EXHIBIT 10.14
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
As of February 18, 1998
THIS SECOND AMENDMENT is made to the May 30, 1997 Loan and Security
Agreement, as amended (the "Loan Agreement") between
BankBoston Retail Finance Inc., (formerly known as "GBFC, Inc."), a
Delaware corporation with its principal executive offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, as Administrative Agent for the ratable benefit of the
"Lenders" and as a "Lender;
Fleet National Bank, a national banking association with offices at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, as Co-Agent for the ratable benefit of
the Lenders and as a "Lender;
and
JBI, Inc. a Massachusetts corporation with its principal executive
offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as "Lead
Borrower" and as agent for the "Borrowers", being the following:
JBI, Inc.;
MorseShoe, Inc. (a Delaware corporation with its principal executive
offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, 02012); and
JBI Holding Company, Inc. (a Delaware corporation with its principal
executive offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, DE, 19801),
in consideration of the mutual covenants contained herein and benefits
to be derived herefrom,
WITNESSETH:
1. AGREEMENT TO AMEND
Provided each of those "Conditions to Amendment" set forth in Section
2, below, is satisfied timely as provided in that Section, the Loan Agreement
shall be amended, as set forth below, such amendment to take effect as of
February 18, 1998, it being understood, however, that in the event that any of
such conditions is not satisfied by 5:00PM (Boston Time) on the deadline date
for that condition (as stated in Section 2), then such amendment shall become
null and void, effective as of 5:00PM (Boston Time) on the subject deadline
date:
Section 1-1(b) of the Loan Agreement is amended to read as follows:
(b) As used herein, the term "Availability" refers at any time
to the lesser of (i) or (ii), below, where:
(i) Is the result of:
(A) The Loan Ceiling.
Minus
(B) The then unpaid principal balance of the
Loan Account. Minus (C) The then aggregate
of such Availability Reserves as may have
been
established by the Administrative Agent as provided herein.
Minus
(D) The then outstanding Stated Amount of all L/C's.
(ii) Is the result of:
(A) Up the lesser of
(I) (1) During the calendar months of November
and December: Twelve Million Dollars ($12,000,000.00).
(2) At all other times: Ten Million Dollars
($10,000,000.00)
or
(II) Eighty-Five Percent (85%) of the face amount of
Acceptable Accounts.
Plus
(B)Up to the following percentage of the Retail of Acceptable Inventory:
(I) Through June 30, 1997: 30%.
(II) After June 30, 1997 : 25%.
Plus
(C) "O/A Availability", being up to the following
percentage of the Retail of Acceptable Inventory (the
result of which percentage is reduced, however, dollar
for dollar by the aggregate of all Canadian
Settlement Payments):
(I) February 15 to 28, 1998 : 2.5%
(II) March 1 to 31, 1998 : 3.5%
(III) April 1 to April 30, 1998 : 2.5%
(IV) May 1 to May 31, 1998 : 2.5%
(V) All other times : Zero
Plus
(D) 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
(E) The then unpaid principal balance of the Loan Account.
Minus
(F) The then aggregate of such Availability Reserves
as may have been established by the Lender as provided
herein.
Minus
(G) The then outstanding Stated Amount of all L/C's.
Section 1-5 of the Loan Agreement is Amended to read as follows:
1-5. Requests For Revolving Credit Loans.
(a) Subject to the limitations included in this Agreement, the
Lead 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 within the time frames set forth in Section 1-5(c).
(b) Loans which are, or which otherwise would be converted to
a Base Rate Loan, shall be, or be converted to, an O/A Loan to the extent that
such Revolving Credit Loan is supported by O/A Availability.
(c) Subjection to Section 1-5(b), the following are the time
frames applicable to the election of interest rates and Interest Periods:
(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.
(d) 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.
Section 1-6(a) of the Loan Agreement is amended to read as follows:
(a) Except as provided in Sections 1-6(a)(i), (ii), and (iii),
each Revolving Credit Loan shall bear interest at the Base Rate.
(i) O/A Loans shall bear interest at the O/A Rate.
(ii) If timely notice is given (as provided in
Section 1-5(a)), then the subject Revolving Credit Loan (or a portion
thereof) shall be, or shall be converted to, a Eurodollar Loan.
(iii) Revolving Credit Loans shall be deemed O/A
Loans in the following order (and in all instances, only to the extent
that the subject Revolving Credit Loan is then supported by O/A
Availability) and shall cease to be deemed O/A Loans in the reverse of
the following order:
(A) First: Base Rate Loans.
(B) Second: Eurodollar Loans.
Section 1-6(f) of the Loan Agreement is amended to read as follows:
(f) The margins, applicable to the various interest options
available to the Borrowers pursuant hereto, are subject to change as described
on Pricing Grid I and Pricing Grid II, respectively included in the definition
of "Pricing Grid", as then applicable.
Section 1-11(a) of the Loan Agreement is amended to read as follows:
(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 O/A Loans, then to Base Rate
Loans, and only then to Eurodollar Loans.
Section 1-11(b) of the Loan Agreement is amended to read as follows:
(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 O/A Loans,
then to Base Rate Loans, and only then to Eurodollar Loans.
Article 3 (Definition of "EBITDA") of the Loan Agreement is amended to
read as follows:
"EBITDA":The Borrowers' Consolidated earnings from continuing
operations before interest, taxes, depreciation, and
amortization, each as determined in accordance with GAAP and
before any charge on account of the settlement of the "▇▇▇▇▇▇▇
Litigation" (so-called). Consolidated earnings from continuing
operations shall not, in any event, include any Canadian
Settlement Payments or other amounts received by any Borrower
or any Related Entity on account of, or in respect to, the
Canadian Action),
Article 3 (Definition of "Interest Payment Date") is amended to read as
follows:
"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, except that, to the extent that, by reason of Section
1-6(a)(ii), interest on any part of such Eurodollar Loan
accrues at the O/A Rate, the "Interest Payment Date" for the
difference between interest at the O/A Rate and at the
applicable Eurodollar Rate shall be the same as the Interest
Payment Date for O/A Loans.
(b) Any Base Rate Loan: the first day of each month;
the Termination Date; and the End Date.
(c) Any O/A Loan: the first day of each month; the
Termination Date; and the End Date.
Article 3 (Definition of "Interest Period") is amended to read as
follows:
"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 the O/A Loan: the period commencing
on the date of the making of such O/A Loan and ending (with
respect to all or a portion of the O/A Loan) on that day on
which, and to the extent that, O/A Availability is not needed
to support the unpaid principal balance of the Revolving
Credit Loans.
(c) With respect to each Base Rate Loan: Subject to
Subsection (d), 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.
(d) 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.
Article 3 (Definition of "Pricing Grid") is amended to read as follows:
"Pricing Grid": (I) For any month (a) during any part of which month
"O/A Availability" is greater than zero (whether or not any
O/A Loan is made) or (b) Pricing Grid II is not effective, the
Eurodollar Margin, Base Margin, the O/A Margin, and Line Fee
shall be as follows:
PRICING GRID I
EURODOLLAR MARGIN BASE MARGIN O/A Margin LINE FEE
(Basis Points) (Basis Points) (Basis Points) (Percentage)
275% 100 250 0.375%
(II) For any month during which both (a)"O/A
Availability" is zero and (b) Excess Availability on each day
of the immediately prior month was greater than $5,000,000.00,
the Eurodollar Margin, Base Margin, and Line Fee shall be
determined in accordance with Pricing Grid II.
PRICING GRID II
EURODOLLAR MARGIN BASE MARGIN LINE FEE
(Basis Points) (Basis Points) (Percentage)
225 50 0.375%
Article 3 (Definitions) is amended by the addition of the following
Definitions in alphabetical order therein:
"Allowable Canadian Settlement Deductions": The aggregate of the following:
(a) The Canadian Cost Fund.
(b) Backup withholding, not to exceed 5%, of any
settlement or payment made on account of, or in respect to,
the Canadian Action, other than the payment described in
Subsection (a) of this definition.
(c) Canadian federal and provincial income tax due on
account of any settlement or payment made on account of, or in
respect to, the Canadian Action.
"Canadian Action": The action in the Provincial Court of Ontario, styled ▇▇▇▇▇
Shoe (Canada) Limited and Zellers Inc., et al (Court File No. 91-CQ-6044).
"Canadian Cost Fund": Cdn$800,000.00 paid in trust to ▇▇▇▇▇▇ & Elliot pursuant
to subparagraph 2(k) of the Agreement dated February 12, 1998, between
counsel to the Canadian Action.
"Canadian Settlement Payments": The aggregate of
(a) Cash proceeds (net only of Allowable Canadian
Settlement Deductions) received by, or for the account of any
Borrower or for ▇▇▇▇▇ Canada, on account of the subject matter
of the Canadian Action,
plus
(b) The amount (if any) remaining after the
application of amounts netted against such cash proceeds
(clause (a) of this Definition) for the purposes stated or
referred to in clauses (a), (b), or (c) of the Definition of
"Allowable Canadian Settlement Deduction".
"▇▇▇▇▇ Canada": ▇▇▇▇▇ Shoe (Canada) Limited.
"O/A Availability": That percentage of Acceptable Inventory (net of
the aggregate of all Canadian Settlement Payments) which is
determined in accordance with Section 1-1(b)(ii)(C).
"O/A Loan": The unpaid principal balance of all Revolving Credit Loans which are
then supported by O/A Availability. -
"O/A Margin": The per annum percentage to be added to Base, as determined
pursuant to the Pricing Grid.
"O/A Rate": The aggregate (calculated based on a 360 day year and actual days
elapsed) of Base plus the applicable O/A Margin.
Section 7-2 of the Loan Agreement is amended to read as follows:
7-2. Proceeds and Collection of Accounts and Canadian Settlement Payments
(a) On 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.
(b) The Lead Borrower shall cause all Canadian Settlement
Payments to be wire transferred to the Concentration Account no later than five
(5) Business Days following receipt of any such Canadian Settlement Payment by a
Borrower or by ▇▇▇▇▇ Canada. In the event that, at that time, it appears that
the Canadian Cost Fund is not sufficient to satisfy payment of accrued and
reasonably anticipated costs and expenses associated with the prosecution and
settlement of the Canadian Action, the Lead Borrower, with the consent of the
Administrative Agent (which consent will not be unreasonably withheld or
delayed), may adopt a tax efficient method to assure payment of such costs and
expense.
Section 9-3(a) of the Loan Agreement is amended by the addition of the
following Section:
(v) Any fact, circumstance, or development in the Canadian
Action or any dispute resolution procedure adopted to resolve the
subject matter of the Canadian Action which has more than a de minimus
effect on any Borrower or on ▇▇▇▇▇ Canada.
Section 9-3(b) of the Loan Agreement is amended by the addition of the
following Section:
(vi) Provide the Administrative Agent and its counsel, when
sent or received by any Borrower or by ▇▇▇▇▇ Canada, all nonprivileged
correspondence, written communications, pleadings, and rulings in the
Canadian Action or any dispute resolution procedure adopted to resolve
the subject matter of the Canadian Action, other than correspondence,
written communications, pleadings, and rulings of a de minimus nature.
Section 10-14, to read as follows, is added to the Loan Agreement:
10-14. ▇▇▇▇▇ Canada.
(a) The abandonment, by ▇▇▇▇▇ Canada, of its claims arising
out of the facts and circumstances which formed the basis for the Canadian
Action.
(b) The granting, creation, levying, or imposition of any lien
or Encumbrance on any asset of ▇▇▇▇▇ Canada.
(c) ▇▇▇▇▇ Canada's engaging in any business activities or
incurring of any obligations or indebtedness other than in its prosecution of
the Canadian Action.
EXHIBIT 9-11(a) of the Loan Agreement (Financial Performance
Covenants) is amended by its replacement with EXHIBIT 9-11(a)
annexed to this Second Amendment.
2. CONDITIONS TO EFFECTIVENESS OF AMENDMENT
The within Amendment shall remain effective only if each of the
following conditions is satisfied on or before 5:00PM (Boston Time) on the
deadline date for the subject condition:
(a) Deadline Date: February 19, 1998: Receipt by the Administrative Agent, for
the account of the Lenders, of an Amendment Fee of $125,000.00.
(b) Deadline Date: February 20, 1998:
(i) Creation of a perfected security interest, in
favor of the Administrative Agent (for the ratable benefit of the
Lenders), in all capital stock of ▇▇▇▇▇ Shoe (Canada) Limited, which
security interest secures the Liabilities, (which security interest
shall be created pursuant to a Stock Pledge Agreement substantially
similar to those executed by certain Borrowers on or about May 30,
1997).
(ii) Receipt by the Administrative Agent of a
Certificate, executed by the Lead Borrower's President or its Chief
Financial Officer, respectively confirming that no Suspension Event is
then extant.
(c) Deadline Date: February 25, 1998:
(i) Receipt by the Administrative Agent of a
Certificate setting forth the text of the resolutions adopted by the
Directors of each Borrower authorizing that Borrower's execution of the
within Amendment, and attesting to the authority of the persons who
executed the within Amendment on behalf of that Borrower.
(ii) Receipt by the Administrative Agent of an
opinion of counsel to the Borrowers as to the due execution and
effectiveness of the within Amendment (which opinion is subject only to
the same qualifications as had been included in the opinion delivered
by that counsel at the initial execution of the Loan Agreement).
Each Borrower hereby represents that, at the execution of the within
Agreement, no Suspension Event has occurred.
Except as amended hereby or by the First Amendment to the Loan
Agreement, all terms and provisions of the Loan Agreement shall remain in full
force and effect as executed.
THE AGENTS AND LENDERS
BANKBOSTON RETAIL FINANCE INC. FLEET NATIONAL BANK
(Formerly "GBFC, Inc.")
By/s/▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By /s/▇▇▇▇▇▇▇ ▇▇▇▇▇
Print Name:▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President Title:Assistant Vice President
THE LEAD BORROWER
JBI, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title:Executive Vice President
THE BORROWERS
JBI, INC. ▇▇▇▇▇ SHOE, INC.
By /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President Title:Executive Vice President
JBI HOLDING COMPANY, INC.
By /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Print Name:▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
