SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 26, 2002
FOODARAMA SUPERMARKETS, INC.
(Exact name of registrant as specified in charter)
New Jersey 1-5745-1 21-0717108
(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification No.)
Building 6, Suite 1, 922 Highway 33, Freehold, New Jersey 07728 (Address
of principal executive offices) (Zip code)
Registrant's telephone number, including area code:(732) 462-4700
Item 5. Other Events
Foodarama Supermarkets, Inc. previously reported that it was in negotiations
with its lenders to increase the amount of, and to make certain changes to,
its credit facility. The increases and changes, as reported in the 10-Q for
the quarter ended August 3, 2002, which was filed with the Securities and
Exchange Commission on September 17, 2002, were incorporated into the Third
Amended and Restated Revolving Credit and Term Loan Agreement which was
executed and closed as of September 26, 2002.
Item 7. Financial Statement and Exhibits
(c) Exhibits
Exhibit 10.1 Third Amended and Restated Revolving Credit and
Term Loan Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
FOODARAMA SUPERMARKETS, INC.
(REGISTRANT)
By: /S/ Michael Shapiro
Michael Shapiro
Senior Vice President
Chief Financial Officer
Date: September 30, 2002
Exhibit 10.1
THIRD AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN
AGREEMENT
Dated as of September 26, 2002
Among
FOODARAMA SUPERMARKETS, INC.,
NEW LINDEN PRICE RITE, INC.,
THE GUARANTORS NAMED HEREIN,
THE LENDERS NAMED HEREIN,
and
GMAC BUSINESS CREDIT, LLC, AS AGENT
TABLE OF CONTENTS
Page
I. DEFINITIONS 6
II. THE LOANS 22
SECTION 2.01. Commitments 22
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SECTION 2.02. Loans 24
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SECTION 2.03. Notice of Loans 26
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SECTION 2.04. Notes; Repayment of Loans 26
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SECTION 2.05. Interest on Loans 27
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SECTION 2.06. Fees 27
----
SECTION 2.07. Termination of Revolving Commitments and Capital 28
Expenditure Facility Commitment
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SECTION 2.08. Interest on Overdue Amounts 29
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SECTION 2.09. Prepayment of Loans 29
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SECTION 2.10. Reserve Requirements; Change in Circumstances 32
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SECTION 2.10A Change in Legality; Eurodollar Availability 34
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SECTION 2.10B Indemnity 35
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SECTION 2.11. Pro Rata Treatment 36
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SECTION 2.12. Sharing of Setoffs 36
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SECTION 2.13. Taxes 36
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SECTION 2.14. Payments and Computations 38
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SECTION 2.15. Settlement Among Lenders 39
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SECTION 2.16. Making of Revolving Loans 41
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SECTION 2.17. Joint and Several Borrowers 42
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IIA. LETTERS OF CREDIT 42
SECTION 2A.01. Issuance of Letters of Credit 42
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SECTION 2A.02. Payment; Reimbursement 43
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SECTION 2A.03. GMACBC's Actions 44
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SECTION 2A.04. Payments in Respect of Increased Costs 45
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SECTION 2A.05. Indemnity as to Letters of Credit 46
---------------------------------
SECTION 2A.06. Letter of Credit Fees 47
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III. COLLATERAL SECURITY 47
SECTION 3.01. Security Documents 47
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SECTION 3.02. Filing and Recording 48
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SECTION 3.03. Real Property; Mortgages; Title Insurance 48
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SECTION 3.04. Additional Collateral 50
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i
IV. REPRESENTATIONS AND WARRANTIES 50
SECTION 4.01. Organization, Legal Existence 51
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SECTION 4.02. Authorization 51
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SECTION 4.03. Governmental Approvals 51
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SECTION 4.04. Binding Effect 51
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SECTION 4.05. Material Adverse Change 52
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SECTION 4.06. Litigation; Compliance with Laws; etc 52
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SECTION 4.07. Financial Statements 52
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SECTION 4.08. Federal Reserve Regulations 53
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SECTION 4.09. Taxes 53
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SECTION 4.10. Employee Benefit Plans 53
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SECTION 4.11. No Material Misstatements 55
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SECTION 4.12. Investment Company Act; Public Utility Holding
Company Act 55
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SECTION 4.13. Security Interest 55
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SECTION 4.14. Bank Accounts 56
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SECTION 4.15. Subsidiaries 56
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SECTION 4.16. Title to Properties; Possession Under Leases;
Trademarks 56
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SECTION 4.17. Solvency 57
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SECTION 4.18. Permits, etc 58
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SECTION 4.19. Compliance with Environmental Laws 58
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SECTION 4.20. Material Agreements 59
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V. CONDITIONS OF CREDIT EVENTS 59
SECTION 5.01. All Credit Events 59
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SECTION 5.01A. Capital Expenditure Loans 60
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SECTION 5.02. Closing Date 61
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VI. AFFIRMATIVE COVENANTS 65
SECTION 6.01. Legal Existence 65
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SECTION 6.02. Businesses and Properties 65
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SECTION 6.03. Insurance 65
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SECTION 6.04. Taxes 66
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SECTION 6.05. Financial Statements, Reports, etc 66
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SECTION 6.06. Litigation and Other Notices 68
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SECTION 6.07. ERISA 69
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SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit 70
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SECTION 6.09. Fiscal Year-End 70
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SECTION 6.10. Further Assurances 70
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SECTION 6.11. Additional Grantors and Guarantors 70
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SECTION 6.12. Environmental Laws 71
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SECTION 6.13. Pay Obligations to Lenders and Perform Other Covenants72
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SECTION 6.14. Maintain Operating Accounts 72
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SECTION 6.15. Amendments 73
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SECTION 6.16. Use of Proceeds 73
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ii
SECTION 6.17 Collateral Locations 73
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VII. NEGATIVE COVENANTS 73
SECTION 7.01. Liens 73
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SECTION 7.02. Sale and Lease-Back Transactions 75
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SECTION 7.03. Indebtedness 75
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SECTION 7.04. Dividends, Distributions and Payments 77
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SECTION 7.05. Consolidations, Mergers and Sales of Assets 77
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SECTION 7.06. Investments 78
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SECTION 7.07. EBITDA 79
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SECTION 7.08. Leverage Ratio 80
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SECTION 7.09. Debt Service Coverage Ratio 80
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SECTION 7.10. Capital Expenditures 80
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SECTION 7.11 Business 81
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SECTION 7.12. Sales of Receivables 81
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SECTION 7.13. Use of Proceeds 81
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SECTION 7.14. ERISA 81
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SECTION 7.15. Accounting Changes 82
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SECTION 7.16. Prepayment or Modification of Indebtedness;
Modification of Charter Documents 82
SECTION 7.17. Transactions with Affiliates 82
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SECTION 7.18. Consulting Fees 83
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SECTION 7.19. Limitations on Dividends and Other Payments 83
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VIII. EVENTS OF DEFAULT 83
IX. AGENT 89
X. CASH RECEIPTS COLLECTION 92
SECTION 10.01. Collection of Cash 92
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SECTION 10.02. Monthly Statement of Account 94
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SECTION 10.03. Collateral Custodian 94
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XI. MISCELLANEOUS 94
SECTION 11.01. Notices 94
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SECTION 11.02. Survival of Agreement 95
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SECTION 11.03. Successors and Assigns; Participations 95
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SECTION 11.04. Expenses; Indemnity 98
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SECTION 11.05. Applicable Law 99
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SECTION 11.06. Right of Setoff 99
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SECTION 11.07. Payments on Business Days 100
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SECTION 11.08. Waivers; Amendments; Final Maturity Date 100
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SECTION 11.09. Severability 101
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SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc 101
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SECTION 11.11. Confidentiality 102
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iii
SECTION 11.12. Submission to Jurisdiction 103
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SECTION 11.13. Counterparts; Facsimile Signature 103
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SECTION 11.14. Headings 103
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SECTION 11.15. Defaulting Lender 103
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XII. GUARANTEES 105
XIII. AMENDMENT AND RESTATEMENT 106
iv
EXHIBITS
EXHIBIT A Form of Revolving Note
EXHIBIT B-1 Form of Term Note
EXHIBIT B-2 Form of Capital Expenditure Note
EXHIBIT C Form of Opinion of Counsel
EXHIBIT D Form of Pledge Agreement
EXHIBIT E Form of Security Agreement
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Form of Security Agreement (Partnership Interests)
EXHIBIT H Form of Landlord Waiver
EXHIBIT I Form of Conversion/Continuation Notice
SCHEDULES
SCHEDULE 2.01 Commitments
SCHEDULE 2.02 Domestic Lending Offices
SCHEDULE 2.03 Eurodollar Lending Offices
SCHEDULE 3.03 Original Mortgages
SCHEDULE 4.01 Qualified Jurisdictions
SCHEDULE 4.06(a) Litigation
SCHEDULE 4.10 ERISA Representation Qualifications
SCHEDULE 4.14 List of Bank Accounts
SCHEDULE 4.15 Subsidiaries
SCHEDULE 4.16(a-1) Owned Real Property
SCHEDULE 4.16(a-2) Leased Real Property
SCHEDULE 4.19 Environmental Law Compliance
SCHEDULE 4.20 Material Agreements
SCHEDULE 5.01A Exceptions to Capital Expenditure Loan Conditions
SCHEDULE 6.17 Collateral Locations
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.03 Existing Indebtedness
SCHEDULE 7.06 Permitted Investments
SCHEDULE A Certain Intellectual Property
SCHEDULE B New/Replacement Store Projects
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THIRD AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT, dated
as of September 26, 2002 (this "Agreement"), among NEW LINDEN PRICE RITE, INC.,
a New Jersey corporation ("New Linden"), FOODARAMA SUPERMARKETS, INC., a New
Jersey corporation (the "Parent", and together with New Linden, each a
"Borrower" and collectively, the "Borrowers"), the Guarantors signatory hereto,
the lenders named in Schedule 2.01 annexed hereto (collectively with their
respective permitted successors and assigns, the "Lenders"), and GMAC BUSINESS
CREDIT, LLC ("GMACBC"), as agent for the Lenders (GMACBC in such capacity, the
"Agent").
New Linden, the Parent, the Guarantors, Agent, JP Morgan Chase (formerly
known as The Chase Manhattan Bank) ("Chase") and Citizens Business Credit
Company ("Citizens") entered into a Second Amended and Restated Revolving Credit
and Term Loan Agreement dated as of January 7, 2000 (as amended, restated,
modified and supplemented through but excluding the date hereof) (the "Existing
Loan Agreement"), pursuant to which Agent, Citizens and Chase extended certain
financial accommodations. The Obligations (as defined under the Existing Loan
Agreement) were secured by the Security Documents and the other Loan Documents
(including the Mortgages).
Pursuant to a certain Assignment and Assumption Agreement, Chase has
assigned to The Bank of New York ("BNY") its rights, obligations and commitment
under the Existing Loan Agreement.
New Linden, the Parent and the Guarantors have requested that the Agent
and the Lenders amend and restate the Existing Loan Agreement as follows.
The proceeds of the Loans (other than the proceeds of the Capital
Expenditure Facility) shall be used by the Borrowers to pay fees and expenses in
connection with the financing contemplated hereby and for the working capital
and general corporate purposes of the Borrowers to the extent that such purposes
are permitted hereunder. The Lenders are severally, and not jointly, willing to
extend such Loans to the Borrowers subject to the terms and conditions
hereinafter set forth. Therefore, the parties hereto agree that the Existing
Loan Agreement shall be amended and restated as follows:
For purposes hereof, the following terms shall have the meanings specified
below:
I. DEFINITIONS
"Adjusted CAPEX" shall mean, for any period, (i) the total Capital
Expenditures of Parent and its Subsidiaries on a Consolidated basis, minus (ii)
the sum of (x) all Capital Expenditures for real estate assets acquired pursuant
to Capitalized Lease Obligations and (y) all Capital Expenditures relating to
New/Replacement Store Projects.
"Adjusted EBITDA" shall mean, for any period, EBITDA minus cash
amounts due, whether or not paid, as rent under capitalized real estate leases
(whether accounted for as interest expense, principal amortization, or
otherwise).
6
"Adjusted Indebtedness" shall mean, (i) Indebtedness of Parent and
its Subsidiaries on a Consolidated basis less (ii) any such Indebtedness
attributable to Capitalized Lease Obligations related to real estate leases.
"Adjusted Interest Expense" shall mean, for any period, the interest
expense, net of interest income, of the Parent and its Subsidiaries during such
period determined on a Consolidated basis in accordance with generally accepted
accounting principles, excluding (i) the amortization of all fees payable in
connection with the incurrence of Indebtedness to the extent included in
interest expense, and (ii) interest on Capitalized Lease Obligations.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period a rate of interest equal to:
(a) the offered rate for deposits in U.S. dollars in the
London interbank market for the relevant Interest Period which is published by
the British Bankers' Association and currently appears on Telerate Page 3750 as
of 11:00 a.m. (London time) on the day which is two (2) Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period; provided, however, that if such a rate ceases to be available on that or
any other source from the British Bankers' Association, Adjusted LIBO Rate shall
be a rate per annum equal to the offered rate for deposits in U.S. dollars in
the London interbank market for the relevant Interest Period that appears on
Reuters Screen LIBO Page (or any successor page) as of 11:00 a.m. (London time)
on the day which is two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period, provided that if
more than one rate is specified on Reuters Screen LIBO Page, Adjusted LIBO Rate
shall be a rate per annum equal to the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%); provided, however,
that if, for any reason, such a rate is not published by the British Bankers'
Association or available on the Reuters Screen LIBO Page, Adjusted LIBO Rate
shall be equal to a rate per annum equal to the average rate (rounded upwards,
if necessary, to the nearest 1/100 of 1%) at which Agent determines that U.S.
dollars in an amount comparable to the amount of the applicable Loans are being
offered to prime banks at approximately 11:00 a.m. (London time) on the day
which is two (2) Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period for settlement in immediately
available funds by leading banks in the London interbank market selected by
Agent; divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior to the
beginning of such Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be maintained
by a member bank of the Federal Reserve System; such rate to be rounded upward
to the next whole multiple of one-sixteenth of one percent (.0625%).
"Affiliate" of any person shall mean any other person which,
directly or indirectly, controls or is controlled by or is under common control
7
with such person and, without limiting the generality of the foregoing, includes
(i) any other person which beneficially owns or holds 5% or more of any class of
voting securities of such person or 5% or more of the equity interest in such
person, (ii) any person of which such person beneficially owns or holds 5% or
more of any class of voting securities or in which such person beneficially owns
or holds 5% or more of the equity interest in such person and (iii) any person
who is known by the Parent or any of its Subsidiaries to be a director, officer
or partner of such person. For the purposes of this definition, the term
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"Agent" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Agent's Account" shall mean the deposit account number 3613249-84
of Agent at Bank One Michigan, or such other deposit account as Agent shall
designate by written notice to Borrower.
"Alternative Capex Financing" shall have the meaning assigned
thereto in Section 7.03 hereof.
"Applicable Lending Office" shall mean, with respect to each Lender,
such Lender's Domestic Lending Office in the case of a Base Rate Loan and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Loan.
"Applicable Margin" shall mean (i) in the case of Loans which are
Base Rate Loans, (x) one and one-half of one percent (1.50%) if such Base Rate
Loans are Revolving Loans, and (y) two percent (2.00%) if such Base Rate Loans
are Term Loans or Capital Expenditure Loans; and (ii) in the case of Loans which
are Eurodollar Loans, (x) three and one-quarter percent (3.25%) if such
Eurodollar Loans are Revolving Loans, and (y) three and three- quarter percent
(3.75%) if such Eurodollar Loans are Term Loans or Capital Expenditure Loans.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee and accepted by the Agent, in
substantially the form of Exhibit F annexed hereto.
"Base Rate" shall mean a variable rate of interest per annum equal
to the higher of (a) the rate of interest from time to time published by the
Board of Governors of the Federal Reserve System as the "Bank Prime Loan" rate
in Federal Reserve Statistical Release H.15(519) entitled "Selected Interest
Rates" or any successor publication of the Federal Reserve System reporting the
Bank Prime Loan rate or its equivalent, or (b) the Federal Funds Effective Rate
then in effect plus one-half of one percent (.50%). The statistical release
generally sets forth a Bank Prime Loan rate for each Business Day. The
applicable Bank Prime Loan rate for any date not so set forth shall be the rate
set forth for the last preceding date. In the event the Board of Governors of
the Federal Reserve System ceases to publish a Bank Prime Loan rate or its
8
equivalent, the term "Prime Rate" shall mean a variable rate of interest per
annum equal to the highest of the "prime rate", "reference rate", "base rate",
or other similar rate announced from time to time by either of Citibank, N.A. or
The Chase Manhattan Bank or their respective successors (with the understanding
that any such rate may merely be a reference rate and may not necessarily
represent the lowest or best rate actually charged to any customer by the any
such bank).
"Base Rate Loan" shall mean a Loan bearing interest based upon the
Base Rate in accordance with Article II hereof.
"BNY" shall mean The Bank of New York.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" and "Borrowers" shall have the respective meanings
assigned to such terms in the preamble to this Agreement.
"Borrowing Base" shall have the meaning assigned to such term in
Section 2.01(a)(i) hereof.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the States of New York or Michigan or
is a day on which banking institutions located in either of such states are
closed or authorized to close and for the purposes of Eurodollar Loans and the
determination of Adjusted LIBO Rate and Interest Periods a day on which U.S.
dollar deposits are traded on the London interbank market.
"Capital Expenditure Facility" shall mean the loan facility extended
under Section 2.01(c) hereof.
"Capital Expenditure Facility Availability Period" shall have the
meaning set forth in Section 2.01(d).
"Capital Expenditure Facility Commitment" shall mean with respect to
each Lender, the Capital Expenditure Facility Commitment of such Lender set
forth in Schedule 2.01, as it may be adjusted from time to time pursuant to
Section 2.07 and the definition of Total Capital Expenditure Facility
Commitment.
"Capital Expenditure Loan" shall have the meaning set forth in
Section 2.01(c).
"Capital Expenditure Notes" shall mean the Capital Expenditure Notes
of the Borrowers, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit B-2, as amended, modified or supplemented from
time to time.
"Capital Expenditures" shall mean the amount of all purchases made
by the Parent or any of its Subsidiaries directly or indirectly for the purpose
9
of acquiring, constructing or maintaining fixed assets, real property or
equipment which, in accordance with generally accepted accounting principles,
would be added as a debit to the fixed asset account of the Parent or any such
Subsidiary.
"Capitalized Lease Obligation" shall mean an obligation to pay rent
or other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with generally accepted accounting principles, and for purposes hereof the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with such principles.
"Cash on Hand of Borrowers" shall mean at any point in time of
measurement, the sum of (i) all Payments constituting cleared funds on deposit
in any deposit accounts of Borrowers that are subject to blocked account,
collection account or similar agreements in form and substance satisfactory to
Agent but which, at the point in time of measurement have not been wire
transferred to Agent's Account; (ii) all credit and debit card sales that have
taken place and have been approved by the relevant credit and/or debit card
company but for which credit has not been given by such credit and/or debit card
company; (iii) cash and checks which have been delivered by Borrowers into the
custody of their armored car service for delivery to any deposit account of
Borrowers that are subject to blocked account, collection account or similar
agreements in form and substance satisfactory to Agent, but which funds have not
yet been deposited into such account and (iv) cash and checks in the stores of
the Borrowers which have been deposited into the stores' on-site dual-key
depository safes, awaiting pickup by the Borrowers' armored car service.
"Change of Control" shall mean (i) Joseph Saker, Gloria Saker,
Richard Saker and Permitted Family Transferees shall together fail to own,
beneficially and control all voting rights with respect to, at least 35% of all
of the issued and outstanding capital common stock of the Parent or (ii) Joseph
Saker, Gloria Saker, Richard Saker, Joseph J. Saker, Jr. and Thomas Saker shall
together fail to own, beneficially and all voting rights with respect to, at
least 30% of all of the issued and outstanding capital common stock of the
Parent (provided, however that the 30% requirement set forth in this clause (ii)
shall be reduced by 1% each year (e.g., from 30% to 29% and from 29% to 28%,
etc.) effective on each anniversary date of the Initial Closing Date, but in no
event to lower than 25%.
"Chase" shall mean JPMorgan/Chase.
"Closing Date" shall mean September 26, 2002.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all collateral and security as described in
the Security Documents.
10
"Commitment" shall mean, with respect to each Lender, the sum of the
Revolving Commitment, the Term Commitment and the Capital Expenditure Facility
Commitment of such Lender as set forth in Schedule 2.01, as it may be adjusted
from time to time pursuant to Section 2.07.
"Commitment Fee" shall have the meaning set forth in Section 2.06(a)
hereof.
"Consolidated" shall mean, in respect of any person, as applied to
any financial or accounting term, such term determined on a consolidated basis
in accordance with generally accepted accounting principles (except as otherwise
required herein) for the person and all consolidated Subsidiaries thereof.
"Credit Event" shall mean each borrowing of a Loan and each issuance
of a Letter of Credit hereunder.
"Debt Service Coverage Ratio" shall mean, for any period, the ratio
of (i) Operating Cash Flow to (ii) the sum of (A) Adjusted Interest Expense for
such period, (B) provision for (to the extent greater than zero) income taxes
included in the determination of Net Income (excluding any provision for
deferred taxes), (C) payment of deferred taxes accrued in any prior period, and
(D) the aggregate of regularly scheduled principal payments of all Adjusted
Indebtedness made or scheduled to have been made by the Parent and its
Subsidiaries during such period, determined on a Consolidated basis in
accordance with generally accepted accounting principles.
"Default" shall mean any condition, act or event which, with notice
or lapse of time or both, would constitute an Event of Default.
"Defaulting Lenders" shall have the meaning assigned to such term in
Section 11.15(a) hereof.
"Dollars" or the symbol "$" shall mean dollars in lawful currency of
the United States of America.
"Domestic Lending Office" shall mean, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" opposite
its name in Schedule 2.02 annexed hereto, or such other office of such Lender as
such Lender may from time to time specify to the Borrowers and the Agent.
"EBITDA" shall mean, for any period, Net Income plus, (X) to the
extent included in the calculation of Net Income, the sum of (i) any
extraordinary non-cash losses, (ii) the amount of any reserves taken and
occasioned by the closing of store locations, (iii) non-cash charges for assets
written down as a result of store remodels and/or closedowns or other non-cash
write downs required pursuant to GAAP, (iv) interest expenses net of interest
income, (v) depreciation and amortization, (vi) federal, state and local income
taxes and (vii) any increase in the LIFO reserve and less (Y) the sum of (i) any
extraordinary non-cash gains included in the calculation of Net Income, (ii) any
11
extraordinary cash gains included in the calculation of Net Income, but only to
the extent such gains exceed extraordinary cash losses included in the
calculation of Net Income and (iii) any charges to balance sheet reserves
previously or presently established in connection with the closing of store
locations or the disposition of other assets in each case of the Parent and its
Subsidiaries for such period determined on a Consolidated basis, and any other
non cash charges to reserves, computed and calculated in accordance with
generally accepted accounting principles, and (iv) any decrease in the LIFO
reserve.
"Eligible Inventory" shall mean inventory owned by a Borrower which
is not, in the commercially reasonable judgment of the Agent, obsolete or
unmerchantable and is and at all times shall continue to be acceptable to the
Agent in its commercially reasonable judgment in all respects but shall in any
event include only finished goods and shall not in any event include
delicatessen, bakery, floral, meat, fish, produce goods and/or milk and certain
other subcategories of dairy to be determined by the Agent, provided, however,
that the Agent may, in its sole discretion, deem certain raw material bakery and
commissary goods, certain supplies and certain non-perishable goods included by
the Borrowers under the perishable category to be acceptable. Standards of
eligibility may be fixed and revised from time to time solely by the Agent in
the Agent's exclusive commercially reasonable judgment. In determining
eligibility, the Agent may, but need not, rely on reports and schedules
furnished by the Borrowers, but reliance by the Agent thereon from time to time
shall not be deemed to limit the right of the Agent to revise standards of
eligibility at any time as to both present and future inventory of the
Borrowers.
"Environmental Claim" shall mean any written notice of violation,
claim, demand, abatement or other order by any governmental authority or any
person for personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or deed or use restrictions, resulting from or based upon (i) the
existence, or the continuation of the existence, of a Release (including,
without limitation, sudden or non-sudden, accidental or nonaccidental Releases),
of, or exposure to, any Hazardous Material in, into or onto the environment
(including, without limitation, the air, ground, water or any surface) at, in,
by or from any of the properties of the Parent or its Subsidiaries, (ii) the
environmental aspects of the transportation, storage, treatment or disposal of
Hazardous Materials in connection with the operation of any of the properties of
the Parent or its Subsidiaries or (iii) the violation, or alleged violation by
the Parent or any of its Subsidiaries, of any Environmental Laws relating to any
of the properties of the Parent or its Subsidiaries.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C.s.9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C.s.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C.s. 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C.s.1251 et seq.), the Oil Pollution Act of 1990
(P.L. 101-380), the Safe Drinking Water Act (42 U.S.C. s.300(f), et seq.), the
Clear Air Act (42 U.S.C.s. 7401 et seq.), the Toxic Substances Control Act, as
amended (15 U.S.C. s.2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. s.136 et seq.), and the Occupational Safety and Health
Act (29 U.S.C. s.651 et seq.), as such laws have been and hereafter may be
amended or supplemented, and any related or analogous present or future Federal,
12
state or local, statutes, rules, regulations, ordinances, licenses, permits and
interpretations and orders of regulatory and administrative bodies.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder, as in
effect from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which together with the Parent or any of its Subsidiaries would be
treated as a single employer under the provisions of Title I or Title IV of
ERISA.
"Eurodollar Lending Office" shall mean, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" opposite
its name in Schedule 2.03 annexed hereto (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender as such Lender
may from time to time specify to the Borrowers and the Agent.
"Eurodollar Loan" shall mean a Loan bearing interest based on the
Adjusted LIBO Rate in accordance with Article II hereof.
"Event of Default" shall have the meaning assigned to such term in
Article VIII hereof.
"Existing Loan Agreement" shall have the meaning assigned to such
term in the preamble to this Agreement.
"Federal Funds Effective Rate" means, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Federal Reserve Bank of New York or,
if such rate is not published for any Business Day, the average of the
quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.
"Fee Letter" shall mean the letter dated as of the Closing Date
between and among the Borrowers and Agent.
"Final Maturity Date" shall mean December 31, 2007, subject to
extension pursuant to Section 11.08(c) hereof.
"Financed Equipment" shall have the meaning assigned to such term in
Section 5.01A(b) hereof.
"Financial Officer" shall mean, with respect to any person, the
chief financial officer or chief accounting officer of such person.
"Fiscal Quarter" shall mean and refer to each fiscal quarter of
Parent and its Subsidiaries in accordance with their respective historical
practices.
13
"Fiscal Year" shall mean the fiscal year of the Parent for
accounting purposes which ends on the Saturday nearest to October 31 of each
year.
"GMAC" shall mean General Motors Acceptance Corporation, a Delaware
corporation.
"GMACBC" shall have the meaning set forth in the preamble to this
Agreement.
"Grantor" shall mean any Assignor, Grantor, Pledgor, Mortgagor or
Debtor, as such terms are defined in any of the Security Documents.
"Guarantee" shall mean any obligation, contingent or otherwise, of
any person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or obligation of any other person in any manner, whether directly
or indirectly, and shall in any event include any guarantee under Article XII
hereof, and shall include, without limitation, any obligation of such person,
direct or indirect, to (i) purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or obligation or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such Indebtedness or obligation, (ii) purchase property, securities or services
for the purpose of assuring the owner of such Indebtedness or obligation of the
payment of such Indebtedness or obligation, or (iii) maintain working capital,
equity capital, available cash or other financial condition of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or
obligation; provided, however, that the term Guarantee shall not include
endorsements for collection or collections for deposit, in either case in the
ordinary course of business.
"Guarantor" shall mean, collectively, the Borrowers and each
Subsidiary thereof or any Subsidiary of the Parent which becomes a guarantor of
the Obligations after the date hereof.
"Hazardous Material" shall mean any pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous waste, substance or
material, defined or regulated as such in (or for purposes of) any Environmental
Law and any other toxic, reactive, or flammable chemicals, including (without
limitation) any asbestos, any petroleum (including crude oil or any fraction),
any radioactive substance and any polychlorinated biphenyls; provided, in the
event that any Environmental Law is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment; and provided, further, to the extent that the
applicable laws of any state establish a meaning for "hazardous material,"
"hazardous substance," "hazardous waste," "solid waste" or "toxic substance"
which is broader than that specified in any federal Environmental Law, such
broader meaning shall apply.
"Indebtedness" shall mean, with respect to any person, without
duplication, (a) all obligations of such person for borrowed money or with
respect to deposits (excluding security deposits received by a Grantor in
connection with real property subleases) or advances of any kind, (b) all
obligations of such person evidenced by bonds, debentures, notes or other
14
similar instruments, (c) all obligations of such person for the deferred
purchase price of property or services, except current accounts payable arising
in the ordinary course of business and not overdue, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property purchased by such person, (e) all payment obligations of such person
with respect to interest rate or currency protection agreements, (f) all
obligations of such person as an account party under any letter of credit or in
respect of bankers' acceptances, (g) all obligations of any third party secured
by property or assets owned by such person (regardless of whether or not such
person is liable for repayment of such obligations), (h) all Guarantees of such
person and (i) all obligations of such person as lessee under leases the
expenditures under which are Capitalized Lease Obligations.
"Indemnitees" shall have the meaning assigned to such term in
Section 11.04(c) hereof.
"Information" shall have the meaning assigned to such term in
Section 11.11 hereof.
"Initial Closing Date" shall mean January 7, 2000.
"Intercreditor Agreements" shall mean each of (i) the Intercreditor
Agreement dated as of August 31, 1998 (as amended, the "CIT Intercreditor
Agreement") among The CIT Group/Equipment Financing, the Parent, New Linden and
the Agent (as successor to Heller Financial, Inc.) and (ii) the letter agreement
dated December 28, 1999 (the "GE Capital Agreement") between the Agent and GE
Capital Corporation (as successor to MetLife Capital Corporation).
"Interest Payment Date" shall mean (i) in the case of a Base Rate
Loan, the first day of each month, commencing February 1, 2000, and (ii) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
thereto, and, in addition, in respect of any Eurodollar Loan of more than three
(3) months' duration, each earlier day which is three (3) months after the first
day of such Interest Period.
"Interest Period" shall mean, as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is one (1), two (2), three (3) or six (6) months
thereafter, as the Borrowers may elect with respect to such Eurodollar Loan in
accordance with the terms hereof; provided, however, that (x) if an Interest
Period would end on a day that is not a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, with respect to such
Eurodollar Loan, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (y) no Interest Period shall end later than the Final
Maturity Date and (z) interest shall accrue from and including the first day of
an Interest Period to but excluding the last day of such Interest Period.
"Issuing Bank" shall mean GMAC and/or any other financial
institution that issues a Letter of Credit.
15
"Landlord Waiver" shall mean a landlord's or bailee's agreement with
respect to each property of a Borrower subject to a lease substantially in the
form of Exhibit H hereto or as agreed to by Agent.
"Lender" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Letter of Credit" shall have the meaning assigned such term in
Section 2A.01 hereof.
"Letter of Credit Usage" shall mean at any time, (i) the aggregate
undrawn amount of all outstanding Letters of Credit plus (ii) any unreimbursed
drawing at such time under Letters of Credit.
"Lien" shall mean, with respect to any asset, (i) any mortgage,
lien, pledge, encumbrance, charge or security interest in or on such asset, (ii)
the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset, (iii)
in the case of securities, any purchase option, call or similar right of a third
party with respect to such securities or (iv) any other right of or arrangement
with any creditor to be entitled to receive any such mortgage, lien, pledge,
encumbrance, charge or security interest on or to have such creditor's claim
satisfied out of such assets, or the proceeds therefrom, prior to the general
creditors of the owner thereof.
"Loan" shall mean, collectively, each Revolving Loan, the Term Loan
and each Capital Expenditure Loan.
"Loan Documents" shall mean this Agreement, each Security Document,
the Notes, the Intercreditor Agreements, any letter of credit applications with
respect to Letters of Credit and each other document, instrument, or agreement
now or hereafter delivered to the Agent, any Lender, Issuing Bank or GMACBC in
connection herewith or therewith.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, liabilities, properties, prospects (within one year of
the date of determination and in any event excluding the effects of the opening
or expansion of competing stores), operations or financial condition of any
Borrower, or the Parent and its Subsidiaries taken as a whole, (ii) the ability
of any Borrower or any Guarantor to perform or pay the Obligations in accordance
with the terms hereof or of any other Loan Document or to perform its other
material obligations thereunder or (iii) the Agent's Lien on any material
portion of the Collateral or the priority of such Lien.
"Mortgages" shall have the meaning set forth in Section 3.03 hereof.
16
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"Net Amount of Eligible Inventory" shall mean, at any time, the
aggregate value, computed at the lower of cost (on a FIFO basis) and current
market value, of Eligible Inventory of the Borrowers.
"Net Income" shall mean, for any period, the aggregate income (or
loss) of the Parent and its Subsidiaries determined on a Consolidated basis for
such period, all computed and calculated in accordance with generally accepted
accounting principles consistently applied.
"New/Replacement Store Projects" shall mean the new store projects
and replacement store projects described on Schedule B hereto.
"Non-Ratable Loans" shall have the meaning assigned to such term in
Section 2.15(c)(iii) hereof.
"Notes" shall mean collectively, the Revolving Notes, the Capital
Expenditure Notes and the Term Notes.
"Obligations" shall mean all obligations, liabilities and
Indebtedness of any Borrower and/or any Guarantor to the Lenders, the Agent, any
Issuing Bank and/or GMACBC, whether now existing or hereafter created, direct or
indirect, due or not, whether created directly or acquired by assignment,
participation or otherwise, under or with respect to this Agreement, the Notes,
the Security Documents and the other Loan Documents, including without
limitation, the principal of and interest on the Loans and the payment or
performance of all other obligations, liabilities, and Indebtedness of any
Borrower and/or any Guarantor to the Lenders, the Agent, any Issuing Bank and/or
GMACBC hereunder, under or with respect to the Letters of Credit (including,
without limitation, any obligation of any Borrower and/or any Guarantor to
reimburse the Lenders, the Agent, any Issuing Bank and/or GMACBC with respect to
any amounts paid in connection with Letters of Credit) or under any one or more
of the other Loan Documents, including but not limited to all fees, costs,
expenses and indemnity obligations hereunder and thereunder.
"Operating Cash Flow" shall mean, for any period (i) Adjusted EBITDA
for such period, minus (ii) the difference between (x) Adjusted CAPEX for such
period and (y) Remodel/Expansion CAPEX for such period for stores in operation
as of the Closing Date, each for the Parent and its Subsidiaries on a
Consolidated basis.
"Original Capital Expenditure Loan" shall mean the capital
expenditure loans made to Borrowers pursuant to the Existing Loan Agreement in
the original principal amount of $11,757,628.00.
"Other Taxes" shall have the meaning assigned to such term in
Section 2.13(b) hereof.
17
"Parent" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any Plan which is subject to the
provisions of Title IV of ERISA.
"Permits" shall have the meaning assigned to such term in Section
4.18 hereof.
"Permitted Family Transferees" shall mean (a) each member of the
Saker Group, (b) any trust established by one or more Saker Persons, the
beneficiaries of which are solely one or more members of the Saker Group, (c)
any partnership owned solely by one or more members of the Saker Group or owned
solely by one or more entities which are either owned solely by one or more
members of the Saker Group or of which solely one or more members of the Saker
Group are beneficiaries, or (d) any estate of which solely one or more members
of the Saker Group are beneficiaries.
"Permitted Option Loan" shall mean a loan made by Parent to an
employee for the purpose of effectuating and the proceeds of which are used to
effectuate the purchase by such employee of shares of capital stock of Parent
under a qualified Stock Option Plan of Parent.
"Person" shall mean any natural person, corporation, business trust,
association, company, joint venture, partnership, limited liability company, or
government or any agency or political subdivision thereof.
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA and which is maintained (in whole or in part) for
employees of the Parent, any Subsidiary thereof or any ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of
February 15, 1995, among the Parent, New Linden, the Guarantors and the Agent,
for the benefit of the Secured Parties, in substantially the form of Exhibit D
annexed hereto, as amended, modified or supplemented from time to time.
"Pledged Stock" shall have the meaning assigned to such term in the
Pledge Agreement.
"Reading" shall mean Shop Rite of Reading, Inc., a Pennsylvania
corporation.
"Register" shall have the meaning assigned to such term in Section
11.03(e) hereof.
"Regulation D" shall mean Regulation D of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
18
"Regulation T" shall mean Regulation T of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder.
"Related Family Transferee" means (a) any Saker Person (excluding
Richard Saker, Gloria Saker, Joseph Saker, Thomas Saker or Joseph Saker, Jr.);
(b) any trust established solely or jointly by any Saker Person, the
beneficiaries of which include any Saker Person; (c) any partnership owned in
whole or in part by any Saker Person or owned in whole or in part by one or more
entities which are either owned in whole or in part by any Saker Person or of
which any Saker Person is a beneficiary or (d) any estate of which any Saker
Person is a beneficiary.
"Release" shall mean any releasing, spilling, leaking, seepage,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in Environmental Law,
and shall include any "Threatened Release," as defined in Environmental Law.
"Remedial Work" shall mean any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind or
nature with respect to any property of any Borrower or its Subsidiaries (whether
such property is owned, leased, subleased or used), including, without
limitation, with respect to Hazardous Materials and the Release thereof.
"Remodel/Expansion CAPEX" shall mean with respect to any of
Borrower's individual stores, Capital Expenditures used specifically for a
remodeling or expansion project, which Capital Expenditures with respect to each
such project equals or exceeds $500,000.
"Reportable Event" shall mean a Reportable Event as defined in
Section 4043(b) of ERISA.
"Required Lenders" shall mean (a) in the event that there are more
than two (2) Lenders, at least two (2) or more Lenders (each having a minimum
$5,000,000 Commitment) having an aggregate of 51% of the aggregate Commitments
of all Lenders and (b) in the event that there are fewer than three (3) Lenders,
Lenders having 67% of the aggregate Commitments of all Lenders. For the purposes
of this definition of "Required Lenders", the terms "Lender", "Lenders" and "all
Lenders" shall exclude all Defaulting Lenders.
"Responsible Officer" shall mean, with respect to any person, any
senior vice president, executive vice president, president, chief financial
officer or chief accounting officer, of such person.
19
"Revolving Commitment" shall mean, with respect to each Lender, the
Revolving Credit Commitment of such Lender set forth in Schedule 2.01, as it may
be adjusted from time to time pursuant to Section 2.07.
"Revolving Loans" shall mean each Loan made pursuant to Section
2.01(a) hereof.
"Revolving Notes" shall mean the revolving notes of the Borrowers,
executed and delivered as provided in Section 2.04 hereof, in substantially the
form of Exhibit A annexed hereto, as amended, modified or supplemented from time
to time.
"Saker Group" shall mean each spouse, sibling, child or grandchild
of Richard Saker, Gloria Saker, Joseph Saker, Thomas Saker or Joseph Saker, Jr.
"Saker Person" means any (a) of Richard Saker, Gloria Saker,
Joseph Saker, Thomas Saker and/or Joseph Saker, Jr.; and/or (b) member of the
Saker Group.
"Secured Parties" shall mean the Agent, the Lenders and GMACBC.
"Security Agreement" shall mean the Security Agreement, dated as of
the Closing Date, between the Grantor(s) and the Agent, for the benefit of the
Secured Parties, substantially in the form of Exhibit E annexed hereto, as
amended, modified or supplemented from time to time.
"Security Agreement (Partnership Interests)" shall mean the Security
Agreement (Partnership Interests) dated as of February 15, 1995, between the
Parent and the Agent, for the benefit of the Secured Parties, substantially in
the form of Exhibit G annexed hereto, as amended, modified or supplemented from
time to time.
"Security Documents" shall mean the Pledge Agreement, the Security
Agreement, the Security Agreement (Partnership Interests), the Mortgages and
each other agreement now existing or hereafter created providing collateral
security for the payment or performance of any Obligations.
"Settlement Date" shall mean each Business Day after the Closing
Date selected by the Agent in its sole discretion subject to and in accordance
with the provisions of Section 2.15(c) as of which a Settlement Report is
delivered by the Agent and on which settlement is to be made among the Lenders
in accordance with the provisions of Section 2.15 hereof.
"Settlement Report" shall mean each report prepared by the Agent and
delivered to each Lender and setting forth, among other things, as of the
Settlement Date indicated thereon and as of the next preceding Settlement Date,
(i) the aggregate principal balance of all Loans outstanding, (ii) each Lender's
ratable portion thereof, and (iii) all Loans made, and all payments of principal
received by the Agent from or for the account of the Borrowers during the period
beginning on such next preceding Settlement Date and ending on such Settlement
Date.
20
"Subordinated Indebtedness" shall mean, with respect to the Parent
or any Subsidiary thereof, Indebtedness subordinated in right of payment to such
person's monetary obligations under this Agreement and the other Loan Documents
upon terms satisfactory to and approved in writing by the Agent, to the extent
it does not by its terms (except as otherwise approved in writing by the Agent)
mature or become subject to any mandatory prepayment or amortization of
principal prior to the Final Maturity Date.
"Subsidiary" shall mean, with respect to any person, the parent of
such person, any corporation, association or other business entity of which
securities or other ownership interests representing more than 50% of the
ordinary voting power are, at the time as of which any determination is being
made, owned or controlled, directly or indirectly, by the parent or one or more
Subsidiaries of the parent. All references to Subsidiaries of the Parent shall
include the Borrowers.
"Taxes" shall have the meaning assigned to such term in Section
2.13(a) hereof.
"Term Commitment" shall mean, with respect to each Lender, the Term
Commitment of such Lender as set forth in Schedule 2.01 to be reduced pro-rata
by amounts amortized pursuant to Section 2.01(b).
"Term Loan A" shall mean the Term Loan A made by Lenders to
Borrowers under the Existing Loan Agreement in the original principal amount of
$10,000,000.
"Term Loan" shall mean the Loan made pursuant to, and described in,
Section 2.01(b) hereof.
"Term Notes" shall mean, collectively, the term notes of the
Borrowers, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit B-1 annexed hereto, as amended, modified or
supplemented from time to time.
"Termination Date" shall mean the earlier to occur of (i) the Final
Maturity Date and (ii) the date on which the Revolving Credit Commitments shall
terminate, expire or be canceled in accordance with the terms of this Agreement.
"Total Capital Expenditure Facility Commitment" shall mean the
lesser of (i) $20,000,000 and (ii) the sum of the Lenders' Capital Expenditure
Facility Commitments; provided, however, that the sum in clause (i) shall be
permanently reduced by the amount of any Alternative Capex Financing consummated
under Section 7.03 and as a result thereof each Lender's Capital Expenditure
Facility Commitment shall be reduced on a pro rata basis..
"Total Commitment" shall mean the sum of the Lenders' Total
Revolving Commitments, Total Capital Expenditure Facility Commitments and Total
Term Commitments.
"Total Revolving Commitment" shall mean the lesser of (i)
$35,000,000 and (ii) the sum of the Lenders' Revolving Commitments.
21
"Total Term Commitment" shall mean the lesser of (i) $25,000,000 and
(ii) the sum of the Lenders' Term Commitments.
"Transactions" shall have the meaning assigned to such term in
Section 4.02 hereof.
"Undrawn Availability" shall mean, at any time, an amount equal to
(A) the lesser of (i) the Total Revolving Commitment and (ii) the Borrowing
Base, minus (B) the sum of (i) all Revolving Loans outstanding at such time,
(ii) the Letter of Credit Usage at such time and (iii) reserves established
pursuant to Section 2.01(a)(iii) below at such time.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York from time to time.
"Wakefern" shall mean Wakefern Food Corp., a New Jersey corporation.
"Wakefern Intercreditor Agreement" shall have the meaning assigned
to such term in Section 8(n) hereof.
"Wakefern Shareholder Agreement" shall mean the Stockholders'
Agreement dated as of August 20, 1987, by and among Wakefern Food Corp. and each
of its member-stockholders (including Parent) as heretofore and hereafter
amended, restated, modified and supplemented.
Unless otherwise expressly provided herein, each accounting term
used herein shall have the meaning given it under generally accepted accounting
principles in effect from time to time in the United States applied on a basis
consistent with those used in preparing the financial statements referred to in
Section 6.05 hereof; provided, however, that each reference in Article VII
hereof, or in the definition of any term used in Article VII hereof, to
generally accepted accounting principles shall mean generally accepted
accounting principles as in effect on the Closing Date.
All terms used herein and defined in the UCC shall have the meaning
given therein unless otherwise defined herein.
II. THE LOANS
SECTION 2.01. Commitments.
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(a) Revolving Commitment. (i) Subject to the terms and conditions
and relying upon the representations and warranties herein set forth, each
Lender, severally and not jointly, agrees to make Loans to the Borrowers, at any
time and from time to time from the date hereof to the Termination Date in an
aggregate principal amount at any time outstanding not to exceed the amount of
such Lender's Revolving Commitment set forth opposite its name in Schedule
22
2.01(a) annexed hereto, as such Revolving Commitment may be reduced from time to
time in accordance with the provisions of this Agreement. Notwithstanding the
foregoing, the aggregate principal amount of Revolving Loans outstanding at any
time to the Borrowers shall not exceed (1) the lesser of (A) the Total Revolving
Commitment (as such amount may be reduced pursuant to Section 2.07 hereof) and
(B) an amount equal to sixty-five percent (65%) of the Net Amount of Eligible
Inventory (this clause (1) (B) referred to herein as the "Borrowing Base"),
minus (2) the Letter of Credit Usage at such time (which Letter of Credit Usage
shall not exceed $4,500,000 at any time), and minus (3) reserves established
pursuant to Section 2.01(a)(iii) below at such time. The Borrowing Base will be
computed weekly and a compliance certificate from a Responsible Officer of the
Borrowers presenting its computation will be delivered to the Agent in
accordance with Section 6.05 hereof. If the Borrowers fail to deliver such
certificate, the Borrowing Base shall be deemed to be $0 or shall be fixed by
the Agent in its sole discretion.
(ii) Subject to the foregoing and within the foregoing limits,
and subject to all other applicable terms, provisions and limitations set forth
in this Agreement, the Borrowers may borrow, repay (or, subject to the
provisions of Section 2.09 hereof, prepay) and reborrow Revolving Loans, on and
after the date hereof and prior to the Termination Date.
(iii) The Agent may from time to time decrease the Loans and
Letters of Credit available to the Borrowers by an amount equal to the aggregate
amount of all reserves which the Agent deems necessary or desirable to maintain
hereunder, such reserves to be determined by the Agent in its commercially
reasonable judgment and to include, without limitation, reserves with respect to
(i) rent payments with respect to premises leased by the Borrowers for which a
Landlord Waiver has not been obtained, (ii) trust fund liabilities under the
Perishable Agricultural Commodities Act and the Packers and Stockyards Act,
(iii) environmental remediation and liability, (iv) Liens on Collateral (other
than Liens in existence on the Closing Date which are listed on Schedule 7.01);
and (v) credit exposure of Borrowers with respect to interest rate protection
arrangements. Agent shall provide Borrowers and the Lenders with prompt notice,
in writing, of any such reserves established.
(b) Term Commitments. Prior to the Closing Date, Agent and certain
of the Lenders made the following Loans to Borrowers: the Term Loan A and the
Original Capital Expenditure Loan. As of the Closing Date, the outstanding
principal balance of the (i) Term Loan A is $5,000,000; and (ii) Capital
Expenditure Loan is $10,652,661.98 (the "Outstanding Balance"). On the Closing
Date, (i) the Lenders shall make a new term loan to Borrowers in the original
principal sum of $9,347,338.02 (the "New Term Loan") and (ii) the New Term Loan
shall be consolidated with the Outstanding Balance and as so consolidated such
loan shall be referred to as the ("Term Loan"). The aggregate outstanding
principal balance of the Term Loan as of the Closing Date is $25,000,000. The
Term Loan shall be payable in twenty (20) equal consecutive quarterly
installments of principal, each equal to $1,250,000, commencing on January 1,
2003, and on the first day of each subsequent April, July and October.
(c) Capital Expenditure Facility. Subject to the terms and
conditions hereof (including, without limitation, the conditions set forth in
Section 5.01A) and relying upon the representations and warranties herein set
forth, each Lender, severally and not jointly, agrees to make Loans (the
23
"Capital Expenditure Loans") during the Capital Expenditure Facility
Availability Period to the Borrowers to finance Borrowers' purchase of Financed
Equipment for use in New/Replacement Store Projects in the sum equal to such
Lender's aggregate Capital Expenditure Facility Commitment in an amount not to
exceed ninety-five percent (95%) of the net invoice cost of such Financed
Equipment purchased by Borrowers (which shall be exclusive of shipping,
handling, taxes, and installation costs, provided, however, that in the case of
refrigeration equipment, installation costs may be included), provided that the
total amount of all outstanding Capital Expenditure Loans shall not exceed the
Total Capital Expenditure Facility Commitment. All Capital Expenditure Loans
must be in original principal amounts of not less than $250,000. Once repaid, a
Capital Expenditure Loan may not be reborrowed. Capital Expenditure Loans may
consist of either Base Rate Loans or Eurodollar Rate Loans and may be converted
pursuant to Section 2.02 hereof.
(d) Capital Expenditure Loans shall be available at all times from
the Closing Date through and excluding the earlier of (i) the Termination Date
and (ii) December 31, 2004 (the "Capital Expenditure Facility Availability
Period"). After December 31, 2004, the sum of the principal amount of all
Capital Expenditure Loans made through December 31, 2004 will convert to a term
loan, which will be amortized on the basis of a twenty-eight (28) quarter
amortization schedule, commencing on April 1, 2005 with a payment of the
outstanding principal balance due on December 31, 2007. The Capital Expenditure
Loans shall be, with respect to principal, payable in equal quarterly
installments based upon the amortization schedule set forth above, on the first
day of each July, October and January subject to acceleration upon the
occurrence of an Event of Default under this Agreement or the termination of
this Agreement. In any event, the entire principal amount of the Capital
Expenditure Loans shall be due and payable on the Final Maturity Date.
SECTION 2.02. Loans.(a) The Eurodollar Loans made by the Lenders on any
date shall be in integral multiples of $250,000 and in a minimum aggregate
principal amount of $250,000.
(b) Subject to the provisions of Sections 2.15 and 2.16 hereof,
Loans shall be made ratably by the Lenders in accordance with their respective
Commitments; provided, however, that the failure of any Lender to make any Loan
shall not in itself relieve any other Lender of its obligation to lend
hereunder. The initial Loans shall be made by the Lenders against delivery of
Notes, payable to the order of the Lenders, as referred to in Section 2.04
hereof.
(c) Each Loan shall be either a Base Rate Loan or a Eurodollar Loan
as the Borrowers may request pursuant to Section 2.03 hereof. Each Lender may
fulfill its obligations under this Agreement by causing its Applicable Lending
Office to make such Loan; provided, however, that the exercise of such option
shall not affect the obligation of the Borrower to repay such Loan in accordance
with the term of the Notes. Not more than three (3) Eurodollar Loans may be
outstanding at any one time.
(d) Subject to the provisions of Sections 2.15 and 2.16 hereof, each
Lender shall make its Loans on the proposed dates thereof by paying the amount
24
required to the Agent in immediately available funds not later than 1:00 p.m.,
New York City time, and the Agent shall as soon as practicable, but in no event
later than 3:00 p.m., New York City time, wire the amounts received to a deposit
account designated by the Borrowers, or, if Loans are not to be made on such
date because any condition precedent to a borrowing herein specified is not met,
return the amounts so received to the respective Lenders.
(e) The Borrowers shall have the right at any time upon prior
irrevocable written or facsimile notice to the Agent given in the manner and at
the times specified in Section 2.03 hereof and in substantially the form of
Exhibit I (a "Conversion/Continuation Notice") hereof with respect to the Loans
into which conversion or continuation is to be made, to convert all or any
portion of Eurodollar Loans into Base Rate Loans, to convert all or any portion
of Base Rate Loans into Eurodollar Loans (specifying the Interest Period to be
applicable thereto) and to continue all or any portion of any Eurodollar Loans
into a subsequent Interest Period selected by the Borrowers in accordance with
the terms hereof, in each instance subject to the terms and conditions of this
Agreement (including the last sentence of Section 2.02(c) hereof) and to the
following:
(i) in the case of a conversion or continuation of fewer than
all the Loans, the aggregate principal amount of Loans (A) converted
shall not be less than $250,000 in the case of Base Rate Loans or
(B) converted or continued shall not be less than $250,000 in the
case of Eurodollar Loans and shall be an integral multiple of
$250,000;
(ii) accrued interest on a Loan (or portion thereof) being
converted or continued shall be paid by the Borrowers at the time of
conversion or continuation;
(iii) if any Eurodollar Loan is converted at any time other
than the end of an Interest Period applicable thereto, the Borrowers
shall make such payments associated therewith as are required
pursuant to Section 2.10B hereof;
(iv) any portion of a Eurodollar Loan which is subject to an
Interest Period ending on a date that is less than three (3) months
prior to the Termination Date may not be converted into, or
continued as, a Eurodollar Loan and shall be automatically converted
at the end of such Interest Period into a Base Rate Loan;
(v) no Default or Event of Default shall have occurred and be
continuing; and
(vi) in the case of a Term Loan or a Capital Expenditure Loan
which is being converted to a Eurodollar Loan or is being continued
as a Eurodollar Loan, there shall be sufficient remaining Term Loans
and/or Capital Expenditure Loans, as the case may be, to repay the
next succeeding scheduled principal installment with respect to such
Term Loans and/or Capital Expenditure Loans, as the case may be,
without requiring an indemnity payment under Section 2.10B of this
Agreement.
25
The Interest Period applicable to any Eurodollar Loan resulting from
a conversion or continuation shall be specified by the Borrower in the
irrevocable Conversion/Continuation Notice delivered pursuant to this Section;
provided, however, that if no such Interest Period shall be specified, the
Borrowers shall be deemed to have selected an Interest Period of one (1) month's
duration. If the Borrowers shall not have given three (3) Business Days notice
to continue any Eurodollar Loan into a subsequent Interest Period (and shall not
otherwise have given notice to convert such Loan), such Loan (unless repaid or
required to be repaid pursuant to the terms hereof) shall, subject to (iv)
above, automatically be converted into a Base Rate Loan.
SECTION 2.03. Notice of Loans. The Borrowers shall, through a Responsible
Officer, give the Agent irrevocable written or facsimile notice of each
borrowing (including, without limitation, a conversion as permitted by Section
2.02(e) hereof) (i) not later than 11:00 A.M., New York City time, three (3)
Business Days before a proposed Eurodollar Loan borrowing or conversion, and
(ii) not later than 12:00 Noon, New York City time on the Business Day of the
requested Base Rate Loan borrowing or conversion. Such notice shall specify (x)
whether the Loans then being requested are to be Base Rate Loans or Eurodollar
Loans, (y) the date of such borrowing (which shall be a Business Day) and amount
thereof and (z) if such Loans are to be Eurodollar Loans, the Interest Period
with respect thereto. If no election as to the type of Loan is specified in any
such notice, all such Loans shall be Base Rate Loans. If no Interest Period with
respect to any Eurodollar Loan is specified in any such notice, then an Interest
Period of one (1) month's duration shall be deemed to have been selected. The
Agent shall promptly advise the Lenders of any notice given pursuant to this
Section 2.03 and of each Lender's portion of the requested borrowing.
SECTION 2.04. Notes; Repayment of Loans.
-------------------------
(a) Revolving Notes. All Revolving Loans made by a Lender to the
Borrowers shall be evidenced by a single Revolving Note, duly executed on behalf
of the Borrowers, in substantially the form of Exhibit A annexed hereto,
delivered and payable to such Lender in a principal amount equal to its
Revolving Commitment in respect of the Borrowers on such date. The outstanding
balance of each Revolving Loan, as evidenced by any such Revolving Note, shall
mature and be due and payable on the Termination Date.
(b) Term Notes. All Term Loans made by a Lender to the Borrowers
shall be evidenced by a single Term Note, duly executed on behalf of the
Borrowers, in substantially the form of Exhibit B-1 annexed hereto, delivered
and payable to such Lender in an aggregate principal amount equal to its Term
Commitment in respect of the Borrowers on such date. The outstanding balance of
the Term Loan, as evidenced by the Term Note, shall be repaid as required under
Section 2.01(b) hereof.
(c) Capital Expenditure Notes. All Capital Expenditure Loans made by
a Lender to the Borrowers shall be evidenced by a single Capital Expenditure
Note, duly executed on behalf of the Borrowers, in substantially the form of
Exhibit B-2 annexed hereto, delivered and payable to such Lender in an aggregate
principal amount equal to its Capital Expenditure Facility Commitment in respect
of the Borrowers on such date. The outstanding balance of the Capital
26
Expenditure Loans, as evidenced by the Capital Expenditure Note, shall be repaid
as required under Section 2.01(d) hereof.
(d) Each Note shall bear interest from its date on the outstanding
principal balance thereof, as provided in Section 2.05 hereof.
(e) Each Lender, or the Agent on its behalf, shall, and is hereby
authorized by the Borrowers to, endorse on the schedule attached to the Notes of
such Lender (or on a continuation of such schedule attached to such Note and
made a part thereof) an appropriate notation evidencing the date and amount of
each Loan to the Borrowers from such Lender, as well as the date and amount of
each payment and prepayment with respect thereto; provided, however, that the
failure of any person to make such a notation on a Note shall not affect any
obligations of the Borrowers under such Note. Any such notation shall be
conclusive and binding as to the date and amount of such Loan or portion
thereof, or payment or prepayment of principal or interest thereon, absent
manifest error.
(f) Each Borrower hereby irrevocably authorizes and directs the
Agent on behalf of itself and the Lenders to charge the loan accounts of the
Borrowers with the Agent for all amounts which may now or hereafter be due and
payable by Borrowers and their Subsidiaries hereunder or under any other Loan
Document, including, without limitation, all amounts of principal and interest,
fees and expenses. If at any time there is not sufficient availability to cover
any of the payments referred to in the prior sentence, and, in any event, upon
the occurrence and during the continuance of any Default, the Borrowers shall
make any such payments to the Agent on demand.
SECTION 2.05. Interest on Loans. (a) Subject to the provisions of
Sections 2.05(c) and Section 2.08 hereof, each Base Rate Loan shall bear
interest at a rate per annum equal to the Base Rate plus the Applicable Margin.
(b) Subject to the provisions of Section 2.05(c) and Section 2.08
hereof, each Eurodollar Loan shall bear interest at a rate per annum equal to
the Adjusted LIBO Rate plus the Applicable Margin.
(c) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date and on the maturity thereof (whether as
scheduled, by acceleration or otherwise). Interest on each Loan shall be
computed based on the number of days elapsed in a year of 360 days. The Agent
shall determine each interest rate applicable to the Loans and shall promptly
advise the Borrowers and the Lenders of the interest rate so determined (which
determination shall be conclusive and binding on the Borrowers and the Lenders
absent manifest error).
SECTION 2.06. Fees. (a) The Borrowers shall pay to the Agent for the
benefit of the Lenders without duplication for any time period,(i) on the first
Business Day of each month in arrears commencing February 1, 2000, (ii) on the
date of any reduction of the Revolving Commitment and/or Capital Expenditure
Facility Commitment pursuant to Section 2.07 hereof and (iii) on the Termination
Date, in immediately available funds, a commitment fee (the "Commitment Fee") of
27
(i) one-half percent (1/2%) per annum on (A) the average amount, calculated on a
daily basis, by which the Revolving Commitment of such Lender, during the month
(or shorter period commencing with the date hereof or ending with the
Termination Date) ending on such date exceeds the aggregate outstanding
principal amount of the Revolving Loans made by such Lender and such Lender's
pro rata share of the aggregate undrawn amount of all outstanding Letters of
Credit plus (ii) three quarters of one percent (.75%) per annum on (B) the
average amount, calculated on a daily basis for the Capital Expenditure Facility
Availability Period only, by which the Capital Expenditure Facility Commitment
of such Lender, during the month (or shorter period commencing on the date
hereof or ending with the Termination Date) ending on such date exceeds the
aggregate outstanding principal amount of the Capital Expenditure Loans made by
such Lender. The Commitment Fee due to each Lender under this Section 2.06(a)(A)
shall continue to accrue on the Closing Date and cease to accrue on the earlier
of (i) the Termination Date and (ii) the termination of the Revolving Commitment
of such Lender pursuant to Section 2.07 hereof. The Commitment Fee due to each
Lender under Section 2.06(a)(ii) shall continue to accrue on the Closing Date
and cease to accrue on the earlier of (i) the Termination Date and (ii) the
termination or expiration of the Capital Expenditure Facility Availability
Period. The Commitment Fee shall be calculated on the basis of the actual number
of days elapsed in a year of 360 days.
(b) The Borrowers shall pay to Agent for its benefit and for the
ratable benefit of Lenders, a closing fee in the amount of $600,000 which fee
shall be payable, non-refundable and fully earned as of the Closing Date.
(c) The Borrowers shall pay to the Agent, for its own account, an audit fee of
$750 per audit day per auditor of GMACBC, plus out-of-pocket expenses incurred,
and fees, costs and expenses paid to third-party auditors. The timing and
frequency of such audits shall be mutually agreed upon by Borrowers and Agent.
SECTION 2.07. Termination of Revolving Commitments and Capital Expenditure
Facility Commitment. (a) Upon at least five (5) Business Days' prior irrevocable
written notice (or facsimile notice promptly confirmed in writing) to the Agent,
the Borrowers may at any time in whole permanently terminate or in part
permanently reduce the Total Revolving Commitment and/or the Total Capital
Expenditure Facility Commitment; provided, however, that no termination or
partial reduction may be made with respect to the Total Revolving Commitment if
any Term Loan, Capital Expenditure Loan or Capital Expenditure Facility
Commitment is outstanding.
(b) Simultaneously with any termination or partial reduction of the
Total Revolving Commitment pursuant to paragraph (a) of this Section 2.07, the
Borrowers shall (i) pay to the Agent for the account of the Lenders, the
Commitment Fee due and owing through and including the date of such termination
on the amount of the Revolving Commitment and Capital Expenditure Facility
Commitment of such Lender, (ii) with respect to a partial reduction in the
Revolving Commitment, terminate the Capital Expenditure Facility Commitment and
repay all Obligations (other than with respect to the Revolving Loans) and (iii)
with respect to a termination of the Revolving Commitment, terminate all other
Commitments under this Agreement and repay all of the Obligations.
28
(c) Simultaneously with the termination or partial reduction of the
Total Capital Expenditure Facility Commitment pursuant to paragraph (a) of this
Section 2.07, the Borrowers shall pay to the Agent for the account of the
Lenders the Commitment Fee due and owing through and including the date of such
termination on the amount of the Capital Expenditure Facility of such Lender.
(d) In any event, the Revolving Commitment and Capital Expenditure
Facility Commitment of each Lender shall automatically and permanently terminate
on the Termination Date unless extended as herein provided, and all Revolving
Loans and Capital Expenditure Loans still outstanding on such date shall be due
and payable in full together with accrued interest thereon.
SECTION 2.08. Interest on Overdue Amounts. If there shall occur and be
continuing any Event of Default, the Borrowers shall on demand from time to time
pay interest, to the extent permitted by law, on principal, interest, fees and
any other amount which is payable hereunder or under any other Loan Document
(whether then due and payable or not) (after as well as before judgment) at a
rate per annum equal to two percent (2%) in excess of the rates otherwise
applicable thereto (or if no rate is applicable thereto, at a rate per annum
equal to four percent (4%) in excess of the Prime Rate).
SECTION 2.09. Prepayment of Loans. (a) Subject to the terms and conditions
contained in this Section 2.09 and elsewhere in this Agreement, the Borrowers
shall have the right to prepay any Revolving Loan, Term Loan and/or Capital
Expenditure Loan at any time in whole or from time to time in part (except in
the case of a Eurodollar Loan, only on the last day of an Interest Period
therefor) without penalty (except as otherwise provided for herein); provided,
however, that each such partial prepayment of a Eurodollar Loan shall be in an
integral multiple of $250,000, and provided, further, that no prepayment of Term
Loans may be made under this Section 2.09(a) to the extent that any Capital
Expenditure Loans or any Capital Expenditure Facility Commitments shall remain
outstanding.
(b) On the date of any termination of the Total Revolving Commitment
pursuant to Section 2.07(a) hereof or elsewhere in this Agreement, the Borrowers
shall pay the aggregate principal amount of all Loans then outstanding, together
with interest to the date of such payment and all fees and other amounts due
under this Agreement and deposit in a cash collateral account with the Agent on
terms satisfactory to the Agent an amount equal to 105% of the amount of the
Letter of Credit Usage.
(c) The Borrowers shall make prepayments of the Revolving Loans from
time to time such that the outstanding principal balance of the Revolving Loans
plus the Letter of Credit Usage plus the reserves then in effect under Section
2.01(a)(iii) hereof does not exceed the lesser of (i) the Total Revolving
Commitment and (ii) the Borrowing Base at such time. In the event that after the
prepayment in full (or cash collateralization thereof as provided above) of the
Revolving Loans, the Letter of Credit Usage plus the reserves then in effect
under Section 2.01(a)(iii) hereof exceeds the lesser of (i) the Total Revolving
Commitment and (ii) the Borrowing Base, the Borrowers shall deposit cash in the
29
amount of such excess with the Agent in a cash collateral account with a
financial institution acceptable to the Agent to be held in such account on
terms satisfactory to the Agent.
(d) Within five days of:
(i) the sale or other disposition (other than the sale of Inventory in the
ordinary course of business, collections of accounts receivable arising out of
the sale of Inventory in the ordinary course of business, payments made to the
Parent or any of its Subsidiaries as lessors with respect to store leases, sales
of assets of less than $10,000 per transaction or series of transactions, or
$50,000 in the aggregate between the Closing Date and the Final Maturity Date
and returns of insurance deposits and other deposits made by Borrowers in their
ordinary course of business) of any assets of the Parent or any of its
Subsidiaries, any Grantor or any Guarantor or any sale or issuance by any
Subsidiary of the Parent of any of such Subsidiary's capital stock or other
equity interests in such Subsidiary or any option, warrant or similar right to
acquire any of same, or
(ii) the consummation of the issuance of any debt securities of the Parent or
any of its Subsidiaries (other than Indebtedness permitted by Section 7.03(i) of
this Agreement to the extent secured by Liens permitted under Section 7.01(e) of
this Agreement),
the Borrowers shall make a mandatory prepayment of the Loans in an amount equal
to 100% of the proceeds received by the Parent or any of its Subsidiaries (net
of related pension obligations, estimated taxes due, any reasonable expenses of
sale and any Indebtedness secured by Liens on the assets sold), which proceeds
shall be applied as set forth in paragraph (g) below. Nothing contained in this
paragraph shall constitute, or be deemed to constitute, a consent to any of the
transactions described in this paragraph (d).
(e) (i) Except as provided in clause (ii) below, not later than the
third day following the receipt by the Agent or the Parent or any of its
Subsidiaries (x) of any net proceeds of any insurance required to be maintained
pursuant to Section 6.03 hereof on account of each separate loss, damage or
injury to any asset of the Parent or such Subsidiary (including, without
limitation, any Collateral) or of any condemnation or eminent domain awards with
respect to any real property or improvements thereon owned by the Parent or any
of its Subsidiaries, or (y) of any net proceeds of any business interruption
insurance required to be maintained pursuant to Section 6.03 hereof, the Parent
or such Subsidiary shall notify the Agent of such receipt in writing or by
telephone promptly confirmed in writing, and not later than the third day
following receipt by the Agent or the Parent or such Subsidiary of any such
proceeds or awards, there shall become due and payable a prepayment of the Loans
in an amount equal to 100% of such proceeds or award. Prepayments from such net
proceeds or award shall be applied as set forth in paragraph (g) below.
(ii) In the case of the receipt of net proceeds or awards
described in clause (i) above with respect to the loss, damage or injury to any
asset of the Parent or any of its Subsidiaries or the condemnation or taking by
eminent domain of any real property or improvements thereon owned by the Parent
or any of its Subsidiaries (other than net proceeds of any business interruption
30
insurance), the Parent or such Subsidiary may elect, by written notice delivered
to the Agent not later than the day on which a prepayment would otherwise be
required under clause (i), to apply all or a portion of such net proceeds or
award for the purpose of replacing, repairing, restoring or rebuilding the
relevant tangible property, and, in such event, any required prepayment under
clause (i) above shall be reduced dollar for dollar by the amount of such
election. An election under this clause (ii) shall not be effective unless: (x)
at the time of such election there is continuing no Default or Event of Default;
(y) the Borrowers shall have certified to the Agent that: (1) the net proceeds
of the insurance adjustment for such loss, damage or injury or the amount of
such award, together with other funds available to the Borrowers, shall be
substantially sufficient to complete such replacement, repair, restoration or
rebuilding in accordance with all applicable laws, regulations and ordinances;
and (2) to the best knowledge of the Borrowers, no Default or Event of Default
has arisen or will arise as a result of such loss, damage, injury, condemnation,
taking, replacement, repair or rebuilding; and (z) if the amount of net proceeds
or awards in all such cases exceeds $1,000,000 in the aggregate from February
15, 1995 to the Final Maturity Date, the Borrowers shall have obtained the
written consent of the Agent to such election.
(iii) In the event of an election under clause (ii) above,
pending application of the net proceeds or award to the required replacement,
repairs, restoration or rebuilding, the Parent or such Subsidiary shall not
later than the time at which prepayment would have been, in the absence of such
election, required under clause (i) above, apply such net proceeds or award to
the prepayment of the outstanding principal balance, if any, of the Revolving
Loans (not in permanent reduction of the Revolving Commitment), and deposit (the
"Special Deposit") with the Agent, the balance, if any, of such net proceeds or
award remaining after such application, pursuant to agreements in form, scope
and substance reasonably satisfactory to the Agent. The Special Deposit,
together with all earnings on such Special Deposit, shall be available to the
Parent and its Subsidiaries solely for the replacement, repair, rebuilding or
restoration of the tangible property suffering the injury, loss, damage,
condemnation or taking by eminent domain in respect of which such prepayment and
Special Deposit were made or to such other purpose as to which the Agent may
consent in writing; provided, however, that at such time as a Default or Event
of Default shall occur, the balance of the Special Deposit and earnings thereon
may be applied by the Agent to repay the Obligations in such order as the Agent
shall elect. The Agent shall be entitled to require proof, as a condition to the
making of any withdrawal from the Special Deposit, that the proceeds of such
withdrawal are being applied for the purposes permitted hereunder.
(f) When making a prepayment, whether mandatory or otherwise,
pursuant to paragraph (a), (b), (c) , (d) or (e) above, the Borrowers shall
furnish to the Agent, not later than 11:00 a.m. (New York City time) (i) one (1)
Business Day prior to the date of such prepayment of Base Rate Loans and (ii)
five (5) Business Days prior to the date of such prepayment of Eurodollar Loans,
written or facsimile notice (promptly confirmed in writing) of prepayment which
shall specify the prepayment date and the principal amount of each Loan (or
portion thereof) to be prepaid, which notice shall be irrevocable and shall
commit the Borrowers to prepay such Loan by the amount stated therein on the
date stated therein. All prepayments shall be accompanied by accrued interest on
the principal amount being prepaid to the date of prepayment. Prepayments made
pursuant to paragraph (d) or paragraph (e) (other than paragraph (e) (i) (y)
above) shall be applied to the repayment of the Capital Expenditure Loans, with
31
any excess to be applied to the repayment of the Term Loan and any further
excess to be applied to the repayment of the Revolving Loans (with respect to
the Term Loan and the Capital Expenditure Loans, such payment being applied to
installments in inverse order of maturity (in the case of prepayments of less
than $1,000,000 or, if such prepayment is equal to or greater than $1,000,000,
then pro rata to each installment of the Loan being repaid)). Payments made
pursuant to paragraph (e)(i)(y) above shall be applied as a prepayment of the
Revolving Loans. Notwithstanding the terms of this clause (f), if at the time of
the making of any prepayment described in this Section 2.09, a Default or an
Event of Default is in existence and is continuing and there are undrawn Letters
of Credit outstanding (but no principal or interest with respect to Loans are
outstanding), then in the discretion of the Agent, all or a portion of any such
prepayment (not to exceed an amount equal to the aggregate undrawn amount of all
such outstanding Letters of Credit) shall be deposited in a cash collateral
account to be held by the Agent for the benefit of the Lenders for application
by the Agent to the payment of any drawing made under any such Letters of Credit
(the foregoing to be invested by Agent in investments permitted under clauses
(a), (b), (c) and (d) of Section 7.06 (provided that neither Agent nor any
Lender shall have any responsibility for or obligation with respect to any
return on such investment or loss of principal) and the foregoing requirement to
be in addition to any other cash collateral requirements under this Agreement);
and, provided, further, that any prepayments of Loans required by this Section
2.09 shall be applied to outstanding Base Rate Loans of such type up to the full
amount of such Base Rate Loans before they are applied to outstanding Eurodollar
Loans of such type; provided, however, that the Borrowers shall not be required
to make any prepayment of any Eurodollar Loan pursuant to this Section 2.09
until the last day of the Interest Period with respect thereto so long as an
amount equal to such prepayment is deposited by the Borrowers in a cash
collateral account with the Agent or a depository institution acceptable to
Agent to be held in such account on terms satisfactory to the Agent.
(g) All prepayments under this Section 2.09 shall be subject to
Section 2.12 hereof.
(h) Except as otherwise expressly provided in this Section 2.09,
payments with respect to any paragraph of this Section 2.09 are in addition to
payments made or required to be made under any other paragraph of this Section
2.09.
(i) All fees payable under or in connection with this Agreement
shall be fully earned upon the earlier of accrual and payment and shall be
nonrefundable in all circumstances.
SECTION 2.10. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
(or in the case of any assignee of any Lender, the date such assignee becomes a
Lender hereunder) any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall (i) subject the Agent or any Lender (which shall for the
purpose of this Section 2.10 include any assignee or lending office or branch of
the Agent or any Lender) to any tax with respect to any amount paid or to be
paid by either the Agent or any Lender with respect to any Eurodollar Loans made
by a Lender to a Borrower (other than (x) taxes imposed on the overall net
income of the Agent or such Lender and (y) franchise taxes imposed on the Agent
32
or such Lender, in either case by the jurisdiction in which such Lender or the
Agent has its principal office or its lending office with respect to such
Eurodollar Loan or any political subdivision or taxing authority of either
thereof); (ii) change the basis of taxation of payments to any Lender or the
Agent of the principal of or interest on any Eurodollar Loan or any other fees
or amounts payable hereunder (other than taxes imposed on the overall net income
of such Lender or the Agent by the jurisdiction in which such Lender or the
Agent has its principal office or by any political subdivision or taxing
authority therein); (iii) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or loans or loan commitments extended by, such Lender; or (iv)
impose on any Lender or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by such Lender; and the result
of any of the foregoing shall be to increase the cost to any such Lender of
making or maintaining any Eurodollar Loan, or to reduce the amount of any
payment (whether of principal, interest or otherwise) receivable by such Lender
or to require such Lender to make any payment in respect of any Eurodollar Loan,
then the Borrowers shall pay to such Lender or the Agent, as the case may be,
upon such Lender's or the Agent's demand, such additional amount or amounts as
will compensate such Lender or the Agent for such additional costs or reduction.
The Agent and each Lender agree to give notice to the Borrowers of any such
change in law, regulation, interpretation or administration with reasonable
promptness after becoming actually aware thereof and of the applicability
thereof to the Transactions and, at the request of the Borrowers, shall set out
in reasonable detail the calculations used in determining such additional
amounts. Notwithstanding anything contained herein to the contrary, nothing in
clause (i) or (ii) of this Section 2.10(a) shall be deemed to (x) permit the
Agent or any Lender to recover any amount thereunder which would not be
recoverable under Section 2.13 hereof or (y) require the Borrowers to make any
payment of any amount to the extent that such payment would duplicate any
payment made by the Borrowers pursuant to Section 2.13 hereof.
Notwithstanding any other provision of this Section 2.10, no Lender
shall demand any payment referred to above if it shall not at the time be the
general policy or practice of such Lender to demand such compensation in
substantially similar circumstances under substantially comparable provisions of
other credit agreements.
(b) If at any time and from time to time after the date of this
Agreement, any Lender shall determine that the adoption of any applicable law,
rule, regulation or guideline regarding capital adequacy, or any change in any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change in the interpretation or administration of any thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender (or its
lending office or an affiliate) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or will have the effect of reducing the rate of
return on such Lender's or its affiliate's capital as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or
affiliate could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or its affiliate's policies with
respect to capital adequacy), then from time to time the Borrowers shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
its affiliate for such reduction. Each Lender agrees to give notice to the
33
Borrowers of any adoption of, change in, or change in interpretation or
administration of, any such law, rule, regulation or guideline with reasonable
promptness after becoming actually aware thereof and of the applicability
thereof to the Transactions.
(c) A statement of any Lender or the Agent setting forth such amount
or amounts, supported by calculations in reasonable detail, as shall be
necessary to compensate such Lender or its affiliate (or the Agent) as specified
in paragraph (a) and (b) above shall be delivered to the Borrowers and shall be
conclusive absent manifest error. The Borrowers shall pay each Lender or the
Agent the amount shown as due on any such statement within ten (10) days after
its receipt of the same.
(d) Failure on the part of any Lender or the Agent to demand
compensation for any increased costs, reduction in amounts received or
receivable or reduction in the rate of return earned on such Lender's or its
affiliate's capital, shall not constitute a waiver of such Lender's or the
Agent's rights to demand compensation for any increased costs or reduction in
amounts received or receivable or reduction in rate of return in such Interest
Period or in any other Interest Period. The protection under this Section 2.10
shall be available to each Lender and the Agent regardless of any possible
contention of the invalidity or inapplicability of any law, regulation or other
condition which shall give rise to any demand by such Lender or the Agent for
compensation.
SECTION 2.10A Change in Legality; Eurodollar Availability. (a)
Notwithstanding anything to the contrary herein contained, if any change in any
law or regulation or in the interpretation thereof by any governmental authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations to make Eurodollar Loans as contemplated hereby, then, by written
notice to Borrowers and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made
by such Lender hereunder, whereupon the Borrowers shall be
prohibited from requesting Eurodollar Loans from such Lender
hereunder unless such declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it
be converted to Base Rate Loans, in which event (A) all such
Eurodollar Loans shall be automatically converted to Base Rate Loans
as of the effective date of such notice as provided in paragraph (b)
below and (B) all payments of principal which would otherwise have
been applied to repay the converted Eurodollar Loans, shall instead
be applied to repay the Base Rate Loans resulting from the
conversion of such Eurodollar Loans.
(b) For purposes of Section 2.10A(a) hereof, a notice to the
Borrowers by any Lender shall be effective, if lawful, on the last day of the
then current Interest Period or, if there are then two or more current Interest
Periods, on the last day of each such Interest Period, respectively; otherwise,
such notice shall be effective with respect to the Borrowers on the date of
receipt by the Borrowers.
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(c) In the event, and on each occasion, that on the day two (2)
Business Days prior to the commencement of any Interest Period for a Eurodollar
Loan the Agent shall have determined that dollar deposits in the amount of each
Eurodollar Loan are not generally available in the London interbank market, or
that the rate at which dollar deposits are being offered will not reflect
adequately and fairly the cost to one or more Lenders of making or maintaining
such Eurodollar Loan during such Interest Period, or that reasonable means do
not exist for ascertaining the Adjusted LIBO Rate, the Agent shall as soon as
practicable thereafter give written notice (or facsimile notice promptly
confirmed in writing) of such determination to the Borrowers and the Lenders,
and any request by Borrower for the making of a Eurodollar Loan pursuant to
Section 2.03 hereof or conversion or continuation of any Loan into a Eurodollar
Loan pursuant to Section 2.02 hereof shall, until the circumstances giving rise
to such notice no longer exist, be deemed to be a request for a Base Rate Loan.
Each determination by the Agent made hereunder shall be conclusive absent
manifest error.
Notwithstanding any other provisions of this Section 2.10A, no
Lender shall apply or request that the Agent apply the provisions of subsection
(c) of this Section 2.10A with respect to the Borrowers if it shall not at the
time be the general policy or practice of such Lender to apply the provisions of
subsection (c) of this Section 2.10A to other borrowers in substantially similar
circumstances under substantially comparable provisions of other credit
agreements.
SECTION 2.10B Indemnity. Each Borrower shall indemnify each Lender against
any loss (including, without limitation, loss of anticipated profits) or expense
(including, but not limited to, any loss or expense sustained or incurred or to
be sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain any Loan or part thereof as a Eurodollar Loan)
which such Lender may sustain or incur as a consequence of the following events
(regardless of whether such events occur as a result of the occurrence of an
Event of Default or the exercise of any right or remedy of the Agent or the
Lenders under this Agreement or any other agreement, or at law): any failure of
any Borrower to fulfill on the date of any borrowing of a Eurodollar Loan
hereunder (including, without limitation, any conversion to or continuation of a
Eurodollar Loan or portion thereof) the applicable conditions set forth in
Article V hereof applicable to it; any failure of any Borrower to borrow a
Eurodollar Loan hereunder (including, without limitation, to convert to or
continue a Eurodollar Loan) after irrevocable notice of borrowing pursuant to
Section 2.03 hereof has been given; any payment, prepayment or conversion of
principal on a Eurodollar Loan on a date other than the last day of the relevant
Interest Period; any default in payment or prepayment of the principal amount of
any Eurodollar Loan or any part thereof or interest accrued thereon, as and when
due and payable (at the due date thereof, by irrevocable notice of prepayment or
otherwise); or the occurrence of an Event of Default. Such loss or expense shall
include, without limitation, an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount so paid,
prepaid or converted or not borrowed for the period from the date of such
payment, prepayment or conversion or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Eurodollar Loan which would have commenced on the date
of such failure to borrow), at the applicable rate of interest for such Loan
provided for herein over (ii) the amount of interest (as reasonably determined
by such Lender) that would be realized by such Lender in reemploying the funds
35
so paid, prepaid or converted or not borrowed in United States Treasury
obligations with comparable maturities for comparable periods. Any such Lender
shall provide to the Borrowers a statement, signed by an officer of such Lender,
explaining any loss or expense and setting forth, if applicable, the computation
pursuant to the preceding sentence, and such statement shall be conclusive
absent manifest error. The Borrowers shall pay such Lender the amount shown as
due on any such statement within three (3) Business Days after the receipt of
the same.
SECTION 2.11. Pro Rata Treatment. Except as otherwise provided hereunder
and subject to the provisions of Sections 2.15 and 2.16 hereof, each borrowing,
each payment or prepayment of principal of the Notes, each payment of interest
on the Notes, each payment of any fee or other amount payable hereunder and each
reduction of the Total Revolving Commitment and/or the Total Capital Expenditure
Facility Commitment shall be made pro rata among the Lenders in the proportions
that their Commitments bear to the Total Commitment.
SECTION 2.12. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Parent or any of its Subsidiaries, including, but not limited to, a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, obtain payment (voluntary or involuntary) in respect of a Note held
by it as a result of which the unpaid principal portion of the Notes held by it
shall be proportionately less than the unpaid principal portion of the Notes
held by any other Lender, it shall be deemed to have simultaneously purchased
from such other Lender a participation in the Notes held by such other Lender,
so that the aggregate unpaid principal amount of the Notes and participations in
Notes held by it shall be in the same proportion to the aggregate unpaid
principal amount of all Notes then outstanding as the principal amount of the
Notes held by it prior to such exercise of banker's lien, setoff or counterclaim
was to the principal amount of all Notes outstanding prior to such exercise of
banker's lien, setoff or counterclaim; provided, however, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.12
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustments restored without interest. The
Parent and its Subsidiaries expressly consent to the foregoing arrangements and
agree that any Lender holding a participation in a Note deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing to such Lender as fully as
if such Lender held a Note in the amount of such participation.
SECTION 2.13. Taxes. (a) Any and all payments by the Borrowers and/or
Guarantors hereunder shall be made, in accordance with Section 2.14 hereof, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings in any such case imposed by
the United States or any political subdivision thereof, provided that the
following taxes may be deducted:
(i) in the case of the Agent and each Lender, taxes imposed or
based on its net income, and franchise or capital taxes imposed on
it, (A) if the Agent or such Lender is organized under the laws of
36
the United States or any political subdivision thereof and (B) if
the Agent or such Lender is not organized under the laws of the
United States or any political subdivision thereof, and its
principal office or Domestic Lending Office is located in the United
States, and in the case of both (A) and (B), withholding taxes
payable with respect to payments to the Agent or such Lender at its
principal office or Applicable Lending Office under laws (including,
without limitation, any treaty, ruling, determination or regulation)
in effect on the date hereof, but not any increase in withholding
tax resulting from any subsequent change in such laws (other than
withholding with respect to taxes imposed or based on its net income
or with respect to franchise or capital taxes), and
(ii) taxes (including withholding taxes) imposed by reason of
the failure or inability of the Agent or any Lender, in either case
that is organized outside the United States, to comply with Section
2.13(f) hereof (or the inaccuracy at any time of the certificates,
documents and other evidence delivered thereunder)
(all such nondeducted taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the Borrowers or
any Guarantor shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to the Lenders or the Agent, (x) the sum payable shall
be increased by the amount necessary so that after making all required
deductions (including without limitation deductions applicable to additional
sums payable under this Section 2.13) such Lender or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (y) the Borrowers and/or such Guarantor shall make such
deductions and (z) the Borrowers and/or such Guarantor shall pay the full amount
deducted to the relevant tax authority or other authority in accordance with
applicable law.
(b) In addition, the Borrowers and each Guarantor agrees to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement (hereinafter referred to as "Other Taxes").
(c) The Borrowers will indemnify each Lender and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction (except as specified in clauses (a)(i)
and (ii)) on amounts payable under this Section 2.13) paid by such Lender or the
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 30 days from the date such Lender or the Agent (as the case may
be) makes written demand therefor. If any Lender receives a refund in respect of
any Taxes or Other Taxes for which such Lender has received payment from the
Borrowers hereunder, such Lender shall promptly notify the Borrowers of such
refund and such Lender shall, within 30 days of receipt of a request by the
Borrowers, repay such refund to the Borrowers (or if there shall at such time be
continuing a Default or Event of Default, pay same to the Agent to be applied to
the Obligations in such order and manner as the Agent shall choose in its
37
discretion), provided that the Borrowers, upon the request of such Lender, agree
to return such refund (whether returned to the Borrowers or applied to the
Obligations) (plus any penalties, interest or other charges) to such Lender in
the event such Lender is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrowers, or any Guarantor in respect of any payment to
any Lender, the Borrowers will furnish to the Agent, at its address referred to
in Section 11.01 hereof, such certificates, receipts and other documents as may
be reasonably required to evidence payment thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section 2.13 shall
survive the payment in full of principal and interest hereunder and termination
or expiration of the Commitments.
(f) Each Lender that is organized outside of the United States shall
deliver to the Borrowers on the date hereof (or, in the case of an assignee, on
the date of the assignment) and from time to time as required for renewal under
applicable law duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 (or any successor or additional forms as the Borrowers may
reasonably request), as appropriate, indicating in each case that such Lender is
entitled to receive payments under this Agreement without any deduction or
withholding of any United States federal income taxes. The Agent (if the Agent
is an entity organized outside the United States) and each Lender that is
organized outside the United States shall promptly notify the Borrowers and the
Agent of any change in its Applicable Lending Office and upon written request of
the Borrowers such Lender shall, prior to the immediately following due date of
any payment by the Borrowers hereunder, deliver to the Borrowers (with copies to
the Agent), such certificates, documents or other evidence, as required by the
Code or Treasury Regulations issued pursuant thereto, including without
limitation Internal Revenue Service Form 4224, Form 1001 and any other
certificate or statement of exemption required by Treasury Regulation Section
1.1441-4(a) or Section 1.1441-6(c) or any subsequent version thereof, properly
completed and duly executed by such Lender establishing that such payment is (i)
not subject to withholding under the Code because such payment is effectively
connected with the conduct by such Lender of a trade or business in the United
States or (ii) totally exempt from United States tax under a provision of an
applicable tax treaty. The Borrowers shall be entitled to rely on such forms in
their possession until receipt of any revised or successor form pursuant to this
Section 2.13(f). If the Agent or a Lender fails to provide a certificate,
document or other evidence required pursuant to this Section 2.13(f), then (i)
the Borrowers shall be entitled to deduct or withhold on payments to the Agent
or such Lender as a result of such failure, as required by law, and (ii) the
Borrowers shall not be required to make payments of additional amounts with
respect to such withheld Taxes pursuant to clause (x) of Section 2.13(a) to the
extent such withholding is required by reason of the failure of the Agent or
such Lender to provide the necessary certificate, document or other evidence.
SECTION 2.14. Payments and Computations. The Borrowers shall make each
payment hereunder and under any instrument delivered hereunder not later than
12:00 noon (New York City time) on the day when due in lawful money of the
38
United States (in freely transferable dollars) to the Agent's Account or, at the
option of Agent, to Agent's office at 3000 Town Center, Suite 280, Southfield,
Michigan 48075, in each case for the account of the Lenders, in immediately
available funds. The Agent may charge, when due and payable, the Borrowers' loan
account with the Agent for all interest, principal and fees owing to the Agent,
the Lenders, any Issuing Bank or GMACBC on or with respect to this Agreement
and/or the Loans and Letters of Credit and other Loan Documents.
SECTION 2.15. Settlement Among Lenders. (a) The Agent shall pay to each
Lender not later than one (1) Business Day after each Interest Payment Date, or
upon receipt of interest payments otherwise received, its ratable portion, based
on the principal amount of the Loans owing to such Lender, of all interest
payments and any other fees received by the Agent hereunder in respect of the
Loans, net of any amounts payable by such Lender to the Agent, by wire transfer.
(b) It is agreed that each Lender's Revolving Loans are intended by
the Lenders to be equal at all times to such Lender's ratable portion (as
determined in accordance with the percentage amounts set forth in Schedule 2.01
hereto) of the aggregate principal amount of all Revolving Loans outstanding.
Notwithstanding such agreement, the Lenders agree that in order to facilitate
the administration of this Agreement and the other Loan Documents, settlement
among them as to Revolving Loans shall, subject to the provisions of clause (d)
below, take place on a periodic basis in accordance with the provisions of
clause (c) below.
(c) (i) To the extent and in the manner hereinafter provided in this
Section 2.15, settlement among the Lenders as to Revolving Loans shall occur
periodically on Settlement Dates determined from time to time by the Agent,
which may occur before or after the occurrence or during the continuance of a
Default or Event of Default and whether or not all of the conditions to the
making of Revolving Loans set forth in Section 5.01 have been met. On each
Settlement Date, payments shall be made to the Agent for the account of the
Lenders (including, without limitation, GMACBC as a Lender) in the manner
provided in this Section 2.15 in accordance with the Settlement Report delivered
by the Agent pursuant to the provisions of this Section 2.15 in respect of such
Settlement Date so that as of each Settlement Date, and after giving effect to
the transactions on such Settlement Date, each Lender's Revolving Loans shall
equal such Lender's ratable portion of the Revolving Loans outstanding as
determined in accordance with the percentage amounts set forth in Schedule 2.01
hereto.
(ii) The Agent shall designate periodic Settlement Dates which
may occur on any Business Day after the Closing Date; provided, however, that
Settlement Dates shall occur weekly or more frequently as determined by the
Agent in its discretion (including, without limitation, under clause (d)(i)
hereof). The Agent shall designate a Settlement Date by delivering to each
Lender a Settlement Report not later than 10:00 a.m. (New York City time) on the
proposed Settlement Date, which Settlement Report shall be with respect to the
period beginning on the next preceding Settlement Date and ending on such
designated Settlement Date.
(iii) Between Settlement Dates, the Agent shall request and
GMACBC as a Lender shall, subject to the provisions of clause (d) below, advance
to the Borrower out of GMACBC own funds, the entire principal amount of any
39
Revolving Loan requested or deemed requested pursuant to Section 2.03 (any such
Revolving Loan being referred to as a "Non-Ratable Loan"). The making of each
Non-Ratable Loan by GMACBC shall be deemed to be a purchase by GMACBC of a 100%
participation in each other Lender's ratable portion of the amount of such
Non-Ratable Loan. All payments of principal, interest and any other amount with
respect to such Non-Ratable Loan shall be payable to and received by the Agent
for the account of GMACBC. Any payments received by the Agent between Settlement
Dates which in accordance with the terms of this Agreement are to be applied to
the reduction of the outstanding principal balance of Revolving Loans, shall be
paid over to and retained by GMACBC for such application to the extent that
GMACBC has made such Revolving Loans out of its own funds, and such payment to
and retention by GMACBC shall be deemed, to the extent of each other Lender's
ratable portion of such payment, to be a purchase by each such other Lender of a
participation in the Revolving Loans (including the repurchase of participations
in Non-Ratable Loans) held by GMACBC immediately prior to the receipt and
application of such payment.
(iv) If any amounts received by GMACBC in respect of the
Obligations are later required to be returned or repaid by GMACBC to the
Borrowers or any other obligor or their respective representatives or successors
in interest, whether by court order, settlement or otherwise, and such amounts
repaid or returned by GMACBC are in excess of GMACBC's ratable portion of all
such amounts required to be returned by all Lenders, each other Lender shall,
upon demand by GMACBC with notice to the Agent, pay to the Agent for the account
of GMACBC, an amount equal to the excess of such Lender's ratable portion of all
such amounts required to be returned by all Lenders over the amount, if any,
returned directly by such Lender.
(v) (x) Payment by any Lender to the Agent shall be made not
later than 1:00 p.m. (New York City time) on the Business Day such payment is
due, provided that if such payment is due on written demand by another Lender,
including pursuant to clause (d) below, such written demand shall be made on the
paying Lender not later than 10:00 a.m. (New York City time) on such Business
Day. Payment by the Agent to any Lender shall be made by wire transfer, promptly
following the Agent's receipt of funds for the account of such Lender and in the
type of funds received by the Agent, provided that if the Agent receives such
funds at or prior to 12:00 noon (New York City time), the Agent shall pay such
funds to such Lender by 3:00 p.m. (New York City time) on such Business Day. If
a demand for payment is made after the applicable time set forth above, the
payment due shall be made by 3:00 p.m. (New York City time) on the first
Business Day following the date of such demand.
(y) If a Lender shall, at any time, fail to make any
payment to the Agent required hereunder, the Agent may, but
shall not be required to, retain payments that would otherwise
be made to such Lender hereunder and apply such payments to
such Lender's defaulted obligations hereunder, at such time,
and in such order, as the Agent may elect in its sole
discretion.
(z) With respect to the payment of any funds under this
Section 2.15(c), whether from the Agent to a Lender or from a
Lender to the Agent, the party failing to make full payment
40
when due pursuant to the terms hereof shall, upon written
demand by the other party, pay such amount together with
interest on such amount at the Federal Funds Effective Rate.
(d) (i) The Agent shall have the right at any time to require, by
notice to each Lender, that all settlements in respect of advances and
repayments of Revolving Loans be made on a daily basis. From and after the
giving of such notice (and until such time, if any, as the Agent notifies the
Lenders of its determination to return to a periodic settlement basis), each
Lender shall pay to the Agent such Lender's ratable portion of the amount of
each Revolving Loan on the date such Revolving Loan is made in accordance with
the provisions of clause (c)(v) above and the Agent shall pay to each Lender by
wire transfer by 5:00 p.m. (New York City time) funds received before 1:00 p.m.
(New York City time) on such Business Day by the Agent from the Borrower and by
3:00 p.m. (New York City time) funds received after 1:00 p.m. (New York City
time) of the preceding Business Day by the Agent from the Borrowers, by wire
transfer, such Lender's ratable portion of the net amount of all payments
received by the Agent hereunder in respect of the principal of the Revolving
Loans (after deducting the principal amount of Revolving Loans made on such day)
or in respect of interest on the Revolving Loans. Any amount payable pursuant to
this subsection which is not paid when due shall bear interest, payable by the
Agent, or the applicable Lender, as the case may be, for each day until paid in
full at the Federal Funds Effective Rate in effect on such day.
(ii) In addition to, and without limiting the right of the
Agent to require daily settlement pursuant to clause (i), upon written demand by
GMACBC with notice thereof to the Agent, each other Lender shall pay to the
Agent, for the account of GMACBC, as the repurchase of GMACBC's participation
interest in such Lender's Non-Ratable Loans, an amount equal to 100% of such
Lender's ratable portion of the unpaid principal amount of all Non-Ratable
Loans. Payments made pursuant to this clause (ii) shall be made not later than
5:00 p.m. (New York City time) on any Business Day if demand for such payment is
received by such Lender not later than 10:00 a.m. (New York City time) on such
Business Day; otherwise, any such payment shall be made on the next Business Day
after demand is received therefore.
SECTION 2.16. Making of Revolving Loans. (a) Unless the Agent has been
notified in writing to the contrary before 1:00 p.m. New York City time on the
date of any borrowing, the Agent may assume that each Lender will make its
ratable portion of any amount to be borrowed available to the Agent in
accordance with Section 2.02(b) hereof, and the Agent may in its discretion, in
reliance upon such assumption, make available to the Borrowers on such date a
corresponding amount. If and to the extent such Lender shall not make such
ratable portion available to the Agent, such Lender and the Borrowers severally
agree to repay to the Agent forthwith on demand such corresponding amount,
together with interest thereon for each day from the date such amount is made
available to the Borrowers until the date such amount is repaid to the Agent, as
to the Borrowers, at the rate of interest applicable to Loans hereunder, and as
to such other Lender, at the Federal Funds Effective Rate and until so repaid
such amount shall be deemed to constitute a Revolving Loan by the Agent to the
Borrowers hereunder entitled to the benefits of the Collateral and the other
provisions hereof applicable to the Revolving Loans. If such Lender shall repay
to the Agent such corresponding amount, the amount so repaid shall constitute
such Lender's ratable portion of the Revolving Loans made on such borrowing date
41
for purposes of this Agreement. No Lender shall be responsible for the failure
of any other Lender to make its ratable portion of such Revolving Loans
available on the borrowing date.
(b) Without limiting the generality of Article IX, each Lender
expressly authorizes the Agent to determine on behalf of such Lender (i) whether
to make Revolving Loans requested or deemed requested by the Borrowers on any
borrowing date (unless the Agent has been notified in writing to the contrary by
any Lender before 1:00 p.m. New York time on such borrowing date), (ii) the
creation of any reserves against the Borrowing Base, (iii) any reduction of
advance rates applicable to the Borrowing Base, (iv) approval of one or more
overadvances (provided, however, that any such overadvance shall not result in
the principal amount of Revolving Loans exceeding, prior to a Default or an
Event of Default, an amount which is $1,000,000 in excess of the Borrowing Base
minus the Letter of Credit Usage and the reserves described in Section
2.01(a)(iii) but not in excess of the Total Revolving Commitment (it being
understood that any such excess Revolving Loans shall be payable upon demand of
the Agent) and such overadvance shall not remain outstanding for a period of
longer than 45 consecutive Business Days without approval of Required Lenders
and in no event shall overadvances exist for more than 45 Business Days in the
aggregate during any calendar year), and (v) whether specific items of inventory
constitute "Eligible Inventory" in accordance with the definition of such term
set forth in Article I. The Agent shall give prompt notice to the Lenders of any
determinations made pursuant to clause (ii), (iii) or (iv) above. Nothing
contained in this Section 2.16(b) shall create any rights in favor of the
Borrower, any Guarantor or any person other than the Agent, and the terms of
this Section 2.16(b) may be amended by the Agent and the Lenders without the
consent of the Borrowers or any Guarantor.
SECTION 2.17. Joint and Several Borrowers. The parties hereto agree and
confirm that the obligations of the Borrowers under and/or in connection with
this Agreement and the other Loan Documents (including, without limitation, with
respect to payments of principal, interest, fees and all other amounts with
respect to the Loans) are the joint and several undertaking of each Borrower.
IIA. LETTERS OF CREDIT
SECTION 2A.01. Issuance of Letters of Credit. Upon the request of the
Borrowers, and subject to the conditions set forth in Article V hereof and such
other conditions to the opening of Letters of Credit as GMACBC requires of its
customers generally, the Agent shall cause GMACBC from time to time to open or
arrange (by means of a guaranty (a "Letter of Credit Guaranty") in favor of the
Issuing Bank or otherwise) for an Issuing Bank to open standby letters of credit
(each, a "Letter of Credit") for the account of the Borrowers, provided that the
Letter of Credit Usage shall not at any time exceed $4,500,000 and provided,
further, that the face amount of any Letter of Credit that the Borrowers may
request to be opened at any time shall not exceed an amount equal to (A) the
lesser of (i) the Total Revolving Commitment at such time and (ii) the Borrowing
Base at such time minus (B) the sum of (i) the unpaid principal amount of all
Revolving Loans outstanding at such time, (ii) the Letter of Credit Usage at
such time and (iii) the reserves then in effect under Section 2.01 hereof. The
issuance of each Letter of Credit shall be made on at least four Business Days'
prior written notice from the Borrowers to the Agent, at its Domestic Lending
42
Office, which written notice shall be an application for a Letter of Credit on
GMACBC's or such Issuing Bank's customary form. The expiration date of any
Letter of Credit shall not be later than 365 days from the date of issuance
thereof and, in any event, no Letter of Credit shall have an expiration date
later than the Termination Date. The Letters of Credit shall be issued with
respect of transactions occurring in the ordinary course of business of the
Borrowers.
SECTION 2A.02. Payment; Reimbursement. Upon the issuance of any Letter of
Credit or any Letter of Credit Guaranty, as the case may be, the Agent shall
notify each Lender of the principal amount, the number, and the expiration date
thereof and the amount of such Lender's participation therein. By the issuance
of a Letter of Credit hereunder and without further action on the part of the
Agent, GMACBC or the Lenders, each Lender hereby accepts from GMACBC a
participation (which participation shall be nonrecourse to GMACBC) in such
Letter of Credit or such Letter of Credit Guaranty, as the case may be, equal to
such Lender's pro rata (based on its Revolving Commitment) share of such Letter
of Credit or such Letter of Credit Guaranty, as the case may be, effective upon
the issuance of such Letter of Credit or Letter of Credit Guaranty. Each Lender
hereby absolutely and unconditionally assumes, as primary obligor and not as a
surety, and agrees to pay and discharge, and to indemnify and hold GMACBC
harmless from liability in respect of, such Lender's pro rata share of the
amount of any drawing under a Letter of Credit or payment under a Letter of
Credit Guaranty, as the case may be. Each Lender acknowledges and agrees that
its obligation to acquire participations in each Letter of Credit issued by
GMACBC or arranged to be issued by GMACBC and its obligation to make the
payments specified herein, and the right of GMACBC to receive the same, in the
manner specified herein, are absolute and unconditional and shall not be
affected by any circumstance whatsoever, including, without limitation, the
occurrence and continuance of a Default or an Event of Default hereunder, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. The Agent, GMACBC and/or the Issuing Bank shall review,
on behalf of the Lenders, each draft and any accompanying documents presented
under a Letter of Credit and shall notify each Lender of any such presentment.
Promptly after the Agent, GMACBC and/or the Issuing Bank shall have ascertained
that any draft and any accompanying documents presented under such Letter of
Credit appear on their face to be in substantial conformity with the terms and
conditions of the Letter of Credit, the Agent shall give telephonic or facsimile
notice to the Lenders and the Borrowers of the receipt and amount of such draft
and the date on which payment thereon will be made, and the Lenders shall, by
11:00 a.m., New York City time on the date such payment is to be made, pay the
amounts required to the Agent on behalf of GMACBC in immediately available
funds, and GMACBC, not later than 3:00 p.m. on such day, shall make, or arrange
to be made, the appropriate payment to the beneficiary of such Letter of Credit.
If GMACBC or the applicable Issuing Bank shall pay any draft presented under a
Letter of Credit, then Borrowers shall be deemed to have automatically requested
a Revolving Loan in an amount equal to the amount thereof. If there is
insufficient availability to make such Revolving Loans and the Lenders have not
been reimbursed with respect to such drawing by 11:00 a.m., New York City Time,
on the date of such payment, the Borrowers shall pay to the Agent, for the
account of the Lenders, the amount of the drawing together with interest on such
amount at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the Prime Rate plus 4%, payable on
demand. Nothing set forth in this paragraph or otherwise shall obligate Agent or
any Lender to advance Revolving Loans in excess of the amounts set forth in
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Section 2.01(a). The obligation of the Borrowers under this Section 2A.02 to
reimburse the Lenders and GMACBC for all drawings under Letters of Credit and
Letter of Credit Guaranties shall be absolute, unconditional and irrevocable and
shall be satisfied strictly in accordance with their terms, irrespective of:
(a) any lack of validity or enforceability of any Letter of Credit;
(b) the existence of any claim, setoff, defense or other right which
Borrowers or any other person may at any time have against the beneficiary
under any Letter of Credit, the Agent, GMACBC, the Issuing Bank or any
Lender (other than the defense of payment in accordance with the terms of
this Agreement) or any other person in connection with this Agreement or
any other transaction;
(c) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;
(d) payment by the Agent, GMACBC, the Issuing Bank or any Lender
under any Letter of Credit against presentation of a draft or other
document which does not comply with the terms of such Letter of Credit;
and
(e) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing.
It is understood that in making any payment under any Letter of
Credit (x) the Agent's, GMACBC's, the Issuing Bank's or any Lender's exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including, without limitation, reliance on
the amount of any draft presented under such Letter of Credit, whether or not
the amount due to the beneficiary equals the amount of such draft and whether or
not any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever
and (y) any noncompliance in any immaterial respect of the documents presented
under such Letter of Credit with the terms thereof shall, in each case, not be
deemed willful misconduct or bad faith of the Agent, GMACBC, the Issuing Bank or
any Lender.
SECTION 2A.03. GMACBC's Actions. Any Letter of Credit may, in the
discretion of GMACBC, the Issuing Bank or their respective correspondents, be
interpreted by them (to the extent not inconsistent with such Letter of Credit)
in accordance with the International Standby Practices (ISP 98-International
Chamber of Commerce Publication No. 590), as adopted or amended from time to
time. GMACBC, the Issuing Bank and their respective correspondents may accept
and act upon the name, signature, or act of any party purporting to be the
executor, administrator, receiver, trustee in bankruptcy, or other legal
representative of any party designated in any Letter of Credit in the place of
the name, signature, or act of such party.
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SECTION 2A.04. Payments in Respect of Increased Costs. (a) Notwithstanding
any other provision herein, if after the date of this Agreement any change in
applicable law or regulation or in the interpretation or administration thereof
by any governmental authority charged with the interpretation or administration
thereof (whether or not having the force of law) or any change in generally
accepted accounting principles or regulatory accounting principles applicable to
the Agent, GMACBC, any Issuing Bank or any Lender shall (i) impose, modify or
make applicable to the Agent, GMACBC, any Issuing Bank or any Lender any
reserve, special deposit or similar requirement with respect to its obligations
under this Article IIA, any Letter of Credit Guaranty or any Letter of Credit,
(ii) impose on the Agent, GMACBC, any Issuing Bank or any Lender any other
condition with respect to its obligations under this Article IIA, any Letter of
Credit Guaranty or any Letter of Credit, or (iii) subject the Agent, GMACBC, any
Issuing Bank or any Lender to any tax (other than (x) taxes imposed on the
overall net income of the Agent, GMACBC, any Issuing Bank or such Lender and (y)
franchise taxes imposed on the Agent, GMACBC, such Issuing Bank or such Lender,
in either case by the jurisdiction in which the Agent, GMACBC, such Issuing Bank
or such Lender, as appropriate, has its principal office or lending office or
any political subdivision or taxing authority of any such jurisdiction), charge,
fee, deduction or withholding of any kind whatsoever, and the result of any of
the foregoing shall be to increase the cost to the Agent, GMACBC, such Issuing
Bank or such Lender of maintaining such Letter of Credit or making any payment
under such Letter of Credit, such Letter of Credit Guaranty or this Article IIA
or to reduce the amount of principal, interest or any fee or compensation
receivable by the Agent, GMACBC, such Issuing Bank or such Lender in respect of
this Article IIA, such Letter of Credit Guaranty or such Letter of Credit, then
such additional amount or amounts as will compensate the Agent, GMACBC, such
Issuing Bank or such Lender for such additional costs or reduction shall be paid
to the Agent for its benefit or the benefit of GMACBC, such Issuing Bank or such
Lender by the Borrowers. Each Lender agrees to give notice to the Borrowers and
the Agent of any such change in law, regulation, interpretation or
administration with reasonable promptness after becoming actually aware thereof
and of the applicability thereof to the transactions contemplated in this
Article IIA.
(b) If, after the date of this Agreement, any Lender, Issuing Bank
or GMACBC shall have determined that the adoption of any applicable law, rule,
regulation or guideline regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender, Issuing Bank or GMACBC (or
its lending office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's, Issuing Bank's or GMACBC's capital as a consequence of its
obligations under this Article IIA, with respect to a Letter of Credit Guaranty
or with respect to a Letter of Credit to a level below that which such Lender,
Issuing Bank or GMACBC could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's, Issuing Bank's and GMACBC's
policies with respect to capital adequacy) then from time to time, the Borrowers
shall pay to such Lender, Issuing Bank, GMACBC or the Agent on behalf of GMACBC
such additional amount or amounts as will compensate such Issuing Bank, GMACBC
or such Lender for such reduction. Each Lender agrees to give notice to the
Borrowers and the Agent of any adoption of, change in, or change in
interpretation or administration of, any such law, rule, regulation or guideline
45
with reasonable promptness after becoming actually aware thereof and of the
applicability thereof to the transactions contemplated hereby.
(c) A certificate of the Agent, Issuing Bank, GMACBC or a Lender
setting forth such amount or amounts, supported by calculations in reasonable
detail, as shall be necessary to compensate the Agent, Issuing Bank, GMACBC or
such Lender, as appropriate, as specified in paragraphs (a) and (b) above shall
be delivered to the Borrowers and shall be conclusive and binding upon the
Borrowers absent manifest error. The Borrowers shall pay the Agent on behalf of
Issuing Bank, GMACBC or such Lender the amount shown as due on any such
certificate within five (5) Business Days after its receipt of the same.
(d) Failure on the part of any Lender, Issuing Bank, GMACBC or the
Agent to demand compensation for any increased costs, reduction in amounts
received or receivable with respect to this Article IIA, any Letter of Credit
Guaranty or any Letter of Credit or reduction in the rate of return earned on
such Lender's, Issuing Bank's, GMACBC's capital, in each case pursuant to
paragraph (a) or (b) above, shall not constitute a waiver of the Agent's,
Issuing Bank's, GMACBC's or such Lender's rights to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
rate of return pursuant to paragraph (a) or (b) above. The protection under this
Section 2A.04 shall be available to each Lender, Issuing Bank, GMACBC and the
Agent regardless of any possible contention of the invalidity or inapplicability
of any law, regulation or other condition which shall give rise to any demand by
such Lender, Issuing Bank, GMACBC or the Agent for compensation (but if such
law, regulation or other condition is finally determined to be invalid or
inapplicable, the Agent on its behalf and on behalf of Issuing Bank, GMACBC or
Lenders shall promptly refund (without interest) all amounts paid under this
Section 2A.04 arising from such invalid or inapplicable law, regulation or other
condition).
SECTION 2A.05. Indemnity as to Letters of Credit. Each Borrower hereby
agrees to indemnify and hold harmless the Agent, Issuing Bank, GMACBC and the
Lenders from and against any and all claims, damages, losses, liabilities, costs
or expenses whatsoever which the Agent, Issuing Bank, GMACBC or the Lenders may
incur or suffer by reason of or in connection with the execution and delivery or
assignment of, or payment under, any Letter of Credit Guaranty or any Letter of
Credit, except only if and to the extent that any such claim, damage, loss,
liability, cost or expense shall be caused by the gross negligence, willful
misconduct or bad faith of the Agent, Issuing Bank, GMACBC or any Lender
performing its obligations under this Agreement. Without limiting the foregoing,
Borrowers and each Guarantor further agrees to indemnify and hold harmless the
Agent, Issuing Bank and GMACBC, their respective officers and directors, each
person who controls the Agent, Issuing Bank or GMACBC within the meaning of
Section 15 of the Securities Act of 1933 or any applicable state securities law
and their respective successors from and against any and all claims, damages,
losses, liabilities, costs or expenses, joint or several, to which they or any
of them may become subject under any Federal or state securities law, rule or
regulation, at common law or otherwise, insofar as such claims, damages, losses,
liabilities, costs or expenses arise out of or are based upon the execution and
delivery by Issuing Bank or GMACBC of any Letter of Credit Guaranty or any
Letters of Credit or the execution and delivery of any other document in
connection therewith (but not including any claims, damages, losses,
46
liabilities, costs or expenses arising from the gross negligence, bad faith or
willful misconduct of Issuing Bank or GMACBC). The Borrowers, upon demand by the
Agent, Issuing Bank or GMACBC at any time, shall reimburse the Agent, and
Issuing Bank and GMACBC for any reasonable legal or other expenses incurred in
connection with investigating or defending against any of the foregoing. The
indemnities contained herein shall survive the expiration or termination of the
Letters of Credit and this Agreement.
SECTION 2A.06. Letter of Credit Fees. The Borrowers agree to pay to the
Agent for the ratable benefit of the Lenders, with respect to any Letter of
Credit, on the last business day of each month and on the date of the full
drawing, cancellation, termination or expiration of such Letter of Credit, a
letter of credit fee for such month or shorter period equal to three and one
quarter of one percent (3.25%) per annum on the average daily undrawn amount
thereof for such month or shorter period, payable to the Agent at its Domestic
Lending Office in immediately available funds. The foregoing fees shall be
computed on the basis of the actual number of days elapsed over a year of 360
days. Additionally, the Borrowers shall pay to the Agent at its Domestic Lending
Office for the sole account of GMACBC and/or any Issuing Bank, as the case may
be, upon demand by the Agent or GMACBC all of the customary fees and expenses of
GMACBC and/or such Issuing Bank with respect to the opening, drawing upon,
extending, amending, transferring, canceling or administration of Letters of
Credit from time to time in effect. The Agent shall disburse to each Lender such
Lender's pro rata share of any payment of the letter of credit fees referred to
in clause (a) of the first sentence of this Section 2A.06 in immediately
available funds within one (1) Business Day of the Agent's receipt of such
payment.
III. COLLATERAL SECURITY
SECTION 3.01. Security Documents. The Obligations shall be secured by the
Collateral described in the Security Documents and are entitled to the benefits
thereof. The Parent shall, and shall cause the other Grantors to, duly execute
and deliver the Security Documents, all consents of third parties necessary to
permit the effective granting of the Liens created in such agreements, financing
statements pursuant to the UCC and other documents, all in form and substance
satisfactory to the Agent, as may be reasonably required by the Agent to grant
to the Agent for the benefit of the Secured Parties a valid, perfected and
enforceable first priority Lien on and security interest in (subject only to the
Liens permitted under Section 7.01 hereof) the Collateral. Without in any manner
limiting the foregoing, (i) each of the Grantors hereby agrees and confirms that
the Collateral includes all "investment property" of each Grantor, as such term
may from time to time be used under the UCC and (ii) each Grantor hereby grants
a Lien on and security interest in such investment property and all proceeds
thereof (to the extent any applicable jurisdiction contemplates or permits a
Lien or security interest in investment property) as security for the
Obligations. The Grantors agree, at the request of the Agent, to promptly
execute all documents that may be required by the Agent in order to further
create and perfect such Lien and Security Interest. Notwithstanding the terms of
this Section 3.01, the foregoing grant of a Lien in "investment property" shall
specifically exclude any capital stock of Wakefern Food Corp, Insure-Rite, Ltd.
and/or WFC-1 Realty Corp. owned by any Grantor and described in Schedule 7.06.
47
SECTION 3.02. Filing and Recording. The Parent and its Subsidiaries shall,
at their sole cost and expense, cause all instruments and documents given as
evidence of security pursuant to this Agreement to be duly recorded and/or filed
or otherwise perfected in all places necessary, in the opinion of the Agent, and
take such other actions as the Agent may reasonably request, in order to perfect
and protect the Liens of the Agent and the Secured Parties in the Collateral.
The Borrowers and each Guarantor, to the extent permitted by law, hereby
authorize the Agent to file any financing statement in respect of any Lien
created pursuant to the Security Documents which may at any time be required or
which, in the opinion of the Agent, may at any time be desirable although the
same may have been executed only by the Agent or, at the option of the Agent, to
sign such financing statement on behalf of the Borrowers or the Guarantor, as
the case may be, and file the same, and the Borrowers and each Guarantor hereby
irrevocably designate the Agent, its agents, representatives and designees as
its agent and attorney-in-fact for this purpose. In the event that any
re-recording or refiling thereof (or the filing of any statements of
continuation or assignment of any financing statement) is required to protect
and preserve such Lien, Borrowers shall, at the Borrowers' cost and expense,
cause the same to be recorded and/or refiled at the time and in the manner
requested by the Agent.
SECTION 3.03. Real Property; Mortgages; Title Insurance.
-----------------------------------------
(a) In connection with the Existing Loan Agreement, the Parent and
its Subsidiaries had executed and delivered mortgages or deeds of trust (each an
"Original Mortgage" and collectively the "Original Mortgages") in respect of
real property owned or leased by the Parent or such Subsidiary, listed on
Schedule 3.03 annexed hereto and made a part hereof.
(b) (i) To the extent requested by the Agent, the Parent and each of
its Subsidiaries shall duly execute and deliver to the Agent mortgages or deeds
of trust with respect to additional real property owned or leased by the Parent
or such Subsidiary (each an "Additional Mortgage" and collectively the
"Additional Mortgages") so as to create in the Agent's favor, for the benefit of
the Secured Parties, upon recordation of each of the Additional Mortgages, a
valid, perfected and enforceable first priority Lien securing the Obligations
(subject to Liens permitted under Section 7.01 hereof) on the real property and
improvements described therein. To the extent requested by the Agent, the Parent
and each of its Subsidiaries shall make best efforts to deliver to the Agent
consents of third parties to the Additional Mortgages, and such title searches,
non-disturbance agreements, lease amendments and/or consents, landlord's
waivers, estoppel certificates and waivers, as the Agent shall request (in each
case, in form and substance satisfactory to the Agent). Such Additional
Mortgages shall be in form and substance satisfactory to the Agent. The parties
hereto acknowledge and agree that the term Additional Mortgages shall include
(x) the additional fee mortgages and leasehold mortgages required to be
delivered as a condition precedent to the effectiveness of this Agreement
pursuant to Section 5.02 hereof and (y) any future leasehold mortgages requested
by Agent with respect to real property where a Grantor acts as lessor;
(ii) Without limiting the foregoing clause (i), the Parent and each
of its Subsidiaries shall duly execute and deliver to the Agent mortgages or
48
deeds of trust with respect to all real property owned or leased by the Parent
or such Subsidiary with respect to each New/Replacement Store Project (each a
"New/Replacement Store Project Mortgage" and collectively the "New/Replacement
Store Project Mortgages") so as to create in the Agent's favor, for the benefit
of the Secured Parties, upon recordation of each of the New/Replacement Store
Project Mortgages, a valid, perfected and enforceable first priority Lien
securing the Obligations (subject to Liens permitted under Section 7.01 hereof)
on the real property and improvements described therein. In the event that
Agent does not finance the New/Replacement Store Project and the financier of
such New/Replacement Store Project requires a mortgage or deed of trust on such
real property, Agent agrees that it shall not require a mortgage or deed of
trust on such real property. The Parent and each of its Subsidiaries shall
deliver to the Agent consents of third parties to the New/Replacement Store
Project Mortgages, and such title searches, non-disturbance agreements, lease
amendments and/or consents, landlord's waivers, estoppel certificates and
waivers, as the Agent shall request (in each case, in form and substance
satisfactory to the Agent). Such New/Replacement Store Project Mortgages shall
be in form and substance satisfactory to the Agent.
(c) To the extent requested by the Agent, the Parent and each of its
Subsidiaries shall duly execute and deliver to the Agent amendments to the
Original Mortgages (each a "Mortgage Amendment" and collectively the "Mortgage
Amendments") modifying the Original Mortgages to also secure the Capital
Expenditure Facility so as to cause, upon recordation of the Mortgage
Amendments, the Original Mortgages, as so amended by the Mortgage Amendments, to
be a valid, perfected, and enforceable first priority Lien (subject to the liens
under Section 7.01 hereof) on the real property and improvements described
therein securing the Obligations. To the extent requested by the Agent, the
Parent and each of its Subsidiaries shall duly execute and deliver to the Agent,
consents of third parties to the Mortgage Amendments and such title searches,
non-disturbance agreements and/or consents, Landlord's Waivers, estoppel
certificates and waivers as the Agent may request (in each case, in form and
substance satisfactory to the Agent).
(d) the Parent and each of its Subsidiaries shall cause the
Additional Mortgages, New/Replacement Store Project Mortgages and the Mortgage
Amendments (such mortgages as they are now and may hereafter be amended,
modified, consolidated or supplemented, collectively, the "Mortgages") executed
and delivered to be duly recorded in the appropriate recording office or offices
and shall pay all fees and taxes payable in connection therewith.
(e) If requested by the Agent, the Parent and each of its
Subsidiaries shall furnish to the Agent for the benefit of the Secured Parties,
at the expense of the Parent and its Subsidiaries, one or more policies of
mortgagee title insurance, in form, substance and amount satisfactory to the
Agent, insuring that each of the Mortgages executed and delivered by it pursuant
hereto is a valid and perfected first priority Lien securing the Obligations
(except for the Liens permitted by Section 7.01) in favor of the Agent, for the
benefit of the Secured Parties, on the fee or leasehold interest of the Parent
or such Subsidiary, in the real property and improvements described therein, and
that the Parent or such Subsidiary has good and marketable title thereto, issued
by a title insurance company reasonably satisfactory to the Agent, together with
satisfactory evidence that all title insurance premiums have been fully paid.
49
The Parent shall furnish to the Agent certified surveys of real property and
such other certificates and documents as the Agent may reasonably request and
which are customary in financing of this type. The Parent and each applicable
Subsidiary shall provide to each Lender with respect to any real property to be
subject to a Mortgage, or any other real property of Parent or any of its
Subsidiaries, such appraisals of such real property as shall be requested by the
Agent (provided, however, that so long as no Default or Event of Default shall
be in existence, Borrowers shall not be required to reimburse Agent for more
than one such real property appraisal for any property every thirty months). If
requested by the Agent, the Parent and its Subsidiaries shall, at their cost and
expense, furnish to the Agent, for the benefit of the Secured Parties, flood
insurance with respect to any real property subject to any Mortgage to the
extent such flood insurance can be obtained by the Parent and its Subsidiaries
on commercially reasonable terms; provided, however, that, at the cost and
expense of the Parent and its Subsidiaries, the Parent and its Subsidiaries
shall in any event maintain and shall furnish to the Agent flood insurance with
respect to any real property subject to any Mortgage to the extent flood
insurance with respect to such real property is required to be maintained by
applicable law (whether such law is applicable to any Lender, including, without
limitation, by reason of such Mortgage, the Parent, any Subsidiary thereof or
otherwise). This Section 3.03 shall not be deemed to allow the Parent or any
Subsidiary to acquire any property if otherwise prohibited by this Agreement.
SECTION 3.04. Additional Collateral. The Borrowers and each Guarantor
acknowledge that it is their intention to provide the Agent with a Lien on all
the property of the Parent and its Subsidiaries (personal, real and mixed),
whether now owned or hereafter acquired (other than as agreed to in writing by
the Agent), subject only to Liens permitted hereunder. Without limitation of
Section 3.03(c) hereof, the Parent and its Subsidiaries shall from time to time
promptly notify the Agent of the acquisition by the Parent or any of its
Subsidiaries of any material property in which the Agent does not then hold a
perfected Lien (other than as agreed to in writing by the Agent), or the
creation or existence of any such property, and such person shall, upon request
by the Agent, promptly execute and deliver to the Agent or cause to be executed
and delivered to the Agent pledge agreements, security agreements, mortgages or
other like agreements with respect to such property, together with such other
documents, certificates, opinions of counsel and the like as the Agent shall
reasonably request in connection therewith, in form and substance satisfactory
to the Agent, such that the Agent shall receive valid and perfected first
priority Liens (subject to Liens permitted hereby) on all such property
(including property which, on the Closing Date, is not subject to a Lien in
favor of the Agent). In addition, in the event that the Borrowers or any
Subsidiary acquires or owns any material trademarks, copyrights, patents or
other intellectual property, the Borrowers shall notify the Agent promptly in
writing and shall execute, or cause the execution of a security agreement and
other documents with respect thereto in form and substance reasonably
satisfactory to the Agent.
IV. REPRESENTATIONS AND WARRANTIES
The Borrowers and each of the Guarantors jointly and severally represents
and warrants to each of the Lenders that:
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SECTION 4.01. Organization, Legal Existence. The Borrowers and each
Guarantor (and each of their respective Subsidiaries) are legal entities duly
formed or incorporated, validly existing and in good standing under the laws of
the jurisdiction of their respective organization. The exact State
organizational identification number of each Borrower and Guarantor is listed on
Schedule 4.01 attached hereto. Each Borrower and Guarantor has the requisite
power and authority to own their property and assets and to carry on their
business as now conducted and as currently proposed to be conducted in and are
qualified to do business in each jurisdiction where the failure to so qualify
would have a Material Adverse Effect (all such jurisdictions being listed in
Schedule 4.01 annexed hereto). The Borrowers and each Guarantor has the
corporate power to execute, deliver and perform its obligations under this
Agreement and the other Loan Documents to which it is a party, and, with respect
to Borrowers, to borrow hereunder and to execute and deliver the Notes. The
exact name of each Borrower and Guarantor is set forth in the first paragraph to
this Agreement (or if such Borrower and/or Guarantor is not listed in such first
paragraph, such exact name is set forth on Schedule 4.01.)
SECTION 4.02. Authorization. The execution, delivery and performance by
the Borrowers and each Guarantor of this Agreement and each of the other Loan
Documents to which it is a party, the borrowings hereunder by Borrowers, the
execution and delivery by Borrowers of the Notes and the grant of security
interests in the Collateral created by the Security Documents (collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate and, if
required, stockholder action and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation applicable to the Borrowers or any Guarantor or
the certificate or articles of incorporation or other applicable constitutive
documents or the by-laws of the Borrowers, any Guarantor, or its Subsidiaries,
as the case may be, (B) any order of any court, or any rule, regulation or order
of any other agency of government binding upon the Borrowers, any Guarantor, or
its Subsidiaries, or (C) any provisions of any indenture, agreement or other
instrument to which the Borrowers, any Guarantor or its Subsidiaries, or any of
their respective properties or assets are or may be bound, (ii) be in conflict
with, result in a breach of or constitute (alone or with notice or lapse of time
or both) a default under any indenture, agreement or other instrument referred
to in (b)(i)(C) above or (iii) result in the creation or imposition of any Lien
of any nature whatsoever (other than in favor of the Agent, for the benefit of
the Secured Parties, as contemplated by this Agreement and the Security
Documents) upon any property or assets of the Borrowers, any Guarantor, or its
Subsidiaries.
SECTION 4.03. Governmental Approvals. No registration or filing (other
than the filings necessary to perfect the Liens created by the Security
Documents and the filing of a SEC form 8K, 10K, or 10Q) with, consent or
approval of, or other action by, any Federal, state or other governmental
agency, authority or regulatory body is or will be required on behalf of the
Borrowers or any Guarantor in connection with the Transactions, other than any
which have been made or obtained.
SECTION 4.04. Binding Effect. This Agreement and each of the other Loan
Documents to which it is a party constitutes, and each of the Notes when duly
executed and delivered will constitute, a legal, valid and binding obligation of
the Borrowers and each Guarantor, as appropriate, enforceable in accordance with
its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
51
and to general principles of equity (regardless of whether considered in a
proceeding in equity or at law).
SECTION 4.05. Material Adverse Change. There has been no change, event or
facts that would reasonably be expected to have a Material Adverse Effect since
November 3, 2001.
SECTION 4.06. Litigation; Compliance with Laws; etc. (a) Except as set
forth in Schedule 4.06(a) annexed hereto, there are not any actions, suits or
proceedings at law or in equity or by or before any governmental instrumentality
or other agency or regulatory authority now pending or, to the knowledge of any
Responsible Officer of the Parent or any Subsidiary thereof, threatened, against
or affecting the Parent or any of its Subsidiaries or the businesses, assets or
rights of the Parent or any of its Subsidiaries. None of the items listed on
Schedule 4.04(a) are items (i) which involve any of the Transactions or (ii) as
to which it is probable (within the meaning of Statement of Financial Accounting
Standards No. 5) that there will be an adverse determination and which, if
adversely determined, would, individually or in the aggregate, have a Material
Adverse Effect.
(b) Neither the Parent nor any of its Subsidiaries is in violation
of any law in any material respect, or in default with respect to any judgment,
writ, injunction, decree, rule or regulation of any court or governmental agency
or instrumentality.
SECTION 4.07. Financial Statements. (a) The Parent has heretofore
furnished to the Lenders Consolidated balance sheets and statements of income
and cash flows of the Parent dated as October 30, 1999, October 28, 2000 and
November 3, 2001, respectively, each audited by and accompanied by the opinion
of independent public accountants. Such balance sheets and statements of income
and cash flows present fairly the Consolidated financial condition and results
of operations of the Parent and its Subsidiaries as of the dates and for the
periods indicated, and such balance sheets and the notes thereto disclose all
material liabilities, direct or contingent, of the Parent and its Subsidiaries,
as of the dates thereof to the extent such material liabilities are required to
be disclosed under GAAP. The Parent has heretofore furnished to the Lenders
unaudited Consolidated balance sheets and statements of income and cash flows of
the Parent dated as of May 4, 2002. Such unaudited balance sheets and statements
of income and cash flows present fairly the Consolidated financial condition and
results of operations of the Parent and its Subsidiaries as of the dates and for
the periods indicated, and such balance sheets and the notes thereto disclose
all material liabilities, direct or contingent, of the Parent and its
Subsidiaries as of the dates thereof. The financial statements referred to in
this Section 4.07 have been prepared in accordance with generally accepted
accounting principles consistently applied.
(b) The Parent has, on or about July 11, 2002, furnished to the
Lenders projected income statements, balance sheets and cash flows of the
Parent, on a Consolidated basis through the Fiscal Year ended November 3, 2007
(which projections are on a quarterly basis for Fiscal Year of Borrower ending
November 1, 2003 and on a yearly basis thereafter), together with a schedule
confirming the ability of the Parent and its Subsidiaries to consummate the
Transactions and demonstrating prospective compliance with all financial
covenants contained in this Agreement, such projections disclosing all
assumptions made by the Parent and its Subsidiaries in formulating such
52
projections and giving effect to the Transactions. The projections are based
upon reasonable estimates and assumptions, all of which are reasonable in light
of the conditions which existed at the time the projections were made, have been
prepared on the basis of the assumptions stated therein, and reflect as of the
Closing Date the reasonable estimate of the Parent and its Subsidiaries of the
results of operations and other information projected therein.
SECTION 4.08. Federal Reserve Regulations. (a) Neither the Parent nor any
of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including, without limitation, Regulation T, U or X thereof. If requested by any
Lender, the Parent or any of its Subsidiaries shall furnish to such Lender a
statement on Federal Reserve Form U-1 referred to in said Regulation U.
SECTION 4.09. Taxes. Except for filing extensions which have been duly
obtained from the appropriate government authorities and are still in effect,
the Parent and each of its Subsidiaries have filed or caused to be filed all
Federal, state, local and foreign tax returns which are required to be filed by
them, on or prior to the date hereof, other than tax returns in respect of taxes
that (x) are not franchise, capital or income taxes, (y) in the aggregate are
not material and (z) would not, if unpaid, result in the imposition of any
material Lien on any property or assets of the Parent or any of its
Subsidiaries. The Parent and its Subsidiaries have paid or caused to be paid all
taxes shown to be due and payable on such filed returns or on any assessments
received by them, other than any taxes or assessments the validity of which the
Parent or a Subsidiary is contesting in good faith by appropriate proceedings,
and with respect to which the Parent or such Subsidiary shall, to the extent
required by generally accepted accounting principles consistently applied have
set aside on its books adequate reserves. After the fiscal year ended October
30, 1993, no Federal income tax returns of the Parent or any of its Subsidiaries
have been audited by the United States Internal Revenue Service. All
deficiencies which have been asserted against the Parent or its Subsidiaries as
a result of such completed examinations have been fully paid or finally settled
and no issue has been raised in any such examination which, by application of
similar principles, reasonably can be expected to result in assertion of a
material deficiency for any other year not so examined which has not been
reserved for in any financial statement of the Parent or any of its Subsidiaries
delivered to the Lenders. Neither the Parent nor any of its Subsidiaries has
taken any reporting positions for which they do not have a reasonable basis and
neither the Parent nor any of its Subsidiaries anticipate any further material
tax liability with respect to the years which have not been closed. Neither the
Parent nor any of its Subsidiaries is party to or has any obligation under any
tax sharing agreement. None of the Parent or any Subsidiary files a consolidated
tax return with a person other than the Parent or a Subsidiary of the Parent.
SECTION 4.10. Employee Benefit Plans. With respect to the provisions of
ERISA:
53
(i) Except as set forth on Schedule 4.10, no Reportable Event
has occurred or is continuing with respect to any Pension Plan with respect to
which the 30-day notice period has not been waived.
(ii) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) has occurred with respect to any Plan
(other than a Multiemployer Plan) subject to Part 4 of Subtitle B of Title I of
ERISA which could have a Material Adverse Effect.
(iii) Except as set forth on Schedule 4.10, none of the
Borrowers nor any ERISA Affiliate is now, or has been during the preceding five
years, obligated to contribute to a Pension Plan or a Multiemployer Plan. Except
as set forth on Schedule 4.10, none of the Borrowers nor any ERISA Affiliate has
(A) ceased operations at a facility so as to become subject to the provisions of
Section 4062(e) of ERISA, (B) withdrawn as a substantial employer so as to
become subject to the provisions of Section 4063 of ERISA, (C) ceased making
contributions to any Pension Plan subject to the provisions of Section 4064(a)
of ERISA to which the Borrowers, any Subsidiary of Borrowers or any ERISA
Affiliate made contributions, (D) incurred or caused to occur a "complete
withdrawal" (within the meaning of Section 4203 of ERISA) or a "partial
withdrawal" (within the meaning of Section 4205 of ERISA) from a Multiemployer
Plan that is a Pension Plan so as to incur withdrawal liability under Section
4201 of ERISA (without regard to subsequent reduction or waiver of such
liability under Section 4207 or 4208 of ERISA), or (E) been a party to any
transaction or agreement under which the provisions of Section 4204 of ERISA
were applicable.
(iv) No notice of intent to terminate a Pension Plan (other
than a Multiemployer Plan) has been filed, nor has any Plan been terminated
pursuant to the provisions of Section 4041(e) of ERISA which termination could
have a Material Adverse Effect.
(v) The PBGC has not instituted proceedings to terminate (or
appoint a trustee to administer) a Pension Plan (other than a Multiemployer
Plan) and no event has occurred or condition exists which might constitute
grounds under the provisions of Section 4042 of ERISA for the termination of (or
the appointment of a trustee to administer) any such Plan.
(vi) With respect to each Pension Plan (other than a
Multiemployer Plan) that is subject to the provisions of Title I, Subtitle B,
Part 3 of ERISA, the funding method used in connection with such Plan is
acceptable under ERISA, and the actuarial assumptions and methods used in
connection with funding such Pension Plan satisfy the requirements of Section
302 of ERISA. The aggregate present value of all accrued benefits under all
Pension Plans (other than Multiemployer Plans) do not exceed the aggregate fair
market value of the assets of such Plans by more than $3,000,000, in each case
as of the latest actuarial valuation date for such Plan (determined in
accordance with the same actuarial assumptions and methods as those used by the
Plan's actuary in its valuation of such Plan as of such valuation date). Except
as set forth on Schedule 4.10, no such Pension Plan has incurred any
"accumulated funding deficiency" (as defined in Section 412 of the Code),
whether or not waived.
54
(vii) There are no actions, suits or claims pending (other
than routine claims for benefits) or, to the knowledge of the Borrowers or any
ERISA Affiliate, which could reasonably be expected to be asserted, against any
Plan (other than a Multiemployer Plan) or the assets of any such Plan. No civil
or criminal action brought pursuant to the provisions of Title I, Subtitle B,
Part 5 of ERISA is pending or threatened against any fiduciary or any Plan
(other than a Multiemployer Plan) which could have a Material Adverse Effect.
None of the Plans or any fiduciary thereof (in its capacity as such) has been
the direct or indirect subject of any audit, investigation or examination by any
governmental or quasi-governmental agency which could have a Material Adverse
Effect.
(viii) All of the Plans (other than Multiemployer Plans)
comply currently, and have substantially complied in the past, both as to form
and operation, with their terms and with the provisions of ERISA and the Code,
and all other applicable laws, rules and regulations except for such
noncompliance as may be remedied during the remedial amendment period under
Section 401(b) of the Code; all necessary governmental approvals for the Plans
have been obtained and a favorable determination as to the qualification under
Section 401(a) of the Code of each of the Plans which is an employee pension
benefit plan (within the meaning of Section 3(2) of ERISA) has been made by the
Internal Revenue Service and a recognition of exemption from federal income
taxation under Section 501(a) of the Code of each of the funded employee welfare
benefit plans (within the meaning of Section 3(1) of ERISA) has been made by the
Internal Revenue Service, and nothing has occurred since the date of each such
determination or recognition letter that would adversely affect such
qualification which could have a Material Adverse Effect.
SECTION 4.11. No Material Misstatements. No information, report, financial
statement, exhibit or schedule prepared or furnished by or on behalf of the
Borrowers or any Guarantor to the Agent or any Lender in connection with any of
the Transactions or this Agreement, the Security Documents, the Notes or any
other Loan Documents or included therein contained or contains any material
misstatement of fact or omitted or omits to state any material fact necessary to
make the statements therein, taken together with all other such statements made
to the Agent or any Lender, in the light of the circumstances under which they
were made, not misleading.
SECTION 4.12. Investment Company Act; Public Utility Holding Company Act.
None of the Parent or any of its Subsidiaries is an "investment company" as
defined in, or is otherwise subject to regulation under, the Investment Company
Act of 1940. None of the Parent or any of its Subsidiaries is a "holding
company" as that term is defined in, or is otherwise subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 4.13. Security Interest. Each of the Security Documents creates
and grants to the Agent, for the benefit of the Secured Parties, a legal, valid
and perfected first (except as permitted pursuant to Section 7.01 hereof)
priority security interest in the collateral identified therein. Such collateral
or property is not subject to any other Liens whatsoever, except Liens permitted
by Section 7.01 hereof.
55
SECTION 4.14. Bank Accounts. Schedule 4.14 hereto sets forth as of the
Closing Date a list of all bank accounts of the Parent and its Subsidiaries.
SECTION 4.15. Subsidiaries. Except as set forth on Schedule 4.15 hereto,
as of the Closing Date, the Parent has no Subsidiaries.
SECTION 4.16. Title to Properties; Possession Under Leases; Trademarks.
(a) The Parent and each of its Subsidiaries owns good and marketable,
indefeasible fee simple title to all of the real estate described on Schedule
4.16(a-1) hereto as owned by it and has a valid leasehold interest in all of the
real estate described on Schedule 4.16(a-2) hereto as leased by it, in each case
free and clear of all Liens or other encumbrances of any kind, except as
described in Schedule 4.16(a-2) and except Liens permitted under Section 7.01
hereof. Schedules 4.16(a-1) and 4.16(a-2) hereto correctly identify as of the
Closing Date (x) each parcel of real property owned by the Parent or a
Subsidiary of the Parent, together in each case with an accurate street address
and description of the use of such parcel, (y) each parcel of real property
leased by or to the Parent or a Subsidiary, together in each case with an
accurate street address and description of the use of such parcel, and (z) each
other interest in real property owned, leased or granted to or held by the
Parent and each Subsidiary of the Parent. Except as set forth on Schedules
4.16(a-1) and 4.16(a-2):
(i) no structure owned or leased by the Parent or any
Subsidiary of the Parent fails to conform in any material respect with
applicable ordinances, regulations, zoning laws and restrictive covenants
(including in any such case and without limitation those relating to
environmental protection) nor encroaches upon property of others, nor is
any such real property encroached upon by structures of others in any case
in any manner that would have or would be reasonably likely to have a
Material Adverse Effect on the Agent's or Lenders' interest in any
material Collateral located on the premises or otherwise would have or
would be reasonably likely to have a Material Adverse Effect;
(ii) no charges or violations have been filed, served, made or
threatened, to the knowledge of the Parent, against or relating to any
such property or structure or any of the operations conducted at any such
property or structure, as a result of any violation or alleged violation
of any applicable ordinances, requirements, regulations, zoning laws or
restrictive covenants (including in any such case and without limitation
those relating to environmental protection) or as a result of any
encroachment on the property of others where the effect of same would have
or would be reasonably likely to have a Material Adverse Effect on the
Agent's or Lenders' interest in any material Collateral located on the
premises or otherwise would have or would be reasonably likely have a
Material Adverse Effect;
(iii) other than pursuant to applicable laws, rules,
regulations or ordinances, covenants that run with the land or provisions
in the applicable leases, there exists no restriction on the use, transfer
or mortgaging of any such property;
56
(iv) the applicable Borrower and/or Subsidiary each have
adequate permanent rights of ingress to and egress from any such property
used by it for the operations conducted thereon;
(v) except as expressly set forth in the lease agreements to
which such property relates, there are no developments affecting any of
the real property or interests therein pending or threatened which might
reasonably be expected to curtail or interfere in any material respect
with the use of such property for the purposes for which it is now used;
and
(vi) Neither the Parent nor any Subsidiary of the Parent has
any option in, or any right or obligation to acquire any interest in, any real
property;
(b) Except as set forth in Schedule 4.16(a-2), the Parent and each
Subsidiary of the Parent owns and has good and marketable title to all the owned
properties and assets reflected on its most recent balance sheet and valid
leasehold interests in the property it leases subject to no Liens except Liens
permitted under Section 7.01, and all such leases are in full force and effect
and the Parent and each of its Subsidiaries enjoy peaceful and undisturbed
possession under all such leases.
(c) Except as set forth in Schedule A, the Parent and each of its
Subsidiaries own or control all trademarks, trademark rights, trade names, trade
name rights, copyrights, patents, patent rights and licenses which are material
to the conduct of the business of the Parent and each of its Subsidiaries. To
the best of the Parent's knowledge, neither the Parent nor any of its
Subsidiaries is infringing upon or otherwise acting adversely to any of such
trademarks, trademark rights, trade names, trade name rights, copyrights, patent
rights or licenses owned by any other person or persons. There is no claim or
action by any such other person pending, or to the knowledge of any Responsible
Officer of the Parent or any Subsidiary thereof, threatened, against the Parent
or any of its Subsidiaries with respect to any of the rights or property
referred to in this Section 4.16(c).
(d) Other than motor vehicles, none of the assets or properties of
the Parent or any of its Subsidiaries is subject to a document of title.
SECTION 4.17. Solvency. (a) The fair salable value of the assets of the
Parent and each of its Consolidated Subsidiaries is not less than the amount
that will be required to be paid on or in respect of the probable liability on
the existing debts and other liabilities (including contingent liabilities) of
the Parent and each such Consolidated Subsidiary, as they become absolute and
mature.
(b) The assets of the Parent and each of its Consolidated
Subsidiaries do not constitute unreasonably small capital for the Parent and
such Consolidated Subsidiaries to carry out their respective businesses as now
conducted and as proposed to be conducted including the capital needs of the
Parent and such Consolidated Subsidiaries, taking into account the particular
capital requirements of the business conducted by the Parent and each such
Consolidated Subsidiary and projected capital requirements and capital
availability thereof.
57
(c) Neither the Parent nor any of its Subsidiaries intends to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be received by the Parent and its
Subsidiaries, and of amounts to be payable on or in respect of debt of the
Parent and its Subsidiaries). The cash flow of the Parent and its Consolidated
Subsidiaries, after taking into account all anticipated uses of the cash of the
Parent and its Consolidated Subsidiaries, will at all times be sufficient to pay
all such amounts on or in respect of debt of the Parent and its Consolidated
Subsidiaries when such amounts are required to be paid.
(d) Neither the Parent nor any of its Subsidiaries believes that
final judgments against them in actions for money damages presently pending will
be rendered at a time when, or in an amount such that, they will be unable to
satisfy any such judgments promptly in accordance with their terms (taking into
account the maximum reasonable amount of such judgments in any such actions and
the earliest reasonable time at which such judgments might be rendered). The
cash flow of the Parent and its Consolidated Subsidiaries, after taking into
account all other anticipated uses of the cash of the Parent and its
Consolidated Subsidiaries (including the payments on or in respect of debt
referred to in paragraph (c) of this Section), will at all times be sufficient
to pay all such judgments promptly in accordance with their terms.
SECTION 4.18. Permits, etc. The Parent and each of its Subsidiaries
possess all licenses, permits, approvals and consents, including, without
limitation, all environmental, health and safety licenses, permits, approvals
and consents of all Federal, state and local governmental authorities which are
required under Environmental Law and are material to the conduct of the business
of the Parent, New Linden, Reading and/or the Parent and its Subsidiaries taken
as a whole (collectively, "Permits"), each such Permit is and will be in full
force and effect, the Parent and each of its Subsidiaries are in compliance in
all material respects with all such Permits, and, to their knowledge, no event
(including, without limitation, any material violation of any law, rule or
regulation) has occurred which would be likely to lead to the revocation or
termination of any such Permit or any additional restriction thereon.
SECTION 4.19. Compliance with Environmental Laws. Except as disclosed in
Schedule 4.19 hereto: (i) the operations of the Parent and its Subsidiaries
comply in all material respects with all applicable Environmental Laws; (ii) the
Parent and its Subsidiaries and all of their present facilities or operations,
as well as to the best of their knowledge their past facilities or operations,
are not subject to any judicial proceeding or administrative proceeding or any
outstanding written order or agreement with any governmental authority or
private party respecting (a) any Environmental Law, (b) any Remedial Work, or
(c) any Environmental Claims arising from the Release of a Contaminant into the
environment; (iii) to the best of the knowledge of the Parent and its
Subsidiaries, none of their operations is the subject of any Federal or state
investigation evaluating whether any Remedial Work is needed to respond to a
Release of any Contaminant into the environment in violation of any
Environmental Law; (iv) neither the Parent nor any of its Subsidiaries nor to
the best of their knowledge any predecessor of the Parent or any of its
Subsidiaries has filed any notice under any Environmental Law indicating past or
present treatment, storage, or disposal of a Hazardous Material or reporting a
spill or Release of a Contaminant into the environment in violation of any
58
Environmental Law; (v) to the best of the knowledge of the Parent and its
Subsidiaries, neither the Parent nor any of its Subsidiaries has any material
contingent liability in connection with any Release of any Hazardous Materials
into the environment; (vi) none of the operations of the Parent or any of its
Subsidiaries involves the generation, transportation, treatment or disposal of
Hazardous Materials, except for fuel, household wastes and routine cleaning and
maintenance products; (vii) neither the Parent nor any of its Subsidiaries has
disposed of any Hazardous Materials by placing it in or on the ground or waters
of any premises currently owned, leased or used by any of them and to the
knowledge of the Parent and its Subsidiaries neither has any lessee, prior
owner, or other person; (viii) no underground storage tanks or surface
impoundments are on any property of the Parent and/or any of its Subsidiaries;
and (ix) no Lien in favor of any governmental authority for (A) any liability
under any Environmental Law or regulation, or (B) damages arising from or costs
incurred by such governmental authority in response to a Release of a
Contaminant into the environment, has been filed or attached to the property of
the Parent and/or any of its Subsidiaries.
SECTION 4.20. Material Agreements. Schedule 4.20 hereto sets forth as of
the Closing Date a list of all material agreements, contracts and instruments to
which the Parent or any of its Subsidiaries is a party or by which any of such
persons is bound and all amendments, modifications and supplements to each of
the foregoing.
V. CONDITIONS OF CREDIT EVENTS
The obligation of each Lender to make Loans and provide other Credit
Events hereunder shall be subject to the following conditions precedent:
SECTION 5.01. All Credit Events. On each date on which a Credit Event is
to occur:
(a) The Agent shall have received a notice of borrowing as required
by Section 2.03 hereof or a notice of the issuance of a Letter of Credit
as required by Section 2A.01 hereof, as appropriate.
(b) The representations and warranties set forth in Article IV
hereof and in any documents delivered herewith, including, without
limitation, the Loan Documents, shall be true and correct in all material
respects with the same effect as though made on and as of such date
(except insofar as such representations and warranties relate expressly to
an earlier date).
(c) The Parent and its Subsidiaries shall be in compliance with all
the terms and provisions contained herein on their part to be observed or
performed, and at the time of and immediately after such Credit Event no
Default or Event of Default shall have occurred and be continuing.
(d) The Agent shall have received a certificate signed by the
Financial Officer of the Borrowers (i) as to the compliance with (b) and
(c) above and (ii) with respect to each Loan and each Letter of Credit,
demonstrating that after giving effect thereto that the sum of the
59
Revolving Loans and the Letter of Credit Usage does not exceed the
Borrowing Base.
SECTION 5.01A. Capital Expenditure Loans.
-------------------------
After the Closing Date, on each date on which a Capital Expenditure Loan
is requested to be made:
(a) all conditions to Credit Events set forth in Section 5.01 shall
have been satisfied.
(b) The Agent shall have received the following:
(i) a copy of invoices relating to the equipment purchased
(the "Financed Equipment"), such invoices to indicate that the
Financed Equipment was acquired by the applicable Borrower no more
than one hundred and eighty (180) days prior to the date of the
requested Capital Expenditure Loan; provided that if the seller of
such Financed Equipment (x) has been paid in full as of the date of
the receipt by Agent of such invoices, then such invoices shall be
accompanied by evidence (e.g., a cancelled check or wire
confirmation) of such full payment and (y) has not been paid in full
as of the date of the receipt by Agent of such invoices, then
evidence of full payment shall be provided to Agent no later than
forty-five (45) days after the date of such invoices,
(ii) a certificate of a Responsible Officer of the applicable
Borrower stating (w) that such Financed Equipment has been received
by the applicable Borrower at the premises ("Project Premises")
listed on the schedule of New/Replacement Store Projects set forth
herein on Schedule B; (x) the address of the relevant Project
Premises; (y) that it is intended that such Financed Equipment will
be used by the applicable Borrower at such Project Premises; and (z)
that no Person other than the Agent for the benefit of the Lenders
has a Lien on any Collateral or other property of Borrowers located
or to be located on the Project Premises (other than Liens described
in clauses (a) through (d), clause (f) and clauses (h) through (k)
of Section 7.01), and
(iii) evidence that the requested Capital Expenditure Loan
does not exceed ninety-five percent (95%) of the net invoice cost of
such Financed Equipment purchased by the applicable Borrower,
and such other documentation and evidence that Agent may request,
each in form and substance satisfactory to the Agent provided,
however, that the foregoing requirements shall be subject to the
exceptions expressly set forth in Schedule 5.01A hereto.
(c) (i) the aggregate principal amount of Capital Expenditure Loans
(including the requested Capital Expenditure Loan) made with respect to
60
the Project Premises shall not exceed the amount corresponding to such
Project Premises on Schedule B, (ii) the Borrower has entered into a lease
with respect to such Project Premises in form and substance reasonably
satisfactory to Agent, and (iii) Agent shall have been granted a Mortgage
and such other agreements as Agent shall require under Section 3.03 and
Section 3.04 of this Agreement with respect to such Project Premises and
the Collateral located thereon, each in form and substance satisfactory to
Agent, and (iv) there shall be no Liens or security interests in the
Financed Equipment, other than Liens in favor of Agent;
(d) Agent shall receive a certificate of a Responsible Officer of
Borrowers stating that the conditions set forth in clauses (a) through and
including (c) above have been satisfied; and
(e) Agent and each Lender shall have received a schedule summarizing
the invoices, costs, and description of the Financed Equipment relating to
such Capital Expenditure Loan.
Each request for a Capital Expenditure Loan by a Borrower hereunder shall
constitute a representation and warranty by Borrowers as of the date of such
Capital Expenditure Loan that the conditions contained in this subsection shall
have been satisfied.
SECTION 5.02. Closing Date. The obligations of the Agent and the Lenders
hereunder and the effectiveness of the amendment and restatement of the Existing
Loan Agreement are each subject to the following additional conditions
precedent, which conditions shall be deemed satisfied or waived as of the
initial funding under this Agreement:
(a) The Lenders shall have received the favorable written opinion of
counsel for the Borrowers and each of the Guarantors and Grantors,
substantially in the form of Exhibit C hereto, dated the Closing Date,
addressed to the Lenders and satisfactory to the Agent.
(b) The Lenders shall have received (i) a copy of the certificate or
articles of incorporation or constitutive documents, in each case as
amended to date, of each of the Borrowers, the Grantors and the
Guarantors, certified as of a recent date by the Secretary of State or
other appropriate official of the state of its organization, and a
certificate as to the good standing of each from such Secretary of State
or other official, in each case dated as of a recent date; (ii) a
certificate of the Secretary of the Borrowers, Grantors and Guarantors,
dated the Closing Date and certifying (A) that attached thereto is a true
and complete copy of such person's By-laws as in effect on the date of
such certificate and at all times since a date prior to the date of the
resolution described in item (B) below, (B) that attached thereto is a
true and complete copy of a resolution adopted by such person's Board of
Directors authorizing the execution, delivery and performance of this
Agreement, the Security Documents, the Notes, the other Loan Documents and
the Credit Events hereunder, as applicable, and that such resolution has
not been modified, rescinded or amended and is in full force and effect,
(C) that such person's certificate or articles of incorporation or
constitutive documents has not been amended since the date of the last
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amendment thereto shown on the certificate of good standing furnished
pursuant to (i) above, and (D) as to the incumbency and specimen signature
of each of such person's officers executing this Agreement, the Notes,
each Security Document or any other Loan Document delivered in connection
herewith or therewith, as applicable; (ii) a certificate of another of
such person's officers as to incumbency and signature of its Secretary;
and (iii) such other documents as the Agent or any Lender may reasonably
request.
(c) The Agent shall have received a certificate, dated the Closing
Date and signed by the Financial Officer of the Borrowers, confirming
compliance with the conditions precedent set forth in paragraphs (b) and
(c) of Section 5.01 hereof and the conditions set forth in this Section
5.02.
(d) Each Lender shall have received its Notes, each duly executed by
the Borrowers, payable to its order and otherwise complying with the
provisions of Section 2.04 hereof.
(e) The Agent shall have received in form and substance satisfactory
to Agent and its counsel, a duly executed copy of this Agreement and the
other Loan Documents together with such additional documents, instruments
and certificates as Lenders and their counsel shall require in connection
therewith from time to time, all in form and substance satisfactory to
Lenders and their counsel.
(f) The Agent shall have received certified copies of requests for
copies or information on Form UCC-11 or certificates satisfactory to the
Lenders of a UCC Reporter Service, listing all effective financing
statements which name as debtor any Borrower, any Guarantor or any Grantor
and which are filed in the appropriate offices in the States in which are
located the chief executive office and other operating offices of such
person or where Collateral is located, together with copies of such
financing statements. With respect to any Liens not permitted pursuant to
Section 7.01 hereof, the Agent shall have received termination statements,
and/or payoff letters which provide further assurances regarding the
provision of termination statements, in form and substance satisfactory to
it.
(g) Each document (including, without limitation, each UCC financing
statement) required by this Agreement, any related agreement or under law
or reasonably requested by the Agent to be filed, registered or recorded
in order to create in favor of the Agent for the benefit of the Secured
Parties a first priority perfected security interest in or lien upon the
Collateral shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof is
so required or requested. The Agent shall have received an acknowledgment
copy, or other evidence satisfactory to it, of each such filing,
registration or recordation.
(h) The Agent shall have received the results of a search of the UCC
filings made with respect to the Borrowers and each Grantor and Guarantor
in the jurisdictions in which UCC filings have been made against the
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Borrowers, each Guarantor and each Grantor pursuant to paragraph (g)
above, and such results shall be satisfactory to the Agent, tax and
judgment lien searches with respect to the Borrowers and each Grantor and
Guarantor in such jurisdictions as the Agent shall require, and the
results of such searches shall be satisfactory to the Agent.
(i) The Lenders and the Agent shall have received and determined to
be in form and substance satisfactory to them:
(i) evidence of the compliance by the Parents and its
Subsidiaries with Section 6.03 hereof;
(ii) the financial statements described in Section 4.07
hereof;
(iii) evidence that the Transactions are in compliance with
all applicable laws and regulations;
(iv) evidence of payment of all fees owed to the Agent and
the Lenders by the Borrowers under this Agreement or otherwise;
(v) evidence that all requisite third party consents and
waivers (including, without limitation, consents with respect to
Borrowers and each of the Grantors and Guarantors, landlords'
waivers, and lease amendments required under Section 3.03) to the
Transactions, have been received;
(vi) a representation by the Borrowers that since November 3,
2001, there has been no event that could reasonably be expected to
have a Material Adverse Effect;
(vii) evidence that there are no actions, suits or proceedings
at law or in equity or by or before any governmental instrumentality
or other agency or regulatory authority now pending or (to the best
of the knowledge of the Parent and its Subsidiaries) threatened
against or affecting the Borrowers, any of the Grantors or
Guarantors, any of their respective businesses, assets or rights or
any Lender (i) which is reasonably likely to have a Material Adverse
Effect or which may materially impair the ability of any Borrower,
any Grantor or any Guarantor to perform its obligations under any
Loan Document to which it is a party or (ii) which involve any of
the Transactions; and
(viii) evidence of compliance with the representations and
warranties made in Section 4.17 hereof.
(j) The Agent and the Lenders shall have had the opportunity, if
they so choose, to examine the books of account and other records
and files of the Parent and its Subsidiaries, the Grantors and the
Guarantors and to make copies thereof, and to conduct a pre-closing
audit or perform other due diligence which shall include, without
limitation, verification of payment of payroll taxes and accounts
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payable, formulation of an opening Borrowing Base and review of
environmental and labor issues, and the results of such examination,
audit and due diligence shall have been reasonably satisfactory to
the Agent and Lenders in all respects. Neither the Agent nor any
Lender shall have become aware of any previously undisclosed
materially adverse information with respect to the Parent or any of
its Subsidiaries or the Transactions or of any material adverse
change in the facts, circumstances or information with respect to
the Parent or any of its respective Subsidiaries or the Transactions
as understood by the Agent on or as of July 31, 1999. None of the
information submitted prior to the Closing Date shall have been or
become, taken together with all other such information submitted
prior to the Closing Date, false, incomplete, or inaccurate in any
material and adverse respect, and none of the conditions represented
or indicated by the Parent or any of its Subsidiaries to exist shall
change in any material and adverse respect.
(k) The Agent shall have received and had the opportunity to review
and determine to be in form and substance satisfactory to it:
(i) copies of all lease agreements entered into by the
Parent and/or its Subsidiaries;
(ii) copies of all loan agreements, notes and other
documentation evidencing Indebtedness for borrowed money of the
Parent, its Subsidiaries, Grantors or Guarantors and of all other
material agreements of the Parent, its Subsidiaries, the Grantors
and the Guarantors.
(l) Hahn & Hessen LLP, counsel to the Agent, shall have received
payment in full for all legal fees charged, and all costs and expenses
incurred, by such counsel through the Closing Date in connection with the
transactions contemplated under this Agreement, the Security Documents and
the other Loan Documents and instruments in connection herewith and
therewith.
(m) The tax assumptions, capital, organization, ownership and legal
structure of the Parent and its Subsidiaries shall be satisfactory to the
Lenders in all respects.
(n) All legal matters in connection with the Transactions shall be
satisfactory to the Agent, the Lenders and their respective counsel in
their sole discretion.
(o) Agent shall have received all environmental studies and reports
prepared by independent environmental engineering firms with respect to
all real property owned by Borrowers.
(p) Agent shall have received and be satisfied with the form and
substance of the "Wakefern Shareholder Agreement".
(q) The Agent shall have received such other documents as the
Lenders or the Agent or Agent's counsel shall reasonably deem necessary
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(including, without limitation, all UCC amendment statements, UCC
assignment statements, mortgage amendments, mortgage assignments, and
other agreements reasonably requested by the Agent.
VI. AFFIRMATIVE COVENANTS
The Borrowers each covenant and agree with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Note, any amount under or with respect to any Letter of Credit or any fee,
expense or amount payable hereunder or in connection with any of the
Transactions shall be unpaid, it will, and will cause each of its Subsidiaries
and, with respect to Section 6.07 hereof, each ERISA Affiliate, to:
SECTION 6.01. Legal Existence. Do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence.
SECTION 6.02. Businesses and Properties. At all times do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
the rights, licenses, Permits, franchises, patents, copyrights, trademarks and
trade names material to the conduct of its businesses; maintain and operate such
businesses in the same general manner in which they are presently conducted and
operated; comply with all laws, rules, regulations and governmental orders
(whether Federal, state or local) applicable to the operation of such businesses
whether now in effect or hereafter enacted (including, without limitation, all
applicable laws, rules, regulations and governmental orders relating to public
and employee health and safety and all Environmental Laws) and with any and all
other applicable laws, rules, regulations and governmental orders the lack of
compliance with which would have a Material Adverse Effect; take all actions
which may be required to obtain, preserve, renew and extend all Permits and
other authorizations which are material to the operation of such businesses; and
at all times maintain, preserve and protect all property material to the conduct
of such businesses and keep such property in good repair, working order and
condition, ordinary wear and tear excepted, and from time to time make, or cause
to be made, all needful and proper repairs, renewals, additions, improvements
and replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 6.03. Insurance. (a) Keep its insurable properties adequately
insured against all risks, including fire, flood, sprinkler leakage, earthquake
and other hazards, at all times by financially sound and reputable insurers with
a rating of "A-" or better (except for Home Insurance, which may be rated B+ or
better), as established by Best's Rating Guide (or an equivalent rating with
such other publications of a similar nature as shall be in current use), (b)
maintain such other insurance, to such extent and against all risks, including
fire and other risks insured against by extended coverage, provided, however,
that such insurance shall insure the property of the Parent and its Subsidiaries
against all risk of physical damage, including, without limitation, loss by
fire, explosion, theft, fraud and such other casualties as may be reasonably
satisfactory to the Agent, but in no event at any time in an amount less than
the greater of (i) the Obligations and (ii) the replacement value of the
Collateral, (c) maintain in full force and effect public liability insurance
against claims for personal injury or death or property damage occurring upon,
in, about or in connection with the use of any properties owned, occupied or
controlled by the Parent or any of its Subsidiaries, in such amount as the Agent
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shall reasonably deem necessary, and (d) maintain such other insurance as may be
required by law or as may be reasonably requested by the Agent for purposes of
assuring compliance with this Section 6.03. All insurance covering tangible
personal property subject to a Lien in favor of the Agent for the benefit of the
Lenders granted pursuant to the Security Documents shall provide that, in the
case of each separate loss the full amount of insurance proceeds shall be
payable to the Agent and shall further provide for at least 30 days' prior
written notice to the Agent of the cancellation or substantial modification
thereof.
SECTION 6.04. Taxes. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, would give rise to Liens upon such
properties or any part thereof, except such taxes, assessments and governmental
charges and levies which are diligently contested in good faith by appropriate
proceedings and as to which adequate reserves have been established in
accordance with generally accepted accounting principles and except for di
minimus Liens on property other than inventory and accounts receivable securing
not more than $50,000 in the aggregate.
SECTION 6.05. Financial Statements, Reports, etc. Furnish to the Agent,
with copies for each of the Lenders:
(a) within 90 days after the end of each Fiscal Year, (i)
Consolidated balance sheets and Consolidated income statements showing the
financial condition of the Parent and its Subsidiaries as of the close of
such Fiscal Year and the results of their operations during such year, and
(ii) a Consolidated statement of shareholders' equity and a Consolidated
statement of cash flow, as of the close of such Fiscal Year, all the
foregoing financial statements to be audited by a Big 4 or other
independent public accountants reasonably acceptable to the Agent
(including the firm of Amper, Politziner & Mattia) (which report shall not
contain any qualification except with respect to new accounting principles
mandated by the Financial Accounting Standards Board), and to be in form
and substance reasonably acceptable to the Agent;
(b) (i) within 45 days after the end of each Fiscal Quarter,
unaudited Consolidated balance sheets and Consolidated income statements
showing the financial condition and results of operations of the Parent
and its Subsidiaries as of the end of each such quarter, a Consolidated
statement of shareholders' equity and a Consolidated statement of cash
flow as of the end of each such quarter, together with a statement
comparing actual results for such quarter with the projections set forth
in paragraph (f) below, prepared and certified by the Financial Officer of
the Parent as presenting fairly the financial condition and results of
operations of the Parent and its Subsidiaries and as having been prepared
in accordance with generally accepted accounting principles consistently
applied, setting forth in each case in comparative form the corresponding
figures for the corresponding quarter of the preceding year and
corresponding figures for the period beginning with the first day of the
relevant Fiscal Year and ending on the last day of the relevant Fiscal
Quarter and the corresponding period for the previous Fiscal Year, in each
case subject to normal year-end audit adjustments; and (ii) within 30 days
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after the end of each fiscal month, sales information, inbound gross
profit information, SG&A information, inventory reports, receivables
reports and accounts payable reports, each for the Parent and its
Subsidiaries, prepared and certified by the Financial Officer of the
Parent as presenting fairly (subject to normal quarterly accruals and
physical inventory adjustments) the financial condition and results of
operations of the Parent and its Subsidiaries and as having been prepared
in accordance with generally accepted accounting principles consistently
applied, setting forth in each case in comparative form the corresponding
figures for the corresponding month of the preceding year and
corresponding figures for the period beginning with the first day of the
current Fiscal Year and ending on the last day of the relevant fiscal
month and the corresponding period for the previous Fiscal Year, in each
case subject to normal year-end audit adjustments;
(c) promptly after the same become publicly available, copies of
such registration statements, annual, periodic and (upon the request of
the Agent) other reports, and such proxy statements and (upon the request
of the Agent) other information, if any, as shall be filed by the Parent
or any of its Subsidiaries with the Securities and Exchange Commission or
any governmental authority that may be substituted therefore, or any
national securities exchange and copies of all proxy statements, financial
statements and reports submitted to its shareholders;
(d) concurrently with any delivery under (a) and (b) above, a
certificate of the firm or person referred to therein and a certificate of
the Financial Officer of the Parent (which certificate furnished by the
independent public accountants referred to in paragraph (a) above may be
limited to accounting matters and disclaim responsibility for legal
interpretations), each certifying that to the best of its, his or her
knowledge no Default or Event of Default has occurred (including
calculations demonstrating compliance, as of the dates of the financial
statements being furnished at such time, with the covenants set forth in
Sections 7.07, 7.08 and 7.09 hereof) and, if such a Default or Event of
Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto;
(e) within 60 days of any delivery under (a) above, a management
letter prepared by the independent public accountants who reported on the
financial statements delivered under (a) above, with respect to the
internal audit and financial controls of each of the Parent and its
Subsidiaries;
(f) within 45 days prior to the beginning of each Fiscal Year, a
summary of business plans and financial operation projections (including,
without limitation, forecasts of Capital Expenditures, forecasts regarding
expenditures with respect to New/Replacement Store Projects and any other
expenditures for fixed assets, along with forecasts of any financing
associated with any of the foregoing expenditures and information
regarding the status of New/Replacement Store Projects) for the Parent and
its Subsidiaries for such Fiscal Year (including Fiscal Quarterly balance
sheets, statements of income and of cash flow and an Undrawn Availability
forecast) and annual projections through the Final Maturity Date prepared
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by management and in form, substance and detail (including, without
limitation, principal assumptions) reasonably satisfactory to the Agent;
(g) no later than Friday of each week, a certificate, in form,
substance and detail reasonably satisfactory to the Agent, of the
Financial Officer of the Borrowers demonstrating that (A) the sum of (x)
the amount available to be borrowed under Section 2.01(a) of this
Agreement as at the close of business on Saturday of the preceding week
plus (y) the Cash on Hand of Borrowers on the day of the week after such
Saturday on which the weekly payment for amounts due to Wakefern is made
(such day, the "Wakefern Payment Day") exceeded by at least $2,500,000 (B)
the sum of (x) all Revolving Loans outstanding as of such Wakefern Payment
Day after giving effect to all such payments made to Wakefern; provided,
however, for the purpose of this sub-section 6.05 (g) only, the Cash on
Hand of Borrowers noted above shall only be added to the extent that on
the day on which the above certificate is delivered, all funds included in
the Cash on Hand of Borrowers on the Wakefern Payment Day have been
forwarded to Agent and applied to reduce the Revolving Loans.
(h) promptly upon the request of the Agent, a certificate, in form,
substance and detail satisfactory to the Agent, of the Financial Officer
of the Borrowers demonstrating that, as at the close of business on such
previous date as Agent shall reasonably request the sum of (x) the amount
available to be borrowed under Section 2.01(a) of this Agreement plus (y)
the Cash on Hand of Borrowers exceeded by at least $2,500,000 the sum of
all Revolving Loans outstanding as of such date of determination;
(i) immediately upon becoming aware thereof, notice to the Agent of
the breach beyond any applicable grace period by any party of any material
agreement with the Parent or any of its Subsidiaries;
(j) such other information as the Agent or any Lender may reasonably
request, including, without limitation, profit and loss information on a
store by store basis, as well as supplemental expense information. At the
reasonable request of any Lender, the Agent agrees to promptly forward
such request for information to the Borrowers; and
(k) a copy of all documents and information provided by Borrowers or
any Guarantor to any other lender, to the extent such documents and/or
information has not already been provided to Agent.
SECTION 6.06. Litigation and Other Notices. Give the Agent prompt written
notice of the following:
(a) the issuance by any court or governmental agency or authority of
any injunction, order, decision or other restraint prohibiting, or having
the effect of prohibiting, the making of the Loans or occurrence of other
Credit Events, or invalidating, or having the effect of invalidating, any
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provision of this Agreement, the Notes or the other Loan Documents, or the
initiation of any litigation or similar proceeding seeking any such
injunction, order, decision or other restraint;
(b) the filing or commencement of any action, suit or proceeding
against the Parent or any of its Subsidiaries, whether at law or in equity
or by or before any court or any Federal, state, municipal or other
governmental agency or authority, (i) which is material and is brought by
or on behalf of any governmental agency or authority, or in which
injunctive or other equitable relief is sought or (ii) as to which it is
probable (within the meaning of Statement of Financial Accounting
Standards No. 5) that there will be an adverse determination and which, if
adversely determined, would (A) reasonably be expected to result in
liability of the Parent or a Subsidiary thereof in an aggregate amount of
$100,000 or more, not reimbursable by insurance, or (B) materially impair
the right of the Parent or a Subsidiary thereof to perform its obligations
under this Agreement, any Note or any other Loan Document to which it is a
party;
(c) any Default or Event of Default, specifying the nature and
extent thereof and the action (if any) which is proposed to be taken with
respect thereto; and
(d) any development in the business or affairs of the Parent or its
Subsidiaries which has had or which is likely, in the reasonable judgment
of any Responsible Officer of the Borrowers, to have, a Material Adverse
Effect (including, without limitation, any actual or threatened strike,
work stoppage or other labor action, whether or not authorized by labor
unions).
SECTION 6.07. ERISA. (a) Pay and discharge promptly any liability imposed
upon it pursuant to the provisions of Title IV of ERISA except to the extent the
Borrowers are contesting the liability in good faith.
(b) Deliver to the Agent, promptly, and in any event within 30 days,
after (i) the occurrence of any Reportable Event, a copy of the materials that
are filed with the PBGC, (ii) any Borrower or any ERISA Affiliate or an
administrator of any Pension Plan files with participants, beneficiaries or the
PBGC a notice of intent to terminate any such Plan, a copy of any such notice,
(iii) the receipt of notice by any Borrower or any ERISA Affiliate or an
administrator of any Pension Plan from the PBGC of the PBGC's intention to
terminate any Pension Plan or to appoint a trustee to administer any such Plan,
a copy of such notice, (iv) the filing thereof with the Internal Revenue
Service, copies of each annual report that is filed on Treasury Form 5500 with
respect to any Plan, together with certified financial statements (if any) for
the Plan and any actuarial statements on Schedule A to such Form 5500, (v) any
Borrower or any ERISA Affiliate knows or has reason to know of any event or
condition which might constitute grounds under the provisions of Section 4042 of
ERISA for the termination of (or the appointment of a trustee to administer) any
Pension Plan, an explanation of such event or condition, (vi) the receipt by any
Borrower or any ERISA Affiliate of an assessment of withdrawal liability under
Section 4201 of ERISA from a Multiemployer Plan, or any other notice from such
Multiemployer Plan of any action or event involving or in connection with
insolvency, reorganization or termination (each as defined in ERISA) a copy of
such assessment, or notice (vii) any Borrower or any ERISA Affiliate knows or
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has reason to know of any event or condition which might cause any one of them
to incur a liability under Section 4062, 4063, 4064 or 4069 of ERISA or Section
412(n) or 4971 of the Code, an explanation of such event or condition, and
(viii) any Borrower or any ERISA Affiliate knows or has reason to know that an
application is to be, or has been, made to the Secretary of the Treasury for a
waiver of the minimum funding standard under the provisions of Section 412 of
the Code, a copy of such application, and in each case described in clauses (i)
through (iii) and (v) through (vii) together with a statement signed by the
Financial Officer of the Parent setting forth details as to such Reportable
Event, notice, event or condition and the action which the Parent, the Borrower
or such ERISA Affiliate proposes to take with respect thereto.
(c) within 30 days after the end of any Fiscal Quarter in which any
Borrower becomes aware, directly or indirectly, of any fact or information that
materially changes the status of the Borrowers with respect to the Multiemployer
Plans, give notice thereof to the Agent.
SECTION 6.08. Maintaining Records; Access to Properties and Inspections;
Right to Audit. Maintain financial records in accordance with accepted financial
practices and, upon reasonable notice (which may be telephonic), at all
reasonable times and as often as any Agent may request, permit any authorized
representative designated by such Agent to visit and inspect the properties and
financial records of the Parent and its Subsidiaries and to make extracts from
such financial records at the Borrowers' expense, and permit any authorized
representative designated by such Agent to discuss the affairs, finances and
condition of the Parent and its Subsidiaries with the appropriate Financial
Officer and such other officers as such Agent shall deem appropriate and the
Parent's independent public accountants, as applicable. An authorized
representative of each of the Lenders may accompany the Agent on such visits and
inspections. The Agent shall have the right to audit, as often as it may
request, the existence and condition of the inventory, books and records of the
Parent and its Subsidiaries and to review their compliance with the terms and
conditions of this Agreement and the other Loan Documents. The Borrowers shall
pay Agent's customary per diem rates, all out-of-pocket expenses of Agent's
auditors and all costs of Agent with respect to third-party examiners.
Notwithstanding the foregoing, prior to a Default or Event of Default, the
Borrowers shall not be obligated to reimburse Agent for more than four visits
each calendar year.
SECTION 6.09. Fiscal Year-End. Cause its Fiscal Year to end on the
Saturday nearest to October 31 in each year.
SECTION 6.10. Further Assurances. Execute any and all further documents
and take all further actions which may be required under applicable law, or
which the Agent may reasonably request, to grant, preserve, protect and perfect
the first priority security interest created by the Security Documents in the
Collateral.
SECTION 6.11. Additional Grantors and Guarantors. Promptly inform the
Agent of the creation or acquisition of any direct or indirect Subsidiary
(subject to the provisions of Section 7.06 hereof) and cause each direct or
indirect Subsidiary not in existence on the date hereof to become a Guarantor
hereunder pursuant to an agreement in form and substance reasonably satisfactory
to the Agent, and to execute the Security Documents, as applicable, as a
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Grantor, and cause the direct parent of each such Subsidiary to pledge all of
the capital stock of such Subsidiary pursuant to the Pledge Agreement and cause
each such Subsidiary to pledge its inventory and all other owned assets pursuant
to the Security Agreement.
SECTION 6.12. Environmental Laws. (a) Comply, and cause each of its
Subsidiaries to comply, in all material respects with the provisions of all
Environmental Laws, and shall keep its properties and the properties of its
Subsidiaries free of any Lien imposed pursuant to any Environmental Law. The
Parent shall not cause or suffer or permit, and shall not suffer or permit any
of its Subsidiaries to cause or suffer or permit, the property of the Parent or
its Subsidiaries to be used for the use, generation, production, processing,
handling, storage, transporting or disposal of any Hazardous Material, except
for the use, generation, storage or transportation of fuel, household wastes and
routine cleaning and maintenance products.
(b) Supply to the Agent copies of all submissions by the Parent or
any of its Subsidiaries to any governmental body and of the reports of all
environmental audits and of all other environmental tests, studies or
assessments (including the data derived from any sampling or survey of asbestos,
soil, or subsurface or other materials or conditions) that may be conducted or
performed (by or on behalf of the Parent or any of its Subsidiaries) on or
regarding the properties owned, operated, leased or occupied by the Parent or
any of its Subsidiaries or regarding any conditions that might have been
affected by Hazardous Materials on or Released or removed from such properties.
The Parent shall also permit and authorize, and shall cause its Subsidiaries to
permit and authorize, the consultants, attorneys or other persons that prepare
such submissions or reports or perform such audits, tests, studies or
assessments to discuss such submissions, reports or audits with the Agent and
the Lenders.
(c) Promptly (and in no event more than two Business Days after the
Parent or any Subsidiary becomes aware or is otherwise informed of such event)
provide oral and written notice to the Agent upon the happening of any of the
following:
(i) the Parent, any Subsidiary of the Parent, or any tenant or
other occupant of any property of the Parent or such Subsidiary
receives notice of any claim, complaint, charge or notice of a
violation or potential violation of any Environmental Law;
(ii) there has been a Release of Hazardous Materials upon,
under or about or affecting any of the properties owned, operated,
leased or occupied by the Parent or any of its Subsidiaries, or
Hazardous Materials at levels or in amounts that may have to be
reported, remedied or responded to under Environmental Law are
detected on or in the soil or groundwater;
(iii) the Parent or any of its Subsidiaries is or may be
liable for any costs of cleaning up or otherwise responding to a
Release of Hazardous Materials;
(iv) any part of the properties owned, operated, leased or
occupied by the Parent or any of its Subsidiaries is or may be
subject to a Lien under any Environmental Law; or
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(v) the Parent or any of its Subsidiaries undertakes any
Remedial Work with respect to any Hazardous Materials.
(d) Timely undertake and complete any Remedial Work required to be
undertaken of the Borrowers or any Guarantor by any Environmental Law.
(e) Without in any way limiting the scope of Section 11.04(c) and in
addition to any obligations thereunder, Borrowers each hereby indemnifies and
agrees to hold the Agent and the Lenders harmless from and against any
liability, loss, damage, suit, action or proceeding arising out of its business
or the business of its Subsidiaries pertaining to Hazardous Materials,
including, but not limited to, claims of any governmental body or any third
person arising under any Environmental Law or under tort, contract or common
law. To the extent laws of the United States or any state or local jurisdiction
in which property owned, operated, leased or occupied by the Borrowers or any of
their respective Subsidiaries is located provide that a Lien upon such property
of the Borrowers or such Subsidiary may be obtained for the removal of Hazardous
Materials which have been Released, no later than sixty days after notice is
given by the Agent to the Borrowers or such Subsidiary, the Borrowers or such
Subsidiary shall deliver to the Agent a report issued by a qualified third party
engineer certifying as to the existence of any Hazardous Materials located upon
or beneath the specified property. To the extent any Hazardous Materials located
therein or thereunder either subject the property to Lien or require removal
pursuant to any applicable Environmental Laws, the removal thereof shall be an
affirmative covenant of the Borrowers hereunder.
(f) In the event that any Remedial Work is required to be performed
by the Parent or any of its Subsidiaries under any applicable Environmental Law,
any judicial order, or by any governmental entity, the Parent or such
Subsidiaries shall commence all such Remedial Work at or prior to the time
required therefor under such Environmental Law or applicable judicial orders and
thereafter diligently prosecute to completion all such Remedial Work in
accordance with and within the time allowed under such applicable Environmental
Laws or judicial orders.
SECTION 6.13. Pay Obligations to Lenders and Perform Other Covenants. (a)
Make full and timely payment of the Obligations, whether now existing or
hereafter arising, (b) duly comply with all the terms and covenants contained in
this Agreement (including, without limitation, the borrowing limitations and
mandatory prepayments in accordance with Article II hereof) in each of the other
Loan Documents, all at the times and places and in the manner set forth therein,
and (c) except for the filing of continuation statements and the making of other
filings by the Agent as secured party or assignee, at all times take all actions
necessary to maintain the Liens and security interests provided for under or
pursuant to this Agreement and the Security Documents as valid and perfected
first Liens on the property intended to be covered thereby (subject only to
Liens expressly permitted hereunder) and supply all requested information to the
Agent necessary for such maintenance.
SECTION 6.14. Maintain Operating Accounts. Maintain all of its operating
accounts and cash management arrangements with a bank or banks acceptable to the
72
Agent or as otherwise contemplated by Section 10.01 hereof; and notify the Agent
promptly of the closing of any account specified in Schedule 4.14 and the
opening up of any new accounts, in detail satisfactory to the Agent.
SECTION 6.15. Amendments. Promptly supply to the Agent certified copies of
any amendments to any Subordinated Indebtedness (subject to Section 7.17 hereof)
SECTION 6.16. Use of Proceeds. (a) Use all proceeds of each borrowing
under the Revolving Commitment and the Term Commitment to pay out-of-pocket fees
and expenses incurred by the Borrowers in connection with the financing
contemplated hereunder, to provide for working capital requirements and the
general corporate purposes of the Borrowers to the extent that such purposes are
permitted hereunder.
(b) Use all proceeds of each borrowing under the Capital Expenditure
Facility Commitment in compliance with Section 5.01A hereof.
SECTION 6.17 Collateral Locations. Keep the Collateral at the locations
specified on Schedule 6.17. With respect to any new location (which in any event
shall be within the continental United States), Parent and its Subsidiaries will
execute such documents and take such actions as Agent deems necessary to perfect
and protect the security interests of the Agent and Lenders in the Collateral,
as well as any documents requested by Agent pursuant to Sections 3.03 and/or
3.04 prior to the transfer or removal of any Collateral to such new location.
VII. NEGATIVE COVENANTS
The Borrowers each covenant and agree with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Note, any amount under or with respect to any Letter of Credit, or any fee,
expense or amount payable hereunder or in connection with any of the
Transactions shall be unpaid, it will not and will not cause or permit any of
its Subsidiaries and, in the case of Section 7.14 hereof, any ERISA Affiliate
to, either directly or indirectly:
SECTION 7.01. Liens. Incur, create, assume or permit to exist any Lien on
any of its property or assets (including the stock of any direct or indirect
Subsidiary), whether owned at the date hereof or hereafter acquired, or assign
or convey any rights to or security interests in any future revenues, except:
(a) Liens incurred and pledges and deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, old-age pensions and other social security benefits (not
including any lien described in Section 412(m) of the Code);
(b) Liens imposed by law, such as landlord, carriers',
warehousemen's, mechanics', materialmen's and vendors' liens and other
similar liens, incurred in good faith in the ordinary course of business
73
and securing obligations which are not overdue or which are being
contested in good faith by appropriate proceedings as to which the Parent
or any of its Subsidiaries, as the case may be, shall, to the extent
required by generally accepted accounting principles consistently applied,
have set aside on its books adequate reserves;
(c) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent or are being
diligently contested in good faith by appropriate proceedings and as to
which adequate reserves have been established in accordance with generally
accepted accounting principles; provided, however, that in no event shall
the aggregate amount of such reserves be less than the aggregate amount
secured by such Liens, and provided, further, that the amount secured by
such Liens shall at no time exceed an aggregate of $50,000;
(d) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of
real property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, liens and other encumbrances
incurred, created, assumed or permitted to exist and arising by, through
or under a landlord, ground lessor or owner of the leased property, with
or without consent of the lessee) which do not in the aggregate materially
detract from the value of its property or assets or materially impair the
use thereof in the operation of its business;
(e) Liens upon any equipment purchased or leased by the Parent or
any of its Subsidiaries (other than Financed Equipment as defined in
Section 5.01A hereof and other than equipment located on the same Project
Premises as Financed Equipment), which Liens are created or incurred by
the Parent or any of its Subsidiaries (x) as a condition to the financing
of such acquisition to secure or provide for the payment of any part of
the purchase price of, or lease payments on, such equipment or (y) as a
condition to the financing of a Capital Expenditure made in cash by the
Parent or any of its Subsidiaries in order to acquire such equipment, to
the extent that such financing is consummated and Lien is granted within
forty-five (45) days of the acquisition of such equipment, in each of (x)
and (y) above to secure or provide for the payment of any part of the
purchase price of, or lease payments on, such equipment or to secure the
repayment of such refinancing as described in clause (y) above (but no
other amounts and not in excess of the purchase price or lease payments);
provided, however, that any such Lien shall not apply to any other
property of the Parent or any of its Subsidiaries (other than the proceeds
of such equipment and accessions and additions thereto, substitutions
therefor, and all replacements thereof); and provided, further, that after
giving effect to such purchase, lease or refinancing, compliance is
maintained with Section 7.10 hereof;
(f) Liens created in favor of GMACBC or any Issuing Bank for the
benefit of the Secured Parties with respect to Letters of Credit;
(g) (i) Liens existing on the date of this Agreement and set forth
in Schedule 7.01 annexed hereto, (ii) Liens existing after the date of
this Agreement with respect to the property described on Schedule 7.01
74
annexed hereto established pursuant to refinancings permitted under
Section 7.03(ii) (but only to the extent that the Indebtedness being
refinanced was secured by the property described on Schedule 7.01), or
(iii) Liens set forth in Schedule A to each of the title policies referred
to in Section 3.03 hereof;
(h) Liens created in favor of the Agent for the benefit of the
Secured Parties;
(i) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money, statutory
obligations, surety, customs and appeal bonds and other obligations of
like nature, incurred as an incident to and in the ordinary course of
business);
(j) Liens (excluding Liens on inventory or accounts receivable)
securing no more than $50,000; or
(k) consigned inventory in display cases owned by the consignor.
SECTION 7.02. Sale and Lease-Back Transactions. After the Initial Closing
Date, enter into any arrangement, directly or indirectly, with any person
whereby the Parent or any of its Subsidiaries shall sell or transfer any
property, real or personal, and used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease such property or other
property which the Parent or such Subsidiary intends to use for substantially
the same purpose or purposes as the property being sold or transferred.
SECTION 7.03. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness other than (i) Indebtedness secured by Liens permitted under
Section 7.01; provided, however, that (x) Adjusted Indebtedness shall not exceed
the sum of (1) Adjusted Indebtedness for the acquisition of equipment at a
single New/Replacement Store Project (the "Alternative Capex Financing")
incurred at any time during the Capital Expenditure Facility Availability
Period; provided, however, that (a) the Alternative Capex Financing shall be
limited to the lesser of $4,000,000 and the unused principal amount of the Total
Capital Expenditure Facility Commitment; (b) such Alternative Capex Financing
shall be incurred pursuant to documents reasonably satisfactory to Agent; (c) no
portion of such Alternative Capex Financing shall be guaranteed by Wakefern; (d)
the Agent shall be notified in writing prior to the incurrence of any such
Alternative Capex Financing, which notice shall designate such borrowing as the
"Alternative Capex Financing" and indicate the date on which such borrowing
shall occur; (e) the Borrowers shall be permitted to incur only one borrowing
with the Alternative Capex Financing; and (f) simultaneously with the incurrence
of such Alternative Capex Financing, the Total Capital Expenditure Facility
Commitment shall be immediately and permanently reduced by $4,000,000 and (2)
(a) $550,000 in new Adjusted Indebtedness incurred during Fiscal Year 1999; (b)
$1,250,000 in new Adjusted Indebtedness incurred during Fiscal Year 2000; (c)
$250,000 in new Adjusted Indebtedness incurred during Fiscal Year 2001; (d) $0
in new Adjusted Indebtedness incurred during Fiscal Year 2002 (provided,
however, that such Indebtedness shall be incurred in connection with no more
than two store locations and the amount of Indebtedness incurred with respect to
each individual store shall not exceed $4,000,000); (e) $3,000,000 in new
Adjusted Indebtedness incurred during Fiscal Year 2003; (f) $19,000,000 in new
75
Adjusted Indebtedness incurred during Fiscal Year 2004; (g) $0 in new Adjusted
Indebtedness incurred during Fiscal Year 2005; (h) $8,000,000 in new Adjusted
Indebtedness incurred during Fiscal Year 2006; and (i) $8,000,000 in new
Adjusted Indebtedness incurred during Fiscal Year 2007, in each case for the
Parent and its Subsidiaries, and provided, further, that to the extent the full
amount of permitted Indebtedness as set forth in clauses (a) through (i) above
is not incurred in any particular Fiscal Year, such unused amount may be
"carried over" and utilized in the immediately succeeding Fiscal Year only (but
not in any subsequent Fiscal Year), provided, however, that any Indebtedness
incurred in such immediately succeeding Fiscal Year shall first be applied to
the reduction of the regularly scheduled amount of permitted Indebtedness as set
forth in the foregoing clauses (a) through (i), as the case may be and secondly
to any such carryover amount; and provided, further, that the Adjusted
Indebtedness described in the foregoing clause (2) shall be incurred pursuant to
documents reasonably satisfactory to Agent and (y) Indebtedness attributable to
Capitalized Lease Obligations in connection with real estate leases shall not
exceed an aggregate amount of (a) $5,865,000 in new Indebtedness incurred during
Fiscal Year 1999; (b) $21,691,000 in new Indebtedness incurred during Fiscal
Year 2000; (c) $0 in new Indebtedness incurred during Fiscal Year 2001; (d)
$9,958,000 in new Indebtedness incurred during Fiscal Year 2002; (e) $67,523,000
in new Indebtedness incurred during Fiscal Year 2003; (f) $84,833,000 in new
Indebtedness incurred during Fiscal Year 2004; (g) $0 in new Indebtedness
incurred during Fiscal Year 2005; (h) $29,392,000 in new Indebtedness incurred
during Fiscal Year 2006 and (i) $29,392,000 in new Indebtedness incurred during
Fiscal Year 2007, in each case for the Parent and its Subsidiaries and provided,
further, that to the extent the full amount of permitted Indebtedness as set
forth in clauses (a) through (i) above is not incurred in any particular Fiscal
Year, such unused amount may be "carried over" and utilized in the immediately
succeeding Fiscal Year only (but not in any subsequent Fiscal Year), provided,
however, that any Indebtedness incurred in such immediately succeeding Fiscal
Year shall first be applied to the reduction of the regularly scheduled amount
of permitted Indebtedness as set forth in the foregoing clauses (a) through (i),
as the case may be and secondly to any such carryover amount, (ii) Indebtedness
(including, without limitation, Guarantees) existing on the date hereof and
listed in Schedule 7.03 annexed hereto, but not the increase, extension, renewal
or refunding thereof if, pursuant to such increase, extension, renewal or
refunding, (x) the amount of the relevant Indebtedness is increased, (y) the
terms thereof and the related interest rate do not fairly reflect market
conditions for companies in businesses and with credit standing similar to the
Parent or (z) such Indebtedness is more senior in rank than that being so
extended, renewed or refunded, (iii) Indebtedness incurred hereunder and under
the other Loan Documents, (iv) Indebtedness of the Parent to Wakefern and
affiliates of Wakefern required to be incurred under the Wakefern Shareholder
Agreement, the Certificate of Incorporation of Wakefern and/or the bylaws of
Wakefern, (v) Guarantees constituting the endorsement of negotiable instruments
for deposit or collection in the ordinary course of business, (vi) Guarantees of
the Obligations, (vii) Subordinated Indebtedness, but not the increase,
extension, renewal or refunding thereof except as consented to by Agent in
writing, (viii) Indebtedness to banks with whom Borrowers regularly bank with
respect to uncollected funds in accordance with past practices; (ix)
Intercompany Indebtedness to the extent permitted under Section 7.06 and (x)
Indebtedness of Borrowers as a result of Borrowers' acquisition of certain
equipment required by Wakefern, the amount of such Indebtedness shall be
satisfactory to Agent in its reasonable discretion and Agent shall not
unreasonably withhold its consent to such financing.
76
SECTION 7.04. Dividends, Distributions and Payments. Declare or pay,
directly and indirectly, any cash dividends or make any other distribution,
whether in cash, property, securities or a combination thereof, with respect to
(whether by reduction of capital or otherwise) any shares of its capital stock
or directly or indirectly redeem, purchase, retire or otherwise acquire for
value (or permit any Subsidiary to purchase or acquire) any shares of any class
of its capital stock or set aside any amount for any such purpose, except that
(i) any Subsidiary of the Parent may pay dividends to a Borrower; (ii)
distributions of Common Stock of the Parent may be made to shareholders of the
Parent other than Wakefern and its Subsidiaries or affiliates; and (iii) Parent
may redeem or repurchase its common stock for an aggregate purchase price not to
exceed $1,000,000, after the Closing Date, provided, however, (a) both prior to
and immediately after giving effect to such redemption or repurchase, each
Borrower and Guarantor is "solvent" as such term is used under applicable
corporate law and insolvency law and each Borrower and Guarantor shall comply
with the representations and warranties set forth in Section 4.17 hereof; (b)
Agent and Lender shall have received evidence that the redemption or repurchase
of the Parent's common stock will not violate: (1) any provision of law,
statute, rule or regulation applicable to any Borrower or any Guarantor
(including, without limitation Rules 10b-18 and 13e-3 under the Securities
Exchange Act of 1934) or certificate or articles of incorporation or other
applicable constitutive documents or the by-laws of any Borrower, any Guarantor,
or its Subsidiaries, as the case may be; or (2) any order of any court, or any
rule, regulation or order of any other agency of government binding upon any
Borrower, any Guarantor, or its Subsidiaries; (c) no Borrower or Guarantor may,
after the Closing Date, redeem or repurchase any shares of any class of stock
from Joseph Saker, Gloria Saker, Richard Saker, Joseph J. Saker, Jr., Thomas
Saker or any Subsidiary of the Parent or more than 35,000 shares of all classes
of stock in the aggregate from any Related Family Transferees; and (d) Borrowers
and Guarantors shall have delivered to Agent and Lenders such information
regarding such redemption and/or repurchase as Agent shall reasonably request.
Notwithstanding the foregoing, no payment referred to herein may be made unless
both before and immediately after giving effect thereto, there shall exist and
be continuing no Default or Event of Default and all other conditions and
restrictions with respect to such payment under this Agreement shall have been
satisfied.
SECTION 7.05. Consolidations, Mergers and Sales of Assets. Consolidate
with or merge into any other person, or sell, lease, transfer or assign to any
persons or otherwise dispose of (whether in one transaction or a series of
transactions) any portion of its assets (whether now owned or hereafter
acquired), or permit another person to merge into it, or acquire all or
substantially all the capital stock or assets of any other person except as
otherwise permitted by Section 7.06 hereof, except that (a) the Borrowers may
sell any of their inventory in the normal course of their business, (b) in
addition to the foregoing, subject to Section 2.09 hereof, the Parent and its
Subsidiaries may sell any of their assets for fair market value, provided that
the aggregate fair market value of all assets sold under this clause (b) during
the period from the February 15, 1995 through and including the Closing Date
shall not, without the prior written consent of the Agent, exceed $5,000,000,
and (c) the Borrowers and Guarantors may (i) merge with and into each other, or
(ii) convey all or substantially all of their assets to each other or to any
entity wholly owned, in the aggregate, by the Borrowers and/or Guarantors,
provided that the Borrowers shall give the Agent at least 30 days notice thereof
prior to any such merger or conveyance of assets and, provided further,
77
immediately after such merger or conveyance the Borrowers and Guarantors would
not, as a result of such transaction, breach any other obligation under any Loan
Documents.
SECTION 7.06. Investments. Own, purchase or acquire any stock,
obligations, assets or securities of, or any interest in, or make any capital
contribution or loan or advance to, any other person, or make any other
investments, except:
(a) certificates of deposit in dollars of any commercial banks
registered to do business in any state of the United States (i) having
capital and surplus in excess of $1,000,000,000 and (ii) whose long-term
debt rating is at least investment grade as determined by either Standard
& Poor's Corporation or Moody's Investor Service, Inc.;
(b) readily marketable direct obligations of the United States
government or any agency thereof which are backed by the full faith and
credit of the United States;
(c) commercial paper at the time of acquisition having the highest
rating obtainable from either Standard & Poor's Corporation or Moody's
Investor Service, Inc.;
(d) federally tax exempt securities rated A or better by either
Standard & Poor's Corporation or Moody's Investor Service, Inc.;
(e) investments in the stock of any Subsidiary existing on the
Second Amendment and Restatement Date, but not any additional investments
therein;
(f) capital contributions by the Parent or any Subsidiary in
Wakefern or any Affiliate thereof as required under the certificate of
incorporation or bylaws of Wakefern or under the Wakefern Shareholder
Agreement;
(g) interest rate protection agreements in a notional amount not
exceeding $20,000,000;
(h) charitable contributions not in excess of $25,000 individually
and $250,000 in the aggregate over the term of this Agreement;
(i) loans for which the indebtedness is otherwise permitted under
Section 7.03 hereof;
(j) cash advances, made subsequent to October 30, 1999, by the
Borrowers to Reading not in excess of an aggregate of $100,000 per year
and cash advances made by a Borrower to another Borrower (collectively,
"Intercompany Indebtedness");
(k) capital stock issued by Wakefern Food Corp., Insure-Rite, Ltd.
and/or WFC-1 Realty Corp. described in Schedule 7.06 hereto, but no
additional capital stock in such entities except as issued in connection
with capital contributions made as permitted under Section 7.06(f) above;
78
(l) loans made by a Borrower and/or Guarantor to its employees up to
a maximum of $50,000 in the aggregate for all Borrowers and Guarantors
other than Permitted Option Loans;
(m) Permitted Option Loans not to exceed $2,000,000 in the aggregate
at any time outstanding; and
(n) State of Israel bonds as described on Schedule 7.06.
provided that, in each case mentioned in (a), (b), (c) and (d) above, such
obligations shall mature not more than one year from the date of acquisition
thereof; and provided, further, that Loans may not be used to purchase or
otherwise fund the investments described in clauses (a) through and including
(e) above.
SECTION 7.07. EBITDA. Permit Adjusted EBITDA of the Parent and its
Subsidiaries for the four most recent consecutive Fiscal Quarters of the Parent
ending on or prior to the date of determination to be less than the amounts
listed below during the periods listed below:
--------------------------------------------------------------------------------
Minimum Adjusted EBITDA:
--------------------------------------------------------------------------------
For the first, second and third Fiscal Quarters $13,000,000
of the Fiscal Year ended October 2000
--------------------------------------------------------------------------------
At the end of the fourth Fiscal Quarter $13,500,000
of Fiscal Year ended October 2000 and the first,
second and third Fiscal Quarters of the Fiscal
Year ended October 2001
--------------------------------------------------------------------------------
At the end of the fourth Fiscal Quarter $16,000,000
of Fiscal Year ended October 2001, and the first,
second and third Fiscal Quarters of the Fiscal Year ended
October 2002.
--------------------------------------------------------------------------------
At the end of the fourth Fiscal Quarter $16,500,000
of Fiscal Year ended October 2002, and the first
Fiscal Quarter of the Fiscal Year ended
October 2003.
--------------------------------------------------------------------------------
At the end of the second Fiscal Quarter $17,000,000
of the Fiscal Year ending October 2003.
--------------------------------------------------------------------------------
At the end of the third Fiscal Quarter $18,500,000
of the Fiscal Year ending October 2003.
--------------------------------------------------------------------------------
At the end of the fourth Fiscal Quarter $19,500,000
of Fiscal Year ended October 2003.
--------------------------------------------------------------------------------
At the end of the first Fiscal Quarter $22,000,000
of the Fiscal Year ending October 2004
--------------------------------------------------------------------------------
At the end of the second Fiscal Quarter $24,000,000
of the Fiscal Year ending October 2004
--------------------------------------------------------------------------------
At the end of the third Fiscal Quarter $25,000,000
of the Fiscal Year ending October 2004
--------------------------------------------------------------------------------
79
--------------------------------------------------------------------------------
For each Fiscal Quarter including and $26,000,000
after the fourth Fiscal Quarter of the
Fiscal Year ended October 2004.
--------------------------------------------------------------------------------
SECTION 7.08. Leverage Ratio. Permit the ratio of (a) Adjusted
Indebtedness at the date of determination of the Parent and its Subsidiaries to
(b) Adjusted EBITDA of the Parent and its Subsidiaries for the four most recent
consecutive Fiscal Quarters ending on or prior to the date of determination to
exceed the following ratios as of the end of any Fiscal Quarter of Parent.
-------------------------------------------------------------------
For each Fiscal Quarter in Fiscal Year 2000 3.0:1.00
-------------------------------------------------------------------
For each Fiscal Quarter in Fiscal Year 2001 3.5:1.00
-------------------------------------------------------------------
For fourth Fiscal Quarter in Fiscal Year 2002 3.2:1.00
-------------------------------------------------------------------
For the first Fiscal Quarter in Fiscal Year 2003 3.6:1.00
-------------------------------------------------------------------
For the second Fiscal Quarter in Fiscal Year 2003 3.5:1.00
-------------------------------------------------------------------
For the third Fiscal Quarter in Fiscal Year 2003 3.2:1.00
-------------------------------------------------------------------
For the fourth Fiscal Quarter in Fiscal Year 2003 3.2:1.00
-------------------------------------------------------------------
For the first Fiscal Quarter in Fiscal Year 2004 3.0:1.00
-------------------------------------------------------------------
For the second Fiscal Quarter in Fiscal Year 2004 3.0:1.00
-------------------------------------------------------------------
For the third Fiscal Quarter in Fiscal Year 2004 3.0:1.00
-------------------------------------------------------------------
For the fourth Fiscal Quarter in Fiscal Year 2004 3.0:1.00
-------------------------------------------------------------------
For the first, second and third Fiscal Quarters in 3.0:1.00
Fiscal Year 2005
-------------------------------------------------------------------
For the fourth Fiscal Quarter in Fiscal Year 2005 and 2.5:1.00
thereafter
-------------------------------------------------------------------
SECTION 7.09. Debt Service Coverage Ratio. Permit the Debt Service
Coverage Ratio of the Parent and its Subsidiaries for the four most recent
consecutive Fiscal Quarters of the Parent ending on or prior to the date of
determination to be less than the following ratios as of the end of any Fiscal
Quarter of Parent:
-----------------------------------------------------
For each Fiscal Quarter in Fiscal Year 2000 1.10:1.00
-----------------------------------------------------
For each Fiscal Quarter in Fiscal Year 2001 1.20:1.00
-----------------------------------------------------
For each Fiscal Quarter in Fiscal Year 2002 1.10:1.00
and for the first two Fiscal Quarters of
Fiscal Year 2003
-----------------------------------------------------
For the third and fourth Fiscal Quarters of 1.10:1.00
Fiscal Year 2003 and thereafter
-----------------------------------------------------
SECTION 7.10. Capital Expenditures Contract for, purchase or make
any expenditure or commitments for
(a) Adjusted Capex in any Fiscal Year in an aggregate amount
in excess of the following amounts for the Parent and its Subsidiaries on a
Consolidated basis:
-------------------------------------------------------------
Adjusted Capex
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
Fiscal Year 2000 $7,446,000
-------------------------------------------------------------
Fiscal Year 2001 $12,039,000
-------------------------------------------------------------
80
-------------------------------------------------------------
Fiscal Year 2002 $7,800,000
-------------------------------------------------------------
Fiscal Year 2003 $5,740,000
-------------------------------------------------------------
Fiscal Year 2004 $6,100,000
-------------------------------------------------------------
Fiscal Year 2005 $6,500,000
-------------------------------------------------------------
Fiscal Year 2006 and each Fiscal Year $6,900,000
thereafter
-------------------------------------------------------------
(b) Capital Expenditures relating to New/Replacement Store
Projects (excluding Capital Expenditures for real estate assets acquired
pursuant to Capitalized Lease Obligations, hereinafter referred to as "Store
Project Capex") in any Fiscal Year in an aggregate amount in excess of the
following amounts for the Parent and its Subsidiaries on a Consolidated basis:
--------------------------------------------------------------------
Store Project Capex
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Fiscal Year 2000 $9,303,922
--------------------------------------------------------------------
--------------------------------------------------------------------
Fiscal Year 2001 $5,008,000
--------------------------------------------------------------------
--------------------------------------------------------------------
Fiscal Year 2002 $24,000,000
--------------------------------------------------------------------
--------------------------------------------------------------------
Fiscal Year 2003 $23,175,000
--------------------------------------------------------------------
--------------------------------------------------------------------
Fiscal Year 2004 $27,750,000
--------------------------------------------------------------------
--------------------------------------------------------------------
Fiscal Year 2005 $0
--------------------------------------------------------------------
--------------------------------------------------------------------
Fiscal Year 2006 and each Fiscal Year $14,000,000
thereafter
--------------------------------------------------------------------
provided, however, that to the extent the full amount of permitted Store Project
Capex is not incurred in any particular Fiscal Year, such unused amount may be
"carried over" and utilized in the immediately succeeding Fiscal Year only (but
not in any subsequent Fiscal Year), provided, however, that any such Store
Project Capex incurred in such immediately succeeding Fiscal Year shall first be
applied to the reduction of the amount of permitted Store Project Capex for the
fiscal year in which such Store Project Capex is made and secondly to any such
carryover amount.
SECTION 7.11 Business . Alter the nature of its business as operated
on the date of this Agreement in any material respect.
SECTION 7.12. Sales of Receivables. Sell, assign, discount,
transfer, or otherwise dispose of any accounts receivable, promissory notes,
drafts or trade acceptances or other rights to receive payment held by it, with
or without recourse, except for the purpose of collection or settlement in the
ordinary course of business.
SECTION 7.13. Use of Proceeds. Permit the proceeds of any Credit
Event to be used for any purpose which entails a violation of, or is
inconsistent with, Regulation T, U or X of the Board, or for any purpose other
than those set forth in Section 6.16 hereof.
SECTION 7.14. ERISA. (a) Engage in any transaction in connection
with which any Borrower or any ERISA Affiliate could be subject to either a
material civil penalty assessed pursuant to the provisions of Section 502 of
ERISA or a material tax imposed under the provisions of Section 4975 of the
Code.
81
(b) Terminate any Pension Plan in a "distress termination" under
Section 4041 of ERISA which could result in a material liability of any Borrower
or any ERISA Affiliate to the PBGC, or take any other action which could result
in a material liability of any Borrower or any ERISA Affiliate to the PBGC.
(c) Fail to make payment when due of all amounts which, under the
provisions of any Plan, any Borrower or any ERISA Affiliate is required to pay
as contributions thereto, or, with respect to any Pension Plan, permit to exist
any "accumulated funding deficiency" (within the meaning of Section 302 of ERISA
and Section 412 of the Code), whether or not waived, with respect thereto.
(d) Adopt an amendment to any Pension Plan requiring the provision
of security under Section 307 of ERISA or Section 401(a)(29) of the Code.
SECTION 7.15. Accounting Changes. Make, or permit any Subsidiary to
make any material change in its accounting treatment or financial reporting
practices except as required or permitted by this Agreement or generally
accepted accounting principles in effect from time to time.
SECTION 7.16. Prepayment or Modification of Indebtedness;
Modification of Charter Documents. (a) Directly or indirectly prepay, redeem,
purchase or retire in advance of its scheduled maturity any Indebtedness other
than Indebtedness incurred hereunder. Nothing herein contained shall be deemed
to prevent the refinancing of Indebtedness otherwise permitted under Section
7.03(ii) of this Agreement.
(b) Directly or indirectly modify, amend or otherwise alter the
terms and provisions of any Subordinated Indebtedness or any Adjusted
Indebtedness with a principal amount in excess of $25,000. Nothing herein
contained shall be deemed to prevent the refinancing of Indebtedness otherwise
permitted under Section 7.03(ii) of this Agreement.
(c) Directly or indirectly modify, amend or alter their certificates
or articles of incorporation, preferred stock/certificates of designations or
by-laws, other than amendments to the by-laws of the Parent conforming such
by-laws to the 2002 amendment to Parent's certificate of incorporation and other
amendments consistent with the New Jersey Business Corporation Act, including,
without limitation, amendments related to corporate governance and indemnity of
corporate agents.
SECTION 7.17. Transactions with Affiliates. Except as otherwise
specifically permitted in this Agreement after the Closing Date, directly or
indirectly purchase, acquire or lease any property from, or sell, transfer or
lease any property to, or enter into any other transaction with, any
stockholder, Affiliate or agent of Parent, any Subsidiary thereof, or any
relative thereof, except at prices and on any terms not less favorable to it
than that which would have been obtained in an arm's-length transaction with a
non-affiliated third party.
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SECTION 7.18. Consulting Fees. Pay any management, consulting or
other fees of any kind to any Affiliate of Parent or any Subsidiary thereof,
other than salaries to employees consistent with industry practice, legal fees
and consulting and investment banking fees, but only to the extent that the
payment of the foregoing legal, consulting and investment banking fees complies
with Section 7.17.
SECTION 7.19. Limitations on Dividends and Other Payments. Create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Subsidiary of Parent to (a) pay dividends or
make any other distributions on its capital stock or any other equity interest
or participation in, or measured by, its profits, owned by Parent or any
Subsidiary of Parent, or pay any indebtedness owed to, Parent or any Subsidiary
of Parent, (b) make loans or advances to Parent, or any Subsidiary of Parent, or
(c) transfer any of its properties or assets to Parent, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law
or (ii) this Agreement.
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein
called "Events of Default"):
(a) any representation or warranty made or deemed made in or in
connection with this Agreement, any of the Security Documents, the Notes
or other Loan Documents or any Credit Events hereunder, shall prove to
have been incorrect in any material respect when made or deemed to be
made;
(b) default shall be made in the payment of any principal of any
Note when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on any
Note, any fee or any other amount payable hereunder, or under or with
respect to the Notes, Letters of Credit, or any other Loan Document or in
connection with any other Credit Event or any of the Transactions when and
as the same shall become due and payable;
(d) (i) default shall be made in the due observance or performance
of any covenant, condition or agreement (not within preceding clauses
VIII(a) or VIII(b) or within clause VIII(d)(ii)) to be observed or
performed on the part of the Parent or any of its Subsidiaries pursuant to
the terms of this Agreement, any of the Notes, any of the Security
Documents or any other Loan Document; or (ii) default shall be made on the
due observance or performance of Sections 6.01, 6.02, 6.07, 6.09, 6.10,
6.11, 6.12(a), 6.12(b), 6.12(d), 7.11, 7.14 and/or 7.15 of this Agreement,
and such default under this clause (d)(ii) shall not be cured by the
Borrowers within a period of 10 days after the Parent or any of its
Subsidiaries becomes aware, or after the Parent of any of its Subsidiaries
should reasonably have become aware, of such default, whichever is
earlier; provided, however, that if such default under this clause (d)(ii)
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is not curable within such 10 day period then such 10 day period shall be
extended by twenty (20) days to a total of thirty (30) days in the event
that the Borrowers shall, within such ten (10) day period and continuously
thereafter, diligently proceed to cure such default;
(e) any Borrower, any Guarantor, any Grantor or any Subsidiary of
any thereof shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, liquidation or
similar law, (ii) consent to the institution of, or fail to contravene in
a timely and appropriate manner, any such proceeding or the filing of any
such petition, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar official for such
Borrower, such Guarantor, such Grantor or such Subsidiary or for a
substantial part of its property or assets, (iv) file an answer admitting
the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take corporate action for the
purpose of effecting any of the foregoing;
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of any Borrower, any Guarantor, any Grantor or any
Subsidiary of any thereof, or of a substantial part of the property or
assets of any Borrower, any Guarantor, any Grantor or any Subsidiary of
any thereof, under Title 11 of the United States Code or any other Federal
state or foreign bankruptcy, insolvency, receivership or similar law, (ii)
the appointment of a receiver, trustee, custodian, sequestrator or similar
official for any Borrower, any Guarantor, any Grantor or any Subsidiary of
any thereof or for a substantial part of the property of any Borrower, any
Guarantor, any Grantor or any Subsidiary of any thereof or (iii) the
winding-up or liquidation of any Borrower, any Guarantor, any Grantor or
any Subsidiary of any thereof; and such proceeding or petition shall
continue undismissed for 45 days or an order or decree approving or
ordering any of the foregoing shall continue unstayed and in effect for 45
days;
(g) default shall be made with respect to any Indebtedness or
obligations under a capitalized lease of any Borrower, any Guarantor, any
Grantor or any Subsidiary of any thereof, whose unpaid principal payments
exceed in the aggregate $100,000 at any time (excluding Indebtedness
outstanding hereunder) if the effect of any such default shall be to
accelerate, or to permit the holder or obligee of any such Indebtedness or
obligations under a capitalized lease (or any trustee on behalf of such
holder or obligee) at its option to accelerate, the maturity of such
Indebtedness or obligations under a capitalized lease, or if any such
Indebtedness or obligations under a capitalized lease shall not be paid
when scheduled to be due and payable (taking into account any grace
periods);
(h) (i) a Reportable Event shall have occurred with respect to a
Pension Plan, (ii) the filing by any Borrower, any ERISA Affiliate, or an
administrator of any Plan of a notice of intent to terminate such a Plan
in a "distress termination" under the provisions of Section 4041 of ERISA,
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(iii) the receipt of notice by any Borrower, any ERISA Affiliate, or an
administrator of a Plan that the PBGC has instituted proceedings to
terminate (or appoint a trustee to administer) such a Pension Plan, (iv)
any other event or condition exists which might, in the opinion of the
Agent, constitute grounds under the provisions of Section 4042 of ERISA
for the termination of (or the appointment of a trustee to administer) any
Pension Plan by the PBGC, (v) a Pension Plan shall fail to maintain the
minimum funding standard required by Section 412 of the Code for any plan
year or a waiver of such standard is sought or granted under the
provisions of Section 412(d) of the Code, (vi) except for the withdrawal
set forth on Schedule 4.10 with respect to the Tri-State Pension Fund
incur a partial or complete withdrawal from a Multiemployer Plan that
results in any liability to any Borrower or any ERISA Affiliate; (vii) any
Borrower or any ERISA Affiliate has incurred, or is likely to incur, a
liability under the provisions of Section 4062, 4063, 4064, 4201 or 4203
of ERISA, (viii) any Borrower or any ERISA Affiliate fails to pay the full
amount of an installment required under Section 412(m) of the Code, (ix)
the occurrence of any other event or condition with respect to any Plan
which would constitute an event of default under any other agreement
entered into by any Borrower or any ERISA Affiliate, and in each case in
clauses (i) through (ix) of this subsection (h), such event or condition,
together with all other such events or conditions, if any, could subject
any Borrower or any ERISA Affiliate to any taxes, penalties or other
liabilities which, in the opinion of the Agent, could have a Material
Adverse Effect on the financial condition of the Borrowers and the ERISA
Affiliates taken as a whole;
(i) any Borrower or any ERISA Affiliate (i) shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred any material
withdrawal liability to such Multiemployer Plan, and (ii) does not have
reasonable grounds for contesting such withdrawal liability and is not in
fact contesting such withdrawal liability in a timely and appropriate
manner;
(j) a judgment (not reimbursed by insurance policies of any
Borrower, any Guarantor, any Grantor or any Subsidiary of any thereof or,
if an admission of coverage by the applicable insurance company has been
issued and delivered to the Agent, if not reimbursable within 45 days of
such judgment) or decree for the payment of money, a fine or penalty which
when taken together with all other such judgments, decrees, fines and
penalties shall exceed $500,000 shall be rendered by a court or other
tribunal against any Borrower, any Guarantor, any Grantor or any
Subsidiary of any thereof;
(k) this Agreement, any Note, any of the Security Documents or other
Loan Documents shall for any reason cease to be, or shall be asserted by
any Borrower, any Guarantor or any Grantor not to be, a legal, valid and
binding obligation of such Borrower, such Guarantor or such Grantor, as
applicable, enforceable in accordance with its terms, or the security
interest or Lien purported to be created by any of the Security Documents
shall for any reason cease to be, or be asserted by any Borrower, any
Guarantor or any Grantor not to be, a valid, first priority perfected
security interest in any Collateral (except to the extent otherwise
permitted under this Agreement or any of the Security Documents);
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(l) a Change of Control shall occur;
(m) any violation by the Parent, New Linden or any other Person of
any Intercreditor Agreement;
(n) any violation by the Parent, New Linden or Wakefern of any
agreements in favor of Agent with respect to any charge card or credit
card arrangements involving Parent or any Subsidiary;
(o) Wakefern's failure to remit to Parent any and all proceeds
arising out of debit card sales of Parent and New Linden and the use
thereof to off-set in whole or in part against any amounts that Parent
and/or New Linden is claimed to owe to Wakefern; and
(p) default shall be made with respect to (x) any operating lease of
any Borrower, any Grantor, any Guarantor or any Subsidiary thereof, with
respect to real property (y) any operating lease of any Borrower, any
Grantor, any Guarantor or any Subsidiary thereof where the regularly
scheduled monthly payment exceeds $10,000 if the effect of such default
shall be to accelerate, or to permit the lessor with respect to such
operating lease, at its option, to terminate such operating lease,
then, and in any such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event, the
Agent may, and upon the written request of the Required Lenders shall, by
written notice (or facsimile notice promptly confirmed in writing) to the
Borrowers, take any or all of the following actions at the same or different
times: (i) terminate forthwith all or any portion of the Total Commitment and
the obligations of GMACBC to issue or arrange for the issuance of Letters of
Credit hereunder; and (ii) declare the Notes, any amounts then owing to the
Lenders, any Issuing Bank or GMACBC on account of drawings under any Letters of
Credit and all other Obligations to be forthwith due and payable, whereupon the
principal of such Notes, together with accrued interest and fees thereon and any
amounts then owing to the Lenders, any Issuing Bank or GMACBC on account of
drawings under any Letters of Credit and other liabilities of the Borrowers
accrued hereunder and all other Obligations, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by Borrowers and each Guarantor,
anything contained herein or in the Notes to the contrary notwithstanding;
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provided, however, that with respect to a default described in paragraph (e) or
(f) above, the Total Commitment and the obligation of GMACBC to issue or arrange
for the issuance of Letters of Credit shall automatically terminate and the
principal of the Notes, together with accrued interest and fees thereon and any
amounts then owing to the Lenders, any Issuing Bank and GMACBC on account of
drawings under any Letters of Credit and any other liabilities of Borrowers
accrued hereunder and all other Obligations shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by Borrowers and each Guarantor, anything
contained herein or in the Notes to the contrary notwithstanding.
During the continuance of an Event of Default, the Agent shall have
and may exercise all rights and remedies of a mortgagee or a secured party under
the UCC in effect in the State of New York at such time, whether or not
applicable to the affected Collateral, and otherwise, including, without
limitation, the right to foreclose the Liens granted herein or in any of the
Security Documents by any available judicial procedure and/or to take possession
of any or all of the Collateral, the other security for the Obligations and the
books and records relating thereto, with or without judicial process; for the
purposes of the preceding sentence, the Agent may enter upon any or all of the
premises where any of the Collateral, such other security or books or records
may be situated and take possession and remove the same therefrom; provided,
however, with respect to Events of Default other than under Section VIII(a),
Section VIII(b), Section VIII(c), Section VIII(e), Section VIII(f) and/or
Section VIII(k), in recognition of the obligations of the Parent and its
Subsidiaries under the Wakefern Shareholder Agreement, the Agent and the Lenders
agree that if the Borrowers promptly after such Event of Default institutes and
maintains asset deployment programs or other actions intended to sell assets of
the Parent and Subsidiaries (which program and actions shall be sufficient to
repay all Obligations under this Agreement and shall be otherwise acceptable to
the Agent and the Lenders in their good faith judgment), then the Agent and the
Lenders shall not foreclose on any Collateral at any time prior to the date that
is sixty days after the Default which gave rise to such Event of Default;
provided, however, that all Obligations under this Agreement shall be repaid no
later than the expiration of such sixty day period, and provided, further, that
the foregoing proviso shall not affect any other rights or remedies of the Agent
or any Lender during such sixty day period (including the right to terminate the
Commitment and to accelerate all Obligations).
Subject to Section 11.08, the Agent shall have the right, in its
sole discretion, to determine which rights, Liens or remedies it shall at any
time pursue, relinquish, subordinate, modify or take any other action with
respect thereto, without in any way modifying or affecting any of them or any of
the Lenders', GMACBC's or the Agent's rights hereunder or under any other Loan
Documents; and any moneys, deposits, accounts, balances or other property which
may come into any Lender's, GMACBC's or the Agent's hands at any time or in any
manner, may be retained by such Lender, GMACBC or the Agent and applied to any
of the Obligations.
In case any one or more Events of Default shall occur and be
continuing, the Agent may proceed to protect and enforce its rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any document or instrument delivered in connection with or pursuant to this
Agreement or any other Loan Document, or to enforce the payment of the
Obligations or any other legal or equitable right or remedy.
No right or remedy herein conferred upon the Lenders, GMACBC or the
Agent is intended to be exclusive of any other right or remedy contained herein
or in any instrument or document delivered in connection with or pursuant to
this Agreement or any other Loan Document, and every such right or remedy shall
be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
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No course of dealing between any Borrower or any Grantor or
Guarantor and any Lender, GMACBC or the Agent or any failure or delay on the
part of any Lender, GMACBC or the Agent in exercising any rights or remedies
hereunder or under any other Loan Document shall operate as a waiver of any
rights or remedies of the Lenders, GMACBC or the Agent and no single or partial
exercise of any rights or remedies hereunder or under any other Loan Document
shall operate as a waiver or preclude the exercise of any other rights or
remedies hereunder or under any other Loan Document or of the same right or
remedy on a future occasion.
After the occurrence of an Event of Default and acceleration of the
Obligations as herein provided, the proceeds of the Collateral and of property
of persons other than the Borrowers and the Grantors securing the Obligations
and collections from each Guarantee of the Obligations shall be applied by the
Agent to payment of the Obligations in the following order, unless a court of
competent jurisdiction shall otherwise direct or if otherwise provided in a
Security Document:
(i) FIRST, to payment of all reasonable costs and expenses of
the Agent, the Issuing Bank, GMACBC and the Lenders incurred in connection
with the preservation, collection and enforcement of the Obligations or
any Guarantee thereof, or of any of the Liens granted to the Agent
pursuant to the Security Documents or otherwise, including, without
limitation, any amounts advanced by the Agent, GMACBC or the Lenders to
protect or preserve the Collateral;
(ii) SECOND, to payment of that portion of the Obligations
constituting accrued and unpaid interest and fees and indemnities due and
payable under Section 2 hereof, ratably amongst the Agent, GMACBC and the
Lenders in accordance with the proportion which the accrued interest and
fees and indemnities due and payable under Section 2 hereof constituting
the Obligations owing to the Agent, GMACBC and each such Lender at such
time bears to the aggregate amount of accrued interest and fees and
indemnities payable under Section 2 hereof constituting the Obligations
owing to the Agent, GMACBC and all of the Lenders at such time until such
interest, fees and indemnities shall be paid in full;
(iii) THIRD, to the Agent on behalf of GMACBC in an amount
equal to 105% of the then aggregate undrawn amount of all outstanding
Letters of Credit to be held by the Agent for the payment of the
Obligations with respect thereto when and if due and payable;
(iv) FOURTH, to payment of the principal of the Obligations
(which shall exclude all Obligations with respect to the undrawn amount of
Letters of Credit), ratably amongst the Lenders and GMACBC in accordance
with the proportion which the principal amount of the Obligations (which
shall exclude all Obligations with respect to the undrawn amount of
Letters of Credit) owing to each such Lender and GMACBC bears to the
aggregate principal amount of the Obligations (which shall exclude all
Obligations with respect to the undrawn amount of Letters of Credit) owing
to all of the Lenders and GMACBC until such principal of the Obligations
shall be paid in full;
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(v) FIFTH, to the payment of all other Obligations, ratably
amongst the Lenders in accordance with the proportion which the amount of
such other Obligations owing to each such Lender bears to the aggregate
principal amount of such other Obligations owing to all of the Lenders
until such other Obligations shall be paid in full; and
(vi) SIXTH, the balance, if any, after all of the Obligations
have been satisfied, shall, except as otherwise provided in the Security
Documents, be refunded by Agent to the Borrowers or pursuant to the
Borrowers' joint written instructions, or paid over to such other person
or persons as may be required by law.
In the event that the amount of monies received by the Agent under
clause (iii) above with respect to a Letter of Credit for which there are
undrawn amounts at the time of the Agent's receipt of such monies shall exceed
the amount of actual payments GMACBC or the Issuing Bank shall have made with
respect to drawings under such Letter of Credit after the Agent's receipt of
such monies, which determination shall be made after such Letter of Credit has
been terminated or has expired, then the Agent shall apply such excess monies
and cash collateral in accordance with the preceding paragraphs (i) through
(vi).
The Borrowers and the Guarantors acknowledge and agree that they
shall remain liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and collections under the Guarantees of the
Obligations and the aggregate amount of the sums referred to in the first
through fifth clauses above.
IX. AGENT
In order to expedite the transactions contemplated by this
Agreement, GMAC Business Credit LLC is hereby appointed to act as Agent on
behalf of the Lenders. Each of the Lenders and each subsequent holder of any
Note or issuer of any Letter of Credit by its acceptance thereof, irrevocably
authorizes the Agent to take such action on its behalf and to exercise such
powers hereunder and under the Security Documents and other Loan Documents as
are specifically delegated to or required of the Agent by the terms hereof and
the terms thereof together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted to be taken by it
or them hereunder or under any of the Security Documents and other Loan
Documents or in connection herewith or therewith (a) at the request or with the
approval of the Required Lenders (or, if otherwise specifically required
hereunder or thereunder, the consent of all the Lenders) or (b) in the absence
of its or their own gross negligence, bad faith or willful misconduct.
The Agent is hereby expressly authorized on behalf of the Lenders,
without hereby limiting any implied authority, (a) to receive on behalf of each
of the Lenders any payment of principal of or interest on the Notes outstanding
hereunder and all other amounts accrued hereunder paid to the Agent, and
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promptly to distribute to each Lender its proper share of all payments so
received, (b) to distribute to each Lender copies of all notices, agreements and
other material as provided for in this Agreement or in the Security Documents
and other Loan Documents as received by such Agent and (c) to take all actions
with respect to this Agreement and the Security Documents and other Loan
Documents as are specifically delegated to the Agent.
In the event that (a) the Borrowers fail to pay when due the
principal of or interest on any Note, any amount payable under or with respect
to any Letter of Credit, or any fee payable hereunder or (b) the Agent receives
written notice of or otherwise becomes aware of the occurrence of a Default or
an Event of Default, the Agent shall promptly give written notice thereof to the
Lenders, and shall take such action with respect to such Event of Default or
other condition or event as it shall be directed to take by the Required Lenders
(but shall not be required to take any such actions which violate any law or any
term of this Agreement or any other Loan Document); provided, however, that,
unless and until the Agent shall have received such directions, the Agent may
take such action or refrain from taking such action hereunder or under the
Security Documents or other Loan Documents with respect to a Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
The Agent shall not be responsible in any manner to any of the
Lenders for the effectiveness, enforceability, perfection, value, genuineness,
validity or due execution of this Agreement, the Notes or any of the other Loan
Documents or Collateral or any other agreements or certificates, requests,
financial statements, notices or opinions of counsel or for any recitals,
statements, warranties or representations contained herein or in any such
instrument or be under any obligation to ascertain or inquire as to the
performance or observance of any of the terms, provisions, covenants,
conditions, agreements or obligations of this Agreement or any of the other Loan
Documents or any other agreements on the part of any Borrower or any Guarantor
and, without limiting the generality of the foregoing, the Agent shall, in the
absence of knowledge to the contrary, be entitled to accept any certificate
furnished pursuant to this Agreement or any of the other Loan Documents as
conclusive evidence of the facts stated therein and shall be entitled to rely on
any note, notice, consent, certificate, affidavit, letter, telegram, teletype
message, statement, order or other document which it believes in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. It is understood and agreed that the Agent may exercise its rights and
powers under other agreements and instruments to which it is or may be a party,
and engage in other transactions with any Borrower or any Guarantor, as though
it were not Agent of the Lenders hereunder.
Neither the Agent nor any of its directors, officers, employees or
agents shall have any responsibility to any Borrower or any Guarantor on account
of the failure or delay in performance or breach by any Lender other than the
Agent of any of its obligations hereunder or to any Lender on account of the
failure of or delay in performance or breach by any other Lender or any Borrower
or any Guarantor of any of their respective obligations hereunder or in
connection herewith.
The Agent may consult with legal counsel selected by it in
connection with matters arising under this Agreement or any of the other Loan
Documents and any action taken or suffered in good faith by it in accordance
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with the opinion of such counsel shall be full justification and protection to
it. The Agent may exercise any of its powers and rights and perform any duty
under this Agreement or any of the other Loan Documents through agents or
attorneys.
The Agent and the Borrowers may deem and treat the payee of any Note
as the holder thereof until written notice of transfer shall have been delivered
as provided herein by such payee to the Agent and the Borrowers.
With respect to the Loans made hereunder, the Notes issued to it and
any other Credit Event applicable to it, the Agent in its individual capacity
and not as an Agent shall have the same rights, powers and duties hereunder and
under any other Loan Document executed in connection herewith as any other
Lender and may exercise the same as though it were not the Agent, and the Agent
and its affiliates may accept deposits from, lend money to and generally engage
in any kind of business with any Borrower, any Guarantor or other affiliate
thereof as if it were not the Agent.
Each Lender agrees (i) to reimburse the Agent in the amount of such
Lender's pro rata share (based on its Total Commitment hereunder) of any
expenses incurred for the benefit of the Lenders by the Agent, including counsel
fees and compensation of agents paid for services rendered on behalf of the
Lenders, not reimbursed by the Borrowers and (ii) to indemnify and hold harmless
the Agent and any of its directors, officers, employees or agents, on demand, in
the amount of its pro rata share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against it or such directors, officers, employees or
agents in its or their capacity as, or acting on behalf of, the Agent in any way
relating to or arising out of this Agreement or any of the other Loan Documents
or any action taken or omitted by it or any of them under this Agreement or any
of the other Loan Documents, to the extent not reimbursed by the Borrowers;
provided, however, that no Lender shall be liable to the Agent for any portion
of such liabilities, obligations, losses, damages, penalties, actions, judgment,
suits, costs, expenses or disbursements resulting from the gross negligence or
willful misconduct of the Agent or any of its directors, officers, employees or
agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent, GMACBC or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and any other Loan Document to which such
Lender is party. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent, GMACBC or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document, any related agreement or any document
furnished hereunder. Each Lender further acknowledges that Agent does not, and
shall not, have (i) a fiduciary duty or (ii) any other duties toward any Lender,
except such duties as are expressly delineated in this Agreement.
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Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
such Lenders and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent which shall be a bank with an
office (or an affiliate with an office) in New York, New York, having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent and the retiring Agent shall be discharged from
its duties and obligations hereunder and under each of the other Loan Documents.
After any Agent's resignation hereunder, the provisions of this Article shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent.
The Lenders hereby acknowledge that the Agent shall be under no duty
to take any discretionary action permitted to be taken by the Agent pursuant to
the provisions of this Agreement or any of the other Loan Documents unless it
shall be requested in writing to do so by the Required Lenders (and the Agent
shall not be obligated to take any such requested action which violates
applicable law or any terms of this Agreement or any other Loan Document).
X. CASH RECEIPTS COLLECTION
SECTION 10.01. Collection of Cash. (a) The Parent and its
Subsidiaries will, at their own cost and expense, cause all payments received by
them from any source, whether in the form of cash, checks, notes, drafts, bills
of exchange, money orders, credit card payments, debit card payments or
otherwise (referred to herein as "Payments"), (i) (net of ordinary course petty
cash payments and ordinary course payroll check cashing payments made at the
stores of the Parent and its Subsidiaries to employees of the Parent and its
Subsidiaries) to be deposited daily (or, with respect to checks received at the
offices of the Parent and its Subsidiaries, pursuant to the ordinary course of
business of the Parent, but no less often than weekly) in precisely the form
received (but with any endorsements of the Parent and its Subsidiaries necessary
for deposit or collection) in one or more bank accounts maintained by the Parent
and its Subsidiaries and acceptable to the Agent in which only the Payments will
be deposited, (ii) to be transferred (net of any rights of setoff in favor of
any depository institutions to the extent agreed to in writing by Agent and the
Parent) daily from the accounts referred to in clause (i) to one or more
concentration accounts designated by the Agent with a bank acceptable to the
Agent in which only the Payments will be deposited, and (iii) cause the Payments
to be transferred daily from the concentration accounts referred to in clause
(ii) to Agent's Account, such Payments to be subject to withdrawal by the Agent
only, as hereinafter provided. Until such Payments are deposited with the Agent
in accordance with the prior sentence, such Payments shall be deemed to be held
in trust by the Parent and its Subsidiaries for and as the Lenders' property and
shall not be commingled with the other funds of the Parent and its Subsidiaries.
All Payments that are transferred to Agent in accordance with the foregoing
will, if transferred and cleared as good funds by 1:00 p.m. (New York time), be
applied by the Agent to reduce the outstanding balance of the Revolving Loans
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and thereafter other Obligations then due and payable, subject to Section 2.09.
Each bank requested by the Agent at which an account referred to in clause (i)
of the first sentence of this Section 10.01(a) is maintained and each bank at
which a concentration account referred to in clause (ii) of such sentence shall
execute and deliver to the Agent such agreements, in form and substance
satisfactory to the Agent, as the Agent shall request with respect to such
accounts, including, without limitation, with respect to prohibitions on the
Parent and its Subsidiaries withdrawing funds from such accounts or otherwise
directing or modifying actions with respect to such accounts.
Upon the occurrence and continuance of an Event of Default, the
Agent may send a notice of assignment and/or notice of the Agent's security
interest to any and all third parties holding or otherwise concerned with any of
the Collateral, and thereafter the Agent shall have the sole right to collect
and/or take possession of the Collateral and the books and records relating
thereto.
(b) (i) Each Borrower hereby constitutes the Agent or the Agent's
designee as such person's attorney-in-fact with power to endorse its name upon
any notes, acceptances, checks, drafts, money orders or other evidences of
payment or Collateral that may come into its possession; upon the occurrence and
during the continuation of an Event of Default, to open and dispose of all mail
received by the Parent and its Subsidiaries and to notify the Postal Service
authorities to change the address for delivery of mail addressed to such person
to such address as the Agent may designate; and to do all other acts and things
necessary to carry out this Agreement. All acts of said attorney or designee are
hereby ratified and approved, and said attorney or designee shall not be liable
for any acts of omission or commission, for any error of judgment or for any
mistake of fact or law, provided that the Agent or its designee shall not be
relieved of liability to the extent it is determined by a final judicial
decision that its act, error or mistake constituted gross negligence, bad faith
or willful misconduct. This power of attorney being coupled with an interest is
irrevocable until all of the Obligations are paid in full and this Agreement and
the Total Commitment is terminated.
(ii) The Agent, without notice to or consent of any Borrower,
upon the occurrence and during the continuance of an Event of Default, shall
have the right to receive, endorse, assign and/or deliver in its name or the
name of the Borrowers any and all checks, drafts and other instruments for the
payment of money relating to the Collateral, and the Borrowers hereby waive
notice of presentment, protest and non-payment of any instrument so endorsed.
(c) Nothing herein contained shall be construed to constitute any
Borrower as agent of the Agent for any purpose whatsoever, and the Agent shall
not be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof (except to the extent it is determined by a
final judicial decision that the Agent's or a Lender's act or omission
constituted gross negligence, bad faith or willful misconduct). The Agent and
the Lenders shall not, under any circumstances or in any event whatsoever, have
any liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Collateral or for any damage
resulting therefrom (except to the extent it is determined by a final judicial
decision that the Agent's or such Lender's error, omission or delay constituted
gross negligence, bad faith or willful misconduct). The Agent and the Lenders do
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not, by anything herein or in any assignment or otherwise, assume any Borrower's
obligations under any contract or agreement assigned to the Agent or the
Lenders, and the Agent and the Lenders shall not be responsible in any way for
the performance by any Borrower of any of the terms and conditions thereof.
(d) If any of the Collateral includes a charge for any tax payable
to any governmental tax authority, the Agent is hereby authorized (but in no
event obligated) in its discretion to pay the amount thereof to the proper
taxing authority for the account of any Borrower and to charge the Borrowers'
account therefore. The Borrowers shall notify the Agent if any Collateral
include any tax due to any such taxing authority and, in the absence of such
notice, the Agent shall have the right to retain the full proceeds of such
Collateral and shall not be liable for any taxes that may be due from any
Borrower by reason of the sale of any of the Collateral.
(e) The parties hereto acknowledge that the cash collection
procedures instituted in connection with the Existing Loan Agreement will remain
in place pending the institution of cash collection procedures acceptable to
Agent pursuant to documents in form and substance satisfactory to Agent. The
Grantors agree to enter into such documentation no later than ninety (90) days
after the Closing Date.
SECTION 10.02. Monthly Statement of Account. The Agent shall render
to the Borrowers each month a statement of the Borrowers' account, which shall
constitute an account stated and shall be deemed to be correct and accepted by
and be binding upon the Borrowers unless the Agent receives a written statement
of the Borrowers' exceptions within 30 days after such statement was rendered to
the Borrowers.
SECTION 10.03. Collateral Custodian. Upon the occurrence and
continuance of an Event of Default, the Agent may at any time and from time to
time employ and maintain in the premises of the Borrowers' a custodian selected
by the Agent who shall have full authority to do all acts necessary to protect
the Agent's and Lenders' interests and to report to the Agent thereon. The
Borrowers each hereby agrees to cooperate with any such custodian and to do
whatever the Agent may reasonably request to preserve the Collateral. All costs
and expenses incurred by the Agent by reason of the employment of the custodian
shall be charged to the Borrowers' account and added to the Obligations.
XI. MISCELLANEOUS
SECTION 11.01. Notices. Notices, consents and other communications
provided for herein shall be in writing and shall be delivered or mailed by
certified mail return receipt requested (or in the case of facsimile
communication, delivered by telecopier with receipt confirmed by means of a
signed telecopy or with a copy mailed as aforesaid) addressed,
(a) if to any Borrower, Guarantor, or Grantor, at 922 Highway 33,
Building 6, Suite 1, Freehold, New Jersey 07728, Attention: Mr. Richard
Saker, President and Mr Michael Shapiro, Senior Vice President, with a
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copy to Giordano, Halleran & Ciesla, P.C., 125 Half Mile Road, Middletown,
New Jersey 07748, Attention: John A. Aiello, Esq.;
(b) if to the Agent, at GMAC Business Credit, LLC, 461 Fifth
Avenue, 21st Floor, New York, New York 10017, Attention: Thomas Maiale,
with a copy to Hahn & Hessen LLP, 350 Fifth Avenue, New York, New York
10118, Attention: Daniel J. Krauss, Esq.; and
(c) if to any Lender, at the address set forth below its name in
Schedule 2.01 annexed hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if hand delivered or three days after being sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail, or
upon receipt if by facsimile, in each case addressed to such party as provided
in this Section 11.01 or in accordance with the latest unrevoked direction from
such party.
SECTION 11.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Parent or any of its Subsidiaries
herein and in the certificates or other instruments prepared or delivered in
connection with this Agreement, any of the Security Documents or any other Loan
Document, shall be considered to have been relied upon by the Lenders and shall
survive the making by the Lenders of the Loans and the execution and delivery to
the Lenders of the Notes and occurrence of any other Credit Event and shall
continue in full force and effect as long as the principal of or any accrued
interest on the Notes or any other fee or amount payable under the Notes or this
Agreement or any other Loan Document is outstanding and unpaid and so long as
the Total Commitment has not been terminated.
SECTION 11.03. Successors and Assigns; Participations. (a) Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of any Borrower, any
Guarantor, any Grantor, any ERISA Affiliate, any Subsidiary of any thereof, the
Agent or the Lenders, that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns. Without limiting the
generality of the foregoing, each Borrower specifically confirms that any Lender
may at any time and from time to time pledge or otherwise grant a security
interest in any Loan or any Note (or any part thereof) to any Federal Reserve
Bank. The Borrowers may not assign or transfer any of their rights or
obligations hereunder without the written consent of all the Lenders.
(b) Each Lender, without the consent of the Borrowers, may sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment and the Loans owing to it and interest in undrawn
Letters of Credit and the Notes held by it); provided, however, that (i) such
Lender's obligations under this Agreement (including, without limitation, its
Commitment), shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
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(iii) the banks or other entities buying participations shall be entitled to the
cost protection provisions contained in Sections 2.10(a) (except to the extent
that application of such Section 2.10(a) to such banks and entities would cause
Borrowers to make duplicate payments thereunder), and 2A.04 hereof, but only to
the extent any of such Sections would be available to the Lender which sold such
participation, (iv) each such participation shall be in a minimum amount of
$5,000,000 and shall be of a constant, and not a varying, percentage of all of
the selling Lender's rights and obligations under this Agreement, which shall
include the same percentage interest in the Revolving Loan, Term Loan and
Capital Expenditure Loans, interest in undrawn and unreimbursed Letters of
Credit and Notes, and (v) the Borrowers, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement; provided, further,
however, that each Lender shall retain the sole right and responsibility to
enforce the obligations of the Borrowers, Grantors and the Guarantors relating
to the Loans, including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement, other than
amendments, modifications or waivers with respect to any fees payable hereunder
or the amount of principal or the rate of interest payable on, or the dates
fixed for any payment of principal of or interest on, the Loans in which such
entity is participating or the release of all Collateral.
(c) Each Lender may assign and delegate to any one or more banks or
other entities with the prior written consent of the Borrowers (which shall not
be unreasonably withheld or delayed and which shall not be required following
the occurrence and the continuation of an Event of Default) and the Agent (which
shall not be unreasonably withheld or delayed), all or a portion of its
interests, rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, all or a portion of its Commitment and
the same portion of the Loans and interest in undrawn Letters of Credit at the
time owing to it and the Note or Notes held by it), provided, however, that (i)
each such assignment shall be of a constant, and not a varying, percentage of
all of the assigning Lender's rights and obligations under this Agreement, which
shall include the same percentage interest in the Revolving Loans, Term Loan and
Capital Expenditure Loans, interest in undrawn and unreimbursed Letters of
Credit and Notes, (ii) the amount of the Commitment of the assigning Lender
being assigned pursuant to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Agent) shall be in a minimum principal amount of $10,000,000 (provided that this
clause (ii) shall have no force and effect in the event that an Event of Default
shall have been in existence for greater than sixty (60) days after written
notice by the Agent to the Borrowers of such Event of Default, unless such Event
of Default shall have been waived) and (iii) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance, together with any
Note subject to such assignment and a processing and recordation fee of $2,500.
Upon such execution, delivery, acceptance and recording and after receipt of the
written consent of the Agent, from and after the effective date specified in
each Assignment and Acceptance, which effective date shall be at least five (5)
Business Days after the execution thereof, (x) the assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and under the other Loan
Documents and (y) the Lender which is assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement with respect to the period after the date of such
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assignment (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto). Notwithstanding the
foregoing, each Lender may pledge it rights hereunder to any Federal Reserve
Bank as collateral security without the consent of Agent, Lenders and Borrowers.
(d) By executing and delivering an Assignment and Acceptance, the
Lender which is assignor thereunder and the assignee thereunder confirm to, and
agree with, each other and the other parties hereto as follows: (i) other than
the representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereunder free and clear of any adverse claim, such
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, perfection, genuineness, sufficiency or value of this Agreement,
the other Loan Documents or any Collateral with respect thereto or any other
instrument or document furnished pursuant hereto or thereto; (ii) such Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Borrower, or any Grantor or Guarantor or the
performance or observance by any Borrower, Grantor or the Guarantor of any of
their respective obligations under this Agreement, any of the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee confirms that it has received a copy of this
Agreement and of the other Loan Documents, together with copies of financial
statements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon the
Agent, such Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee appoints and authorizes the Agent to take such action as the Agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(e) The Agent may, at its option, maintain at its address referred
to in Section 11.01 hereof a copy of each Assignment and Acceptance delivered to
it and a register for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the Loans owing to, each Lender
from time to time (the "Register"). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the Agent and
the Lenders may treat each person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrowers at any reasonable time and from time
to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee together with any Note or Notes subject to such
assignment and the written consent to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is precisely in the form of
Exhibit F annexed hereto, (i) accept such Assignment and Acceptance, (ii) record
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the information contained therein in the Register and (iii) give prompt notice
thereof to Borrowers. Within five (5) Business Days after receipt of such
notice, each Borrower, at its expense, shall execute and deliver to the Agent in
exchange for each surrendered Note or Notes a new Note or Notes to the order of
such assignee in an amount equal to its portion of the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained any Commitment hereunder, a new Note or Notes to the order of the
assigning Lender in an amount equal to the Commitment retained by it hereunder.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A, Exhibit B-1, or Exhibit B-2 as the case may
be. Notes surrendered to the Borrowers shall be canceled by the Borrowers.
(g) Notwithstanding any other provision herein, any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 11.03, disclose to the assignee or
participant or proposed assignee or participant, any information, including,
without limitation, any Information, relating to any Borrower, any Grantor or
any Guarantor furnished to such Lender by or on behalf of Borrowers in
connection with this Agreement; provided, however, that prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any confidential
Information relating to the Borrowers received from such Lender. The Borrowers
and the Guarantors agree to cooperate with, and assist, each Lender with respect
to the syndication of the Commitments both prior to and after the Closing Date.
Such cooperation and assistance shall include, without limitation, making
available senior officers of the Borrowers for meetings with prospective
assignees.
SECTION 11.04. Expenses; Indemnity. (a) Each Borrower agrees to pay
all reasonable out-of-pocket expenses incurred by the Agent in connection with
the preparation of this Agreement, the Security Documents, the Notes and the
other Loan Documents or with any amendments, modifications, waivers, extensions,
renewals, renegotiations or work-outs of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be consummated) or
incurred by the Agent, Issuing Bank, GMACBC or any of the Lenders in connection
with the enforcement or protection of its rights in connection with this
Agreement or any of the other Loan Documents or with the Loans made or the Notes
or Letters of Credit issued hereunder, or in connection with any pending or
threatened action, proceeding, or investigation relating to the foregoing,
including but not limited to the reasonable fees and disbursements of counsel
for the Agent, GMACBC and each Lender and ongoing field examination expenses and
charges. Without limitation of the foregoing, each Borrower hereby agrees to
reimburse the Agent for any and all costs and expenses incurred in connection
with audits, field exams and appraisals of the Parents' and its Subsidiaries'
property, assets, business and operations performed at the request of the Agent
by an independent party selected by the Agent, provided, however, that prior to
the occurrence of a Default or an Event of Default, Borrowers shall not be
required to reimburse Agent for appraisals of any store and/or fixed asset more
often than once every thirty months. Each Borrower further indemnifies the
Lenders and GMACBC from and agrees to hold them harmless against any documentary
taxes, assessments or charges made by any governmental authority by reason of
the execution and delivery of this Agreement, the Notes or the making of any
Credit Events.
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(b) Each Borrower indemnifies the Agent, Issuing Bank, GMACBC and
each Lender and their respective directors, officers, employees and agents
against, and agrees to hold the Agent, Issuing Bank, GMACBC, each Lender and
each such person harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel fees and expenses, incurred
by or asserted against the Agent, Issuing Bank, GMACBC, the Lender or any such
person arising out of, in any way connected with, or as a result of (i) the use
of any of the proceeds of the Loans or of any Letter of Credit, (ii) this
Agreement, any of the Security Documents, or the other documents contemplated
hereby or thereby, except, as to any Lender, as a result of a breach thereof by
such Lender (iii) the performance by the parties hereto and thereto of their
respective obligations hereunder and thereunder (including but not limited to
the making of the Total Commitment) and consummation of the transactions
contemplated hereby and thereby, (iv) breach of any representation or warranty,
or (v) any claim, litigation, investigation or proceedings relating to any of
the foregoing, whether or not the Agent, Issuing Bank, GMACBC, any Lender or any
such person is a party thereto; provided, however, that such indemnity shall
not, as to the Agent, Issuing Bank, GMACBC or any Lender, apply to any such
losses, claims, damages, liabilities or related expenses to the extent that they
result from the gross negligence, bad faith or willful misconduct of the Agent,
Issuing Bank, GMACBC or any Lender.
(c) Each Borrower indemnifies, and agrees to defend and hold
harmless the Agent, Issuing Bank, GMACBC and the Lenders and their respective
officers, directors, shareholders, agents and employees (collectively, the
"Indemnitees") from and against any loss, cost, damage, liability, lien,
deficiency, fine, penalty or expense (including, without limitation, reasonable
attorneys' fees and reasonable expenses for investigation, removal, cleanup and
remedial costs and modification costs incurred to permit, continue or resume
normal operations of any property or assets or business of Parent or any
Subsidiary thereof) arising from a violation of, or failure to comply with any
Environmental Law and to remove any Lien arising therefrom except to the extent
caused by the gross negligence, bad faith or willful misconduct of any
Indemnitee, which any of the Indemnitees may incur or which may be claimed or
recorded against any of the Indemnitees by any person.
(d) The provisions of this Section 11.04 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or the Notes, or any investigation made by or on
behalf of the Agent, Issuing Bank, GMACBC or any Lender. All amounts due under
this Section 11.04 shall be payable on written demand therefor.
SECTION 11.05. Applicable Law. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK
(OTHER THAN, EXCEPT FORss.5-1401 OF THE G.O.L., THE CONFLICTS OF LAWS PRINCIPLES
THEREOF).
SECTION 11.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, upon the request of the Required Lenders each Lender
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and GMACBC shall and is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender or GMACBC to or for the
credit or the account of the Parent or any Subsidiary thereof against any and
all of the Obligations, the Notes held by such Lender or any other Loan
Document, irrespective of whether or not such Lender or GMACBC shall have made
any demand under this Agreement, the Notes or such other Loan Document and
although such obligations may be unmatured. Each Lender agrees to notify
promptly the Agent and the Borrowers after any such setoff and application made
by such Lender, but the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Lender and GMACBC
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which may be available to such
Lender or GMACBC.
SECTION 11.07. Payments on Business Days. (a) Should the principal
of or interest on the Notes or any fee or other amount payable hereunder become
due and payable on other than a Business Day, payment in respect thereof may be
made on the next succeeding Business Day (except as otherwise specified in the
definition of "Interest Period"), and such extension of time shall in such case
be included in computing interest, if any, in connection with such payment.
(b) All payments by any Borrower and any Guarantor hereunder and all
Loans made by the Lenders hereunder shall be made in lawful money of the United
States of America in immediately available funds to Agent's Account, or, at the
option of Agent upon written notice to Borrowers at the office of the Agent set
forth in Section 2.14 hereof.
SECTION 11.08. Waivers; Amendments; Final Maturity Date. (a) No
failure or delay of the Agent, any Lender or GMACBC in exercising any power or
right hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agent, the Lenders and GMACBC
hereunder or under any other Loan Document are cumulative and not exclusive of
any rights or remedies which they may otherwise have. No waiver of any provision
of this Agreement or the Notes nor consent to any departure by any Borrower or
any Guarantor therefrom shall in any event be effective unless the same shall be
authorized as provided in paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Borrower or any Guarantor in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances. Each holder of any of the Notes shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not
such Note shall have been marked to indicate such amendment, modification,
waiver or consent.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders; provided, however, (i)
that no such agreement shall, without the prior written consent of each Lender
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(A) change the principal amount of, or extend or advance the maturity of or the
dates for the payment of principal of or interest on, any Note or fees payable
hereunder or reduce the rate of interest on any Note or fees payable hereunder,
(B) change the Commitment of any Lender or amend or modify the provisions of
this Section 11.08, Section 2.11, Section 6.16, or Section 11.04 hereof or the
definition of "Required Lenders," or (C) release Collateral having a value in
excess of $1,000,000 in any calendar year (not to exceed an aggregate of
$3,500,000 between the Closing Date and the Final Maturity Date), except that
the Agent may, without the prior written consent of any Lender, release
Collateral permitted to be sold pursuant to the terms of Section 7.05 hereof,
(D) increase advance rates applicable to the Borrowing Base, or (E) release the
guarantee of any Guarantor and (ii) that no such agreement shall amend, modify
or otherwise affect the rights or duties of the Agent or GMACBC under this
Agreement or the other Loan Documents without the written consent of the Agent.
Each Lender and holder of any Note shall be bound by any modification or
amendment authorized by this Section regardless of whether its Notes shall be
marked to make reference thereto, and any consent by any Lender or holder of a
Note pursuant to this Section shall bind any person subsequently acquiring a
Note from it, whether or not such Note shall be so marked. In the event that
Agent gives any Lender notice of a proposed waiver, amendment or modification of
this Agreement and such Lender does not (x) acknowledge in writing its receipt
of such notice within ten (10) Business Days of such notice and (y) respond in
writing in the affirmative or in the negative within fifteen (15) Business Days
of such notice, then such Lender shall be deemed to have irrevocably consented
to such waiver, amendment or modification; provided, however, that the foregoing
provision shall not apply if there are fewer than four (4) Lenders under this
Agreement.
(c) The Final Maturity Date shall be extended for successive
one-year periods, with the prior written consent of the Borrowers and all of the
Lenders for each such one-year extension (the Parent hereby agreeing to give the
Agent and the Lenders no less than ninety (90) days' prior written notice of any
request for extension). The decision to extend or not extend the Final Maturity
Date may be made by each Lender in its sole discretion. Notwithstanding that
this Agreement may not be extended, the Obligations shall continue in full force
and effect, and the duties, covenants and other liabilities of the Borrowers
hereunder and under the other Loan Documents shall continue in full force and
effect until all Obligations have been paid in full.
SECTION 11.09. Severability. In the event any one or more of the
provisions contained in this Agreement or in the Notes should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall not
in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc. (a) This
Agreement, the Notes, the Fee Letter and the other Loan Documents constitute the
entire contract between the parties hereto relative to the subject matter
hereof. Any previous agreement among the parties hereto with respect to the
Transactions is superseded by this Agreement, the Notes, the Fee Letter and the
other Loan Documents. Except as expressly provided herein or in the Notes, the
101
Fee Letter or the Loan Documents (other than this Agreement), nothing in this
Agreement, the Notes, the Fee Letter or in the other Loan Documents, expressed
or implied, is intended to confer upon any party, other than the parties hereto,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, the Notes or the other Loan Documents.
(b) EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE
NOTES, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS.
(c) Except as prohibited by law, each party hereto hereby waives any
right it may have to claim or recover in any litigation referred to in paragraph
(b) of this Section 11.10 any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages.
(d) Each party hereto (i) certifies that no representative, agent or
attorney of any Lender has represented, expressly or otherwise, that such Lender
would not, in the event of litigation, seek to enforce the foregoing waivers and
(ii) acknowledges that it has been induced to enter into this Agreement, the
Notes or the other Loan Documents, as applicable, by, among other things, the
mutual waivers and certifications herein.
SECTION 11.11. Confidentiality. The Agent and the Lenders agree to
keep confidential (and to cause their respective officers, directors, employees,
agents, advisors, consultants and representatives to keep confidential) all
information, materials and documents furnished by or on behalf of the Parent or
any of its Subsidiaries to the Agent or any Lender (the "Information") and shall
not (and shall cause their respective officers, directors, employees, agents,
advisors, consultants and representatives to not) use any such Information for
any purpose unrelated to the making of any Loans, the extension of any other
credit, the administration of the Loans and the Loan Documents and the
performance and enforcement of the Loan Documents. Without limiting the
generality of the foregoing, trading in securities of the Borrower shall
constitute a purpose unrelated to the performance of the Loan Documents..
Notwithstanding the foregoing, the Agent and each Lender shall be permitted to
disclose Information (i) to such of its officers, counsel, directors, employees,
agents, advisors, consultants and representatives as need to know such
Information in connection with its participation in any of the Transactions or
the administration of this Agreement or the other Loan Documents with
instructions to maintain the confidentiality thereof; (ii) to the extent
required by applicable laws and regulations or by any subpoena or similar legal
process, or requested by any governmental agency or authority (the Agent and
each Lender receiving such subpoena or similar legal process agrees to use
reasonable efforts to promptly furnish the Borrowers with a copy thereof); (iii)
to the extent such Information (A) becomes publicly available other than as a
result of a breach of this Agreement, (B) becomes available to the Agent or such
Lender on a non-confidential basis from a source other than any Borrower, any
Guarantor, any Grantor or any of their respective Subsidiaries or (C) was
available to the Agent or such Lender on a non-confidential basis prior to its
disclosure to the Agent or such Lender by any Borrower, any Guarantor, any
Grantor or any of their respective Subsidiaries; (iv) to the extent any
102
Borrower, any Guarantor or any of their respective Subsidiaries shall have
consented to such disclosure in writing; (v) in connection with the sale of any
Collateral pursuant to the provisions of any of the other Loan Documents; or
(vi) pursuant to Section 11.03(g) hereof.
SECTION 11.12. Submission to Jurisdiction. (a) Any legal action or
proceeding with respect to this Agreement or the Notes or any other Loan
Document may be brought in state courts located in the City of New York or of
the United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, each of the Borrowers and each of the
Guarantors hereby accept for themselves and in respect of their property,
generally and unconditionally, the jurisdiction of the aforesaid courts.
(b) The Borrowers and each of the Guarantors hereby irrevocably
waive, in connection with any such action or proceeding, any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which they may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
(c) The Borrowers and each of the Guarantors hereby irrevocably
consent to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to each such person, as the case may be, at its
address set forth in Section 11.01 hereof.
(d) Nothing herein shall affect the right of the Agent or any Lender
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any Borrower or any Guarantor in any
other jurisdiction.
SECTION 11.13. Counterparts; Facsimile Signature. This Agreement may
be executed in counterparts, each of which shall constitute an original but all
of which when taken together shall constitute but one contract, and shall become
effective when copies hereof which, when taken together, bear the signatures of
each of the parties hereto shall be delivered to the Agent. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed signature page hereto.
SECTION 11.14. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 11.15. Defaulting Lender. (a) Notwithstanding anything to
the contrary contained herein, in the event that any Lender (x) refuses (which
refusal constitutes a breach by such Lender of its obligations under this
Agreement and which has not been retracted) to make available its portion of any
Loan or (y) notifies the Agent and/or any Borrower that it does not intend to
make available its portion of any Loan (if the actual refusal would constitute a
breach by such Lender of its obligations under this Agreement and which has not
been retracted) (each, a "Lender Default"), all rights and obligations hereunder
of the Lender (a "Defaulting Lender") as to which a Lender Default is in effect
103
and of the other parties hereto shall be modified to the extent of express
provisions of this Section 11.15 while such Lender Default remains in effect.
(b) Loans shall be incurred pro rata from the Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Revolving Commitments and/or Capital Expenditure Facility
Commitments, and no Revolving Commitment or Capital Expenditure Facility
Commitment of any Lender or any pro rata share of any Loans required to be
advanced by any Lender shall be increased as a result of such Lender Default.
Amounts received in respect of principal of the Loans shall be applied to reduce
the Loans of each of the Lenders pro rata based on the aggregate of the
outstanding Loans of all of the Lenders at the time of such application;
provided that, such amount shall not be applied to any Loan of a Defaulting
Lender at any time when, and to the extent that, the aggregate amount of Loans
of any Non-Defaulting Lender exceeds such Non-Defaulting Lenders' pro rata share
of all Loans then outstanding.
(c) The Lenders shall participate in Letters of Credit on the basis
of their respective pro rata shares, and no participation or reimbursement
obligation of any Lender shall be increased as a result of a failure of any
Defaulting Lender to reimburse the Agent on GMACBC's behalf with respect to any
amounts drawn on or otherwise payable with respect to any Letters of Credit (the
amount that any such Defaulting Lender has failed to reimburse is hereinafter
referred to as such Defaulting Lender's "Unreimbursed Amount"). Until such
Defaulting Lender has reimbursed the Agent on GMACBC's behalf for any
Unreimbursed Amount owed by it, all payments and other amounts received from any
source with respect to the Obligations or otherwise under or in connection with
the Agreement (including any letter of credit fees) which would otherwise be
payable to such Defaulting Lender will instead be paid to the Agent for the
benefit of GMACBC for application to such Unreimbursed Amount until such
Unreimbursed Amount has been paid in full. A Defaulting Lender shall not be
entitled to receive any portion of the Commitment Fee, the letter of credit fees
or any other fees payable in connection with this Agreement, or any indemnity
arising from its commitment to make Loans and/or participate in Letters of
Credit.
(d) A Defaulting Lender shall not be entitled to give instructions
to the Agent or to approve, disapprove, consent to or vote on any matters
relating to this Agreement and the Loan Documents. All amendments, waivers and
other modifications of this Agreement and the Loan Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender, not to have a
Revolving Commitment, not to have a Term Commitment, not to have a Capital
Expenditure Facility Commitment and not to have Loans outstanding.
(e) Other than as expressly set forth in this Section 11.15, the
rights and obligations of a Defaulting Lender (including the obligation to
indemnify the Agent) and the other parties hereto shall remain unchanged.
Nothing in this Section 11.15 shall be deemed to release any Defaulting Lender
from its Revolving Commitment or Capital Expenditure Facility Commitment
hereunder, shall alter such Revolving Commitment or Capital Expenditure Facility
Commitment, shall operate as a waiver of any default by such Defaulting Lender
104
hereunder, or shall prejudice any rights which any Borrower, the Agent or any
Lender may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(f) In the event the Defaulting Lender is able to retroactively cure
to the satisfaction of the Agent the breach which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall upon notice to Borrowers, no
longer be a Defaulting Lender and shall be treated as a Lender hereunder.
XII. GUARANTEES
Each Guarantor unconditionally guarantees, as a primary obligor and
not merely as a surety, jointly and severally with each other Guarantor, the due
and punctual payment of the principal of and interest on each of the Notes, when
and as due, whether at maturity, by acceleration, by notice of prepayment or
otherwise, and the due and punctual performance of all other Obligations. Each
Guarantor further agrees that the Obligations may be extended and renewed, in
whole or in part, without notice to or further assent from it, and that it will
remain bound upon its guarantee notwithstanding any extension or renewal of any
Obligations.
Each Guarantor waives presentment to, demand of payment from and
protest to the Borrowers of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. The
obligations of a Guarantor hereunder shall not be affected by (a) the failure of
any Lender, GMACBC or the Agent to assert any claim or demand or to enforce any
right or remedy against the Borrowers or any other Guarantor under the
provisions of this Agreement, the Notes or any of the other Loan Documents or
otherwise; (b) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement, the Notes, any of the other Loan
Documents, any guarantee or any other agreement; (c) the release of any security
held by the Agent for the Obligations or any of them; or (d) the failure of any
Lender, the Agent or GMACBC to exercise any right or remedy against any other
Guarantor of the Obligations.
Each Guarantor further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by any Lender, the Agent or GMACBC to any
security (including, without limitation, any Collateral) held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
any Lender, the Agent or GMACBC in favor of Borrowers or any other person.
The obligations of each Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the Agent,
GMACBC or any Lender to assert any claim or demand or to enforce any remedy
under this Agreement, the Notes or under any other Loan Document, any guarantee
105
or any other agreement, by any waiver or modification of any provision thereof,
by any default, failure or delay, willful or otherwise, in the performance of
the Obligations, or by any other act or omission which may or might in any
manner or to any extent vary the risk of such Guarantor or otherwise operate as
a discharge of such Guarantor as a matter of law or equity.
Each Guarantor further agrees that its guarantee shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Obligation is rescinded or
must otherwise be returned by the Agent, GMACBC or any Lender upon the
bankruptcy or reorganization of any Borrower or otherwise.
Until the indefeasible payment in full of all Obligations of the
Borrowers and the Guarantors to the Agent and the Lenders, each Guarantor hereby
waives and releases all rights of subrogation against any Borrower and its
property and all rights of indemnification, contribution and reimbursement from
any Borrower and its property, in each case in connection with this guarantee
and any payments made hereunder, and regardless of whether such rights arise by
operation of law, pursuant to contract or otherwise.
XIII. AMENDMENT AND RESTATEMENT
Each of the parties hereto confirm, acknowledge and agree that this
Agreement is an amendment and restatement of the Existing Loan Agreement and
that the execution, delivery and performance of this Agreement does not create a
novation or any new Indebtedness (other than any Capital Expenditure Loans and
other than any Indebtedness arising in connection with the increase of the
Revolving Commitment and the Term Commitment under this Third Amended and
Restated Revolving Credit and Term Loan Agreement). Each of the Borrowers, the
Guarantors and the Grantors confirm, acknowledge and agree that this Agreement
benefits from all collateral security and guarantees executed in connection with
the Existing Loan Agreement and that the "Obligations" under this Agreement are
secured by, and benefit from, all collateral security and guarantees included in
the Loan Documents.
[Signatures appear on following page]
106
IN WITNESS WHEREOF, the Borrowers, the Guarantors, the Agent and
the Lenders have caused this Agreement to be duly executed by their respective
authorized officers as
of the day and year first above written.
NEW LINDEN PRICE RITE, INC.,
as Borrower and as Guarantor
By:_______________________________
Name: Michael Shapiro
Title: Sr. Vice President
FOODARAMA SUPERMARKETS, INC., as
Borrower and as Guarantor
By:_____________________________
Name: Michael Shapiro
Title: Sr. Vice President
SHOP RITE OF READING, INC., as Guarantor
By:_____________________________
Name: Michael Shapiro
Title: Sr. Vice President
SHOP RITE OF MALVERNE, INC., as
Guarantor
By:_____________________________
Name: Michael Shapiro
Title: Sr. Vice President
GMAC BUSINESS CREDIT, LLC, as Agent
By:_____________________________
Name: Thomas Maiale
Title:Vice President
107
GMAC BUSINESS CREDIT, LLC, as Lender
By:_____________________________
Name: Thomas Maiale
Title:Vice President
THE BANK OF NEW YORK, as Lender
By:_____________________________
Name:
Title:
CITIZENS BUSINESS CREDIT COMPANY,
as Lender
By:_____________________________
Name: Cyril Prince
Title: Vice President
108
EXHIBIT A
FORM OF REVOLVING NOTE
$_________ New York, New York
September __, 2002
FOR VALUE RECEIVED, the undersigned, NEW LINDEN PRICE RITE, INC., a New
Jersey corporation and FOODARAMA SUPERMARKETS, INC., a New Jersey corporation
(each, a "Maker") hereby jointly and severally promise to pay to the order of
__________________________ (the "Lender"), at the office of GMAC BUSINESS
CREDIT, LLC (the "Agent"), 461 Fifth Avenue, 21st Floor, New York, New York
10017, on the Termination Date as defined in the Third Amended and Restated
Revolving Credit and Term Loan Agreement dated as of September __, 2002 among
the Makers, the Guarantors named therein, the Lenders named therein and the
Agent (as the same may be amended, restated, modified or supplemented from time
to time in accordance with its terms, the "Credit Agreement") or earlier as
provided for in the Credit Agreement, the lesser of the principal sum of
$__________ or the aggregate unpaid principal amount of all Revolving Loans from
the Lender pursuant to the terms of the Credit Agreement, in lawful money of the
United States of America in immediately available funds, and to pay interest
from the date hereof on the principal amount hereof from time to time
outstanding, in like funds, at said office, at a rate or rates per annum and
payable on such dates as determined pursuant to the terms of the Credit
Agreement.
This Revolving Note amends and restates in its entirety and is given in
substitution for (but not satisfaction of) that certain Fourth Amended and
Restated Revolving Note in the original principal amount of $_____________ dated
May 11, 2001 and issued by New Linden Price Rite, Inc. and Foodarama
Supermarkets, Inc. under the Credit Agreement. The obligations evidenced by this
Revolving Note includes obligations outstanding under the Credit Agreement
(including, without limitation accrued and unpaid interest and fees under the
Credit Agreement as of the date hereof), which continue to be outstanding, and
the issuance of this Revolving Note does not evidence or cause a repayment or
novation with respect to such obligations.
This Revolving Note is subject to the terms of the Credit Agreement, which
terms are hereby incorporated herein by reference. This Revolving Note is
secured pursuant to and the holder is entitled to the benefits of the Credit
Agreement.
Each Maker promises to pay interest, on demand, on any overdue principal
and fees and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
Each Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
109
All borrowings evidenced by this Revolving Note and all payments and
prepayments of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the holder hereof on the schedule attached hereto
and made a part hereof, or on a continuation thereof which shall be attached
hereto and made a part hereof, or otherwise recorded by such holder in its
internal records; provided, however, that the failure of the holder hereof to
make such a notation or any error in such a notation shall not in any manner
affect the obligations of the Makers to make payments of principal and interest
in accordance with the terms of this Revolving Note and the Credit Agreement.
This Revolving Note is one of the Notes referred to in the Credit
Agreement, which, among other things, contains provisions for the acceleration
of the maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof and
for the amendment or waiver of certain provisions of the Credit Agreement, all
upon the terms and conditions therein specified. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
NEW LINDEN PRICE RITE, INC.
By:_________________________
Name:
Title:
FOODARAMA SUPERMARKETS, INC.
By:_________________________
Name:
Title:
110
Loans and Payment
Unpaid
Principal Name of
Amount and Payments of Balance of Person Making
Date Type of Loan Principal/Interest Note Notation
111
EXHIBIT B-1
FORM OF TERM NOTE
$___________ New York, New York
September __, 2002
FOR VALUE RECEIVED, the undersigned, NEW LINDEN PRICE RITE, INC., a New
Jersey corporation and FOODARAMA SUPERMARKETS, INC. a New Jersey corporation,
(each, a "Maker") hereby jointly and severally promise to pay to the order of
_________________________ (the "Lender"), at the office of GMAC BUSINESS CREDIT,
LLC (the "Agent"), 461 Fifth Avenue, 21st Floor, New York, New York 10017, in
installments and as otherwise provided in Section 2.01 of the Third Amended and
Restated Revolving Credit and Term Loan Agreement dated as of September __, 2002
among the Makers, the Guarantors named therein, the Lenders named therein and
the Agent (as the same may be amended, restated, modified or supplemented from
time to time in accordance with its terms, the "Credit Agreement") or earlier as
provided for in the Credit Agreement, the lesser of the principal sum of
____________________________________________ ($__________) or the unpaid
principal amount of the Term Loan loaned by the Lender pursuant to the terms of
the Credit Agreement, in lawful money of the United States of America in
immediately available funds, and to pay interest from the date hereof on the
principal amount hereof from time to time outstanding, in like funds, at said
office, at a rate or rates per annum and payable on such dates as determined
pursuant to the terms of the Credit Agreement.
This Term Note amends and restates in its entirety and is given in
substitution for (but not satisfaction of) (i) the Second Amended and Restated
Term Note in the original principal amount of $_____________ dated January 7,
2000 made by Makers in favor of Lender; and (ii) the Original Capital
Expenditure Note in the original principal amount of $____________ dated January
7, 2000 made by Makers in favor of Lender. The obligations evidenced by this
Term Note include obligations outstanding under the Credit Agreement (including,
without limitation accrued and unpaid interest and fees under the Credit
Agreement as of the date hereof), which continue to be outstanding, and the
issuance of this Term Note does not evidence or cause a repayment or novation
with respect to such obligations.
This Term Note is subject to the terms of the Credit Agreement, which
terms are hereby incorporated herein by reference. This Term Note is secured
pursuant to and the holder is entitled to the benefits of the Credit Agreement.
Each Maker promises to pay interest, on demand, on any overdue principal
and fees and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
112
Each Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Term Note and all payments and
prepayments of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the holder hereof on the schedule attached hereto
and made a part hereof, or on a continuation thereof which shall be attached
hereto and made a part hereof, or otherwise recorded by such holder in its
internal records; provided, however, that the failure of the holder hereof to
make such a notation or any error in such a notation shall not in any manner
affect the obligations of the Makers to make payments of principal and interest
in accordance with the terms of this Term Note and the Credit Agreement.
This Term Note is one of the Notes referred to in the Credit Agreement,
which, among other things, contains provisions for the acceleration of the
maturity hereof upon the happening of certain events, for optional and mandatory
prepayment of the principal hereof prior to the maturity hereof and for the
amendment or waiver of certain provisions of the Credit Agreement, all upon the
terms and conditions therein specified. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
As used herein, the term "Original Capital Expenditure Note" shall mean and
refer to the Capital Expenditure Note made by Makers to Lender in the original
principal amount of $____________ dated January 7, 2000 pursuant to the Second
Amended and Restated Revolving Credit and Term Loan Agreement dated January 7,
2000 as amended, modified and supplemented to date, among Makers, certain
affiliates of Makers, Agent and certain lenders.
NEW LINDEN PRICE RITE, INC.
By:_________________________
Name:
Title:
FOODARAMA SUPERMARKETS, INC.
By:_________________________
Name:
Title:
113
Loans and Payment
Unpaid
Principal Name of
Amount and Payments of Balance of Person Making
Date Type of Loan Principal/Interest Note Notation
114
EXHIBIT B-2
FORM OF CAPITAL EXPENDITURE NOTE
$________ New York, New York
September __, 2002
FOR VALUE RECEIVED, the undersigned, NEW LINDEN PRICE RITE, INC., a New
Jersey corporation and FOODARAMA SUPERMARKETS, INC., a New Jersey Corporation
(each, a "Maker") hereby jointly and severally promise to pay to the order of
_______________(the "Lender"), at the office of GMAC BUSINESS CREDIT, LLC (the
"Agent"), 461 Fifth Avenue, 21st Floor, New York, New York 10017, in
installments and as otherwise provided in Section 2.01 of the Third Amended and
Restated Revolving Credit and Term Loan Agreement dated as of September __, 2002
among the Makers, the Guarantors named therein, the Lenders named therein and
the Agent (as the same may be amended, restated, modified or supplemented from
time to time in accordance with its terms, the "Credit Agreement") or earlier as
provided for in the Credit Agreement, the lesser of the principal sum of
___________________ ($__________) or the aggregate unpaid principal amount of
all Capital Expenditure Loans from the Lender pursuant to the terms of the
Credit Agreement, in lawful money of the United States of America in immediately
available funds, and to pay interest from the date hereof on the principal
amount hereof from time to time outstanding, in like funds, at said office, at a
rate or rates per annum and payable on such dates as determined pursuant to the
terms of the Credit Agreement.
This Capital Expenditure Note is subject to the terms of the Credit
Agreement, which terms are hereby incorporated herein by reference. This Capital
Expenditure Note is secured pursuant to and the holder is entitled to the
benefits of the Credit Agreement.
Each Maker promises to pay interest, on demand, on any overdue principal
and fees and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
Each Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Capital Expenditure Note and all payments
and prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such holder in
its internal records; provided, however, that the failure of the holder hereof
to make such a notation or any error in such a notation shall not in any manner
affect the obligations of the Makers to make payments of principal and interest
in accordance with the terms of this Capital Expenditure Note and the Credit
Agreement.
115
This Capital Expenditure Note is one of the Notes referred to in the
Credit Agreement, which, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory prepayment of the principal hereof prior to the maturity
hereof and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. THIS NOTE SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
NEW LINDEN PRICE RITE, INC.
By:_________________________
Name:
Title:
FOODARAMA SUPERMARKETS, INC.
By:_________________________
Name:
Title:
116
Loans and Payment
Unpaid
Principal Name of
Amount and Payments of Balance of Person Making
Date Type of Loan Principal/Interest Note Notation
117
EXHIBIT C
FORM OF OPINION OF COUNSEL
September 26, 2002
GMAC Business Credit, LLC, as Agent
630 Fifth Avenue, 30th Floor
New York, NY 10111
Re: Foodarama Supermarkets, Inc.
---------------------------
Gentlemen:
We have acted as counsel to Foodarama Supermarkets, Inc., a New Jersey
corporation ("Foodarama"), New Linden Price Rite, Inc., a New Jersey
corporation ("New Linden"), Shop Rite of Reading, Inc., a Pennsylvania
corporation ("Reading") and Shop-Rite of Malverne, Inc., a New York
corporation ("Malverne") (collectively the "Loan Parties") in connection
with the execution and delivery of:
(1) a Third Amended and Restated Revolving Credit and Term
Loan Agreement dated as of September 26, 2002 (the "Third Amendment") by
and among Foodarama and New Linden, as borrowers ("Borrowers"), Reading
and Malverne, as guarantors, certain lenders a party thereto ("Lenders")
and GMAC Business Credit, LLC ("GMACBC") , as a lender and as agent (in
such capacity, "Agent"), in an aggregate principal amount up to
$80,000,000;
(2) three Fifth Amended and Restated Revolving Notes in the
maximum aggregate principal amount of $35,000,000 made by Borrowers,
payable to the Lenders dated September 26, 2002 (the "Revolving Note");
(3) three Capital Expenditure Notes in an aggregate principal
amount up to $20,000,000 made by Borrowers, payable to the Lenders dated
as of September 26, 2002 (the "Capital Expenditure Note");
(4) three Third Amended and Restated Term Notes in the
original aggregate principal amount of $25,000,000 made by Borrowers,
payable to the Lenders dated September 26, 2002 (the "Term Note");
(5) Leasehold Mortgage Modifications (Term Loan & Capital
Expenditure Loan) and Leasehold Mortgage Modifications (Revolving Loan)
each dated as of September 26, 2002 (collectively the "Leasehold Mortgage
Modifications") modifying the leasehold mortgages described on Schedule A,
attached hereto;
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(6) Fee Mortgage Modification dated as of September 26, 2002
modifying the fee mortgage described on Schedule A (collectively with the
Leasehold Mortgage Modifications, the "Mortgage Documents");
(7) Reaffirmation, Ratification and Amendment Agreement dated
as of September 26, 2002 by the Loan Parties in favor of Agent (the
"Reaffirmation Agreement"); and
(8) financing statements on Form UCC-1 described on Schedule C
to be filed in the filing offices listed on Schedule C (the "Financing
Statements").
The Revolving Note, the Capital Expenditure Note and the Term Note are
hereinafter collectively referred to as the "Notes" and individually as a
"Note".
In rendering this opinion, we have examined only:
(1) the Third Amendment;
(2) the Notes;
(3) the Mortgage Documents;
(4) the Reaffirmation Agreement;
(5) the Financing Statements;
(6) certificates of existence issued by the New Jersey
Department of Treasury as of September 13, 2002 with respect to Foodarama
and New Linden and subsisting certificates issued by the Pennsylvania
Secretary of the Commonwealth as of September 5, 2002 with respect to
Reading and by the New York Secretary of State as of September 5, 2002
with respect to Malverne (collectively the "Certificates of Existence");
(7) certificates of incorporation certified by the Secretaries
of State of the jurisdiction of incorporation of each Loan Party and
further certified as true and complete by an officer of each Loan Party
(the "Certificates of Incorporation");
(8) bylaws of each Loan Party certified as true and complete
by an officer of each Loan Party (the "Bylaws"); and
(9) secretary's certificates of each secretary of each Loan
Party (the "Secretary's Certificates").
The Third Amendment, the Notes, the Mortgage Documents, the Reaffirmation
Agreement and the Financing Statements are hereinafter collectively
referred to as the "Amendment Documents". Other than the Factual
Certificate described below, we have not examined any other documents
executed in connection with the Amendment Documents. We have not examined
any records of any court, administrative tribunal or other similar entity
in connection with our opinions.
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We have been furnished with, and with your consent have relied upon, a
certificate of an officer of each Loan Party with respect to certain
factual matters (the "Factual Certificate"). As to matters of fact
material to the opinions set forth therein, we have relied upon the
accuracy of the matters addressed in the Factual Certificate and upon the
representations and warranties of the Loan Parties contained in the Loan
Documents (as defined in the Third Amendment). We have assumed, without
independent investigation, that such statements and representations are
true, correct and complete, in all material respects and we have no actual
knowledge that such matters of fact are untrue.
In basing the opinions and other matters set forth herein on "our
knowledge," such phrases signify that, in the course of our representation
of the Loan Parties in the matters with respect to which we have been
engaged by the Loan Parties as counsel and as to which the lawyers in our
firm who have had active involvement in the preparation of this opinion
letter or are primarily responsible for providing the response concerning
a particular opinion issue (the "Primary Lawyer Group") have recently
devoted substantive legal attention, no information has come to the
attention of the Primary Lawyer Group, without investigation or inquiry,
that would give them actual knowledge that any such opinions or other
matters are not accurate or that any of the documents, certificates,
reports and/or other information referenced herein on which we have relied
are not accurate and complete.
In rendering the opinions set forth herein, with your permission, we have
assumed the following:
(a) (i) that each of the parties thereto (other than the Loan Parties
solely as to the Amendment Documents) has duly and validly executed and
delivered each Loan Document to which such party is a signatory, (ii) that
the obligations of each party to any Loan Document (other than the
Amendment Documents, solely as to the Loan Parties) are its legal, valid
and binding obligations, enforceable in accordance with their respective
terms, (iii) the absence or satisfaction of any requirement of consent,
approval or other authorization by any person or entity with respect to
the actions of each party to any Loan Document (other than the Amendment
Documents, solely as to the Loan Parties), (iv) the existence and good
standing of each party to any Loan Document (other than the Loan Parties),
(v) the legal right and power of each party to any Loan Document (other
than the corporate power of the Loan Parties) under all applicable laws
and regulations to perform its obligations thereunder, and (vi) that the
Loan Documents (other than the Amendment Documents) contain adequate
default and remedial provisions for the practical realization by Agent of
the benefits afforded thereby;
(b) the legal capacity of all natural persons;
(c) that (other than the Amendment Documents) there have been no oral or
written modifications of or amendments to any Loan Document and there has
been no waiver or modification of any of the provisions thereof by actions
or conduct of the parties or otherwise;
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(d) the genuineness of all signatures of all persons signing any
document or agreement;
(e) the authenticity of all documents and agreements submitted to us as
originals and the conformity to original documents and agreements of all
documents or agreements submitted to us as copies;
(f) that the Financing Statements will be duly filed and indexed in the
filing offices indicated on Schedule C hereto;
(g) that the Assignment and Assumption Agreement between Heller
Financial, Inc. and GMACBC dated January 7, 2000 has been consummated and
is valid, binding and enforceable in accordance with its terms;
(h) (i) the execution and delivery of a Confirmation of Transfer of Agency
with respect to each of the existing mortgages described on Schedule A,
(ii) that each such Confirmation of Transfer of Agency has been duly
recorded and properly indexed and (iii) that the upon such recording and
indexing GMACBC, as agent, became the holder of record, for the benefit of
the Lenders, of the mortgages to which each such Confirmation of Transfer
of Agency pertains;
(i) (i) the execution and delivery of an Assignment of Mortgage (the
"Assignment") among Heller Financial, Inc. ("Heller") and GMACBC pursuant
to which Heller assigns the Linden Mortgage (defined below) to GMACBC,
(ii) that the Assignment has been duly recorded and properly indexed and
(iii) that the upon such recording and indexing GMACBC, as agent, became
the holder of record, for the benefit of the Lenders, of the Mortgage and
Security Agreement dated as of January 7, 2000 made by Foodarama, as
mortgagor, in favor of Agent, as mortgagee, filed and recorded in the
Office of the County Clerk of Union County, New Jersey (the "Linden
Mortgage"); and
(j) that all references to recording information, including, but not
limited to, the book and page numbers, in the Mortgage Documents are
accurate.
We have made no investigation as to whether GMACBC is authorized, in the
State of New Jersey or otherwise, to make the loan contemplated by the
Loan Documents (the "Loan") or perform their obligations thereunder or
whether any person or entity is authorized to do business in any state
(other than the Loan Parties in the State of New Jersey) and express no
opinion as to whether any such authorization is required in connection
therewith. We assume that if any such authorization is required, that each
such person or entity is so authorized.
The opinions expressed herein are subject to and are limited by:
(a) bankruptcy, insolvency, reorganization, fraudulent conveyance,
fraudulent transfer, moratorium or other similar laws of general
application, now or hereafter in effect, affecting the enforcement of
creditors' rights in general;
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(b) judicial discretion and general principles of equity (regardless of
whether considered in a proceeding in equity or at law), including, without
limitation, principles that (i) include a requirement that a creditor act in
good faith and deal fairly with its debtors, (ii) limit a creditor's right to
accelerate maturity of a debt upon the occurrence of a default deemed
immaterial, or (iii) might render certain waivers unenforceable, and we wish to
advise you that the remedy of specific performance or injunctive relief (whether
considered in a proceeding in equity or at law) is subject to the exercise of
judicial discretion;
(c) the qualification that certain provisions in the Mortgage Documents,
in addition to those expressly qualified by the phrase "to the extent permitted
by law" or comparable provisions (as to which no opinion is expressed herein),
may be unenforceable in whole or in part, but the inclusion of such provisions
does not render the other provisions thereof invalid or preclude, subject to the
other exceptions and limitations expressed herein, (i) the judicial enforcement
of the obligation of the Borrowers to repay the principal, together with
interest thereon as provided in the Notes, (ii) the acceleration of the
obligation of the Borrowers to repay such principal or interest, upon a material
default by the Borrowers in the payment of such principal or interest, and (iii)
the judicial foreclosure in accordance with applicable law of the lien on and
security interest in the collateral created thereby (to the extent we have
expressly opined thereto) upon maturity or upon the acceleration pursuant to
(ii) above;
(d) the qualification that certain provisions in the Amendment Documents
other than the Mortgage Documents, in addition to those expressly qualified by
the phrase "to the extent permitted by law" or comparable provisions (as to
which no opinion is expressed herein), may be unenforceable in whole or in part,
but the inclusion of such provisions does not render the other provisions
thereof invalid, and collectively, the Amendment Documents other than the
Mortgage Documents contain adequate remedial provisions for the practical
realization of the rights and benefits afforded thereby (except for the economic
consequences of any delay that arises from such lack of enforceability);
(e) the rights of any person or entity which is a party to any agreement
between such person or entity and the Loan Parties (including without
limitation, licensors, lessees or account debtors) in any of the collateral, the
terms of such agreements, and any claims or defenses of any such person or
entity against the Loan Parties arising under or outside such agreements;
(f) the provisions of the New Jersey Industrial Site Recovery Act (ISRA)
in the event there occurs a closing, terminating or transferring of ownership or
operations within the meaning thereof (which provisions may prevent foreclosure
of any lien on any collateral pending compliance with the requirements of ISRA);
(g) the qualification that any provision requiring the payment of
attorney's fees and costs of suit or payment of interest in connection with the
exercise of remedies may be unenforceable except to the extent that such fees
and costs are reasonable and are permitted by applicable Court Rules of the
State of New Jersey;
(h) the nonenforceability of provisions providing for "interest on
interest" (or compound interest), payment of late charges, post-default
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increased interest rates, liquidated damages and prepayment premiums, to the
extent they are deemed to be penalties or forfeitures or are otherwise violative
of public policy;
(i) the nonenforceability of provisions permitting the Agent or Lenders to
exercise rights under a power of attorney granted in connection with the
Amendment Documents after all amounts due thereunder have been paid and the
obligation to make further advances has terminated;
(j) the nonenforceability of provisions requiring amendments or waivers
of the provisions of agreements or documents to be written (other than as
provided pursuant to N.J.S.A. ss.25:1-5);
(k) the nonenforceability of any provision imposing increased interest
rates and/or late payment charges upon the occurrence of an event of default to
the extent they are deemed to be penalties or forfeitures or are otherwise
violative of public policy;
(l) the nonenforceability of any provision imposing an additional charge
in connection with any prepayment of principal where such prepayment arises out
of the occurrence of an event beyond the control of a Loan Party or the
condemnation or the complete or partial destruction of any collateral;
(m) the nonenforceability of provisions requiring a Loan Party to
indemnify the Agent or Lenders or their agents, officers, directors or any other
person or entity or of any provisions exculpating any person or entity from
liability for its actions or inaction to the extent such indemnification or
exculpation is deemed inequitable, unconscionable or contrary to public policy;
(n) the nonenforceability, under certain circumstances, of provisions to
the effect that failure to exercise or delay in exercising rights or remedies
will not operate as a waiver of the rights or remedies;
(o) the nonenforceability of provisions purporting to entitle the Agent or
any Lender to the appointment of a receiver to the extent that such provisions
contravene public policy; and
(p) the nonenforceability of provisions providing for the cumulation of,
or selection among, remedies, to the extent that the cumulation or selection
would put the aggrieved party in a better position than it would have been in
had there been full performance by the other party.
The opinions hereinafter set forth are subject to the further qualification
that no opinion is expressed as to:
(1) any lien or security interest that purports to secure any
future obligations or liabilities of a Loan Party to the
Agent or any Lender that are determined not to constitute
"future advances" within the meaning of Section 9-204(c) of
Chapter 9 of the Uniform Commercial Code, as enacted in New
Jersey (the "UCC"), are determined not to have been within
the contemplation of the Loan Parties and the Agent or any
Lender at the time the Amendment Documents were executed, or
are determined not to be of the same character or class as
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the obligations and liabilities to the Agent or any Lender
created or arising under the Amendment Documents;
(2) the adequacy of the description of any collateral in any Loan
Document or Amendment Document;
(3) whether the description of any real property covered by any
Amendment Document or financing statement (including without
limitation the identity of the record owner thereon) is
accurate, correct or complete and whether any such
description, in fact, describes the property intended to by
covered thereby;
(4) the Loan Parties' rights in and title to any collateral;
(5) the priority of any lien or security interest;
(6) any lien or security interest to the extent that the grant,
creation or perfection thereof is governed exclusively by any
law other than the UCC;
(7) any law other than the UCC, to the extent that such other law
is applicable to the grant, creation or perfection of any
security interest in personal property;
(8) any guaranty or other Loan Document (other than the Amendment
Documents);
(9) provisions which purport to constitute or provide for the
waiver or release of the rights of a Loan Party, including,
without limitation, the waiver or release of (i) the benefit
of a statute of limitation or moratorium laws, (ii) the
benefits of any exemption from civil process or extension of
time for payment, (iii) the right to trial by jury, (iv)
rights to notice, (v) rights to assert claims for punitive
damages, (vi) appraisal or valuation rights, and (vii) rights
to marshalling of assets;
(10) whether any fees, sums or other benefits, direct or indirect,
which could constitute interest, including any capital
adequacy or compensating balance or return requirements or
fees in lieu thereof, payable to or receivable by the Lenders
may be includable as interest; and
(11) the perfection of any security interest in as-extracted
collateral, timber to be cut, goods that are or are to become
fixtures, possessory security interests, agricultural liens,
goods covered by a certificate of title, deposit accounts,
investment property or letter-of-credit rights.
We call your attention to the fact that the perfection of the security interests
in the collateral with respect to which we have opined herein will be terminated
(1) as to any collateral acquired by the grantor of such security interest more
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than four months after such grantor so changes its name, identity or structure
as to make the financing statements seriously misleading, unless new appropriate
financing statements indicating, among other things, the new name, identity or
structure of such grantors are duly filed and indexed before the expiration of
such four month period, (2) one year after a transfer of the collateral to a
person who thereby becomes a debtor and is located in another jurisdiction
unless new and appropriate financing statements are duly filed in the new
jurisdiction prior to the expiration of such one year period, (3) as to any
collateral consisting of "accounts" (as defined in the UCC), four months after
the grantor changes its state of organization to a new jurisdiction unless such
security interests are perfected in such new jurisdiction before such
termination, and (4) as to any collateral consisting of "instruments" (as
defined under the UCC), twenty days after the security interest therein
attaches, unless the secured party takes possession of such instruments or files
a financing statement with respect to such instruments.
The opinions set forth herein are subject to the following further
qualifications:
(1) in the case of the collateral consisting of proceeds, continuation or
perfection of the security interest therein is limited to the extent
set forth in Section 9-315 of the UCC;
(2) in the case of the collateral consisting of accessions, the ability of
a secured party to remove its collateral from the whole is limited to
the extent set forth in Section 9-335 of the UCC;
(3) the UCC requires the filing of continuation statements within the
period of six months prior to the expiration of five years from the
date of the original filing or the filing of any continuation
statement, in order to maintain the effectiveness of the filings
referred to herein;
(4) buyers in the ordinary course and other buyers may take certain
collateral free of a secured party's security interest pursuant to
Section 9-320 of the UCC;
(5) security interests in after acquired property are subject to the
limitations set forth in Section 9-204 of the UCC;
(6) the amount of a deficiency that a secured party may collect may be
limited (a) if it fails to conduct a sale of collateral in a
commercially reasonable manner as required by Sections 9-610 and
9-626a(3), or (b) even if the sale is procedurally regular, if,
pursuant to Section 9-626(5) of the UCC, the debtor establishes that
the amount of proceeds of the disposition is significantly below the
range of proceeds that a complying disposition to a person other than
the secured party, a person related to the secured party or a
secondary obligor would have brought, and the sale is to a person that
the UCC defines as a secondary obligor, or to the secured party or a
person related to the secured party; and
(7) if the notice requirements with respect to subordinate interest
holders set forth in Section 9-621 of the UCC are not complied with
in a strict foreclosure of the collateral, the secured party may be
liable in damages to the other interest holders.
We have investigated such questions of law for the purpose of rendering
this opinion as we have deemed necessary. The members of this firm are
engaged in the practice of law in the State of New Jersey. We are opining
herein only as to applicable provisions of New Jersey law and, subject to
the exceptions set forth below, United States federal law. We express no
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opinion as to any other laws, statutes, ordinances, rules or regulations
(such as those identified in Section 19 of the Legal Opinion Accord of the
ABA Section of Business Law (1991) (the "Accord"), except to the extent
that we have expressly opined as to matters addressed in Section 19(h) of
the Accord. To the extent that the Loan Documents are governed by the laws
of the State of New York and to the extent that the legal matters
addressed by our opinions expressed herein related to the laws of a
jurisdiction other than New Jersey, we have assumed, with your permission,
that the laws of such other jurisdiction are identical to the laws of the
State of New Jersey, provided however, that, under the UCC, perfection and
the effect of perfection or nonperfection of the security interests in the
collateral of Reading and Malverne is governed by the local law of the
Commonwealth of Pennsylvania and the State of New York, respectively,
except with respect to fixtures, as-extracted collateral, timber to be
cut, possessory security interests, agricultural liens, goods covered by a
certificate of title, deposit accounts, investment property and
letter-of-credit rights. Accordingly, the opinions rendered herein as to
the perfection of those security interests with respect to which
perfection is governed by Pennsylvania and New York law, are rendered as
if the UCC selected New Jersey local law as the law governing such
perfection, except solely as to the requirement that (i) the Reading
financing statements be filed with the Secretary of Commonwealth of
Pennsylvania as to which our opinion is limited to 13 PA.CONS. STAT.
SS.9501 and (ii) the Malverne financing statements be filed with the
Secretary of State of New York as to which our opinion is limited to N.Y.
U.C.C. LAW SS. 9-501.
In rendering the opinions expressed in paragraph 1, below, as to the
existence and good standing of the Loan Parties, we have relied solely on the
Certificates of Incorporation, the Certificates of Existence, the Secretary's
Certificates and the Factual Certificate.
In rendering the opinions expressed in paragraph 2, below, as to due
authorization we have relied on the Secretary's Certificates.
In rendering the opinions expressed in paragraph 3, below, we have relied
upon the Secretary's Certificates, the Factual Certificate, the
Certificates of Incorporation and the Bylaws.
In rendering the opinions expressed in paragraph 4, below, as to pending
or threatened actions, suits or proceedings, if any Loan Party is not
represented by this law firm in a particular matter or if a Loan Party is
represented by another law firm or other legal counsel in a particular
matter, although we may have knowledge of such matter, we render no
opinion as to such matters and have made no comments or reference in this
opinion or on the litigation schedule attached hereto with respect
thereto. We recommend that you communicate with the Loan Parties with
respect to any such matters.
In rendering the opinions expressed in paragraph 5, below, we have relied
on the Factual Certificate.
Furthermore, to the extent that the opinions rendered herein encompass
laws relating to usury, we opine only as to New Jersey State law without
regard to those provisions which refer to federal law and we have assumed,
with your permission, that the interest rate charged to the Borrower will
not exceed fifty percent (50%).
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On the basis of and subject to the foregoing, and in reliance thereon, and
subject to the further assumptions, limitations, qualifications and
exceptions set forth below, we are of the opinion that:
1. Each Loan Party is validly existing and in good standing as a
corporation under the laws of its jurisdiction of formation. Each Loan
Party has the requisite corporate power to enter into and perform its
obligations under the Amendment Documents to which it is a party.
2. The execution, delivery and performance by each Loan Party of each
Amendment Document to which it is a party has been duly authorized by all
requisite corporate action. Each Amendment Document has been duly executed
and delivered and is valid, binding and enforceable against each Loan
Party which is a party thereto in accordance with its terms.
3. Neither the execution and delivery of the Amendment Documents by the
Loan Parties, nor the Loan Parties' compliance with any of the provisions
thereof, will violate any New Jersey state or federal law or regulation
applicable to the Loan Parties or violate any provisions of the
Certificates of Incorporation or Bylaws. To our knowledge, no Loan Party
is a party to any order or decree of any court or governmental agency.
4. Except as identified on Schedule B attached hereto and as otherwise
disclosed in the Third Amendment and the attachments thereto, to our
knowledge, there are no actions, suits or proceedings pending or
threatened against any Loan Party before any court, arbitrator or
governmental or administrative body or agency.
5. No action (with regard to the Loan Parties) of, or filing by the Loan
Parties with, any New Jersey or federal governmental or public body or
authority is required to authorize, or is otherwise required in connection
with, each Loan Party's execution, delivery and performance of the
Amendment Documents to which it is a party, other than the filing of a
Current Report on Form 8-K with the Securities and Exchange Commission and
the recording and proper indexing of the Mortgage Documents in the
mortgage records of the counties in which the real estate subject to such
Mortgage Documents is located.
6. Each of the Mortgage Documents, when executed and acknowledged will be
in proper form for recording in the office of the clerk of the county in
which such real estate is located.
7. Each Mortgage Document is valid, binding and enforceable against the
Loan Party which is a party thereto and each Mortgage Document will not
render the mortgages which they amend unenforceable or preclude (i) the
judicial enforcement of the obligation of the Loan Parties to repay the
principal, together with interest thereon (to the extent not deemed a
penalty) as provided in the Notes, (ii) the acceleration of the obligation
of the Loan Parties to repay such principal, together with such interest,
upon a material default by the Loan Parties in the payment thereof, and
(iii) the judicial foreclosure in accordance with applicable state law of
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the lien on the real estate created by such mortgage upon maturity or upon
such acceleration.
8. Upon the due recording and proper indexing of the Mortgage Documents,
such recording and indexing will be sufficient to provide constructive
notice to third parties of the terms thereof. No state or local mortgage
tax, stamp tax or other similar fee is required to be paid in connection
with the execution, delivery or recording of New Jersey other than
customary per document filing and recording fees.
9. The Financing Statements are in the proper form for filing in the
filing offices indicated on Schedule C hereto. Upon the due filing and
indexing of the Financing Statements, the security interests in such
collateral in favor of the Lenders will be perfected to the extent that
such security interest therein is governed by the UCC and may be perfected
by the filing of a financing statement pursuant to the UCC.
All assumptions have been made without independent investigation and sole
or exclusive reliance on certificates or documents identified herein have
been without independent investigation. We have no actual knowledge that
assumptions as to matters of fact are untrue.
This opinion is provided to you as a legal opinion only and not as a
guaranty or warranty of the matters discussed herein. This opinion is for
your reliance only in connection with the Third Amendment and is not
intended for reliance of, and shall not be relied upon by, any other
person or entity without our express written consent, other than assignees
of or participants under the Loan Documents in connection with such
assignment or participation. This opinion is not to be quoted in whole or
in part or referred to, nor is it to be filed with or disclosed to any
governmental agency without our prior written consent, except to the
extent required by laws or regulations. No opinion is to be implied or
inferred beyond the opinions expressly stated herein. We undertake no
obligation to inform you of any matters which may subsequently come to our
attention or subsequently occur which affect, in any way, the opinions
rendered herein.
Very truly yours,
GIORDANO, HALLERAN & CIESLA
A Professional Corporation
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SCHEDULE A
Description of Existing Mortgages
Existing Mortgages modified by the Leasehold Mortgage Modifications:
1. Aberdeen Term Loan - Leasehold Mortgage and Security Agreement dated as
of July 24, 1997, made by Foodarama Supermarkets, Inc., as Mortgagor, in favor
of Heller Financial, Inc., as Mortgagee, filed for record on August 20, 1997 in
the Office of the County Clerk, Monmouth County in Mortgage Book 6268, Page 669
as amended by that certain Modification of Leasehold Mortgage and Security
Agreement dated as of January 7, 2000 and filed for record on April 3, 2000 in
the Office of the County Clerk, Monmouth County in Mortgage Book 7062, Page 924.
2. Aberdeen Revolving Loan - Leasehold Mortgage and Security Agreement
dated as of July 24, 1997, made by Foodarama Supermarkets, Inc., as Mortgagor,
in favor of Heller Financial, Inc., as Mortgagee, filed for record on August 20,
1997 in the Office of the County Clerk, Monmouth County in Mortgage Book 6268,
Page 718 as amended by that certain Modification of Leasehold Mortgage and
Security Agreement dated as of January 7, 2000 and filed for record on April 3,
2000 in the Office of the County Clerk, Monmouth County in Mortgage Book 7062,
Page 949.
3. Brick Term Loan - Leasehold Mortgage and Security Agreement dated as of
February 15, 1995, made by Foodarama Supermarkets, Inc., as Mortgagor, in favor
of NatWest Bank N.A., as Mortgagee, filed for record on May 26, 1995 in the
Office of the County Clerk, Ocean County in Mortgage Book 4083, Page 190 as
amended by that certain Modification of Leasehold Mortgage and Security
Agreement dated as of May 14, 1997 and filed for record on May 23, 1997 in the
Office of the County Clerk, Ocean County in Mortgage Book 451, Page 46 as
further amended by that certain Second Modification of Leasehold Mortgage and
Security Agreement dated as of January 7, 2000 and filed for record on January
27, 2000 in the Office of the County Clerk, Ocean County in Mortgage Book 10021,
Page 877.
4. Brick Revolving Loan - Leasehold Mortgage and Security Agreement dated
as of February 15, 1995, made by Foodarama Supermarkets, Inc., as Mortgagor, in
favor of NatWest Bank N.A., filed for record on May 26, 1995 in the Office of
the County Clerk, Ocean County in Mortgage Book 4083, Page 234 as amended by
that certain Modification of Leasehold Mortgage and Security Agreement dated as
of May 14, 1997 and filed for record on May 23, 1997 in the Office of the County
Clerk, Ocean County in Mortgage Book 451, Page 55 as further amended by that
certain Second Modification of Leasehold Mortgage and Security Agreement dated
as of January 7, 2000 and filed for record on January 27, 2000 in the Office of
the County Clerk, Ocean County in Mortgage Book 10021, Page 887.
5. Edison (Oak Tree Road) Term Loan - Leasehold Mortgage and Security
Agreement dated as of February 15, 1995, made by Foodarama Supermarkets, Inc.,
as Mortgagor, in favor of NatWest Bank N.A., as Mortgagee, filed for record on
August 14, 1995 in the Office of the County Clerk, Middlesex County in Mortgage
Book 4938, Page 705 as amended by that certain Modification of Leasehold
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Mortgage and Security Agreement dated as of May 14, 1997 and filed for record on
May 22, 1997 in the Office of the County Clerk, Middlesex County in Mortgage
Book 74, Page 698 as further amended by that certain Second Modification of
Leasehold Mortgage and Security Agreement dated as of January 7, 2000 and filed
for record on January 13, 2000 in the Office of the County Clerk, Middlesex
County in Mortgage Book 89, Page 508.
6. Edison (Oak Tree Road) Revolving Loan - Leasehold Mortgage and Security
Agreement dated as of February 15, 1995, made by Foodarama Supermarkets, Inc.,
as Mortgagor, in favor of NatWest Bank N.A., as Mortgagee, filed for record on
August 14, 1995 in the Office of the County Clerk, Middlesex County in Mortgage
Book 4938, Page 754 as amended by that certain Modification of Leasehold
Mortgage and Security Agreement dated as of May 14, 1997 and filed for record on
May 22, 1997 in the Office of the County Clerk, Middlesex County in Mortgage
Book 74, Page 707 as further amended by that certain Second Modification of
Leasehold Mortgage and Security Agreement dated as of January 7, 2000 and filed
for record on January 13, 2000 in the Office of the County Clerk, Middlesex
County in Mortgage Book 89, Page 518.
7. Edison (Route 1 and Old Post Road) Term Loan - Leasehold Mortgage and
Security Agreement dated as of February 15, 1995, made by Foodarama
Supermarkets, Inc., as Mortgagor, in favor of NatWest Bank N.A., as Mortgagee,
filed for record on March 6, 1995 in the Office of the County Clerk, Middlesex
County in Mortgage Book 4869, Page 379 as amended by that certain Modification
of Leasehold Mortgage and Security Agreement dated as of January 7, 2000 and
filed for record on January 13, 2000 in the Office of the County Clerk,
Middlesex County in Mortgage Book 89, Page 488.
8. Edison (Route 1 and Old Post Road) Revolving Loan - Leasehold Mortgage
and Security Agreement dated as of February 15, 1995, made by Foodarama
Supermarkets, Inc., as Mortgagor, in favor of NatWest Bank N.A., as Mortgagee,
filed for record on March 6, 1995 in the Office of the County Clerk, Middlesex
County in Mortgage Book 4869, Page 421 as amended by that certain Modification
of Leasehold Mortgage and Security Agreement dated as of January 7, 2000 and
filed for record on January 13, 2000 in the Office of the County Clerk,
Middlesex County in Mortgage Book 89, Page 498.
9. Freehold (Liquor Store) Term Loan - Leasehold Mortgage and Security
Agreement dated as of February 15, 1995, made by New Linden Price Rite, Inc., as
Mortgagor, in favor of NatWest Bank N.A. as Mortgagee, filed for record on March
6, 1995 in the office of the County Clerk, Monmouth County in Mortgage Book
5761, Page 231 as amended by that certain Modification of Leasehold Mortgage and
Security Agreement dated as of May 14, 1997 and filed for record on June 20,
1997 in the Office of the County Clerk, Monmouth County in Mortgage Book 6222,
Page 93 as further amended by that certain Second Modification of Leasehold
Mortgage and Security Agreement dated as of January 7, 2000 and filed for record
on January 28, 2000 in the Office of the County Clerk, Monmouth County in
Mortgage Book 7010, Page 560.
130
10. Freehold (Liquor Store) Revolving Loan - Leasehold Mortgage and
Security Agreement dated as of February 15, 1995, made by New Linden Price Rite,
Inc., as Mortgagor, in favor of NatWest Bank N.A., as Mortgagee, filed for
record on March 6, 1995 in the office of the County Clerk, Monmouth County in
Mortgage Book 5761, Page 273 as amended by that certain Modification of
Leasehold Mortgage and Security Agreement dated as of May 14, 1997 and filed for
record on June 20, 1997 in the Office of the County Clerk, Monmouth County in
Mortgage Book 6222, Page 101 as further amended by that certain Second
Modification of Leasehold Mortgage and Security Agreement dated as of January 7,
2000 and filed for record on January 28, 2000 in the Office of the County Clerk,
Monmouth County in Mortgage Book 7010, Page 570.
11. Freehold (3559) (supermarket) Term Loan - Leasehold Mortgage and
Security Agreement dated as of February 15, 1995, made by New Linden Price Rite,
Inc., as Mortgagor, in favor of NatWest Bank N.A., as Mortgagee, filed for
record on March 6, 1995 in the Office of the County Clerk, Monmouth County in
Mortgage Book 5761, Page 139 as amended by that certain Modification of
Leasehold Mortgage and Security Agreement dated as of May 14, 1997 and filed for
record on June 20, 1997 in the Office of the County Clerk, Monmouth County in
Mortgage Book 6222, Page 70 as further amended by that certain Second
Modification of Leasehold Mortgage and Security Agreement dated as of January 7,
2000 and filed for record on January 28, 2000 in the Office of the County Clerk,
Monmouth County in Mortgage Book 7010, Page 602.
12. Freehold (3559) (supermarket) Revolving Loan - Leasehold Mortgage and
Security Agreement dated as of February 15, 1995, made by New Linden Price Rite,
Inc., as Mortgagor, in favor of NatWest Bank N.A., as Mortgagee, filed for
record on March 6, 1995 in the Office of the County Clerk, Monmouth County in
Mortgage Book 5761, Page 181 as amended by that certain Modification of
Leasehold Mortgage and Security Agreement dated as of May 14, 1997 and filed for
record on June 20, 1997 in the Office of the County Clerk, Monmouth County in
Mortgage Book 6222, Page 85 as further amended by that certain Second
Modification of Leasehold Mortgage and Security Agreement dated as of January 7,
2000 and filed for record on January 28, 2000 in the Office of the County Clerk,
Monmouth County in Mortgage Book 7010, Page 613.
13. Montgomery Term Loan - Leasehold Mortgage and Security Agreement dated
as of July 24, 1997, made by Foodarama Supermarkets, Inc., as Mortgagor, in
favor of Heller Financial, Inc., as Mortgagee, filed for record on August 20,
1997 in the Office of the County Clerk, Somerset County in Mortgage Book 2806,
Page 240 as amended by that certain Modification of Leasehold Mortgage and
Security Agreement dated as of January 7, 2000 and filed for record on January
19, 2000 in the Office of the County Clerk, Somerset County in Mortgage Book
3235, Page 901.
14. Montgomery Revolving Loan - Leasehold Mortgage and Security Agreement
dated as of July 24, 1997, made by Foodarama Supermarkets, Inc., as Mortgagor,
in favor of Natwest Bank N.A., as Mortgagee, filed for record on August 20, 1997
in the Office of the County Clerk, Somerset County in Mortgage Book 2806, Page
131
200 as amended by that certain Modification of Leasehold Mortgage and Security
Agreement dated as of January 7, 2000 and filed for record on January 19, 2000
in the Office of the County Clerk, Somerset County in Mortgage Book 3236, Page
001.
15. Neptune Term Loan - Leasehold Mortgage and Security Agreement dated as
of February 15, 1995, made by Foodarama Supermarkets, Inc., as Mortgagor, in
favor of NatWest Bank N.A., as Mortgagee, filed for record on March 6, 1995 in
the Office of the County Clerk, Monmouth County in Mortgage Book 5761, Page 418
as amended by that certain Modification of Leasehold Mortgage and Security
Agreement dated as of May 14, 1997 and filed for record on May 22, 1997 in the
Office of the County Clerk, Monmouth County in Mortgage Book 6200, Page 691 as
further amended by that certain Second Modification of Leasehold Mortgage and
Security Agreement dated as of January 7, 2000 and filed for record on January
28, 2000 in the Office of the County Clerk, Monmouth County in Mortgage Book
7010, Page 627.
16. Neptune Revolving Loan - Leasehold Mortgage and Security Agreement
dated as of February 15, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of Natwest Bank N.A., as Mortgagee, filed for record on
March 6, 1995 in the Office of the County Clerk, Monmouth County in Mortgage
Book 5761, Page 461 as amended by that certain Modification of Leasehold
Mortgage and Security Agreement dated as of May 14, 1997 and filed for record on
May 22, 1997 in the Office of the County Clerk, Monmouth County in Mortgage Book
6200, Page 700 as further amended by that certain Second Modification of
Leasehold Mortgage and Security Agreement dated as of January 7, 2000 and filed
for record on January 28, 2000 in the Office of the County Clerk, Monmouth
County in Mortgage Book 7010, Page 635.
17. Sayreville Term Loan - Leasehold Mortgage and Security Agreement dated
as of February 15, 1995, made by Foodarama Supermarkets, Inc., as Mortgagor, in
favor of Natwest Bank N.A., as Mortgagee, filed for record on March 6, 1995 in
the Office of the County Clerk, Middlesex County in Mortgage Book 4869, Page 292
as amended by that certain Modification of Leasehold Mortgage and Security
Agreement dated as of January 7, 2000 and filed for record on January 13, 2000
in the Office of the County Clerk, Middlesex County in Mortgage Book 89, Page
468.
18. Sayreville Revolving Loan - Leasehold Mortgage and Security Agreement
dated as of February 15, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of Natwest Bank N.A., as Mortgagee, filed for record on
March 6, 1995 in the Office of the County Clerk, Middlesex County in Mortgage
Book 4869, Page 335 as amended by that certain Modification of Leasehold
Mortgage and Security Agreement dated as of January 7, 2000 and filed for record
on January 13, 2000 in the Office of the County Clerk, Middlesex County in
Mortgage Book 89, Page 478.
19. West Long Branch Term Loan - Leasehold Mortgage and Security Agreement
dated as of February 15, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of Natwest Bank N.A., as Mortgagee, filed for record on
March 6, 1995 in the Office of the County Clerk, Monmouth County in Mortgage
Book 5761, Page 323 as amended by that certain Modification of Leasehold
Mortgage and Security Agreement dated as of January 7, 2000 and filed for record
132
on January 28, 2000 in the Office of the County Clerk, Monmouth County in
Mortgage Book 7010, Page 367.
20. West Long Branch Revolving Loan - Leasehold Mortgage and Security
Agreement dated as of February 15, 1995, made by Foodarama Supermarkets, Inc.,
as Mortgagor, in favor of Natwest Bank N.A., as Mortgagee, filed for record on
March 6, 1995 in the Office of the County Clerk, Monmouth County in Mortgage
Book 5761, Page 367 as amended by that certain Modification of Leasehold
Mortgage and Security Agreement dated as of January 7, 2000 and filed for record
on January 28, 2000 in the Office of the County Clerk, Monmouth County in
Mortgage Book 7010, Page 395.
21. Branchburg Term and Capital Expenditure Loan - Leasehold Mortgage and
Security Agreement dated as of January 7, 2000, made by Foodarama Supermarkets,
Inc., as Mortgagor, in favor of GMACBC, as Mortgagee, filed for record on
January 19, 2000 in the Office of the County Clerk, Somerset County in Mortgage
Book 3236, Page 009.
22. Branchburg Revolving Loan - Leasehold Mortgage and Security Agreement
dated as of January 7, 2000, made by Foodarama Supermarkets, Inc., as Mortgagor,
in favor of GMACBC, as Mortgagee, filed for record on January 19, 2000 in the
Office of the County Clerk, Somerset County in Mortgage Book 3236, Page 043.
23. Lakewood Term and Capital Expenditure Loan - Leasehold Mortgage and
Security Agreement dated as of January 7, 2000, made by Foodarama Supermarkets,
Inc., as Mortgagor, in favor of GMACBC, as Mortgagee, filed for record on
January 27, 2000 in the Office of the County Clerk, Ocean County in Mortgage
Book 10021, Page 897.
24. Lakewood Revolving Loan - Leasehold Mortgage and Security Agreement
dated as of January 7, 2000, made by Foodarama Supermarkets, Inc., as Mortgagor,
in favor of GMACBC, as Mortgagee, filed for record on January 27, 2000 in the
Office of the County Clerk, Ocean County in Mortgage Book 10021, Page 932.
25. Middletown Term Loan (new location) - Leasehold Mortgage and Security
Agreement dated as of May 28, 2002, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of GMAC Business Credit, LLC , as Mortgagee, filed for
record on July 26, 2002 in the Office of the County Clerk, Monmouth County in
Mortgage Book 8128, Page 7354.
26. Middletown Revolving Loan (new location) - Leasehold Mortgage and
Security Agreement dated as of May 28, 2002, made by Foodarama Supermarkets,
Inc., as Mortgagor, in favor of GMAC Business Credit, LLC, as Mortgagee, filed
for record on July 26, 2002 in the Office of the County Clerk, Monmouth County
in Mortgage Book 8128, Page 7396.
27. Piscataway Term and Capital Expenditure Loan - Leasehold Mortgage and
Security Agreement dated as of January 7, 2000, made by Foodarama Supermarkets,
133
Inc., as Mortgagor, in favor of GMACBC, as Mortgagee, filed for record on
January 13, 2000 in the Office of the County Clerk, Middlesex County in Mortgage
Book 6155, Page 152.
28. Piscataway Revolving Loan - Leasehold Mortgage and Security Agreement
dated as of January 7, 2000, made by Foodarama Supermarkets, Inc., as Mortgagor,
in favor of GMACBC, as Mortgagee, filed for record on January 13, 2000 in the
Office of the County Clerk, Middlesex County in Mortgage Book 6155, Page 186.
29. Wall Term and Capital Expenditure Loan - Leasehold Mortgage and
Security Agreement dated as of January 7, 2000, made by Foodarama Supermarkets,
Inc., as Mortgagor, in favor of GMACBC, as Mortgagee, filed for record on March
14, 2000 in the Office of the County Clerk, Monmouth County in Mortgage Book
7049, Page 191.
30. Wall Revolving Loan - Leasehold Mortgage and Security Agreement dated
as of January 7, 2000, made by Foodarama Supermarkets, Inc., as Mortgagor, in
favor of GMACBC, as Mortgagee, filed for record on March 14, 2000 in the Office
of the County Clerk, Monmouth County in Mortgage Book 7049, page 238.
Existing Fee Mortgage Modified by the Fee Mortgage Modification:
----------------------------------------------------------------
31. Linden Revolving, Term and Capital Expenditure Loan - Mortgage and
Security Agreement dated as of November 14, 1997, made by Foodarama
Supermarkets, Inc., as Mortgagor, in favor of Heller Financial, Inc., as
Mortgagee, filed for record on November 17, 1997 in the Office of the County
Clerk, Union County in Mortgage Book 6459, Page 281 as amended by that certain
Mortgage Modification and Security Agreement dated as of January 7, 2000 and
filed for record on January 10, 2000 in the Office of the County Clerk, Union
County in Mortgage Book 7537, Page 308.
134
SCHEDULE B
Litigation
1. Foodarama adv. Hilltop Supermarkets, Inc. and Franklin Center Associates.
------------------------------------------------------------------------
Docket No. MID-L-3156-01.
2. Foodarama v. Unclaimed Freight, Inc. Docket No. MON-L-986-02
------------------------------------
3. Carmen J. Maggio, Chapter 7 Trustee Of Carmine Forgione & Sons, Inc. v.
------------------------------------------------------------------------
Foodarama Supermarkets, Inc. Docket No. MON-L-5006-01.
----------------------------
4. Melvin Jules Bukiet, et al, v. Foodarama Supermarkets, Inc. et al. Docket
---------------------------------------------------------------
No. MID-C-101-02
135
Schedule C
Filing Jurisdictions
--------------------------------------------------------------------------------
Debtor Secured Party Filing Office Description of
Financing
Statement(s)
--------------------------------------------------------------------------------
Foodarama GMAC Business State of New 1. "In Lieu"
Supermarkets, Inc. Credit, LLC Jersey, Financing
("Foodarama") ("GMACBC") Department of Statement
Treasury pursuant toss.
("NJDOS") 9-706 of the UCC.
2. Amendments to
Financing
Statement filing
numbers 1619580,
1803481 and
1951596 regarding
restated
collateral
description.
--------------------------------------------------------------------------------
New Linden Price GMACBC NJDOS Amendments to
Rite, Inc. ("New Financing
Linden") Statement filing
numbers 1619579
and 1951593.
--------------------------------------------------------------------------------
136
--------------------------------------------------------------------------------
Debtor Secured Party Filing Office Description of
Financing
Statement(s)
--------------------------------------------------------------------------------
Shop-Rite of GMACBC New York 1. "In Lieu"
Malverne, Inc. Secretary of Financing
State ("NYSOS") Statement
pursuant to ss.
9-706 of the UCC.
2. Amendment to
Financing Statement
filing number
036239 regarding
change of name (to
be filed after item
3, below).
3. Amendment to
Financing
Statement filing
number 036239
regarding
restated
collateral
description.
4. Amendment to
"In-Lieu" Financing
Statement pursuant
to ss. 9-706 of the
UCC. (We assume
that the reference
to the financing
statement to be
inserted will be
accurate.)
--------------------------------------------------------------------------------
Shop Rite of Reading, GMACBC Pennsylvania 1. "In Lieu"
Inc. Secretary of the Financing
Commonwealth Statement
("PASOC") pursuant toss.
9-706 of the UCC.
2. Amendment to
Financing
Statement filing
number 24020265
regarding
restated
collateral
description.
--------------------------------------------------------------------------------
137
CERTIFICATE AS TO CERTAIN FACTUAL MATTERS OF OFFICER OF
FOODARAMA SUPERMARKETS, INC., NEW LINDEN PRICE RITE, INC.,
SHOP RITE OF READING, INC. AND SHOP RITE OF MALVERNE INC.
The undersigned hereby certifies that he is a duly elected and qualified
officer of Foodarama Supermarkets, Inc. ("Foodarama"), New Linden Price Rite,
Inc. ("New Linden"), Shop Rite of Reading, Inc. ("Reading") and Shop Rite of
Malverne, Inc. ("Malverne"), that he has personal knowledge of the facts herein
contained and does further certify, individually and on behalf of Foodarama, New
Linden, Reading and Malverne (individually, "Loan Party" or collectively, the
"Loan Parties") and for purposes of the opinion (the "Opinion") to be rendered
by Giordano, Halleran & Ciesla, P.C. ("GH&C") in connection with the Third
Amended and Restated Revolving Credit and Term Loan Agreement dated as of
September 26, 2002 (the "Third Amendment") by and among Foodarama and New Linden
, as borrowers, Malverne and Reading, as guarantors, certain lenders a party
thereto and GMAC Business Credit, LLC ("GMACBC"), as a lender and as agent, in
an aggregate principal amount of $80,000,000, (with all capitalized terms not
defined herein having the respective meanings ascribed to them in the Third
Amendment) and all other agreements and transactions to be entered into or
consummated pursuant to or in connection with the Third Amendment (collectively
the "Amended Loan Documents"); that:
1. All of the representations and warranties contained in the Amended Loan
Documents and all of the certificates, agreements and instruments delivered to
GMACBC pursuant thereto are true, complete and correct, in all material
respects, as of the dates required pursuant to the Amended Loan Documents. None
of the representations, warranties or statements contained in the Amended Loan
Documents, including the schedules and exhibits annexed thereto or delivered to
GMACBC pursuant to any of the Amended Loan Documents, is false or misleading or
omits to state any material fact necessary in order to make such
representations, warranties or statements not misleading.
2. Complete records and complete and accurate photocopies of the minutes
of all meetings and resolutions and consents of the Board of Directors of
each Loan Party have been provided to GH&C in connection with the
execution of the Amended Loan Documents. The minutes of such meeting and
such resolutions and consents represent accurate descriptions of the
business actually transacted at such meetings or pursuant to such
consents, and the resolutions adopted at such meetings or by consent
remain in full force and effect and have not been modified or rescinded.
3. The undersigned has no knowledge of any factual circumstance which is
at variance from the certificates of existence or subsisting certificates
of the Loan Parties referenced in the Opinion. Each Loan Party has fully
and timely paid all state and federal franchise and other taxes due to any
governmental agency and has not taken any action in furtherance of its
dissolution or the termination of its existence.
4. Except as identified on the litigation schedule attached to the
Opinion, there are no actions, suits or proceedings pending or threatened
against any Loan Party before any court, arbitrator or governmental or
138
administrative body or agency with respect to which any Loan Party is
represented by GH&C. No Loan Party is a party to any order or decree of
any court or governmental agency.
5. No action (with regard to the Loan Parties) of, or filing by the Loan
Parties with any New Jersey or federal governmental or public body or
entity is required to authorize, or otherwise required in connection with,
each Loan Party's execution, delivery and performance of the Amended Loan
Documents to which it is a party, other than the filing of a Current
Report on Form 8-K with the Securities and Exchange Commission.
6. The Loan Parties collectively operate 22 supermarkets in New Jersey.
Foodarama is a member of the Wakefern Food Corporation ("Wakefern")
cooperative and licenses the name "ShopRite" from Wakefern. In addition,
the Loan Parties operate two liquor stores and two garden centers in New
Jersey. The Loan Parties also operate meat and bakery commissaries in New
Jersey. The Loan Parties' stores offer shoppers a wide assortment of food
and non-food items. Parking is immediately adjacent to all stores. Chief
products sold include groceries, meat, poultry, produce, dairy products,
fresh fruits and vegetables, bakery products, frozen foods, delicatessen,
prepared foods, and appetizer goods. Non-foods include health and beauty
aids, pharmacy and housewares. Stores stock nationally advertised brands
as well as products sold under the ShopRite label.
7. The undersigned acknowledges that Giordano, Halleran & Ciesla, a
professional corporation, is relying on this Certificate in rendering its
opinion to GMACBC.
139
IN WITNESS WHEREOF, I have hereunto set my hand to this Certificate as to
Certain Factual Matters as of September 26, 2002.
-----------------------------------------
Michael Shapiro, Chief Financial Officer and
Senior Vice President of Foodarama Supermarkets,
Inc., Shop Rite of Reading, Inc., New Linden
Price Rite Inc., and Shop Rite of Malverne, Inc.
140
EXHIBIT D
FORM OF PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of ___, __ 2002 between FOODARAMA
SUPERMARKETS, INC., a New Jersey corporation (the "Parent"), New Linden Price
Rite, Inc., a New Jersey corporation ("New Linden"), Shop Rite of Reading, Inc.,
a Pennsylvania corporation ("Reading") and Shop Rite of Malverne, Inc., a New
York corporation ("Malverne," and together with Parent, New Linden and Reading,
each a "grantor" and (the "Agent") the Grantors"), and GMAC BUSINESS CREDIT,
LLC, as agent "Agent") for itself and each of the lenders (the "Lenders") named
in Schedule 2.01 of the Revolving Credit And Term Loan Agreement dated as of
___, __, 2002, among New Linden, Reading (individually, each a "Borrower" and
collectively, the "Borrowers"), Parent, the Guarantors, the Lenders and the
Agent (as amended, restated, modified or supplemented from time to time in
accordance with its terms, the "Credit Agreement").
A. The Lenders have agreed to extend Loans to, and open or cause to
be opened Letters of Credit for the account of, the Borrowers pursuant to, and
subject to the terms and conditions of, the Credit Agreement. The obligation of
the Lenders to extend such financial accommodations under the Credit Agreement
is conditioned on, inter alia, the execution and delivery by the Grantors of a
pledge agreement in the form hereof to secure the due and punctual payment and
performance of all Obligations (including, without limitation, principal of and
interest on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, and the due and punctual
payment and performance of all obligations of the Grantors under this Pledge
Agreement and of the Grantors under the Letters of Credit, the Credit Agreement
and any of the other Loan Documents).
B. Capitalized terms used herein and not defined herein shall have
the respective meanings assigned to such terms in the Credit Agreement.
Accordingly, the Grantors hereby jointly and severally agree with the Agent as
follows:
1. Pledge. As security for the payment and performance in full of
the Obligations, the Grantors hereby transfer, grant, bargain, sell, convey,
hypothecate, pledge, set over and deliver unto the Agent, and grant to the
Agent, for the benefit of the Lenders, a security interest in, (a) the shares of
capital stock listed in Schedule I annexed hereto and any additional shares of
common stock of the issuers listed in Schedule I annexed hereto (collectively,
the "Issuers") obtained in the future by any of the Grantors (the "Pledged
Stock"), and (b) all other property which may be delivered to and held by the
Agent pursuant to the terms hereof, and (c) all proceeds of the Pledged Stock
and of such other property, including, without limitation, all cash, securities
or other property at any time and from time to time receivable or otherwise
distributed in respect of or in exchange for any of or all such stock or other
property (the items referred to in clauses (a) through (c) being collectively
called the "Collateral"). Upon delivery to the Agent, any securities now or
141
hereafter included in the Collateral (the "Pledged Securities") shall be
accompanied by undated stock powers duly executed in blank or other instruments
of transfer satisfactory to the Agent and by such other instruments and
documents as the Agent may reasonably request. Each delivery of Pledged
Securities shall be accompanied by a schedule showing a description of the
securities theretofore and then being pledged hereunder, which schedule shall be
attached hereto as Schedule I and made a part hereof. Each schedule so delivered
shall supersede any prior schedules so delivered.
2. Delivery of Collateral. The Grantors agree promptly to deliver
----------------------
or cause to be delivered to the Agent any and all Pledged Securities, and any
and all certificates or other instruments or documents representing any of the
Collateral.
3. Representations, Warranties and Covenants.
-----------------------------------------
Each Grantor hereby represents, warrants and covenants to and
with the Agent that:
(a) except for the security interest granted to the Agent, such
Grantor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities that it is pledging
hereunder, (ii) holds the Collateral that it is pledging hereunder free and
clear of all liens, charges, encumbrances and security interests of every kind
and nature, (iii) will make no assignment, pledge, hypothecation or transfer of,
or create any security interest in, the Collateral that it is pledging
hereunder, and (iv) subject to Section 5 below, will cause any and all
Collateral, whether for value paid by the Grantor or otherwise, to be forthwith
deposited with the Agent and pledged or assigned hereunder;
(b) such Grantor (i) has good right and legal authority to pledge
the Collateral it is pledging hereunder in the manner hereby done or
contemplated and (ii) will. defend its title or interest thereto or therein
against any and all attachments, liens, claims, encumbrances, security interests
or other impediments of any nature, however arising, of all persons whomsoever;
(c) no consent or approval of any governmental body o regulatory
authority or any securities exchange is necessary to the validity of the pledge
effected hereby;
(d) by virtue of the execution and delivery by the Grantors of this
Agreement, when the certificates, instruments o other documents representing or
evidencing the Collateral are delivered to the Agent in accordance with this
Agreement, the Agent will obtain a valid and perfected first lien upon and
security interest in such Collateral as security for the repayment of the
Obligations, prior to all other liens and encumbrances thereon and security
interests therein;
(e) the pledge effected hereby is effective to vest in the Agent
the rights of the Agent in the Collateral as set forth herein; and
(f) at the date hereof, the Pledged Stock constitutes all of the
issued and outstanding shares of capital stock of the entities listed on
Schedule I. All representations, warranties and covenants of the Grantors
contained in this Agreement shall survive the execution, delivery and
142
performance of this Agreement until the termination of this Agreement pursuant
to Section 14 hereof.
4. Registration in Nominee Name; Denominations. Upon the occurrence
and during the continuance of an Event of Default, the Agent shall have the
right (in its sole and absolute discretion) to transfer to or to register the
Pledged Securities in its own name or the name of its nominee. In addition, the
Agent shall at all times have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or larger
denominations for any purpose consistent with this Agreement.
5. Voting Rights- Dividends; etc. (a) Unless and until an Event of
-----------------------------
Default hereundershall have occurred and be continuing:
(i) The Grantors shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to an owner of Pledged
Securities or any part thereof for any purpose not inconsistent with the terms
of this Agreement and the Credit Agreement provided that such action would not
materially and adversely affect the rights inuring to the Agent or the Lenders
under this Agreement or the Credit Agreement or materially and adversely affect
the rights and remedies of the Agent or the Lenders under this Agreement or the
Credit Agreement or the ability of the Agent or the Lenders to exercise the
same.
(ii) The Agent shall execute and deliver to the Grantors, or
cause to be executed and delivered to the Grantors all such proxies, powers of
attorney, and other instruments as the Grantors may reasonably request for the
purpose of enabling the Grantors to exercise the voting and/or consensual rights
any powers which they are entitled to exercise pursuant to subparagraph (i)
above.
(iii) The Grantors shall be entitled to receive and retain any
and all cash dividends paid on the Pledged Securities only to the extent that
such cash dividends are permitted by, an otherwise paid in accordance with the
terms and conditions of, the Credit Agreement and applicable laws. Any and all
a. noncash dividends,
b. stock or dividends paid or payable in cash or
otherwise in connection with a partial or total liquidation or dissolution, and
c. instruments, securities, other distributions in
property, return of capital, capital surplus or paid-in surplus or other
distributions made on or in respect of Pledged Securities (other than dividends
and distributions permitted by Section 7.04 of the Credit Agreement), whether
paid or payable in cash or otherwise, whether resulting from a subdivision,
combination or reclassification of the outstanding capital stock of the issuer
of any Pledged Securities or received in exchange for Pledged Securities or any
part thereof, or in redemption thereof, as a result of any merger,
143
consolidation, acquisition or other exchange of assets to which such issuer may
be a party or otherwise, shall be and become part of the Collateral, and, if
received by any of the Grantors, shall not be commingled by such Grantor with
any of its other funds or property but shall be held separate and apart
therefrom, shall be held in trust for the benefit of the Agent and the renders
and shall be forthwith delivered to' the Agent in the same form as so received
(with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an
Event of Default, all rights of the Grantors to receive any dividends which the
Grantors are authorized to receive pursuant to paragraph (a)(iii) of this
Section 5 shall cease, and the Agent shall have the sole and exclusive right and
authority to receive and hold such dividends, such dividends to apply to the
Obligations or to be held as Collateral as permitted under the Loan Documents.
All dividends which are received by the Grantors contrary to the provisions of
this Section 5(b) shall be received in trust for the benefit of the Agent, shall
be segregated from other property or funds of such Grantor. and shall be
forthwith delivered to the Agent as Collateral in the same form as so received
(with any necessary endorsement). Any and all money and other property paid over
to or received by the Agent pursuant t the provisions of this Section 5 shall be
held by the Agent in n account to be established by the Agent upon receipt of
such money or other property and shall be applied in accordance with the
provisions of Section 8 hereof.
(c) Upon the occurrence and during the continuance of an
Event of Default, all rights of the Grantors to exercise the voting and
consensual rights and powers which each is entitled to exercise pursuant to
Section 5(a)(i) shall cease, and all such rights shall thereupon become vested
in the Agent, which shall have the sole and exclusive right and authority to
exercise such voting and consensual rights and powers.
6. Issuance of Additional Stock. The Grantors agree that, they will
cause each of the Issuers not to issue any stock or other securities, whether in
addition to, by stock dividend or other distribution upon, or in substitution
for, the Pledged Securities or otherwise, unless such shares are pledged
hereunder.
7. Remedies upon Default. If an Event of Default shall have occurred
and be continuing, the Agent may sell or otherwise dispose of all or any part of
the Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the Agent
shall deem appropriate. Each such purchaser at any such sale shall hold the
property sold absolutely, free from any claim or right on the part of the
Grantors, and the Grantors hereby waive (to the extent permitted by law) all
rights of redemption, stay and appraisal which the Grantors now have or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. The Agent shall give the Grantors at least 10 days' written
notice (which the Grantors agree is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in New York) of the
Agent's intention to make any sale of Collateral. Such notice, in the case of a
public sale, shall state the time and place for such sale and, in the case of a
sale at a broker's board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
144
or portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Agent may fix and state in the
notice (if any) of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Agent may (in its sole and absolute discretion) determine. The
Agent shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Agent until the sale price is paid by the purchaser or purchasers thereof, but
the Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may be sold again upon like notice. At any public
sale made pursuant to this Section 7, if permitted by law, any Lender may bid
for and purchase, free (to the extent permitted b law) from any right of
redemption, stay or appraisal on the part of the Grantors (all said rights being
also hereby waived and released to the extent permitted by law), the Collateral
or any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Lender from the Grantors as a
credit against the purchase price, and such Lender may, upon compliance with the
terms of sale, hold, retain and dispose of such property without further
accountability to the Grantors therefore. For purposes hereof, a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof; the Agent shall be free to carry out such sale and purchase
pursuant to such agreement, and the Grantors shall not be entitled to the return
of the Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Agent shall have entered into such an agreement all Events
of Default shall have been remedied and the Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon it, the Agent
may proceed by a suit or suits at law or in equity to foreclose this Agreement
and to sell the Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction or pursuant to a
proceeding by a court-appointed receiver.
8. Application of Proceeds of Sale. The proceeds of any sale of
Collateral pursuant to Section 7 hereof, as well as any Collateral consisting of
cash, shall be applied by the Agent as set forth in Article VIII of the Credit
Agreement.
9. Care of Pledged Securities. The Agent shall have no duty as to
the collection or protection of the Pledged Securities or any income thereon or
as to the preservation of any rights pertaining thereto, beyond the safe custody
of any thereof actually in its possession. With respect to any maturities,
calls, conversions, exchanges, redemptions, offers, tenders or similar matters
relating to any of the Pledged Securities (herein called "events"), except to
the extent required by law, the Agent's duty shall be fully satisfied if (i) the
Agent exercise reasonable care to ascertain the occurrence and to give
reasonable notice to the Grantors of any events applicable to any Pledged
Securities which are registered and held in the name of the Agent or its
nominee, (ii) the Agent gives the Grantors reasonable notice of the occurrence
of any events, of which the Agent has received actual knowledge, as to any
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securities which are in bearer form or are not registered and held in the
name of the Agent or its nominee (the Grantors agreeing to give the Agent
reasonable notice of the occurrence of any events applicable to any securities
in the possession of the Agent of which any Grantor has received knowledge), and
(iii) in the exercise of it sole discretion (a) the Agent endeavors to take such
action with respect to any of the events as the Grantors may reasonably and
specifically request in writing in sufficient time for such action to be
evaluated and taken or (b) if the Agent determines that the action requested
might adversely affect the value of the Pledged Securities as collateral, the
collection of the Obligations, or otherwise prejudice the interests of the
Agent, the Agent gives reasonable notice to the Grantors that any such requested
action will not be taken and if the Agent makes such determination or if the
Grantors fail to make such timely request, the Agent takes such other action as
it deems advisable in the circumstances. Except as hereinabove specifically set
forth, the Agent shall have no further obligation to ascertain the occurrence
of, or to notify the Grantors with respect to, any events and shall not
be-deemed to assume any such further obligation as a result of the establishment
by the Agent of any internal procedures with respect to any securities in its
possession. Except for any claims, causes of action or demands arising out of
the Agent's failure to perform its agreements set forth in this Section, the
Grantors release the Agent from any claims, causes of action and demands at any
time arising out of or with respect to this Agreement, the Pledged Securities
and/or any actions taken or omitted to be taken by the Agent with respect
thereto, and the Grantors hereby agree to hold the Agent harmless from and with
respect to any and all such claims, causes of action and demands.
10. Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints
the Agent its attorney-in-fact for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instrument which the
Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Agent shall have the right, with full power of
substitution either in the Agent's name or in the name of such Grantor, (i) upon
the occurrence and during the continuance of an Event of Default, to ask for,
demand, sue for, collect, receive receipt and give acquittance for any and all
moneys due or to become due and under and by virtue of any Collateral, (ii) to
endorse checks, drafts, orders and other instruments for the payment of money
payable to such Grantor representing any interest or dividend, or other
distribution payable in respect of the Collateral or any part thereof or on
account thereof and (iii) upon the occurrence and during the continuance of an
Event of Default, to give full discharge for the same, to settle, compromise,
prosecute or defend any action, claim or proceeding with respect thereto, and to
sell, assign, endorse, pledge, transfer and make any agreement respecting, or
otherwise deal with, the same; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Agent or the Lenders to make
any commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Agent or the Lenders, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken by the Agent or the Lenders or omitted to be taken
with respect to the Collateral or any part thereof shall give rise to any
defense, counterclaim or offset in favor of any Grantor or to any claim or
action against the Agent or the Lenders in the absence of the bad faith, gross
negligence or willful misconduct of the Agent or the Lenders.
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11. No Waiver. No failure on the part of the Agent to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Agent preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
Agent and the Lenders shall not be deemed to have waived any rights hereunder
unless such waiver shall be in writing and signed by such parties.
12. Security Interest Absolute. All rights of the Agent hereunder,
the grant of a security interest in the Collateral and all obligations of the
Grantors hereunder, shall be absolute and unconditional irrespective of (i) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (ii) any change in
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 Credit Agreement, any other Loan Document or any other agreement or
instrument, (iii) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to or departure
from any guarantee, for all or any of the Obligations or (iv) a other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Grantors in respect of the Obligations or in respect of this
Agreement.
13. Agent's Fees and Expenses. The Grantors will upon demand pay to
the Agent the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts or agents which
the Agent may incur ii connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Agent hereunder or (iv) the failure by the Grantors to
perform or observe any of the provisions hereof. In addition, the Grantors will
indemnify the Agent and hold the Agent harmless from and against any and all
liability incurred by the Agent hereunder or in connection herewith, unless such
liability shall be due to the gross negligence, bad faith or willful misconduct
of the Agent. Any such amounts payable as provided hereunder or thereunder shall
be additional Obligations secured hereby and by the Security Documents.
14. Termination. This Agreement shall terminate when all Obligations
have been paid fully and indefeasibly in cash or in a manner otherwise
satisfactory to the Agent and the Lenders have no further commitment to make
Loans or open or cause to be opened Letters of Credit under the Credit
Agreement, at which time the Agent shall reassign and deliver to the Grantors,
or to such person or persons as the Grantors shall designate, against receipt,
such of the Collateral (if any) as shall not have been sold or otherwise still
be held by it hereunder, together with appropriate instruments of reassignment
and release; provided, however, that all indemnities of the Grantors contained
in this Agreement shall survive, and remain operative and in full force and
effect regardless of, the termination of this Agreement. Upon any such
termination, the Agent will, at the Grantors' expense, execute and deliver to
147
the Grantors such documents as the Grantors shall reasonably request to evidence
such termination, such execution and delivery to be without recourse to or
warranty by the Agent.
15. Notices. All communications and notices hereunder shall be in
writing and given as provided in the Credit Agreement.
16. Further Assurances. Each Grantor agrees to do such further acts
and things, and to execute and deliver such additional conveyances, assignments,
agreements and instruments, as the Agent may at any time reasonably request in
connection with the administration and enforcement of this Agreement or wit
respect to the Collateral or any part thereof or in order better to assure and
confirm unto the Agent its rights and remedies hereunder.
17. Binding Agreement Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Grantors shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or otherwise pledge, encumber
or grant any option with respect to the Collateral, or any part thereof, or any
cash or property held by the Agent as Collateral under this Agreement.
18. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT
THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
19. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when counterparts which bear the signature of each Grantor shall have
been delivered to the Agent.
21. Section Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or be taken into
consideration in interpreting, this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
FOODARAMA SUPERMARKETS, INC.
By
---------------------------------
Name:
Title:
NEW LINDEN PRICE RITE, INC.
By
----------------------------------
Name:
Title:
SHOP RITE OF READING, INC.
By:
---------------------------------
Name:
Title:
SHOP RITE OF MALVERNE, INC.
By:
---------------------------------
Name:
Title:
GMAC BUSINESS CREDIT, LLC, as Agent
By:
---------------------------------
Name:
Title:
149
SCHEDULE I
to Pledge Agreement
Guarantor Stock Issuer Class of Stock Percentage
Stock Certificate of
No (s). Par Value Number Outstanding
of Shares Shares
150
EXHIBIT E
FORM OF SECURITY AGREEMENT
SECURITY AGREEMENT dated as of ____, __, 2002, among Foodarama
Supermarkets, Inc., a New Jersey corporation ("Parent"), New Linden Price Rite,
Inc., a New Jersey corporation ("New Linden"), Shop Rite of Reading, Inc., a
Pennsylvania corporation ("Reading"), Shop Rite of Malverne, Inc., a New York
corporation ("Malverne", and together with Parent, New Linden and Reading, each
a "Grantor" and collectively, the "Grantors"), and GMAC Business Credit, LLC, as
agent ("Agent") for itself and each of the Lenders (the "Lenders") named in
Schedule 2.01 of the Revolving Credit and Term Loan Agreement dated as of ___,
__, 1995 among the Grantors, the Guarantors named therein, the Agent and the
Lenders (as amended, restated, modified or supplemented from time to time in
accordance with its terms, the "Credit Agreement").
The Lenders have agreed to extend Loans to New Linden and Reading
(individually, each a "Borrower" and collectively, the "Borrowers") pursuant to,
and subject to the terms and conditions of, the Credit Agreement. The obligation
of the Lenders to extend such Loans under the Credit Agreement is conditioned,
inter alia,on the execution and delivery by the Grantors of a security agreement
in the form hereof to secure the due and punctual payment and performance of all
Obligations (including, without limitation, principal of and interest on the
Loans, when and as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise, the due and punctual payment and
performance of all obligations of the Grantors under this Agreement and the due
and punctual payment and performance of all obligations of the Grantors under
the Letters of Credit, the Credit Agreement and any of the other Loan
Documents).
Accordingly, the Grantors hereby jointly and severally agree with
the Agent as follows:
1. Definitions of Terms Used Herein. All capitalized terms used
--------------------------------
herein but not defined herein shall have the meanings set forth in the Credit
Agreement. As used herein, the following terms shall have the following
meanings:
(a) "Accounts Receivable" shall mean (i) all of any Grantor's
present and future accounts, general intangibles, chattel paper and instruments,
as such terms are defined in the Uniform Commercial Code as in effect in the
State of New York ("NYUCC"), (ii) all moneys, securities and other property and
the proceeds thereof, now or hereafter held or received by, or in transit to,
the Agent from or for any Grantor, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all of the deposits (general or
special) of any Grantor, balances, sums and credits with, and all of any
Grantor's claims against the Agent at any time existing, (iii) all of any
Grantor's right, title and interest, and all of any Grantor's rights, remedies,
security and Liens, in, to and in respect of any accounts receivable, including,
without limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, guaranties or other contracts of suretyship with respect to accounts
receivable, deposits or other security for the obligation of any account debtor,
151
and credit and other insurance, and (iv) all of any Grantor's right, title and
interest in, to and in respect of all goods relating to, or which by sale have
resulted in, accounts receivable, including, without limitation, all goods
described in invoices or other documents or instruments with respect to, or
otherwise representing or evidencing, any account receivable, and all returned,
reclaimed or repossessed goods.
(b) "Collateral" shall mean all (i) Accounts Receivable, (ii)
Documents, (iii) Equipment, (iv) General Intangibles, (v) Inventory, and
(vi) Proceeds.
(c) "Documents" shall mean all instruments, files; records,
ledger sheets and documents covering or relating to any of the Collateral.
(d) "Equipment" shall mean all of any Grantor's entire right,
title and interest in and to machinery, equipment, vehicles, furniture and
fixtures and all attachments, accessories and equipment now or hereafter owned
or acquired in any Grantor's businesses or used in connection therewith, and all
substitutions and replacements thereof, wherever located, whether now owned or
hereafter acquired by any Grantor.
(e) "General Intangibles" shall mean all of any Grantor's
present and future general intangibles of every kind and description,
including (without limitation) patents, patent applications, trade names
and trademarks and the goodwill of the business symbolized thereby, Federal,
State and local tax refund claims of all kinds.
(f) "Inventory" shall mean all of any Grantor's raw materials,
work in process, finished goods and all other inventory (as such term is defined
in the NYUCC), whether now owned or hereafter acquired, and all wrapping,
packaging, advertising and shipping materials, and any documents relating
thereto.
(g) "Proceeds" shall mean any consideration received from the
sale, exchange, lease or other disposition of any asset or property which
constitutes Collateral, any other value received as a consequence of the
possession of any Collateral and any payment received from any insurer or other
person or entity as a result of the destruction, loss, theft or other
involuntary conversion of whatever nature of any asset or property that
constitutes Collateral, and shall include, without limitation, all cash and
negotiable instruments received or held by the Agent and/or any of the Lenders
pursuant to any lockbox or similar arrangement relating to the payment of
Accounts Receivable.
2. Security Interests. As security for the payment or performance,
as the case may be, of the Obligations, each Grantor hereby creates and grants
to the Agent, its successors and its assigns, for the pro rata benefit of the
Lenders, their successors and their assigns, a security interest in the
Collateral (the "Security Interest"). Without limiting the foregoing, the Agent
is hereby authorized to file one or more financing statements, continuation
statements or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest, naming the Grantors
as debtors and the Agent as secured party.
152
The Grantors agree at all times to keep in all material respects
accurate and complete accounting records with respect to the Collateral,
including, but not limited to, a reasonable record of all payments and Proceeds
received.
3. Further Assurances. Each Grantor agrees, at its expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Agent may from time
to time reasonably request for the assuring and preserving of the Security
Interest and the rights and remedies created hereby, including, without
limitation, the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements or other documents in connection
herewith. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be promptly pledged and delivered to
the Agent, duly endorsed in a manner satisfactory to the Agent. Each Grantor
agrees to notify promptly the Agent of any change in its corporate name or in
the location of its chief executive office, its chief place of business or the
office where it keeps its records relating to the Accounts Receivable owned by
it and the location of any Equipment. Each Grantor agrees promptly to notify the
Agent if any material portion of the Collateral is damaged or destroyed.
4. Inspection and Verification. Upon reasonable notice (which may be
telephonic), the Agent shall have the right to at all reasonable times, during
normal business hours, and as often as the Agent may reasonably request, permit
any authorized representative designated by the Agent to visit and inspect the
properties and financial records of the Grantors and to make extracts from such
financial records and copies from such financial records at the Grantors'
expense, and permit any authorized representative designated by the Agent to
discuss the affairs, finances and condition of any Grantor with the appropriate
Financial Officer and such other officers as the Agent shall deem appropriate
and such Grantor's independent public accountants, as applicable. The Agent
agrees that it shall schedule any meeting with any such independent public
accountant through such Grantor and a Responsible Officer of such Grantor shall
have the right to be present at any such meeting. An authorized representative
of each of the Lenders may accompany the Agent on such visits and inspections.
The Agent shall have the right to audit, as often as it may reasonably request,
the existence and condition of the Accounts Receivable, inventory, books and
records of any Grantor and to review its compliance with the terms and
conditions of this Agreement and the other Loan Documents. The Grantors shall
pay Agent's customary per diem rates, all out-of-pocket expenses of Agent's
auditors and all costs of Agent with respect to third-party examiners.
Notwithstanding the foregoing, prior to a Default or Event of Default, the
Borrower shall not be obligated, under this Security Agreement and the Credit
Agreement, to reimburse Agent for a total of more than four (4) visits each
calendar year. Subject to the provisions of Section 11.11 of the Credit
Agreement, the Agent shall have the absolute right to share any information it
gains from such inspection or verification with any or all of the Lenders.
5. Taxes; Encumbrances. At its option, the Agent may (after
providing the Grantors with fifteen (15) days written notice and an opportunity
to cure, discharge, or settle) discharge past due taxes, liens, security
153
interests or other encumbrances at any time levied or placed on the Collateral
and not permitted under the Credit Agreement, and may pay for the maintenance
and preservation of the Collateral to the extent a Grantor fails to do so as
required by the Credit Agreement, and each Grantor agrees to reimburse the Agent
on demand for any payment made or any expense incurred by it pursuant to the
foregoing authorization; provided, however, that nothing in this Section 5 shall
be interpreted as excusing a Grantor from the performance of any covenants or
other promises with respect to taxes, liens, security interests or other
encumbrances and maintenance's as set forth herein or in the Credit Agreement.
6. Assignment of Security Interest. If at any time a Grantor shall
take and perfect a security interest in any property of an account debtor or any
other person to secure payment and performance of an Account Receivable, such
Grantor shall promptly assign such security interest to the Agent. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the account debtor or other person granting the security interest.
7. Representations and Warranties. Each Grantor represents and
warrants to the Agent that:
(a) Title and Authority. Subject to exceptions
specifically set forth in this Security Agreement and the Credit Agreement, it
has (i) rights in and good title to the Collateral in which it is granting a
security interest hereunder and (ii) the requisite power and authority to grant
to the Agent the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval which has been obtained.
(b) Filing. Fully executed Uniform Commercial Code ("UCC")
financing statements containing a description of the Collateral shall have
been, or shall be delivered to the Agent in a form such that they can be,
filed of record in every governmental, municipal or other office in every
jurisdiction in which any portion of the Collateral is-located necessary to
publish notice of and protect the validity of and to establish a valid, legal
and perfected security interest in favor of the Agent in respect of the
Collateral in which a security interest may be perfected by filing in the
United States and its territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of Uniform Commercial Code continuation statements.
(c) Validity of Security Interest. Upon filing of UCC financing
statements in the locations referred to on Schedule I hereto, the Security
Interest will constitute a valid, legal and perfected first priority security
interest in all of the Collateral for payment and performance of the
Obligations, except as otherwise permitted under the Credit Agreement.
(d) Information Regarding Names. It has disclosed in writing on
Schedule I hereto any trade names used to identify it in its business or in the
ownership of its properties within five (5) years of the Closing Date.
154
(e) Absence of Other Liens. The Collateral is owned by it free
and clear of any Lien of any nature whatsoever, except as granted pursuant to
this Agreement and as permitted by the Credit Agreement, and, except as provided
by paragraph (b) of this Section 7, no financing statement has been filed, under
the UCC as in effect in any state or otherwise, covering any Collateral except
as indicated on Schedule 7.01 to the Credit Agreement.
(f) Additional Representations for Accounts Receivable. (i) All
accounts (as defined in the NYUCC) owned by the Grantors on the Closing Date
constitute bona fide receivables arising in the ordinary course of business, the
amount of which is actually owing and payable to the Grantors in the ordinary
course of business, subject to no defense, claim of disability, counterclaim or
offset with respect thereto. All such accounts, net of a bad debt reserve
determined in accordance with generally accepted accounting principles, are
collectible in accordance with their terms.
(ii) Each account (as defined in the NYUCC) arising after the
Closing Date shall be on the date of its creation a good and valid account
representing a bona fide indebtedness incurred or an amount owed by the account
debtor therein named, for a fixed sum as set forth in the invoice relating
thereto, with respect to an absolute sale and delivery upon the specified terms
of goods sold by the Grantors, or work, labor and/or services theretofore
rendered by the Grantors; no Account Receivable is subject to any defense,
offset, counterclaim, discount or allowance (as of the time of its creation)
except as may be stated in the invoice relating thereto or discounts and
allowances as may be customary in a Grantor's business; none of the transactions
underlying or giving rise to any Account Receivable shall violate any applicable
state or federal laws or regulations, and all documents relating to any Account
Receivable shall be legally sufficient under such laws or regulations and are
legally enforceable in accordance with their terms; all documents and agreements
relating to Accounts Receivable are true and correct and in all respects what
they purport to be; to the best of the Grantors' knowledge, all signatures and
endorsements that appear on all documents and agreements relating to such
accounts are genuine and all signatories and endorsers shall have full capacity
to contract; it will immediately notify the Agent if any accounts arise out of
contracts with the United States or any department, agency or instrumentality
thereof, and will execute any instruments and take any steps reasonably required
by the Agent in order that all monies due or to become due under any such
contract shall be assigned to the Agent and notice thereof given to the United
States Government under the Federal Assignment of Claims Act; if any amount
payable under or in connection with any Account Receivable is evidenced by a
promissory note or other instrument, as such terms are defined in the UCC, such
promissory note or instrument shall be immediately pledged, endorsed, assigned
and delivered to the Agent as additional collateral.
(g) Survival of Representations and Warranties. All
representations and warranties of the Grantors contained in this Agreement shall
survive the execution, delivery and performance of this Agreement until the
termination of this Agreement pursuant to Section 27.
8. Records of Accounts Receivable. Each Grantor shall keep or cause
to be kept records of its Accounts Receivable which are accurate in all material
155
respects. In addition, each Grantor will provide the Agent with such further
schedules and/or information respecting each Account Receivable as the Agent may
reasonably require.
9. Protection of Security. Each Grantor shall, at its own cost and
expense, take any and all actions reasonably necessary to defend title to the
Collateral owned by it against all persons and to defend the Security Interest
of the Agent in such Collateral, and the priority thereof, against any adverse
Lien, except for Liens permitted pursuant to Section 7.01 of the Credit
Agreement.
10. Continuing Obligations of the Grantors. Each Grantor shall
remain liable to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement, interest or
obligation relating to the Collateral, all in accordance with the terms and
conditions thereof, and shall indemnify and hold harmless the Agent and the
Lenders from any and all such liabilities.
11. Use and Disposition of Collateral. Except as set forth in
Section 7.01 of the Credit Agreement, no Grantor shall make or permit to be made
any assignment, pledge or hypothecation of the Collateral, or grant any security
interest in the Collateral. No Grantor shall make or permit to be made any
transfer of any Collateral, except Inventory in the ordinary course of business,
or except as may be permitted under the terms of the Credit Agreement, and each
Grantor shall remain at all times in possession of the Collateral owned by it
other than transfers to the Agent pursuant to the provisions hereof and as
otherwise expressly provided in this Agreement or the Credit Agreement.
12. Limitation on Modifications of Accounts Receivable. No Grantor
will, without the Agent's prior written consent, grant any extension of the time
of payment of any of its Accounts Receivable, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partly, any
person liable for the payment thereof, or allow any credit or discount
whatsoever thereon other than extensions, credits, discounts, compromises or
settlements granted or made in the ordinary course of business. No Grantor will
sell, assign, discount, or otherwise dispose of any Accounts Receivable except
for the purpose of collection or settlement in the ordinary course of business
or the sale of any such accounts to the Agent.
13. Power of Attorney. The Agent shall have the right, as the
true and lawful agent of the Grantors, with power of substitution for the
Grantors and in the applicable Grantor's name, the Agent's name or otherwise,
for the use and benefit of the Agent and the Lenders (i) to receive, endorse,
assign and/or deliver any and all notes, acceptances, checks, drafts, money
orders or other evidences of payment relating to the Collateral or any part
thereof; (ii) upon the occurrence and continuance of an Event of Default,
to demand, collect, receive payment of, give receipt for and give discharges
and releases of all or any of the Collateral; (iii) to sign the name of the
applicable Grantor on any invoice or bill of lading relating to any of the
Collateral; (iv) upon the occurrence and continuance of an Event of Default,
to send verifications of Accounts Receivable to any customer; (v) upon the
occurrence and continuance of an Event of Default, to commence and prosecute
any and all suits, actions or proceedings at law or in equity in any court
156
of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (vi) upon
the occurrence and continuance of an Event of Default, to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to or
pertaining to all or any of the Collateral; (vii) upon the occurrence and
continuance of an Event of Default, to notify, or to require the applicable
Grantor to notify, the account debtors obligated on any or all of the Accounts
Receivable to make payment thereof directly to the Agent; and (viii) to use,
sell, assign, transfer, pledge, make any agreement with respect to or otherwise
deal with all or any of the Collateral, and to do all other acts and things
necessary to carry out the purposes of this Agreement, as fully and completely
as though the Agent were the absolute owner of the Collateral for all purposes;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Agent or any Lender to make any commitment or to make any
inquiry as to the nature or sufficiency of any payment received by the Agent or
such Lender or to present or file any claim or notice, or to take any action
with respect to the Collateral or any part thereof or the moneys due or to
become due in respect thereof or any property covered thereby, and no action
taken by the Agent or any Lender or omitted to be taken with respect to the
Collateral or any part thereof shall give rise to any defense, counterclaim or
offset in favor of any Grantor or to any claim or action against the Agent or
any Lender in the absence of the bad faith or willful misconduct of the Agent or
such Lender. It is understood and agreed that the appointment of the Agent as
the agent of the Grantors for the purposes set forth above in this Section 13 is
coupled with an interest and is irrevocable. The provisions of this Section 13
shall in no event relieve any Grantor of any of its obligations hereunder or
under the Credit Agreement with respect to the Collateral or any part thereof or
impose any obligation on the Agent or any Lender to proceed in any particular
manner with respect to the Collateral or any part thereof, or in any way limit
the exercise by the Agent or any Lender of any other or further right which it
may have on the date of this Agreement or hereafter, whether hereunder or by law
or otherwise.
In the case of any inconsistency between this Section 13 with
Article 10 of the Credit Agreement, the provisions of the Credit Agreement shall
prevail.
14. Remedies upon Default. Subject to the restrictions expressly set
forth in the Credit Agreement, upon the occurrence and during the continuance of
an Event of Default, each Grantor agrees to deliver each item of Collateral to
the Agent on demand, and it is agreed that the Agent shall have the right to
take any or all of the following actions at the same or different times: with or
without legal process and with or without previous notice or demand for
performance, to take possession of the Collateral and to enter any premises
where the Collateral may be located for the purpose of taking possession of or
removing the Collateral and, generally, to exercise any and all rights afforded
to a secured party under, and subject to its obligations contained in, the
Uniform Commercial Code as in effect in any state or other applicable law.
Without limiting the generality of the foregoing, each Grantor agrees that the
Agent shall have the right, subject to the mandatory requirements of applicable
law, to sell or otherwise dispose of all or any part of the Collateral, at
public or private sale or at any broker's board or on any securities exchange,
for cash, upon credit or for future delivery as the Agent shall deem
appropriate. Each such purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of the applicable Grantor,
and such Grantor hereby waives (to the extent permitted by law) all rights of
157
redemption, stay and appraisal which such Grantor now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.
The Agent shall give the applicable Grantor 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the NYUCC) of the Agent's intention to make any sale of Collateral.
Such notice, in the case of a public sale, shall state the time and place for
such sale and, in the case of a sale at a broker's board or on a securities
exchange, shall state the board or exchange at which such sale is to be made and
the day on which the Collateral, or portion thereof, will first be offered for
sale at such board or exchange. Any such public sale shall be held at such time
or times within ordinary business hours and at such place or places as the Agent
may fix and state in the notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Agent may (in its sole and absolute discretion)
determine. The Agent shall not be obligated to make any sale of any Collateral
if it shall determine not to do so, regardless of the fact that notice of sale
of such Collateral shall have been given. The Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public sale made pursuant to this Section 14, the Agent or any
Lender may bid for and purchase, free (to the extent permitted by law) from any
right of redemption, stay or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
with respect to the Collateral or any part thereof offered for sale and the
Agent or any such Lender may make payment on account thereof by using any claim
then due and payable to the Agent or any such Lender from any Grantor as a
credit against the purchase price, and the Agent or any such Lender may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to the Grantors therefore. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Agent shall be free to carry out such sale and
purchase pursuant to such agreement, and no Grantor shall be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Agent shall have entered into such an agreement all
Events of Default shall have been remedied and the Obligations paid in full. As
an alternative to exercising the power of sale herein conferred upon it, the
Agent may proceed by a suit or suits at law or in equity to foreclose this
Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.
Upon any sale of the Collateral by the Agent (including, without
limitation, pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Agent or of the officer making the sale shall be
a sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
158
application of any part of the purchase money paid over to the Agent or such
officer or be answerable in any way for the misapplication thereof.
15. Application of Proceeds. The proceeds of any collection or
sale of Collateral, as well as any Collateral consisting of cash, shall be
applied by the Agent as set forth in Article VIII of the Credit Agreement.
16. Locations of Collateral; Place of Business. (a) Each Grantor
hereby represents and warrants that all the Collateral is located at the
locations listed on Schedule I hereto. Each Grantor agrees not to establish, or
permit to be established, any other location for Collateral unless (i) such
Grantor has given the Agent at least thirty (30) days' prior written notice of
such change, has executed such documents and taken such other actions as the
Agent has requested to perfect and protect the Security Interest and (ii) such
new location is in the continental United States of America.
(b) Each Grantor confirms that its chief executive office is
located as indicated on Schedule I hereto. Each Grantor agrees not to change, or
permit to be changed, the location of its chief executive office unless (i) such
Grantor has given the Agent at least thirty (30) days' prior written notice of
such change, has executed such documents and taken such other actions as the
Agent has requested to perfect and protect the Security Interest and (ii) such
new location is in the continental United States of America.
17. Security Interest Absolute. All rights of the Agent
hereunder, the Security Interest, and all obligations of the Grantors hereunder,
shall be absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any other
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (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 consent to any departure from the Credit
Agreement, any other Loan Document, or any other agreement or instrument
relating to the foregoing, (iii) any exchange, release or nonperfection of any
other Collateral, or any release or amendment or waiver of or consent to or
departure from any guarantee, for all or any of the Obligations, or (iv) any
other circumstance which might otherwise constitute a defense available to, or
discharge of, the Grantors, or any other obligor in respect of the Obligations
or in respect of this Agreement.
18. No Waiver. No failure on the part of the Agent to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Agent preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
Agent and the Lenders shall not be deemed to have waived any rights hereunder
unless such waiver shall be in writing and signed by such parties.
159
19. Agent Appointed Attorney-in-Fact. each Grantor hereby appoints
the Agent the attorney-in-fact of such Grantor for the purpose of carrying out
the provisions of this Agreement and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment is irrevocable and coupled with an interest.
20. Agent's Fees and Expenses. The Grantors shall be obligated to,
upon demand, pay to the Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts or
agents which the Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Agent hereunder, or (iv) the failure by
any Grantor to perform or observe any of the provisions hereof. In addition, the
Grantors shall indemnify and hold the Agent and the Lenders harmless from and
against any and all liability incurred by the Agent or the Lenders hereunder or
in connection herewith, unless such liability shall be due to the bad faith,
willful misconduct or gross negligence of the Agent or the Lenders, as the case
may be. Any such amounts payable as provided hereunder or thereunder shall be
additional Obligations secured hereby and by the other Security Documents.
21. `Binding Agreement; Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Grantors shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or any cash or property held
by the Agent as Collateral under this Agreement, except as contemplated by this
Agreement or the Credit Agreement.
21. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT
THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
23. Notices. All communications and notices hereunder shall be in
writing and given as provided in the Credit Agreement.
24. Severabilitv. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable the
remaining provisions contained herein shall not in any way be affected or
impaired.
25. Section Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
160
26. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when counterparts which bear the signature of each Grantor shall have
been delivered to the Agent.
27. Termination. This Agreement and the Security Interest
shall terminate when all the Obligations have been fully and indefeasibly paid
in cash or in a manner otherwise satisfactory to the Agent and when the Lenders
have no further commitment to make any Loans or open or cause to be opened
Letters of Credit under the Credit Agreement, at which time the Agent shall
forthwith assign, transfer and deliver to the Grantors such Collateral as shall
not have been sold, transferred or otherwise applied or disposed of pursuant to
the terms hereof, such assignment, transfer or delivery to be without any
representations or warranties of any kind, and shall execute and deliver to the
Grantors all Uniform Commercial Code termination statements and similar
documents which the Grantors shall reasonably request to evidence such
termination; provided, however, that all indemnities of the Grantors contained
in this Agreement shall survive, and remain operative and in full force and
effect regardless of the termination of this Agreement.
161
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
FOODARAMA SUPERMARKETS, INC.
By
---------------------------
Name:
Title:
NEW LINDEN PRICE RITE, INC.
By
---------------------------
Name:
Title:
SHOP RITE OF READING, INC.
By
---------------------------
Name:
Title:
SHOP RITE OF MALVERNE, INC.
By
---------------------------
Name:
Title:
GMAC BUSINESS CREDIT, LLC,
as Agent
By
---------------------------
Name:
Title:
162
Schedule I to the Security Agreement
LOCATIONS OF COLLATERAL OF EACH GRANTOR
---------------------------------------
I. Foodarama Supermarkets, Inc.
II. New Linden Price Rite, Inc.
III. Shop Rite of Reading, Inc.
IV. Shop Rite of Malverne, Inc.
CHIEF EXECUTIVE OFFICE OF EACH GRANTOR
---------------------------------------
I. Foodarama Supermarkets, Inc.
II. New Linden Price Rite, Inc.
III. Shop Rite of Reading, Inc.
IV. Shop Rite of Malverne, Inc.
TRADENAMES OF EACH GRANTOR
-------------------
I. Foodarama Supermarkets, Inc. None
II. New Linden Price Rite, Inc. None
III. Shop Rite of Reading, Inc. None
IV. Shop Rite of Malverne, Inc. None
163
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated September ___, 2002
Reference is made to the Second Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of January 7, 2000 (as amended, restated, modified
or supplemented from time to time in accordance with its terms, the "Credit
Agreement"), among New Linden Price Rite, a New Jersey corporation, Foodarama
Supermarkets, Inc., a New Jersey corporation (individually, each a "Borrower",
collectively, the "Borrowers"), the Guarantors named therein, JP Morgan Chase
(formerly known as The Chase Manhattan Bank) ("Chase") and Citizens Business
Credit Company (collectively, the "Lenders"), and GMAC Business Credit, LLC, as
agent for itself and each of the Lenders. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
Chase (the "Assignor") and The Bank of New York (the "Assignee") agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, a 27.2727% interest in and to
all the Assignor's rights and obligations under the Credit Agreement as of the
Effective Date (as defined below) (including, without limitation, such
percentage interest in the Loan Documents, in the Revolving Commitment of the
Assignor, in the Term Commitment of the Assignor and in the Capital Expenditure
Facility Commitment on the Effective Date and/or such percentage interest in the
Revolving Loans, the Term Loan and the Capital Expenditure Loan owing to the
Assignor outstanding on the Effective Date, together with such percentage
interest in all unpaid interest, Commitment Fees and other fees accrued to the
Effective Date and such percentage interest in the Notes held by the Assignor,
as defined herein), except that the Assignor expressly reserves from such
Assignment the right to be indemnified by the Borrowers pursuant to the terms of
the Credit Agreement and the other Loan Documents for any loss or liability
which the Assignor may incur to the extent that such right relates to
circumstances or events which occur, exist or arise prior to the Effective Date.
The foregoing sale and assignment is without recourse to the Assignor and is
without representation or warranty except as specifically set forth in Section
2.
2. The Assignor (i) represents that as of the date hereof, its portion of
the Total Commitment is $_________, the outstanding balance of its Revolving
Loan is $__________, the outstanding balance of its Term Loan is $________; and
the outstanding balance of its Capital Expenditure Loan is $_________ (ii) makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
perfection, genuineness, sufficiency or value of the Credit Agreement, the
Security Documents, any other Loan Document, any Collateral or any instrument or
document furnished pursuant thereto, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim attributable to Assignor's acts
or omissions; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Borrower, any
Guarantor or any Grantor or the performance or observance by any Borrower, any
164
Guarantor or any Grantor, of its obligations under the Credit Agreement, any of
the Security Documents, any other Loan Document or any other instrument or
document furnished pursuant thereto.
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance and the other documents executed
and delivered in connection herewith and that this Assignment and Acceptance
constitutes the legal, valid and binding obligation of the Assignee, enforceable
against the Assignee in accordance with its terms; (ii) confirms that it has
received a copy of the Credit Agreement and the other Loan Documents, together
with copies of such financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii) agrees that it has
and will, independently and without reliance upon Agent, the Assignor or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iv) appoints and authorizes Agent
to take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; (v) agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Credit Agreement are required to be performed by it as a Lender; and (vi)
agrees that it will keep confidential all information with respect to any
Borrower, any Guarantor, any Grantor furnished to it by any Borrower, any
Guarantor, any Grantor or the Assignor (other than information generally
available to the public or otherwise available to the Assignor on a
nonconfidential basis).
4. This Assignment and Acceptance is being delivered to Agent together
with the Notes evidencing the Loans included in the interests assigned
hereunder.
5. The effective date for this Assignment and Acceptance shall be
September __, 2002 (the "Effective Date"), subject to the payment by Assignee to
Assignor of an amount (the "Purchase Price") equal to the sum of the outstanding
principal balance of the Assignor's Revolving Loans being assigned pursuant
hereto, the outstanding principal balance of the Capital Expenditure Loan being
assigned pursuant hereto, the outstanding principal balance of the Assignor's
Term Loan being assigned pursuant hereto and all unpaid interest, Commitment
Fees and other fees accrued to the Effective Date with respect to the interests
assigned hereunder. Each of the Assignor, the Assignee and Agent agrees that the
Effective Date shall be as set forth in this paragraph 5 notwithstanding the
requirement in clause (c) of Section 11.03 of the Credit Agreement that the
effective date of each Assignment and Acceptance shall be at least five (5)
Business Days after the execution thereof. Following the execution of this
Assignment and Acceptance, it will be delivered to Agent for acceptance and
recording by Agent.
6. Upon such acceptance and recording, from and after the Effective Date,
the Assignor shall, to the extent of the interests assigned by this Assignment
and Acceptance, relinquish its rights and be released from its obligations under
the Credit Agreement.
7. Upon such acceptance and recording, from and after the Effective Date,
Agent shall make all payments in respect of the interest assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
165
payments for periods prior to the Effective Date by Agent or with respect to the
making of this assignment directly between themselves.
8. Each of the Assignor, the Assignee and Agent agrees that the processing
and recordation fee referred to in clause (c) of Section 11.03 of the Credit
Agreement shall for purposes of this Assignment and Acceptance be waived.
9. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
GMAC BUSINESS CREDIT, LLC
By: __________________________________
Name:
Title:
JP MORGAN CHASE
(formerly known as The Chase Manhattan Bank)
By: _______________________________
Name:
Title:
THE BANK OF NEW YORK
By:__________________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
NEW LINDEN PRICE RITE, INC.
By:
--------------------------
Name:
Title:
FOODARAMA SUPERMARKETS, INC.
By:
--------------------------
Name:
Title:
166
EXHIBIT G
FORM OF SECURITY AGREEMENT
(Partnership Interests)
SECURITY AGREEMENT dated as of ________________ , 2002, between
Foodarama Supermarkets, Inc., a New Jersey corporation (the "Partner") and GMAC
Business Credit, LLC, having an office at 175 Water Street, New York, New York
10038 (together with its successors and assigns, the "Agent"), as agent for
itself and each of the Lenders named in Schedule 2.01 to the Credit Agreement
(as hereinafter defined)(the Agent in such capacity is herein referred to as the
"Secured Party"). It is agreed as follows:
1. In consideration of one or more loans, advances, or other
financial accommodations at any time before, at or after the date hereof made or
extended by the Secured Party and/or the Lenders to New Linden Price Rite, Inc.,
a New Jersey corporation ("New Linden") and/or Shop Rite of Reading, Inc., a
Pennsylvania corporation ("Reading", and together with New Linden, each a
"Borrower" and collectively, the "Borrowers"), the Partner hereby grants to the
Secured Party a security interest in and a continuing lien upon, and the Partner
hereby assigns as collateral to the Secured Party, the Collateral described in
Paragraph 2 hereof, to secure the payment, performance and observance of all
Obligations (as such term is defined in the Revolving Credit and Term Loan
Agreement dated as of________, 2002 among the Partner, New Linden, Reading, the
Guarantors named therein, the Secured Party and the Lenders named therein (as
the same may be amended, supplemented or otherwise modified in accordance with
its terms, the "Credit Agreement")).
2. The Collateral is described as follows and on any separate
schedule at any time furnished by the Partner to the Secured Party (which
schedules are hereby deemed part of this Security Agreement):
(a) all right, title and interest of the Partner in and to, and all
present and future interests and rights and all monies due or to become due with
respect to the Partnerships (as hereinafter defined) and distributions
therefrom, which such Partner may now or hereafter have as a general or limited
partner, in and to the partnerships listed on Schedule I hereto (each
individually, a "Partnership", and collectively, the "Partnerships") existing
under the partnership agreements listed on Schedule I hereto as the same may
from time to time be
modified or amended (each individually a "Partnership Agreement", and
collectively, the "Partnership Agreements"); and (b) all proceeds of and
distributions from the foregoing (including but not limited to all proceeds of
dissolution or liquidation), together with any and all monies, securities,
drafts, notes, items and other property and the proceeds thereof, constituting
any such proceeds or distributions.
3. The Partner warrants, represents and covenants that:
167
(a) the chief executive office of the Partner and the Partner's
books and records are located at the address set forth below its signatures
hereto and the Partner will not change any of the same, or change its name,
without thirty (30) days prior written notice to the Secured Party;
(b) the address of the Partner and the location of its books and
records relating to the Partnership Agreements and the Collateral are set out
below its signatures hereto, and it will not change said addresses or locations
without thirty (30) days prior written notice to the Secured Party;
(c) the Partner has, and will have at all times so long as any
Obligations remain outstanding and any Commitment to lend has not been
terminated under the Credit Agreement, good title to the Collateral, free and
clear of all claims, security interests, liens and encumbrances of every nature
whatsoever except in favor of the Secured Party, and the Partner has full power
and authority to enter into and perform this Security Agreement;
(d) the security interest granted herein in the Collateral is, and
at all times so long as any Obligations remain outstanding and any Commitment to
lend has not been terminated under the Credit Agreement shall be, a first,
perfected, and fully enforceable security interest in the Collateral, subject to
any filings or actions required pursuant to the Uniform Commercial Code ("UCC");
(e) neither the execution and delivery by the Partner of this
Security Agreement or of any of the instruments or documents to be delivered
pursuant hereto, nor the consummation by the Partner or the Borrowers of the
transactions herein contemplated, or compliance by the Partner with the
provisions hereof or thereof, will violate any law or regulation, or to its
knowledge any order or decree of any court or governmental instrumentality, or
will conflict with, or result in the breach of, or constitute a default under,
any indenture, mortgage, deed of trust, agreement or other instrument to which
the Partner is a party (including without limitation, any Partnership Agreement)
or by which they may be bound, or result in the creation or imposition of any
lien, charge or encumbrance upon any of the property of the Partner except in
favor of the Secured Party, or require any action of, or filing (other than the
filing of financing statements pursuant to the UCC) with, any governmental or
public body or authority to authorize same;
(f) the Partner will not assign, sell, mortgage, lease, transfer,
pledge, grant a security interest in or lien upon, encumber, or otherwise
dispose of, nor will it suffer or permit any of the same to occur with respect
to, any part or all of the Collateral;
(g) the Partner will, at any time and from time to time, at its
expense, perform all acts and execute all documents reasonably requested by the
Secured Party at any time to evidence, perfect, maintain and enforce the Secured
Party's security interest in the Collateral or otherwise in furtherance of the
provisions of this Security Agreement;
(h) upon request of the Secured Party, the Partner shall, at any
time and from time to time, at its expense, execute and deliver to the Secured
168
Party one or more financing statements pursuant to the UCC and any other papers,
documents or instruments reasonably requested by the Secured Party in connection
with this Security Agreement, and the Partner hereby authorizes the Secured
Party to execute and file at any time or times, one or more financing statements
with respect to all or any part of the Collateral;
(i) the Partner will promptly pay the Secured Party for any and all
sums, costs, and expenses which the Secured Party may reasonably pay or incur
pursuant to the provisions of this Security Agreement or in reasonably
defending, protecting or enforcing the security interest granted herein or
otherwise in connection with the provisions hereof, including but not limited to
all court costs, collection charges, travel expenses, and reasonable attorneys'
fees, and any such amount shall be deemed an advance by the Secured Party to the
Partner and shall be payable on demand;
(j) the Partner will not, without the prior written consent of the
Secured Party, modify, amend or alter in any respect the terms and conditions of
any Partnership Agreement or execute any document or instrument or take any
action whatsoever which will, in the sole judgment of the Secured Party, impair
the value of the Collateral;
(k) the Partner shall, upon the request of the Secured Party, do and
cause to be done such further acts as may be reasonably necessary or proper in
the opinion of the Secured Party to carry out more effectually the provisions of
this Security Agreement;
(l) under no circumstances whatsoever does the Secured Party, by
reason of this Security Agreement, assume any responsibility for, or obligation
with respect to, any of the terms, covenants, conditions, obligations or
liabilities of the Partner under, or with respect to, any Partnership Agreement
or the Obligations, and the Partner shall hold the Secured Party harmless with
respect to any and all claims arising therefrom or relating thereto, other than
actions taken or omitted to be taken solely through the willful misconduct or
gross negligence of the Secured Party; and
(m) the percentage equity interest owned by the Partner in each
Partnership is set forth on Schedule I hereto.
4. (a) If a Default or an Event of Default shall have occurred and
be continuing, all payments, proceeds, monies, compensation, property, assets,
instruments or rights thereafter paid, issued or distributed in respect of the
Collateral and any other proceeds of the Collateral shall be paid or delivered
to the Secured Party, to be held by it as hereinafter set forth; provided,
however, that prior to the occurrence of any such Default or Event of Default,
the Partner shall be entitled to receive and retain such payments, proceeds,
monies, compensation, property, assets, instruments or rights (except such as
result from a dissolution or liquidation of any Partnership), free and clear of
the security interest of the Secured Party therein.
(b) If a Default or Event of Default shall have occurred and be
continuing, the Secured Party may, in its sole discretion, at any time and from
time to time, in its name or the name of the Partner, or otherwise, notify the
Borrowers, the Partner or any obligor on, or other person interested in, any of
the Collateral, of this Security Agreement and to make payment or delivery to
169
the Secured Party of the Collateral, and the Secured Party may, in its sole
discretion and at any time, demand, sue for, collect or receive any money,
rights or property at any time payable or receivable on account of or in
exchange for, or make any compromise or settlement deemed desirable by the
Secured Party with respect to, any of the Collateral, and/or extend the time of
payment or delivery, arrange for payment or delivery in installments, or
otherwise modify the terms of, or release, any of the Collateral, all without
notice to or consent by the Partner or any other person and without otherwise
discharging or affecting the Obligations, the Collateral or the security
interest granted herein.
(c) Any payments, proceeds, monies, compensation, property, assets,
instruments or rights paid, issued or distributed with respect to the Partner's
interests in any of the Partnerships and any other proceeds of the Collateral
received by the Partner, and required to be paid or delivered to the Secured
Party under paragraph 4(a) or 4(b) hereof, shall not be commingled with other
property of the Partner but shall be segregated, held by the Partner in trust as
the exclusive property of the Secured Party and the Partner will immediately
deliver to the Secured Party the identical checks, monies, property or other
proceeds received, duly endorsed, transferred or assigned in blank where
appropriate to effectuate the provisions hereof, the same, together with any
other cash or property received by the Secured Party hereunder, to be held by
the Secured Party as additional Collateral hereunder or, at the Secured Party's
option, to be applied by the Secured Party to the payment of any of the
obligations, whether or not then due and in any order.
5. Upon the occurrence and during the continuance of any Default or
Event of Default, in addition to the rights described in paragraph 4 hereof, the
Secured Party shall have the following rights and remedies (to the extent
permitted by applicable law) in addition to all rights and remedies of a secured
party under the UCC, or of the Secured Party under the Obligations, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively or concurrently: the Secured Party may at any time
and from time to time sell, resell, assign and deliver, grant options for or
otherwise dispose of any or all of the Collateral at public or private sale or
by legal proceedings or otherwise, by one or more contracts, in one or more
parts, at the same or different times, for cash and/or credit, and upon any
terms, at such places and times and to such persons or entities as the Secured
Party deems best, all without demand for performance or any notice or
advertisement whatsoever except that where an applicable statute requires
reasonable notice of sale or other disposition, the Partner agrees that the
sending of ten (10) days notice by ordinary mail, postage prepaid, to its
address set forth below its signature hereto of the place and time of any public
sale or of the time after which any private sale or other intended disposition
is to be made, shall be deemed reasonable notice thereof. If any of the
Collateral is sold by the Secured Party upon credit or for future delivery, the
Secured Party shall not be liable for the failure of the purchaser to pay for
the same, and in such event the Secured Party may resell such Collateral. The
Secured Party may apply the cash proceeds actually received from any sale or
other disposition to the reasonable expenses of holding or selling the
Collateral, to reasonable attorneys' fees and all legal, travel and other
out-of-pocket expenses which may be incurred by the Secured Party in attempting
to collect the Obligations or enforce this Security Agreement or in the
prosecution or defense of any action or proceeding related to the subject matter
of this Security Agreement, and then to the Obligations in such order and as to
principal or interest as Secured Party may desire; and subject to and in
170
accordance with the terms of the Credit Agreement, the Borrowers and the Partner
shall remain liable and will pay the Secured Party on demand any deficiency
remaining, with any surplus after payment in full of all Obligations to be paid
to the Partner as its interests may appear, subject to any duty of the Secured
Party imposed by law to the holder of any subordinate security interest in the
Collateral known to the Secured Party.
6. To effectuate the terms and provisions hereof, the Partner hereby
designates and appoints the Secured Party and its designees or agents as
attorney-in-fact of the Partner, irrevocably and with power of substitution, at
any time upon the occurrence of a Default and from time to time thereafter, with
authority to endorse the name of the Partner on any notes, acceptances, checks,
drafts, money orders, instruments or other evidences of payment or proceeds of
the Collateral that may come into the Secured Party's possession or control; to
sign the name of the Partner on any statements, documents, drafts against and
notices to obligors with respect to the Collateral; to execute proofs of claim
and loss; to execute any endorsements, assignments, or other instruments of
conveyance or transfer; to execute releases; and to do all other acts and things
necessary and advisable in the sole discretion of the Secured Party to carry out
and enforce this Security Agreement, and to obtain the benefits hereof. All acts
of said attorney or designee are hereby ratified and approved and said
attorney-in-fact or designee shall not be liable for any acts of commission or
omission, nor for any error of judgment or mistake of fact or law. This power of
attorney, being coupled with an interest, is irrevocable while any of the
Obligations shall remain outstanding.
7. The Partner hereby agrees that, without notice or further assent,
before, at or after the maturity of the Obligations, expressed or declared, (a)
the liability of the Partner, the Borrowers or any other party, for or upon the
Obligations, may, from time to time, in whole or in part, be renewed, extended,
modified, prematured, compromised or released by the Secured Party, in
bankruptcy proceedings or otherwise, as the Secured Party may deem advisable and
(b) the Secured Party may, from time to time, in its discretion, exchange,
modify, release or surrender, in whole or in part, with or to the Partnerships
and their representatives, the Borrowers or any other appropriate party, as the
case may be, (i) any Collateral or any substitutes or additions thereto, or (ii)
the surplus net proceeds derived from the sale or sales or disposition of the
Collateral by the Secured Party pursuant to the terms of this Security
Agreement. The Partner hereby waives any and all notice of the acceptance of
this Security Agreement, of the creation, accrual or maturity (whether by
declaration or otherwise) of any and all of the Obligations, and of the Secured
Party's reliance upon this Security Agreement.
8. No act, failure or delay by the Secured Party shall constitute a
waiver of its rights and remedies hereunder or otherwise. No single or partial
waiver by the Secured Party of any Default or right or remedy which it may have
shall operate as a waiver of any other Default, right or remedy or of the same
Default, right or remedy on a future occasion. The Partner hereby waives
presentment, notice of dishonor and protest of all instruments included in or
evidencing any of the Obligations or the Collateral, and any and all other
notices and demands whatsoever (except as expressly provided herein). The
Partner agrees to pay, on demand, all reasonable out-of-pocket expenses incurred
by the Secured Party in connection with the negotiation, execution, perfection,
consummation and enforcement of this Security Agreement, the Obligations, and
the transactions contemplated hereunder and thereunder, including but not
171
limited to the fees and expenses of counsel to the Secured Party. In the event
of any litigation with respect to any matter connected with this Security
Agreement, the Obligations or the Collateral, the Partner hereby waives the
right to a trial by jury and all defenses, rights of set-off (except as
applicable procedural rules require the assertion of a right of set-off under
penalty of losing such right if not asserted) and rights to interpose
counterclaims of any nature. All amounts payable by the Partner hereunder shall
bear interest at the interest rate applicable to the Obligations, except that
such rate shall not exceed the rate of interest permitted to be charged to the
Partner under applicable law. The Partner hereby irrevocably consents to the
non-exclusive jurisdiction of the Courts of the State of New York and of any
Federal Court located in such State in connection with any action or proceeding
arising out of or relating to the Obligations, this Security Agreement or the
Collateral, or any document or instrument delivered with respect to any of the
Obligations. The Partner hereby waives personal service of any summons,
complaint or other process in connection with any such action or proceeding and
agrees that the service thereof may be made by certified or registered mail
directed to the Partner at the address set forth below, or at such other
addresses as the Partner may designate by written notification by certified or
registered mail directed to and received by the Secured Party at its address set
forth below. In the alternative, in its discretion the Secured Party may effect
service upon the Partner in any other form or manner permitted by law. All terms
herein shall have the meanings as defined in the UCC, unless the context
otherwise requires. No provision hereof shall be modified, altered or limited
except by a written instrument expressly referring to this Security Agreement
and to such provision, and executed by the party to be charged. The execution
and delivery of this Security Agreement has been authorized by the Hoard of
Directors of the Partner. This Security Agreement shall be binding upon the
heirs, executors, administrators, successors, and assigns of the Partner, and
shall, together with the rights and remedies of the Secured Party hereunder,
inure to the benefit of the Secured Party, its successors, endorsees and
assigns. This Security Agreement and the Obligations shall be governed in all
respects by the laws of the State of New York. If any term of this Security
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall in no way be affected thereby. The Partner
acknowledges receipt of a copy of this Security Agreement.
9. Capitalized terms used but not defined herein shall have the
meaning assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the Partner and the Secured Party have duly
executed or caused this Security Agreement to be duly executed in as of the date
first above set forth.
THE PARTNER: FOODARAMA SUPERMARKETS, INC.
-----------
By: ______________________________
Title:
Address:
172
SECURED PARTY: GMAC BUSINESS CREDIT, LLC, as Agent
-------------
By:_________________________
Title:
Address:
CONSENTED TO:
THE PARTNERSHIPS: WESTLO ASSOCIATES
----------------
By:_________________________
Title:
Address:
173
Schedule I to Security Agreement (Partnership Interests)
I Partnership:
II Partnership Agreements:
III Percentage Ownership of Each Partnership:
174
EXHIBIT H
FORM OF LANDLORD'S WAIVER AND CONSENT
NAME OF RECORD OWNER OF REAL PROPERTY: _______________________
("Landlord")
ADDRESS OF REAL PROPERTY: __________________________________________
(the "Premises")
WHEREAS, Landlord is the owner of the Premises, and represents that
Landlord has or is about to enter into a lease transaction (the "Lease") with
Foodarama Supermarkets, Inc. ("Borrower") pursuant to which Borrower has or will
acquire a leasehold interest in all or a portion of the Premises; and
WHEREAS, GMAC Business Credit, LLC ("GMACBC") and various other financial
institutions (collectively, "Lenders") and GMACBC as agent for Lenders ("Agent")
has or is about to enter into a financing transaction with Borrower; to secure
such financing, Borrower has granted to Agent for its benefit and for the
ratable benefit of Lenders a security interest and lien in the tangible and
intangible personal property of Borrower, including, without limitation, goods,
inventory, machinery and equipment, together with all additions, substitutions,
replacements and improvements to, and the products and proceeds of the foregoing
(collectively, the "Collateral"); and
WHEREAS, all or a portion of the Collateral may from time to time be
located at the Premises or may become wholly or partially affixed to the
Premises;
NOW THEREFORE, in consideration of any financial accommodation extended by
Agent and Lenders to Borrower at any time, and other good and valuable
consideration the receipt and sufficiency of which Landlord hereby acknowledges,
Landlord hereby agrees as follows:
1. A true and correct copy of the Lease is attached hereto as Exhibit A.
The Lease is in full force and effect and Landlord is not aware of any existing
default under the Lease.
2. The Collateral may be stored, utilized and/or installed at the Premises
and shall not be deemed a fixture or part of the real estate but shall at all
times be considered personal property, whether or not any of the Collateral
becomes so related to the real estate that an interest therein arises under real
estate law.
3. Until such time as the obligations of Borrower to Agent and Lenders are
paid in full, Landlord disclaims any interest in the Collateral, and agrees not
to distrain or levy upon any of the Collateral or to assert any claim against
the Collateral for any reason.
4. Agent, any Lender or their representatives may enter upon the Premises
at any time to inspect or remove the Collateral, and may advertise and conduct
public auctions or private sales of the Collateral at the Premises, in each case
175
without liability of Agent or Lenders to Landlord; provided however, that Agent
and Lenders shall promptly repair, at their expense, any physical damage to the
Premises actually caused by said removal by Agent and Lenders. Agent and Lenders
shall not be liable for any diminution in value of the Premises caused by the
absence of Collateral actually removed or by any necessity of replacing the
Collateral.
5. Landlord shall not interfere with any sale of the Collateral, by public
auction or otherwise, conducted by or on behalf of Agent and Lenders on the
Premises.
6. Landlord agrees to provide Agent with written notice of any default or
claimed default by Borrower under the Lease, and prior to the termination of the
Lease, to permit Agent and Lenders the same opportunity to cure or cause to be
cured such default as is granted Borrower under the Lease, provided, however
that Agent and Lenders shall have at least ten (10) days following receipt of
said notice to cure such default. Landlord will permit Agent and Lenders to
remain on the Premises for a period of up to one hundred eighty (180) days
following receipt by Agent of written notice from Landlord that Landlord is in
possession and control of the Premises, has terminated the Lease and is
directing removal of the Collateral, subject, however, to the payment to
Landlord by Agent and/or Lenders of the basic rent due under the Lease for the
period of occupancy by Agent and Lenders, pro-rated on per diem basis determined
on a 30 day month. Agent's and Lenders' right to occupy the Premises under the
preceding sentence shall be extended for the time period Agent and Lenders are
prohibited from selling the Collateral due to the imposition of the automatic
stay by the filing of bankruptcy proceedings by or against Borrower. Agent and
Lenders shall not assume nor be liable for any unperformed or unpaid obligations
of Borrower under the Lease.
7. This waiver shall inure to the benefit of Agent, Lenders, their
successors and assigns and shall be binding upon Landlord, its heirs, assigns,
representatives and successors. Landlord agrees and consents to the filing of
this document for recording on the Land Records.
All notices to Agent hereunder shall be in writing, sent by certified mail, and
shall be addressed to Agent at the following address:
__________________________________________.
Dated this _____ day of ___________, 2002.
Witnessed By: LANDLORD: _________________________
By:______________________________ By:______________________________
Name: Name:
Title: Title:
176
STATE OF _____________ )
: ss.:
COUNTY OF ___________ )
On the _______ day of _____________, 200__, before me personally came
_______________ to me known, who, being by me duly sworn did depose and say that
s/he is the _____________ of _______________________________, the corporation
and landlord described in and which executed the above instrument; and that s/he
signed her/his name thereto by order of the board of directors of said
corporation.
--------------------------------
Notary Public
177
EXHIBIT A
[COPY OF LEASE]
178
EXHIBIT I
FORM OF NOTICE OF CONTINUATION/CONVERSION
________________ ___, 200__
GMAC Business Credit, LLC, as Agent
630 Fifth Avenue
New York, New York 10011
FOODARAMA SUPERMARKETS, INC.
Gentlemen:
This notice of continuation/conversion is delivered to you pursuant to
Section 2.02(e) of the Second Amended and Restated Revolving Credit and Term
Loan Agreement (as amended, restated, modified and supplemented, the "Credit
Agreement"), dated as of January __, 2002, among New Linden Price Rite, Inc.,
Foodarama Supermarkets, Inc., the Guarantors named therein, the Lenders named
therein, and GMAC Business Credit, LLC, as agent for the Lenders. Unless
otherwise defined herein or unless the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
The Borrowers hereby request that the Lenders [(a) convert the following
Eurodollar Loans into Base Rate Loans, (b) convert the following Base Rate Loans
into Eurodollar Loans or (c) convert the following Eurodollar Loans into a
subsequent Interest Periods as listed below] [INSERT APPLICABLE PROVISION].
Borrower Type of Loan Principal Amount
Each of the Borrowers hereby certifies that, on the date hereof, and on
the date such Loans are converted and/or continued; the representations and
warranties set forth in Article IV of the Credit Agreement and in any documents
delivered therewith, including, without limitation, the Loan Documents, are true
and correct in all material respects as of the date hereof (except insofar as
such representations and warranties relate expressly to an earlier date).
Each of the Borrowers further certifies that the Parent and its
subsidiaries are in compliance with all the terms and conditions contained in
the Credit Agreement on their part to be observed or performed, and at the time
of and immediately after continuation/conversion of such Loans no Default or
Event of Default has occurred or is continuing.
Each of the Borrowers further certifies that there shall be sufficient
remaining Term Loans and/or Capital Expenditure Loans, as the case may be, after
179
giving effect to the continuation/conversion of the Loans specified above, to
repay the next succeeding scheduled principal installment with respect to such
Term Loans and/or Capital Expenditure Loans, as the case may be, without
requiring an indemnity payment under Section 2.10B of the Credit Agreement.
The Borrowers have caused this notice of continuation/conversion to be
executed and delivered, and certification contained herein to be made, by their
respective ______________________ this __ day of ______, ____.
NEW LINDEN PRICE RITE, INC.
By:_________________________
Name:
Title:
FOODARAMA SUPERMARKETS, INC.
By:__________________________
Name:
Title:
180
SCHEDULE 2.01
COMMITMENTS
GMAC Business Credit, LLC:
Revolving Commitment $17,500,000
Term Commitment $12,500,000
Capital Expenditure Facility Commitment $10,000,000
-----------
Total: $40,000,000
50%
Address: 461 Fifth Avenue, 21st Floor
New York, New York 10017
The Bank of New York:
Revolving Commitment $8,750,000
Term Commitment $6,250,000
Capital Expenditure Facility Commitment $5,000,000
----------
Total: $20,000,000
25%
Address: 385 Rifle Camp Road, 4th Floor
West Patterson, New Jersey 07424
181
Citizens Business Credit Company:
Revolving Commitment $8,750,000
Term Commitment $6,250,000
Capital Expenditure Facility Commitment $5,000,000
----------
Total: $20,000,000
25%
Address: 350 Fifth Avenue, Suite 809
New York, New York 10118
182
SCHEDULE 2.02
DOMESTIC LENDING OFFICES
GMAC Business Credit, LLC
3000 Town Center, Suite 280
Southfield, Michigan 48075
The Bank of New York
New York, New York 11772
Citizens Bank
One Citizens Drive
Riverside, Rhode Island 02915
183
SCHEDULE 2.03
EURODOLLAR LENDING OFFICES
GMAC Business Credit, LLC
3000 Town Center, Suite 280
Southfield, Michigan 48075
The Bank of New York
New York, New York
Citizens Bank
One Citizens Drive
Riverside, Rhode Island 02915
184
Schedule 3.03 - Original Mortgages
(1) Neptune, NJ (Term Loan) (2) Neptune, NJ (Revolving Loan) (3) Sayreville, NJ
(Term Loan) (4) Sayreville, NJ (Revolving Loan) (5) Freehold, NJ (supermarket)
(Term Loan)
(6) Freehold, NJ (supermarket) (Revolving Loan) (7) Freehold, NJ (liquor store)
(Term Loan) (8) Freehold, NJ (liquor store) (Revolving Loan) (9) Edison, NJ (Old
Post Road) (Term Loan) (10) Edison, NJ (Old Post Road) (Revolving Loan) (11)
Edison, NJ (Oak Tree Road) (Term Loan) (12) Edison, NJ (Oak Tree Road)
(Revolving Loan) (13) Middletown, NJ (new location) (Term Loan) (14) Middletown,
NJ (Lease #1) (Revolving Loan) (15) Brick, NJ (Term Loan) (16) Brick, NJ
(Revolving Loan) (17) West Long Branch, NJ (Term Loan) (18) West Long Branch, NJ
(Revolving Loan) (19) Montgomery, NJ (Term Loan) (20) Montgomery, NJ (Revolving
Loan) (21) Aberdeen, NJ (Term Loan) (22) Aberdeen, NJ (Revolving Loan) (23)
Branchburg/Somerville (Term Loan) (24) Branchburg/Somerville (Revolving Loan)
(25) Lakewood (Term Loan) (26) Lakewood (Revolving Loan) (27) Piscataway (Term
Loan) (28) Piscataway (Revolving Loan) (29) Wall Township (Term Loan) (30) Wall
Township (Revolving Loan) (31) Linden (fee property)
185
Schedule 4.01
Qualified Jurisdictions
Exact Name Qualified Organizational Number
Jurisdiction
Foodarama Supermarkets, Inc. New Jersey 3927852500
Shop Rite of Reading, Inc. Pennsylvania 328735
New Linden Price Rite, Inc. New Jersey 6500531000
Shop-Rite of Malverne, Inc. New York N/A
186
Schedule 4.06 (a)
Litigation
1. Foodarama v. Hilltop Supermarkets, Inc. and Franklin Center Associates.
Docket No. MID-L-3156-01. Foodarama has been named in an action regarding its
Franklin Township store On April 26, 2002, summary judgment was entered in favor
of Foodarama. Plaintiff, Hilltop Supermarkets, Inc. has filed a motion for
reconsideration, and has hired a new attorney. The motion for reconsideration
was denied and Hilltop Supermarkets, Inc. has appealed the court's decision. The
claim against Foodarama was for approximately $450,000 and the court dismissed
the complaint. The court did, however, award Hilltop Supermarkets, Inc. the
additional rent under the lease for the months of September 2000 and October
2000, because a formal extension of the lease was negotiated for those two
months over one year prior to the lapsing of the lease term. Further, the court
found that the assignment pursuant to which Foodarama took possession of the
lease allowed for extensions of the lease, and therefore the extension obligated
Foodarama to pay the additional rent ($36,000) to Hilltop Supermarkets, Inc.
Foodarama successfully cross-moved to have this liability shifted to Franklin
Center Associates. By way of background, Foodarama took an assignment of the
lease at the Franklin Township store from the Plaintiff Hilltop Supermarkets,
Inc., and through a variety of agreements was required to pay a fee to the
Plaintiff, Hilltop Supermarkets, Inc., above and beyond the rent paid to the
landlord Franklin Center Associates. Foodarama did not renew the lease with
Franklin Center Associates as it was contemplated that it would open a new store
in North Brunswick at a different site. Although Foodarama did not renew the
lease it retained possession of the premises, and paid rent on a month-to-month
basis as a month-to-month tenant to the landlord, Franklin Center Associates.
The Plaintiff's claim against Franklin Center Associates was that it was
required and obligated to provide the Plaintiff with notice that the lease was
not renewed and allow an additional thirty (30) days for the Plaintiff to renew
the lease itself and exercise the options under the lease. Franklin Center
Associates was granted summary judgment motion on this issue.
2. Foodarama v. Unclaimed Freight, Inc. Docket No. MON-L-986-02. Unclaimed
Freight ("Unclaimed Freight") was a sublessee of property leased by Foodarama
and located in Reading, Pennsylvania. Foodarama had an ongoing dispute with the
landlord regarding Foodarama's obligation to make repairs to the roof of the
leased premises and other repairs required upon surrender of the leased
premises. Foodarama and the landlord agreed to a cost of repairs of
approximately $107,000. Foodarama believes it has a right to recover this amount
from the sub-tenant, Unclaimed Freight. Foodarama's outside counsel has filed a
lawsuit on behalf of Foodarama against Unclaimed Freight for amounts allegedly
due upon the termination of Foodarama's lease with the landlord, and its
sublease to Unclaimed Freight. The amount in controversy is approximately
$107,000. Unclaimed Freight has refused to pay the amount due which Foodarama
believes is payable pursuant to the terms of the sublease and the prime lease.
187
The suit alleges breach of lease/contract. The sublease came to be assigned to
an entity known as UFC, Inc., by way of an order issued from the United States
Bankruptcy Court relating to the bankruptcy of UFC, Inc.'s predecessor, Valley
Advisors, Inc. Valley Advisors, Inc. was the original sublessor. Service has
been effectuated only upon the related entity Unclaimed Freight LLC. This
defendant filed a motion to dismiss in lieu of an answer, and that motion has
been denied. Discovery is continuing.
3. Carmen J. Maggio, Chapter 7 Trustee Of Carmen Forgione & Sons, Inc. v.
Foodarama Supermarkets, Inc. Docket No. MON-L-5006-01. Carmine J. Maggio
("Maggio") Chapter 7 Trustee of Carmine Forgone & Sons, Inc. ("Forgione"), filed
a complaint against Foodarama in October, 2001, claiming that Foodarama owes
$27,709.88 for waste disposal services rendered by the bankrupt, Forgione.
Foodarama has filed an answer denying all allegations. The Company's records
show something less than $27,709.88 is due, and confirmed approximately $15,000
was due. Plaintiff has accepted 12,500. Recently, Plaintiff's counsel has
amended the complaint to add a second claim. Upon further review of the bankrupt
entities records an additional claim for unpaid invoices of $80,000 has been
made. This information has just been recently sent to Foodarama for review.
4. Melvin Jules Bukiet, et al, v. Foodarama Supermarkets, Inc. et al.
Docket No. MID-C-101-02. This lawsuit was filed in the Superior Court of New
Jersey, Middlesex County Chancery Division, alleging that the directors and the
named officers breached their fiduciary duties to the Company's shareholders
through their previous recommendation, implementation and administration of the
2001 Stock Incentive Plan, and by proposing that the shareholders adopt the
amendments to the 2001 Stock Incentive Plan and to the Company's certificate of
incorporation. The plaintiffs allege that the actions have been taken to enrich
and entrench the defendants at the shareholders' expense. The plaintiffs have
asked the court, among other things, to reverse previous grants of options to
the defendants under the 2001 Stock Incentive Plan and to enjoin the Company
from submitting the proposals described above to shareholders at the 2002 annual
meeting. A motion to dismiss the complaint was filed on June 7, 2002, and the
motion has been carried until the first return date in January 2003. Plaintiffs'
opposition to the motion to dismiss the complaint is due to be filed on November
25, 2002.
188
Schedule 4.10
ERISA Representation Qualifications
Borrower is the sponsor of the following Pension Plans:
- Foodarama Supermarkets, Incorporated Pension Plan
- Foodarama Local 1360 Employees' Retirement Plan
Borrower contributes to the following Multiemployer Plans:
- UFCW Local 1262 and Employers Pension Fund (includes Locals 1263 & 1265)
- UFCW Local 464 A Pension Fund (includesLocal 465)
In approximately October 2000, a $241 accumulated funding deficiency existed for
35 days with respect to the Local 1360 Plan. The deficiency was due to an
administrative error and was corrected promptly upon discovery. The 30 day
notice period with respect to this event has not been waived.
With respect to the Foodarama Supermarkets, Incorporated Pension Plan, there was
a delay in payment as a result of the Parent's misunderstanding that payments
whose due dates fell on a weekend (in this case June 15, 2002) were due on the
Monday following the weekend due date. The delay in payment triggered an excise
tax which was promptly adjusted. The delay in payment resulted in a temporary
accumulated funding deficiency. The 30 day notice period with respect to this
event has not been waived.
189
Schedule 4.14
Bank Accounts
Bank Account Information intentionally omitted.
190/191
Schedule 4.15
Subsidiaries
Shop Rite of Reading, Inc.
New Linden Price Rite, Inc.
Shop-Rite of Malverne, Inc.
192
Schedule 4.16 (a-1)
Owned Real Property
1. 1930 East Elizabeth Avenue Meat/Prepared Foods Commissary
Linden, New Jersey 07036
2. 1931 Pennsylvania Avenue Meat/Prepared Foods Commissary
Linden, New Jersey 07036
3. 1911 Pennsylvania Avenue Meat/Prepared Foods Commissary
Linden, New Jersey 07036
4. 23 North Park Avenue Unpaved Parking Lot
Linden, New Jersey 07036
193
Schedule 4.16 (a-2)
Leased Real Property
Operating Locations
1. 1700 Madison Avenue, Lakewood, New Jersey 08701- Supermarket/KX
2. South Street & Route 9, Freehold, New Jersey 07728- Supermarket
3. South Street & Route 9, Freehold, New Jersey 07728- Liquor Store
4. South Street & Route 9, Freehold, New Jersey 07728- Garden Center
5. 2200 Highway 66, Neptune, New Jersey 07753- Supermarket/KX- Liquor Store
6. Routes 36 & 71, West Long Branch, New Jersey 07740- Supermarket
7. Route 35, Belmar, New Jersey 07719- Supermarket
8. Route 70 & Chambersbridge Road, Bricktown, New Jersey 08723- Supermarket
9. 1665 Oak Tree Road, Edison, New Jersey 08820- Supermarket/KX
10. 877 St. George Avenue, Woodbridge, New Jersey 07095- Supermarket
11. 14-22 Prospect Avenue, East Brunswick, New Jersey 08816- Supermarket
12. Route 36, Hazlet, New Jersey 07730- Supermarket
13. Route 35 & Harmony Road, Middletown, New Jersey 07740- Supermarket
14. Route 130, East Windsor, New Jersey 08520- Supermarket
15. Route 130, Hightstown, New Jersey 08520- Garden Center
16. 1306 Centennial Avenue, Piscataway, New Jersey 08854- Supermarket
17. 2909 Washington Road, Sayreville, New Jersey 08872- Supermarket
18. Route 1 & Old Post Road, Edison, New Jersey 08817-Supermarket
19. Route 27 & Veronica, Franklin Township, New Jersey 08873- Supermarket
20. 280 Highway 9, Morganville, NJ 07751-Supermarket/KX
21. Lloyd Road & Route 34, Aberdeen, NJ 07747-Supermarket
22. 611 West Union Avenue, Bound Brook, NJ 08805- Supermarket/KX
23. 1325 Route 206 Skillman, New Jersey 08558- Supermarket
24. 2445 Highway 34, Manasquan, New Jersey 08736- Supermarket
25. 3166 Route 22, Somerville, New Jersey 08876- Supermarket
26. Fairfield Industrial Park, Bldg. 2, Route 33, Freehold, New Jersey 07728-
Warehouse
27. Fairfield Industrial Park, Bldg. 3, Route 33, Freehold, New Jersey 07728-
Warehouse
28. Fairfield Industrial Park, Bldg. 8, Route 33, Freehold, New Jersey 07728-
Bakery Commissary
194
29. Fairfield Industrial Park, Bldg. 6, Route 33, Freehold, New Jersey 07728-
Office
Other Locations
1. 400 Renaissance Blvd., North Brunswick, NJ 08902- Supermarket Under
Construction
2. 877 St. George Avenue, Woodbridge, NJ 07095- Supermarket Under Construction
3. 1750 North Olden Avenue, Trenton, NJ 08638- Supermarket Under Construction
4. Route 130 North & Crosswicks Hamilton Square Road, Hamilton, NJ -Executed
Lease
5. 4095 US Route 1, South Brunswick, NJ 08852- Lease Negotiations
6. Route 9 South & West Farms Road, Howell, NJ- Lease Negotiations
7. Route 71 & 18th Avenue, Wall Township, NJ- Lease Negotiations
8. 261 Highway 34 & Lloyd Road, Aberdeen, NJ -Executed Lease
9. Dover Mall, Highway 37 & 166, Toms River, NJ- Executed Lease
10. Nottingham Way & Klockner Road, Hamilton, NJ- Executed Lease
11. Route 1 South & Quaker Bridge Road, Lawrence Township, NJ -Lease
Negotiations
12. Freehold Business Park 32 Asbury Avenue, Freehold, NJ 07728- Bakery
Executed Lease
Non-Operating Locations
1. Suffolk & Wheeler Avenue, Central Islip, New York- Sublet- Supermarket
2. Kennedy Blvd., Lakewood, New Jersey 08701- Warehouse
3. 521 Raritan Street, Sayreville, New Jersey- Sublet
4. Route 34 & Route 537, Colts Neck, New Jersey- Ground Lease
5. Hempstead Pike, West Hempstead, NY 11552- Sublet- Supermarket
6. 2450 Jerusalem Avenue, North Bellmore, NY- Sublet- Supermarket
7. 105-38 Rockaway Beach Boulevard, Rockaway Park, NY 11694- Sublet-
Supermarket
8. 3926 Linden Street, Bethlehem, Pa 18017-Sold to Wakefern member
9. 2641 MacArthur Road, Whitehall, Pa 18052-Sold to Wakefern member
10. 629 Higgins Avenue, Brielle, New Jersey 08730- Vacant
Does not include locations for which leases have been assigned.
195
Schedule 4.19
Environmental Law Compliance
Between 1976 and 1981, the Parent leased property located at Route 9 and Craig
Road in Manalapan, New Jersey from Vornado/Two Guys. There were two underground
storage tanks at the property, one owned and operated by Vornado/Two Guys and
the other operated by the Parent. In 1979, there was a spill from one of the
tanks. The Parent and Vornado/Two Guys promptly remedied the spill to the
satisfaction of the New Jersey Department of Environmental Protection and the
matter was closed.
Since 1987, the Parent has been a ground lease tenant at property located at
Routes 34 and 537 in Colts Neck, New Jersey. The Parent has not developed the
property and has never conducted any operations there. The property was formerly
operated as an auto salvage yard. Saker Enterprises ("Saker") is the owner of
the South Freehold Shopping Center, Freehold, New Jersey. The property has been
the subject of an environmental investigation and remediation with oversight
from the New Jersey Department of Environmental Protection ("NJDEP") since
November 2000. The remediation is being conducted pursuant to a Memorandum of
Agreement between Saker and NJDEP for voluntary cleanup. Elevated levels of
tetrachloroethene (PCE) (and related biodegradation compounds) have been
detected in the groundwater and soils at the property in the vicinity of a dry
cleaners, located at Store 16 in the Shopping Center, and it is believed that
the dry cleaning operations are the source of contamination at the property. At
this time, the investigation and remediation of contamination at the property is
ongoing.
196
Schedule 4.20
Material Agreements
1. Trademark License Agreement with Wakefern Food Corporation
2. Wakefern Food Corporate Stockholders' Agreement dated 8/20/87- amended
2/20/92
3. Union Contracts:
Local 1360 - Clerks, East Windsor- 02/24/02-02/25/06 Local 464A -
Meat, New Jersey- 12/20/98-04/19/03 Local 465 - Meat, Commissary-
10/22/00-02/26/05 Local 1262 - Clerks, New Jersey except East
Windsor- 04/13/97-04/16/05
Local 1263 - Customer Service, New Jersey except East Windsor-
04/13/97-04/16/05
Local 1265 - Bakery Commissary- 08/18/02-08/19/06
4. Equipment/Construction Contracts
Vendor Amount
2134 A & J Refrigeration $289,000
216 Little Falls Road
Cedar Grove, NJ 07009
10160 Construction Maintenance Plus $509,500
2301 E Edgar Building 5
Linden, NJ 07036
18090 Engineering and Refrigeration, Inc. $218,000
56-58 Baldwin Avenue
Jersey City, NJ 07306
50666 Northwood Construction Co. Inc. $792,000
2563 Wyandotte Road
Willow Grove, Pa 19090
62002 C. Raimondo Construction $820,000
540 Bergen Blvd.
Fort Lee, NJ 07024
11604 Capitol Refrigeration $691,000
800 New York Avenue
Trenton, NJ 08638
30852 Milric Construction $4,000,000
4900 Route 33 Suite 101
Neptune, NJ 07753
32728 Hill Phoenix $151,000
PO Box 79102
Baltimore, MD 21279
29306 Hussman $243,000
3001 Irwin Road
Mt. Laurel, NJ 08054
43990 Monarch Plumbing $254,000
701 N. Stiles Street PO Box 370
Linden, NJ 07036
42840 L.S. Mechanical $402,000
197
Vendor Amount
PO Box 949
Clark, NJ 07066
37146 Katzianer Construction $287,000
1420 Easton Road
Warrington, Pa 18976
72542 Star-Lo Electric $910,000
32 South Jefferson Road
Whippany, NJ 07981
67808 Summit Steel $517,000
PO Box 730
New Castle, De 19720
35190 Joseph S. Smith Roofing, Inc. $264,000
313 Hulmeville Road
Lang Horne, Pa 19047
11550 C. H. Babb $305,000
445 Paramount Drive
Raynham, Ma 02767
8300 Chelsea $865,000
34 Chelsea Drive
Jackson, NJ 08527
85076 Wescho Company, Inc. $400,000
924 South Concord Road
West Chester, PA 19382
2460 A&J Fixtures $4,232,000
216 Little Falls Road
Cedar Grove, NJ 07009
*Balances as of 9/20/02
198
Schedule 5.01(A)
Capital Expenditure Loans
Store # 514
Location: Ewing
*Note: items listed below are not subject to 180 day limitation as detailed
in Section 5.01A (b)
Vendor Invoice Invoice Date Billed Amount Description
------ ------- ------------- -------------- -----------
A & J Fixtures, Inc. 082188 05/26/02 $72,144 Produce case
Sign Art 1 06/24/02 $24,910 Carved signs
Construction Maintenance Plus 1 07/31/02 $34,660 Walk-In coolers & prep room
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Total Requested $131,714
===========================================================================================================================
199
Schedule 5.01(A)
Capital Expenditure Loans
Store # 522
Location: Woodbridge
*Note: items listed below are not subject to 180 day limitation as detailed
in Section 5.01A (b)
Vendor Invoice Invoice Date Billed Amount Description
------ ------- ------------- -------------- -----------
RPC Construction, Inc. 267 01/17/01 $100,000 compressors
Wescho Company, Inc. 020013 01/17/02 $55,602 Refrigerated cases
Wescho Company, Inc. 020014 01/17/02 $106,831 Refrigerated cases
A & J Fixtures, Inc. 2097 01/25/02 $140,810 Cases
A & J Fixtures, Inc. 2123 02/22/02 $21,509 Grill case
Solutions Restaurant Equipment 211357 05/28/02 4,500 2 deck gas oven
Beroc 681 06/17/02 $3,400 Gemini 2 door roll-in proofbox
Solutions Restaurant Equipment 211413 06/17/02 4,000 Berkel bread slicer, Hobart
tenderizer
Sign Art 1 06/24/02 $24,910 Carved signs
Chef's Equipment Emporium Co. 1003995 07/05/02 $5,000 Rotisserie pan
Solutions Restaurant Equipment 211728 07/20/02 4,100 Bizerba slicer, under counter
oven
A & J Fixtures, Inc. 2343 07/24/02 $97,880 Compressor system
Engineering and Refrigeration Inc. 0125777-IN 07/26/02 $60,370 Refrigeration
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Total Requested $473,310
===========================================================================================================================
200
Schedule 5.01(A)
Capital Expenditure Loans
Store # 524
Location: North Brunswick*
*Note: items listed below are not subject to 180 day limitation as detailed
in Section 5.01A (b)
Vendor Invoice Invoice Date Billed Amount Description
------ ------- ------------- -------------- -----------
Sun Coast Sales 2875 12/01/99 $5,596 hot food drop in
Engo 12523 05/21/99 $500 CRC desk
CMP Refrigeration 2085 09/13/99 $15,762 meat case
A & J Fixtures 1004 01/05/00 $11,565 case
Sun Coast Sales 3426 01/31/00 $2,920 cart & stand
Mosler J013363 05/20/00 $3,758 safe
A & J Fixtures 1209 05/25/00 $3,494 refrigerated dome
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Total Requested $43,595
===========================================================================================================================
201
Schedule 6.17
Collateral Locations
Location Address Landlord Landlord Consent Leasehold
-------- ------- Waiver ------- Mortgage
Marlboro Supermarket/KX 280 Highway 9 no no no
Morganville, NJ 07751
Neptune Supermarket/KX 2200 Highway 66 yes yes yes
Neptune, NJ 07753
Lakewood Supermarket/KX 1700 Madison Avenue Suite yes yes yes
21
Lakewood, NJ 08701
Aberdeen Supermarket Lloyd Road & Route 34 yes yes yes
Aberdeen, NJ 07747
Freehold Supermarket South Street & Route 9 yes yes yes
Freehold, NJ 07728
West Long Branch Supermarket Route 36 & Route 71 yes yes yes
West Long Branch, NJ 07740
Hazlet Supermarket Route 36 yes no no
Hazlet, NJ 07730
Middletown Supermarket 1361 Route 35 yes yes yes
Middletown, NJ 07748
Belmar Supermarket Route 35 no no no
Wall, NJ 07719
Bricktown Supermarket Route 70 & Chambersbridge (a) yes yes
Road
Brick, NJ 08723
Bound Brook Supermarket/KX 611 West Union Avenue yes (a) no
Bound Brook, NJ 08805
East Windsor Supermarket/KX Route 130 no no no
East Windsor, NJ 08520
Oak Tree Road Supermarket/KX 1665 Oak Tree Road yes yes yes
Edison, NJ 08820
Woodbridge Supermarket 877 St. George Avenue (a) no no
Woodbridge, NJ 07095
Piscataway Supermarket 1306 Centennial Avenue yes yes yes
202
Piscataway, NJ 08854
Sayreville Supermarket 2909 Washington Road yes yes yes
Parlin, NJ 08859
Edison Supermarket Route 1 & Old Post Road no yes yes
Edison, NJ 08817
Franklin Supermarket Route 27 & Veronica Road no no no
Franklin, NJ 08873
East Brunswick Supermarket 14-22 Prospect Avenue (a) no no
East Brunswick, NJ 08816
Montgomery Supermarket 1325 Highway 206 yes yes yes
Skillman, NJ 08558
Branchburg Supermarket 3166 Route 22 yes yes
Somerville, NJ 08876
Wall Supermarket 2445 Highway 34 yes yes yes
Manasquan, NJ 08736
Hightstown Garden Center Route 130 no no no
Hightstown, NJ 07095
Freehold Garden Center South Street & Route 9 no no no
Freehold, NJ 07728
Freehold Liquor Store South Street & Route 9 yes yes yes
Freehold, NJ 07728
Neptune Liquor Store 2200 Highway 66 Part of Neptune Supermarket lease.
Neptune, NJ 07753 No separate lease
Meat/Processed Foods Commissary 1930 Elizabeth Avenue Owned by borrower.
Linden, NJ 07036
Bakery Commissary Fairfield Industrial Park yes no no
Building 8
Freehold, NJ 07728
Corporate Office Fairfield Industrial Park yes no no
922 Highway 33
Freehold, NJ 07728
Warehouse Route 9 & Kennedy Boulevard no no no
Lakewood, NJ 08701
Warehouse 339 Fairfield Road no no no
Howell, NJ
(a) : Sent to Landlord for execution.
203
(b) : Landlord approved; sent to Landlords' lender.
204
Schedule 7.01
Existing Liens
All references to financing statements include any and all amendments and
continuations thereof and thereto.
--------------------------------------------------------------------------------
Debtor Secured Party Financing Statement
--------------------------------------------------------------------------------
Parent Pitney Bowes Credit Corp NJ Department of Treasury
Financing Statement #1503819
NJ Department of Treasury
Financing Statement #1831663
NJ Department of Treasury
Financing Statement #1950160
NJ Ocean County Clerk Financing
Statement #70330
--------------------------------------------------------------------------------
Parent Qualex, Inc. NJ Department of Treasury
Financing Statement #1821536
NJ Department of Treasury
Financing Statement #21127960
--------------------------------------------------------------------------------
Parent Imaging Financial Services, NJ Department of Treasury
Inc. Financing Statement #2026960
NJ Department of Treasury
Financing Statement #2026962
NJ Department of Treasury
Financing Statement #2026964
NJ Department of Treasury
Financing Statement #2026966
--------------------------------------------------------------------------------
Parent Metlife Capital Corporation NJ Department of Treasury
Financing Statement #1725189
NJ Monmouth County Clerk
Financing Statement #1996107209
NJ Somerset County Clerk
Financing Statement #96-22965
--------------------------------------------------------------------------------
205
--------------------------------------------------------------------------------
Parent The CIT Group/Equipment NJ Department of Treasury
Financing Group Financing Statement #1871494
NJ Somerset County Clerk
Financing Statement #031722
--------------------------------------------------------------------------------
Parent Competitive Plumbing, Inc. NJ Somerset County Clerk
(Construction Lien) Construction Lien
Book 0007 Page 312-315
--------------------------------------------------------------------------------
Parent Valley National Bank NJ Somerset County Clerk
(as record Financing Statement #026993
owner of the
real property) NJ Somerset County Clerk
Financing Statement #98-32527
--------------------------------------------------------------------------------
New Linden Metlife Capital Corporation NJ Department of Treasury
Financing Statement #1725189
NJ Department of Treasury
Financing Statement #1468021
NJ Department of Treasury
Financing Statement #1468024
NJ Department of Treasury
Financing Statement #1468027
NJ Department of Treasury
Financing Statement #1468029
NJ Department of Treasury
Financing Statement #1468023
NJ Department of Treasury
Financing Statement #1468022
NJ Department of Treasury
Financing Statement #1468025
NJ Department of Treasury
Financing Statement #1468026
NJ Department of Treasury
Financing Statement #1477982
--------------------------------------------------------------------------------
206
--------------------------------------------------------------------------------
NJ Somerset County Clerk
Financing Statement #96-22965
NJ Monmouth County Clerk
Financing Statement #1996107209
--------------------------------------------------------------------------------
Reading Metlife Capital Corporation NJ Department of Treasury
Financing Statement #1478181
--------------------------------------------------------------------------------
Malverne Metlife Capital Corporation NJ Department of Treasury
Financing Statement #1477978
--------------------------------------------------------------------------------
207
Schedule 7.03
Existing Indebtedness
Balance
8/03/02
Wakefern Food Corporation (Investment) 1,535,000
Pitney Bowes Credit Corporation 1,315,955
Capitalized Real Property Leases 65,010,465
GE Capital (formerly Met Life Capital)* 2,100,328
CIT 1,496,191
-----------
-----------
*Total loan comprised of the following $71,457,939
balances:
============
============
Marlboro $1,050,666
Montgomery $1,049,662
Contingent Liabilities
Assigned Leases Calculated Per Annum 1,645,591
$1,645,591
===========
208
Schedule 7.06
Permitted Investments As Of 08/03/02
1. Wakefern Food Corporation- 12.3% of outstanding Capital Stock - owned by
Parent
2. Insure-Rite, Ltd.- Mutual Captive Offshore Insurance Company -
approximately 10% owned by Parent
3. State of Israel Bonds- $95,000
4. WFC-1 Realty Corporation- $1,300- approximately 13% owned by Parent.
209
Schedule A
Certain Intellectual Property
The Parent and the Borrower have the following trademarks, trademark rights, and
licenses:
1. Trademark License Agreement with Wakefern Food Corporation for the
right to use the ShopRite name.
2. Caribbean Hardwood Grill (New Jersey State trademark filed on
June 8, 2000)
3. World Class Kitchens (New Jersey State trademark filed on June 8,
2000)
4. Kosher Experience (New Jersey State trademark filed on June 8, 2000)
210
Schedule B
New/Replacement Store Projects
Square Capital New Store/
Feet Expenditure Replacement
---- ----------- -----------
North Brunswick $5,500,000 Replacement
Ewing 9,000,000 New Location
Hamilton $6,500,000 New Location
(Marketplace)
Howell 7,000,000 New Location
Belmar 6,000,000 Replacement
Hamilton 6,500,000 New Location
(Nottingham)
Woodbridge $11,200,000 Replacement
Aberdeen $7,000,000 Replacement
Mercer $6,500,000 New Location
East Brunswick $7,000,000 Replacement
Toms River $7,000,000 New Location
New Location $7,000,000
New Location $7,000,000
New Location $7,000,000
211