EXHIBIT 10.17.1
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FIRST AMENDMENT TO AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT FLEET RETAIL FINANCE INC.
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This First Amendment to Amended and Restated Loan and Security
Agreement (the "FIRST AMENDMENT") is made as of this 20th day of February, 2003
by and among
Fleet Retail Finance Inc. (the "LENDER"), a Delaware
corporation with offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
and
Bakers Footwear Group, Inc., f/k/a ▇▇▇▇▇ and ▇▇▇▇▇▇
Shoe Co. (the "BORROWER"), a Missouri corporation with its
principal executive offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇,
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
A. Reference is made to that certain Amended and Restated Loan and
Security Agreement (the "LOAN AGREEMENT") dated as of June 11, 2002 by
and among the Borrower and the Lender.
B. The Borrower arid the Lender desire to modify and amend the Loan
Agreement, to, among other things, extend the maturity date of the
Sublimit Facility from February 20, 2003 to February 20, 2004, subject
to the terms and conditions of this First Amendment.
Accordingly, the Borrower and the Lender agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Loan Agreement.
2. AMENDMENT TO ARTICLE 2. Section 2.22 of the Loan Agreement is hereby
deleted in its entirety and replaced by the following:
"2.22. Sublimit Facility.
As of February 20, 2003 (the "SUBLIMIT FACILITY
EXTENSION DATE"), the Lender agrees to make available to the
Borrower up to $2,000,000.00 in Revolving Credit Loans (the
"SUBLIMIT FACILITY") on the following terms and conditions:
(a) The Sublimit Facility shall terminate, and the
aggregate of Revolving Credit Loans outstanding under
the Sublimit Facility and any remaining installments
of the Sublimit Facility Fee (hereinafter referred
to) shall be due and payable in full, on the date
which is the earliest to occur of (i) February 20,
2004 and (ii) the Termination Date. The Sublimit
Facility is a part of the Revolving Credit and does
not, and shall not be deemed to, increase the
Revolving Credit
Ceiling. Other than as specifically set forth in this Section
2.22, Revolving Credit Loans under the Sublimit Facility shall
be treated as are all other Revolving Credit Loans under this
Agreement including, without limitation, Section 2.10 hereof;
provided, however, that Revolving Credit Loans under the
Sublimit Facility shall not be subject to the Borrowing Base
limitations set forth in this Agreement regarding Revolving
Credit Loans (including, without limitation, Sections 2.1(b)
and 2.4(a) hereof). The Borrower has the right to terminate
the Sublimit Facility at any time upon written notice to the
Lender accompanied by payment in full of all Revolving Credit
Loans outstanding under the Sublimit Facility and the
applicable amount of the Sublimit Facility Fee referred to in
Section 2.22(b).
(b) In addition to any other fee or expense to be paid by the
Borrower on account of the Revolving Credit, a "SUBLIMIT
FACILITY FEE" (so referred to herein) of not more than
$400,000.00 shall be payable by the Borrower to the Lender as
a fee for making the Sublimit Facility available to the
Borrower (and regardless of whether or not any Revolving
Credit Loans are made at any time under the Sublimit Facility)
as follows:
(i) the Sublimit Facility Fee shall be paid to the
Lender in monthly installments of $33,333.00 each on
the first day of each month commencing with March 1,
2003; and
(ii) in any event, $200,000.00 of the Sublimit
Facility Fee shall be deemed fully earned by the
Lender on the Sublimit Facility Extension Date; if
the Sublimit Facility shall be terminated for any
reason prior to the payment of $200,000.00, the
Borrower shall pay to the Lender on such date of
termination the difference between $200,000.00 and
the amount of Sublimit Facility Fee previously paid
to Lender.
(c) The Borrower shall repay Revolving Credit Loans, if any,
outstanding under the Sublimit Facility such that (i)
Revolving Credit Loans outstanding under the Sublimit Facility
shall not exceed (x) $1,500,000.00 as of December 1, 2003, (y)
$1,000,000.00 as of January 1, 2004 and (z) $500,000.00 as of
February 1, 2004, and (ii) no Revolving Credit Loans shall be
outstanding, and the Sublimit Facility shall be terminated, on
February 20, 2004. The Lender agrees the first Revolving
Credit Loans to which it shall apply collected balances in
accordance with Section 7.5 hereof shall be Revolving Credit
Loans under the Sublimit Facility, if any.
(d) (i) Upon the termination of the Revolving Credit; (ii)
upon the occurrence of any Event of Default described in
Section 10.11; or (iii) at the option of the Lender upon the
occurrence of any other Event of Default, any unpaid
installments of the Sublimit Facility Fee for periods ending
on or prior to the date of such termination or Event of
Default, as the case may be, shall be immediately due and
payable, it being understood that, in any event, an aggregate
of not less than $200,000.00 shall be due and payable as a
Sublimit Facility Fee hereunder."
3. AMENDMENTS TO ARTICLE 5. Sections 5.9(d) and 5.9(f) of the Loan
Agreement are hereby deleted in their entirety and replaced by the following,
respectively:
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(d) The Lender contemplates conducting no less than
Two (2) and not more than Four (4) commercial finance audits
(in each event, at the Borrowers expense) of the Borrower's
books and records during any Twelve (12) month period during
which this Agreement is in effect, but in its discretion, may
undertake additional such audits during such period."
(f) The Lender agrees that prior to the occurrence of
any Event of Default, the maximum amount of third party fees
for which the Borrower shall, be obligated to reimburse the
Lender, cumulatively in any Twelve (12) month period during
which this Agreement is in effect, is the aggregate of the
following, plus out of pocket expenses:
Audits: $25,000.00.
Appraisals: 45,000.00.
In the event of and following the occurrence of any Event of
Default, there shall not be any "cap" on such fees."
4. AMENDMENTS TO EXHIBITS. Exhibits 4:4.6,4:4.9, 4:4.11,4:4.19,5:5.11(a)
and 7:7.1 are each hereby amended as set forth on respective Exhibits annexed
hereto.
5. ADDITIONAL ACKNOWLEDGMENTS AND REPRESENTATIONS
(a) As an inducement for the Lender to execute this First
Amendment, the Borrower hereby represents and warrants that as of the
date hereof:
(i) no Suspension Event has occurred and is
continuing; and
(ii) other than with respect to the MVC Note (as such
term is defined below), none of the principal
outstanding under any Permitted Subordinated
Indebtedness has matured or otherwise become due and
payable and the maturity date of all of such
Permitted Subordinated Indebtedness is later than the
Maturity Date.
(b) In accordance with Section 5.10(c) of the Agreement,
Lender hereby acknowledges receipt from Borrower of Borrower's forecast
for the fiscal year ending January 4, 2004 and confirms that it has
accepted such forecast which shall be deemed the current Business Plan
under the Agreement.
6. RATIFICATION OF LOAN DOCUMENTS; NO CLAIMS AGAINST LENDER. Except as
provided herein, all terms and conditions of the Loan Agreement and of the other
Loan Documents remain in full force and effect. Each of the Borrower and the
Guarantor hereby ratifies, confirms, and re-affirms all and singular the terms
and conditions, including execution and delivery, of the Loan Documents. There
is no basis nor set of facts on which any amount (or any portion thereof) owed
by the Borrower or the Guarantor to the Lender could be reduced, offset, waived,
or forgiven, by rescission or otherwise; nor is there any claim, counterclaim,
off set, or defense (or other right, remedy, or basis having a similar effect)
available to the Borrower or to the Guarantor with regard to the respective
Liabilities of the Borrower and the Guarantor to the Lender; nor is there any
basis on which the terms and conditions of any of the respective Liabilities of
the Borrower and of the Guarantor to the Lender could be claimed to be other
than as stated on the written instruments which evidence such Liabilities. To
the extent that the Borrower or the Guarantor has (or ever had any such claim
the Lender, each hereby affirmatively WAIVES and RELEASES same.
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7. CONDITIONS TO EFFECTIVENESS. This First Amendment shall not be effective
until each of the following conditions precedent have been fulfilled to the
satisfaction of the Lender:
(a) This First Amendment shall have been duly executed and delivered by
the respective parties hereto, shall be in full force and effect and shall
be in form and substance satisfactory to the Lender;
(b) All action on the part of the Borrower necessary for the valid
execution, delivery and performance by the Borrower of this First Amendment
shall have been duly and effectively taken and evidence thereof
satisfactory to the Lender shall have been provided to the Lender. The
Lender shall have received from the Borrower true copies of the resolutions
adopted by the Directors of the Borrower authorizing the transactions
described herein, certified by the secretary of the Borrower to be true
and complete;
(c) The Borrower shall have paid to the Lender all fees and expenses
then due and owing pursuant to the Loan Agreement including, without
limitation, any portion of the Sublimit Facility Fee due and owing under
the Loan Agreement through the date hereof;
(d) The Borrower shall have provided such additional instruments and
documents to the Lender as the Lender and Lender's counsel may have
reasonably requested, each in form and substance satisfactory to the
Lender;
(e) The promissory note (the "MVC NOTE") in the original principal
amount of $500,000.00 dated June 22, 1999 made by Borrower to Mississippi
Valley Capital, LLC ("MVC"), assignee of Mississippi Valley Capital
Company, the Warrant (the "MVC WARRANT") to purchase shares of Class A
Common Stock issued by the Borrower to MVC, and the Intercreditor and
Subordination Agreement (the "MVC INTERCREDITOR AGREEMENT") dated as of
June 22, 1999 by and among the Borrower, the Lender and MVC, shall each be
amended or otherwise modified on terms and conditions satisfactory to
Lender;
(f) ▇▇▇▇▇ ▇▇▇▇▇▇ shall have executed and delivered a Confirmation of
Guarantee in form and substance satisfactory to Lender and shall have
delivered to Lender current personal financial statements including,
without limitation, federal and state tax returns for the 2001 fiscal year;
and
(g) The Lender shall have received an opinion of counsel to the Borrower
covering such matters and otherwise in form and substance satisfactory to
the Lender.
8. MISCELLANEOUS.
(a) This First Amendment may be executed in several counterparts and by
each party on a separate counterpart, each of which when so executed and
delivered shall be an original, and all of which together shall constitute
one instrument.
(b) The First Amendment expresses the entire understanding of the
parties with respect to the transactions contemplated hereby. No prior
negotiations or discussions shall limit, modify, or otherwise affect the
provisions hereof.
(c) Any determination that any provision of this First Amendment or any
application hereof is invalid, illegal, or unenforceable in any respect and
in any instance shall not affect the validity, legality, or enforceability
of such provision in any other instance, or the validity, legality, or
enforceability of any other provisions of this First Amendment.
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(d) The Borrower shall pay on demand all reasonable costs and
expenses of the Lender, including, without limitation, reasonable
attorneys' fees in connection with the preparation, negotiation,
execution, and delivery of this First Amendment.
(e) This First Amendment shall be construed, governed, and
enforced pursuant to the internal laws of The Commonwealth of
Massachusetts and shall take effect as scaled instrument.
[SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have hereunto caused this First
Amendment to be executed ad their seals to be hereto affixed as of the date
first above written.
BAKERS FOOTWEAR GROUP, INC.,
F/K/A ▇▇▇▇▇ AND ▇▇▇▇▇▇ SHOE CO.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name ▇▇▇▇▇ ▇▇▇▇▇▇
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Title Chief Executive Officer
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FLEET RETAIL FINANCE INC.
By
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Name
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Title
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The undersigned Guarantor hereby consents to the terms and conditions
of this First Amendment and hereby joins in the acknowledgments and agreements
set forth in this First Amendment, all as of the date first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇
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IN WITNESS WHEREOF, the parties have hereunto caused this First
Amendment to be executed and their seals to be hereto affixed as of the date
first above written.
BAKERS FOOTWEAR GROUP, INC.,
F/K/A ▇▇▇▇▇ AND ▇▇▇▇▇▇ SHOE CO.
By
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Name
--------------------------------
Title
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FLEET RETAIL FINANCE INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title ?VP
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The undersigned Guarantor hereby consents to the terms and conditions
of this First Amendment and hereby joins in the acknowledgements and agreements
set forth in this First Amendment, all as of the date first above written.
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▇▇▇▇▇ ▇▇▇▇▇▇
/S-1/
[Exhibit 4.4.7(c)(ii) Equipment Usage Agreements; Exhibit 4.6 Locations, Leases,
and Landlords; Exhibit 4.\7 Encumbrances; Exhibit 4.9 Insurance Policies;
Exhibit 4.11 Capital Leases; and Exhibit 4.19 Litigation to this Exhibit 10.17.1
have been omitted. The registrant undertakes to furnish supplementally a copy of
such exhibits upon request.]
EXHIBIT 5:5.11(a)
FINANCIAL PERFORMANCE COVENANTS
CAPITAL EXPENDITURES:
The Borrower shall not permit or suffer its Unfunded Capital Expenditures for
the fiscal year ending January 4, 2004 to be greater than $2,300,000; Unfunded
Capital Expenditures for any fiscal year thereafter shall be set based on the
Business Plan of Borrower pursuant to Section 5.11 of the Loan Agreement.
MINIMUM AVAILABILITY:
The Borrower shall maintain at all times Availability of not less than $1.5
Million, except that, Availability may be less than $1.5 Million for nor more
than three (3) consecutive Business Days in any month.
EBITDA:
The Borrower shall not permit its EBITDA to be less than the amounts set forth
below, in each case measured for the period from March 2, 2003 through the date
indicated:
DATE MINIMUM EBITDA
---- --------------
April 5, 2003 ($564,563.00)
May 3, 2003 ($68,842.00)
May 31, 2003 $422,575.00
July 5, 2003 $1,227,036.00
August 2, 2003 $36,324.00
August 30, 2003 $522,638.00
October 4, 2003 $1,149,748.00
November 1, 2003 $1,336,452.00
November 29, 2003 $2,180,198.00
January 3, 2004 $7,035,338.00
[Exhibit 7.1 DDA's to this Exhibit 10.17.1 has been omitted. The registrant
undertakes to furnish supplementally a copy of such exhibit upon request.]
AMENDED AND RESTATED INTERCREDITOR AND SUBORDINATION AGREEMENT
Preliminary Statement
This Amended and Restated Intercreditor and Subordination Agreement (this
"AGREEMENT") is made by and among BAKERS FOOTWEAR GROUP, INC., f/k/a ▇▇▇▇▇
and ▇▇▇▇▇▇ Shoe Co. (the "COMPANY"), MISSISSIPPI VALLEY CAPITAL, LLC (the
"SUBORDINATED CREDITOR") and FLEET RETAIL FINANCE INC. ("FLEET" or "SENIOR
LENDER").
WHEREAS, the Company, Mississippi Valley Capital Company ("MVCC") and
Senior Lender entered into that certain Intercreditor and Subordination
Agreement dated as of January 18, 2000 (the "ORIGINAL SUBORDINATION
AGREEMENT") in accordance with which the parties agreed to the subordination of
the indebtedness owned by the Company to the Subordinated Creditor under the
"Subordinated Note" and "Warrant" (as each such term is defined in the Original
Subordination Agreement; such Subordinated Note is referred to herein as the
"ORIGINAL NOTE" and the Warrant as the "ORIGINAL WARRANT") to the Liabilities
under the
Loan and Security Agreement dated as of January 18, 2000 between the
Company and the Senior Lender (as amended, the "ORIGINAL LOAN AGREEMENT");
WHEREAS, the Company and the Senior Lender amended and restated the
Original Loan Agreement as of June 11, 2002 (the "LOAN AGREEMENT"); capitalized
terms used herein and not otherwise defined shall have the same meanings
ascribed to them in the Loan Agreement;
WHEREAS, MVCC assigned its interest in the Original Note and the Original
Warrant to Subordinated Creditor pursuant to that certain Assignment of
Transaction and Transaction Documents dated as of January 30, 2003;
WHEREAS, the Subordinated Creditor and the Company amended and restated
the Original Note and Original Warrant as of January 31, 2003 and the
Subordinated Creditor is now the holder of an Amended and Restated Promissory
Note issued by the Company in the principal amount of $500,000 (the
"SUBORDINATED NOTE"), and an Amended and Restated Warrant to Purchase Shares of
Class A Common Stock of Bakers Footwear Group, Inc., f/k/a ▇▇▇▇▇ and ▇▇▇▇▇▇
Shoe Co. issued pursuant to the Subordinated Note (the "WARRANT") copies of each
which are attached hereto as Exhibit 1;
WHEREAS, the Company has granted to the Subordinated Creditor a second
priority lien on the Collateral pursuant to a Security Agreement dated as of
January 31, 2003 between the Company and the Subordinated Creditor (the
"SECURITY AGREEMENT"); and
WHEREAS, the obligation of the Senior Lender to continue to make the Loans
to the Company under the Loan Agreement is subject to the condition, among
others, that the Subordinated Creditor and the Company each agrees to the
subordination provisions contained herein.
NOW THEREFORE, FOR VALUABLE CONSIDERATION, the receipt and sufficiency of
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which are hereby acknowledged, and in consideration of the willingness of the
Senior Lender to continue to make the Loans to the Company pursuant to the Loan
Agreement, the Company and the Subordinated Creditor, jointly and severally,
agree with the Senior Lender that the Original Subordination Agreement shall be
amended and restated in its entirety as follows:
1. Subordination of Indebtedness and Subordination of Lien.
a. The Subordinated Creditor hereby subordinates all present and future
indebtedness of the Company to the Subordinated Creditor including but
not limited to the Indebtedness evidenced by the Subordinated Note
and the Warrant, together with any and all Indebtedness of or rights
of the Subordinated Creditor against any guarantor of the Senior
Indebtedness (collectively, the "SUBORDINATED INDEBTEDNESS"), to any
and all Indebtedness now or hereafter owing by the Company to the
Senior Lender (collectively, the "SENIOR INDEBTEDNESS") and agrees
that the Subordinated Indebtedness shall be junior in right of payment
and exercise of remedies to the Senior Indebtedness.
b. The security interests of the Senior Lender in the Collateral shall
be deemed to have a priority senior to any security interest of the
Subordinated Creditor in the Collateral. The Senior Lender's priority
shall be irrespective of the time, order or method of attachment or
perfection of security interests, or the time or order of filing of
mortgages or financing statements or taking of possession, or the
giving of or failure to give notice of purchase money security
interests. The lien priorities provided in this Section 1(b) shall not
be altered or otherwise affected by any amendment, modification,
supplement, extension, renewal, restatement or refinancing of either
the Senior Indebtedness or the Subordinated Indebtedness, or any
portion thereof, nor by any action or inaction which either the Senior
Lender or the Subordinated Creditor may take or fail to take in
respect of the Collateral.
2. Payments.
a. Subject to Section 2(c) below, for so long as any Senior Indebtedness
remains outstanding, the Subordinated Creditor shall be entitled to
receive and retain only those regularly scheduled payments (without
acceleration) of interest on the Subordinated Note (the "SCHEDULED
INTEREST PAYMENTS"), to the extent and in the manner set forth in the
Subordinated Note. The Company shall not pay, and the Subordinated
Creditor shall not accept payment of, the Warrant Redemption Price.
b. Subject to Section 2(c) below, for so long as any Senior Indebtedness
remains outstanding, commencing with March 1, 2004 the Subordinated
Creditor shall be entitled to receive and retain prepayments of the
Subordinated Indebtedness (other than payments or prepayments of the
Warrant Redemption Price) in an amount not to exceed $400,000 in any
fiscal year, so long as prior to the Company making and the
Subordinated Creditor receiving such permitted prepayment of
Subordinated
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Indebtedness, the Senior Lender shall have received the Company's
audited financial statements for the fiscal year just ended, which
audited financial statements shall show that (i) the Company had
positive net income for such fiscal year, (ii) the Company has minimum
Availability under (and from time to time defined in) the Loan
Agreement (after giving effect to any such prepayment of Subordinated
Indebtedness) of $3,000,000, (iii) as of such date, there exists no
Default (as defined below) under the Loan Agreement, and no Default
will occur by reason of the making of any such prepayment of
Subordinated Indebtedness and (iv) the aggregate amount of prepayments
of all Permitted Subordinated Indebtedness (including any such
prepayment of Subordinated Indebtedness) of the Company does not
exceed $500,000 in any fiscal year of the Company.
c. Notwithstanding the provisions of Sections 2(a) and 2(b) above, the
Company and the Subordinated Creditor covenant to and agree with the
Senior Lender that upon the occurrence of a default or event of
default under the Loan Agreement (collectively, a "DEFAULT"), the
Subordinated Creditor's right to receive and retain the Scheduled
Interest Payments under the Subordinated Note shall immediately cease.
The Senior Lender covenants to give written notice to the Subordinated
Creditor promptly upon the cure by the Company or waiver by the Senior
Lender of any Default (any such notice being referred to herein as a
"CURE OR WAIVER NOTICE"). The Subordinated Creditor agrees not to
demand, accept or receive any payment in respect of the Subordinated
Indebtedness or take any action of any kind whatsoever with respect to
the Collateral after the occurrence of a Default, including, without
limitation, any payment received through the exercise of any right of
setoff, counterclaim, cross-claim or otherwise, or any collateral
therefor, until the earlier to occur of (i) receipt by the
Subordinated Creditor of a Cure or Waiver Notice signed by the Senior
Lender, or (ii) receipt by the Subordinated Creditor of written
confirmation from the Senior Lender that the Senior Indebtedness has
been paid in full in cash. Without limiting the foregoing, the Company
agrees that no amount shall be paid in respect of the Subordinated
Indebtedness, whether in cash, property, securities or otherwise, by
the Company to the Subordinated Creditor, or any additional Collateral
or interests therein given to Subordinated Creditor, during the
pendency of a Default under the Loan without the prior written consent
of the Senior Lender or the issuance by the Senior Lender of a Cure or
Waiver Notice, in which event the Scheduled Interest Payments may
resume.
3. Bankruptcy; Insolvency; Acceleration of Senior Indebtedness, etc.
a. In the event of an insolvency, bankruptcy, receivership, liquidation,
acceleration and demand for repayment of the Senior Indebtedness,
reorganization or other similar proceedings relative to the Company or
to its assets, or in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of the Company, whether
or not involving insolvency or bankruptcy (any such proceeding
referenced above being referred to herein as an "INSOLVENCY
PROCEEDING"), so long as any Senior Indebtedness is outstanding, the
Senior Lender shall be entitled in any such proceedings to receive
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payment in full in cash of all Senior Indebtedness before the
Subordinated Creditor is entitled in such proceeding to receive any
payment on account of the Subordinated Indebtedness, and to that end
in any such proceedings, so long as any Senior Indebtedness remains
outstanding, any payment or distribution of any kind or character,
whether in cash or in other property, to which the Subordinated
Creditor would be entitled but for the provisions hereof, shall be
delivered to the Senior Lender to the extent necessary to make payment
in full in cash of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders
of Senior Indebtedness.
b. Upon the commencement of an Insolvency Proceeding, the Subordinated
Creditor shall be deemed, in order to effectuate the subordination set
forth above, to have assigned the Subordinated Indebtedness to the
Senior Lender and granted to the Senior Lender as of the date of the
commencement of such Insolvency proceeding the right to collect all
payments and distributions of any kind and description, whether in
cash or other property, thereafter paid or payable in respect of any
claims or demands of the Subordinated Creditor against the Company
arising from the Subordinated Indebtedness. Upon the commencement of
an Insolvency Proceeding, the Subordinated Creditor shall also be
deemed to have granted to the Senior Lender the full right (but no
obligation), in its own name or in its name as attorney in fact for
the Subordinated Creditor, to collect and enforce said claims and
demands of the Subordinated Creditor by suit, proof of claim in
bankruptcy or other liquidation, reorganization or insolvency
proceedings or otherwise. The Subordinated Creditor by its execution
of this Agreement also hereby grants to the Senior Lender: (i) the
exclusive right to vote any and all claims of the Subordinated
Creditor in any Insolvency Proceeding involving the Company with
respect to the election of a trustee or similar official and with
respect to any proposed plan of reorganization of the Company; and
(ii) the exclusive right to object to any proposed plan of
reorganization relating to the Company to which the Subordinated
Creditor otherwise would have standing to object in an Insolvency
Proceeding.
4. Turn-Over of Payments and/or Collateral Received by Subordinated Creditor.
In the event that notwithstanding the provisions of the Loan Agreement and
this Agreement:
a. The Company shall make any payment to the Subordinated Creditor not
expressly authorized hereby, such payment shall be held in trust by
the Subordinated Creditor, for the benefit of the Senior Lender, and
shall be paid over immediately (upon demand) to the Senior Lender for
application in accordance with the Loan Agreement to the payment of
all Senior Indebtedness remaining due and payable until the same shall
have been paid in full, in cash, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness. In
the event of the failure of the Subordinated Creditor to endorse any
instrument for the payment of money so received by the Subordinated
Creditor, the Senior Lender is irrevocably appointed attorney-in-fact
for the Subordinated Creditor with full power to make such endorsement
and with
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full power of substitution.
b. The Subordinated Creditor receives any Collateral, and/or any
additional collateral to secure the Subordinated Indebtedness, the
Subordinated Creditor shall deliver same to the Senior Lender,
immediately upon receipt thereof.
c. The Subordinated Creditor receives any payment on account of the
Collateral, including but not limited to payments made or Collateral
granted as adequate protection in connection with a bankruptcy
proceeding of the Company, the Subordinated Creditor shall hold such
payment in trust for the Senior Lender and shall not commingle such
payments with any other funds of the Subordinated Creditor. The
Subordinated Creditor shall deliver all such payments to the Senior
Lender immediately upon the receipt thereof by the Subordinated
Creditor in the identical form received, duly endorsed to the Senior
Lender.
5. Obligations Absolute. The provisions of this Agreement are for the
purpose of defining the relative rights of the Senior Lender on the one
hand and the Subordinated Creditor on the other hand with respect to the
enforcement of rights and remedies and priority of payment of the various
obligations of the Company to each of them. Nothing herein shall impair, as
between the Company and the Subordinated Creditor, the obligations of the
Company, which are unconditional and absolute, to pay to the holder thereof
the principal and interest thereon and any other liabilities encompassed in
the Subordinated Indebtedness, all in accordance with the respective terms,
subject to the prior payment in full in cash of the Senior Indebtedness.
6. Subordination Not Affected. Without the necessity of any reservation of
rights against or any notice to or further assent by the Subordinated
Creditor, (i) any demand for payment of any Senior Indebtedness made by the
Senior Lender may be rescinded in whole or in part by the Senior Lender,
(ii) the Senior Lender may exercise or refrain from exercising any rights
and/or remedies against the Company and others, if any, liable under the
Senior Indebtedness, and (iii) the Senior Indebtedness and any agreement or
instrument evidencing, securing, or otherwise relating to the Senior
Indebtedness (including without limitation, the Loan Agreement and the
other Loan Documents), or any collateral security therefor or guaranty
thereof or other right of any nature with respect thereto, may be amended,
extended, modified, continued, accelerated, compromised, waived,
surrendered or released by the Senior Lender, in any manner the Senior the
subordination of the Subordinated Indebtedness to the Senior
Indebtedness provided for herein Lender deems in its best interests, all
without impairing, abridging, releasing or affecting in any manner. Without
limiting the foregoing, the Subordinated Creditor waives any and all notice
of the creation, amendment, restatement, extension, acceleration,
compromise, continuation, waiver, surrender, release or modification of any
nature of Senior Indebtedness, the Loan Agreement or the other Loan
Documents, and notice of or proof of reliance by the Senior Lender upon the
subordination provided for herein. The Senior Indebtedness shall
conclusively be deemed to have been created, contracted and incurred in
reliance upon the provisions of this Agreement.
5
7. Warranties, Representations, Covenants and Acknowledgements of the
Subordinated Creditor.
a. The Subordinated Creditor represents to the Senior Lender that all
existing Indebtedness of the Company to the Subordinated Creditor is
evidenced by the Subordinated Note and the Warrant. The Subordinated
Creditor further represents that said Indebtedness has not heretofore
been assigned, pledged to, or subordinated in favor of, any other
Person.
b. The Subordinated Creditor hereby covenants and agrees that it will
not amend or permit amendment of the terms of any agreement, document
or instrument hereafter evidencing any Subordinated Indebtedness,
without the prior written consent of the Senior Lender, including,
without limitation, any amendment that would: (i) increase the
principal amount of the Subordinated Indebtedness; (ii) increase the
rate of interest accruing on the Subordinated Indebtedness; (iii)
change in any manner the dates upon which any principal or interest
payment on the Subordinated Indebtedness is due; (iv) change in any
manner, or add, affirmative or negative covenants, events of default,
redemption provisions or subordination provisions of any Subordinated
Indebtedness; or grant to the Subordinated Creditor the right to
purchase, or to cause the Company to issue, equity interests in the
Company. This Section 7(b) shall not operate to preclude the
Subordinated Creditor from (i) causing the Company to issue the Common
Stock under and as defined in the Warrant, (ii) extending the maturity
date of the Subordinated Note, as provided therein, or (iii) causing
the Company to execute a promissory note in the original principal
amount of $800,000.00, payable to the order of Subordinated Creditor,
in lieu of the payment of the Warrant Redemption Price (as provided in
the Warrant), subject to the applicable provisions of the Loan
Agreement.
c. The execution, delivery and performance of this Agreement has been
duly authorized by all necessary corporate, partnership or other
action on the part of the Subordinated Creditor, and this Agreement
constitutes a valid and binding obligation of the Subordinated
Creditor, enforceable against it in accordance with its terms.
d. The Subordinated Creditor covenants and agrees that it will not
assign, pledge, sell, transfer or otherwise dispose of any of the
Subordinated Indebtedness or interests herein, whether through
assignment or participation or otherwise, except to a Person who first
becomes a party hereto and accepts without qualification all
obligations of the Subordinated Creditor hereunder.
e. The Subordinated Creditor covenants and agrees that it will (i) in
order to effectuate its agreement in Section 4(b) above, endorse in
favor of and deliver to the Senior Lender (immediately upon receipt
thereof) any evidence of, or collateral for, the Subordinated
Indebtedness, and (ii) execute all such documentation as the Senior
Lender may reasonably request from time to time in order to facilitate
the liquidation of the Collateral by the Company and/or the exercise
of the Senior Lender's rights and remedies under the Loan Agreement
and other Loan Documents, it being understood
6
that, subject to the Senior Lender's prior rights therein, the
Subordinated Creditor's security interest in the Collateral shall
attach to the net proceeds (if any) of such liquidation or exercise to
the extent that the Subordinated Creditor is entitled thereto. Such
documentation may include, without limitation, terminations of
financing statements which the Senior Lender may file in connection
with the liquidation or exercise. In the event the Senior Lender, in
connection with its exercise of its rights and remedies hereunder,
requests the Subordinated Creditor to prepare and file amendments or
terminations of any financing statement and the Subordinated Creditor
fails to provide such amendments or terminations within ten (10) days
of the Senior Lender's request, then the Senior Lender shall be
authorized, and this Agreement shall constitute an authenticated
record authorizing the Senior Lender to, file such amendments or
terminations.
f. The Subordinated Creditor acknowledges and agrees that this Agreement
is a "subordination agreement" within the meaning of Section 510(a) of
the United States Bankruptcy Code (the "CODE"), 11 U.S.C. Section
510(a).
8. Validity and Enforceability of Liens Securing Senior Indebtedness;
Cooperation with Senior Lender; Application of Proceeds.
a. The Subordinated Creditor will not in any proceeding, whether in
connection with a bankruptcy or insolvency or other event described in
Section 2 or otherwise, challenge, oppose or contest (or join in any
challenge, opposition or contest by any third party, or encourage any
third party to challenge, oppose or contest) the Senior Indebtedness
or the perfection, superiority, priority, validity or enforceability
of any security interest or lien granted to the Senior Lender pursuant
to the Loan Agreement, the Security Documents or other Loan Documents,
nor will the Subordinated Creditor challenge the validity or
enforceability of such Loan Agreement, Security Documents or other
Loan Documents, or any provision thereof. The Subordinated Creditor
hereby acknowledges that the provisions of this Agreement are intended
to be enforceable at all times, whether before or after any proceeding
or other event described in Section 2 of this Agreement. The
Subordinated Creditor hereby waives any right to require the Senior
Lender to marshal the collateral for such Senior Indebtedness.
b. Without limiting the foregoing, the Subordinated Creditor will not
challenge or oppose (or join with any party challenging or opposing)
or take any action whatsoever to impair the exercise by the Senior
Lender of the rights and remedies granted to the Senior Lender in the
Loan Document.
c. Upon the entry of an order for relief with respect to the Company
pursuant to Title 11 of the Code, the Subordinated Creditor shall not
(i) object to or oppose any motions filed by the Senior Lender
including, without limitation, any motion for relief from the
automatic stay pursuant to Section 362 of the Code, any motion to
approve debtor in possession financing pursuant to Section 364 of the
Code, or any motion filed by the
7
Company to conduct a sale of any or all of the Collateral pursuant to
Section 363 of the Code; or (ii) provide or cause an affiliate of the
Subordinated Creditor to provide debtor in possession financing
pursuant to Section 364 of the Code.
d. The Senior Lender shall have no duty as to the collection or
protection of the Collateral or any income or distribution thereon,
beyond the safe custody of such of the Collateral as may come into the
possession of the Senior Lender, and shall have no duty as to the
preservation of any rights pertaining thereto, including, without
limitation, any rights against prior parties.
e. In the event of a sale, transfer or other disposition of any
Collateral, the Subordinated Creditor agrees that any security
interest or lien of the Subordinated Creditor in or on such Collateral
shall terminate and be released automatically and without further
action to the extent that the Senior Lender terminates and releases
its security interest in or lien on such Collateral, and the
Subordinated Creditor further agrees to execute all necessary
instruments and documents to evidence such termination and release. In
the event any Collateral, or any collections or other proceeds
thereof, shall be received by the Subordinated Creditor at any time
for any such reason, such Collateral and proceeds shall be held in
trust for the benefit of, and promptly remitted to, the Senior Lender.
f. The proceeds (if any) received by the Senior Lender on account of
the Collateral shall be applied towards the Senior Indebtedness in
such order and manner as the Senior Lender determines in its sole and
exclusive discretion. Any such proceeds received by the Senior Lender
in excess of the amounts necessary to satisfy the Senior Indebtedness
in full shall be paid to the Subordinated Creditor or in accordance
with any applicable law or court order.
9. Limitations on Remedies. Upon any event of default in respect of the
Subordinated Indebtedness, the Subordinated Creditor shall not (1)
accelerate all or any portion of the Subordinated Indebtedness, (2)
commence or join (unless the Senior Lender shall also commence or join) in
any involuntary proceeding against the Company or any of its Subsidiaries
under any bankruptcy, reorganization, readjustment of debt, arrangement of
debt, receivership, liquidation or insolvency law or statute of any federal
or state government, (3) commence any action or against the Company or any
of its Subsidiaries to enforce payment of all or any part of the
Subordinated Indebtedness or (4) commence or continue any foreclosure or
liquidation proceedings or remedies or take any action (other than to
perfect or to continue the perfection of, the lien of the Subordinated
Creditor in any Collateral) in respect of any of the Collateral, or
exercise any other of the Subordinated Creditor' rights, remedies, powers,
privileges, and discretions with respect to the Collateral, for a period of
180 days after receipt by the Senior Lender from the Subordinated Creditor
of written notice of such event of default (the "STANDSTILL PERIOD");
provided, however, that if before the expiration of the Standstill Period
(i) the Senior Lender accelerates all or any portion of the Senior
Indebtedness, (ii) if the event of default under the Subordinated
Indebtedness is caused solely by the occurrence of a Default under the
Senior Indebtedness, Senior Lender delivers to the Subordinated Creditor a
8
Cure or Waiver Notice in accordance with Section 2(c) hereof, or (iii) the
Senior Lender in its sole discretion, shall cure the event of default under
the Subordinated Indebtedness which gave rise to the Standstill Period (it
being understood that Senior Lender shall have absolutely no obligation to
the Company or the Subordinated Creditor to so cure any such event of
default and, furthermore, that if Senior Lender shall cure any such event
of default it shall not be obligated under any circumstances to cure any
other event of default at any time occurring), then the Subordinated
Creditor shall continue to forbear after the Standstill Period from the
exercise of any rights or remedies against the Company or the Collateral
unless the Senior Lender consents in writing to the exercise of such rights
and remedies. If the forbearance of Subordinated Creditor after expiration
of a Standstill Period has not occurred in accordance with the prior
sentence, then the Subordinated Creditor shall be entitled to exercise (for
the benefit of the Senior Lender until the Senior Lender is paid in full in
cash) its rights and remedies against the Company or Collateral after five
(5) days advance written notice to the Senior Lender. Nothing contained in
this Section 9 shall limit or impair the obligations and agreements of the
Subordinated Creditor set forth in Sections 1 and 2 of this Agreement.
10. Assignments and Appointments. The Subordinated Creditor, for itself and
its successors and assigns, hereby irrevocably authorizes and directs the
Senior Lender, and any trustee or debtor in possession in bankruptcy,
receiver, custodian or assignee for the benefit of creditors of the
Company, whether in voluntary or involuntary liquidation, dissolution or
reorganization, on his or its behalf, to take such action as may be
necessary or appropriate to effectuate the subordination provided for in
this Agreement and irrevocably appoints the Senior Lender any such trustee,
receiver, custodian or assignee, their attorney-in-fact for such purpose
with full powers of substitution and revocation.
11. No Impairment. No right of the Senior Lender to enforce subordination as
herein provided shall at any time or in any way be affected or impaired by
any failure to act on the part of the Company, or by any non-compliance by
the Company with any of the terms, provisions and covenants of the
agreement, documents and instruments evidencing the Subordinated
Indebtedness, regardless of any knowledge thereof that the Senior Lender
may have or be otherwise charged with, or by any action which the Senior
Lender may take or refrain from taking with respect to the Senior
Indebtedness or the Subordinated Indebtedness.
12. Further Assurances. In order to carry out the terms and intent of this
Subordination Agreement more effectively, the Subordinated Creditor will
take all actions and execute all further documents and instruments
reasonably necessary or convenient to preserve for the Senior Lender the
benefits of this Agreement.
13. Waivers, etc. No action which the Senior Lender, or the Company with the
consent of the Senior Lender, may take or refrain from taking with respect
to any Subordinated Indebtedness, or any promissory note or notes
representing the same, or any collateral therefor, including any waiver or
release thereof (or any waiver of any provision thereof or default
thereunder) or of any agreement or agreements (including guaranties) in
connection therewith, shall affect this Agreement or the rights of the
Senior Lender or the obligations of the Subordinated Creditor
9
hereunder. No waiver shall be deemed to be made by the Senior Lender of any
of its rights hereunder unless the same shall be in writing and then only
with respect to the specific instance involved, and shall in no way impair
or offset the rights of the Senior Lender or the obligations of the
Subordinated Creditor in any other respect or at any other time.
14. Notices.
a. By the Senior Lender to the Subordinated Creditor. The Senior Lender
shall endeavor to provide the Subordinated Creditor with notice of any
default or event of default by the Company under the Loan Agreement
simultaneously with giving notice to the Company, provided that any
failure by the Senior Lender to give such notice shall not affect or
limit the senior Lender's rights hereunder.
b. By the Subordinated Creditor to the Senior Lender. The Subordinated
Creditor shall provide the Senior Lender with notice of any default
relating to any Subordinated Indebtedness simultaneously with giving
notice to the Company.
c. By the Company to the Senior Lender. The Company shall provide the
Senior Lender with copies of all notices of any default received by it
from the Subordinated Creditor immediately upon its receipt thereof.
d. By the Company to the Subordinated Creditor. The Company shall
provide the Subordinated Creditor with copies of all notices of any
default given by it to the Lender or received by it from the Senior
Lender immediately upon its delivery or receipt thereof.
e. Method. Except as otherwise provided herein, all demands or notices
hereunder shall be in writing and shall be deemed to have been
sufficiently given or served for all purposes hereof if personally
delivered or mailed or transmitted by (a) telecopy if the sender on
the same day sends a confirming copy of such communication by a
recognized overnight delivery services (charges prepaid), (b)
recognized overnight delivery services (charges prepaid) or (c) first
class mail, postage prepaid, to them as their respective addresses as
set forth on the signature pages hereto and incorporated herein by
reference, or at such other address as the party to whom such notice
is directed may have designated in writing to the other party hereto.
A notice shall be deemed to have been given upon the earlier to occur
of (i) three (3) days after the date on which it is deposited in the
U.S. mails or (ii) receipt by the party to whom such notice is
directed.
15. Miscellaneous. This Agreement shall be binding upon the Subordinated
Creditor and the Company and their respective heirs, legal representatives,
successors and assigns and shall inure to the benefit of the Senior Lender
and its legal representatives, successors and assigns (including without
limitation any transferee of any Senior Indebtedness). The Senior Lender
may assign this Agreement or its rights thereunder without the consent of
the Subordinated Creditor or the Company. This Agreement may be executed in
any number of counterparts and
10
by the different parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all of the
counterparts shall together constitute one and the same instrument.
16. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement,
including the validity hereof and the rights and obligations of the parties
hereunder, shall be construed in accordance with and governed by the
internal laws of the Commonwealth of
Massachusetts (without regard to
conflicts of law principals). The Subordinated Creditor, to the extent that
the Subordinated Creditor may lawfully do so, hereby consents to service of
Creditor may lawfully do so, hereby consents to service of process, and to
be sued, in the Commonwealth of
Massachusetts and consents to the
jurisdiction of the courts of the Commonwealth of
Massachusetts and the
United States District Court for the District of
Massachusetts, as well as
to the jurisdiction of all courts to which an appeal may be taken from such
courts, for the purpose of any suit, action or other proceeding arising out
of any of such Subordinated Creditor's Obligations hereunder or with
respect to the transactions contemplated hereby, and expressly waives any
and all objections as to venue in any such courts. The Subordinated
Creditor further agrees that a summons and complaint commencing an action
or proceeding in any of such courts shall be properly served and confer
personal jurisdiction if served personally or by certified mail at the
address set forth below under the signature of the Subordinated Creditor or
as otherwise provided under the laws of the Commonwealth of
Massachusetts.
EACH OF THE COMPANY AND THE SUBORDINATED CREDITOR IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION, OR OTHER PROCEEDING HEREAFTER
INSTITUTED BY OR AGAINST IT IN RESPECT OF ITS OBLIGATIONS HEREUNDER OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
17. Acknowledgment by Company. The Company covenants and agrees not to make any
distribution or payment to the Subordinated Creditor in violation of the
terms of this Agreement.
18. Legends. The Subordinated Creditor covenants and agrees that until all
Senior Indebtedness is paid in full in cash, the Subordinated Note, the
Warrant and the Security Agreement, and each promissory note or other
instrument at any time evidencing Subordinating Indebtedness, shall bear at
all times, in a conspicuous manner, the following legend:
This [Note/Warrant/Security Agreement] and the indebtedness evidenced
hereby are subordinate, in the manner and to the extent set forth in
that Amended and Restated Intercreditor and Subordination Agreement
(as amended, supplemented or otherwise modified from time to time, the
"SUBORDINATION AGREEMENT") dated as of April 8, 2003 between and
among Bakers Footwear Group, Inc., f/k/a ▇▇▇▇▇ & ▇▇▇▇▇▇ Shoe Co. (as
the "COMPANY"), Mississippi Valley Capital, LLC (as the
"SUBORDINATED CREDITOR") and the Senior Lender named therein, to all
indebtedness owed by the maker of this [Note/Warrant/Security
Agreement] to the Senior Lender, and the holder of this
[Note/Warrant/Security Agreement], by its acceptance hereof, shall be
bound by the provisions of the Subordination Agreement.
11
This Agreement is executed as a sealed instrument as of the 8th day of
April, 2003.
COMPANY
BAKERS FOOTWEAR GROUP, INC., f/k/a ▇▇▇▇▇ and ▇▇▇▇▇▇ Shoe Co.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
SUB ORDINATED CREDITOR
MISSISSIPPI VALLEY CAPITAL, LLC
By:
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
SENIOR LENDER
FLEET RETAIL FINANCE INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Assistant Vice President
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
12
This Agreement is executed as a sealed instrument as of the 8th day of
April, 2003.
COMPANY
BAKERS FOOTWEAR GROUP, INC., f/k/a ▇▇▇▇▇ and ▇▇▇▇▇▇ Shoe Co.
By:
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
SUB ORDINATED CREDITOR
MISSISSIPPI VALLEY CAPITAL, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
SENIOR LENDER
FLEET RETAIL FINANCE INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Assistant Vice President
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
12
This Agreement is executed as a sealed instrument as of the 8th day of
April, 2003.
COMPANY
BAKERS FOOTWEAR GROUP, INC., f/k/a ▇▇▇▇▇ and ▇▇▇▇▇▇ Shoe Co.
By:
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
SUB ORDINATED CREDITOR
MISSISSIPPI VALLEY CAPITAL, LLC
By:
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
SENIOR LENDER
FLEET RETAIL FINANCE INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Assistant Vice President
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
12
THIS SECURITY AGREEMENT AND THE INDEBTEDNESS
EVIDENCED HEREBY ARE SUBORDINATE, IN THE
MANNER AND TO THE EXTENT SET FORTH IN THAT
AMENDED AND RESTATED INTERCREDITOR AND
SUBORDINATION AGREEMENT (AS AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM
TIME TO TIME, THE "SUBORDINATION AGREEMENT")
DATED AS OF APRIL 8, 2003, BETWEEN AND AMONG
BAKERS FOOTWEAR GROUP, INC., F/K/A/ ▇▇▇▇▇ &
▇▇▇▇▇▇ SHOE CO., AS THE COMPANY, MISSISSIPPI
VALLEY CAPITAL, LLC, AS THE SUBORDINATED
CREDITOR, AND THE SENIOR LENDER NAMED
THEREIN, TO ALL INDEBTEDNESS OWED BY THE
MAKER OF THIS SECURITY AGREEMENT TO THE
SENIOR LENDER, AND THE HOLDER OF THIS
SECURITY AGREEMENT, BY ITS ACCEPTANCE
HEREOF, SHALL BE BOUND BY THE PROVISIONS
OF THE SUBORDINATION AGREEMENT.
SECURITY AGREEMENT
1. Grant of Security Interest. BAKERS FOOTWEAR GROUP, INC., F/K/A ▇▇▇▇▇ AND
▇▇▇▇▇▇ SHOE CO., a Missouri corporation with its principal place of business
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Debtor"), in order to
induce Mississippi Valley Capital, LLC, a Missouri limited liability company
("Secured Party") to extend certain financial accommodations and in
consideration thereof and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, hereby transfers, assigns, and
grants to Secured Party a continuing and irrevocable security interest and
general lien in and to all of the following property and rights of Debtor:
(a) All now owned or hereafter acquired Accounts, accounts
receivable, other receivables, any right to payment of a monetary
obligation, whether or not earned by performance, leases and
lease payments, contract rights, any other obligations or
indebtedness owed to Debtor from whatever source arising; all
other rights of Debtor to receive performance or any payments in
money or in kind, whether or not earned by performance, all
guaranties, security interests and Supporting Obligations of any
of the foregoing and insurance policies and proceeds relating
thereto, and all rights of Debtor as an unpaid seller of Goods
and services, including, but not limited to, the rights to
stoppage in transit, replevin, reclamation, and resale, and
rights to payment for money or funds advanced or sold. The rights
and property described in this Section 1(a) are referred to
herein collectively as the "Accounts Collateral."
(b) All now owned or hereafter acquired Inventory, merchandise, raw
materials, goods in process, work in progress, materials used or
consumed in a business, finished goods, findings or component
materials, and all supplies, incidentals, office supplies,
packaging materials, and any and all property or items used or
consumed in the operation of the business of Debtor or which
contribute to the finished products or to the sale, promotion and
shipment thereof, As-Extracted collateral, all property leased by
Debtor, held by Debtor for sale or lease or to be furnished under
a contract for service and all Documents evidencing any part of
any of the foregoing. The rights and property described in this
Section 1(b) are referred to herein collectively as the
"Inventory Collateral."
(c) All now owned or hereafter acquired Equipment, goods other than
Inventory Collateral, parts, computers, including data, hardware
and software, machinery, fixtures, furniture, furnishings, tools,
dies, aircraft, vessels and vehicles of every kind and
description, whether or not titled, and all parts and accessories
for or relating to any of the foregoing. The rights and property
described in this Section 1(c) are referred to herein
collectively as the "Equipment Collateral."
(d) All now owned or hereafter acquired General Intangibles, all
claims and causes of action, and all other intangible personal
property of Debtor of every kind and nature, whether registered
or unregistered, Payment Intangibles, corporate or other business
records, all books, mailing and customer lists, ledgers, books of
account, records, writings, data bases, software, information and
data however stored or embedded, inventions, designs, blueprints,
plans specifications, patents, patent applications, service
marks, trademarks, trade names, trade secrets, domain names,
processes, formulas, goodwill, copyrights, registrations,
licenses, permits, leases, contracts, governmental approvals,
franchises, applications and renewals of any of the foregoing,
privileges, rights, tax refunds and tax claims, any swap, hedging
or derivatives agreements, insurance proceeds, pension and
insurance surpluses. The rights and property described in this
Section 1(d) are referred to herein as the "General Intangibles
Collateral."
In addition to, and not by way of limitation of, the grant of a
security interest in service marks, trademarks and patents set
forth above, Debtor hereby, effective upon the occurrence of a
default under this Security Agreement and upon the written demand
of Secured Party, assigns, grants, sells, conveys, transfers
title to and sets over to Secured Party for the benefit of
Secured Party all of Debtor's right, title and interest, whether
now or hereafter existing or acquired, in and to such service
marks, trademarks and patents.
(e) All now owned or hereafter acquired, Chattel Paper, Instruments,
Notes, Promissory Notes, Deposit Accounts, Investment Property,
Securities, letters of credit, Letter-of-Credit Rights,
Documents, Payment Intangibles, Financial Assets, all Supporting
Obligations for any of the foregoing ("Other Property
Collateral").
(f) All proceeds including proceeds and products of all of the
foregoing and all additions and accessions to, replacements and
substitutions of, insurance policies and payments, condemnation
proceeds of, and documents covering all of the foregoing, all
property received wholly or partly in trade or exchange for all
of the foregoing, and all income, rents, revenues, dividends,
distributions, issues, profits, cash or non-cash proceeds and
accessions arising from the sale, lease, license, encumbrance,
collection, or any other temporary or permanent disposition of
any of the foregoing or any interest therein (the "Proceeds").
-2-
Capitalized terms used and not defined herein shall have the meanings
given to them in the Uniform Commercial Code as adopted and in force in the
State of Missouri, as from time to time amended.
The Accounts Collateral, Inventory Collateral, Equipment Collateral,
General Intangibles Collateral, Other Property Collateral and Proceeds are
collectively referred to herein as the "Collateral."
2. Proceeds. The security interests granted to Secured Party in any
proceeds or other property arising out of the disposition of the Collateral and
anything contained herein or in any financing statement shall not be deemed
permission or assent by Secured Party to any sale of disposition of the
Collateral except to the extent expressly provided herein.
3. Indebtedness Secured. The security interest granted hereby is to secure
payment in full of (i) any and all sums from time to time due from Debtor to
Secured Party, any instruments evidencing the indebtedness of Debtor to Secured
Party in respect of that certain Amended and Restated Subordinated Note dated as
of January 31, 2003, executed by Debtor and payable to the order of Secured
Party (the "Note"), and the full and complete performance of all agreements and
documents executed or delivered pursuant thereto, all as the same may be
amended, modified, or extended from time to time, (ii) all advances made by
Secured Party to discharge taxes or levies on, or made for repairs to,
maintenance of, or insurance on, the Collateral, (iii) all money or other credit
heretofore and hereafter advanced by Secured Party to or for the account of
Debtor pursuant to the Note, and (v) all costs and expenses incurred in the
collection of the foregoing, including representation in any bankruptcy
proceedings, including attorney's fees (all of the above being referred to,
collectively, as the "Obligations").
It is the true, clear, and express intention of Debtor that the continuing
grant of this security interest remain as security for payment and performance
of the Obligations, whether now existing, or which may hereinafter be incurred,
or whether or not contemplated by the parties at the time of the granting of
this security interest. The notice of the continuing grant of this security
interest, therefore, shall not be required to be stated on the face of any
document representing any Obligations, nor otherwise identify it as being
secured hereby; and if such Obligations shall remain, or become that of less
than all of Debtors herein, any Debtor not liable therefrom hereby expressly
hypothecates his, her, its or their ownership interest in the Collateral to the
extent required to satisfy the Obligations, without restriction, or limitation.
Any Obligations shall be deemed to have been made pursuant to Section 400.9-204
of the Uniform Commercial Code of Missouri.
4. Debtor's Name, Place of Business and Location of Collateral. Debtor's
(i) chief executive office and all Collateral is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; (ii) its State of organization or incorporation is
Missouri, and without prior written notice to Secured Party, Debtor shall not
change its State of incorporation or organization until such time as all
outstanding Obligations to Secured Party have been satisfied in full; and (iii)
its exact legal name is as first provided above.
When any Collateral is in the possession of a third party, the Debtor will
join with the Secured Party in notifying the third party of the Secured Party's
security interest and obtaining an acknowledgement from the third party that it
is holding the Collateral for the benefit of the Secured Party. The Debtor will
use commercially reasonable efforts to obtain control agreements in form
satisfactory to the Secured Party as deemed necessary by the Secured Party for
purposes of further perfecting or enforcing the security interests of the
Secured Party hereunder. The Debtor shall not create any Chattel Paper of
certificated Collateral without delivering same to the Secured Party or placing
a legend on the Chattel Paper acceptable to the Secured Party indicating that
the Secured Party has a security interest in the Chattel Paper.
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5. Collateral Use. The Collateral shall be kept in good order and repair
and Debtor will not permit waste or do anything to impair the value of the
Collateral or any part thereof or use or permit others to use the Collateral in
material violation of any insurance policy covering the Collateral or any
statute, ordinance or state or federal regulation. Debtor shall give Secured
Party immediate written notice of any damage, destruction, theft, loss or the
occurrence of any event which impairs the value of the Collateral.
6. Adverse Security Interests and Liens. Debtor is, or, to the extent that
the Collateral will be acquired after the date hereof, will be, the owner of the
Collateral free from any and all liens, security interests or encumbrances,
except for the security interest granted hereby and the following permitted
liens:
(a) The security interests granted to the Senior Lender, as defined
in the Subordination Agreement (the "Senior Lender");
(b) Purchase money security interests in Collateral to secure
indebtedness permitted by the Senior Lender;
(c) Those encumbrances (if any) listed on EXHIBIT 4.7, annexed to the
Amended and Restated
Loan and Security Agreement dated as of June
11, 2002 (the "Credit Agreement") between Debtor and Senior
Lender.
(d) Encumbrances for taxes not yet delinquent or which are being
contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the
books of the Debtor in accordance with generally accepted
accounting principles.
(e) Encumbrances in respect of property or assets imposed by law in
the ordinary course of business, such as carrier's,
warehousemen's, mechanics', materialmen's, repairmen's,
landlord's or similar encumbrances arising in the ordinary course
of business which are (x) not overdue in accordance with
customary business practices and consistent with the Debtor's
prior practices, and do not in the aggregate materially detract
from the value of such property or assets or materially impair
the use thereof in the operation of the business of the Debtor,
or (y) being contested in good faith by the Debtor by appropriate
proceedings diligently instituted and conducted and without
danger of any material risk to the Collateral, and adequate
reserves or other appropriate provision as shall be required in
conformity with generally accepted accounting principles shall
have been made therefor.
(f) Deposits to secure the performance of tenders, bids, sales, trade
and government contracts, leases, statutory obligations, surety,
appeal, and supersedeas bonds, warranty, advance payment,
customs, performance and return-of-money bonds and other
obligations of a like nature in the ordinary course of business
(exclusive of obligations in respect of the payment of borrowed
money) whether pursuant to statutory requirements, common law or
consensual arrangements.
(g) Easements, rights of way, leases, zoning or deed restrictions,
licenses, covenants, building, restrictions, minor defects or
irregularities in title and other similar real estate
encumbrances incurred in the ordinary course of business that in
the
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aggregate do not materially interfere with the conduct of the business
of the Debtor.
(h) Any interest or title of a lessor under any lease entered into by the
Debtor in the ordinary course of business covering only the assets so
leased.
(i) Judgment liens with respect to judgments not in excess of $1,000,000
in the aggregate during the term of this Agreement and with respect to
which lien execution has been stayed within sixty (60) days by
appropriate judicial proceedings or the posting of an appeal bond or
other security.
(j) Statutory and common law landlord's liens under leases to which the
Debtor is a party.
Debtor shall not further transfer or assign any interest in this Security
Agreement or the Collateral; and Debtor, at Debtor's expense, will defend the
Collateral against all claims and demands of all other persons at any time
claiming the same or an interest therein. There are no financing statements now
on file in any public office covering the Collateral, or intended so to be, or
in which Debtor is named or signed as debtor, and Debtor will not execute and
there will not be on file in any public office any financing statement or
statements covering the Collateral except the financing statements to be filed
in respect of and for the security interest of (i) Secured Party hereby granted
or provided for, (ii) Senior Lender, and (iii) any other permitted lien.
7. Insurance. Debtor, at Debtor's sole cost, shall at all times keep the
Collateral insured against physical loss or damage with coverage to be in
special coverage form, plus earthquake, flood, mine subsidence and other hazards
in an amount not less than the greater of (1) the full replacement cost or (2)
such other amount as may from time to time be required by Secured Party, with no
co-insurance clauses or deductibles in excess of $1,000.00 in the policies of
insurance unless Secured Party shall consent thereto in writing, in such form,
for such periods and written by such companies as may be satisfactory to Secured
Party, payable to and protecting Secured Party for not less than the total
amount owing on all indebtedness and obligations secured hereby. Debtor shall
maintain combined form business interruption and extra expense coverage. In
addition, Debtor shall maintain commercial general liability insurance in
occurrence form with coverage limits of at least $2,000,000.00 annual aggregate,
$1,000,000.00 per occurrence or as otherwise acceptable to Secured Party.
Notwithstanding the foregoing, Secured Party acknowledges that Debtor's
insurance policies include $2,500,000 sublimits for flood and earthquake
coverage, and such earthquake sublimit excludes the Debtor's facilities in
California, Nevada, and Washington. All such insurance shall be carried by
companies authorized to insure in Missouri and which have an AM Best rating of
A-IX or better and are otherwise acceptable to Secured Party, and all such
policies shall be in form acceptable to Secured Party.
All policies of insurance shall provide that Secured Party be the loss
payee and that the proceeds shall be paid first to Secured Party and that
Secured Party shall be protected against loss from any act or neglect of Debtor
or third parties, and such other endorsements as Secured Party may from time to
time request. Debtor will promptly provide Secured Party with evidence of such
insurance. Such insurance shall require a minimum of thirty (30) days prior
written notice to Secured Party or any cancellation thereof or any changes
affecting coverage, and no act or omission by Company shall invalidate the
obligation of the insurer to Secured Party. Debtor hereby assigns to Secured
Party, its successors and assigns, the proceeds of all such insurance to the
extent of the unpaid balance of the Obligations secured hereby. Debtor appoints
Secured Party as its attorney-in-fact (such appointment to be effective only
upon and after the occurrence of an Event of Default) to file claims under any
such insurance policies, to receive, receipt and give acquittance for any
payments that may be payable thereunder, and to execute any
- 5 -
and all endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies. Secured Party or its
successors or assigns may cancel such insurance at any time and shall receive
the return premium, if any, therefor, and may apply such return premium to the
purchase of similar insurance or to the balance due on the Obligations secured
hereby at its election. The insurance provisions herein contained are in
addition to and not in limitation of any other insurance requirements contained
in other agreements of Debtor to Secured Party.
8. Records. The records concerning the Collateral will be kept at the
address indicated in Section 4 hereof. Secured Party may inspect such records or
the Collateral at any reasonable time at any address. Debtor will not remove any
part of such records from said location without the price written consent of
Secured Party.
9. Financing Statement and Others Acts. Debtor irrevocably authorizes
Secured Party at any time and from time to time to file financing or
continuation statements and/or amendments thereto, without the signature of
Debtor, and Debtor shall execute and deliver such other instruments and
documents as may be requested by Secured Party to perfect, confirm and further
evidence the security interest and assignments hereby granted and shall pay the
fees incurred in filing all such financing statements or other instruments or
documents. If any applicable law requires the registration of the Collateral or
the issuance of a certificate of title therefor or both, Debtor agrees to
promptly comply with such law(s) and shall cause notice of the security interest
of Secured Party to be shown on any such certificate of title and will join in
executing such application for the title forms as Secured Party shall require.
Upon request of Secured Party, Debtor will promptly do all other acts and
things, and will execute and file all other instruments deemed necessary by
Secured Party under applicable law to establish, maintain and continue Secured
Party's perfected security interest in the Collateral and to effectuate the
intent of this Security Agreement and will pay all costs and expenses of filing
and recording or promptly reimburse Secured Party therefor if such costs and
expenses are incurred by Secured Party, including the costs of any searches
deemed necessary by Secured Party to establish, determine or maintain the
validity and the priority of the security interest of Secured Party, and pay or
otherwise satisfy all other claims and charges which in the reasonable opinion
of Secured Party might prejudice, imperil or otherwise affect the Collateral or
Secured Party's security interest therein. A photocopy of this Agreement shall
be deemed an original for purposes of filing or recording.
10. Taxes and Assessments. Debtors will pay promptly when due all taxes,
assessments and other charges levied or assessed upon the Collateral or for its
use or operation or upon this Security Agreement or upon any or other documents
evidencing the Obligations secured hereby.
11. Collateral Certificates and Schedules. Debtor shall furnish to Secured
Party from time to time, upon reasonable request, written statements,
certificates and schedules identifying and describing the Collateral and any
additions thereto and substitutions therefor in such detail as Secured Party
may require and certified as to accuracy the President or Chief Executive
Officer of Debtor.
12. Collateral Disposition. Until default hereunder or receipt of contrary
instructions from Secured Party:
(a) Debtor may have possession of the Collateral and use it in any lawful
manner not inconsistent with this Agreement or with any policy of
insurance thereon;
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(b) Debtor may sell the Inventory Collateral in the ordinary course
of Debtor's business (excluding, however, transfers or
dispositions on satisfaction of debt), and Debtor may use and
consume raw materials or supplies, the use and consumption of
which is necessary in order to carry on Debtor's business in the
ordinary course; and
(c) Debtor will, at its own expense, collect, as and when due, all
amounts due under the Accounts Collateral, including the taking
of such action with respect to such collection as Secured Party
may reasonably request or, in the absence of such request, as
Debtor may deem advisable, and may grant, in the ordinary course
of Debtor's business, to any party obligated on any of the
Accounts Collateral, any rebate, refund or adjustment to which
such party may be lawfully entitled, and may accept, in
connection therewith, the lawful return of goods, the sale or
lease or which shall have given rise to such Accounts Collateral.
13. Undertakings by Secured Party. Secured Party may from time to time, at
its sole option, and without notice to Debtor, perform any undertaking of
Debtor hereunder which, after reasonable notice, Debtor shall fail to perform
and take any other action which Secured Party deems necessary for the
maintenance or preservation of any of the Collateral or the interest of Secured
Party therein (including, without limitation, the discharge of taxes or liens
of any kind against the Collateral or the procurement of insurance) and Debtor
agrees to forthwith reimburse Secured Party, on demand, for all expenses of
Secured Party in connection with the foregoing, together with interest thereon
at a per annum rate equal to the highest rate of interest applicable to any of
the Obligations secured hereby, until reimbursed by Debtor and all amounts not
so reimbursed shall be added to and become a part of the Obligations secured
hereby. Secured Party may, for the foregoing purposes, act in its own name or
that of Debtor and may also act for the purpose of adjusting or settling any
policy of insurance on the Collateral, or endorsing any draft received in
connection therewith. For all of the foregoing purposes, Debtor hereby grants
to any officer of Secured Party its power of attorney, irrevocable so long as
any of the Obligations secured hereby shall be outstanding.
14. Warranties Correct. Debtor hereby warrants and represents that all
financial statements, certificates and schedules heretofore and hereafter
delivered to Secured Party by or on behalf of Debtor, and any statement and
data submitted in writing to Secured Party in connection with this Security
Agreement or any Obligations of Debtor to Secured Party, are true and correct
in all material respects and fairly present in all material respects the
financial condition of Debtor for the periods involved.
15. Identification of Collateral. Upon request of Secured Party, Debtor
will stamp on its records concerning the Collateral, a notation, in form
reasonably satisfactory to Secured Party, of the security interest of the
Secured Party hereunder, and when requested by Secured Party, Debtor shall
further affix to the Collateral such signs or labels as shall be reasonably
satisfactory to Secured Party to indicate the security interest of Secured
Party in the Collateral. Upon request of Secured Party at any time, Debtor will
promptly deliver to Secured Party lists or copies of all Collateral.
16. Accounts Collateral Warranties. Debtor warrants and represents with
respect to the Accounts Collateral that:
(a) all accounts are due and payable in cash not more than thirty
(30) days from the date of the invoice evidencing the account;
(b) The accounts are genuine in all respects and are as purported and
the account debtor has the capacity to enter into the
transaction;
-7-
(c) The accounts have not been previously assigned or encumbered
except as otherwise set forth herein;
(d) Debtor has full right and authority to assign them;
(e) If arising from the sale or lease of goods, such goods have been
shipped or delivered to the account debtor;
(f) The accounts are valid, legally enforceable obligation of the
account debtor thereunder and are not subject to any offset,
counterclaim or other defense on the part of such account debtor
or to any claim on the part of such account debtor denying
liability thereunder in whole or in part;
(g) No partial payment not shown upon the accounts has been made by
anyone;
(h) The accounts are enforceable according to their respective terms;
and
(i) The accounts are evidenced by invoices, dated not later than the
date of shipment or performance rendered to such account debtor
and are not evidenced by any instrument or chattel paper.
17. Default. Debtor shall be in default under this Security Agreement upon
the occurrence of any one or more of the following events or conditions (each of
which is an "Event of Default"):
(a) Failure of Debtor to pay any sum due under any Obligations or
liability secured hereby;
(b) Breach or failure to perform by Debtor of any covenant, promise,
condition, obligation or liability contained or referred to
herein, in the Obligations secured hereby or in any other
agreement to which Debtor and Secured Party are parties;
(c) The making or furnishing in any manner of any representation,
statement or warranty to Secured Party by or on behalf of Debtor
in connection with this Security Agreement or all or any part of
the Obligations secured hereby, which representation, statement
or warranty was false in any material respect when made or
furnished;
(d) Any loss, theft, damage, destruction, sale or encumbrance to or
of any of the Collateral;
(e) Any tax levy, attachment, garnishment, levy or execution or other
process issued against Debtor or the Collateral;
(f) With respect to any principal indebtedness exceeding $1,000,000
owed by Debtor to any creditor, (i) any suspension of payment by
Debtor, or (ii) any event or occurrence which constitutes an
event of default or which results in the acceleration of the
maturity of any obligations of Debtor under any indenture,
agreement, undertaking or other instrument; or
(g) Merger, consolidation, dissolution, termination of existence,
insolvency, business failure, bankruptcy, appointment of a
custodian or receiver of any part of the
-8-
property of Debtor, the commencement of any bankruptcy or
insolvency proceedings or any assignment for the benefit of
any creditors by or against Debtor or any co-maker,
accommodation maker, surety or guarantor of Debtor, or entry
of any judgment against any of them, death of Debtor or any
guarantor, or failure of any guarantor or surety of Debtor to
provide Secured Party with financial information promptly when
requested by Secured Party.
Notwithstanding the foregoing, until the payment in full of the Senior
Indebtedness (as defined in the Subordination Agreement), an Event of Default
shall only include (i) Debtor's failure to pay any sum due under any
Obligations or liability secured hereby, and (ii) any event or occurrence which
constitutes an event of default or which results in the acceleration of the
maturity of any obligations of Debtor owed to the Senior Lender.
18. Remedies. Upon the occurrence of any default under this Security
Agreement, Secured Party may at its option, without notice or demand, declare
all Obligations secured hereby immediately due and payable and Secured Party,
upon the occurrence of any such default, may exercise any and all of the rights
and remedies of a secured party under the Uniform Commercial Code of Missouri,
then in effect. Secured Party may take immediate possession of the Collateral
or any part thereof wherever the same may be found, and for said purposes may,
and is hereby appointed Debtor's agent and authorized by Debtor to, enter
Debtor's premises for the purpose of removing, assembling or taking possession
of the Collateral without liability for trespass or any other right of action
by reason of taking possession of said Collateral. Whenever the Collateral is
in Secured Party's possession, Secured Party may use and operate same as
appropriate for the purpose of protecting Secured Party's interest with respect
thereto. In addition, if any Collateral shall require rebuilding, repairing,
maintenance, preparation, or is in process or other unfinished state, Secured
Party shall have the right at its option to do such rebuilding, repairing
preparation, processing or completion of manufacturing on or off Debtor's
premises, for the purpose of putting the Collateral in such saleable form as
Secured Party shall deem appropriate. Secured Party may require Debtor, at
Debtor's expense, to assemble the Collateral and make it available to Secured
Party at a place to be designated by Secured Party. Debtor agrees to pay all
costs of Secured Party in the collection of the Obligations and enforcement of
rights hereunder, including reasonable attorney's fees and legal expense, and
of any repairs to any realty or other property to which any of the Collateral
may be affixed or be a part. Any notice of any sale, lease, or other
disposition, or other intended action by Secured Party shall be deemed
reasonable if it is in writing and deposited in the United States mail at least
ten (10) days in advance of the intended disposition or other intended action
or, with respect to a private sale, at least ten (10) days in advance of the
date after which a private sale or sales shall occur, first class postage
prepaid, addressed to Debtor at the address set forth in Section 4 hereof or to
any other address of Debtor appearing on the records of Secured Party. At any
sale, the Secured Party may specifically disclaim any warranties including of
title or the like. The Secured Party may comply with any applicable state or
federal law requirements in connection with a disposition of the Collateral and
compliance will not be considered adversely to affect the commercial
reasonableness of any sale or disposition of the Collateral. Debtor waives all
rights to require any marshalling of assets.
Secured Party shall also have the right to apply for and have a
receiver appointed by a court of competent jurisdiction to enforce its rights
and remedies hereunder in order to mange, protect and preserve the Collateral,
continue the operation of the business of Debtor, and to collect all revenues
and profits thereof and apply the same to the payment of (i) all expenses and
other charges of such receivership, including the compensation of the receiver,
and (ii) the Obligations secured hereby until a sale or other disposition of
such Collateral shall be finally made and consummated.
Secured Party may notify, or at the request of Secured Party the
Debtor will so notify, any and all parties obligated on any of the Collateral
that the Collateral has been assigned to Secured Party and that
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all payments thereon are to be made directly to Secured Party. Secured Party
may settle, compromise or release, on terms acceptable to Secured Party, in
whole or in part, any amounts owing on such Collateral; ▇▇▇ to enforce payments
and prosecute any action or proceeding with respect to the Collateral in its
own name or the name of Debtor; and extend the time of payment, make allowance
and adjustments, and issue credits in its own name or the name of Debtor. Upon
request of Secured Party, Debtor will indicate on all invoices to account
debtors that the accounts are payable directly to Secured Party.
Debtor will deliver to Secured Party promptly upon receipt, all
proceeds of Collateral received by Debtor, including proceeds of the Accounts
Collateral in the exact form in which they are received. To protect Secured
Party's rights hereunder, Debtor will assign or endorse proceeds to Secured
Party as Secured Party may request, and hereby constitutes any officer or
employee of Secured Party its true and lawful attorney-in-fact (such
appointment to be effective only upon and after the occurrence of an Event of
Default), with full power to endorse the name of Debtor upon any invoice,
freight or express ▇▇▇▇ or ▇▇▇▇ of lading relating to any such accounts, upon
drafts against account debtors and assignments and verifications of accounts and
notices to account debtors, upon any and every remittance or instrument of
payment, including checks, drafts and money orders, and in whatever form
received, and to do and perform all other acts and things necessary, proper and
requisite to carry out the intent of this Security Agreement. The power herein
granted shall be deemed to be coupled with an interest and shall not be revoked
by Debtor until Secured Party has been paid all sums due it, including all
proper expenses, with interest. All such items received by Secured Party for the
Collateral shall be applied in the manner set forth below for the proceeds of
any sale of Collateral.
The proceeds of any sale shall be applied in the following order:
first, to pay all costs and expenses of every kind for care, safekeeping,
collection, sale, delivery or otherwise (including expenses incurred in the
protection of Secured Party's title to or lien upon or right in any such
property, expenses for legal services of any kind in connection therewith or in
making any such sale or sales, insurance, commission for sale and guaranty),
then to interest on all Obligations of Debtor to Secured Party; then to the
principal thereof, whether or not such Obligations are due or accrued. Any
remaining surplus shall be paid to whomever shall be legally entitled thereto.
Application of proceeds as between particular Obligations to Secured Party
shall be in the absolute and sole discretion of Secured Party. If the proceeds
of any such sales are insufficient to pay all Obligations of Debtor to Secured
Party, Debtor shall remain liable for the deficiency.
19. Inspection. Section Party or its nominee shall have the privilege
at any time, upon request, of inspecting during reasonable business hours any
of the business properties or premises of Debtor and the books and records of
Debtor relating not only to the Collateral, or the processing or collecting
thereof, but also those relating to its general business affairs and financial
condition of Debtor. Debtor further agrees from time to time to furnish such
other reports, data and financial statements, in respect of its business and
financial condition, as Secured Party may reasonably require.
20. The Secured Party's Duties. The powers conferred on the Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Unless otherwise
required by law, the Debtor has the risk of loss of the Collateral, and the
Secured Party shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against other parties or any other
rights pertaining to any Collateral.
21. Nature and Priority of Security Interest. Secured Party
acknowledges and agrees that the security interest granted by Debtor to Secured
Party under this Agreement, as well as the exercise of Secured Party's rights
and remedies with respect to the Collateral, are subordinate and junior to the
security interests of Senior Lender in the Collateral to the extent set forth
in the Subordination Agreement. All representations and warranties of Debtor to
Secured Party in this Agreement or in any
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related document or instrument are hereby qualified in their entirety to reflect
the existence and priority of such security interest.
22. Miscellaneous. Debtor and Secure Party further agree as follows:
(a) Governing Law. This Security Agreement shall be governed by
and construed in accordance with the laws of the State of
Missouri without regard to conflict of laws principles.
(b) Non-Waiver. Waiver of or acquiescence by Secured Party in
any default by Debtor, or failure of Secured Party to insist
upon strict performance by Debtor of any warranties,
agreements or other obligations contained in this Security
Agreement shall not constitute a waiver of any subsequent or
other default, failure or waiver of strict performance,
whether similar or dissimilar.
(c) Modifications. No Modification of any provision of this
Security Agreement, no approvals required from Secured Party
and no consent by Secured Party to any departure therefrom
by Debtor shall be effective unless such modification,
approval or consent shall be in writing and signed by a duly
authorized officer of Secured Party, and the same shall then
be effective only for the period and on the conditions and
for the specific instances and purposes specified in such
writing. No notice to or demand on Debtor in any case shall
entitle Debtor to any other or further notice or demand in
similar or other circumstances.
(d) Severability. Wherever possible, each provision of this
Security Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any
provision of this Security Agreement shall be prohibited
by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Security
Agreement.
(e) Notices. All notices and other communications provided for
herein shall, unless otherwise stated herein, be in writing
and shall be personally delivered or sent by certified mail,
postage prepaid, by prepaid overnight nationally recognized
courier, or by facsimile, to the intended party at the
address or facsimile number of such party set forth as
follows:
If to Secured Party:
Mississippi Valley Capital, LLC
c/o Bush ▇'▇▇▇▇▇▇▇ and Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Debtor:
Bakers Footwear Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address or facsimile number as shall be
designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective
(a) if personally delivered, when delivered, (b) if sent by
certified mail, three (3) days after having been deposited in the
mail, postage prepaid, (c) if sent by overnight courier, one
business day after having been given to such courier, or (d) if
transmitted by facsimile, when sent.
(f) RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies of
Secured Party under this Security Agreement are cumulative and
are not in lieu of, but are in addition to any other rights or
remedies which Secured Party shall have under this Security
Agreement or any other instrument, or at law or in equity. No
course of dealing between Secured Party and Debtor or any failure
or delay on the part of Secured Party in exercising any rights or
remedies hereunder shall operate as a waiver of any rights or
remedies of Secured Party and no single or partial exercise of
any rights or remedies hereunder shall operate as a waiver or
preclude the exercise of any other rights or remedies hereunder.
(g) SECURITY INTEREST AND PLEDGE ABSOLUTE. All rights, including the
security interest of Secured Party granted hereunder, and all
obligations of Debtor hereunder, shall be absolute and
unconditional irrespective of:
i. any lack of validity or enforceability of the Obligations or
any other agreement or instrument relating thereto:
ii. any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure
from the Obligations or any agreement or instrument relating
thereto; or
iii. any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or
consent to departure from any guaranty, for all or any of
the Obligations.
(h) COSTS OF ENFORCEMENT. In the event that Secured Party shall
retain or engage an attorney or attorneys to collect or enforce
or protect its interests with respect to this Security Agreement
or any instrument or document delivered pursuant to this Security
Agreement, including the representation of Secured Party in
connection with any bankruptcy, reorganization, receivership or
any other any action affecting creditor's rights, and regardless
of whether a suit or action is commenced, Debtor shall pay all of
the costs and expenses of such collection, enforcement or
protection, including reasonable attorneys' fees, and Secured
Party may take judgment for all such amounts.
(i) SUCCESSORS AND ASSIGNS. This Security Agreement shall be binding
upon and inure to the benefit of Secured Party and its successors
and assigns Debtor and its heirs, successors and permitted
assigns.
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(j) Assignment: Sale of Interest. The Secured Party shall notify the
Company upon the assignment of Secured Party's rights, title,
interests, remedies, powers and duties hereunder.
(k) Fees and Expenses. Debtor shall pay all out-of-pocket costs and
expenses, including reasonable attorneys' fees and expenses,
incurred by Secured Party in connection with the preparation of
this Security Agreement and any document or instrument delivered
pursuant to or in connection with this Security Agreement and all
related documentation, recording or filing fees. Debtor shall
also pay all like costs and expenses incurred by Secured Party
in connection with any amendments, waivers, renewals or
modifications of or made pursuant to this Security Agreement or
any document or instrument delivered pursuant to or in connection
with this Security Agreement and all other related documentation.
(l) Reinstatement of Obligations. Debtor expressly agrees that to the
extent a payment or payments to Secured Party, or any part
thereof, are subsequently invalidated, declared to be void or
voidable, set aside and are required to be repaid to a trustee,
custodian, receiver or any other party under any bankruptcy act,
state or federal law, common law or equitable cause, then to the
extent of such payment or repayment, the obligation or part
thereof intended to be satisfied and any collateral given
therefore including this Agreement shall be revived and continued
in full force and effect as if said payment had not been made.
(m) Financing Statement. At the option of Secured Party, this
Security Agreement, or a carbon, photographic or other
reproduction of this Security Agreement or of any Uniform
Commercial Code financing statement covering the Collateral or
any portion thereof, shall be sufficient as a Uniform Commercial
Code financing statement and may be filed as such.
(n) Capitalized Terms. Capitalized terms used and not defined herein
shall have the meanings given to them in the Uniform Commercial
Code as adopted and in force in the State of Missouri, as from
time to time amended.
(o) Controlling Provisions. If any item of Collateral hereunder also
constitutes collateral granted to Secured Party under any other
mortgage, deed of trust, agreement or instrument, in the event of
any conflict between the provisions under this Security Agreement
and those under such other mortgage, agreement or instrument
relating to such Collateral, the provision or provisions selected
by Secured Party shall control with respect to such Collateral.
(p) Setoff. In addition to any rights now or hereafter granted under
the provisions of any applicable law, rule or regulation and, not
by way of limitation of any such rights, upon the occurrence of
(a) any Event of Default, or (b) any event which with the lapse
of time or the giving of notice, or both, would constitute an
Event of Default, Secured Party is hereby authorized by Debtor,
at any time or from time to time, without notice to Debtor or to
any other person, any such notice being hereby expressly waived,
i. to setoff and to appropriate and to apply any and all
deposits (general or special, time or demand, including, but
not limited to, indebtedness evidenced by certificates of
deposit, in each case whether matured or
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unmatured) and any other indebtedness at any time held or
owing by Secured Party to or for the credit or account of
Debtor against and on account of the obligations and
liabilities of Debtor to Secured Party, including, but not
limited to, all claims of any nature or description arising
out of or connected with this Security Agreement or any
instrument or document delivered in connection with or
pursuant to this Security Agreement, irrespective of whether
or not (a) Secured Party shall have made any demand under
this Security Agreement or any instrument or document
delivered in connection with or pursuant to this Security
Agreement, or (b) Secured Party shall have declared the
principal of and interest on amounts under this Security
Agreement or any instrument or document delivered in
connection with or pursuant to this Security Agreement to be
due and payable as permitted pursuant to this Security
Agreement or any instrument or document delivered in
connection with or pursuant to this Security Agreement, and
although said obligations and liabilities, or any of them,
shall be contingent or unmatured, and
ii. pending any such setoff or appropriation or application, to
hold the amounts of all deposits as collateral and to
return as unpaid any or all checks drawn against such
deposits that are presented for payment as Secured Party in
its sole discretion shall decide.
(q) Consent to Forum. DEBTOR HEREBY CONSENTS TO THE JURISDICTION OF
ANY STATE COURT LOCATED WITHIN THE CITY OF ST. LOUIS OR ST. LOUIS
COUNTY, MISSOURI OR FEDERAL COURT IN THE EASTERN DISTRICT OF
MISSOURI, EASTERN DIVISION. DEBTOR WAIVES ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON
LACK OF JURISDICTION OR VENUE. DEBTOR FURTHER AGREES NOT TO
ASSERT AGAINST SECURED PARTY (EXCEPT BY WAY OF A DEFENSE OR
COUNTERCLAIM IN A PROCEEDING INITIATED BY SECURED PARTY) ANY
CLAIM OR OTHER ASSERTION OF LIABILITY WITH RESPECT TO THIS
SECURITY AGREEMENT, SECURED PARTY'S CONDUCT OR OTHERWISE IN ANY
JURISDICTION OTHER THAN THE FOREGOING JURISDICTIONS.
(r) Waiver of Jury Trial. DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY (WHICH SECURED PARTY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING
TO THIS SECURITY AGREEMENT, THE OBLIGATIONS OF DEBTOR HEREUNDER
OR SECURED PARTY'S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.
(s) Mo.Rev.Stat. Section 432.045 Statement. The following notice is
given pursuant to Section 432.045 of the Missouri Revised
Statues; nothing contained in such notice shall be deemed to
limit or modify the terms of this Agreement: "ORAL AGREEMENTS OR
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A
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DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT
ENFORCEABLE. TO PROTECT YOU (COMPANY) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN
US EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT."
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by Debtor this 31st day of January, 2003.
BAKERS FOOTWEAR GROUP, INC. F/K/A
▇▇▇▇▇ AND ▇▇▇▇▇▇ SHOE CO.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of, and consents to, the
foregoing Security Agreement dated January 31, 2003, executed by Bakers
Footwear Group, Inc. f/k/a ▇▇▇▇▇ and ▇▇▇▇▇▇ Shoe Co., a Missouri corporation,
granting a security interest in the collateral further described therein to
Mississippi Valley Capital, LLC, a Missouri limited liability company.
IN WITNESS WHEREOF, the undersigned has executed this Acknowledgement
and Consent of as of this 31st day of January, 2003.
FLEET RETAIL FINANCE INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------
Title: AVP
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