EXHIBIT 10.13
SECOND AMENDED AND RESTATED LOAN AGREEMENT
BUILD-A-BEAR WORKSHOP, INC., successor by merger to BUILD-A-BEAR WORKSHOP,
LLC, AND SHIRTS ILLUSTRATED, LLC, jointly and severally (individually and
collectively, the "Borrower"), and U.S. BANK NATIONAL ASSOCIATION, formerly
known as FIRSTAR BANK, NATIONAL ASSOCIATION ("Lender"), hereby agree as follows:
WHEREAS, Lender and Build-A-Bear Workshop, LLC entered into a Loan
Agreement and related loan and security documents dated as of March 1, 2000;
WHEREAS, Lender, Build-A-Bear Workshop, LLC and Build-A-Bear Workshop,
Inc. entered into an assumption and amendment agreement dated as of April 3,
2000, whereby Build-A-Bear Workshop, Inc. assumed all of the obligations of its
predecessor in interest, Build-A-Bear Workshop, LLC;
WHEREAS, Lender and Borrower entered into a First Amended and Restated
Loan Agreement and related loan and security documents dated as of June 1, 2001
(the "Prior Loan Agreement");
WHEREAS, Lender and Borrower now desire to amend and restate the Prior
Loan Agreement by this Second Amended and Restated Loan Agreement;
NOW THEREFORE, in consideration of the mutual promises, conditions, and
covenants set forth herein, the receipt and/or sufficiency of which is hereby
acknowledged, Borrower and Lender agree that the Prior Loan Agreement is hereby
amended and restated in its entirety as follows (the Prior Loan Agreement, as
amended and restated hereby, being referred to as the "Loan Agreement"):
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
herein will have the meanings given those terms in the second to last
section of this Agreement.
2. CREDIT FACILITIES.
2.1 REVOLVING CREDIT LOAN.
2.1.1 TOTAL FACILITY. Lender will make available to Borrower a line
of credit of up to $15,000,000 ("Total Facility"), subject to
the terms and conditions and made upon the representations and
warranties of Borrower set forth in this Agreement. Amounts
outstanding under the line of credit from time to time will be
referred to as the "Revolving Credit Loan". The Revolving
Credit Loan will be represented by the First Amended and
Restated Revolving Credit Note of Borrower of even date
herewith and all amendments, extensions and renewals thereto
and restatements and replacements thereof ("Revolving Credit
Note"). The Revolving Credit Loan will bear interest and will
be payable in the manner set forth in the Revolving Credit
Note, the terms of which are incorporated herein by reference.
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2.1.2 MAXIMUM AMOUNT. The maximum amount that may be outstanding
under the Revolving Credit Note at any particular time may not
exceed the lesser of the following (the "Maximum Amount"): (A)
the Total Facility; or (B) an amount equal to the sum of (a)
up to 75% of Borrower's Eligible Receivables, plus (b) up to
the lesser of: (i) $12,000,000; or (ii) 50% of Borrower's
Eligible Inventory, plus (c) up to 10% of the book value of
Borrower's net fixed assets. Notwithstanding anything to the
contrary contained herein, Lender in its sole discretion may,
but will never be obligated to, increase the amount of the
Total Facility or change or suspend the limits on the Maximum
Amount.
2.1.3 ADVANCES. Advances will be made as specified in the Revolving
Credit Note.
2.1.4 EXTENSIONS. After the initial term of the Revolving Credit
Note, Lender in its sole discretion may extend or renew the
Total Facility and the Revolving Credit Note by accepting from
Borrower one or more new notes, each of which will be deemed
to be the Revolving Credit Note under this Agreement. In no
event will Lender be under any obligation to extend or renew
the Total Facility or the Revolving Credit Note beyond the
initial term thereof.
2.2 ADDITIONAL COSTS.
2.2.1 TAXES, RESERVE REQUIREMENTS, ETC. In the event that any
applicable law, treaty, rule or regulation (whether domestic
or foreign) now or hereafter in effect and whether or not
presently applicable to Lender, or any interpretation or
administration thereof by any governmental authority charged
with the interpretation or administration thereof, or
compliance by Lender with any guideline, request or directive
of any such authority (whether or not having the force of
law), will (a) affect the basis of taxation of payments to
Lender of any amounts payable by Borrower under this Agreement
(other than taxes imposed on the overall net income of Lender,
by the jurisdiction, or by any political subdivision or taxing
authority of any such jurisdiction, in which Lender has its
principal office), (b) impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by
Lender, or (c) impose any other condition with respect to this
Agreement, any Note executed in connection with this Agreement
or any of the Security Documents, and the result of any of the
foregoing is to increase the cost of making, funding or
maintaining any such Note or to reduce the amount of any sum
receivable by Lender thereon, then Borrower will pay to Lender
from time to time, upon request by Lender, additional
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amounts sufficient to compensate Lender for such increased
cost or reduced sum receivable.
2.2.2 CAPITAL ADEQUACY. If either: (a) the introduction of, or any
change in, or in the interpretation of, any United States or
foreign law, rule or regulation or (b) compliance with any
directive, guidelines or request from any central bank or
other United States or foreign governmental authority (whether
or not having the force of law) promulgated, made, or that
becomes effective (in whole or in part) after the date hereof
affects or would affect the amount of capital required or
expected to be maintained by Lender or any corporation
directly or indirectly owning or controlling Lender and Lender
determines that such introduction, change or compliance has or
would have the effect of reducing the rate of return on Lender
capital or on the capital of such owning or controlling
corporation as a consequence of its obligations hereunder or
under any Note or any commitment to lend thereunder to a level
below that which Lender or such owning or controlling
corporation could have achieved but for such introduction,
change or compliance (after taking into account Lender's
policies or the policies of such owning or controlling
corporation, as the case may be, regarding capital adequacy)
by an amount deemed by Lender (in its sole discretion) to be
material, then, from time to time, Borrower will pay to Lender
such additional amount or amounts as will compensate Lender
for such reduction.
2.2.3 CERTIFICATE OF LENDER. A certificate of Lender setting forth
such amount or amounts as will be necessary to compensate
Lender as specified above will be delivered to Borrower and
will be conclusive absent manifest error. Borrower will pay
Lender the amount shown as due on any such certificate within
10 days after its receipt of the same. Failure on the part of
Lender to deliver any such certificate will not constitute a
waiver of Lender's rights to demand compensation for any
particular period or any future period. The protection of this
Section will be available to Lender regardless of any possible
contention of invalidity or inapplicability of the law,
regulation, etc., that results in the claim for compensation
under this Section.
3. COLLATERAL. The Collateral for the repayment of the Obligations will be
that granted pursuant to the Security Documents.
4. REPRESENTATIONS AND WARRANTIES. To induce Lender to enter into this
Agreement and to make the advances herein contemplated, Borrower hereby
represents and warrants as follows:
4.1 ORGANIZATION. Borrower is a Delaware corporation or Missouri limited
liability company duly organized and in good standing under the laws
of the state of its organization, is duly qualified in all
jurisdictions where required by the conduct of
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its business or ownership of its assets except where the failure to
so qualify would not have a material adverse effect on its
condition, financial or otherwise, and has the power and authority
to own and operate its assets and to conduct its business as is now
done.
4.2 LATEST FINANCIALS. Its Current Financial Statements as delivered to
Lender are true, complete and accurate in all material respects and
fairly present its financial condition, assets and liabilities,
whether accrued, absolute, contingent or otherwise and the results
of its operations for the periods specified therein. The annual
financial statements of all business entities included in the
Current Financial Statements have been prepared in accordance with
generally accepted accounting principles applied consistently with
preceding periods subject to any comments and notes contained
therein.
4.3 RECENT ADVERSE CHANGES. Except as specifically disclosed in the
Disclosure Schedule, since the dates of its Current Financial
Statements, Borrower has not suffered any damage, destruction or
loss which has materially and adversely affected its business or
assets and no event or condition of any character has occurred which
has materially and adversely affected its assets, liabilities,
business or financial condition, and Borrower has no knowledge of
any event or condition which may materially and adversely affect its
assets, liabilities, business or financial condition.
4.4 RECENT ACTIONS. Except as disclosed in the Disclosure Schedule,
since the dates of its Current Financial Statements, its business
has been conducted in the ordinary course and Borrower has not: (a)
incurred any obligations or liabilities, whether accrued, absolute,
contingent or otherwise, other than liabilities incurred and
obligations under contracts entered into in the ordinary course of
business and other than liabilities to Lender; (b) discharged or
satisfied any lien or encumbrance or paid any obligations, absolute
or contingent, other than current liabilities, in the ordinary
course of business; (c) mortgaged, pledged or subjected to lien or
any other encumbrance any of its assets, tangible or intangible, or
cancelled any debts or claims except in the ordinary course of
business; or (d) made any loans or otherwise conducted its business
other than in the ordinary course.
4.5 TITLE. Borrower has good and marketable title to the assets
reflected on its Current Financial Statements, free and clear from
all liens and encumbrances except for: (a) current taxes and
assessments not yet due and payable, (b) liens and encumbrances, if
any, reflected or noted on said balance sheet or notes, (c) any
security interests, pledges or mortgages to Lender in connection
with the closing of this Agreement, (d) assets disposed of in the
ordinary course of business, and (e) Permitted Liens.
4.6 LITIGATION, ETC. Except as disclosed on the Disclosure Schedule, as
of the date hereof, there are no actions, suits, proceedings or
governmental investigations
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pending or, to its knowledge, threatened against Borrower which, if
adversely determined, could result in a material and adverse change
in its financial condition, business or assets; and there is no
basis known to Borrower for any such actions, suits, proceedings or
investigations.
4.7 TAXES. Except as to taxes not yet due and payable, Borrower has
filed all returns and reports that are now required to be filed by
Borrower in connection with any federal, state or local tax, duty or
charge levied, assessed or imposed upon Borrower or its property,
including unemployment, social security and similar taxes; and all
of such taxes have been either paid or adequate reserve or other
provision has been made therefor. Borrower has timely filed the
payments of every tax and tax return with the appropriate
governmental authorities, and Borrower has never incurred a penalty
for failure to file or to file in a timely manner. If Borrower has
currently filed an extension for the payment of taxes, Borrower has
accrued sufficient funds for the payment of such tax in accordance
with generally accepted accounting principles.
4.8 AUTHORITY. Borrower has full power and authority to enter into the
transactions provided for in this Agreement. The documents to be
executed by Borrower in connection with this Agreement, when
executed and delivered by Borrower will constitute the legal, valid
and binding obligations of Borrower enforceable in accordance with
their respective terms except as such enforceability may be limited
by applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws in effect from time to time affecting the rights of
creditors generally and except as such enforceability may be subject
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in law or in equity).
4.9 OTHER DEFAULTS. There does not now exist any default or violation by
Borrower of or under any of the terms, conditions or obligations of:
(a) as to corporate entities only, its Articles or Certificate of
Incorporation and Regulations or Bylaws, as applicable, or as to
limited liability companies only, its Articles of Organization and
Operating Agreement; (b) any material indenture, mortgage, deed of
trust, franchise, permit, contract, agreement, or other material
instrument to which Borrower is a party or by which Borrower is
bound; or (c) any law, regulation, ruling, order, injunction,
decree, condition or other requirement applicable to or imposed upon
Borrower by any law or by any governmental authority, court or
agency; and the transactions contemplated by this Agreement and the
Security Documents will not result in any such default or violation.
4.10 STOCK OF BORROWER. If Borrower is not a publicly traded entity, all
of the issued and outstanding securities of Borrower are owned by
the parties listed on the Disclosure Schedule in the amounts
specified by the name of each such shareholder and except as listed
on the Disclosure Schedule, Borrower has no outstanding options,
warrants or contracts to issue additional securities of any kind.
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4.11 STOCK. Except as listed on the Disclosure Schedule, Borrower does
not own more than one percent (1%) of the issued and outstanding
capital stock or other ownership interests of any corporation, firm
or entity.
4.12 SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES. Except as listed on
the Disclosure Schedule, Borrower has no Subsidiaries and is not a
party to any partnership agreement or joint venture agreement.
4.13 LICENSES, ETC. Borrower has obtained any and all licenses, permits,
franchises or other governmental authorizations necessary for the
ownership of its properties and the conduct of its business.
Borrower possesses adequate licenses, patents, patent applications,
copyrights, trademarks, trademark applications, and trade names to
continue to conduct its business as heretofore conducted by it,
without any conflict with the rights of any other person or entity.
4.14 SUFFICIENT CAPITAL. Borrower now has capital sufficient to carry on
its business, all business and transactions in which Borrower is
about to engage, and is now solvent and able to pay its debts as
they mature.
4.15 NAME, PLACES OF BUSINESS AND LOCATION OF COLLATERAL. Except as
otherwise disclosed by written notice to Lender, the address of its
principal place of business and every other place from which
Borrower conducts business is as specified in the Disclosure
Schedule. Except as otherwise disclosed by written notice to Lender,
the Collateral and all books and records pertaining to the
Collateral are and will be located at the addresses indicated on the
Disclosure Schedule. In the five years preceding the date hereof,
Borrower has not conducted business under any name other than its
current name nor maintained any place of business or any assets in
any jurisdiction other than those disclosed on the Disclosure
Schedule.
4.16 ERISA. Borrower and each of its ERISA Affiliates are in compliance
in all material respects with the applicable provisions of ERISA and
the regulations and published interpretations thereunder. Neither
Borrower nor any ERISA Affiliate maintains, sponsors or contributes
to, or has ever maintained, sponsored or contributed to any Plan or
Multiemployer Plan.
4.17 REGULATION U. No part of the proceeds of any Loans will be used to
purchase or carry any margin stock (as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve
System).
4.18 CLOSING MEMO. The information contained in each of the documents
prepared by Borrower, executed by Borrower or provided by a third
party at the request of Borrower listed on the Closing Memo to be
executed or delivered by Borrower or relating to Borrower is
complete and correct in all material respects.
4.19 ENVIRONMENTAL MATTERS.
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4.19.1 Borrower and the activities or operations on any of the real
estate that Borrower owns or occupies (the "Property") are in
compliance in all material respects with all applicable
federal, state and local, statutes, laws, regulations,
ordinances, policies and orders relating to regulation of the
environment, health or safety, or contamination or cleanup of
the environment (collectively "Environmental Laws").
4.19.2 Borrower has obtained all approvals, permits, licenses,
certificates, or satisfactory clearances from all governmental
authorities required under Environmental Laws with respect to
the Property and any activities or operations at the Property.
4.19.3 To the best of Borrower's knowledge, there have not been and
are not now any solid waste, hazardous waste, hazardous or
toxic substances, pollutants, contaminants, or petroleum in,
on, under or about the Property. The use which Borrower makes
and intends to make of the Property will not result in the
deposit or other release of any hazardous or toxic substances,
solid waste, pollutants, contaminants or petroleum on, to or
from the Property.
4.19.4 To the best of Borrower's knowledge, there have been no
complaints, citations, claims, notices, information requests,
orders or directives on environmental grounds or under
Environmental Laws (collectively "Environmental Claims") made
or delivered to, pending or served on, or anticipated by
Borrower or its agents, or of which Borrower or its agents,
are aware or should be aware (i) issued by any governmental
department or agency having jurisdiction over the Property or
the activities or operations at the Property, or (ii) issued
or claimed by any third party relating to the Property or the
activities or operations at the Property.
4.19.5 To the best of Borrower's knowledge, no asbestos-containing
materials are installed, used or incorporated into the
Property, and no asbestos-containing materials have been
disposed of on the Property.
4.19.6 To the best of Borrower's knowledge, no polychlorinated
biphenyls ("PCBs") are located at, on or in the Property in
the form of electrical equipment or devices, including, but
not limited to, transformers, capacitors, fluorescent light
fixtures with ballasts, cooling oils or any other device or
form.
4.19.7 To the best of Borrower's knowledge, there have not been and
are not now any underground storage tanks located within or
about the Property.
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4.19.8 The Property does not contain any wetlands as that term is
defined by relevant governmental agencies under Environmental
Laws and, to the best of Borrower's knowledge, there has been
no filling of wetlands on the Property in violation of
Environmental Laws.
4.19.9 Borrower has provided Lender with copies of all environmental
reports, audits and studies known to Borrower and accessible
to Borrower, whether in Borrower's possession or otherwise,
regarding the Property.
4.20 LABOR MATTERS. There are no material strikes or other material labor
disputes against Borrower pending or, to its knowledge, threatened.
The hours worked and payment made to its employees in all material
respects have not been in violation of the Fair Labor Standards Act
or any other applicable law dealing with such matters. All payments
due from it, or for which any claim may be made against it, on
account of wages and employee health and welfare insurance and other
benefits, have been paid or accrued as a liability on its books. The
consummation of the transactions contemplated herein will not give
rise to a right of termination or right of renegotiation on the part
of any union under any collective bargaining agreement to which
Borrower is a party or by which Borrower is bound.
5. AFFIRMATIVE COVENANTS. From the date of execution of this Agreement until
all Obligations to Lender have been fully paid and this Agreement
terminated, Borrower will:
5.1 BOOKS, RECORDS AND ACCESS TO THE COLLATERAL. Maintain proper books
of account and other records and enter therein complete and accurate
entries and records of all of its transactions and, upon reasonable
advance notice, give representatives of Lender access thereto at
all reasonable times, including permission to examine, copy and make
abstracts from any of such books and records and such other
information as Lender may from time to time reasonably request.
Borrower, upon reasonable advance notice, will give Lender
reasonable access to the Collateral for the purposes of examining
the Collateral and verifying its existence. Borrower will make
available to Lender for examination copies of any reports,
statements or returns which Borrower may make to or file with any
governmental department, bureau or agency, federal or state. In
addition, Borrower will be available to Lender, or cause its
officers or general partners, as applicable, to be available from
time to time upon reasonable notice to discuss the status of the
Loans, its business and any statements, records or documents
furnished or made available to Lender in connection with this
Agreement.
5.2 MONTHLY STATEMENTS. Furnish Lender within 45 days after the end of
each calendar month internally prepared financial statements of
Borrower with respect to such calendar month, which financial
statements will: (a) be in reasonable detail and in form reasonably
satisfactory to Lender; (b) be accompanied by a compliance
certificate and a Borrowing Base Certificate; (c) include a balance
sheet as of the end of such period, profit and loss and surplus
statements for such
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period and a statement of cash flows for such period; (d) include
prior year comparisons; and (e) be on a consolidating and
consolidated basis for Borrower and its Subsidiaries, if any, and
for any entity in which Borrower's financial information is
consolidated in accordance with generally accepted accounting
principles.
5.3 ANNUAL STATEMENTS. Furnish Lender within 120 days after the end of
each fiscal year of Borrower annual audited financial statements
which will: (a) include a balance sheet as of the end of such year,
profit and loss and surplus statements and a statement of cash flows
for such year; (b) be on a consolidated basis with Borrower, its
Subsidiaries, if any, and any entity into which Borrower's financial
information is consolidated in accordance with generally accepted
accounting principles; (c) be accompanied by a compliance
certificate and a Borrowing Base Certificate, and (d) contain the
unqualified opinion of a national independent certified public
accountant and its examination will have been made in accordance
with generally accepted auditing standards and such opinion will
identify any generally accepted accounting principles not
consistently applied from year to year, to the extent such
inconsistency is material to the financing statements.
5.4 AUDITOR'S LETTERS, ETC. Furnish any letter, other than routine
correspondence, directed to Borrower by its auditors or independent
accountants, relating to its financial statements, accounting
procedures, financial condition, tax returns or the like since the
date of the Current Financial Statements to Lender.
5.5 TAXES. Pay and discharge when due all indebtedness and all taxes,
assessments, charges, levies and other liabilities imposed upon it,
its income, profits, property or business, except those which
currently are being contested in good faith by appropriate
proceedings and for which Borrower has set aside adequate reserves
or made other adequate provision with respect thereto, but any such
disputed item will be paid forthwith upon the commencement of any
proceeding for the foreclosure of any lien which may have attached
with respect thereto, unless Lender has received an opinion in form
and substance and from legal counsel acceptable to Borrower that
such proceeding is without merit.
5.6 OPERATIONS. Continue its business operations in substantially the
same manner as at present, except where such operations are rendered
impossible by a fire, strike or other events beyond its control;
keep its real and personal properties in good operating condition
and repair; make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto and comply with the
provisions of all leases to which Borrower is party or under which
Borrower occupies or holds real or personal property so as to
prevent any loss or forfeiture thereof or thereunder.
5.7 INSURANCE. Comply with the insurance requirements of the Security
Documents. In addition to the foregoing, keep its insurable real and
personal property insured
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with responsible insurance companies against loss or damage by fire,
windstorm and other hazards which are commonly insured against in an
extended coverage endorsement in an amount equal to not less than
90% of the insurable value thereof on a replacement cost basis and
also maintain public liability insurance in a reasonable amount. In
addition, the parties delivering to Lender insurance certificates as
listed on the Closing Memo will maintain extended liability
insurance and property insurance of at least the amounts and
coverages listed on such certificates delivered in connection with
the Closing and in a form and with companies reasonably satisfactory
to Lender. Notwithstanding the foregoing, such property insurance
will at all times be in an amount so that such party will not be
deemed a "co-insurer" under any co-insurance provisions of such
policies. All such insurance policies will name Lender as an
additional insured and, where applicable, as lender's loss payee
under a loss payable endorsement satisfactory to Lender. All such
policies will provide that ten (10) days prior written notice must
be given to Lender before such policy is altered or cancelled.
Schedules of all insurance will be submitted to Lender upon request.
Such schedules will contain a description of the risks covered, the
amounts of insurance carried on each risk, the name of the insurer
and the cost of such insurance. Borrower will provide new schedules
to Lender promptly to reflect any change in insurance coverage.
5.8 COMPLIANCE WITH LAWS. Comply with all laws and regulations
applicable to Borrower and to the operation of its business,
including without limitation those relating to environmental and
health matters, and do all things necessary to maintain, renew and
keep in full force and effect all rights, permits, licenses,
certificates, satisfactory clearances and franchises necessary to
enable Borrower to continue its business.
5.9 ENVIRONMENTAL VIOLATIONS.
5.9.1 In the event that any hazardous or toxic substances,
pollutants, contaminants, solid waste or hazardous waste, or
petroleum are released (as that term is defined under
Environmental Laws) at or from the Property, or are otherwise
found to be in, on, under, about or migrating to or from the
Property in violation of Environmental Laws or in excess of
cleanup levels established under Environmental Laws, promptly
will notify Lender in writing and will promptly commence such
action as may be appropriate or required with respect to such
conditions, including, but not limited to, investigation,
removal and cleanup thereof, and deposit with Lender cash
collateral, letter of credit, bond or other assurance of
performance in form, substance and amount reasonably
acceptable to Lender to cover the cost of such action. Upon
request, Borrower will provide Lender with updates on the
status of Borrower's actions to resolve or otherwise address
such conditions, until such time as such conditions are fully
resolved to the satisfaction of Lender, as determined by
Lender in the exercise of its reasonable discretion.
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5.9.2 In the event Borrower receives notice of an Environmental
Claim from any governmental agency or other third party
alleging a violation of or liability under Environmental Laws
with respect to the Property or Borrower's activities or
operations at the Property, promptly notify Lender in writing
and will commence such action as may be appropriate or
required with respect to such Environmental Claim. Upon
request, Borrower will provide Lender with updates on the
status of Borrower's actions to resolve or otherwise address
such Environmental Claim, until such claim has been fully
resolved to the satisfaction of Lender, as determined by
Lender in the exercise of its reasonable discretion.
5.10 ENVIRONMENTAL AUDIT AND OTHER ENVIRONMENTAL INFORMATION. Provide
copies of all environmental reports, audits, and studies obtained by
Borrower from work conducted by Borrower or any other person or
entity on the Property or property adjacent thereto as soon as such
reports, audits and studies become available to it. If the
submissions are considered inadequate or insufficient in order for
Lender to adequately consider the environmental condition of the
Property or the status of Borrower's environmental compliance or if
the submissions are in error, then Lender may require Borrower, at
Borrower's sole expense, to engage an independent engineering or
consulting firm acceptable to Lender to conduct a complete
environmental report, study, or audit in as timely as fashion as is
reasonably possible. In addition, Borrower will provide Lender with
information related to remedial action at its Property or adjacent
to its Property as soon as such information becomes available to it.
5.11 BUSINESS NAMES AND LOCATIONS. Promptly notify Lender of: (a) any
change in the name under which Borrower conducts its business; (b)
any change in the location of the Collateral or Borrower's principal
place of business; and (c) the opening or closing of any place from
which Borrower conducts business.
5.12 ACQUISITION OF ASSETS. Not acquire any assets, real or personal,
unless such assets are automatically covered by the existing
Security Documents or within 10 days of such acquisition, Borrower
delivers to Lender a mortgage, pledge or security agreement to
encumber such asset in favor of Lender.
5.13 ACCOUNTS. So long as any of the Loans are in effect, maintain Lender
as Borrower's primary bank of account and Borrower will maintain all
operating accounts and all store accounts (in areas where a branch
location of Lender or any of Lender's Affiliates is accessible to
Borrower) with Lender or any of Lender's Affiliates.
5.14 ERISA COMPLIANCE. Comply in all material respects with the
applicable provisions of ERISA and furnish to Lender: (i) as soon as
possible, and in any event within 30 days after any officer of
Borrower or any ERISA Affiliate knows or has reason to know that any
Reportable Event for which the thirty (30) day
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notice requirement has not been waived pursuant to Section 4043 of
ERISA and the regulations promulgated thereunder has occurred that
alone or together with any other Reportable Event could reasonably
be expected to result in liability of Borrower to the PBGC in an
aggregate amount exceeding $25,000, a statement of a financial
officer setting forth details as to such Reportable Event and the
action that Borrower proposes to take with respect thereto, together
with a copy of the notice of such Reportable Event, if any, given to
the PBGC, (ii) promptly after receipt thereof, a copy of any notice
Borrower or any ERISA Affiliate may receive from the PBGC relating
to the intention of the PBGC to terminate any Plan or Plans (other
than a Plan maintained by an ERISA Affiliate which is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Code
Section 414) or to appoint a trustee to administer any such Plan,
(iii) within 10 days after the due date for filing with the PBGC
pursuant to Section 412(n) of the Code of a notice of failure to
make a required installment or other payment with respect to a Plan,
a statement of its financial officer setting forth details as to
such failure and the action that Borrower proposes to take with
respect thereto together with a copy of any such notice given to the
PBGC and (iv) promptly and in any event within 30 days after receipt
thereof by Borrower or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by Borrower or
any ERISA Affiliate concerning (A) the imposition of Withdrawal
Liability in an amount exceeding $25,000, or (B) a determination
that a Multiemployer Plan is, or is expected to be, terminated or in
reorganization, both within the meaning of Title IV of ERISA, and
which, in each case, is expected to result in an increase in annual
contributions of Borrower or an ERISA Affiliate to such
Multiemployer Plan in an amount exceeding $25,000.
5.15 NOTICE OF DEFAULT. Notify Lender in writing within five days after
Borrower knows or has reason to know of the occurrence of an Event
of Default.
5.16 SALE AND LEASEBACK. Except to the extent related to Indebtedness
permitted by Section 6.1, not directly or indirectly enter into any
arrangement to sell or transfer all or any part of its assets then
owned by Borrower and thereupon or within one year thereafter rent
or lease any of the assets so sold or transferred.
5.17 LINE OF BUSINESS. Not enter into any lines or areas of business
substantially different from the business or activities in which
Borrower is presently engaged.
5.18 BUSINESS OPPORTUNITIES. Not divert (or permit anyone to divert) any
of its business or opportunities to any other corporate or business
entity in which Borrower or its Affiliates may hold a direct or
indirect interest.
5.19 WAIVERS. Not waive any right or rights of substantial value which,
singly or in the aggregate, is or are material to its condition
(financial or other), properties or business.
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5.20 BORROWING BASE REPORTS. Upon the request from time to time of Lender
but in no event less often than monthly furnish Lender a Borrowing
Base Certificate.
5.21 LANDLORD LIEN WAIVERS. Use its commercially reasonable efforts to
promptly deliver to Lender, in form and substance satisfactory to
Lender, landlord lien waivers from the existing and future landlords
of Borrower.
6. NEGATIVE COVENANTS. From the date of execution of this Agreement until all
of the Obligations have been fully paid, Borrower will not without
Lender's prior written consent:
6.1 DEBT. Incur any Indebtedness other than: (a) the Loans and any
subsequent Indebtedness to Lender; (b) open account obligations
incurred in the ordinary course of business having maturities of
less than 150 days; (c) lease payments for real property; (d) lease
and rental payments for personal property whose aggregate annual
rental payments do not exceed $1,000,000 during calendar year 2002
and $1,300,000 through May, 2003; (e) Indebtedness secured by
Permitted Liens; and (f) existing unsecured Indebtedness to
Enterprise Bank in an amount not to exceed $525,000.
6.2 LIENS. Incur, create, assume, become or be liable in any way, or
suffer to exist any mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets, now or
hereafter owned, other than Permitted Liens.
6.3 GUARANTEES. Guarantee, endorse or become contingently liable for the
obligations of any person, firm or corporation, except in connection
with the endorsement and deposit of checks in the ordinary course of
business for collection.
6.4 MINIMUM TANGIBLE NET WORTH. Permit the Tangible Net Worth of
Borrower on a consolidated basis to be less than the following: (a)
$37,000,000 as of December 29, 2001 through December 27, 2002; and
(b) $39,000,000 as of December 28, 2002 and thereafter. All such
amounts shall be increased by the amount of all equity contributions
made to the Borrower from time to time.
6.5 FUNDED DEBT RATIO. Permit the ratio of: (i) Funded Debt of Borrower
to (ii) EBTIDA of Borrower calculated on a rolling historical
12-month basis, all on a consolidated basis to be greater than 2.00
to 1.00 at any time.
6.6 DIVIDENDS. Declare or pay any dividends of any kind other than
dividends payable solely in shares of its capital stock (including
without limitation debt repayment, payment for goods and services).
6.7 ADDITIONAL SECURITIES. Issue any additional securities of any
description or issue warrants, options or rights to purchase its
securities (collectively, "Additional Securities"), provided,
however, that so long as no Default or Event of Default
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has occurred and is continuing, the Borrower shall be permitted to
issue Additional Securities to the extent that any such issuance
(individually or in the aggregate) does not result in a transfer of
Control of the Borrower from its current shareholders as of the date
hereof. For purposes of this Section, "Control of the Borrower"
shall mean the power, direct or indirect: (a) to vote 50% or more of
the securities having ordinary voting power for the election of
directors of Borrower; or (b) to direct or cause the direction of
the management and policies of Borrower by contract or otherwise.
6.8 REDEMPTIONS. Purchase, retire, redeem or otherwise acquire for
value, directly or indirectly, any shares of its capital stock now
or hereafter outstanding.
6.9 INVESTMENTS. Except as disclosed on the Disclosure Schedule,
purchase or hold beneficially any stock, other securities or
evidences of indebtedness of, or make any investment or acquire any
interest whatsoever in, any other person, firm or corporation other
than (i) obligations of the United States Treasury and agencies
thereof, (ii) commercial paper maturing within one-year and rated
"A-1/P-2" and better, or (iii) Certificates of Deposit of the
Lender.
6.10 MERGER, ACQUISITION OR SALE OF ASSETS. Except as disclosed on the
Disclosure Schedule, merge or consolidate with or into any other
entity or acquire all or substantially all the assets of any person,
firm, partnership, joint venture, or corporation, or sell, lease or
otherwise dispose of any of its assets except for dispositions in
the ordinary course of business. Store closings from time to time
(not in excess of ten during any 12-month period) are considered in
the ordinary course of business
6.11 ADVANCES AND LOANS. Except as set forth in the Disclosure Schedule,
lend money, give credit or make advances (other than ordinary,
reasonable advances not to exceed $550,000 in the aggregate at any
time) to any person, firm, joint venture or corporation, including,
without limitation, Affiliates.
6.12 SUBSIDIARIES. Except as disclosed on the Disclosure Schedule,
acquire any Subsidiaries, create any Subsidiaries or enter into any
partnership or joint venture agreements.
6.13 TRANSACTIONS WITH AFFILIATES. Enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service, with any Affiliate unless
such transaction is otherwise permitted under this Agreement, is in
the ordinary course of its business, and is on reasonable terms no
less favorable to Borrower than Borrower would obtain in a
comparable arm's length transaction with a non-Affiliate.
6.14 POST CLOSING MATTERS. Fail to deliver to Lender in form and
substance satisfactory to Lender the documents, if any, noted as
post closing items on the Closing Memo on or before the date
specified in the Closing Memo.
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7. EVENTS OF DEFAULT. Upon the occurrence of any of the following events with
respect to Borrower:
7.1 NON-PAYMENT. The non-payment of any principal amount of any Note
when due, whether by acceleration or otherwise, or the nonpayment of
any interest upon any Note or any other amount due Lender pursuant
to this Agreement within 5 days of when the same is due;
7.2 COVENANTS. The default in the due observance of any covenant or
agreement to be kept or performed by it under the terms of this
Agreement or any of the Security Documents and the failure or
inability of it to cure such default within 30 days of the
occurrence thereof; provided that such 30 day grace period will not
apply to: (a) any default which in Lender's good faith determination
is incapable of cure, (b) any default that has previously occurred
more than 3 times, (c) any default in any negative covenants, or (d)
any failure to maintain insurance or to permit inspection of the
Collateral or of its books and records.
7.3 REPRESENTATIONS AND WARRANTIES. Any representation or warranty made
by it in this Agreement, in any of the Security Documents or in any
report, certificate, opinion, financial statement or other document
furnished in connection with the Obligations is false or erroneous
in any material respect or any material breach thereof has been
committed;
7.4 OBLIGATIONS. Except as provided in Sections 7.1, 7.2 and 7.3 above,
the default by it in the due observance of any covenant, negative
covenant or agreement to be kept or performed by it under the terms
of this Agreement, the Security Documents or any document now or
in the future executed in connection with any of the Obligations and
the lapse of any applicable cure period provided therein with
respect to such default, or, if so defined therein, the occurrence
of any Event of Default or Default (as such terms are defined
therein);
7.5 BANKRUPTCY, ETC. It: (a) dissolves or is the subject of any
dissolution, a winding up or liquidation; (b) makes
a general assignment for the benefit of creditors; or (c) files or
has filed against it a petition in bankruptcy, for a reorganization
or an arrangement, or for a receiver, trustee or similar creditors'
representative for its property or assets or any part thereof, or
any other proceeding under any federal or state insolvency law, and
if filed against it, the same has not been dismissed or discharged
within 60 days thereof;
7.6 EXECUTION, ATTACHMENT. ETC. The commencement of any foreclosure
proceedings, proceedings in aid of execution, attachment actions,
levies against, or the filing by any taxing authority of a lien
against it or against any of the Collateral, except those liens
being diligently contested in good faith which in the aggregate do
not exceed $100,000;
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7.7 LOSS, THEFT OR SUBSTANTIAL DAMAGE TO THE COLLATERAL. In addition to
the rights of Lender to deal with proceeds of insurance as provided
in the Security Documents, the loss, theft or substantial damage to
the Collateral if the result of such occurrence (singly or in the
aggregate) is the failure or inability to resume substantially
normal operation of its business within 30 days of the date of such
occurrence;
7.8 JUDGMENTS. Unless in the opinion of Lender it is adequately insured
or bonded, the entry of a final judgment for the payment of money
involving more than $100,000 against it and the failure by it to
discharge the same, or cause it to be discharged, within 10 days
from the date of the order, decree or process under which or
pursuant to which such judgment was entered, or to secure a stay of
execution pending appeal of such judgment; the entry of one or more
final monetary or non-monetary judgments or order which, singly or
in the aggregate, does or could reasonably be expected to: (a) cause
a material adverse change in the value of the Collateral or its
condition (financial or otherwise), operations, properties or
prospects, (b) have a material adverse effect on its ability to
perform its obligations under this Agreement or the Security
Documents, or (c) have a material adverse effect on the rights and
remedies of Lender under this Agreement, any Note or any Security
Document;
7.9 IMPAIRMENT OF SECURITY. (a) The validity or effectiveness of any
Security Document or its transfer, grant, pledge, mortgage or
assignment by the party executing it in favor of Lender is impaired;
(b) any party, other than Lender, to a Security Document asserts
that any Security Document is not a legal, valid and binding
obligation of it enforceable in accordance with its terms; (c) the
security interest or lien purporting to be created by any of the
Security Documents ceases to be or is asserted by any party to any
Security Document (other than Lender) not to be a valid, perfected
lien subject to no liens other than liens not prohibited by this
Agreement or any Security Document; or (d) any Security Document is
amended, subordinated, terminated or discharged, or any person is
released from any of its covenants or obligations except to the
extent that Lender expressly consents in writing thereto;
7.10 OTHER INDEBTEDNESS OF LENDER'S AFFILIATES. A default with respect to
any evidence of Indebtedness by it (other than to Lender pursuant to
this Agreement) to any of Lender's Affiliates, if the effect of such
default is to accelerate the maturity of such Indebtedness or to
permit the holder thereof to cause such Indebtedness to become due
prior to the stated maturity thereof, or if any Indebtedness of it
for borrowed money (other than to Lender pursuant to this Loan
Agreement) is not paid when due and payable, whether at the due date
thereof or a date fixed for prepayment or otherwise (after the
expiration of any applicable grace period;
7.11 OTHER INDEBTEDNESS. A default with respect to any evidence of
Indebtedness in excess of $100,000 by it (other than to Lender or
Lender's Affiliate pursuant to
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this Agreement), if the effect of such default is to accelerate the
maturity of such Indebtedness or to permit the holder thereof to
cause such Indebtedness to become due prior to the stated maturity
thereof, or if any Indebtedness of it in excess of $100,000 for
borrowed money (other than to Lender or Lender's Affiliate pursuant
to this Loan Agreement) is not paid when due and payable, whether at
the due date thereof or a date fixed for prepayment or otherwise
(after the expiration of any applicable grace period);
7.12 LEASES. Any declared material default, that is not cured within any
applicable cure period, existing under more than two (2) of
Borrower's real property leases at any one time;
then immediately upon the occurrence of any of the events described in Section
7.5 and at the option of the Lender upon the occurrence of any other Event of
Default, the Loans, all Notes and all other Obligations immediately will mature
and become due and payable without presentment, demand, protest or notice of any
kind which are hereby expressly waived. After the occurrence of any Event of
Default, Lender is authorized without notice to anyone to offset and apply to
all or any part of the Obligations all moneys, credits and other property of any
nature whatsoever of Borrower now or at any time hereafter in the possession of,
in transit to or from, under the control or custody of, or on deposit with
(whether held by Borrower individually or jointly with another party), Lender or
any of Lender's Affiliates. The rights and remedies of Lender upon the
occurrence of any Event of Default will include but not be limited to all rights
and remedies provided in the Security Documents and all rights and remedies
provided under applicable law. In furtherance but not in limitation of the
foregoing, upon the occurrence of an Event of Default, Lender may refuse to make
any further advances under any Note included in the Obligations. Borrower waives
any requirement of marshalling of the assets covered by the Security Documents
upon the occurrence of any Event of Default. Upon or during the occurrence of an
Event of Default, Lender may request the appointment of a receiver of the
Collateral. Such appointment may be made without notice, and without regard to
(i) the solvency or insolvency, at the time of application for such receiver, of
the person or persons, if any, liable for the payment of the Obligations; and
(ii) the value of the Collateral at such time. Such receiver will have the power
to take possession, control and care of the Collateral and to collect all
accounts resulting therefrom. Notwithstanding the appointment of any receiver,
trustee, or other custodian, Lender will be entitled to the possession and
control of any cash, or other instruments at the time held by, or payable or
deliverable under the terms of this Loan Agreement or any Security Documents to
Lender.
8. CONDITIONS PRECEDENT.
8.1 AT CLOSING. Lender's obligation to make any of the Loans is
conditioned upon the receipt by Lender of all documents in form and
substance acceptable to Lender listed on the Closing Memo, except
for those specifically listed thereon as post-closing items.
8.2 ADDITIONAL ADVANCES. Lender's obligations to make any Loan and/or
any advance under any Note on any date in the future (to the extent
that there are
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funds remaining to be disbursed hereunder or under any Note) are
subject to the conditions precedent that:
8.2.1 NO DEFAULTS. There does not exist any Event of Default, nor
any event which upon notice or lapse of time or both would
constitute an Event of Default.
8.2.2 ACCURACY. The representations and warranties contained in this
Agreement, the Security Documents, and in each document listed
on the Closing Memo prepared by Borrower, executed by Borrower
or provided by a third party at the request of Borrower, and
in any document delivered in connection therewith will be true
and accurate on and as of such date, except as such warranties
and representations may be affected by: (a) this Agreement or
transactions contemplated thereby, and (b) events occurring
after the Closing Date as to those representations and
warranties relating to the Current Financial Statements.
8.2.3 OTHER DOCUMENTS. Lender will have received such other
documents, instruments, opinions, certificates, or items of
information which it may have reasonably required in
connection with the transactions provided for in this
Agreement.
8.3 BORROWING REPRESENTATIONS. Each borrowing by Borrower hereunder will
constitute a representation and warranty by Borrower as of the date
of such borrowing that the conditions set forth in Section 8.2 have
been satisfied.
9. CLOSING EXPENSES. Borrower will pay Lender at closing a reasonable sum for
expenses and Attorneys Fees incurred by Lender in connection with the
preparation, execution and delivery of this Agreement and the attendant
documents and the consummation of the transactions contemplated hereby
together with all: (a) recording fees and taxes; (b) survey, appraisal and
environmental report charges; and (c) title search and title insurance
charges, including any stamp or documentary taxes, charges or similar
levies which arise from the payment made hereunder or from the execution,
delivery or registration of any Security Document or this Agreement. If
Borrower fails to pay such fees, Lender is entitled to disburse such sums
as an advance under any Note.
10. POST-CLOSING EXPENSES. To the extent that Lender incurs any costs or
expenses in protecting or enforcing its rights in the Collateral or
observing or performing any of the conditions or obligations of Borrower
or any Guarantor thereunder, including but not limited to reasonable
Attorneys' Fees in connection with litigation, preparation of amendments
or waivers, present or future stamp or documentary taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of any Security Document or this
Agreement, such costs and expenses will be due on demand, will be included
in the Obligations and will bear interest at the Default Rate if not paid
within fifteen (15) days of becoming due.
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11. REPRESENTATIONS AND WARRANTIES TO SURVIVE. All representations,
warranties, covenants, indemnities and agreements made by Borrower herein
and in the Security Documents will survive the execution and delivery of
this Agreement, the Security Documents and the issuance of any Notes.
12. ENVIRONMENTAL INDEMNIFICATION. Lender will not be deemed to assume any
liability or obligation for loss, damage, fines, penalties, claims or
duties to clean-up or dispose of wastes or materials on or relating to the
Property merely by conducting any inspections of the Property or by
obtaining title to the Property by foreclosure, deed in lieu of
foreclosure or otherwise. Borrower, including its successors and assigns,
agrees to remain fully liable and will indemnify, defend and hold harmless
Lender, its directors, officers, employees, agents, contractors,
subcontractors, licensees, invitees, successors and assigns, from and
against any claims, demands, judgments, damages, actions, causes of
action, injuries, administrative orders, liabilities, costs, expenses,
clean-up costs, waste disposal costs, litigation costs, fines, penalties,
damages and other related liabilities arising from (i) the failure of
Borrower to perform any obligation herein required to be performed by
Borrower, (ii) the removal or other remediation of hazardous or toxic
substances, hazardous wastes, pollutants or contaminants, solid waste or
petroleum at or from the Property, (iii) any act or omission, event or
circumstance existing or occurring resulting from or in connection with
the ownership, construction, occupancy, operation, use and/or maintenance
of the Property, (iv) any and all claims or proceedings (whether brought
by private party or governmental agency) for bodily injury, property
damage, abatement or remediation, environmental damage or impairment and
any other injury or damage resulting from or relating to any hazardous or
toxic substances, hazardous waste, pollutants, contaminants, solid waste,
or petroleum located upon or migrating into, from or through the Property
(whether or not any or all of the foregoing was caused by the Borrower or
its tenant or subtenant, or a prior owner of the Property or its tenant or
subtenant, or any third party and whether or not the alleged liability is
attributable to the handling, storage, generation, transportation or
disposal of such material or the mere presence of such material on the
Property), and (v) Borrower's breach of any representation or warranty
contained in this Agreement. Without limitation, the foregoing indemnities
will apply to Lender with respect to claims, demands, losses, damages
(including consequential damages), liabilities, causes of action,
judgements, penalties, costs and expenses (including reasonable attorneys'
fees and court costs) which in whole or in part are caused by or arise out
of the negligence of Lender. Such indemnity, however, will not apply to
Lender to the extent the subject of the indemnification is caused by or
arises out of the gross negligence or willful misconduct of Lender. All
environmental representations, warranties, covenants, and indemnities will
continue indefinitely and may not be cancelled or terminated except by a
writing signed by Lender specifically referring to this Section.
Notwithstanding anything contained to the contrary in any Note, the Loan
Agreement, or other Security Documents evidencing or securing the
Obligations, the provisions of this Section will survive the termination
or expiration of the Obligations, the full repayment of the Obligations,
or the acquiring of title by Lender or its successors and assigns by
foreclosure, deed in lieu of foreclosure or otherwise, and will be fully
enforceable against Borrower and its successors and assigns. The
provisions of this Section will constitute a separate
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undertaking by Borrower and will be an inducement to Lender in extending
the Loan evidencing the Obligations to Borrower. The provisions of this
Section will not be subject to any anti-deficiency or similar laws.
13. DEFINITIONS. For purposes hereof;
13.1 Each accounting term not defined or modified herein will have the
meaning given to it under generally accepted accounting
principles in effect on the Closing Date.
13.2 "Affiliate" will mean any person, partnership, joint venture,
company or business entity under common control or having similar
equity holders owning at least ten percent (10%) thereof, whether
such common control is direct or indirect. All of Person's direct
or indirect parent corporations, partners, Subsidiaries, and the
officers, shareholders, members, directors and partners of any of
the foregoing and persons related by blood or marriage to any of
the foregoing will be deemed to be a Person's Affiliates for
purposes of this Agreement.
13.3 "Attorneys Fees" will mean the reasonable value of the services
(and all costs and expenses related thereto) of the attorneys
(and all paralegals and other staff employed by such attorneys)
employed by Lender from time to time to: (i) take any action in
or with respect to any suit or proceedings (bankruptcy or
otherwise) relating to the Collateral or this Agreement; (ii)
protect, collect, lease or sell, any of the Collateral; (iii)
attempt to enforce any lien on any of the Collateral or to give
any advice with respect to such enforcement; (iv) enforce any of
Lender's rights to collect any of the Obligations; (v) give
Lender advice with respect to this Agreement, including but not
limited to advice in connection with any default, workout or
bankruptcy; (vi) prepare any amendments, restatements, amendments
or waivers to this Agreement or any of the documents executed in
connection with any of the Obligations.
13.4 "Borrowing Base Certificate" will mean the Borrowing Base
Certificate in the form delivered by Lender to Borrower in
connection with the Closing of this Agreement and all amendments
thereto and revisions thereof required by Lender.
13.5 "Business Day" will mean any day excluding Saturday, Sunday and
any other day on which banks are required or authorized to close
in Ohio.
13.6 "Closing" will mean the execution and delivery of the documents
listed on the Closing Memo.
13.7 "Closing Date" will mean the date on which this Agreement is
executed.
13.8 "Closing Memo" will mean the Closing Memorandum between Borrower
and Lender in connection with the transactions represented by
this Agreement.
13.9 "Code" will mean the Internal Revenue Code of 1986, as amended
from time to time.
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13.10 "Collateral" will mean any property, real or personal,
tangible or intangible, now or in the future securing the
Obligations, including but not limited to the property covered
by the Security Documents.
13.11 Intentionally Deleted
13.12 "Current Financial Statements" will mean the following
financial statements: (a) Borrower's audited balance sheet
dated December 31, 2000 and statement of profit, loss and
surplus for the fiscal year ended December 31, 2000; and (b)
Borrower's internally prepared balance sheet dated October 31,
2001 and statement of profit, loss and surplus for the period
January 1, 2001 through October 31, 2001. For the purposes of
any future date on which the representations and warranties
contained in Section 4 hereof are deemed to be remade, the
most current financial statements, tax returns or other
documents with respect to Borrower delivered to Lender
pursuant to Section 5 above will be deemed the "Current
Financial Statements".
13.13 "Default Rate" will mean 4% per annum plus the highest rate of
interest that would otherwise be in effect under any Note but
not more than the highest rate permitted by applicable law.
13.14 "Default" will mean any event or condition that with the
passage of time or giving of notice, or both, would constitute
an Event of Default.
13.15 "Disclosure Schedule" will mean collectively, the Disclosure
Schedule of Borrower dated March 1, 2000 and the first and
second supplements thereto, now or previously delivered by the
Borrower to the Lender in connection with the Loan.
13.16 "EBITDA" will mean the sum of: (i) net income (or loss), as
determined in accordance with generally accepted accounting
principles; (ii) depreciation and amortization; (iii)
interest; (iv) taxes. Other non-cash charges and extraordinary
items including, but not limited to, gain or loss from the
sale or disposition of capital assets, will be included or
excluded at the sole discretion of the Lender.
13.17 "Eligible Receivables" will mean those amounts set forth on
Borrower's Current Financial Statements as "Tenant
Allowances", less any amounts of such "Tenant Allowances"
deemed by Lender, in its sole credit judgment, to be
ineligible.
13.18 "Eligible Inventory" will mean Inventory which is not, in the
good faith opinion of Lender, in accordance with its customary
business practices, obsolete or unmerchantable and which
Lender, in its sole credit judgment, deems Eligible Inventory,
based on such credit and collateral considerations as Lender
may deem appropriate. Eligible Inventory will be valued at the
lower of cost or market value.
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13.19 "ERISA Affiliate" will mean any trade or business (whether or
not incorporated) that is a member of a group of which
Borrower is a member and which is treated as a single employer
under Section 414 of the Code.
13.20 "ERISA" will mean the Employee Retirement Income Security Act
of 1974, or any successor statute, as amended from time to
time.
13.21 "Event of Default" will mean any of the events listed in
Section 7.
13.22 "Funded Debt" will mean all Indebtedness to financial
institutions or commercial lenders.
13.23 "Hazardous Wastes", "hazardous substances" and "pollutants or
contaminants" will mean any substances, waste, pollutant or
contaminant now or hereafter included with any respective
terms under any now existing or hereinafter enacted or amended
federal, state or local statute, ordinance, code or
regulation, including but not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq. ("CERCLA").
13.24 "Indebtedness" will mean, without duplication: (i) all
obligations (including capitalized lease obligations) which in
accordance with generally accepted accounting principles would
be shown on a balance sheet as a liability; (ii) all
obligations for borrowed money or for the deferred purchase
price of property or services; and (iii) all guarantees,
reimbursement, payment or similar obligations, absolute,
contingent or otherwise, under acceptance, letter of credit or
similar facilities.
13.25 "Lender's Affiliate" will mean any person, partnership, joint
venture, company or business entity under common control or
having similar equity holders owning at least ten percent
(10%) thereof with Lender, whether such common control is
direct or indirect. All of Lender's direct or indirect parent
corporations, sister corporations, and subsidiaries will be
deemed to be a Lender's Affiliate for purposes of this
Agreement.
13.26 "Loan(s)" will mean any and all advances of funds under this
Agreement or any of the Notes.
13.27 "Multiemployer Plan" will mean a multiemployer plan as defined
in Section 4001(a)(3) of ERISA to which Borrower or any ERISA
Affiliate (other than one considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Code Section 414) is
making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an
obligation to make contributions.
13.28 "Note(s)" will mean any note, now or in the future, between
Borrower and Lender, and will include any amendments made
thereto and restatements thereof, extensions and replacements.
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13.29 "Obligations" will mean and include all loans, advances,
debts, liabilities, obligations, covenants and duties owing to
Lender or any of Lender's Affiliates, from Borrower of any
kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, including but not
limited to those arising under: (i) this Agreement, (ii) the
Notes, (iii) under any other agreement, instrument or
document, whether or not for the payment of money, whether
arising by reason of an extension of credit, opening of a
letter of credit, loan, guaranty, indemnification or in any
other manner, whether direct or indirect (including those
acquired by assignment, participation, purchase, negotiation,
discount or otherwise), absolute or contingent, joint or
several, due or to become due, now existing or hereafter
arising and whether or not contemplated by Borrower or Lender
or any Lender's Affiliate on the Closing Date; and as to all
of the foregoing, including any amendments, modifications, or
superceding documents to each of the foregoing; and all
charges, expenses, fees, including but not limited to
reasonable Attorneys' Fees, and any other sums chargeable to
Borrower under any of the Obligations.
13.30 "PBGC" will mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
13.31 "Permitted Liens" will mean:
13.31.1 liens securing the payment of taxes, either not yet
due or the validity of which is being contested in
good faith by appropriate proceedings, and as to
which Borrower has set aside on its books adequate
reserves to the extent required by generally accepted
accounting principles;
13.31.2 deposits under workers' compensation, unemployment
insurance and social security laws, or to secure the
performance of bids, tenders, contracts (other than
for the repayment of borrowed money) or leases, or to
secure statutory obligations or surety or appeal
bonds, or to secure indemnity, performance or other
similar bonds in the ordinary course of business;
13.31.3 liens imposed by law, such as carrier's,
warehousemen's or mechanics' liens, incurred by
Borrower in good faith in the ordinary course of
business, and liens arising out of a judgment or
award against Borrower with respect to which Borrower
will currently be prosecuting an appeal, a stay of
execution pending such appeal having been secured;
13.31.4 liens in favor of Lender;
13.31.5 reservations, exceptions, encroachments and other
similar title exceptions or encumbrances affecting
real properties, provided such do not materially
detract from the use or value thereof as used by the
owner thereof;
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13.31.6 attachment, judgment, and similar liens provided that
execution is effectively stayed pending a good faith
contest;
13.31.7 liens by a bank on deposit accounts of Borrower that
arise by operation of law, and that are otherwise in
compliance with the terms of this Agreement;
13.31.8 purchase money security interests limited to the
asset financed by Borrower and securing Indebtedness
not in excess of $100,000 in the aggregate at any
time; and
13.31.9 security interests arising as a result of lease
transactions permitted by Section 6.1(d) and limited
to the asset leased by Borrower.
13.32 "Person" will include an individual, a corporation, a limited
liability company, an association, a partnership, a trust or
estate, a joint stock company, an unincorporated organization,
a joint venture, a government (foreign or domestic), any
agency or political subdivisions thereof, or any other entity.
13.33 "Plan" will mean any pension plan subject to the provisions of
Title IV of ERISA or Section 412 of the Code and which is
maintained for employees of Borrower or any ERISA Affiliate.
13.34 "Prime Rate" will mean the rate per annum established by
Lender from time to time based on its consideration of various
factors, including money market, business and competitive
factors, and it is not necessarily Lender's most favored
interest rate. Subject to any maximum or minimum interest rate
limitations specified herein or by applicable law, if and when
such Prime Rate changes, then in each such event, the rate of
interest payable under this Agreement, any Note, the Security
Documents or any other document evidencing the Obligations
that is tied to the Prime Rate will change automatically
without notice effective the date of such changes.
13.35 "Reportable Event" will mean any reportable event as defined
in Section 4043(b) of ERISA or the regulations issued
thereunder with respect to a Plan (other than a Plan
maintained by an ERISA Affiliate which is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Code
Section 414).
13.36 "Security Documents" will mean this agreement and the
agreements, pledges, mortgages, guarantees, or other documents
delivered by Borrower, any Guarantor or any other person or
entity to Lender or Lender's Affiliate previously, now or in
the future to encumber the Collateral in favor of Lender or
Lender's Affiliate, including but not limited to those listed
on the Closing Memo, and all amendments thereto and
restatements thereof.
13.37 "Subsidiaries" means a corporation of which shares of stock
having ordinary voting power (other than stock having such
power only by reason of the
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happening of a contingency) to elect a majority of the Board
of Directors or other managers of such corporation are at the
time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more
intermediaries, or both, by Borrower.
13.38 "Tangible Net Worth" will mean the total of book net worth
(including the sum of common stock, preferred stock, paid-in
capital, subordinated debt and earned surplus) less
capitalized organizational or closing costs, treasury stock,
deferred leasing and financing costs, goodwill, and any other
assets generally considered as intangible.
13.39 "Withdrawal Liability" will mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
13.40 All other terms contained in this Agreement and not otherwise
defined herein will, unless the context indicates otherwise,
have the meanings provided for by the Uniform Commercial Code
of the State of Ohio to the extent the same are defined
therein.
14. GENERAL.
14.1 INDEMNITY. Borrower will indemnify, defend and hold harmless
Lender, its directors, officers, counsel and employees, from
and against all claims, demands, liabilities, judgments,
losses, damages, costs and expenses, joint or several
(including all accounting fees and Attorneys' Fees reasonably
incurred), that Lender or any such indemnified party may incur
arising under or by reason of this Agreement or any act
hereunder or with respect hereto or thereto including but not
limited to any of the foregoing relating to any act, mistake
or failure to act in perfecting, maintaining, protecting or
realizing on any collateral or lien thereon except the willful
misconduct or gross negligence of such indemnified party.
Without limiting the generality of the foregoing, Borrower
agrees that if, after receipt by Lender of any payment of all
or any part of the Obligations, demand is made at any time
upon Lender for the repayment or recovery of any amount or
amounts received by Borrower in payment or on account of the
Obligations and Lender repays all or any part of such amount
or amounts by reason of any judgment, decree or order of any
court or administrative body, or by reason of any settlement
or compromise of any such demand, this Agreement will continue
in full force and effect and Borrower will be liable, and will
indemnify, defend and hold harmless Lender for the amount or
amounts so repaid. The provisions of this Section will be and
remain effective notwithstanding any contrary action which may
have been taken by Borrower in reliance upon such payment, and
any such contrary action so taken will be without prejudice to
Lender's rights under this Agreement and will be deemed to
have been conditioned upon such payment having become final
and irrevocable. The provisions of this Section will survive
the expiration or termination of this Agreement.
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14.2 CONTINUING AGREEMENT. This Agreement is and is intended to be
a continuing Agreement and will remain in full force and
effect until the Loan is finally and irrevocably paid in full.
14.3 NO THIRD PARTY BENEFICIARIES. Nothing express or implied
herein is intended or will be construed to confer upon or give
any person, firm, or corporation, other than the parties
hereto, any right or remedy hereunder or by reasons hereof.
14.4 NO PARTNERSHIP OR JOINT VENTURE. Nothing contained herein or
in any of the agreements or transactions contemplated hereby
is intended or will be construed to create any relationship
other than as expressly stated herein or therein and will not
create any joint venture, partnership or other relationship.
14.5 WAIVER. No delay or omission on the part of Lender to exercise
any right or power arising from any Event of Default will
impair any such right or power or be considered a waiver of
any such right or power or a waiver of any such Event of
Default or any acquiescence therein nor will the action or
nonaction of Lender in case of such Event of Default impair
any right or power arising as a result thereof or affect any
subsequent default or any other default of the same or a
different nature. No disbursement of the Loans hereunder will
constitute a waiver of any of the conditions to Lender's
obligation to make further disbursements; nor, in the event
that Borrower is unable to satisfy any such condition, will
any such disbursement have the effect of precluding Lender
from thereafter declaring such inability to be an Event of
Default.
14.6 NOTICES. All notices, demands, requests, consents, approvals
and other communications required or permitted hereunder will
be in writing and will be conclusively deemed to have been
received by a party hereto and to be effective if delivered
personally to such party, or sent by telecopy (followed by
written confirmation) or by overnight courier service, or by
certified or registered mail, return receipt requested,
postage prepaid, addressed to such party at the address set
forth below or to such other address as any party may give to
the other in writing for such purpose:
Lender: U.S. BANK NATIONAL ASSOCIATION
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
To Borrower: BUILD-A-BEAR WORKSHOP, INC.
SHIRTS ILLUSTRATED, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
All such communications, if personally delivered, will be
conclusively deemed to have been received by a party hereto
and to be effective when so delivered, or if
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sent by telecopy, on the day on which transmitted, or if sent
by overnight courier service, on the day after deposit thereof
with such service, or if sent by certified or registered mail,
on the third Business Day after the day on which deposited in
the mail.
14.7 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon
and inure to the benefit of Borrower and Lender and their
respective successors and assigns, provided, however, that
Borrower may not assign this Agreement in whole or in part
without the prior written consent of Lender and Lender at any
time may assign this Agreement in whole or in part.
14.8 MODIFICATIONS. This Agreement, any Notes and the Security
Documents, and the documents listed on the Closing Memo,
constitute the entire agreement of the parties and supersede
all prior agreements and understandings regarding the subject
matter of this Agreement, including but not limited to any
proposal or commitment letters. No modification or waiver of
any provision of this Agreement, any Note, any of the Security
Documents or any of the documents listed on the Closing Memo,
nor consent to any departure by Borrower therefrom, will be
established by conduct, custom or course of dealing; and no
modification, waiver or consent will in any event be effective
unless the same is in writing and specifically refers to this
Agreement, and then such waiver or consent will be effective
only in the specific instance and for the purpose for which
given. No notice to or demand on Borrower in any case will
entitle Borrower to any other or further notice or demand in
the same, similar or other circumstance.
14.9 REMEDIES CUMULATIVE. No single or partial exercise of any
right or remedy by Lender will preclude any other or further
exercise thereof or the exercise of any other right or remedy.
All remedies hereunder and in any instrument or document
evidencing, securing, guaranteeing or relating to any Loan or
now or hereafter existing at law or in equity or by statute
are cumulative and none of them will be exclusive of the
others or any other remedy. All such rights and remedies may
be exercised separately, successively, concurrently,
independently or cumulatively from time to time and as often
and in such order as Lender may deem appropriate.
14.10 ILLEGALITY. If fulfillment of any provision hereof or any
transaction related hereto or of any provision of the Notes or
the Security Documents, at the time performance of such
provision is due, involves transcending the limit of validity
prescribed by law, then ipso facto, the obligation to be
fulfilled will be reduced to the limit of such validity; and
if any clause or provisions herein contained other than the
provisions hereof pertaining to repayment of the Obligations
operates or would prospectively operate to invalidate this
Agreement in whole or in part, then such clause or provision
only will be void, as though not herein contained, and the
remainder of this Agreement will remain operative and in full
force and effect; and if such provision pertains to repayment
of the Obligations, then, at the option of Lender, all of the
Obligations of Borrower to Lender will become immediately due
and payable.
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14.11 GENDER, ETC. Whenever used herein, the singular number will
include the plural, the plural the singular and the use of the
masculine, feminine or neuter gender will include all genders.
14.12 HEADINGS. The headings in this Agreement are for convenience
only and will not limit or otherwise affect any of the terms
hereof.
14.13 TIME. Time is of the essence in the performance of this Loan
Agreement.
14.14 GOVERNING LAW AND JURISDICTION; No JURY TRIAL. THIS AGREEMENT
WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF OHIO, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES,
AND BORROWER HEREBY AGREES TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN ▇▇▇▇▇▇▇▇ COUNTY, OHIO AND
CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL
DIRECTED TO BORROWER AT BORROWER'S ADDRESS SET FORTH HEREIN
FOR NOTICES AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED
FIVE (5) BUSINESS DAYS AFTER THE SAME HAS BEEN DEPOSITED IN
U.S. MAILS, POSTAGE PREPAID; PROVIDED THAT NOTHING CONTAINED
HEREIN WILL PREVENT LENDER FROM BRINGING ANY ACTION OR
EXERCISING ANY RIGHTS AGAINST ANY SECURITY OR AGAINST BORROWER
INDIVIDUALLY, OR AGAINST ANY PROPERTY OF BORROWER, WITHIN ANY
OTHER STATE OR NATION. BORROWER WAIVES ANY OBJECTION BASED ON
FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER. BORROWER AND LENDER EACH WAIVE ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, ANY DOCUMENTS EVIDENCING ANY OF THE OBLIGATIONS, OR
ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH AGREEMENTS.
Executed as of February _, 2002 BUILD-A-BEAR WORKSHOP, INC.
BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
PRINT NAME: ▇▇▇▇▇▇ ▇▇▇▇▇
TITLE: PRESIDENT
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SHIRTS ILLUSTRATED, LLC
BY: Build-A-Bear Workshop, Inc.
Its Managing Member
BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
PRINT NAME: ▇▇▇▇▇▇ ▇▇▇▇▇
TITLE: President
U.S. BANK
NATIONAL ASSOCIATION
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
PRINT NAME: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
TITLE: Vice President
STATE OF________________)
) SS.
COUNTY OF_______________)
The foregoing instrument was acknowledged before me this February __,
2002 by ▇▇▇▇▇▇ ▇▇▇▇▇, the duly authorized Officer of BUILD-A-BEAR WORKSHOP,
INC., a Delware corporation, on behalf of the corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Notary Public
STATE OF________________) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
) SS. NOTARY PUBLIC - NOTARY SEAL
COUNTY OF_______________) STATE OF MISSOURI
ST. ▇▇▇▇▇▇▇ COUNTY
MY COMMISSION EXPIRES: MAY 24, 2003
The foregoing instrument was acknowledged before me this
February___________, 2002 by ▇▇▇▇▇▇ ▇▇▇▇▇, the duly authorized Officer of
BUILD-A-BEAR WORKSHOP, INC., a Delaware corporation, the managing member of
SHIRTS ILLUSTRATED, LLC, a Missouri limited liability company, on behalf of the
company.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Notary Public
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
NOTARY PUBLIC - NOTARY ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
MY COMMISSION EXPIRES: MAY 24, 2003
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