Person, or any property of such
Person, or of any other Person for whose conduct such Person
would be responsible; and (b) that Person's organizational
documents, by-laws and/or other instruments which deal with
corporate or similar governance, as applicable.
"Reserve Percentage": The decimal equivalent of that rate applicable to
a Lender under regulations issued from time to time by the
Board of Governors of the Federal Reserve System for
determining the maximum reserve requirement of that Lender
with respect to "Eurocurrency liabilities" as defined in such
regulations. The Reserve Percentage applicable to a particular
Eurodollar Loan shall be based upon that in effect during the
subject Interest Period, with changes in the Reserve
Percentage which take effect during such Interest Period to
take effect (and to consequently change any interest rate
determined with reference to the Reserve Percentage) if and
when such change is applicable to such loans.
"Retail": As reflected in the Borrowers' stock ledger, being
the Cost of Acceptable Inventory
divided by the Cost Factor.
"Revolving Credit": Is defined in Section 1-1.
"Revolving Credit Loans": Is defined in Section 1-6(b).
"Revolving Credit Note": Is defined in Section 1-10.
"Securities": Has the meaning given that term in the UCC.
"Side Collateral Account": An account established by the Lead Borrower
with BankBoston, N.A., the
contents of which shall be pledged to the Administrative
Agent and which may consist of cash
and Permitted Investments.
"Stated Amount": The maximum amount for which an L/C may be honored.
"Suspension Event": Any occurrence, circumstance, or state of facts
which (a) is an Event of Default; or (b) would become an Event
of Default if any requisite notice were given and/or any
requisite period of time were to run and such occurrence,
circumstance, or state of facts were not absolutely cured
within any applicable grace period.
"Termination Date": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 10-9, below; or
(c) the Administrative Agent's notice to the Lead Borrower
setting the Termination Date on account of the occurrence of
any Event of Default other than as described in Section 10-9,
below.
"Total Debt Service": The aggregate, for the same period in respect
to which "Total Debt Service" is determined, of the following:
(a) interest and fees payable with respect to borrowed money
(including all interest (and to the extent not included in the
determination of EBITDA, fees) payable on account of the
credit facility contemplated by the within Agreement other
than (i) any amortization of the Upfront Fee; any fees on
account of L/C's; and other fees, but only if the amount of
such fees are deducted as an expense in the calculation of
EBITDA) plus (b) principal payments due or to become due on
account of indebtedness for borrowed money (other than
ordinary course repayments of the Loan Account from
collections of accounts receivable and scheduled reductions in
Availability) or any Capital Lease plus (c) without
duplication of amounts described in Clauses (a) and (b) of
this Definition, Permitted Distributions to the extent not
included in the determination of EBITDA.
"UCC": The Uniform Commercial Code as presently in effect in
Massachusetts (Mass. Gen. Laws,
Ch. 106).
"Upfront Fee": Is defined in Section 1-14.
ARTICLE 4 - CONDITIONS PRECEDENT.
The effectiveness of this Agreement is conditioned upon the delivery of
the documents respectively described in Section 4-1 through and including 4-5,
each in form and substance satisfactory to the Administrative Agent, and
satisfaction of the conditions respectively described in Sections 4-6 through
and including 4-9:
Corporate Due Diligence. igence.-1. Corporate Due Diligence.
(a) Certificates of corporate good standing issued, with
respect to each Obligor, by the respective Secretaries of State for the States
under whose law the Obligors are organized.
(b) Certificates of due qualification, in good standing,
issued by the Secretary(ies) of State of each State in which the nature of an
Obligor's business conducted or assets owned could require such qualification.
(c) Certificates of the Obligor's respective Secretaries or
Clerk's of the due adoption, continued effectiveness, and setting forth the
texts of, each corporate resolution adopted in connection with the establishment
of the loan arrangement contemplated by the Loan Documents and attesting to the
true signatures of each Person authorized as a signatory to any of the Loan
Documents.
Opinion. An opinion of counsel to the Obligors in form and substance
reasonably satisfactory to the Agents .
Guaranties arantieThe unlimited Guaranty by each of those Persons
listed on EXHIBIT 4-3, annexed hereto, which Guaranty, in the case of J. Baker,
shall be secured by a first and only perfected security interest in all capital
stock of the Borrower, JBI, Inc.
Additional Documents. Such additional instruments and documents as the
Agents, and their counsel reasonably may require or request (each in form
satisfactory to the Agents), including, without limitation, the following:
(a) A Pledge Agreement pursuant to which JBI, Inc., creates a
first and only perfected security interest security interest, in favor of the
Administrative Agent (for the ratable benefit of the Agents and the Lenders) in
all capital stock of all other Borrowers.
(b) A Letter, from Fleet National Bank, pursuant to which
Fleet National Bank, as issuer, prior to the date of the within Agreement, of
certain letters of credit for the account of JBI, Inc. and The Casual Male, will
not look to JBI, Inc. for reimbursement in the event of any drawing under such
letters of credit.
(c) Agreements with the Escrow Agents holding certain funds in
connection with the sales of Shoe Corporation of America and Parade of Shoes.
(d) An Agreement with the Borrowers' customs broker.
(e) Agreements with each of the Key Host Stores.
(f) A Tax Sharing Agreement (substantially in the form of
EXHIBIT 4-4(f), annexed hereto) amongst the Borrowers and all Related Entities.
(g) A "Blocked Account Agreement" with Fleet National Bank.
4-5 Officers' Certificates. Certificates executed by the respective
Presidents and the Chief Financial Officers of each Borrower and stating that
the representations and warranties made by that Borrower in the Loan Documents
are true and correct, in all material respects, as of the date of such
Certificate, and that no Suspension Event has occurred.
. Each of the representations made by or on behalf of each Borrower in
this Agreement or in any of the other Loan Documents or in any other report,
statement, document, or paper provided by any or on behalf of that Borrower
shall be true and complete as of the date as of which such representation or
warranty was made.
.
-7 Each of the following events shall have been consummated on terms
and condition which are satisfactory to the Agents and their counsel and the
following conditions shall be have satisfied:
(a) The retirement in full of the credit facility between
Casual Male and .........
(b) Completion of the review, by the Agents and their
counsel, of all material contracts
to which any Borrower is a party (including all material leases (so-called)
between any Borrower and a Host Store.
(c) Receipt of satisfactory agreements with all Key Host
Stores.
(d) Completion of review, by the Agents and their
counsel, of all documentation relating
to: J. Baker's Convertible Subordinated Notes due 2002; J. Baker's $35 Million
Convertible Subordinated Notes;
the mortgage financing which is secured by the Canton Warehouse; and the
execution of such intercreditor
agreement, with respect thereto, as may be satisfactory to the Agents and their
counsel.
Minimum Excess Availability.labilitThe Borrowers shall have provided
the Administrative Agent with a Borrowing Base Certificate (in the form of
EXHIBIT 9-4, annexed hereto), on which "Availability", after giving effect to
the initial advances to be made under, and in connection with the establishment
of, the credit facility contemplated hereby, is not less than $10,000,000.00
No Event of Default. No event shall have occurred, or failed to occur,
which occurrence or which failure constitutes, or which, solely with the passage
of time or the giving of notice (or both) would constitute, an Event of Default.
No Adverse Change. No event shall have occurred or failed to occur,
since February 1, 1997, which occurrence or failure is or would likely have a
materially adverse effect upon the Borrower's or any Obligor's financial
condition, operating results, or cash flows from their financial condition at
the end of the Borrower's fiscal year in January, 1997.
No document shall be deemed delivered to any Agent or any Lender until received
and accepted by the Administrative Agent at its head offices in Boston,
Massachusetts. Under no circumstances will the within Agreement take effect
until executed and accepted by the Administrative Agent at said head office.
ARTICLE 5 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
To induce each Agent and each Lender to establish the loan arrangement
contemplated herein and to make loans and advances and to provide financial
accommodations under the Revolving Credit (each of which loans shall be deemed
to have been made in reliance thereupon), the Borrowers, in addition to all
other representations, warranties, and covenants made in any other Loan
Document, respectively make those representations, warranties, and covenants
included in the within Agreement.
Payment and Performance of Liabilities. Each Borrower shall pay each
Liability when due (or when demanded if payable on demand) and shall promptly,
punctually, and faithfully perform each other Liability.
5-2. Due Organization - Corporate Authorization -
Authoriza. on - No Conflicts
(a) Each Borrower is and shall remain in good standing as a
corporation in the state of its organization, as referenced in the Preamble, and
is and shall remain duly qualified and in good standing in every other State in
which, by reason of the nature or location of that Borrower's assets or
operation of that Borrower's business, such qualification may be necessary,
except where the failure to so qualify would have a Material Adverse Effect on
the business or assets of that Borrower.
(b) Each Related Entity is listed on EXHIBIT 5-2, annexed
hereto. The Lead Borrower shall
provide the Administrative Agent with prior written notice of any entity's
becoming or ceasing to be a Related
Entity. The aggregate assets of all Guarantors other than J. Baker, Inc. is,
and shall remain, less than
$100,000.00, plus the value (if any) of the claim of Morse Shoe (Canada) Ltd.
against Hudsons Bay Company.
(c) Each Borrower has all requisite corporate power and
authority to execute and deliver to the Lender those Loan Documents to which
that Borrower is a party and has and will retain all requisite corporate power
to perform the Liabilities.
(d) Each Borrower's: execution and delivery of each Loan
Document to which it is a party;
performance under those of the Loan Documents to which it is a party; and
borrowing hereunder and use of the
proceeds thereof:
(i) has been duly authorized by all necessary
corporate action;
(ii) does not, and will not, contravene in any
material respect any provision of
any Requirement of Law where such contravention would have more than a
de minimus adverse effect on the
Borrowers;
(iii) does not, and will not, contravene in any
material respect any material
obligation of that Borrower; and
(iv) will not result in the creation or
imposition of, or the obligation to
create or impose, any Encumbrance
upon any assets of that Borrower
except pursuant to the Loan
Documents.
(e) The Loan Documents have been duly executed and delivered
by the Lead Borrower and each Obligor and are the legal, valid and binding
obligations of the Lead Borrower and each Obligor, enforceable against each in
accordance with their respective terms.
Trade Names. e Names.-3. Trade Names.
(a) EXHIBIT 5-3, annexed hereto, is a listing of:
(i) All names under which any Borrower ever conducted its business.
(ii) All entities and/or persons with whom any Borrower ever
consolidated or merged, or from whom any Borrower ever acquired in a
single transaction or in a series of related transactions substantially
all of such entity's or person's assets.
(b) Except (i) upon not less than twenty-one (21) days prior
written notice given the Administrative Agent , and (ii) in compliance with all
other provisions of the within Agreement, no Borrower will undertake or commit
to undertake any action such that the results of that action, if undertaken
prior to the date of this Agreement, would have been reflected on EXHIBIT 5-3.
(c) Each Borrower owns and possesses, or has the right to use
all material patents, industrial designs, trademarks, trade names, trade styles,
brand names, service marks, logos, copyrights, trade secrets, know-how,
confidential information, and other intellectual or proprietary property of any
third Person necessary for that Borrower's conduct of that Borrower's business.
(d) The conduct by each Borrower of that Borrower's business
does not infringe on the patents, industrial designs, trademarks, trade names,
trade styles, brand names, service marks, logos, copyrights, trade secrets,
know-how, confidential information, or other intellectual or proprietary
property of any third Person.
Locations.ocations -4. Locations.
(a) The Collateral, and the books, records, and papers of the
Borrowers pertaining thereto, are kept and maintained solely at the chief
executive offices of the Lead Borrower, as stated in the Preamble of this
Agreement, and at those locations which are listed on EXHIBIT 5-4, annexed
hereto, which EXHIBIT includes all service bureaus with which any such records
are maintained and the names and addresses of each of the landlords or Host
Stores (as applicable) of each Borrower Except (i) to accomplish sales of
Inventory in the ordinary course of business; (ii) to utilize such of the
Collateral as is removed from such locations in the ordinary course of business
(such as motor vehicles); no Borrower shall remove any Collateral from said
chief executive offices or those locations listed on EXHIBIT 5-4.
(b) No Borrower will make any material alterations,
modifications, or amendments of any Host Store Agreement with any Key Host
Store, other than the extension of the term of such Host Store Agreement.
5-5. Title to Assets.
(a) Each Borrower is, and shall hereafter remain, the owner of
the Collateral free and clear of all Encumbrances with the exceptions of the
following:
(i) The security interest created herein.
(ii) Those Encumbrances (if any) listed on
EXHIBIT 5-5, annexed hereto.
(iii) Permitted Encumbrances.
(iv) Prior claims to the escrow accounts
established in connection with
transactions with Shoe Corporation of America and Parade of Shoes.
(b) No Borrower has any property on consignment.
Indebtedness. No Borrower has and none shall hereafter have any
Indebtedness with the exceptions of:
(a) Any Indebtedness to the Lenders .
(b) The Indebtedness (if any) listed on EXHIBIT 5-6,
annexed hereto.
(c) Indebtedness, not to exceed Two Million Dollars
($2,000,000.00) in the aggregate
outstanding at any one time outstanding, on account of Capital Leases.
(d) The Liabilities constitute
(i) "Secured Indebtedness" within the meaning of the
Indenture dated June 12, 1992 relating to the issuance of J.Baker's 7%
Convertible Subordinated Notes due 2002.
(ii) "Funded Debt" within the meaning of the
Indenture dated May 1, 1989, as modified by that certain Letter dated
February 24, 1997, relating to JBI, Inc.'s $35,000,000.00 11.21% Senior
Subordinated Notes due 1999.
(iii) "Senior Debt" within the meaning of
Subordinated Convertible Debentures due 2002 issued by Morse Shoe, Inc.
in an aggregate principal amount outstanding on the Closing Date of
Three Hundred and Fifty Three Thousand ($353,000.00) Dollars.
Insurance Policies.Policies-7. Insurance Policies
(a) EXHIBIT 5-7, annexed hereto, is a schedule of all
insurance policies owned by any Borrower or under which any Borrower is the
named insured. Each of such policies is in full force and effect. Neither the
issuer of any such policy nor any Borrower is in default or violation of any
such policy.
(b) Each Borrower shall have and maintain at all times
insurance covering such risks, in such amounts, containing such terms, in such
form, for such periods, and written by such companies as may be satisfactory to
the Agent. The coverage reflected on EXHIBIT 5-7 presently satisfies the
foregoing requirements, it being recognized by the Borrowers, however, that the
Administrative Agent, in the exercise of its reasonable discretion, may
determine different requirements hereafter to reflect changing circumstances.
All insurance carried by each Borrower shall provide for a minimum of twenty
(20) days' written notice of cancellation to the Administrative Agent and all
such insurance which covers the Collateral shall include an endorsement in favor
of the Administrative Agent, which endorsement shall provide that the insurance,
to the extent of the Administrative Agent's interest therein, shall not be
impaired or invalidated, in whole or in part, by reason of any act or neglect of
any Borrower or by the failure of any Borrower to comply with any warranty or
condition of the policy. In the event of the failure by any Borrower to maintain
insurance as required herein, the Administrative Agent, at its option, may
obtain such insurance, provided, however, the Administrative Agent's obtaining
of such insurance shall not constitute a cure or waiver of any Event of Default
occasioned by that Borrower's failure to have maintained such insurance. The
Lead Borrower shall furnish to the Administrative Agent certificates or other
evidence satisfactory to the Lender regarding compliance by the Borrowers with
the foregoing insurance provisions.
(c) The Lead Borrower shall advise the Administrative Agent of
each claim which affects Collateral having a Cost in excess of $500,000.00 and,
following the occurrence of any Event of Default, will permit the Administrative
Agent, at the Administrative Agent's option in each instance, to the exclusion
of all Borrowers, to conduct the adjustment of each such claim (and of all
claims following the occurrence of any Suspension Event). Each hereby appoints
the Administrative Agent as that Borrower's attorney in fact, effective upon the
occurrence of an Event of Default, to obtain, adjust, settle, and cancel any
insurance described in this section and to endorse in favor of the
Administrative Agent any and all drafts and other instruments with respect to
such insurance. The within appointment, being coupled with an interest, is
irrevocable until this Agreement is terminated by a written instrument executed
by a duly authorized officer of the Administrative Agent. The Administrative
Agent shall not have any obligation to undertake any of the foregoing and shall
have no liability on account of any action so undertaken except where there is a
specific finding in a judicial proceeding (in which the Administrative Agent has
had an opportunity to be heard), from which finding no further appeal is
available, that Administrative Agent had acted in actual bad faith or in a
grossly negligent manner or in willful misconduct. The Administrative Agent may
apply any proceeds of such insurance against the Liabilities, whether or not
such have matured, in such order of application as the Administrative Agent may
determine.
5-8. Host Store Agreements
(a) Prior to the execution of the within Agreement, the Lead
Borrower provided the Administrative Agent with complete copies of all Host
Store Agreements, as amended to date and of all instruments and documents which
may modify any of such Host Store Agreements.
(b) EXHIBIT 5-8, annexed hereto, is a schedule of all
presently effective Host Store Agreements and Capital Leases, each of which is
in full force and effect. No Borrower has received any notice or threat of
cancellation of any such Host Store Agreement or Capital Lease. Each Borrower
hereby authorizes the Administrative Agent, at any time with the consent of the
Lead Borrower and at all times after the occurrence of an Event of Default, to
contact any Host Store of any Borrower in order to confirm that Borrower's
continued compliance with the terms and conditions of the Host Store Agreements
between that Borrower and that landlord or Host Store and to discuss such issues
in connection therewith, as the Administrative Agent may determine.
5-9. Requirements of Law. Each Borrower is and shall remain, and use
its assets, in compliance, in all material effects, with all Requirements of
Law. No Borrower has received written notice of any violation of any Requirement
of Law, which violation has not been cured or otherwise remedied, which
violation, if not so cured or remedied, could have a Material Adverse Effect on
the Borrowers.
Maintain Properties. The Borrowers shall:in Properties
(a) Keep the Collateral in good order and repair
(ordinary reasonable wear and tear and
insured casualty excepted).
(b) Not suffer or cause the waste or destruction of any
material part of the Collateral.
(c) Not use any of the Collateral in violation of any
policy of insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the
Collateral, other than the
following:
(i) The sale of Inventory in compliance with
the within Agreement.
(ii) The disposal of Equipment which is
obsolete, worn out, or damaged beyond
repair, which Equipment is replaced to the extent necessary to preserve
or improve the operating efficiency of the Borrowers.
(iii) The turning over to the Administrative Agent
of all Receipts as provided
herein.
Pay Taxes. Taxes.-11. Pay Taxes.
(a) The Borrowers have no knowledge of any material adverse
finding on account of any examination of or with respect to any Borrower
presently being conducted by any taxing authority.
(b) Each Borrower has and shall: pay, as they become due and
payable, all taxes and unemployment contributions and other charges of any kind
or nature levied, assessed or claimed against that Borrower or the Collateral by
any person or entity whose claim could result in an Encumbrance upon any asset
of any Borrower or by any governmental authority; properly exercise any trust
responsibilities imposed upon any Borrower by reason of withholding from
employees' pay; timely make all contributions and other payments as may be
required pursuant to any Employee Benefit Plan now or hereafter established by
that Borrower; and timely file all tax and other returns and other reports with
each governmental authority to whom that Borrower is obligated to so file except
where failure to file would not have a material adverse effect.
(c) At its option, with prior notice to the Lead Borrower, the
Administrative Agent may pay any tax, charge levied, assessed, or claimed upon
any Borrower or the Collateral by any person or entity or governmental
authority, and make any payments on account of any Borrower's Employee Benefit
Plan as the Administrative Agent , in the Administrative Agent's discretion, may
deem necessary or desirable, to protect the Administrative Agent's Rights and
Remedies.
No Margin Stock.inNo Borrower is engaged in the business of extending
credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulations G.U.T. and X. of the Board of Governors of the Federal
Reserve System of the United States). No part of the proceeds of any borrowing
hereunder will be used at any time to purchase or carry any such margin stock or
to extend credit to others for the purpose of purchasing or carrying any such
margin stock.
ERISA. The Borrowers are and shall hereafter remain in compliance, in
all material respects, with ERISA.
Hazardous Materials. To the Borrower's knowledge, none of the real
property used or operated by any
Borrower contains any material amount of Hazardous Materials.
Litigation. Except as disclosed on EXHIBIT 5-15, annexed hereto, there
is not presently pending or threatened by or against any Borrower any suit,
action, proceeding, or investigation which, if determined adversely to that
Borrower, would have a material adverse effect upon that Borrower's financial
condition or ability to conduct its business as such business is presently
conducted or is contemplated to be conducted in the foreseeable future.
Dividends or Investments. No Borrower shall Dividends or Investments
(a) Pay any cash dividend or make any other distribution in
respect of any class of that Borrower's capital stock except for, and subject to
such conditions as apply to, the making of Permitted Distributions.
(b) Own, redeem, retire, purchase, or acquire any of that
Borrowers' capital stock.
(c) Invest in or purchase any stock or securities or
rights to purchase any such stock or
securities, of any corporation or other entity, including without limitation,
any capital stock of J. Baker,
provided, however,
(i) any Borrower may maintain Permitted Investments
in the Side Collateral Account and also at any time that there has not
been an outstanding principal balance in the Loan Account for not less
than Seven (7) days and no L/C's are then outstanding; and
(ii) any Borrower may create a wholly owned
subsidiary, provided that
(A) The Lead Borrower shall have
provided the Administrative Agent with
not less than Thirty (30) days prior written notice of such
creation (with reasonable detail concerning the facts and
circumstances relating to such subsidiary).
(B) No Event of Default is extant on the
date on which the subsidiary is so created and none will occur
by reason of such creation.
(C) each of the following conditions is
satisfied prior to the date on which any asset (other than of
nominal value) is transferred to such entity:
(I) Such entity shall have executed
such documentation as the Administrative Agent
reasonably may request in order for such entity to
become a "Borrower" hereunder.
(II) The holder of all capital stock
of such entity shall have created a security interest
therein to secure the Liabilities.
(d) Merge or consolidate or be merged or consolidated with or
into any other corporation or other entity; provided that nothing in this
Agreement shall prevent any Borrower from merging into any other Borrower.
(e) Consolidate any of that Borrower's operations with
those of any other corporation or
other entity.
(f) Except as provided in Section 5-16(c)(ii), above,
organize or create any Related
Entity.
(g) Subordinate any debts or obligations owed to that Borrower
by any third party to any other debts owed by such third party to any other
Person.
(h) Engage in any interest rate swaps, caps, or similar
activities, or any hedging activities other than in the ordinary course and
conduct of that Borrower's business, and then only with a Lender or any
affiliate of a Lender.
Loans. No Borrower shall make any loans to or acquire the Indebtedness
of, any Person except for the
following:
(a) Subject to such conditions respectively as apply
thereto, the making of Permitted
Distributions and Permitted Investments.
(b) Advances to employees of a Borrower for travel and other
business expenses to be incurred by such employees in the ordinary course of the
business of one or more of the Borrowers.
(c) Loans to employees of a Borrower not exceeding $75,000.00
outstanding at any time to any employee nor exceeding $300,000 in the aggregate
outstanding at any time.
Protection of Assets. The Administrative Agent, at the Administrative
Agent's discretion, at any time that a Suspension Event is extant, may discharge
any tax or Encumbrance on any of the Collateral, or take any other action that
the Administrative Agent may deem necessary or desirable to repair, insure,
maintain, preserve, collect, or realize upon any of the Collateral. The
Administrative Agent shall not have any obligation to undertake any of the and
shall have no liability on account of any action so undertaken except where
there is a specific finding in a judicial proceeding (in which the
Administrative Agent has had an opportunity to be heard), from which finding no
further appeal is available, that Administrative Agent had acted in actual bad
faith or in a grossly negligent manner or in willful misconduct. The Borrowers
shall pay to the Administrative Agent, on demand, or the Lender, in its
discretion, may add to the Loan Account, all amounts paid or incurred by the
Administrative Agent, the Funding Administrative Agent, and each Lender pursuant
to this section. The obligation of the Borrowers to pay such amounts is a
Liability.
Line of Business. No Borrower shall engage in any business other than
the business in which it is currently engaged or a business reasonably related
thereto.
Affiliate Transactions. No Borrower shall give any value to any
Related Entity except for:
(a) Goods and services actually purchased by that
Borrower from, or sold by that Borrower
to, such Related Entity for a price which shall be competitive and not differ
from that which would have been charged in an arms length transaction.
(b) Permitted Overhead Contributions.
(c) Permitted Distributions.
21. Additional Assurances.5-21. Additional Assurances.
(a) No Borrower has any interest in any Collateral which is
not subject to a first priority perfected security interest in favor of the
Administrative Agent (subject only to Encumbrances (if any) permitted by Section
5-5, above) to secure the Liabilities and none will hereafter acquire any
interest in property which is not, immediately upon such acquisition, subject to
such a prior perfected security interest (subject to Encumbrances (if any)
permitted pursuant to Section 5-5, above).
(b) Each Borrower shall execute such instruments, and shall do
all such things as the Administrative Agent may request to carry into effect the
provisions and intent of this Agreement and to protect the Administrative
Agent's security interest in the Collateral.
(c) No Borrower may amend the Tax Sharing Agreement (EXHIBIT
4-4(f)) nor the Overhead Expense Allocation Protocol (EXHIBIT 5-21(c)) without
the prior written consent of the Administrative Agent, which consent will not be
unreasonably withheld.
(d) A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument executed pursuant to
this Section shall be sufficient for filing to perfect the security interests
granted herein.
Adequacy of Disclosure. losure-22.Adequacy of Disclosure
(a) All financial statements furnished to any Agent or any
Lender by J. Baker or by or on behalf of any Borrower have been prepared in
accordance with GAAP (except for the absence of footnotes and subject to year
end adjustments) consistently applied and present fairly the condition of that
Borrower at the date(s) thereof and the results of operations and cash flows for
the period(s) covered. Except as disclosed on EXHIBIT 5-22(a), annexed hereto,
between February 1, 1997 and the date of this Agreement, there has been no
change in the financial condition, results of operations, or cash flows of any
Borrower since, other than changes in the ordinary course of business, which
changes have not been materially adverse, either singularly or in the aggregate.
(b) Except as disclosed on EXHIBIT 5-22(b), annexed hereto, no
Borrower has any contingent obligations not noted in that Borrower's financial
statements furnished to the Administrative Agent and each Lender.
(c) No paper now or hereafter given any Agent or any Lender by
or on behalf of any Borrower or any guarantor of the Liabilities contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements therein not
misleading.
(d) With the exception of general market and economic
conditions, there is no fact known to any officer of any Borrower, on the date
on which the within Agreement was executed, which has, or which, in the
foreseeable future could reasonably be expected to have, a material adverse
effect on the financial condition of that Borrower or any such guarantor which
has not been disclosed in writing to the Administrative Agent and each Lender.
Other Covenants. No Borrower shall indirectly do or cause to be done
any act which, if done directly by that Borrower, would breach any covenant
contained in this Agreement.
ARTICLE 6 - USE AND COLLECTION OF COLLATERAL.ARTICLE 6 - USE AND COLLECTION OF
COLLATERAL.
Use of Collateral. lateral.No Borrower shall engage in any sale of the
Inventory other than for fair
consideration in the conduct of that Borrower's business in the ordinary course.
Inventory Quality. Quality-All Inventory now owned or hereafter
acquired by each Borrower is intended to be of good and merchantable quality and
free from defects (other than defects within customary trade tolerances).
Adjustments and Allowances. During the existence of a Suspension Event,
no Borrower may grant any adjustment of more than a de minimus nature to any
Account owed to that Borrower by any of its Account Debtors, which adjustment is
not in keeping with prior practice and the course of dealing between that
Borrower and the subject Account Debtor without the prior written consent of the
Administrative Agent in each instance.
Validity of Accounts. ccounts-4. Validity of Accounts
(a) The amount of each Account, as shown on a Borrower's
books, is and will be correct and shall have been fully earned by performance.
(b) The Lead Borrower shall advise the Administrative Agent
upon any Borrower's obtaining knowledge of the impairment of the validity or
collectibility of any Account or of a material portion of the Accounts.
(c) Except as otherwise provided in EXHIBIT 6-4(c) , annexed
hereto, no Borrower shall post any bond to secure that Borrower's performance
under any agreement to which that Borrower is a party nor cause any surety,
guarantor, or other third party obligee to become liable to perform any
obligation of that Borrower (other than to the Agent) in the event of that
Borrower's failure so to perform.
Notification to Account Debtors. The Administrative Agent shall have
the right at any time a Suspension Event has occurred, to notify the Account
Debtors of each Borrower to make payment directly to the Administrative Agent
and to collect all amounts due on account of the Collateral.
ARTICLE 7 - CASH MANAGEMENT.ARTICLE 7 - CASH MANAGEMENT.
The Concentration and the Funding Accounts. counts-1.
(a) On or before the Cash Management Date, the following
checking accounts will be
established (and are so referred to herein):
(i) The Concentration Account: Established by
the Administrative Agent with a
Lender.
(ii) The Funding Account: Established by the
Lead Borrower with one of the Agents.
(b) The contents of the Concentration Account constitutes
property of the Administrative
Agent which it is holding for the ratable benefit of the Lenders.
(c) The Lead Borrower shall pay all fees and charges of, and
maintain such impressed balances as may be required by the Lender or by any bank
in which any account is opened as required hereby (even if such account is
opened by the Administrative Agent ).
Proceeds and Collection of Accounts. countsOn or before the Cash
Management Date, and at all times thereafter, each Borrower shall cause each
Host Store to pay all amounts owed by that Host Store to such lockbox or
remittance account as may from time to time be required by the Administrative
Agent. Such lock box or remittance account shall be swept to the Concentration
Account with such frequency as may from time to time be determined by the
Administrative Agent.
Interim Cash Management Procedures. Until the implementation of the
cash management procedures set forth in Sections 7-1 and 7-2, above, each
Borrower shall cause all Receipts of such Borrower, consisting of collected
funds, to be forwarded daily to the Borrower's operating account with Fleet
National Bank, with the aggregate of such Receipts, when they become collected
funds in such operating account, then wire transferred from that account to the
Concentration Account.
Payment of Liabilities.bilities-4. Payment of Liabilities
(a) On each Business Day, the Administrative Agent shall
apply, towards the Liabilities, the then collected balance of the Concentration
Account (net of fees charged, and of such impressed balances as may be required
by the bank at which the Concentration Account is maintained) in the following
order:
(i) Costs and expenses of any Agent or any
Lender, to the extent the Borrowers are
obligated to reimburse that Agent or Lender for the same.
(ii) Interest and fees then due and payable.
(iii) Towards the unpaid principal balance of Base
Rate Loans.
(iv) Towards unreimbursed honorings of L/C's (to
the extent that the amount of such
honorings were not converted to Revolving Credit Loans).
(v) To the Side Collateral Account.
(b) The Administrative Agent shall transfer to the Funding
Account any cash contents of the Side Collateral Account, upon the request of
the Lead Borrower, provided, however,
(i) In the event that both (A) a Suspension Event has
occurred and (B) one or more L/C's are then outstanding, the
Administrative Agent may maintain, in the Side Collateral Account, a
funded reserve of up to 105% of the aggregate Stated Amounts of such
L/C's.
(ii) The aggregate of collected funds on deposit
in the Funding Account shall not
exceed $250,000.00 at any one time.
ARTICLE 8 - ADMINISTRATIVE AGENT AS BORROWERS' ATTORNEY-IN-FACT.
Appointment as Attorney-In-Fact.-InEach Borrower hereby irrevocably
constitutes and appoints the Lender as the Borrower's true and lawful attorney,
effective (with the exception of Section 8-1(h)) only upon the occurrence of an
Event of Default and appoints the Administrative Agent as that Borrower's true
and lawful attorney, with full power of substitution, to convert the Collateral
into cash at the sole risk, cost, and expense of the Borrower, but for the sole
benefit of the Agent and each Administrative Agent. The rights and powers
granted the Agent by the within appointment include but are not limited to the
right and power to:
(a) Prosecute, defend, compromise, or release any action
relating to the Collateral.
(b) Sign change of address forms to change the address to
which each Borrower's mail is to
be sent to such address as the Agent shall designate; receive and open each
Borrower's mail; remove any Receivables Collateral and Proceeds of Collateral
therefrom and turn over the balance of such mail either to the Lead Borrower or
to any trustee in bankruptcy, receiver, assignee for the benefit of creditors of
the Lead Borrower, or other legal representative of the Lead Borrower whom the
Agent determines to be the appropriate person to whom to so turn over such mail.
(c) Endorse the name of the appropriate Borrower in favor of
the Administrative Agent upon any and all checks, drafts, notes, acceptances, or
other items or instruments; sign and endorse the name of the appropriate
Borrower on, and receive as secured party, any of the Collateral, any invoices,
schedules of Collateral, freight or express receipts, or bills of lading,
storage receipts, warehouse receipts, or other documents of title respectively
relating to the Collateral.
(d) Sign the name of the appropriate Borrower on any notice to
that Borrower's Account Debtors or verification of the Receivables Collateral;
sign the appropriate Borrower's name on any Proof of Claim in Bankruptcy against
Account Debtors, and on notices of lien, claims of mechanic's liens, or
assignments or releases of mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the
payment of any letter of credit and/or banker's acceptance of which any Borrower
is a beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver,
alter or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any customer of.
(g) Use, license or transfer any or all General
Intangibles of any Borrower.
(h) The designation of the Lender as the Borrower's
attorney in fact pursuant to this
Section 8-1(h) is effective immediately upon execution of the within Agreement):
Sign and file or record any financing or other statements in order to perfect or
protect the Agent's security interest in the Collateral.
No Obligation to Act. The Administrative Agent shall not be obligated
to act as authorized herein, but if the Administrative Agent does so, it shall
not be accountable for more than it actually receives and shall not be
responsible to the Lead Borrower or any Borrower except for any act or omission
to act as to which there is a final determination made in a judicial proceeding
(in which proceeding the Administrative Agent has had an opportunity to be
heard) which determination includes a specific finding that the subject act or
omission to act had been grossly negligent or in actual bad faith or constituted
willful misconduct.
ARTICLE 9 - FINANCIAL AND OTHER REPORTING REQUIREMENTS/FINANCIAL
COVENANTS
Maintain Records. Each Borrower shall at all times
(a) Keep proper books of account, in which full, true, and
accurate entries shall be made of all of that Borrower's transactions, all in
accordance with GAAP applied consistently with prior periods to fairly reflect
the financial condition of that Borrower at the close of, and its results of
operations for, the periods in question.
(b) Keep accurate current records of the Collateral including,
without limitation, accurate current stock, cost, and sales records of its
Inventory, accurately and sufficiently itemizing and describing the kinds,
types, and quantities of Inventory and the cost and selling prices thereof.
(c) Retain KPMG Peat Marwick LLP or any other independent
certified public accountants who are reasonably satisfactory to the
Administrative Agent and instruct such accountants to fully cooperate with, and
be available to, the Administrative Agent to discuss that Borrower's financial
performance, financial condition, operating results, controls, and such other
matters, within the scope of the retention of such accountants, as may be raised
by the Administrative Agent.
(d) Not change that Borrower's fiscal year.
(e) Not change that Borrower's taxpayer identification number.
Access to Records. Records-2. Access to Records
(a) Each Borrower shall accord the Administrative Agent and
the Administrative Agent's representatives with reasonable access from time to
time as the Administrative Agent and such representatives may require to all
properties owned by or over which that Borrower has control. The Administrative
Agent, and the Administrative Agent's representatives, shall have the right, and
each Borrower will permit the Lender and such representatives from time to time
as the Administrative Agent and such representatives may request, to examine,
inspect, copy, and make extracts from any and all of the books, records,
electronically stored data, papers, and files of that Borrower and of each
Related Entity. Each Borrower shall, and shall cause each Related Entity to,
make all of such Person's copying facilities available to the Administrative
Agent.
(b) Each Borrower hereby authorizes the Administrative Agent
and the Administrative Agent's representatives to:
(i) Inspect, copy, duplicate, review, cause to be
reduced to hard copy, run off, draw off, and otherwise use any and all
computer or electronically stored information or data which relates to
that Borrower, or to any Related Entity, which information or data is
in the possession of that Borrower or any Related Entity or any service
bureau, contractor, accountant, or other person, and directs any such
service bureau, contractor, accountant, or other person fully to
cooperate with the Administrative Agent and the Administrative Agent's
representatives with respect thereto.
(ii) Verify at any time the Collateral or any portion
thereof, including verification with Account Debtors, and/or with that
Borrower's computer billing companies, collection agencies, and
accountants and to sign the name of that Borrower on any notice to that
Borrower's Account Debtors or verification of the Collateral.
-3. Immediate Notice to Administrative Agent.9-3.
(a) The Lead Borrower shall provide the Administrative
Agent with written notice (with reasonable particularity) immediately upon
the occurrence of any of the following:
(i) Any: material change in the business affairs of
any Borrower, including, by way of examples, any change in a Borrower's
Executive Officers; event, with respect to any Host Store, which might
have an adverse effect on the financial condition of that Host Store or
ability of that Host Store to discharge its obligations under the Host
Store Agreement between the Host Store and that Borrower; event which
might have an adverse effect to any material contract with any supplier
of Inventory to a Borrower.
(ii) The occurrence of any Suspension Event.
(iii) Any intention on the part of a Borrower to
discharge that Borrower's present independent accountants or any
withdrawal or resignation by such independent accountants from their
acting in such capacity (as to which, see Subsection 9-1(c)).
(iv) Any litigation which, if determined adversely to
a Borrower, would have a material adverse effect on the financial
condition of that Borrower.
(b) The Lead Borrower shall:
(i) Add the Administrative Agent as an addressee
on all mailing lists maintained by or for any Borrower.
(ii) Advise the Administrative Agent promptly
following the completion of any physical or cycle count of a Borrower's
Inventory and, at the request of the Administrative Agent, provide the
Administrative Agent with a copy of the results of that count.
(iii) Provide the Administrative Agent , when
received by any Borrower, with a copy of any management letter or
similar communications from any accountant of that Borrower.
(iv) Provide the Administrative Agent with copies
of all filings, by J. Baker, with
the Securities and Exchange Commission, when so filed by J. Baker.
(v) Provide the Administrative Agent with a copy of
each annual forecast when prepared by any Borrower, when so prepared.
Weekly Reports. Weekly, on Wednesday of each week (as of the then
immediately preceding Saturday) the Lead Borrower shall provide the
Administrative Agent with the following (each in such form as may be specified
from time to time by the Administrative Agent ):
(a) A Borrowing Base Certificate (in the form of EXHIBIT 9-4
annexed hereto, as such form may be revised from time to time by the
Administrative Agent).
(b) A Report of In transit Inventory at Cost (Summary Page Only).
(c) An Accounts Receivable Aging.
Each of such reports shall be sent to the Administrative Agent by facsimile
transmission, provided that the original thereof is forwarded to the
Administrative Agent on the date of such transmission.
9-5. Monthly Reports.
(a) Monthly, the Lead Borrower shall provide the
Administrative Agent with original counterparts of the following (each in such
form as the Administrative Agent from time to time may specify):
(i) Within Fifteen (15) days of the end of the
previous month:
(A) Inventory Certificate (signed by
each Borrowers' President or Chief
Financial Officer) concerning the Borrowers' Inventory.
(B) An aging of the Borrowers' Inventory.
(C) An Open to Buy Report on which is shown
whether inventory levels are adequate to meet sales
projections.
(D) An Inventory Position Report.
(E) A Merchandise Analysis Summary by
Hierarchy by Major Account.
(F) A Report of Year to Date Sales and
Markdowns by Department in Total and Major Account.
(G) A Report of Year to Date Damages by
Department in Total.
(ii) Within Thirty (30) days of the end of the
previous month:
(A) Reconciliations of the above described
Inventory Reports and inventory Certificate (Section
9-5(a)(i)(A)) to Availability and to the general ledger as of
the end of the subject month.
(B) A Gross Margin Reconciliation and
Inventory/Gross Margin Report.
(C) A schedule of purchases from the
Borrowers' ten largest vendors (in terms of year to date purchases), which
schedule shall be in such form as may be satisfactory to the Administrative
Agent and shall include year to date cumulative purchases and an
aging of payables to each such vendor.
(D) An aging of the Borrowers' accounts payable.
(E) A Store Activity Report.
(F) A Comparison of Same Store Results by Host Store.
(iii) Within Thirty Five (35) days of the end of
the previous month, an internally
prepared Consolidated financial statement (with consolidating schedules) of the
Borrowers' financial condition and the results of its operations for, the period
ending with the end of the subject month, which financial statement shall
include, at a minimum, a balance sheet, income statement (on Host Store account
specific and on a "consolidated" basis), and comparison of same store sales for
the corresponding month of the then immediately previous year, as well as to the
Business Plan, with said balance sheet and income statement to show
amortization, depreciation, and capital expenditures.
(b) For purposes of Section 9-5(a), above, the first "previous
month" in respect of which the items required by that Section shall be provided
shall be April, 1997.
Quarterly Reports. Reports-Quarterly, within Forty Five (45) days
following the end of each of the Borrowers' first three fiscal quarters, the
Lead Borrower shall provide the Administrative Agent with an original
counterpart of a management prepared consolidated financial statement of J.
Baker (with consolidating schedules) for the period from the beginning of the
Borrowers' then current fiscal year through the end of the subject quarter, with
comparative information for the same period of the previous fiscal year, which
statement shall include, at a minimum, a balance sheet, income statement (on a
Key Host Store specific and on a "consolidated" basis), and cash flows and
comparisons for the corresponding quarter of the then immediately previous year,
as well as to the Business Plan.
. 7. Annually, within ninety (90) days following the end of the
Borrowers' fiscal year, the Lead
Borrower shall furnish the Administrative Agent with the following:
(a) An original signed counterpart of the J. Baker's annual
consolidated financial statement (with consolidating schedules), which statement
shall have been prepared by, and bearing the unqualified opinion of, the
Borrowers' independent certified public accountants (i.e. said statement shall
be "certified" by such accountants). Such annual statement shall include, at a
minimum (with comparative information for the then prior fiscal year) a balance
sheet, income statement, statement of changes in shareholders' equity, and cash
flows.
(b) The following Consolidated financial statements for the
Borrowers for the prior fiscal year (each prepared by the Borrowers' independent
accountants: Balance sheet, income statement, statement of changes in
stockholders' equity and cash flow.
(c) A certificate of the Borrowers' independent accountant
which states that in connection with their preparation of such annual financial
statements, such accountants did not note or encounter any fact or circumstance
which would lead them to believe that an Event of Default has occurred.
Officers' Certificates. The Lead Borrower shall cause the Lead
Borrower's President, Chief Financial Officer, or other senior officer
reasonably acceptable to the Agents, to provide such Person's Certificate with
those monthly, quarterly, and annual statements to be furnished pursuant to this
Agreement, which Certificate shall be in such form as the Administrative Agent
reasonably may request concerning (a) the preparation of the subject statement
in accordance with GAAP; (b) whether any Suspension Event has occurred (and if
so, the details thereof); and (c) calculations to determine whether the
Borrowers are in compliance at the date of the subject statement with each of
the financial performance covenants included in Section 9-11, below.
Inventories, Appraisals, and Audits.
(a) The Administrative Agent may observe each inventory
any cycle count of the Collateral
which is undertaken on behalf of any. No Borrower may change the methodology to
be followed in connection with the conduct of and reporting on the results of
such inventory from the methodology in effect on May 1, 1997.
(b) The Administrative Agent contemplates Four (4) commercial
finance audits during any Twelve (12) month period during which the within
Agreement is in effect, and following the occurrence of any Suspension Event,
may conduct additional audits. The Administrative Agent does not contemplate
undertaking or requiring any physical inventories, provided, however, the
Administrative Agent, following the occurrence of any Suspension Event, may do
so.
(c) The Administrative Agent from time to time may undertake
"mystery shopping" (so-called) visits to all or any of the Borrower's business
premises. The Administrative Agent shall provide the Lead Borrower with a copy
of any non-company confidential results of such mystery shopping.
(d) The Borrowers shall pay the reasonable out-of-pocket costs
of all inventory counts, audits, and visits conducted by the Administrative
Agent pursuant hereto.
Additional Financial Information.
(a) In addition to all other information required to be
provided pursuant to this Article
9, the Lead Borrower promptly shall provide the Administrative Agent (and any
guarantor of the Liabilities), with such other and additional information
concerning the Borrowers, the Collateral, the operation of the Borrowers'
business, and the Borrowers' financial condition, including original
counterparts of financial reports and statements, as the Administrative Agent
may from time to time reasonably request from the Lead Borrower.
(b) The Lead Borrower may provide the Administrative Agent,
from time to time hereafter, with updated Business Plans. In all events, the
Lead Borrower, no sooner than Ninety (90) nor later than Sixty (60) days prior
to the end of each of the Borrowers' fiscal years, shall furnish the
Administrative Agent with an updated and extended Business Plan which shall go
out at least through the end of the then next fiscal year and shall include the
Borrower's forecast for the subject period covered by such Business Plan. In
each event, such updated and extended Business Plans shall be prepared following
a methodology which is consistent with the methodology employed in prior
Business Plans provided to the Administrative Agent. The Administrative Agent,
following the receipt of any of such Business Plans, may, but shall not be under
any obligation to, revise the financial performance covenants included on
EXHIBIT 9-11, annexed hereto, provided, however, in the event that the Lead
Borrower does not consent to such revisions, the then most recently effective
financial performance covenants shall remain in effect for the cognate future
periods not then covered by such covenants (e.g., a covenant applicable to
January of one year will be applicable to January of the then following year).
. The Borrower shall observe and comply with those financial
performance covenants set forth on EXHIBIT 9-11(a), annexed hereto, certain of
which covenants are based on the Business Plan set forth on EXHIBIT 9-11(b),
annexed hereto. The Administrative Agent may determine the Borrower's compliance
with such covenants based upon financial reports and statements provided by the
Borrower to the Lender (whether or not such financial reports and statements are
required to be furnished pursuant to the within Agreement) as well as by
reference to interim financial information provided to, or developed by, the
Administrative Agent.
ARTICLE 10 - EVENTS OF DEFAULT.
The occurrence of any event described in this Article 10 respectively
shall constitute an "Event of Default" herein. Upon the occurrence of any Event
of Default described in Section 10-9, any and all Liabilities shall become due
and payable without any further act on the part of the Administrative Agent or
any Lender. Upon the occurrence of any other Event of Default, any and all
Liabilities shall become immediately due and payable, at the option of the
Administrative Agent and without notice or demand. The occurrence of any Event
of Default shall also constitute, without notice or demand, a default under all
other agreements between the Administrative Agent or any Lender and any Borrower
and instruments and papers given the Administrative Agent or any Lender by any
Borrower, whether such agreements, instruments, or papers now exist or hereafter
arise.
10-1 Failure to Pay. The failure by any Borrower to pay when due
(or on demand, if payable on
demand) any payment Liability.
10-2. Failure to Perform Liabilities.
(a) The failure by any Borrower to promptly, punctually,
faithfully and timely perform, discharge, or comply with any covenant included
in any of the following provisions hereof:
<TABLE>
<S> <C>
Section: Relates to:
5-4 Location of Collateral
5-5 Title to Assets
5-6 Indebtedness
5-7 Insurance Policies
5-11 Pay taxes
5-20 Affiliate Transactions
5-21 Additional Assurances
Article 7 Cash Management
Article 9 Financial Reporting
Requirements and Financial Performance
Covenants
</TABLE>
(b) The failure by any Borrower, within Twenty (20) days of
the sooner of (i) the Lead Borrower's knowledge of the subject failure or (ii)
the Administrative Agent's written notice to the Lead Borrower, to cure that
Borrower's failure to promptly, punctually and faithfully perform, discharge, or
comply with any covenant or Liability not described in any of Section 10-1 or
Subsection 10-2(a), above.
Misrepresentation.entation-The determination by the Administrative
Agent that any representation or warranty at any time made by the Lead Borrower
or any Borrower to any Agent or any Lender, was not true or complete in all
material respects when given.
10-4. Acceleration of Other Debt. Termination of Host Store
Agreements
(a) The occurrence of any event such that
(i) any Indebtedness of any Borrower to any creditor
other than the Lender could be accelerated, unless, prior to the
acceleration of the Liabilities on account of such occurrence, the
other creditor duly waives such default and evidence of such written
waiver is provided to the Administrative Agent; and/or
(ii) without the consent of that Borrower, any
Acceptable Host Store Agreement could be terminated , unless such
occurrence is immaterial or prior to the acceleration of the
Liabilities on account of such occurrence, the subject Host Store duly
waives such default and evidence of such written waiver is provided to
the Administrative Agent; and/or
(iii) without the consent of that Borrower, any
Host Store Agreement is terminated;
and/or
(iv) the indebtedness of JBAK Canton Realty, Inc.
which is secured by the Canton Warehouse could be accelerated, unless,
prior to the acceleration of the Liabilities on account of such
occurrence, the holder of such indebtedness duly waives such default
and evidence of such written waiver is provided to the Administrative
Agent.
Related Party Defaults Defaults-5. Related Party Defaults
(a) The occurrence of any event such that the indebtedness of
Casual Male under the Casual Male Credit Facility could be accelerated.
(b) The entry of an order for relief under the Bankruptcy
Code with respect to The Casual
Male.
(c) The failure, by the Casual Male, timely to make any
payment of the same or similar type as are described in the Definition of
"Permitted Distributions" and/or "Permitted Overhead Contributions" herein.
(d) The failure of any party thereto to observe and comply
with all terms, conditions, and provisions of the Overhead Expense Allocation
Protocol (EXHIBIT 5-21(c)) and the Tax Sharing Agreement (EXHIBIT 4-4(f).
Casualty Loss. Non-Ordinary Course Sales.se The occurrence of any (a)
uninsured loss, theft, damage, or destruction of or to any material portion of
the Collateral, or (b) sale (other than sales in the ordinary course of
business) of any material portion of the Collateral.
Judgment. Restraint of Business.
(a) The service of process upon any Agent or any Lender or any
Participant seeking to attach, by trustee, mesne, or other process, any funds of
any of the Borrowers on deposit with, or assets of that Borrower in the
possession of, any Agent or any Lender or such Participant.
(b)The entry of judgments against the Borrower not fully
covered by insurance (subject to a reasonable deductible) aggregating more than
$500,000.00, which judgments are not satisfied (if money judgments) or appealed
from (with execution or similar process stayed) within Thirty (30) days of their
entry, provided, however, the entry of money judgments aggregating in excess of
$500,000.00 which are not so timely appealed from (with execution or similar
process stayed) or are not so satisfied, shall not constitute an "Event of
Default" for so long as, following the entry of such judgments, the amount
determined in accordance with Section 1-1(b)(ii), above, is not less than 150%
of the aggregate of such judgments.
(c) The entry of any order or the imposition of any other
process having the force of law, the effect of which is to restrain in any
material way the conduct by any Borrower of its business in the ordinary course.
Business Failure. Failure-8The application for, consent to, or
sufferance of the appointment of a receiver, trustee, or other person over any
material part of any Borrower's property; or the offering by or entering into by
any Borrower of any arrangement seeking relief from or extension of that
Borrower's debts.
Bankruptcy. The entry of an order for relief or similar order with
respect to any Borrower in any proceeding pursuant to The Bankruptcy Code; and
the filing of any pleading against any Borrower initiating any matter in which
that Borrower is or may be granted any relief from its debts pursuant to the
Bankruptcy Code or any insolvency procedure, which pleading is not timely
contested, or if timely contested, is not dismissed within Thirty (30) days of
having been filed.
Indictment - Forfeiture. The indictment of, or institution of any
legal process or proceeding against, any Borrower, under any federal, state,
municipal, and other civil or criminal statute, rule, regulation, order, or
other requirement having the force of law where the relief, penalties, or
remedies sought or available include the forfeiture of more than a de minimus
part of the property of the Borrowers and/or the imposition of any stay or other
order, the effect of which could be to restrain in any material way the conduct
by that Borrower of its business in the ordinary course.
Default by Guarantor or Related Entity. The occurrence of any event
described in Section 10-8 or 10-9 with respect to any guarantor of the
Liabilities, or the occurrence of any of such events with respect to any parent,
subsidiary, or Related Entity.
Challenge to Loan Documents. (a) Any challenge by or on behalf of the
Lead Borrower or any Borrower to the validity of any Loan Document or the
applicability or enforceability of any Loan Document strictly in accordance with
the subject Loan Document's terms or which seeks to void, avoid, limit, or
otherwise adversely affect any security interest created by or in any Loan
Document or any payment made pursuant thereto.
(b) Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's terms or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any Loan
Document or any payment made pursuant thereto.
13. Change in Control.
(a) Except as permitted herein, any change in the ownership of
the capital stock of the Borrowers such that the holders of 100% of the capital
stock of each of the Borrowers, at May 1, 1997 are not the holders of 100% of
such capital stock thereafter.
(b) Any Change in Control with respect to J. Baker.
.RTICLE 11 - RIGHTS AND REMEDIES UPON DEFAULT
Upon the occurrence of any Event of Default and at any time thereafter,
the Administrative Agent shall have the following rights and remedies in
addition to all rights, remedies, powers, privileges, and discretions available
to the Administrative Agent prior to such occurrence.
Rights of Enforcement. The Administrative Agent shall have all of the
rights and remedies of a secured party upon default under the UCC, in addition
to which the Administrative Agent shall have all and each of the following
rights and remedies:
(a) To collect the Receivables Collateral with or without
the taking of possession of any of the Collateral.
(b) To take possession of all or any portion of the
Collateral.
(c) To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or processing as
the Administrative Agent deems advisable and with or without the taking of
possession of any of the Collateral.
(d) To conduct one or more going out of business sales
which include the sale or other disposition of the Collateral.
(e) To apply the Receivables Collateral or the proceeds
of the Collateral towards (but not necessarily in complete satisfaction of)
the Liabilities.
(f) To exercise all or any of the rights, remedies,
powers, privileges, and discretions
under all or any of the Loan Documents.
2. Sale of Collateral
(a) Any sale or other disposition of the Collateral may be at
public or private sale upon such terms and in such reasonable manner as the
Administrative Agent deems advisable, having due regard to compliance with any
statute or regulation which might affect, limit, or apply to the Administrative
Agent's disposition of the Collateral.
(b) The Administrative Agent, in the reasonable exercise of
the Administrative Agent's rights and remedies upon default, may conduct one or
more going out of business sales, in the Administrative Agent's own right or by
one or more Administrative Agents and contractors. To the extent permitted by
the subject landlord or Host Store, such sale(s) may be conducted upon any
premises owned, leased, or occupied by any Borrower. The Administrative Agent
and any such Administrative Agent or contractor, in conjunction with any such
sale, may augment the Inventory with other goods (all of which other goods shall
remain the sole property of the Administrative Agent or such Administrative
Agent or contractor). Any amounts realized from the sale of such goods which
constitute augmentations to the Inventory (net of an allocable share of the
costs and reasonable expense incurred in their disposition) shall be the sole
property of the Administrative Agent or such Administrative Agent or contractor
and neither any Borrower nor any Person claiming under or in right of any
Borrower shall have any interest therein.
(c) Unless the Collateral is perishable or threatens to
decline speedily in value, or is of a type customarily sold on a recognized
market (in which event the Administrative Agent shall provide the Borrower with
such notice as may be practicable under the circumstances), the Administrative
Agent shall give the Lead Borrower at least seven (7) days prior written notice
of the date, time, and place of any proposed public sale, and of the date after
which any private sale or other disposition of the Collateral may be made. Each
Borrower agrees that such written notice shall satisfy all requirements for
notice to that Borrower which are imposed under the UCC or other applicable law
with respect to the exercise of the Administrative Agent's rights and remedies
upon default.
(d) Any Agent and any Lender may purchase the Collateral,
or any portion of it at any sale held under this Article.
(e) The Administrative Agent shall apply the proceeds of any
exercise of the Administrative Agent's Rights and Remedies under this Article 11
towards the Liabilities in such manner, and with such frequency, as the
Administrative Agent reasonably determines.
Occupation of Business Location.LocIn connection with the
Administrative Agent's exercise of the Administrative Agent's rights under this
Article 11, the Administrative Agent, to the extent permitted by the subject
landlord or Host Store, may enter upon, occupy, and use any premises owned or
occupied by each Borrower, and may exclude each Borrower from such premises or
portion thereof as may have been so entered upon, occupied, or used by the
Administrative Agent . The Administrative Agent shall not be required to remove
any of the Collateral from any such premises upon the Administrative Agent's
taking possession thereof, and may render any Collateral unusable to all
Borrowers. In no event shall the Administrative Agent be liable to any Borrower
for use or occupancy by the Administrative Agent of any premises pursuant to
this Article 11, nor for any charge (such as wages for a Borrower's employees
and utilities) incurred in connection with the Administrative Agent's exercise
of the Administrative Agent's Rights and Remedies.
Grant of Nonexclusive License. LiceEach Borrower hereby grants to the
Administrative Agent a royalty free nonexclusive irrevocable license to use,
apply, and affix any trademark, tradename, logo, or the like in which that
Borrower now or hereafter has rights, such license being with respect to the
Administrative Agent's exercise of the rights hereunder including, without
limitation, in connection with any completion of the manufacture of Inventory or
sale or other disposition of Inventory.
Assembly of Collateral.llatThe Administrative Agent may require the
Borrowers to assemble the Collateral and make it available to the Administrative
Agent at the Borrowers' sole risk and expense at a place or places which are
reasonably convenient to both the Administrative Agent and Borrowers.
Rights and Remedies.RemedieThe rights, remedies, powers, privileges,
and discretions of the Administrative Agent hereunder (herein, the "
Administrative Agent's Rights and Remedies") shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have. No delay or
omission by the Administrative Agent in exercising or enforcing any of the
Administrative Agent's Rights and Remedies shall operate as, or constitute, a
waiver thereof. No waiver by the Administrative Agent of any Event of Default or
of any default under any other agreement with the Administrative Agent shall
operate as a waiver of any other default hereunder or under any other agreement.
No single or partial exercise of any of the Administrative Agent's Rights or
Remedies, and no express or implied agreement or transaction of whatever nature
entered into between the Administrative Agent and any person, at any time, shall
preclude the other or further exercise of the Administrative Agent's Rights and
Remedies. No waiver by the Administrative Agent of any of the Administrative
Agent's Rights and Remedies on any one occasion shall be deemed a waiver on any
subsequent occasion, nor shall it be deemed a continuing waiver. All of the
Administrative Agent's Rights and Remedies and all of the Administrative Agent's
rights, remedies, powers, privileges, and discretions under any other agreement
or transaction are cumulative, and not alternative or exclusive, and may be
exercised by the Administrative Agent at such time or times and in such order of
preference as the Administrative Agent in its sole discretion may determine. The
Administrative Agent's Rights and Remedies may be exercised without resort or
regard to any other source of satisfaction of the Liabilities.
ARTICLE 12 - NOTICES.
Notice Addresses. All notices, demands, and other communications made
in respect of this Agreement (other than a request for a loan or advance or
other financial accommodation under the Revolving Credit) shall be made to the
following addresses, each of which may be changed upon seven (7) days written
notice to all others given by certified mail, return receipt requested:
If to the Administrative Agent: GBFC, Inc.
40 Broad Street
Boston, Massachusetts 02109
Attention: Ms Elizabeth Ratto
Vice President
Fax : 617 422-6245
With a copy to: Riemer & Braunstein
Three Center Plaza
Boston, Massachusetts 02108
Attention: Richard B. Jacobs Esq.
and David S. Berman, Esq.
Fax : 617 723-6831
If to the Lead Borrower or
Any Borrower: JBI, Inc.
555 Turnpike Street
Canton, Massachusetts 02021
Attention: Mr. Philip Rosenberg
Fax : 617 821-4867
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attention: Raymond C. Zemlin, P.C.
Fax : 617 523-1231
Notice Given. (a) Notices shall be deemed given at the sooner of when
actually received or (i) if by mail: Three (3) days following deposit in the
United States mail, postage prepaid; (ii) By overnight express delivery: the
Business Day following the day when sent; (iii) By hand: If delivered on a
Business Day after 9:00 AM and no later than Three (3) hours prior to the close
of customary business hours of the recipient, when delivered (otherwise, at the
opening of the then next Business Day); and (iv) By Facsimile transmission: If
sent on a Business Day after 9:00 AM and no later than Three (3) hours prior to
the close of customary business hours of the recipient, one (1) hour after being
sent (otherwise, at the opening of the then next Business Day).
(b) Rejection or refusal to accept delivery and inability to
deliver because of a changed address or Facsimile Number for which no due notice
was given shall each be deemed receipt of the notice sent.
ARTICLE 13 - TERM.RTICLE 13 - TERM
Termination of Revolving Credit.g CThe Revolving Credit shall remain in
effect (subject to suspension as provided in Section 1-8(d), above) until the
Termination Date.
Effect of Termination. Upon the termination of Revolving Credit, the
Borrowers shall pay to the Administrative Agent (whether or not then due), in
immediately available funds, all then Liabilities. All provisions of this
Agreement, other than any which place an obligation on any Agent or any Lender
to make loans or provide financial accommodations under the Revolving Credit or
otherwise, shall remain in full force and effect until all Liabilities shall
have been paid and provided for in full.
ARTICLE 14 - GENERAL.
Protection of Collateral.llThe Administrative Agent has no duty as to
the collection or protection of the Collateral beyond the safe custody of such
of the Collateral as may come into the possession of the Administrative Agent
and shall have no duty as to the preservation of rights against prior parties or
any other rights pertaining thereto. The Administrative Agent may include
reference to all or any of the Borrowers (and may utilize any logo or other
distinctive symbol associated with any of the Borrowers) in connection with any
advertising, promotion, or marketing undertaken by the Administrative Agent .
Successors and Assigns. AssThis Agreement shall be binding upon the
Lead Borrower, each Borrower, and their respective representatives, successors,
and assigns and shall enure to the benefit of each Agent and each Lender and the
respective successors and assigns of each provided, however, no trustee or other
fiduciary appointed with respect to the any Borrower or any shall have any
rights hereunder. In the event that any Agent or any Lender assigns or transfers
its rights under this Agreement, the assignee shall thereupon succeed to and
become vested with all rights, powers, privileges, and duties of such assignor
hereunder and such assignor shall thereupon be discharged and relieved from its
duties and obligations hereunder.
Severability.rabilAny determination that any provision of this
Agreement or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Agreement.
Amendments. Course of Dealing.
(a) The Loan Documents incorporate all discussions and
negotiations between the parties concerning the matters included therein. No
such discussions and negotiations, nor any custom, usage, or course of dealings
shall limit, modify, or otherwise affect the provisions thereof. No failure to
give notice to the Lead Borrower or any Borrower of that Person's having failed
to observe and comply with any warranty or covenant included in any Loan
Document shall constitute a waiver of such warranty or covenant or the amendment
of the subject Loan Document.
(b) The Lead Borrower and any Borrower may undertake any
action otherwise prohibited hereby, and may omit to take any action otherwise
required hereby, with the express prior written consent of the Administrative
Agent . No consent, modification, amendment, or waiver of any provision of any
Loan Document shall be effective unless executed in writing by or on behalf of
the party to be charged with such modification, amendment, or waiver.
Power of Attorney. All powers conferred upon the Administrative Agent
by this Agreement, being coupled with an interest, shall be irrevocable until
this Agreement is terminated by a written instrument executed by a duly
authorized officer of the Administrative Agent.
Application of Proceeds. The proceeds of any disposition of the
Collateral and of any other payments received on account of the Liabilities
shall be applied toward the Liabilities in such order and manner as the
Administrative Agent determines in its reasonable discretion. Each Borrower
shall remain liable for any deficiency remaining following such application.
Costs and Expenses of Agents and Lenders. LeThe Borrowers shall pay on
demand all Costs of Collection and all reasonable out-of-pocket expenses of each
Agent and each Lender and any Participant in connection with the preparation,
execution, and delivery of this Agreement and of any other Loan Documents,
whether now existing or hereafter arising, and all other reasonable
out-of-pocket expenses which may be incurred by each Agent and by and each
Lender and any Participant in preparing or amending this Agreement and all other
agreements, instruments, and documents related thereto, or otherwise incurred
with respect to the Liabilities. The Borrowers specifically authorize the
Administrative Agent to pay all such fees and expenses and in the Administrative
Agent's reasonable discretion, to add such fees and expenses to the Loan
Account.
.4-8. This Agreement and all documents which relate thereto, which have
been or may be hereinafter furnished any Agent or any Lender may be reproduced
by that Person or by the Administrative Agent by any photographic, microfilm,
xerographic, digital imaging, or other process, and that Person may destroy any
document so reproduced. Any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made in
the regular course of business). Any facsimile which bears proof of transmission
shall be binding on the party which or on whose behalf such transmission was
initiated and likewise shall be so admissible in evidence as if the original of
such facsimile had been delivered to the party which or on whose behalf such
transmission was received.
Massachusetts Law.etts Law-This Agreement and all rights and
obligations hereunder, including matters of construction, validity, and
performance, shall be governed by the laws of The Commonwealth of Massachusetts.
Consent to Jurisdiction. All legal matters which relate to the
relationship contemplated by the Loan Documents may be brought in the Superior
Court of Suffolk County Massachusetts or in the United States District Court,
District of Massachusetts, sitting in Boston, Massachusetts, as the
Administrative Agent may elect in the Administrative Agent's reasonable
discretion. The Lead Borrower and each Borrower submits to the jurisdiction of
said courts.
Indemnification.fiThe Lead Borrower and each Borrower respectively
shall indemnify, defend, and hold the each Agent and each Lender and any
Participant and any employee, officer, or Administrative Agent of any of the
foregoing (each, an "Indemnified Person") harmless of and from any claim brought
or threatened against any Indemnified Person by the Borrower, any guarantor or
endorser of the Liabilities, or any other Person (as well as from attorneys'
reasonable fees and expenses in connection therewith) on account of the
relationship of the Lead Borrower and the Borrowers or of any other guarantor or
endorser of the Liabilities with any Agent or any Lender and/or any syndication,
by any Agent or any Lender of all or any part of the credit facility
contemplated hereby (each of claims which may be defended, compromised, settled,
or pursued by the Indemnified Person with counsel of the Administrative Agent's
selection, but at the expense of the Borrowers) other than any claim as to which
a final determination is made in a judicial proceeding (in which the
Administrative Agent and any other Indemnified Person has had an opportunity to
be heard), which determination includes a specific finding that the Indemnified
Person seeking indemnification had acted in a grossly negligent manner or in bad
faith or in willful misconduct. The within indemnification shall survive payment
of the Liabilities and/or any termination, release, or discharge executed by the
Administrative Agent in favor of the Lead Borrower or any Borrower.
Rules of Construction. (a) Words in the singular include the plural
and words in the plural include the singular.
(b) The words: "includes" and "including" are not
limiting; "may not" are prohibitive and not permissive; and "or" is not
exclusive.
(c) References to "herein", "hereof", and "within" are to this entire
Loan Agreement and not merely the provision in which such reference is included.
(d) Except as otherwise specifically provided, all references to
time are to Boston time.
Intent. It is intended that:
(a) This Agreement take effect as a sealed instrument.
(b) The scope of the security interests created by this
Agreement be broadly construed in favor of the Administrative Agent.
(c) The security interests created by this Agreement
secure all Liabilities, whether now existing or hereafter arising.
Maximum Interest Rate. Regardless of any provision of any Loan
Document, none of any Agent or any Lender shall be entitled to contract for,
charge, receive, collect, or apply as interest on any Liability, any amount in
excess of the maximum rate imposed by applicable law. Any payment which is made
which, if treated as interest on a Liability would result in such interest's
exceeding such maximum rate shall be held, to the extent of such excess, as
additional collateral for the Liabilities as if such excess were "Collateral."
15. Waivers
(a) The Lead Borrower and each Borrower (and all guarantors,
endorsers, and sureties of the Liabilities) make each of the waivers included in
Subsection 14-15(b), below, knowingly, voluntarily, and intentionally, and
understands that each Agent and each Lender, in entering into the financial
arrangements contemplated hereby and in providing loans and other financial
accommodations to or for the account of the Borrowers as provided herein,
whether not or in the future, is relying on such waivers.
(b) THE LEAD BORROWER AND EACH BORROWER, AND EACH SUCH
GUARANTOR, ENDORSER, AND SURETY RESPECTIVELY WAIVES THE FOLLOWING:
(i) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH ANY AGENT OR ANY LENDER IS OR BECOMES A PARTY
(WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST ANY AGENT
OR ANY LENDER OR IN WHICH ANY AGENT OR ANY LENDER IS JOINED AS A PARTY
LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF,
ANY RELATIONSHIP AMONGST OR BETWEEN THE LEAD BORROWER OR ANY BORROWER
OR ANY OTHER PERSON AND ANY AGENT OR ANY LENDER (AND EACH AGENT AND
EACH LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY
SUCH CASE OR CONTROVERSY).
(ii) Any claim to consequential, special, or punitive damages.
<PAGE>
The Lead Borrower
JBI, INC.
By/s/Philip Rosenberg
Print Name: Philip Rosenberg
Title: Executive Vice President
The Borrowers
JBI, INC. MORSE SHOE, INC.
By /s/Philip Rosenberg By/s/Philip Rosenberg
Print Name: Philip Rosenberg Print Name: Philip Rosenberg
Title: Executive Vice President Title: Executive Vice President
JBI HOLDING COMPANY, INC.
By /s/Philip Rosenberg
Print Name: Philip Rosenberg
Title: Executive Vice President
<PAGE>
The Administrative Agent The Co-Agent
GBFC, INC. FLEET NATIONAL BANK
By/s/Elizabeth Ratto By /s/Richard Seufert
Print Name:_________________________ Name____________________________
Title:________________________________ Title____________________________
The
Lenders
GBFC,
INC
By /s/Elizabeth Ratto
Print Name:__________________________
Title:_______________________________
FLEET NATIONAL BANK
By/s/Richard Seufert
Print Name:_________________________
Title:______________________________
EXHIBIT 11
J. BAKER, INC. AND SUBSIDIARIES
Computation of Primary and Fully Diluted Earnings Per Share*
(Unaudited)
<TABLE>
<S> <C> <C>
Quarter Ended
May 3, May 4,
1997 1996
------ ------
PRIMARY:
Net Earnings $ 269,011 $ 825,560
========= =========
Weighted average number of common
shares outstanding 13,892,969 13,874,323
========== ==========
Earnings Per Share $0.019 $0.060
========== ==========
ASSUMING FULL DILUTION:
Net Earnings $ 269,011 $ 825,560
========= ==========
Weighted average number of common
shares outstanding 13,892,969 13,874,323
Dilutive effect of outstanding stock options 38,366 67,603
---------- -----------
Weighted average number of common
shares as adjusted 13,931,335 13,941,926
========== ===========
Earnings per share $0.019 $0.059
========== ===========
</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 MAY 3, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> MAY-3-1997
<CASH> 2,197,884
<SECURITIES> 0
<RECEIVABLES> 24,971,095
<ALLOWANCES> 5,296,617
<INVENTORY> 165,421,322
<CURRENT-ASSETS> 232,942,887
<PP&E> 119,517,329
<DEPRECIATION> 42,494,053
<TOTAL-ASSETS> 349,548,557
<CURRENT-LIABILITIES> 76,803,910
<BONDS> 197,366,337
0
0
<COMMON> 6,947,205
<OTHER-SE> 65,114,524
<TOTAL-LIABILITY-AND-EQUITY> 349,548,557
<SALES> 137,350,261
<TOTAL-REVENUES> 137,350,261
<CGS> 75,352,452
<TOTAL-COSTS> 75,352,452
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,207,576
<INCOME-PRETAX> 442,011
<INCOME-TAX> 173,000
<INCOME-CONTINUING> 269,011
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 269,011
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
